Good day, and welcome to the Talos Energy Investor Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jordan Kiser, Corporate Finance Manager. Please go ahead. Thank you, operator. Before we begin, please let me draw attention to the securities law disclaimers included on slides two and three of the presentation posted to our website, which discuss, among other things, the fact that we intend to file a registration statement on Form S-4 relating to this transaction, including a proxy statement regarding a special meeting and a consent solicitation statement for EnVen, and which when filed, will include additional information that you should read in evaluating the transaction. With that, I'll turn the call over to Tim. Thank you, Jordan, and good morning, everybody. As Jordan read through some of the cautionary statements, I think we're gonna start on page four. What I'm gonna do, for the next several minutes is work through these slides and talk about what are the key highlights in each of these slides and what gets us so excited about this deal. Then Shane Young and I are both available for Q&A when we get done walking through the presentation. You know, I'll start by saying that, you know, we've been very patient in how we think about M&A. The last big deal we announced was in the end of 2019. It closed in early 2020. Although we've done some tactical transactions, you know, we've been very patient about trying to make sure we continue to find the right consolidation with the right set of assets. I would tell you, EnVen's a company we've admired for a long time. These are assets that we've always, you know, appreciated. These are assets, frankly, that we have bid on in previous processes. You know, there's a lot of reasons this makes a lot of sense. I'm gonna walk through all of that in the slide deck. Now on page four, what I draw your attention to is, you know, right off the bat, this is a $1.1 billion deal. We've always been sensitive to the fact that if we're gonna use shares as part of the consideration, we need to make sure that we're doing something that's a discount to where we trade. It's gonna be very accretive on a free cash flow per share basis that doesn't get in the way of the deleveraging goals that we had. I'm gonna walk through all of that in the deck today. This checks all those boxes, which is what we're talking about on the left side. You know, it gives us a significant amount of free cash flow opportunity. We think there's gonna be significant synergies. When you look at exactly specifically what we're buying on the right side of the page, this is a business that's producing 24,000 BOE a day. It's very oil weighted. It's weighted in deepwater as well. We'll, you know, on a pro forma basis, be more oil weighted and more weighted in deepwater from an asset perspective. We'll talk about how these assets fit right into what we do every day. $460 million of adjusted EBITDA as an expected number for 2022. Free cash flow number of about $170 million. Now that's hedged. As we get further into the presentation, we'll talk about what that looks like on an unhedged basis and on a margin basis, which is unbelievably attractive. 78 million bbl on a 2P basis equivalent and 420,000 acres. Again, that gives us plenty of movement on how we think about allocating capital over the next several years. We're gonna talk about, again, going back to the left side of the page and looking at the boxes we're trying to check here. We're gonna go through all that and also talk about how we're trying to enhance the governance profile of what we're trying to do and why we think that's important as we grow as a company. Let's go to page five. Again, you know, more details. We're gonna see a 40% increase in our production and a more diversified asset set. Look, we think that's important as we manage growing the company in the Gulf of Mexico. We think it's really important that you manage concentration. Sometimes you have that. When you're lucky enough to have some success with the drill bit, which is something we did in Tornado and something that we hope to do in our future drilling, it can add to the concentration profile. If you can diversify that with more assets, where you have seismic and where you have active operations, I think you build a healthier company, and this will do that for us. You know, having the additional free cash flow and having this transaction be so accretive to how we think about free cash flow generation gives us more optionality in how we think about allocating capital and what we do, and we're gonna walk through some of that as well. It's a great asset mix. It fits right in with what we're doing. Their strategy is very similar to ours. We're gonna have more operated production facilities that have ample capacity as we think about subsea tiebacks. There's gonna be a tremendous increase in acreage, which again, is helpful to us. We've, I think, been a leader as an independent in our acreage set, and we're just only gonna add to that portfolio. I mentioned on the last slide, the EBITDA generation for this year, $460 million, just as a proxy as you think about this business. Well, on an unhedged basis, that was $630 million. You know, like many companies, we have hedges that we all put on in late 2020 and early 2021. As those hedges roll off, I think the margin story here on a hedged basis gets even better. Again, on an unhedged basis, a netback margin was over $70/BOE. Very consistent with what ours has been, and in fact, slightly better. We had a goal at the beginning of the year to get our leverage stat down under 1x. We're still gonna achieve that goal. If not, we expect to beat that goal. This transaction actually is accretive to that goal, so very important for us. Then on the ESG front, you know, there's a little bit of an environmental benefit. You know, having more weighted deepwater assets, their emissions intensity was slightly lower than ours, so that's gonna be a positive when we put these businesses together. We still always think there's more low-hanging fruit as we continue to study that and figure out how we can improve our emissions intensity across our portfolio. I think there's some governance improvements here which aren't talked about in deals, particularly deals in small caps. I'm proud of the fact that we have a board that's leaning in on getting the right governance structure. Page six, I think is really a compelling page. I mean, this is where those who follow what we do and how we do it will look at this page and say, "Look, this makes a ton of sense." There are a couple of things for us to point out is if you go to page six and you look at the map on the left side. Light blue is our seismic inventory. As we've said in you know, our Analyst Day, and as I've continued to say on the road, you know, having regional seismic across the vast majority of the Gulf of Mexico, a lot of this has been picked up over the years. Then we localize our reprocessing efforts, our seismic re-imaging efforts, where we're thinking about allocating capital in the next year or the next two to three years. This fits perfectly. It fits. You can think about this from operational synergy standpoint. You can think about this from, you know, more of a technology and a science and a seismic standpoint. Then you can think about this on how we think about growing our portfolio. You can also see, again, green, just as a reference, is where we have CCS opportunities, and the Riverbend project is within that. It gives us more of a presence around our stakeholders as we grow this company in the Gulf Coast region. It just everything matches with what we're trying to do and you know kind of who we're trying to be in the Gulf Coast and being a leader as a counterparty there. If you think about our previous transactions, and I think you know this is some of the messaging that I wanna make sure you know you guys all receive, is where we've had success over the last 10 years. You know the first transaction we did was in 2013, and then one of the assets was the Phoenix area. Two years later, we had a discovery in the Tornado area just to the south. We bought the Green Canyon 18 asset. Several years later, we redeveloped that asset. If you look at where our program is focused this year on the capital allocation side, it's around the Ram Powell and Pompano areas, which are transactions that we did in the 2018 timeframe. We fully expect that you're going to see us allocate capital around their facilities as we launch reprocessing projects, and they have their own portfolio. This was a very healthy going concern. It was a company that was very well-built. They have a deepwater rig program that's starting up here in the near future. The first prospect out of the box called Sunspear is one that we're very excited about. Not only do they bring their own inventory, we think we bring our skill set as mature asset managers using the facilities, and then probably launching some reprocessing projects around their facilities to see what else we can pull forward. When we think about that, pulling all that together in the pro forma company, I think we're really excited about where we go from here. Again, on the right side of this page, on page six, you can see the percentage production increase, the gross acreage increase, the weighting on deepwater operations, oil weighting, all of that's improved and I think is a tremendous benefit. Page seven just talks about some of those facilities. Again, similar to what our portfolio looks like, these were put in by, you know, many of these put in by the majors. They've been well taken care of. The EnVen team has done a tremendous job. They have a great track record on health, safety, and compliance. You know, again, we've always admired the work they've done here, and we're familiar with these assets. Brutus/Glider is an example, Petronius. I mean, I'm looking at assets that I smile when I look at it because I know we tried to bid on them and we were narrowly outbid, and they did a good job not only securing those, but then managing those after the transaction. It gave us a lot of familiarity, it gave us a lot of comfort. I think it's one of the reasons we feel really good about how we can execute this transaction. Then, you know, similar to our strategy, these not only are assets that we can work on their development plans, if there's other things we think we can do to enhance, you know, some of the prospectivity around this acreage, these facilities are available almost as midstream assets to host third-party, you know, discoveries. Then as we host that third-party production or maybe that's a working interest partner on some of the things we're trying to do, that just adds another revenue stream to offset our operating costs and will, you know, generally lower the overall operating cost structure of the business. Similar strategy, similar asset set, again, something that we think we can execute well on. That leads you to kinda how do you think about synergies. You know, you go back a couple slides ago and you look at the map and you can kind of envision a lot of duplication in terms of how we think about services. Look, we share a financial auditor. You know, how you can put together insurance packages. There's a lot in the system when you do something in basin, and particularly in the Gulf of Mexico, that we think we can work on and add some synergies. Some of those come through the G&A side, some of those come through the operational efficiency side. Now, what the bottom chart shows is these were businesses running at a very high netback margin before we even think about these synergies. Part of that's because they're oil-weighted, and the price and the premium we typically get on pricing in the Gulf of Mexico. We had those benefits going in. Put the synergies in with this, look at where this can go, and I think you're looking at, you know, a top quartile, if not one of the leaders when we think about netback margin pre-hedged. Now we get asked a lot, before, you know, we even announced this transaction, just being on the road, we were generating a tremendous amount of free cash flow this year, and it's allowed us to really accelerate our debt repayment. I think Shane talked about on our last earnings call that over the last 15 months, we had retired over $450 a share of debt retirement. Here, that free cash flow profile goes up. What that does for us, it's gonna give us optionality on how we think about capital allocation. We certainly wanna continue the de-levering. We think, you know, we all remember 15 and 16, we all remember 2020. We're very proud of the fact we've never had financial distress and never wanna think about that. You know, getting that leverage debt under one, getting that closer to a half is something that we're, you know, focused on and, it's something we're gonna continue to do. Again, this transaction is accretive to where we think we'll be in terms of our year-end leverage goals. It also gives us more flexibility on how we can pro forma, you know, high grade the inventory on both companies, how we think about returning capital to shareholders. We've always been sensitive that that's a goal of ours. It's an ambition of ours. We've been, you know, cautious about how we think about the timing around when to do it. We have a lot to still work on. Again, we're launching a CCS vertical we think adds a tremendous amount of value to the company. I mean, there's other M&A ideas out there as well. You know, we're not putting this in a particular order other than to say all those options are more on the table for us today than they were six months ago, and those options were available to us six months ago. Again, everything we're trying to do and all the goals we have, we think are improved by this transaction. Tim talks a little bit about the leverage. I mean, a couple things I would highlight here. Again, you looked at where we were on a standalone basis at the beginning of the year on the right side of the page, where we think we end up at the end of the year. You know, we're focused on trying to get this into a very conservative place. When we thought about sources and uses on this transaction, we thought about what's the right mix of consideration that we're doing something accretive for the shareholder, but also, you know, making sure that we're heading down that path of being delevering as well. We think we tried to optimize that the best we could in how we thought about, you know, not only the total consideration, but the mix of consideration. You know, from a hedging basis, we're gonna stay focused on, you know, how to continue to do that. We kind of manage that in terms of some of the requirements on the credit facility. There's a lot of open exposure, which is a positive thing I think in 2023. As we kinda continue on and look at managing the businesses, we'll look at where to add. I think one thing that's pretty interesting, and I would draw your attention to, is the last bullet. So on a P&A basis, and part of this is based on the timing in which the EnVen bought these assets. Some of these assets were purchased in the 2015 and 2016 timeframe. The seller asked for requirements to put restricted cash away, pre-fund some of the P&A. On a net liability basis, if you think about it from a BOE basis, it's also accretive on that front as well. They've got restricted cash to pre-fund a lot of the P&A obligations with third-party sureties to the majors. I think that's a really nice benefit that we get. Again, part of that on the timing of when they bought it, but all that flows over to us, and it's a very positive part of this transaction. You know, we talked about you know, ESG for the next couple pages, and it's not just the environmental, which is obviously important to all of us and something that is you know, we're very proud of not only what we've done with our assets over the years and what our goals are and our targets are, and then obviously what we're launching downstream of our operations on the CCS side. But because we have more deepwater waiting here, we expect this to accelerate our own pro forma goals. The other thing that I think that's very important is consistent with the strategy when you have these deepwater facilities, it's gonna encourage more subsea tiebacks when we think about that next barrel. So much of how we think about emissions intensity isn't just managing the emissions you have, it's really focusing on how do you produce a low carbon barrel and what's next for your asset, what's next for your company? Just by the nature of this asset set, by the nature of the unutilized capacity in these physical facilities, and when you think about how we allocate capital, owning and operating more of these facilities, not only do we think we're a good steward and we'll be a good owner of those facilities, we think it encourages more capital allocation where we're doing subsea tieback to these facilities, and then that barrel is gonna be the lowest emitting barrel we can have in a subsea environment. Ultimately, that's gonna lead us to continue to be aggressive in how we're thinking about lowering our emissions intensity on these assets. Again, I think we've said this again and again, we think the Deepwater Gulf of Mexico is the premier leader from an oil, you know, asset emissions intensity basis, and we're just gonna improve on that story. Also this deal has something I think a little bit unique, I hope, for companies our size, and as you think about this and reflect on it, you'll agree, in what we're doing on the governance structure. You know, we've been public four years, and we became public through a reverse merger, and there was a time when we first launched this company as a public company in 2018, that the insiders, you know, owned over 70% of the company, and there wasn't a lot of liquidity in the stock. We had a large private equity presence, which you would expect, and we had a staggered board. You know, as we've matured as a company, as we've rolled some of those owners off, you know, we've thought about how do we think about governance for where we're trying to get to, where we wanna be as a company? Can we affect some of that in our next transaction? It's something we had thought about, and then this is an opportunity to do it. You know, Riverstone has been an unbelievable sponsor to us. They've been a dear friend in the business and have helped us tremendously. As we close this transaction, the Riverstone designee director will proactively resign. EnVen will have two independent directors. We will keep our independent director group, and then obviously I'll still be here. That will set up, you know, I think the right governance approach. We'll eliminate the staggered boards and have annual elections. Look, these are the things that I think a maturing company needs to do. If you can have a catalyst like this transaction to do it, I think it's the right time to do it. You're not seeing, you know, very expansive boards here. You're not seeing some of the other things on expanding management teams, that we're focused on synergies, we're focused on the right governance, and I think that's reflected in how we're doing it in the transaction. To wrap up before I open it up to questions, you know, again, we think this just checks a lot of boxes. We think scale's important in our basin, a diversity of assets importance in our basin. We think these assets lay right over our own operational footprint and kinda what we're doing from a technology standpoint. The tremendous acreage set. We think we bought it at the right price. We're proud of the fact that it's going to be accretive and still be accretive on both free cash flow per share and on our leveraging goals, deleveraging goals. We expect to effect the synergies. There's gonna be a lot to talk about, as we integrate this. You know, we're very proud of the team we've put together that focuses on business opportunities every day. There's a lot of hard work in there. We're excited to talk to their employees and see how they can fit in the pro forma company. Look, we're trying to build a leadership position in a basin that we know very well that'll help us execute for the long haul. This transaction helps us accomplish all those goals. With that, we'll turn it over for questions. We will now begin the question and answer session. To ask a question, you may press Star then one on a touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press Star then two. At this time, we will pause momentarily. The first question today comes from Leo Mariani with MKM Partners. Please go ahead. Hey, wanted to ask a little bit about kind of use of free cash flow in 2023. You obviously are putting some cash in the deal. Looks like you're also assuming $50 million in net debt. Just wanted to clarify if that's just bank debt, and you would just put the $212 million and that $50 million onto the Talos revolver. I guess just wanted to get a sense of, you know, do you kind of try to pay all that incremental acquisition debt off in 2023? You mentioned returning capital to shareholders. Just wanted to get a sense on the priority there. Do you wanna pay that debt off first before you initiate a return of capital program? Just additionally, any comments about like an increase in the size of the credit facility post the deal? Yeah. Hey, Leo, how are you doing? I'm gonna hand that over to Shane. I would tell you, we've been pretty measured. Shane's gonna walk through their balance sheet. We've been pretty measured on how we think about where to prioritize that. I think as we get closer to closing and we think about rolling out next year's budget, we'll continue to focus on that. Shane, why don't we talk a little bit about their balance sheet, and then we'll kinda go back to other parts of this question. Yeah, absolutely. Thanks, Leo. Look, yeah, from their balance sheet perspective, look, similar to us, where we've been focused on, Tim talked about sort of the leverage reduction strategy. You know, those guys have been every bit as part of that. In fact, even ahead of where we are on a leverage to debt, and that's why when we blend all of this together, it's still accretive to the credit. Just walking through it, you know, at year-end, we expect that they'll have $50 million of net debt. That comprises of a note that they have outstanding. It's got a little amortization to it. It should be around $250 million at year-end, including some of that amortization that they've got. They'll have, again, you know, a cash balance that'll build up to get you that net debt of $50 million at that point in time. We'll assume all of that over and then add the additional $212 million to that. They'll be, you know, again, they'll be bringing into the credit picture, you know, inclusive of the cash consideration, you know, roughly $250 million of net debt to the picture. As Tim talked about, their EBITDA expectation for the year at $460 million. You can see you've got, you know, roughly a $250,000 billion of net debt, including the cash consideration against, you know, just under a $500,000 billion of EBITDA, so about a half a turn to the total credit. The goal here is to again consolidate these two credits upon the closing. Yeah. Look, I mean, you know, in terms of when's the right time to launch the shareholder return policy, I think, you know, when you've lived what we've all lived, and we're very lucky and certainly, you know, very proud of the fact that we've managed both of the last downturns without a scratch, maybe slightly bruised, but without, you know, too big of a scratch. I mean, I think you remember that, and you really wanna, you know, focus that first priority in driving the balance sheet to a spot where you think it's healthy and can hold up to potentially another drop in prices. We wanna do that. We wanna finish that goal. You know, as we think about these notes, although they're callable, I mean, we'll have to be opportunistic in the market. When does it make sense to do that? Is the market where we want it to be, you know, maybe at the end of the first quarter next year? That drives a little bit of how we think about the shareholder return policy. I mean, it's a, you know, a high cost of capital business. We wanna lower that cost of capital. But, you know, I'm more encouraged today that we're getting closer to implementing those policies than maybe we would have been three months ago. We certainly, with this transaction, have more of that optionality than we otherwise would. We just have to sit down with the board, look at all the things we're doing as a firm. One thing I've told you, Leo, is that I think our business has a lot of catalysts. You know, I think, you know, we've got exploration catalysts, development catalysts, tie-back catalysts, CCS catalysts, and some of those need some funding. Reallocating capital back into the business is also important. You know, these are all different priorities. We're gonna address all of them with the pro forma board as the companies come together. I think just the fact that we have this much optionality is a huge benefit. Okay, that's helpful. Just sticking on a couple financial questions here for you. You guys clearly talked about how there's some underwater hedges for EnVen in 2022. Can you give us a sense on 2023 and 2024? Is EnVen pretty unhedged for those years? You guys maybe kind of suggested that a little bit, you know, in the slides here. Just on the $30 million of G&A synergies, sounds like it's mostly G&A. Is that roughly equivalent to what the G&A of EnVen is, and you kinda pretty much expect to eliminate all that? Just any help you can offer there would be great. Hey, Leo, I'll field the hedges here quickly for you. Look, here's what I'd say. They've got some hedge losses in 2022. We've got some hedge losses in 2022 as well. Both of us, you know, did a refinancing of our notes around the same time and put hedges in place really to help support those refinancings. We're sort of rolling off the tail end of those as we get through the end of this year. That's good. You know, their policy has been historically very similar to ours. I would say, you know, both entities, you know, open up a lot of capacity starting in 2023 and certainly beyond. At the same time, I think we've been following our historical patterns around adding in some incremental hedges, you know, on a quarterly basis. Wouldn't be surprised if they were doing something similar. Yeah. Oh, on the synergy. Yeah, I'm sorry. Let me get back to you, Leo, on the synergy question that you asked. Look, it's in basin. We've talked about, you know, as we've been looking at M&A deals over the last couple of years, that, you know, even though we've looked at some things that are in other offshore basins internationally, we were focused on trying to get one done in basin because it does impact the synergies. It helps us, you know, grow the operational footprint, make it more efficient. It gives us some economies of scale. It gives us, you know, I think some purchasing power and things of that nature. So I think, you know, the synergy aspect of this deal is important. I think being in basin allows us to be effective there, and we expect to be. We'll look at everything both operationally from a G&A standpoint, where do we have duplicating costs and things of that nature. You know, standard stuff you would expect in a deal. We have a full integration team ready to go. We'll work really hard to make sure we realize all that. All right. You guys also talked about one exploration prospect that you're excited about. Just wanted to get a sense of, you know, are there other, you know, material exploration, you know, prospects as well in the EnVen portfolio? Yeah. Provide us a little bit more color around that. Just, you know, lastly, you know, how does this combination affect CCS initiatives? Does it just kind of give you more scale to be more, you know, competitive on CCS sort of going forward? Just any more thoughts around that. Yeah. Well, look, they absolutely have their own inventory. They have, you know, at least 35-40 different ideas on subsea tiebacks rolling through their inventory. We acknowledge all of that. I think we want to pull it together and look at everything. You know, as we kind of think about how to plan 2023 and 2024 and 2025 rig programs, where do we think that we can launch some more reprocessing? They've built a very healthy business, or they wouldn't be here. You know, we're excited about putting all that together. Now, as they pull a rig program into their operations right now, they've got one coming that'll start here soon and go through the first quarter of next year. You know, we like exactly what they're doing right out of the box. It's always good, you know, particularly in the Gulf of Mexico. This isn't similar to some of the unconventional basins where everyone's familiar with the rock. It's aggregated in just a couple counties. Add a rig, lose a rig. You really have to think about the entire landscape of the Gulf of Mexico and, hey, what are they doing around their assets? You know, they may be in the Mississippi Canyon area, Green Canyon area, Ewing Bank area. What are we doing around our assets? As we step into their business, we really like what they're doing right out of the box. Then we'll continue to kind of high grade, you know, the pro forma portfolio going forward. Now, one thing this does, Leo, for us is there are times where we have a prospect, and we think about where we're allocating capital, and we can raise a little bit of that capital allocation. So it can free up us, depending on what level of working interest we own, depending on what the dry hole cost might be and the drilling cost might be on a prospect, to shift more capital and be more aggressive on our own inventory. So you get multiple benefits. You get the pro forma inventory, and then you get the additional scale and free cash flow to potentially accelerate what you do on your side. So all that's positive. On the CCS front, you know, look, I think it's really important that we are showing how committed we are to the Gulf of Mexico and the Gulf Coast. You know, that whether that be where we're operating, whether that's where our employees live and work. You know, the whole spirit around CCS is lowering emissions broadly in the places where we live and work. Trying to be a service provider and a benefit to that downstream petroleum products and the things that we do that affect emissions. I think being a bigger company allows us to be a better counterparty. I think it allows us to become a better partner of choice. I think it makes us more visible with all the stakeholders that are participating in CCS. I think those are all net adds. Then obviously just from a free cash flow benefit, you know, we have more available to think about how we allocate back into the CCS business. I think it's pros across the board in that front. Okay. Thanks, guys. All right. Thanks, Leo. The next question comes from Subash Chandra with The Benchmark Company. Please go ahead. Thank you. Yeah, congrats, everybody. Was curious, Tim, if or Shane, if you had a PV-10 number associated with this transaction. Did they? Have they disclosed theirs? Well, they haven't done it publicly, 'cause they're they have their note holders, and you know, they had a year-end number, but nothing since then. Yeah. Here's what I would tell you. We obviously bought this well inside proved reserves. You know, look, we'll think about trying to disclose that maybe potentially in future presentations. I would say the entirety of the transaction, all of the acreage, every benefit that I've just talked about on this call was well inside kind of the proved reserves. I would say at a good an appropriate discount rate relative to our cost of capital as we think about how we bid on this, you know, inside those proved reserves. You know, let us think about the appropriate time to disclose all that, and I'm sure we will soon. You know, just kind of what might be on your mind is how do you think about bidding this? I think we bid it the right way relative to our cost of capital and where that hits on the discount rate all inside proved. I think that's one of the benefits of being in the Gulf of Mexico, Subash, is, you know, we've always said that, you know, if you do this right in the Gulf, you get a lot of these extra benefits that typically some folks might think about paying for on the onshore side. We're trying not to pay for in the Gulf of Mexico, and they just come with the deal. I go back to Stone as an example of that and the success we've had in Puma West, and we hope to continue to have as we appraise that. That was acreage that it had no value allocation in the Stone transaction. Subash, I would just tell you know, from their own presentation on their own website, they had as of the beginning of the year, with the beginning of the year strip, they had $1.5 billion of PV-10. Yeah. That's a- Yeah. Strip from the beginning of the year. From the beginning of the year. Yeah. Right. Okay, got it. It sounds like, okay, you got an integration team, but there'll be things you're gonna tweak and work around. Pretty safe to say that the EnVen program that they had planned for 2023 is what you're gonna run with. It might be a little, you know, late in the day to change that. Was that program a maintenance program, Brendan? Or had they not really got to what 2023 was gonna look like? Yeah. Their business is not too dissimilar to ours. I mean, I think they have the right approach on how they think about, you know, where do we have development opportunities. Take their Lobster asset. It's been a tremendous transaction for them. It's been a tremendous asset for them. And they have a platform rig on that asset, and they look for development opportunities on that asset. And they've kept a consistent rig program over the last several years, and that rig program is still ongoing. And so some of the capital they're allocating is towards that rig program. And then they're allocating capital to a couple new, you know, kind of tieback opportunities, similar to what we're trying to do in our Lime Rock and our Venice, and our Rigolets prospects in our program. They have those teed up and ready to go, and we recognize, you know, what they're doing in both of those. You know, we're just gonna step in and execute that plan. That's the beginning building block for 2023. Now, as we work over the next couple of months towards closing and we think about 2023 and then into 2024, the question will be, hey, do we think about extending these programs? Do we allocate more capital on our side while we continue to study theirs and then integrate more of theirs in the 2024 program? You know, we'll have all that optionality, but there's nothing we need to change in what they're doing. I think they're allocating capital the right way. They're focused on the right risk and reward similar to we are. I think we just want to enhance our familiarity with the assets, but I think, you know, the optionality it provides is tremendous. Yeah. No, agreed. Finally, you know, so, you know, January is fast approaching, and you kinda, you know, referred to this with the high yield market, credit market look like, et cetera, et cetera. With the, you know, what are the scenarios towards refi, you know, at this point? I guess, the amortizing notes that EnVen has, I mean, do you sort of expect that to take care of itself? Or is that something you can package into a broader refi with your own 12% and early in the year? Yeah. I'll take that one, Subash. Listen, you know, our strategy of leverage reduction and sort of delivering the best credit profile that we can as we get into 2023 has been pretty consistent and is unchanged. This transaction, frankly, only enhances that and/or accelerates it. I think, you know, we're gonna continue to take care of the things that we can take care of, to deliver the best credit possible. Obviously, the markets have been incredibly choppy to date. I don't know where they'll be as we get into 2023, but we'll certainly take all that into consideration when that time comes. Okay. Yeah. Got it. Fair enough. Thanks, guys. Congrats again. All right. Thanks, Subash. As a reminder, if you would like to ask a question, please press star then one to be joined into the queue. The next question comes from Jeff Robertson with Water Tower Research. Please go ahead. Thanks. Good morning, Tim. You mentioned EnVen is currently producing about 24,000 BOE a day. Is that where you think they will be when the transaction is scheduled to close around year-end? Yeah, we expect that to be the case. I think it's a business that, you know, when you look at how they're allocating capital and how they're prioritizing things that can come on quickly, with that rig program we talked about in the Lobster area, and then where they're allocating capital on these kind of near facility tiebacks, although those take a little more time. We think it's a business that runs relatively flat over the next several years. Again, we integrate that and if we think about future capital allocation, and we build it out from there. you know, one of the things that's attractive is that, I think they've run this at a very stable business, and I think they're allocating capital the right way, and I think that's a great place for us to start. You mentioned this, I think it's Sunspear, the deepwater project that EnVen is picking up. Is that the only rig that they will have running when you expect to close? Or are there other rig commitments that they have in 2023 that you all will take over? They have that ongoing rig we talked about on the Lobster platform. Again, they've done a great job there, similar to the rig program we're trying to work that we had on Green Canyon 18 and now on Pompano. Those are similar, you know, platform rigs, similar horsepower rigs. They have that, and then they have the rig program that they're gonna be picking up here shortly. That's it. That gives us, again, good program. It's exactly doing the things we would hope they would do. Again, that's why we think it's a benefit to buy a very healthy business. But not too many commitments that we can't, you know, go in, take a look, and think about where we're allocating capital in the back half of 2023 and 2024 and 2025. In the projects that they have in place for 2022, will those come on in 2023 or will those come on this year or would they be 2024? They have a well they were successful in that Lobster program that I think is coming online soon. They have some non-operated projects that have come online recently. I think, you know, again, they're in what I would call that normal Ebb and Flow of having success, pulling those wells online, launching the next rig program, and then hopefully those wells will come online, you know, again, some in the first half of 2023, and then some of those will move into 2024 as well, depending on the tieback and the success of that. I think it's that normal cadence that we see, Jeff, in the Gulf of Mexico. You know, you have a hot quarter when you have new wells come online, and then there may be a couple quarters before the next one, and then you get another hot quarter when you bring more things online. It's just that mix of, you know, platform rig drilling, which is a pretty quick turnaround, and then subsea tiebacks, which have a slightly longer turnaround. Similar strategy, similar portfolio, and certainly they've had some success this year. We anticipate that what they're working on will also have success. As I've mentioned, we're super excited about how to think about all the opportunities between the entirety of the acreage set and all of these facilities and how we plan to allocate capital across the portfolio in the years to come. I guess one question on strategy, Tim. You talked about portfolio management in the Gulf of Mexico. How does the scale that you all will pick up pro forma for EnVen and the prospect inventory, how does that play into your risk tolerance on the exploration side of the portfolio you have? You know, that's a really good question, Jeff. I don't know. It doesn't change, you know, risk tolerance per se. We don't wanna suddenly just say, "Hey, look, we're bigger. Let's just turn risk on." I think we've always been measured that when, you know, when we were in the middle of commodity downturns, we focused all our energy to protecting the credit, converting PUDs to PDP, and those were the right things to do. This basin, though, shows itself in the benefit of its geology and the benefit of its technology and the benefit of that infrastructure. That's why we want to drill the Puma West. If you've noticed, we talked about in our last deck, a 46,000 JV that we put together with Oxy on something we wanna drill in the first half of next year. That's a high impact project that you know in the Green Canyon area as well. You know, we wanna spread our dollars across the entire risk-reward spectrum that this basin has to offer. I don't think we're gonna allocate any more risk to more high impact than we would development and exploitation. We can allocate potentially a little more dollars per project. We have the option to kinda adding more projects, or we have the option to adding a little more capital per project. I think from a risk allocation perspective, we'll probably keep that the same. Hopefully that makes sense. I think that's one of the big benefits. That makes a lot of sense, Tim. Thanks. All right. Great. The next question is a follow-up from Subash Chandra with The Benchmark Company. Please go ahead. Hey, Tim. I ask 'cause you know, other packages have recently hit the market as well. Maybe a premature question, but you know, what do you think about your ongoing appetite consolidating the Gulf and ability to do so? You know, at some point, would you seek to expand to you know, other basins, I think, as you've looked internationally? Yeah. Hey, Fernando. Well, look, I mean. I'm sorry. Yeah, Subash. Sorry about that, Subash. I'm trying to keep- I'll go Fernando next. Yeah, he's next. Look, man, I mean, today I'm catching up on emails, and I'm making sure I call everybody by the right name when they give me a phone call to start there. Look, I mean, obviously, we're always looking at what's in the market, and we've been looking at what's in the market, not only in the Gulf. Look, we've been looking at what's in the market, as you know, in a couple areas in the Atlantic Basin. We're gonna keep doing that. We're very familiar with what's on the market. You know, we're not just gonna run out and try to do everything there is to do. I think we wanna maintain, I think this discipline of making sure we're doing it the right way and making sure people look at that and say, "Hey, I wanna make sure wherever Talos goes from here, whether that's stay put and allocate capital, whether that's, you know, think about another transaction, that they're gonna be a healthier business." You know, it's not scale for scale's sake. I think it's scale because scale and diversity, when done the right way, when delivering the right balance sheet, just makes you know, a better operator and makes you a better counterparty as you think about where the business goes from here. Look, we're trying to build something for the long haul. We've said it over and over again, we think that we're the right second owner and third owner on a lot of these assets. That hasn't changed, and we're gonna be in the market and continue to look at that. It had been, you know, almost two years since we announced the transaction. You know, sometimes you can, you know, announce another one fairly quickly, and sometimes it could take another two years. I wouldn't preview anything other than the fact that we are always in the market. I think we're gonna try to stay very disciplined. You know, I'm proud of the way the team's handling this. They constantly show me ideas. Sometimes there's frustration, you know, when we can't get there because we have to walk away. We keep looking, and we keep trying. Look, you know, it took several rounds on this one. You know, we know it's out there, and we're gonna look at it, but I think people can trust that we're trying to do this the right way. Sounds good. Thanks, Tim. Thanks, pal. The next question comes from Fernando Zavala with Pickering Energy Partners. Please go ahead. Sorry, I was muted. Hey guys, thanks for the time. I was wondering if you could share what EnVen's 2022 capital budget is essentially trying to get to, what a normalized pro forma budget could look like next year. Yeah, fair question. For 2022 full year, it is gonna be just about $200 million. Okay, gotcha. Just quick follow-up. You know, your reinvestment targets, I mean, I'm assuming there's no change to the, you know, percentage of cash flow reinvestment that you're trying to do for the Gulf of Mexico business. No, I don't think it changes our approach, you know, our approach at all. I think it gives us. This is really about, you know, flexibility, and it's about, you know, kinda optionality and things of that nature. It's about, you know, I think what I've talked about on one of the previous answers, maybe Jeff's question on, hey, you can allocate a little more per project if that's what makes sense. Or you can add a couple additional projects, but still stay within the discipline of what you're trying to do on a reinvestment rate standpoint. Got it. Thanks. That's it for me. All right, Fernando. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Tim Duncan, President and CEO, for any closing remarks. Yeah. Okay. Thank you, operator. Look, I appreciate the interest we're having in the call and certainly the interest that we're getting over our emails. You know, again, the team has worked very hard. I'm proud of our employees on how hard they work. We're looking forward to meeting and integrating the EnVen employees. Look, let's not lose sight of the other things happening in the business. You know, the team's working hard on all fronts. You know, we have an exciting rig program ahead of us. We have a lot of milestones we're trying to achieve in the CCS business. That team's working extremely hard, and I think we'll have a healthier, better company when this deal gets closed. We're excited about that, and we're excited about where it leads us. We look forward to talking to everybody again in the earnings call, and we look forward to getting this closed and where we go from here. Thanks for joining. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.