Talos Energy Gets Regulatory Nod for Zama Discovery Appraisal

Talos Energy Inc. TALO recently announced authorization for its Zama discovery appraisal program by the National Hydrocarbons Commission (CNH). Currently, the drilling permits applied by Talos Energy are being reviewed by the CNH — the oil and natural gas regulator of Mexico.   

With the appraisal plan, the company will likely make its way into three new reservoirs. Talos Energy is expected to commence the appraisal program with the drilling of the Zama-2 well.

For conducting Marte test, the Zama-2 wellbore is anticipated to be drilled by roughly 1,640 feet. The company expects the well to hold recoverable oil and gas reserve of 60 million barrel of oil equivalent (MMBoE) to 150 MMBoE. Of the total gross expense of roughly $10 million for drilling the wellbore, Talos Energy is likely to bear $3.5 million. It is to be noted that for the entire appraisal program, the company has received approval for a $325-million budget from the CNH.

Talos Energy will likely start drilling the Zama-2 appraisal well by the fourth quarter of this year. The company intends to wrap up the entire appraisal work by mid-2019. 

For the appraisal program — which will employ a semi-submersible rig — the Block 7 Consortium has signed an accord with offshore contract driller Ensco plc ESV. Operator Talos Energy has 35% stake in the block. The other players in the consortium are Sierra Oil and Gas and Premier Oil with respective stakes of 40% and 25%.  

Headquartered in Houston, TX, Talos Energy is an oil and gas explorer. Over the past year, the stock has rallied 13%, outperforming the 11.8% collective gain of the stocks belonging to the industry.

Talos Energy currently carries a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Shell Midstream Partners LP SHLX, and Petroleo Brasileiro S.A. or Petrobras PBR. Both Shell Midstream Partners and Petrobras sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shell Midstream Partners has an average positive earnings surprise of 7.9% for the last four quarters.

Petrobras’ bottom line beat the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 10.4%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Shell Midstream Partners, L.P. (SHLX) : Free Stock Analysis Report
 
Petroleo Brasileiro S.A.- Petrobras (PBR) : Free Stock Analysis Report
 
Ensco plc (ESV) : Free Stock Analysis Report
 
Stone Energy Corporation (TALO) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research