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Talos Energy (TALO) Finds Oil at Tornado Well of US Gulf of Mexico

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Talos Energy Inc. TALO announced the successful drilling results on its Tornado 3 sidetrack well located in the U.S. Gulf of Mexico. Notably, the Tornado Attic well unearthed oil pay in line with the company’s pre-drill expectations in the Green Canyon area of the Gulf of Mexico.

The Tornado field is situated nearly three miles south of the Phoenix complex, which the company acquired in 2013. The field produced nearly 34 million barrels of oil equivalent total gross so far since its discovery in 2016, of which 80% represents crude oil. Notably, Talos Energy is the operator of the field with a 65% ownership interest, while Kosmos Energy KOS owns the rest.

The Tornado Attic well was drilled approximately 4,500 feet from the Tornado water flood injection well and 1,550 feet away from the closest existing producer well, using Seadrill’s West Neptune drillship. Notably, the well was intended to optimize oil recovery and discovered 85 feet of true vertical thickness pay in the B6 Upper Zone.

In 2020, the company commenced the intra-well water flood project, which involved the drilling of an injection well that sources water from a high-pressured aquifer above the producing B-6 sand. The project, known as dump flood, is one of the first projects of its kind in a subsea, deepwater environment.

The aquifer normally inserts more than 20,000 barrels of water per day into the lower-pressured producing reservoir. Notably, this generates reservoir energy needed to maintain productivity and to enhance the potential production from the Tornado field. Once online, the Tornado Attic Well is expected to produce 8,000-10,000 barrels of oil equivalent per day gross, with oil accounting for about 80% of the total.

The company is planning to move right into the project’s completion phase and expects production to begin by third-quarter 2021, ahead of that mentioned initially.

Company Profile & Price Performance

Headquartered in Houston, TX, Talos Energy is a leading upstream company, which engages in the exploration, development, and production of oil and natural gas properties.

Shares of the company have underperformed the industry in the past six months. It stock has gained 87.3% compared with the industry’s 69.1% growth.

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Zacks Investment Research

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Zacks Rank & Stocks to Consider

The company currently has a Zack Rank #3 (Hold).

Some better-ranked players in the energy space are Earthstone Energy, Inc. ESTE and Hess Midstream Partners LP HESM, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earthstone’s earnings for 2021 are expected to rise 31.9% year over year.

Hess’ earnings for 2021 are expected to increase 14.7% year over year.

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