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Debt
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt

Note 7 — Debt

A summary of the detail comprising the Company’s debt and the related book values for the respective periods presented is as follows (in thousands):

 

Maturity Date

June 30, 2026

 

December 31, 2025

 

9.000% Second-Priority Senior Secured Notes

February 1, 2029

$

625,000

 

$

625,000

 

9.375% Second-Priority Senior Secured Notes

February 1, 2031

 

625,000

 

 

625,000

 

Revolving credit facility

January 20, 2030

 

—

 

 

—

 

Total debt, before deferred financing cost

 

 

1,250,000

 

 

1,250,000

 

Unamortized deferred financing cost, net

 

 

(21,236

)

 

(23,811

)

Total debt(1)

 

$

1,228,764

 

$

1,226,189

 

 

(1)
As of June 30, 2026, the Company was in compliance with all debt covenants.

 

Subsequent Event — 8.000% Second-Priority Senior Secured Notes due July 2034

Talos Production Inc. (“Talos Production” or “Issuer”), a Delaware corporation and wholly-owned subsidiary of the Company, issued $800.0 million 8.000% Second-Priority Senior Secured Notes due 2034 (the “8.000% Notes”) pursuant to an indenture dated July 13, 2026, by and among the Parent Company, Talos Production Inc., the subsidiary guarantors party thereto (together with the Parent Company, the “8.000% Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent (“Trustee”). The 8.000% Notes are secured on a second-priority senior secured basis by liens on substantially the same collateral as the collateral securing the Issuer’s existing first-priority obligations under its bank credit facility. The 8.000% Notes rank equally in right of payment with all of the Issuer’s and the 8.000% Notes Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the 8.000% Notes Guarantors’ future debt that is, by its term, expressly subordinated in right of payment to the 8.000% Notes and, to the extent of the value of the collateral, are effectively senior to all existing and future unsecured obligations of the Issuer and the 8.000% Notes Guarantors (other than the Company) and any future obligations of the Issuer and the 8.000% Notes Guarantors that are secured by the collateral on a junior-priority basis. The 8.000% Notes are effectively pari passu with all of the Issuer’s and the 8.000% Notes Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 9.375% Second-Priority Senior Secured Notes due 2031 and are effectively junior to any existing and future obligations of the Issuer and the 8.000% Notes Guarantors that are secured by the collateral on a senior-priority basis to the 8.000% Notes including indebtedness under the bank credit facility. The 8.000% Notes mature on July 15, 2034 and have interest payable semi-annually each January 15 and July 15, commencing January 15, 2027.

If (1) the consummation of the Coulomb and Na Kika Acquisition does not occur on or before December 31, 2026, (2) the Company delivers a notice to the Trustee that the Company will not pursue the consummation of the Coulomb and Na Kika Acquisition, or (3) BP exercises its preferential purchase right with respect to Shell’s interests in the Na Kika platform and related Kepler, Ariel, Fourier and Herschel Fields, then Talos Production will be required to redeem $175.0 million aggregate principal amount of the 8.000% Notes then outstanding, at a redemption price equal to 100% of the principal amount of the 8.000% Notes to be redeemed, plus accrued and unpaid interest on the 8.000% Notes being redeemed, if any, to, but excluding, the special mandatory redemption date. Effective as of July 20, 2026, BP formally waived its preferential purchase right.

At any time prior to July 15, 2029, Talos Production may redeem up to 40% of the principal amount of the 8.000% Notes with the net proceeds from certain equity offerings at a redemption rate of 108.00% of the principal amount plus accrued and unpaid interest. At any time prior to July 15, 2029, Talos Production may also redeem some or all of the 8.000% Notes, plus a “make-whole premium,” together with accrued and unpaid interest, if any, to, but excluding, the date of redemption. Thereafter, Talos Production may redeem all or a portion of the 8.000% Notes in whole at any time or in part from time to time at the following redemption prices (expressed as percentages of the principal amount) plus accrued and unpaid interest if redeemed during the period commencing on July 15 of the years set forth below:

Period

 

Redemption Price

 

2029

 

 

104.000

%

2030

 

 

102.000

%

2031 and thereafter

 

 

100.000

%

Subsequent Event — Redemption of 9.000% Second-Priority Senior Secured Notes due February 2029

On July 13, 2026, the Company redeemed all $625.0 million aggregate principal amount of the 9.000% Second-Priority Senior Secured Notes due 2029 at 104.500% plus accrued and unpaid interest using the net proceeds from the issuance of the 8.000% Notes.

Revolving Reserve-based Credit Facility

The Company maintains a bank credit facility with a syndicate of financial institutions. The borrowing base is redetermined by the lenders at least semi-annually during the second quarter and fourth quarter of each year based on a proved reserves report that the Company delivers to the administrative agent of its bank credit facility.

On January 20, 2026, the Parent Company, Talos Production, and certain other direct and indirect subsidiaries of both the Parent Company and Talos Production entered into the Amended and Restated Credit Agreement (as it may be amended, supplemented, waived or otherwise modified from time to time, the “A&R Credit Agreement”) among the Parent Company, Talos Production, as Borrower, JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), the issuing banks, the lenders party thereto, and the other persons from time to time party thereto. The A&R Credit Agreement amended and restated in its entirety the prior credit agreement, dated as of May 10, 2018 (as amended, the “Prior Credit Agreement”), by and among the Parent Company, Talos Production, as Borrower, JPMorgan Chase Bank, N.A., as administrative agent, the issuing banks, the lenders party thereto, and the other persons party thereto.

The A&R Credit Agreement matures on January 20, 2030 and has an initial borrowing base and total commitments of $700.0 million (with a letter of credit facility with a $250.0 million sublimit).

Interest accrues at Talos Production’s option either at an alternate base rate (“ABR”) plus the applicable margin (“ABR Loans”), an adjusted term secured overnight financing rate (“SOFR”) plus the applicable margin (“Term Benchmark Loans”) or adjusted daily simple SOFR plus the applicable margin (“RFR Loans”). ABR is based on the greater of (a) the prime rate, (b) a federal funds rate plus 0.5% or (c) the adjusted term SOFR for a one-month interest period plus 1.00%. The adjusted term SOFR is equal to the term SOFR for each applicable tenor (e.g., one-month, three-months and six-months) calculated and published by the CME Group Inc. The adjusted daily simple SOFR is equal to the overnight SOFR calculated and published by the Federal Reserve Bank of New York. In addition, Talos Production is obligated to pay a commitment fee on the unutilized portion of the commitments. The applicable margin and the commitment fee rate are calculated based upon the utilization levels as a percentage of unused lender commitments then in effect.

The A&R Credit Agreement includes certain conditions to borrowings, representations and warranties, and events of default customary for financings of its type and size. The A&R Credit Agreement also limits the Company’s, Talos Production’s and their respective subsidiaries’ ability to, among other things, incur additional indebtedness, grant liens on any assets, pay dividends or make certain restricted payments, make certain investments, consummate certain asset sales, make certain payments on indebtedness, and merge, consolidate or engage in other fundamental changes. The A&R Credit Agreement has certain customary affirmative and negative covenants, including that Talos Production must maintain a Consolidated Total Debt to EBITDAX Ratio (as defined in the A&R Credit Agreement) of no greater than 3.00 to 1.00 calculated each quarter utilizing the most recent twelve months to determine EBITDAX. Talos Production must also maintain a current ratio of no less than 1.00 to 1.00 each quarter. Under the A&R Credit Agreement, unutilized commitments are included in current assets in the current ratio calculation. The bank credit facility is secured by, among other things, mortgages covering at least 85.0% of the proved oil and natural gas assets of the Company and is fully and unconditionally guaranteed by the Company and certain of its wholly-owned subsidiaries.

On June 30, 2026, contemporaneously with execution of the Shell Purchase Agreement, the Parent Company, Talos Production, and certain other direct and indirect subsidiaries of both the Parent Company and Talos Production entered into the Borrowing Base Redetermination Agreement, Incremental Agreement, and First Amendment to Amended and Restated Credit Agreement (the “First Amendment”). The First Amendment, among other things, permits the incurrence of additional indebtedness in order to fund the Coulomb and Na Kika Acquisition, with such indebtedness excluded from any reduction of the borrowing base that would otherwise result from such incurrence, and reaffirms the borrowing base at $700.0 million as part of the biannual redetermination of the borrowing base, effective upon closing of the First Amendment. The First Amendment also (i) provides for a borrowing base increase from $700.0 million to $850.0 million and (ii) provides for an increase in the letter of credit sublimit from $250.0 million to $300.0 million, in each case, subject to and effective upon the consummation of the Coulomb and Na Kika Acquisition.

Subsequent Event — On July 22, 2026, the Company entered into the Second Amendment to the A&R Credit Agreement (the “Second Amendment”), which provides additional financing flexibility for costs associated with the Offshore Mexico Farm-In Transaction. The Second Amendment also increases, solely with respect to qualifying investments in Phoenix-Durango Offshore Company, S. de R.L. de C.V. made before December 31, 2027, the maximum Consolidated Total Debt to EBITDAX Ratio applicable to investments made without regard to Available Free Cash Flow from 1.25 to 1.50.