TALOS ENERGY INC.

Our business is subject to a variety of risks and uncertainties. These risks are described elsewhere in this Quarterly Report, including in Part I, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” above, or in our other filings with the SEC, including Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. You should carefully consider the risks and other cautionary statements described in this Quarterly Report, our 2024 Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our business, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. Other than as set forth below, there have been no material changes in our risk factors from those described in our 2024 Annual Report or our other recent SEC filings, including our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Lower oil and natural gas prices and other factors have resulted in, and may in the future result in additional, ceiling test impairments and other impairments of our asset carrying values.

We use the full cost method of accounting for our oil and gas operations. Accordingly, we capitalize the costs to acquire, explore for and develop oil and gas properties. Under the full cost method of accounting, our capitalized costs are limited to a ceiling based on the present value of future net revenues from proved reserves, computed using a discount factor of 10 percent, plus the lower of cost or estimated fair value of unproved oil and natural gas properties not being amortized less the related tax effects. Any costs in excess of the ceiling are recognized as a non-cash “Impairment of oil and natural gas properties” on the condensed consolidated statements of operations and an increase to “Accumulated depreciation, depletion and amortization” on our condensed consolidated balance sheets. An impairment of oil and gas properties does not impact cash flows from operating activities, but does reduce net income. The risk that we are required to impair the carrying value of oil and gas properties increases when oil and natural gas prices are low or volatile. In addition, impairments may occur if we experience substantial downward adjustments to our estimated proved reserves or our undeveloped property values, or if estimated future development costs increase. Volatility in commodity prices, poor conditions in the global economic markets and other factors could cause us to record additional impairments of our oil and natural gas properties and other assets in the future, and incur additional charges against future earnings. For both the three and six months ended June 30, 2025, the Company recorded an impairment of $223.9 million. Any required impairments could materially affect the quantities and present value of our reserves, which could adversely affect our business, results of operations and financial condition.