Acquisitions qualifying as business combinations are accounted for under the acquisition method of accounting, which requires, among other items, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

QuarterNorth Acquisition — On March 4, 2024, the Company completed the acquisition of QuarterNorth Energy Inc. (“QuarterNorth”), a privately-held U.S. Gulf of America exploration and production company (the “QuarterNorth Acquisition,” and the merger agreement related thereto, the “QuarterNorth Merger Agreement”) for consideration consisting of (i) $1,247.4 million in cash and (ii) 24.3 million shares of the Company’s common stock valued at $322.6 million. The cash payment was partially funded with the proceeds from a January 2024 underwritten public offering (the “January Equity Offering”) of 34.5 million shares of the Company’s common stock, borrowings under the Company's senior reserve-based revolving credit facility (the “Bank Credit Facility”), and proceeds from the offering of the Company’s 9.000% Second-Priority Senior Secured Notes due 2029 and 9.375% Second-Priority Senior Secured Notes due 2031 (together, the “Senior Notes”). The January Equity Offering generated net proceeds of $387.7 million after deducting underwriting discounts of $15.1 million and offering expenses of $0.8 million.

The Company incurred approximately $21.6 million of acquisition-related costs in connection with the QuarterNorth Acquisition exclusive of severance expense, of which $18.6 million was recognized in the nine months ended September 30, 2024. These costs were reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations except for $4.9 million of fees associated with an unutilized bridge loan that was included in “Interest expense” on the Condensed Consolidated Statements of Operations during the nine months ended September 30, 2024. Additionally, the Company incurred $22.3 million in severance expense in connection with the QuarterNorth Acquisition for the nine months ended September 30, 2024.

The following table presents revenue and net income attributable to the QuarterNorth Acquisition for the three months ended September 30, 2024 and the period from March 4, 2024 to September 30, 2024 (in thousands):


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Revenue	$	150,538	$	367,644
Net income (loss)	$	12,518	$	74,817

Pro Forma Financial Information (Unaudited) — The following supplemental pro forma financial information (in thousands, except per common share amounts), presents the condensed consolidated results of operations for the three and nine months ended September 30, 2024 as if the QuarterNorth Acquisition had occurred on January 1, 2023. The unaudited pro forma information was derived from historical statements of operations of the Company and QuarterNorth adjusted to include (i) depletion expense applied to the adjusted basis of the oil and natural gas properties acquired, (ii) interest expense to reflect borrowings under the Bank Credit Facility and Senior Notes, (iii) general and administrative expense adjusted for transaction related costs incurred (including severance), (iv) weighted average basic and diluted shares of common stock outstanding from the issuance of 24.3 million shares of common stock as partial consideration for the QuarterNorth Acquisition and (v) weighted average basic and diluted shares of common stock outstanding from the issuance of 34.5 million shares of common stock from the January Equity Offering that partially funded the cash portion of the QuarterNorth Acquisition. Supplemental pro forma earnings for the three and nine months ended September 30, 2024 were adjusted to exclude $0.2 million and $31.7 million of general and administrative expenses, respectively. This information does not purport to be indicative of results of operations that would have occurred had the QuarterNorth Acquisition occurred on January 1, 2023, nor is such information indicative of any expected future results of operations.


	Three Months Ended September 30, 2024		Nine Months Ended September 30, 2024
Revenue	$	509,286	$	1,615,652
Net income (loss)	$	88,315	$	(3,256	)
Basic net income (loss) per common share	$	0.49	$	(0.02	)
Diluted net income (loss) per common share	$	0.49	$	(0.02	)

Acquisitions accounted for as asset acquisitions require, among other items, the cost of the acquisition to be allocated to the assets acquired and liabilities assumed based on relative fair value basis.

Acquisition of Working Interest in Monument Oil Discovery — The Company executed two separate definitive agreements to acquire a collective 21.4% non-operated working interest in the Monument oil discovery (“Monument Project”) in the deepwater U.S. Gulf of America located on certain Walker Ridge lease blocks. Cash consideration totaling $20.2 million, after customary closing adjustments, was paid on the closing dates of July 31, 2024 and August 2, 2024 with $24.4 million of additional cash consideration paid periodically in installments beginning January 1, 2025 through April 1, 2026. The Company allocated $42.6 million to its proved properties. The carrying amount for the deferred cash consideration of $12.1 million is included in “Other current liabilities” on the Condensed Consolidated Balance Sheets at September 30, 2025.

Acquisition of Incremental Working Interest in Monument Oil Discovery — On March 7, 2025, the Company completed the acquisition of an additional 8.3% non-operated working interest in the Monument Project for $14.8 million, substantially all of which was allocated to its proved properties. An additional aggregate $6.3 million of contingent payments will be recognized upon the achievement of certain milestones defined in the agreement.

Acquisition of Incremental Working Interest in Mississippi Canyon Blocks — On July 22, 2025, the Company completed the acquisition of an additional 75.2% and 50.0% working interest in U.S. Gulf of America Mississippi Canyon blocks 108 and 110, respectively (the “Amberjack Acquisition”). Prior to the Amberjack Acquisition, the Company owned an interest in and operated these developed and producing blocks. The Company also acquired a controlling financial interest in SP 49 Pipeline LLC (“SP 49”) as part of the Amberjack Acquisition. The one-third equity interest in SP 49 not held by the Company is presented as “Noncontrolling interest” in the Company’s Condensed Consolidated Financial Statements. The $38.6 million cost of the Amberjack Acquisition, including $33.7 million of cash at closing, was primarily allocated to the Company’s proved properties.

Talos Low Carbon Solutions Divestiture — On March 18, 2024, the Company entered into a definitive agreement relating to and subsequently completed the sale of its wholly owned subsidiary, Talos Low Carbon Solutions LLC to TotalEnergies E&P USA, Inc. for a purchase price of $125.0 million plus customary reimbursements and adjustments, combined totaling approximately $142.0 million (the “TLCS Divestiture”). The TLCS Divestiture included the Company’s entire CCS business including its equity investments in three projects along the U.S. Gulf Coast: Bayou Bend CCS LLC, Harvest Bend CCS LLC, and Coastal Bend CCS LLC. A gain of $100.4 million was recognized related to TLCS Divestiture during the nine months ended September 30, 2024, which reflects a gain of $86.9 million recognized upon the close of the TLCS Divestiture during the three months ended March 31, 2024 and an incremental $13.5 million gain recognized during the three months ended September 30, 2024 related to certain contingent payments. The gain on the TLCS Divestiture is presented as “Other operating income (expense)” on the Condensed Consolidated Statements of Operations. As of September 30, 2025 and December 31, 2024, zero and $9.7 million of contingent payments are included in “Other current assets,” respectively, on the Condensed Consolidated Balance Sheets. A deferred payment of $12.5 million due in October 2025 has not been received and the Company determined there was significant doubt surrounding the collectability of such deferred payment. Accordingly, the Company derecognized the deferred payment, of which $8.9 million is reflected as an expense in “Other operating income (expense)” and $3.6 million is reflected as the reversal of imputed interest income in “Other income (expense)” on the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2025.

The Company incurred approximately $6.0 million of costs in connection with the TLCS Divestiture exclusive of severance expense, of which $5.4 million was recognized during the nine months ended September 30, 2024 and reflected in “General and administrative expense” on the Condensed Consolidated Statements of Operations. Additionally, the Company incurred $3.7 million in severance expense in connection with the TLCS Divestiture for the nine months ended September 30, 2024.