TALOS ENERGY INC.

Previous wording

Pending Coulomb and Na Kika Acquisition — On June 30, 2026, we entered into a purchase and sale agreement to acquire certain oil and gas properties and related assets in the Mississippi Canyon area of the Gulf of America, including interests in the Na Kika and Coulomb Deepwater producing assets for cash consideration of $850.0 million (net to Talos), subject to customary purchase price adjustments (the “Coulomb and Na Kika Acquisition”). The Coulomb and Na Kika Acquisition is expected to close by the end of 2026. See Part I, Item 1. “Financial Statements — Note 2 —Acquisitions and Divestitures” for additional information.

Current wording

Closing of the Coulomb and Na Kika Acquisition — On September 22, 2026, we closed on the acquisition of certain oil and gas properties and related assets in the Mississippi Canyon area of the U.S. Gulf of America, including interests in the Coulomb and Na Kika Deepwater producing assets (the “Coulomb and Na Kika Acquisition”) from Shell Offshore Inc. (“Shell”). See Part I, Item 1. “Financial Statements — Note 2 —Acquisitions and Divestitures” for additional information.

Previous wording

No material events, such as acquisitions or divestitures, affected the comparability of our financial condition or results of operations for the periods presented herein. Management does not currently expect any material factors to affect the comparability of our future financial condition or results of operations, other than the Coulomb and Na Kika Acquisition and the debt refinancing discussed above.

Current wording

No material events, such as acquisitions or divestitures, affected the comparability of our financial condition or results of operations for the periods presented herein other than the Coulomb and Na Kika Acquisition and the debt refinancing discussed in Part I, Item 1. “Financial Statements — Note 2 —Acquisitions and Divestitures” and Part I, Item 1. “Financial Statements — Note 7 —Debt,” respectively. Management does not currently expect any material factors to affect the comparability of our future financial condition or results of operations, other than the Coulomb and Na Kika Acquisition and the debt refinancing.

Previous wording

Volatility in Oil, Natural Gas and NGL Prices — Oil, natural gas and NGL prices have been, and are expected to continue to be, volatile. The war in Iran, which began in February 2026, has increased geopolitical risk in global energy markets and contributed to volatility in oil and gas prices. The war has also disrupted maritime transit, supply chains and energy infrastructure in the Middle East, including in and around the Strait of Hormuz, a key route for global oil and liquefied natural gas shipments. Diplomatic negotiations have further contributed to uncertainty in global energy markets. While certain actions have supported improved market access and the partial resumption of trade and shipping activity, the timing and extent of any sustained normalization of production, exports, transportation networks and related supply chains remain uncertain. Any deterioration in diplomatic efforts, renewed geopolitical tensions or continued disruptions to trade routes, supply chains or energy infrastructure could affect global supply-demand balances and contribute to further volatility in commodity prices. Such volatility could also affect customer demand, counterparty credit risk and broader macroeconomic conditions. We cannot predict the nature, timing or magnitude of any future effects on our business, financial condition or results of operations.

Current wording

Volatility in Oil, Natural Gas and NGL Prices — Oil, natural gas, and NGL prices have been, and are expected to continue to be, volatile. The war in Iran, which began in February 2026, has increased geopolitical risk in global energy markets and contributed to volatility in oil and gas prices. The war has also disrupted, and could further disrupt, maritime transit, supply chains, and energy infrastructure throughout the Middle East and adjacent waters, including along major shipping routes and chokepoints such as the Strait of Hormuz, a critical route for global oil and liquefied natural gas shipments. The duration and extent of these disruptions, and the timing and extent of any normalization of production, exports, transportation networks, and related supply chains, remain uncertain. Any continuation or further escalation of geopolitical tensions, or continued or increased disruptions to trade routes, supply chains, or energy infrastructure, could affect global supply-demand balances and contribute to further volatility in commodity prices. Such volatility could also affect customer demand, counterparty credit risk and broader macroeconomic conditions. We cannot predict the nature, timing or magnitude of any future effects on our business, financial condition or results of operations.

Previous wording

Inflation of Cost of Goods, Services and Personnel —The war in Iran triggered inflationary pressures in the global economy. The federal funds rate target range is currently set at 3.50% to 3.75%, where it was left unchanged at the U.S. Federal Reserve’s latest meeting. Future changes to the benchmark interest rate remain uncertain in light of geopolitical conditions and recent changes to the membership of the Federal Reserve Board of Governors.

Current wording

Inflation of Cost of Goods, Services and Personnel —The war in Iran triggered inflationary pressures in the global economy. In September 2026, the U.S. Federal Reserve raised its benchmark federal funds rate by a quarter of a percentage point to a range of 3.75% to 4.00%. Future changes to the benchmark interest rate remain uncertain.

Previous wording

Impairment of Oil and Natural Gas Properties —Under the full cost method of accounting, the “ceiling test” under SEC rules and regulations specifies that evaluated and unevaluated properties’ capitalized costs, less accumulated amortization and related deferred income taxes (the “Full Cost Pool”), should be compared to a formulaic limitation (the “Ceiling”) each quarter on a country-by-country basis. If the Full Cost Pool exceeds the Ceiling, an impairment must be recorded. As a result of our ceiling test computations, an impairment of our U.S. oil and natural gas properties was recorded during the six months ended June 30, 2026 of $145.0 million. No impairment was recorded during the three months ended June 30, 2026. At June 30, 2026 our ceiling test computation was based on SEC pricing of $71.93 per Bbl of oil, $3.91 per Mcf of natural gas and $18.63 per Bbl of NGLs. During both the three and six months ended June 30, 2025, we recorded an impairment of $223.9 million. See Part I, Item 1. “Financial Statements — Note 3 —Property, Plant and Equipment” for additional information.

Current wording

Impairment of Oil and Natural Gas Properties —Under the full cost method of accounting, the “ceiling test” under SEC rules and regulations specifies that evaluated and unevaluated properties’ capitalized costs, less accumulated amortization and related deferred income taxes (the “Full Cost Pool”), should be compared to a formulaic limitation (the “Ceiling”) each quarter on a country-by-country basis. If the Full Cost Pool exceeds the Ceiling, an impairment must be recorded. No impairment was recorded during the three months ended September 30, 2026. However, as a result of our ceiling test computations, an impairment of our U.S. oil and natural gas properties was recorded during the nine months ended September 30, 2026 of $145.0 million. At September 30, 2026 our ceiling test computation was based on SEC pricing of $75.79 per Bbl of oil, $3.87 per Mcf of natural gas and $20.35 per Bbl of NGLs. During the three and nine months ended September 30, 2025, we recorded an impairment of $60.2 million and $284.1 million, respectively. See Part I, Item 1. “Financial Statements — Note 3 —Property, Plant and Equipment” for additional information.

Previous wording

Financial Assurance Rule Update — On March 9, 2026, BOEM published a new proposed rule entitled “Risk Management and Financial Assurance for OCS Lease and Grant Obligations.” The proposed rule reverts to BOEM’s former policy of considering the financial strength of co-owners and predecessors in title when determining whether supplemental financial assurance is required, and revises the credit rating threshold used for evaluating the financial health of lessees and grantees from BBB- to BB- (S&P Global Ratings) or Baa3 to Ba3 (Moody’s Investor Service Inc.). BOEM, however, retains the discretion to require financial assurance and/or issue liability orders where appropriate, including if it determines there is a substantial risk of nonperformance of an interest holder’s decommissioning liabilities for which the predecessor is not liable.

Current wording

Financial Assurance Rule Update — On March 9, 2026, BOEM published a new proposed rule entitled “Risk Management and Financial Assurance for OCS Lease and Grant Obligations.” The proposed rule reverts to BOEM’s former policy of considering the financial strength of co-owners and predecessors in title when determining whether supplemental financial assurance is required, and revises the credit rating threshold used for evaluating the financial health of lessees and grantees from BBB- to BB- (S&P Global Ratings) or Baa3 to Ba3 (Moody’s Investor Service Inc.). MMA (the new bureau combining BOEM and BSEE), however, retains the discretion to require financial assurance and/or issue liability orders where appropriate, including if it determines there is a substantial risk of nonperformance of an interest holder’s decommissioning liabilities for which the predecessor is not liable.

Previous wording

While we anticipate that BOEM’s proposed rule, if finalized in its current form, would reduce the amount of financial assurance required from certain lessees as compared to the previous rule, the final version and timing of adoption of BOEM’s proposed rule remain uncertain. Any future requirements to provide additional or replacement financial assurances under future regulatory actions or rules could require significant use of our capital or restrict liquidity and could materially and adversely affect our financial condition, cash flows, liquidity, and results of operations.

Current wording

While we anticipate that MMA’s proposed rule, if finalized in its current form, would reduce the amount of financial assurance required from certain lessees as compared to the previous rule, the final version and timing of adoption of MMA’s proposed rule remain uncertain. Any future requirements to provide additional or replacement financial assurances under future regulatory actions or rules could require significant use of our capital or restrict liquidity and could materially and adversely affect our financial condition, cash flows, liquidity, and results of operations.

Previous wording

Update on National Marine Fisheries Service’s Gulf of America Revised Biological Opinion — In August 2024, the federal district court for the District of Maryland vacated the 2020 Biological Opinion issued by the National Marine Fisheries Service (“NMFS”), related to oil and gas activities in the Gulf of America. On May 20, 2025, NMFS published a new Biological Opinion for the Gulf of America oil and gas program, superseding and replacing all prior biological opinions relating to the program. Two lawsuits were filed opposing the new Biological Opinion, one by several environmental groups (Sierra Club, the Center for Biological Diversity, Friends of the Earth and Turtle Island Restoration Network) who filed in the federal district court for the District of Maryland, and the other by the State of Louisiana, the American Petroleum Institute and Chevron U.S.A. Inc. who filed in the Western Louisiana District Court. On February 20, 2026, the Western Louisiana District Court remanded without vacatur NMFS’ 2025 Biological Opinion, declaring that the Rice’s whale jeopardy finding and the Reasonable and Prudent Alternative are arbitrary, capricious and contrary to law. NMFS is required to complete the remand within 185 days of the Western Louisiana District Court’s order. At this time, it is uncertain how NMFS will address the Western Louisiana District Court’s findings. As a result of the remand, the intervenors in the lawsuit filed in the District of Maryland sought to stay the litigation pending completion of the remand order. On March 31, 2026, The Endangered Species Committee (“ESC”), comprised of the Secretary of the Interior, the Secretary of Agriculture, the Secretary of the Army, the Chair of the Council of Economic Advisers, the Administrator of the Environmental Protection Agency, and the Administrator of the National Oceanic and Atmospheric Administration, held a public meeting to address the Secretary of War’s national security finding that it was necessary to exempt Gulf of America oil and gas activities from requirements of the Endangered Species Act. By unanimous vote, the ESC exempted oil and gas activities in the Gulf of America from Section 7 consultation and Section 7(a)(2) requirements pursuant to section 7(h) of the Endangered Species Act. On June 24, 2026, the District of Maryland’s federal district court judge issued a decision from the bench to dismiss the challenge to the 2025 Biological Opinion on the basis that it is moot given the ESC’s exemption decision. On the same day, the Maryland court judge issued a written order dismissing the plaintiffs’ case without prejudice for lack of subject-matter jurisdiction. Several separate lawsuits have been filed challenging the ESC’s exemption decision and the underlying national security finding. At this time, the ultimate impact of the ESC decision is uncertain.

Current wording

Update on National Marine Fisheries Service’s Gulf of America Revised Biological Opinion — In August 2024, the federal district court for the District of Maryland vacated the 2020 Biological Opinion issued by the National Marine Fisheries Service (“NMFS”), related to oil and gas activities in the Gulf of America. On May 20, 2025, NMFS published a new Biological Opinion for the Gulf of America oil and gas program, superseding and replacing all prior biological opinions relating to the program. Two lawsuits were filed opposing the new Biological Opinion, one by several environmental groups (Sierra Club, the Center for Biological Diversity, Friends of the Earth and Turtle Island Restoration Network) who filed in the federal district court for the District of Maryland, and the other by the State of Louisiana, the American Petroleum Institute and Chevron U.S.A. Inc. who filed in the Western Louisiana District Court. On February 20, 2026, the Western Louisiana District Court remanded without vacatur NMFS’ 2025 Biological Opinion, declaring that the Rice’s whale jeopardy finding and the Reasonable and Prudent Alternative are arbitrary, capricious and contrary to law. NMFS was required to complete the remand within 185 days of the Western Louisiana District Court’s order. As a result of the remand, the intervenors in the lawsuit filed in the District of Maryland sought to stay the litigation pending completion of the remand order. On March 31, 2026, the Endangered Species Committee (“ESC”), comprised of the Secretary of the Interior, the Secretary of Agriculture, the Secretary of the Army, the Chair of the Council of Economic Advisers, the Administrator of the Environmental Protection Agency, and the Administrator of the National Oceanic and Atmospheric Administration, held a public meeting to address the Secretary of War’s national security finding that it was necessary to exempt Gulf of America oil and gas activities from requirements of the Endangered Species Act. By unanimous vote, the ESC exempted oil and gas activities in the Gulf of America from Section 7 consultation and Section 7(a)(2) requirements pursuant to Section 7(h) of the Endangered Species Act. On June 24, 2026, the District of Maryland’s federal district court judge issued a decision from the bench to dismiss the challenge to the 2025 Biological Opinion on the basis that it is moot given the ESC’s exemption decision. On the same day, the Maryland court judge issued a written order dismissing the plaintiffs’ case without prejudice for lack of subject-matter jurisdiction. Several separate lawsuits have been filed challenging the ESC’s exemption decision and the underlying national security finding. At this time, the ultimate impact of the ESC decision is uncertain.

Previous wording

Three Months Ended June 30, 2026 and 2025 Volumetric Analysis — Production volumes increased by 0.4 MBoepd to 93.7 MBoepd. This increase is primarily attributable to 4.1 MBoepd of incremental production at our Sunspear Field. This increase was partially offset by a 3.5 MBoepd decline at the Brutus Field, primarily driven by a high-rate gas recompletion, where the well has declined as expected and will be sidetracked to a deeper target in the upcoming Brutus rig program.

Current wording

Three Months Ended September 30, 2026 and 2025 Volumetric Analysis — Production volumes decreased by 3.7 MBoepd to 91.5 MBoepd. This decrease is primarily attributable to 3.1 MBoepd in production related to the divestiture of a wholly-owned subsidiary that held non-core, gas-weighted and predominantly non-operated Shelf and Gulf Coast properties (the “Shelf and Gulf Coast Divestiture”) compared to the same period in 2025. Additionally, there was a 2.8 MBoepd decline at the Brutus Field, primarily driven by a high-rate gas recompletion, where the well has declined as expected and will be sidetracked to a deeper target in the ongoing Brutus Program. These decreases were partially offset by an increase of 3.0 MBoepd related to incremental production at our Sunspear Field.

Previous wording

Six Months Ended June 30, 2026 and 2025 Volumetric Analysis —Production volumes decreased by 5.8 MBoepd to 91.3 MBoepd. This decrease is primarily attributable to a 4.9 MBoepd decline at the Brutus Field, driven by factors mentioned above, as well as a 1.5 MBoepd decrease at the Galapagos Field primarily related to a shut-in due to a failure of the surface-controlled subsurface safety valve at the Genovesa well. We completed the Genovesa workover and returned the well to production late in the second quarter of 2026. These decreases were partially offset by an increase of 3.8 MBoepd related to incremental production at our Sunspear Field.

Current wording

Nine Months Ended September 30, 2026 and 2025 Volumetric Analysis —Production volumes decreased by 5.2 MBoepd to 91.3 MBoepd. This decrease is primarily attributable to a 4.2 MBoepd decline at the Brutus Field, driven by factors mentioned above, as well as 1.7 MBoepd in production related to the Shelf and Gulf Coast Divestiture compared to the same period in 2025. These decreases were partially offset by an increase of 3.6 MBoepd related to incremental production at our Sunspear Field.

Previous wording

Three Months Ended June 30, 2026 and 2025 — Lease operating expense for the three months ended June 30, 2026 increased by approximately $18.7 million, or 14%. This was primarily due to an increase in major well workover expenses at the Galapagos Field to return the Genovesa well to production compared to the same period in 2025.

Current wording

Nine Months Ended September 30, 2026 and 2025 — Lease operating expense for the nine months ended September 30, 2026 increased by approximately $27.1 million, or 7%. This was primarily due to an increase in major well workover expenses at the Galapagos Field to return the Genovesa well to production compared to the same period in 2025.

Previous wording

Six Months Ended June 30, 2026 and 2025 — DD&A expense for the six months ended June 30, 2026 decreased by approximately $90.7 million, or 16%. This decrease was primarily driven by a decrease of $3.49, or 11%, in the depletion rate on our proved oil and natural gas properties, as well as decreased production volumes of 5.8 MBoepd discussed above. The change in DD&A rate and decreased production volumes between periods caused DD&A expense to decrease by $57.7 million and $32.8 million, respectively.

Current wording

Three Months Ended September 30, 2026 and 2025 — Depreciation, depletion and amortization (“DD&A”) expense for the three months ended September 30, 2026 decreased by approximately $29.2 million, or 11%. This decrease was primarily driven by a decrease of $2.23, or 7%, in the depletion rate on our proved oil and natural gas properties, as well as decreased production volumes of 3.7 MBoepd discussed above. The change in DD&A rate and decreased production volumes between periods caused DD&A expense to decrease by $18.8 million and $10.3 million, respectively.

Previous wording

Three Months Ended June 30, 2026 and 2025 — Depreciation, depletion and amortization (“DD&A”) expense for the three months ended June 30, 2026 decreased by approximately $40.3 million, or 15%. This decrease was primarily driven by a decrease of $4.90, or 15%, in the depletion rate on our proved oil and natural gas properties. The change in DD&A rate between periods caused DD&A expense to decrease by $41.8 million.

Current wording

Nine Months Ended September 30, 2026 and 2025 — DD&A expense for the nine months ended September 30, 2026 decreased by approximately $119.9 million, or 15%. This decrease was primarily driven by a decrease of $3.07, or 10%, in the depletion rate on our proved oil and natural gas properties, as well as decreased production volumes of 5.2 MBoepd discussed above. The change in DD&A rate and decreased production volumes between periods caused DD&A expense to decrease by $76.6 million and $42.9 million, respectively. The decrease in the DD&A rate was primarily attributable to a lower amortization base resulting from impairment charges recorded in prior periods.

Previous wording

Six Months Ended June 30, 2026 and 2025 — General and administrative expense for the six months ended June 30, 2026 increased by approximately $11.6 million, or 16%, primarily driven by higher employee related costs, including non-cash equity-based compensation, compared to the same period in 2025. Additionally, there was an increase in legal expenses related to the lawsuit described above.

Current wording

Nine Months Ended September 30, 2026 and 2025 — General and administrative expense for the nine months ended September 30, 2026 increased by approximately $13.1 million, or 11%, primarily driven by higher employee related costs compared to the same period in 2025.

Previous wording

Impairment of oil and natural gas properties — During the three months ended June 30, 2026, we did not record an impairment of our oil and natural gas properties. During the three months ended June 30, 2025, we recorded a $223.9 million impairment of our oil and natural gas properties. See Part I, Item 1. “Financial Statements—Note 3—Property, Plant and Equipment.” for additional information.

Current wording

Impairment of oil and natural gas properties — During the three months ended September 30, 2026, we did not record an impairment of our oil and natural gas properties. During the three months ended September 30, 2025, we recorded a $60.2 million impairment of our oil and natural gas properties. See Part I, Item 1. “Financial Statements—Note 3—Property, Plant and Equipment.” for additional information.

Previous wording

Other Operating (Income) Expense —During the six months ended June 30, 2026, we settled a lawsuit for $14.3 million. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information.

Current wording

Other Operating (Income) Expense —During the three months ended September 30, 2026, we recorded income of $15.1 million related to multi-year federal royalty refund claims partially offset by a $3.0 million accrual related to a court judgment in a lawsuit. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information regarding the lawsuit.

Previous wording

Price Risk Management Activities — The income of $30.5 million for the three months ended June 30, 2026 consists of $104.6 million in non-cash gains from the increase in the fair value of our open derivative contracts partially offset by $74.1 million in cash settlement losses. The income of $86.9 million for the three months ended June 30, 2025 consists of $53.5 million in non-cash gains from the increase in the fair value of our open derivative contracts and $33.3 million in cash settlement gains.

Current wording

Price Risk Management Activities — The expense of $120.6 million for the three months ended September 30, 2026 consists of $90.7 million in non-cash losses from the decrease in the fair value of our open derivative contracts and $29.8 million in cash settlement losses. The income of $4.2 million for the three months ended September 30, 2025 consists of $16.6 million in cash settlement gains partially offset by $12.4 million in non-cash losses from the decrease in the fair value of our open derivative contracts.

Previous wording

Income Tax (Benefit) Expense — During the three months ended June 30, 2026, we recorded $44.8 million of income tax expense compared to $36.4 million of income tax benefit during the three months ended June 30, 2025. See Part I, Item 1. “Financial Statements — Note 10 —Income Taxes” for additional information.

Current wording

Income Tax (Benefit) Expense — During the three months ended September 30, 2026, we recorded $47.1 million of income tax expense compared to $24.2 million of income tax benefit during the three months ended September 30, 2025. See Part I, Item 1. “Financial Statements — Note 10 —Income Taxes” for additional information.

Previous wording

Impairment of oil and natural gas properties — During the six months ended June 30, 2026, we recorded a $145.0 million impairment of our oil and natural gas properties. During the six months ended June 30, 2025, we recorded a $223.9 million impairment of our oil and natural gas properties. See Part I, Item 1. “Financial Statements—Note 3—Property, Plant and Equipment.” for additional information.

Current wording

Impairment of oil and natural gas properties — During the nine months ended September 30, 2026, we recorded a $145.0 million impairment of our oil and natural gas properties. During the nine months ended September 30, 2025, we recorded a $284.1 million impairment of our oil and natural gas properties. See Part I, Item 1. “Financial Statements—Note 3—Property, Plant and Equipment.” for additional information.

Previous wording

Price Risk Management Activities — The expense of $143.0 million for the six months ended June 30, 2026 consists of $46.4 million in non-cash losses from the decrease in the fair value of our open derivative contracts and $96.6 million in cash settlement losses. The income of $71.0 million for the six months ended June 30, 2025 consists of $32.5 million in non-cash gains from the increase in the fair value of our open derivative contracts and $38.5 million in cash settlement gains.

Current wording

Price Risk Management Activities — The expense of $263.6 million for the nine months ended September 30, 2026 consists of $137.1 million in non-cash losses from the decrease in the fair value of our open derivative contracts and $126.5 million in cash settlement losses. The income of $75.2 million for the nine months ended September 30, 2025 consists of $55.1 million in cash settlement gains and $20.1 million in non-cash gains from the increase in the fair value of our open derivative contracts.

Previous wording

Equity Method Investment (Income) Expense — During the six months ended June 30, 2026, we recorded equity income of $6.6 million, which includes a $6.8 million gain on the sale of an additional 30.1% equity interest in Talos Energy Mexico 7, S. de R.L. de C.V. (“TEM 7” and the “Incremental Mexico Equity Sale”). See Part I, Item 1. “Financial Statements—Note 6 –Equity Method Investments for additional information.

Current wording

Equity Method Investment (Income) Expense — During the nine months ended September 30, 2026, we recorded equity income of $6.5 million, which includes a $6.8 million gain on the sale of an additional 30.1% equity interest in Talos Energy Mexico 7, S. de R.L. de C.V. (“TEM 7” and the “Incremental Mexico Equity Sale”). See Part I, Item 1. “Financial Statements—Note 6 –Equity Method Investments for additional information.

Previous wording

Income Tax (Benefit) Expense — During the six months ended June 30, 2026, we recorded $20.5 million of income tax benefit compared to $36.5 million of income tax benefit during the six months ended June 30, 2025. See Part I, Item 1. “Financial Statements — Note 10 —Income Taxes” for additional information.

Current wording

Income Tax (Benefit) Expense — During the nine months ended September 30, 2026, we recorded $26.7 million of income tax expense compared to $60.7 million of income tax benefit during the nine months ended September 30, 2025. See Part I, Item 1. “Financial Statements — Note 10 —Income Taxes” for additional information.

Previous wording

For the three and six months ended June 30, 2026, transaction expenses were not material. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the six months ended June 30, 2026, it includes a $14.3 million litigation settlement expense offset by a $6.8 million gain on the Incremental Mexico Equity Sale. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information on the litigation settlement and “Financial Statements — Note 6 —Equity Method Investments” for additional information on the Incremental Mexico Equity Sale. For the three months ended June 30, 2025, neither transaction expenses nor other income (expense) were material.

Current wording

For the three and nine months ended September 30, 2026 and 2025, transaction expenses were not material. Other income (expense) includes other miscellaneous income and expenses that we do not view as a meaningful indicator of our operating performance. For the nine months ended September 30, 2026, it includes litigation related expense of $17.3 million offset by a $6.8 million gain on the Incremental Mexico Equity Sale. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information on litigation and “Financial Statements — Note 6 —Equity Method Investments” for additional information on the Incremental Mexico Equity Sale. For the three and nine months ended September 30, 2025, it includes the derecognition of $8.9 million related to a deferred payment that was deemed uncollectible.

Previous wording

Our bank credit facility currently has a borrowing base of $700.0 million. Our available liquidity (cash plus available capacity under the bank credit facility) was $1,181.9 million as of June 30, 2026. Letters of credit that are outstanding reduce the available bank credit commitments. The next redetermination of our borrowing base is expected in the fourth quarter of 2026. As discussed above under the subsection entitled “— Recent Developments,” the borrowing base and commitments will be increased to $850.0 million upon closing of the Coulomb and Na Kika Acquisition. The borrowing base in reserve-based lending, which is influenced by banking regulations and guidelines, is a dynamic figure subject to regular redeterminations. Changes in reserve estimations (e.g., lower production forecasts or reduced proved reserves), downward adjustments to the lender's internal price deck (i.e., commodity price expectations) and ongoing production can lead to a reduction in the borrowing base, impacting available liquidity under our bank credit facility.

Current wording

Effective as of the closing of the Coulomb and Na Kika Acquisition, our bank credit facility borrowing base increased from $700.0 million to $850.0 million. Our available liquidity (cash plus available capacity under the bank credit facility) was $1,076.3 million as of September 30, 2026. Letters of credit that are outstanding reduce the available bank credit commitments. The borrowing base in reserve-based lending, which is influenced by banking regulations and guidelines, is a dynamic figure subject to regular redeterminations. Changes in reserve estimations (e.g., lower production forecasts or reduced proved reserves), downward adjustments to the lender's internal price deck (i.e., commodity price expectations), and ongoing production can lead to a reduction in the borrowing base, impacting available liquidity under our bank credit facility. The next redetermination of our borrowing base is expected in the fourth quarter of 2026.

Previous wording

Capital and Other Expenditures —The following is a table of our capital expenditures, excluding acquisitions, for the six months ended June 30, 2026 (in thousands):

Current wording

Capital and Other Expenditures —The following is a table of our capital expenditures, excluding acquisitions, for the nine months ended September 30, 2026 (in thousands):

Previous wording

Based on our current level of operations and available cash, we believe our cash flows from operations, combined with availability under the bank credit facility, provide sufficient liquidity to fund the remaining portion of our 2026 capital spending program of $500.0 million to $550.0 million and plugging & abandonment and decommissioning obligations of $100.0 million to $130.0 million. However, our ability to (i) generate sufficient cash flows from operations, (ii) obtain future borrowings under the bank credit facility, and (iii) repay or refinance any of our indebtedness on commercially reasonable terms or at all for any potential future acquisitions, joint ventures or other similar transactions, depends on various operating and economic conditions, many of which are beyond our control. To the extent possible, we have attempted to mitigate certain of these risks (e.g., by entering into oil and natural gas derivative contracts to reduce the financial impact of downward commodity price movements on a substantial portion of our anticipated production), but we could be required to take additional future actions on an opportunistic basis. To address further changes in the financial or commodity markets, future actions may include, without limitation, issuing debt, including secured debt, or issuing equity to directly or independently repurchase or refinance our outstanding indebtedness.

Current wording

Based on our current level of operations and available cash, we believe our cash flows from operations, combined with availability under the bank credit facility, provide sufficient liquidity to fund the remaining portion of our 2026 capital spending program of $475.0 million to $525.0 million and plugging & abandonment and decommissioning obligations of $135.0 million to $145.0 million. However, our ability to (i) generate sufficient cash flows from operations, (ii) obtain future borrowings under the bank credit facility, and (iii) repay or refinance any of our indebtedness on commercially reasonable terms or at all for any potential future acquisitions, joint ventures or other similar transactions, depends on various operating and economic conditions, many of which are beyond our control. To the extent possible, we have attempted to mitigate certain of these risks (e.g., by entering into oil and natural gas derivative contracts to reduce the financial impact of downward commodity price movements on a substantial portion of our anticipated production), but we could be required to take additional future actions on an opportunistic basis. To address further changes in the financial or commodity markets, future actions may include, without limitation, issuing debt, including secured debt, or issuing equity to directly or independently repurchase or refinance our outstanding indebtedness.

Previous wording

Surety Agreements and Collateral Requirements —We entered into arrangements (“CFSAs”) with our surety providers toward the end of 2025. The CFSAs require us to post agreed upon amounts of collateral through July 1, 2031. The collateral requirements may be secured by cash or letters of credit which will reduce our liquidity. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information.

Current wording

Agreements with Collateral Requirements —We entered into arrangements (“CFSAs”) with our surety providers in the fourth quarter of 2025. The CFSAs require us to post agreed upon amounts of collateral through July 1, 2031. The collateral requirements may be secured by cash or letters of credit which will reduce our liquidity. See Part I, Item 1. “Financial Statements — Note 13 —Commitments and Contingencies” for additional information.

Previous wording

Share Repurchase Program —The Board initially approved a share repurchase program of $100.0 million on March 20, 2023, with subsequent approval of increases in share repurchase capacity of $150.0 million on July 22, 2024, approximately $42.5 million on March 25, 2025, and $157.3 million on April 27, 2026 for a total aggregate repurchase capacity of approximately $449.8 million. Approximately $200.0 million is remaining under the authorized program as of June 30, 2026. We did not repurchase any shares during the three months ended June 30, 2026 because SEC rules prohibit companies from conducting share buybacks while in possession of material, non-public information, such as undisclosed merger and acquisition negotiations or significant material agreements. During the six months ended June 30, 2026, we repurchased approximately 2.7 million shares for $38.2 million excluding broker commissions. Since March 2023, in aggregate, we have repurchased 22.7 million shares for approximately $249.8 million excluding broker commissions. The share repurchase program has no set term limits. All repurchased shares are held in treasury.

Current wording

Share Repurchase Program —The Board initially approved a share repurchase program of $100.0 million on March 20, 2023, with subsequent approval of increases in share repurchase capacity of $150.0 million on July 22, 2024, approximately $42.5 million on March 25, 2025, and $157.3 million on April 27, 2026 for a total aggregate repurchase capacity of approximately $449.8 million. Approximately $176.4 million is remaining under the authorized program as of September 30, 2026. During the three and nine months ended September 30, 2026, we repurchased approximately 1.4 million and 4.1 million shares for $23.6 million and $61.8 million, respectively, excluding broker commissions. Since March 2023, in aggregate, we have repurchased 24.1 million shares for approximately $273.4 million excluding broker commissions. The share repurchase program has no set term limits. All repurchased shares are held in treasury.

Previous wording

Repurchases of stock may be made from time to time in the open market, in privately negotiated transactions, or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate the Company to repurchase any dollar amount or number of shares.

Current wording

Repurchases of shares may be made from time to time in the open market, in privately negotiated transactions, or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate the Company to repurchase any dollar amount or number of shares.

Previous wording

Operating Activities — Cash flow from operating activities decreased $145.2 million in the six months ended June 30, 2026 compared to the corresponding period in 2025. Key drivers of cash flow from operating activities are commodity prices, production volumes and operating costs as presented and discussed under the subsection entitled “— Results of Operations.”

Current wording

Operating Activities — Cash flow from operating activities increased $66.4 million in the nine months ended September 30, 2026 compared to the corresponding period in 2025. Key drivers of cash flow from operating activities are commodity prices, production volumes and operating costs as presented and discussed under the subsection entitled “— Results of Operations.”

Previous wording

The change between periods is primarily attributable to a $139.8 million increase in cash from earnings after non-cash items, as presented in the Condensed Consolidated Statements of Cash Flows under Part I, Item 1. “Financial Statements.” This increase was more than offset by a $147.6 million unfavorable decrease in cash due to changes in working capital accounts. Working capital at any specific point in time is subject to many variables, including commodity prices, production volumes, and the timing of cash receipts and payments.

Current wording

The change between periods is primarily attributable to a $230.7 million increase in cash from earnings after non-cash items, as presented in the Condensed Consolidated Statements of Cash Flows under Part I, Item 1. “Financial Statements.” Additionally, during the nine months ended September 30, 2026, $126.5 million of cash was paid to settle expired commodity derivative instruments compared to $55.1 million of cash received for the corresponding period in 2025.

Previous wording

Investing Activities — Cash flow used in investing activities decreased $99.8 million in the six months ended June 30, 2026 compared to the corresponding period in 2025. This is primarily due to $49.7 million in cash consideration generated from the Incremental Mexico Equity Sale during the six months ended June 30, 2026. Capital expenditures decreased $22.1 million due to project timing between the current period and the corresponding period in 2025. During the six months ended June 30, 2025, we completed the acquisition of an incremental working interest in the Monument oil discovery in the Deepwater U.S. Gulf of America located on certain Walker Ridge lease blocks for$14.8 million and made a $3.1 million project milestone payment related to this acquisition during thesix months ended June 30, 2026. Additionally, proceeds from the sale of property and equipment increased $14.3 million between the current period and the corresponding period in 2025.

Current wording

Investing Activities — Cash flow used in investing activities increased $380.2 million in the nine months ended September 30, 2026 compared to the corresponding period in 2025. During the nine months ended September 30, 2026, we made payments of $440.3 million related to acquisitions, of which $420.3 million was made in connection with the Coulomb and Na Kika Acquisition. During the nine months ended September 30, 2025, we completed the acquisition of an incremental working interest in the Monument oil discovery in the Deepwater U.S. Gulf of America located on certain Walker Ridge lease blocks for$14.8 million and acquired incremental working interests in U.S. Gulf of America Mississippi Canyon blocks 108 and 110 for $33.7 million. During the nine months ended September 30, 2026, we generated $53.9 million from the Incremental Mexico Equity Sale. See Part I, Item 1. “Financial Statements — Note 2 —Acquisitions and Divestitures” for additional information. Capital expenditures increased $32.7 million due to project timing between the current period and the corresponding period in 2025.

Previous wording

Financing Activities —Cash flow used in financing activities decreased $10.4 million in the six months ended June 30, 2026 compared to the corresponding period in 2025. During the six months ended June 30, 2026, we repurchased $38.2 million of our common stock through our share repurchase program compared to $54.7 million in the corresponding period in 2025. See subsection entitled “— Liquidity and Capital Resources — Share Repurchase Program” for additional information. Additionally, we incurred $7.3 million of deferred financing costs duringthe six months ended June 30, 2026 primarilyin connection with an amended and restated credit agreement that was executed on January 20, 2026. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Current wording

Financing Activities —Cash flow provided by (used in) financing activities increased $168.6 million in the nine months ended September 30, 2026 compared to the corresponding period in 2025. On July 13, 2026, we closed an $800.0 million notes offering (discussed below) and fully redeemed the 9.000% Notes for an aggregate payoff of $653.1 million, including a $28.1 million redemption premium. During the nine months ended September 30, 2026, we repurchased $60.8 million of our common stock through our share repurchase program compared to $103.0 million in the corresponding period in 2025. See subsection entitled “— Liquidity and Capital Resources — Share Repurchase Program” for additional information. Additionally, we incurred $24.2 million of deferred financing costs duringthe nine months ended September 30, 2026, of which $15.4 million related to the notes offering and $8.8 million was associated with our bank credit facility. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Previous wording

8.000% Second-Priority Senior Secured Notes — due July 2034—The 8.000% Notes were issued pursuant to an indenture dated July 13, 2026, by and among the Parent Company, the Issuer, the 8.000% Notes Guarantors and Wilmington Trust, National Association, as trustee and collateral agent. The 8.000% Notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. 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.

Current wording

8.000% Second-Priority Senior Secured Notes — due July 2034—The $800.0 million 8.000% Second-Priority Senior Secured Notes due 2034 (the “8.000% Notes”) were issued on July 13, 2026 pursuant to a base indenture, as supplemented by a first supplemental indenture (collectively, the “2034 Indenture”), by and among the Parent Company, Talos Production Inc., as issuer of the 8.000% Notes (“Talos Production” or “Issuer”), 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. The 8.000% Notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. 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.

Previous wording

9.375% Second-Priority Senior Secured Notes — due February 2031 —The 9.375% Second-Priority Senior Secured Notes due 2031 (the “9.375% Notes” and, together with the 8.000% Notes, the “Senior Notes”) were issued pursuant to an indenture dated February 7, 2024, by and among the Parent Company, the Issuer, the subsidiary guarantors party thereto (the “9.375% Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent. The 9.375% Notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The 9.375% 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 9.375% Notes rank equally in right of payment with all of the Issuer’s and the 9.375% Notes Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the 9.375% Notes Guarantors future debt that is, by its term, expressly subordinated in right of payment to the 9.375% 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 9.375% Notes Guarantors (other than the Company) and any future obligations of the Issuer and the 9.375% Notes Guarantors that are secured by the collateral on a junior-priority basis. The 9.375% Notes are effectively pari passu with all of the Issuer’s and the 9.375% Notes Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 8.000% Notes and are effectively junior to any existing and future obligations of the Issuer and the 9.375% Notes Guarantors that are secured by the collateral on a senior-priority basis to the 9.375% Notes including indebtedness under the bank credit facility. The 9.375% Notes mature on February 1, 2031 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Current wording

9.375% Second-Priority Senior Secured Notes — due February 2031 —The 9.375% Second-Priority Senior Secured Notes due 2031 (the “9.375% Notes” and, together with the 8.000% Notes, the “Senior Notes”) were issued on February 7, 2024 pursuant to a base indenture, as supplemented by a first and second supplemental indenture (collectively, the “2031 Indenture”), by and among the Parent Company, the Issuer, the subsidiary guarantors party thereto (the “9.375% Notes Guarantors”) and Wilmington Trust, National Association, as trustee and collateral agent. The 9.375% Notes were offered and sold to qualified institutional buyers pursuant to the exemptions from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in accordance with Regulation S under the Securities Act. The 9.375% 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 9.375% Notes rank equally in right of payment with all of the Issuer’s and the 9.375% Notes Guarantors’ existing and future senior obligations, are senior in right of payment to any obligations of the Issuer and the 9.375% Notes Guarantors’ future debt that is, by its term, expressly subordinated in right of payment to the 9.375% 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 9.375% Notes Guarantors (other than the Company) and any future obligations of the Issuer and the 9.375% Notes Guarantors that are secured by the collateral on a junior-priority basis. The 9.375% Notes are effectively pari passu with all of the Issuer’s and the 9.375% Notes Guarantors’ existing and future obligations that are secured by the collateral on a second-priority basis including the 8.000% Notes and are effectively junior to any existing and future obligations of the Issuer and the 9.375% Notes Guarantors that are secured by the collateral on a senior-priority basis to the 9.375% Notes including indebtedness under the bank credit facility. The 9.375% Notes mature on February 1, 2031 and have interest payable semi-annually each February 1 and August 1, commencing August 1, 2024. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Previous wording

Revolving Reserve-based Credit Facility — matures January 2030 — We maintain 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 we deliver to the administrative agent of the bank credit facility. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Current wording

Revolving Reserve-based Credit Facility — matures January 2030 — We maintain a bank credit facility with a syndicate of financial institutions. The borrowing base is redetermined by the lenders at least semi-annually, typically during the second quarter and fourth quarter of each year based on a proved reserves report that we deliver to the administrative agent of the bank credit facility. See Part I, Item 1. “Financial Statements — Note 7 —Debt” for additional information.

Previous wording

As of June 30, 2026, there were no material changes to our contractual obligations from those disclosed in our 2025 Annual Report, except that if the Coulomb and Na Kika Acquisition closes on September 1, 2026, we estimate cash consideration payable at closing will range from $407.5 million to $457.5 million, after customary purchase price adjustments and application of the deposit paid at signing. See the subsection entitled “— Recent Developments” for additional information regarding the definitive agreement to acquire Deepwater properties. Subsequent to June 30, 2026, the following material changes occurred:

Current wording

The following discussion summarizes material changes to our contractual obligations from those disclosed in our 2025 Annual Report:

Previous wording

The $800.0 million 8.000% Notes were issued and the 9.000% Notes were redeemed as discussed under the subsection entitled “— Recent Developments.” As a result, our long-term material cash requirements and contractual obligations disclosed in our 2025 Annual Report have been modified by extending the maturity of the refinanced indebtedness from February 2029 to July 2034. Our remaining estimated interest payments associated with our debt is now $796.7 million compared to $525.5 million disclosed in our 2025 Annual Report primarily due to the increased term of the notes and increased principal outstanding, partially offset by the lower coupon rate. The refinancing transaction created an immediate increase in near-term cash requirements during July 2026 to fund the redemption of the 9.000% Notes.

Current wording

Debt —During July 2026, the $800.0 million 8.000% Notes were issued and a portion of the proceeds were used to redeem the 9.000% Notes as discussed in Part I, Item 1. “Financial Statements — Note 7 —Debt.” As a result, our long-term material cash requirements and contractual obligations disclosed in our 2025 Annual Report have been modified by extending the maturity of the refinanced indebtedness from February 2029 to July 2034. Our remaining estimated interest payments associated with our debt are now $801.8 million compared to $525.5 million disclosed in our 2025 Annual Report primarily due to the increased term of the notes and increased principal outstanding, partially offset by the lower coupon rate.

Previous wording

We entered into a 365-day minimum commitment vessel contract for approximately $160.0 million. We plan to utilize the vessel for certain Deepwater drilling and completion operations commencing in mid-2027. Other joint owners, to the extent they elect to participate, will be billed for their working interest share of such costs.

Current wording

Vessel Commitments —On July 1, 2026, we entered into a 365-day minimum commitment vessel contract with a financial commitment of approximately $160.0 million. We plan to utilize the vessel for certain Deepwater drilling and completion operations commencing in mid-2027. Other joint owners, to the extent they elect to participate, will be billed for their working interest share of such costs.

Previous wording

Performance Obligations —As of June 30, 2026, we had outstanding performance bonds totaling $1.5 billion primarily related to plugging and abandonment of wells and removal of facilities in the U.S. Gulf of America. Additionally, we had outstanding letters of credit issued under our bank credit facility totaling $95.7 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report subsection entitled “— Known Trends and Uncertainties — Financial Assurance Requirements” and “— Known Trends and Uncertainties — Financial Assurance Market Outlook” for additional information on BOEM’s supplemental bonding requirements and the potential lack of surety bond capacity to comply with BOEM’s financial assurance requirements, which could have a material adverse effect on our business, properties, results of operations and financial condition.

Current wording

Performance Obligations —As of September 30, 2026, we had outstanding performance bonds totaling $1.6 billion primarily related to plugging and abandonment of wells and removal of facilities in the U.S. Gulf of America. Additionally, we had outstanding letters of credit issued under our bank credit facility totaling $183.8 million. Letters of credit that are outstanding reduce the available revolving credit commitments. See Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report subsection entitled “— Known Trends and Uncertainties — Financial Assurance Requirements” and “— Known Trends and Uncertainties — Financial Assurance Market Outlook” for additional information on BOEM’s supplemental bonding requirements and the potential lack of surety bond capacity to comply with BOEM’s financial assurance requirements, which could have a material adverse effect on our business, properties, results of operations and financial condition.