Good morning, ladies and gentlemen, and welcome to the Talos Energy Second Quarter 2025 Earnings Conference Call. This call is being recorded on Thursday, August 7, 2025. I would now like to turn the conference over to Clay Jeansonne. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to our second quarter 2025 earnings conference call. Joining me today to discuss our results are Paul Goodfellow, President and Chief Executive Officer; and Greg Babcock, Vice President, Chief Accounting Officer and Interim CFO. For our prepared remarks, please refer to our second quarter 2025 earnings presentation that is available on Talos' website under the Investor Relations section for a more detailed look at our results and operations update. Before we start, I'd like to remind you that our remarks will include forward-looking statements subject to various cautionary statements identified in our presentation and earnings release. Actual results may differ materially from those contemplated by the company. Factors that could cause these results to differ materially are set forth in yesterday's press release and our Form 10-Q for the period ending June 30th, 2025, filed with the SEC. Forward-looking statements are based on assumptions as of today, and we undertake no obligations to update these statements as a result of new information or future events. During this call, we may present GAAP and non-GAAP financial measures. A reconciliation of certain non-GAAP to GAAP measures is included in yesterday's press release, which was furnished with our Form 8-K filed with the SEC and is available on our website. And now I'd like to turn the call over to Paul.

Thank you, Clay. Good morning, everyone, and thanks for joining us on our call today. I will begin today with some remarks on our financial and operational results for the quarter. Following that, I will hand over to Greg, who will provide a brief overview of certain financial items and guidance. Finally, I'll conclude with some closing thoughts before opening the call to Q&A. It's been a very busy but exciting five months since I joined Talos. Our strong financial and operational results in the second quarter reflect early progress against our strategy and demonstrate our ability to deliver on our commitments. As shown on Slide 3 of today's presentation, Talos has a solid asset base and a proven history of strong operational performance, and we are well positioned to capitalize on growth opportunities across the Gulf. We will continue to leverage our unique culture, history and strengths to enhance our assets. In short, as I highlighted when I started, my role is to take a very good company and make it great as we execute our strategy and become a leading pure-play offshore E&P company. Our focus is squarely on continuous improvement. Turning to Slide 4. In June, we announced our enhanced corporate strategy designed to fuel our future through three strategic pillars focused on the near term, midterm and long term to build upon our strong assets and further strengthen the organization. First, we're focused on improving our business every day. We have some additional details on these key areas of focus on Slide 7, but the key takeaway here is that we have identified and are executing on initiatives designed to generate $100 million of additional free cash flow annually starting in 2026 with approximately $25 million in contributions anticipated by the end of 2025. Second, we'll grow production and cash flow through our continued focus on high-margin projects to further drive our profitability. We will focus on organic growth, and we'll supplement that with disciplined evaluation of bolt-on acquisitions as we demonstrated with the Monument project. We will also maintain a strategic focus on the Gulf of America while evaluating opportunities in other select conventional deepwater basins as appropriate. And third, we will build a portfolio with scale and longevity by developing projects with significant reserves in the Gulf of America and other conventional basins that fit our technical capabilities. We believe participation in greenfield developments, selectively exploring for large resource potential and acquiring and developing projects with significant reserves and production will be key to our third strategic pillar. Together, executing against these pillars will enable us to build on our core competencies and to grow our cash flow per share and position Talos to create significant value for our shareholders. Through our disciplined capital allocation framework, we remain committed to financial discipline when investing in our business, only pursuing selective accretive growth opportunities while maintaining a strong balance sheet and returning cash to shareholders. Turning to our strong second quarter results. Please see Slide 5 for a list of our accomplishments that will be discussed later in this call. As I said earlier, we operate great assets in great locations, but the driving force behind our continued success remains the hard work and dedication of our talented workforce. The result was a strong second quarter across the board that helped drive our improved outlook for 2025. In short, this team remains laser-focused on best-in-class execution to drive consistent free cash flow generation that supports our long-term commitment to a consistent return of capital for our shareholders. Simply put, we delivered on our commitments while prioritizing safety and protecting the environment. As highlighted on Slide 6, second quarter production averaged 93,300 barrels of oil equivalent per day, with oil making up 69% of the total. Including NGLs, liquids accounted for 77% of overall production. We outperformed consensus estimates for adjusted EBITDA, posting $294 million for the second quarter. Our strong adjusted EBITDA performance was bolstered by cost savings associated with improving our business every day initiatives. This equates to an adjusted EBITDA netback margin of approximately $35 per barrel of oil equivalent. Talos consistently ranks in the top quartile amongst public E&P companies in netback margins, as shown in more detail on Slide 9. Continuing on Slide 6, our CapEx in the second quarter was $126 million, and we spent an additional $29 million on plugging and abandonment or P&A activities. After considering our capital expenditures and P&A spending, we achieved adjusted free cash flow of $99 million for the quarter. During the second quarter, we repurchased 3.8 million shares for a cost of $33 million, bringing total repurchases under the program to $100 million. This fits squarely within our strategy of using up to 50% of our free cash flow to repurchase shares. Despite repurchasing shares, our continued strong financial results enabled us to continue strengthening the balance sheet by lowering our leverage ratio to 0.7x and to grow our cash balance by 75% from the first quarter to approximately $357 million. The result was an increase in liquidity to $1 billion. Keep in mind that we achieved these improvements in a volatile and declining commodity price environment. Turning to Slide 7. As we discussed in mid-June, I'm impressed with the capabilities and performance of our assets. Having said that, we do believe, and more importantly, have identified and begun to execute on several significant opportunities to further improve our ongoing cash flow. These opportunities are included in our target to collectively generate an additional $100 million in cash flow for the full year 2026 with a sustainable run rate impact beyond that. We're targeting this solely by improving our existing operations through capital efficiency, margin enhancement, commercial opportunities and general organizational improvements. Realizing this expansion of cash flow will require us to focus on how we use capital efficiently across the organization, deliver on high-margin projects, realize commercial excellence and improve an overall high-performance culture, all the while, ensuring we stay laser-focused on safe and efficient operations. As shown on Slide 8, we outline a high-level breakdown of the opportunities we're executing on to achieve our $100 million annual run rate target. On the right side of the slide, we have a detailed list of projects underway to achieve our target of $100 million of additional cash flow. To date, we've executed on $8 million in savings and have a clear path to realize the $25 million in 2025 and our target of $100 million in 2026. The Arnold P&A project is a strong example of our commitment to improving our business every day. Originally budgeted at $52 million gross, this project was successfully completed for under $35 million gross. This achievement was made possible by assembling a multidisciplinary team of experienced Talos employees and fostering close collaboration with the contractor, who shared valuable lessons learned from similar operations. The team reengineered the execution plan, minimizing unplanned downtime and implementing batch processing across the three wells to reduce vessel usage, which ultimately drove significant cost savings, demonstrating the ability to do more with less. Lessons learned through this collective process will clearly be applied in future projects. On the commercial front, our marketing team has improved oil and gas price realizations by leveraging our increased volumes and focusing on several key initiatives, including direct sales to end users, extending contract duration and optimized transportation strategies. We believe that this will lead to an uplift of approximately $5 million per year in 2025 alone. Within the organizational improvement work stream, we've simplified our entity structure to make it more efficient, resulting in future cash tax savings. As part of our margin improvement strategy, Talos has increased utilization of internal resources by deploying company personnel and dedicated third-party vessels and helicopters to monitor select offshore unmanned facilities, work that was previously performed by contractors. This transition reduces dependence on the service sector, lowers our operating cost and improves our overall operational efficiency. I'm encouraged by the progress we've made, which reflects our strong performance culture and the team's enthusiasm for this way of working. As mentioned earlier, Talos consistently ranks in the top quartile amongst public E&P companies in netback margins, underscoring the strength of our low-cost oil-weighted asset base. During the second quarter, we delivered on several major operational milestones. As shown on Slide 10, we've updated our drilling schedule for the second half of 2025 and the first half of 2026. Our team continues to work closely with the West Vela crew, creating a high-performance partnership, enabling smooth and efficient operations. Due to the strong performance of the West Vela rig, Talos has extended its use through the first half of 2026. The rig is scheduled to drill the Cardona and CPM wells, followed by a third well that is currently in the final stages of planning. Additionally, we've added the non-operated Monterrey prospect to our portfolio with drilling scheduled to begin early in the new year. Slide 11 lists a couple of our current projects and some of our second quarter accomplishments. This includes the initiation of production from our Sunspear and Katmai wells, the spudding of our Daenerys well targeting the high-impact Miocene prospect with drilling results expected in late September and continued advancement of our Monument development project with our first well targeted to spud in the fourth quarter of this year. On Slide 12, we take a closer look at the Katmai West #2 well, which was placed online late in the second quarter as per plan. We delivered the project under budget and ahead of schedule. Total production from the Katmai West and East fields is currently running at approximately 35,000 barrels gross of oil equivalent per day and is expected to remain at that level for several years to come. Production from the Katmai West #2 well is flowing back to Talos' 100% owned and operated Tarantula facility, which is running at maximum nameplate capacity. We currently have an active study underway to evaluate opportunities for increasing near-time production throughput at Tarantula. And as a reminder, Talos holds a 50% working interest in and operates the Katmai field. Turning to Slide 13. First production from the Sunspear discovery was also brought online as planned late in the second quarter of this year. Sunspear is tied back to the Talos-operated Prince platform. We hold a 48% working interest in Sunspear. Initial productive capacity is at the upper end of expectations, although the well is still in the cleanup phase. We recently had to shut in the well due to the early failure of a surface control subsurface safety valve. Of course, we will do a full review with the manufacturer to determine the cause of the failure once we have retrieved the valve and to help ensure this does not happen again. To conduct these remedial operations, the West Vela rig will be mobilized to Sunspear after the drilling of Daenerys, with Sunspear expected to be back online by the end of October of this year. The cost to repair the safety valve and the estimated downtime will affect our annual production guidance by approximately 800 barrels of oil equivalent per day, both of which have been factored into our revised guidance. While I won't get into a lot of detail, Slides 25 through 26 in the appendix of the presentation provide additional information on our Daenerys and Monument projects. We began drilling operations on Daenerys late in the second quarter of this year. Drilling is progressing well and as planned, and we estimate it will take around 100 to 120 days to drill the well with results expected mid to late third quarter of this year. Talos holds a 30% working interest in and serves as the operator of Daenerys. For our Monument project, the large Wilcox oil discovery in the Gulf, we expect to spud our first well at Monument by late fourth quarter of this year with first production anticipated in late '26. In March, we increased our working interest in Monument from 21.4% to just under 29.8%. On Slide 14, we highlight our continued strong safety and environmental performance, which is closely aligned with our operational excellence. This reflects our team's commitment to rigorous safety systems, proactive maintenance and upholding the highest standards of care and performance across Talos. With that, I'll now turn the call over to Greg.

Thank you, Paul, and good morning, everyone. As Paul mentioned, we performed very well in the second quarter, exceeding consensus estimates on adjusted EBITDA and adjusted free cash flow. However, during the quarter, we recorded a noncash impairment of $224 million related to the full cost ceiling test under the SEC guidelines. As a reminder, this test primarily compares the net capitalized cost of our oil and gas properties to the present value of future net cash flows from our proved reserves using a trailing 12-month pricing, which we expect to continue lower in the third quarter of this year. The impairment this quarter was primarily driven by an accumulation of historical nonproductive capital expenditures such as dry holes that did not result in additions to proved reserves. Under the full cost method, these costs remain in the full cost pool and contribute to the ceiling test calculation regardless of technical success. Turning to Slide 15. We've made a modest adjustment to our 2025 capital budget. This reflects the modification of our drilling schedule, the addition of incremental work at Sunspear and better-than-expected drilling efficiencies. The net result is a reduction of approximately $10 million to the overall budget. We now estimate full year capital spending to range between $590 million and $650 million. We remain highly confident in the economic resilience of the key projects that we're advancing, which are estimated to break even at an average oil price of approximately $35 per barrel. On Slide 16, we provide updated guidance for the full year 2025 as well as a first look at our expectations for the third quarter production. We have reduced our operating expense guidance by $25 million, driven primarily by early savings executed on or identified from our improving our business everyday initiative. In short, we are enhancing our full year range of expectations to reflect the second quarter actual results, combined with our full year outlook that includes increased production complemented by lower capital and operational spending. Our new range of anticipated investments of $590 million to $650 million for the full year includes $100 million to $120 million of P&A and decommissioning activities this year. We expect P&A activity to increase in the third quarter before moderating in the fourth quarter. On Slide 17, we include a waterfall presentation showing our methodology and how we arrive at production guidance outlooks. As an offshore operator, we have a number of things, both internally and externally, that can impact production guidance, such as maintenance turnaround and weather-related disruptions, including hurricanes and estimated potential unplanned downtime affecting third-party facilities and pipelines. The good news is that due to our detailed planning and strong execution, we've reduced our planned downtime in the first half of 2025, which should more than offset the impact of the Sunspear shut-in. Taking all considerations into account, we now expect production for 2025 to range between 91,000 barrels and 95,000 barrels of oil equivalent per day. Inclusive of potential hurricane downtime and preventative maintenance, we expect our production for the third quarter to be between 86,000 barrels and 90,000 barrels of oil equivalent per day. Our hedge positions, as shown on Slide 18, support our cash flow stability in a fluctuating commodity market. During the second quarter, we capitalized on oil price volatility to strengthen our hedge portfolio. Our current hedge portfolio for the second half of 2025 reflects our typical approach to the hurricane season when we hedge at lower levels. The mark-to-market value of these hedge positions stood at $56 million as of June 30th. Looking at Slide 19, as Paul discussed in his comments, we focus on making strategic long-term investments to cultivate a sustainable asset base that generates robust returns through the cycle, strengthening our balance sheet to prepare to capitalize on opportunities and growing the business through selective accretive expansion initiatives while consistently returning cash to shareholders. As shown on Slide 20, our strong balance sheet provides us with options and flexibility for the long-term success. At the end of the second quarter, we had $357 million in cash and a leverage ratio of only 0.7x. Talos recently completed its scheduled borrowing base redetermination, resulting in a reduction from $800 million to $700 million in available borrowing capacity under the company's bank credit facility. We are committed to maintaining our strong balance sheet to help ensure we are prepared to capitalize on opportunities that may arise in the current low oil price environment. Our financial framework is built on a balanced three-pronged approach that targets sustainable investments in the business in high-returning projects to maintain production through the cycle and create value for shareholders. On Slide 21, we provide an update on our share repurchase program, the authorization for which is increased by our Board to $200 million. The expectation is to allocate up to 50% of our annual free cash flow to share buybacks in a programmatic approach. We continue to execute on the program in the second quarter with purchases of $33 million for the period and $100 million cumulatively since the program's inception last year. We continue to believe our shares are significantly undervalued, and repurchasing them represents a compelling use of capital. With that, I will now turn it back to Paul for some additional closing comments.

Thanks, Greg. In closing, by continuing to focus on capital discipline, operational excellence and free cash flow generation, we have achieved much success to date in 2025 and have laid a solid foundation for the second half of the year and beyond. Our efforts have and will continue to squarely support our vision for Talos, which is simple: become a leading pure-play offshore E&P company and capitalize on the increasing role offshore and especially deepwater is expected to play in meeting the world's energy needs. We believe Talos is in a unique position to capitalize on this opportunity, and we look forward to keeping everyone apprised of our progress. With that, we'll open the line for Q&A. Thank you.

Your first question comes from Michael Scialla of Stephens.

Paul, I wanted to see how you're thinking about free cash flow priorities now with your leverage at 0.7x, you have almost as much liquidity as total debt. Is there anything more you want to do with the balance sheet at this point? Or do you think buybacks could increase going forward? Or are you saving some dry powder for acquisition opportunities?

Thanks, Michael, for the question. I mean, look, I would put it in the frame of the sort of capital discipline framework that we laid out. That is the lens at which we sort of look at the company in totality. And so how do we sort of make sure that we're investing in the business today whilst maintaining strength of the balance sheet, returning cash to shareholders as we've spoken about, but also giving ourselves the options to actually add and grow the company through accretive opportunities that we see either in the Gulf or in other basins around the world. And that's exactly what we're doing, and that is the lens at which we will look at the sort of strength of the balance sheet going forward. I and Greg and the rest of the team here want to make sure that we give ourselves the optionality such that as opportunities come along, we can actually look at those. And if we do find that they sort of meet our requirements from being sort of accretive to the business, but also sort of fulfilling the needs that we have in terms of being sort of adjacent to the skills that we have, then we have got the ability to do that through various means, either by using the strength of the balance sheet first and foremost or if we choose to go a different route by using, let's say, debt. And so I'd say we'll keep monitoring that. We'll look at it through the lens of the strategy that we put in place and we sort of shared with you in the middle of June. And I'm sort of very pleased with how the organization has sort of stepped up and started to sort of work along those three strategic pillars that we outlined.

I appreciate that detail. I wanted to ask about Slide 10, where you mentioned a couple of new development projects and that you're retaining the West Vela. Could you provide some insight on the decision to keep that rig and give more information about those new projects?

Yes. So again, I'd say look at those projects through the sort of the lens of the sort of capital framework that we laid out, and that is all about investing in our base business, leveraging the strength we have within the Gulf of America, making sure we bring forward high-value accretive projects within the portfolio and then execute them via a team that is highly performance focused, both in terms of the execution of the project and in terms of doing it in a safe and environmentally friendly way. And I would say the West Vela rig in combination with the Talos team here has really shown an outstanding level of performance and an outstanding level of collaboration. And that's absolutely the type of partnership that we will continue to forge with the service sector to make sure that we are at sort of the top of the benchmark when it comes to execution. And so, it was a fairly easy choice for us when looking at how to sort of execute the program as we go into 2026 to start with the basis of building off the sort of great performance that we've had. And I will say we've also been able to take advantage of a slight sort of softening in the rig market such that the rate that we have for that rig is certainly below the rate we were paying in the early part of 2025 and comes in now just south of the $400,000 a day mark. So we're sort of very pleased all around, both from a perspective of delivering on the capital framework that we have, doing that with a highly competent and highly performance-focused rig team and then being able to do it at a sort of cost advantage relative to where we were earlier in 2025.

Your next question comes from Tim Rezvan of KeyBanc Capital Markets.

I want to say thank you for the granularity you provided on the cost savings. It's helpful and actually pretty impressive this early on. So thank you for that. The first question I had, there's been recent news about Pemex discussing using Zama to try to sort of resuscitate its domestic oil production levels. At the same time, there's been market chatter about Talos maybe resuming operatorship. And then on top of that, I noticed that you didn't close the sell-down of Zama interest in the second quarter. So it's a bit of a conspiracy theorist question, but can you help us connect the dots and/or maybe provide a little bigger picture lens into anything that's happening with the Zama partners?

Sure. Let me hand over to Greg to sort of talk about the timing, and then I'll make a few comments on the broader question that you asked, Tim.

Yes. Thanks, Paul. I think we're looking at the timing. We had to refile some paperwork around kind of change in control in the operator in Mexico. That paperwork was filed, restarted some of the clock. We certainly expect that transaction to close here toward the end of the third quarter from a timing perspective.

Thanks, Greg. To address your broader question, the partnership between us, Harbour, and Carso, who invested in Talos Mexico, is very strong, and we are collaborating with Pemex to advance that project. We believe the development concept we propose can be more straightforward, less expensive, and simpler than what Pemex is suggesting. We are working with Pemex to ensure the project is developed in the most cost-effective and risk-aware manner before we commit to investment. This is the ongoing work we will continue to pursue. From Pemex's perspective and the country's, Zama is recognized as a key project, and we will work with our partners to ensure that when we move forward for the final investment decision, it is done in the most value-enhancing way possible.

And then as my follow-up, Paul, you've been in the seat now for five months. It's been two months since you rolled out your strategic update. I was wondering if you could give a little more clarity on any acquisition targets you're looking at or just basically what the state of the market is for deepwater offshore and what you're seeing.

Thanks, Tim. I'll keep this sort of relatively short. And so I'd say, look, I'm not going to talk about specific opportunities that we're looking at. We are looking at a number of opportunities, both sort of within the Gulf of America as well as on the international front that sort of meet the criteria that we have laid out and both ones that are out in the market as well as the ones that we've identified ourselves, and we'll clearly update you as and if and when those progress. I would say on the broader question relative to sort of where the market is, we continue to see a lot of interest in deepwater, which I think underpins our belief and my belief that we'll see more of a resurgence of interest in offshore and deepwater as a way of providing high-margin, lower cost, low carbon intensity barrels into the energy mix. I think Talos is positioned incredibly well to sort of take advantage of that, both within the Gulf given the sort of incredibly strong operating footprint and ability we have to sort of capture volumes on a relatively short cycle basis and then sort of leveraging that out into other sort of conventional basins within the deepwater theater. And I'll probably sort of leave my comments at that for now, Tim. But thank you for the question.

Your next question comes from Nitin Kumar of Mizuho.

I want to start off with the one big beautiful bill; I'm sure I named it wrong. It mandates some leases in the Gulf of Mexico and has made some changes. Could you maybe talk us through how this sort of fits into your organic growth plans? And as a sort of pure-play Gulf of America company, how do you view those regulations for yourself?

Thank you, Nitin. I believe this is a very positive development for renewing regular leasing activity. We plan to have one lease sale at the end of this year, and the new legislation requires two lease sales annually, which each bring at least 80 million acres and lower royalty rates. These factors are undoubtedly beneficial for us as a dedicated deepwater operator with a strong presence in the Gulf of America. We will use this as a crucial foundation for our organic activities. We intend to actively participate in these lease sales, considering opportunities within our capital discipline framework and utilizing our extensive technical expertise, including seismic data and interpretation skills. We're excited about the potential of these lease sales and look forward to collaborating with our key partners in the Gulf.

Great. Appreciate the answer there. My follow-up, Mike, just maybe I'll try Tim's question with a different tack here. You've been here for, I think, five months now. You have international experience in your prior role. As you look at Talos today as an organization, you've talked about inorganic growth outside of the Gulf of America. But if you were to look at sort of technology or sort of technical experience, marketing, regulatory experience, finance, are there any areas where you feel the organization either has underappreciated strengths or maybe some challenges as you look to broaden outside of the Gulf of America?

I think the overall capability of this company is outstanding. And so our task is to work collectively to apply that across the opportunity space that we see in a disciplined and structured way. And whether that's in terms of how we think about the quality of investments or whether that's how we think about leveraging the technical expertise that we have, then sort of that is the focus that we will take. Now what I will say is I'm very, very pleased with the organization in terms of recognizing where maybe it doesn't have the organic knowledge of those other basins and its ability to actually go out and bring that knowledge in. And so although we are at the moment sort of purely focused on the Gulf of America with Zama in Mexico, we do have a lot of people who have worked all over the world in many, many deepwater basins, both from a technical side and a non-technical side. And so, I would not like you to have the view that just because our activity at the moment is Gulf of America focused that, that is purely where our skill set lies because I see it very differently to that. Recognizing that as opportunities come along and if we are successful in sort of creating those that are accretive to the company, then we'll make sure that as part of that we have the appropriate depth and level of skills and competence to make sure that we can execute those with the same level of skill and performance as we're executing here in the Gulf of America at the moment.

Your next question comes from Nathaniel Pendleton of Texas Capital.

Congrats on the strong quarter. Besides the temporary shut-in at Sunspear, can you provide a little more detail about the drivers behind your improving guidance for the year that you show on Slide 17?

Sure. I'll make a few comments, and Greg can add if he'd like. At a high level, our improving performance is due to the dedication and focus we’re applying to all our activities, whether in drilling or in how we manage our capital expenditures for production and P&A. We are concentrating on the availability and uptime of our facilities and fostering a culture at Talos that encourages us to evaluate every task for greater effectiveness and efficiency to achieve higher value. You can see the results of this approach. However, we must consider planning factors such as the potential impact of the hurricane season, which we incorporate into our production forecasts, along with planned downtime. I am very pleased with how our teams have embraced the challenge to transition from being a good company to a great one. This is reflected in our revised forecast for planned downtime, as we performed slightly better in the first half of the year and will carry that momentum into the second half. Ultimately, our significant focus on every activity, every dollar spent, and every opportunity that arises is driving our progress.

That's really encouraging commentary. And with the current administration advocating for more offshore development and deregulation, is there any particular policy or set of policies that you feel could be updated to help achieve the administration's goal of increasing production in the Gulf of America?

Look, I think the drive to increase the frequency of leasing, of course, is really important if you think about the front end of the funnel. I think the change around the commingling rules and regulations is absolutely a positive, especially for assets that sit in the mid life where we can then actually drive the efficiency of that at a greater, greater level. And I think the other lens that I would take on it is not just looking at within the sort of production space, but then thinking about it from a life cycle point of view is can we sort of manage more effectively the abandonment liability and the abandonment process. And that's a conversation that we and others in the industry are actually sort of starting with the administration now, and I think will become a more and more important part of the overall mix given the maturing nature of the Gulf of America.

Your next question comes from Margaret Drefke of Goldman Sachs.

I was just wondering if at first, you could talk a little bit about the low-hanging fruit or near-term targets for the $100 million savings plan beyond those that Talos has already executed on. Which are the buckets, capital efficiency, commercial opportunities, etc.? Do you think kind of have the clearest line of sight from here?

Thanks, Margaret. Greg, why don't you make a few comments on that?

Yes, sure. So look, I think first and foremost, the teams, as we went through kind of the planning session as we started thinking through the ideas, we revamped, as Paul's remarks said on the call about how we did the Arnold P&A campaign from a capital efficiency from hopping the stack from one well to the other. I think we've really challenged the team to work through some of that. So the near term, the things we talked about on the call, the offtake agreements on the marketing side, how we think about LOE management and vessel optimization. The next year items, the $100 million is going to be really digging into transportation, logistics, really revamping how we think about the supply chain of the business, how we really think about production optimization and enhancement, really digging into the capital planning so that we can make all of our drilling activities look like Katmai West #2 drilling and continuing the work around procurement and supply chain. And so we've got the layout of the $100 million on Slide 8 in the presentation of kind of what parts of the business we think each of those come from between the commercial opportunities, margin enhancement, capital efficiency and certainly the organizational improvement.

Great. And I appreciate your color on capital allocation thus far on the call. I was just wondering if you could talk a little bit more about your outlook for the cadence of incremental share repurchases from here. Is the $33 million or so you did this quarter a good quarterly run rate? Or what would be the right framework to use to think about share repurchases going forward?

Yes, we implemented our strategy towards the end of the second quarter, which included our share buyback program and the plan to allocate up to 50% of our free cash flow. After launching this strategy, there was a period when we had to pause our market activities. However, we resumed our market actions as soon as possible following the announcement of our corporate strategy. We were pleased with our team's ability to buy back approximately $33 million in shares during the quarter, which aligns with what we previously indicated regarding the allocation of up to 50% of free cash flow. I want to emphasize that offshore activities can be more variable than onshore ones. Therefore, when considering our strategy for future share buybacks, it's important to look at our actions over the next few quarters rather than only focusing on this initial quarter. Ultimately, our approach is guided by a capital allocation framework that balances investing in the business while maintaining a strong balance sheet, and being ready to seize any accretive opportunities that arise. We continue to find our stock attractive at current prices, and we will keep executing this program in the third quarter.

Your next question comes from Phu Pham of ROTH Capital.

So I just have a question about the shutdown of Sunspear. And can you elaborate more about the delay of the Marmalard greenfield? Like it's supposed to be in the second quarter, but now I think it pushed out to the mid-third quarter. So can you elaborate more on that?

Yes. Thanks, Phu. So look, on Sunspear, as we said, the well and completion was successfully installed. It was successfully tested. It met all the requirements. We started production. We're in the middle of cleaning the well up. The well looks very promising in terms of the initial data that we have, hence my comments that I see that well sort of performing at the upper end of the expectation range that we have and in regular testing that we have to do on all our wells, the subsurface safety valve failed to hold pressure. Now that's a critical safety valve, and we will not operate without that. Therefore, we have shut the well in. We will bring the West Vela rig around after we finish operating at Daenerys to pull the tubing, replace that safety valve, run it back into the well and then we'll come straight back on to production. We don't know why that valve has failed at this point in time. Once we get it to surface, we'll work with the supplier and the manufacturer, which is one of the very large service companies to make sure we understand the root cause of that. So incredibly disappointing, but also incredibly proud of how the team has reacted incredibly quickly to allow us to bring a rig to go and intervene and bring that well online. And that, I think, is another example of the benefit of having the type of partnership that we have with the West Vela and the supply chain there to allow us to actually plan for that in the very short amount of time. I think your second question was related to the Marmalard well, which is, of course, we're a non-operated partner there. They have faced some challenges throughout the sort of the drilling and completions, and they're in the completion phase now, and we would hope that that well will be completed and brought online in the not-too-distant future.

Your next question comes from Michael Furrow of Pickering Energy Partners.

Paul, I just want to hit on one of your last remarks in the previous question regarding the issues around the safety control valve at the Sunspear prospect. Look, issues happen and safety is obviously the number one priority. My question is, does the repair require a rig with capabilities like the West Vela? It sounds like that rig has been performing well, and the best use would be to keep that rig drilling and instead of returning to make sort of a minor repair. So I'm sure Talos has looked into this and looked into the other options. So could you maybe explain to us why the West Vela seemed like the best option to perform this work?

Sure, Michael. I mean, look, at a gross level, your assumption is correct. So you don't need all the capabilities of the West Vela to go and pull the tubing and replace the safety valve and run it back in. But what you do need is a team that is on the top of its game, can do that incident-free. And when you pick up a new rig or a different rig, there's always a time of actually making sure that the team gels and there’s always a risk in terms of unintended errors and mistakes. And so when we looked at it in the round, given the advantaged rate that we could extend the West Vela for the sort of incredible performance that it has, from a value point of view, the best value against risk for us was to go and do this job very quickly and efficiently with the West Vela. And that is the lens through which we sort of look at all the decisions we take in terms of what is the quality decision to give us the highest chance of delivering the outcome that we're after. And the outcome here is to get Sunspear back on production at the lowest cost in the shortest time frame that we can. And the selection of the West Vela met all of those criteria versus alternatives that were out there for us to consider, which, as you rightfully assumed, we did consider.

Thanks, Paul. That's great detail. Look, I completely understand the value of the strong operational team. So just a quick follow-up to that. How long do you think it would take for the West Vela to leave Daenerys, arrive at Sunspear, make the repairs and then return back to Daenerys or Cardona or whatever the next asset is on the deck?

Yes. So we will not leave Daenerys before Daenerys is completed. And we said we're in the process of that well and performance is going very well on Daenerys. And so the timing from when we leave Daenerys to having the well back on production, we forecast within 30 days at this point in time. And I would hope we could do it on the sort of the plus side of that, so less than 30 days, but we have the contingencies planned into that time. And so I think it's prudent that we'll sort of stick with the 30 days from a planning point of view.

We do have a gap between work at Sunspear and before we pick up the rig at Cardona. So there is a space between those two operations.

Ladies and gentlemen, we have time for one more question. The last question will be from Noel Parks of Tuohy Brothers.

I was just wondering, and I apologize if you touched on this already, but any updated thoughts on your non-operated opportunities, either U.S. or internationally? Wondering if you're seeing any interesting things if prices have more or less stabilized in the 60s has maybe sort of helped bid ask as the summer has worn on. Any thoughts there?

Thank you, Noel. We are certainly considering non-operated opportunities, especially where we can add value through our skills and capabilities. We see some potential in the market for operators looking for partners, both in the Gulf of Mexico and internationally, where we believe our capabilities can strengthen those partnerships. It ultimately comes down to whether we can pursue these opportunities for the right value. We're currently working on several opportunities, and I don't believe there's been any fundamental change from last quarter to this quarter. We usually consider price in the mid- to long term due to the cycle times of some projects, even for fast subsea tiebacks that a company like Talos can execute, which allows us to go from discovery to production in under 24 months. Therefore, we need to view pricing with a longer-term perspective, which will continue to guide our decisions within the capital allocation framework we've discussed several times during this call.

There are no further questions at this time. I would hand over the call to Paul Goodfellow for closing remarks. Please proceed.

Thanks, Alan, and thank you all for joining the call this morning for the questions that you've asked and the confidence that you have in Talos. And we look forward to continuing this dialogue with you in the weeks and months ahead. With that, I'll close the call and wish you all a good and safe day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation, and you may now disconnect.