Good afternoon, everyone, and welcome to Talos' first ever analyst and investor day. We're very excited to be hosting this event in person after such a long time. I'm particularly excited to see so many kind of faces that we know and so many new faces as well. Obviously, kind of very excited to have a full room in the house as well. I'd also like to welcome those joining us via webcast today. Please be reminded that today's presentation contains non-GAAP measures as well as estimates, projections, and other forward-looking statements. These statements are subject to certain risks, uncertainties, and other factors that may cause actual results to differ. I'd encourage you to review the safe harbor statement that is on the screen and also available on page two of the presentation.
The non-GAAP reconciliation is available in the appendix of the presentation, which is also available on our website. As you can see, we have two guests joining us today. We have Sophie Zurquiyah, CEO of CGG, and Bob Purgason, Managing Director of Carbon Solutions of EnLink. I'd like to thank you very much for your kind of spending your time with us today and for being kind of great partners of Talos. We have a packed schedule today, so it's gonna be pretty tight for us to kind of run through all of this. Tim is gonna kick us off with an introduction of Talos, kind of an overview of the Gulf of Mexico, and kind of walking through our strategy of kinda the conventional oil and gas.
Robin is then gonna follow with our ESG journey over the years and kind of the journey that we're on. Followed by Sophie talking about how the two companies actually use cutting-edge technology to unlock the resources that we all kinda need. Following that, we're gonna have a short break, probably between 5 and 10 minutes. John Parker is gonna join us to kinda peel the onion a little bit on our kind of oil and gas business. Robin is gonna give us more details of our carbon capture business. After the last break, Bob and Robin are gonna join us here for a short fireside chat. Shane is gonna conclude the day with kinda talking to us about our financial principles.
Before I turn the presentation over to Tim, we'd like to kinda show you a kinda very short video clip that we posted on our website this morning. I think it's really a really great video, and I hope you enjoy it as well. Thank you, everybody. There's a conversation around corporate purpose. We believe our company's purpose is to improve people's lives, and we think that happens with the energy we produce every day and the desire to produce that in a way that people can count on what we're doing so that when that product gets to them, it's reliable in their daily lives.
The example maybe that I would use is if you think about a single mother who lives in a place like rural Alabama, and she's gotta go to her daily job, she's got kids, she's gotta come home, put food on the table, open up and be able to cook on a gas stove or electric stove or whatever that might look like. Maybe she's working on a degree that's online, and she's up till 1:00 A.M. on the Internet and hope that that's reliable, hoping that that's affordable, hoping she's not paying too much in her utility bills. Maybe she's looking at a job that's 20 miles away from where she lives, but if she makes that commute, it improves her take-home pay by 20%-30%. Can she get to that location and hopefully have gas prices be affordable?
Having affordable energy, having reliable energy, our part in that's what connects what we do to the consumer. The diverse level of consumers that we have, not only in this country, but we think about consumers around the world. We think about energy poverty. We think about people that are trying to improve from one generation to the next. That energy needs to be there. It doesn't really matter what kind of form it takes, it just needs to be there, and it needs to be affordable. We think we play an important role in what we're doing. At Talos, we're actually celebrating our 10-year anniversary. Company was started 10 years ago with 5 founders, a credit card, rented office space. We had a belief that we could build something special, we could build something sustainable.
We had done this before, and we had lessons from all of our previous experiences on what we wanted to build in Talos and what would be different. Not only just where we operated, but what we were trying to do. As we built the company, we've also evolved that thinking when we look out another 10 years, another 20 years, to not only building out the oil and gas side of what we do, but also building the CCS side of what we do. The spirit of wanting to continue to grow is in us every day, and we're proud of where we've been so far.
You know, we get asked all the time to kind of explain what we do and how we produce energy and how we produce the oil and gas that we go out and search for. Look, we're headquartered in Houston, Texas, the energy capital of the world, and it's filled with engineers. What do engineers do? They solve problems. When you think about what we do offshore in 3,000 feet of water in the ocean to drill a well 25,000 feet below the earth through 11,000 feet of salt, find that oil and gas deposit that we're looking for, produce it up to the seabed floor, move it 15 miles away, then get it to a location that ultimately ends up in your gas tank or ends up again powering a power plant.
The level of technology and the level of problem-solving that happens, and most people think that it can only be the biggest companies in the world that can solve those types of problems or can engineer the solution that allows us to get that affordable energy, reliable energy. What we would tell you is a company our size can participate in that. We can participate in that in a competitive way, but you have to have an innovative spirit. You have to have a lot of, you know, kind of enthusiasm about what you're doing and be very proud about the problems you're trying to solve.
I see Talos Energy as really being a leader in energy transition when you think about our ability to deliver low cost, low carbon intensive resources from our exploration production side of the house, but also to deliver these decarbonization solutions via CCS or carbon capture and sequestration with our new business line, Talos Low Carbon Solutions. It's really leaning on that same skill set expertise in the conventional rock, the subsurface, how we can model that out. It's about drilling our sequestration wells, but it's also about partner relationships and building these projects together with good execution, making sure that they're operationally ready and reliable. First, we want to maintain that first mover advantage. We wanna be seen as a partner of choice, whether it's an equity partner or it's a new customer.
We really wanna make sure we rely on our operational assurance and how we execute our projects. Lastly, we wanna make sure we ensure financial flexibility on how we can finance and fund each of these projects.
What we're really great at here is teamwork. Working within the training and behavioral safety department, I've come across a few different questions, conundrums, issues that I've been able to get solved through working with my teammates. It's a lot easier to do the job when you have the family aspect. You work together. It's a bit more inclusive within the company. You know what's going on, what we're aiming for as a company, and what we wanna do in going towards the future. Having that family aspect within Talos Energy as a whole, I think sets us apart from our peers.
I think Talos is a young, energetic company with people that are ambitious and willing to pull up their sleeves and get together and work hard. The people I work with and work for care about the outcome of the decisions we make.
At Talos Energy, we put a big emphasis on embodying integrity and safety. It is everyone's responsibility to take care of each other. We encourage our employees to think as an owner. We really want everyone to feel a sense of responsibility and ownership for their work, and understand how much we value them and what their piece does for the overall success of the organization.
To exceed expectations, you need to be involved in everything you're doing. How you think about your community, how do you think about your stakeholders, how do you think about your employees, and how do they think about the job that they're doing? You have to show health, safety, environmental leadership. You have to show some financial leadership. You have to be relied upon to be there and to deliver the right results and to do the right thing, so people can see in the future and say, "Look, I see where Talos is going. I see the mission of that company. I know what they're doing on the upstream side. I understand what they're doing on the CCS side. This is a company that we think will be reliable and will be there in the future." All right. Well, that was great.
We put that on the website today and quickly got a text from my mom asking why I hadn't shaved. I promised her that I had, and that I'm shaving going forward, and then one from my 23-year-old son reminding me that I need to drop my hands. Other than that, I think it was a great video. Our teams work really hard. We're thrilled to be here. We're thrilled we're having this kind of format. It's been a long time. We absolutely understand that. We have a lot to cover. We're gonna go at a brisk pace. So brisk, my team's put me on a shot clock back there. Let's just jump right into the first section.
You know, the way I would introduce and start this is to kind of let you know, look, we know capital's coming back to the market a little bit. Obviously, you know, energy as a percentage of S&P bottomed out. It's moved back up. We are absolutely a different company. We get that. It's very easy just to run into a West Texas name and think about, you know, the merits and the virtues of a company that you might get in West Texas. What we do is a little different, and we think it leans forward into how we can build something, you know, as a small cap, trying to become a bigger company, that's being progressive about who we are, not only on the oil and gas side, but on the low carbon side.
Why we think what we do is sustainable over the long term, and frankly, why we think it's discounted and has a lot of value, and it's a great entry point right now, whether you're covering it as an analyst or whether you're thinking about it as an investor. This first section is really about, you know, how do I think about, you know, what we're getting? What should I think of when I think of what I'm getting with Talos? First is obviously you're investing in a management team, and we're very proud of that. This is a founder-based company. John and I started this company 10 years ago. That was in the video. Small group of us rented office space. We had a plan, we had experiences in our other businesses and how we thought we can make this work.
There's a strategy that we've deployed that I'll talk about. We started to build out the team. Shane. I'll go kind of in chronological order. Shane joined us with his distinguished career as an investment banker on the coverage side for firms like Morgan Stanley and Goldman Sachs. As a managing director, he knew our business. I've known Shane for a long time. He's been with us for several years, and he's the right partner there. As one of our founding partners retired, Bob Abendschein joined us, and Bob and Robin Fielder had a great career at Anadarko and other stops where Bob was also head of global deep water. What we do is difficult. It requires a tremendous amount of sophistication. We have to have folks that absolutely know how to operate in that environment, and Bob does.
Then Robin joined us recently, also with a distinguished career at Anadarko, all the way up through being VP of IR before she went and ran multiple midstream businesses, both Western Gas and Noble Midstream. As you really you know, kind of learn about CCS and various elements of the value chain, the midstream component is a big component of that. She's been a wonderful addition to the team, and you'll hear from her extensively today. Again, you know, don't want to spend too much time on this, but diligencing the team is something that I think is an important part of a public company. You've got to have confidence in the strategy, confidence in who's running it, and we're very proud of the team we've built. We talked about this in the video.
I'd rather jump to this one and just kind of get into a little bit of, you know, what are we looking for when we think about an energy company today? As investors either are in the space and looking at their portfolio and looking for value, or they're coming back to the space and trying to say, "Look, I just don't want to throw something that's about down spacing locations. I mean, what else can I think about when I think about an energy company?" We're trying to satisfy something that's a little different. How we're gonna grow on the oil and gas side, we're not running away from that. We wanna build that business out.
We're gonna talk about who we think we are as a counterparty in the basin that we have a lot of confidence in the Gulf of Mexico and other offshore basins. How we use the skill sets that we have to advance something different in low carbon. We made that commitment last year. We jumped in it last year. I think our first announcement was in the second quarter of 2021, and it was an international joint venture we were putting together with a UK company that had a project in the North Sea, and they were coming to the U.S. called Storegga.
I think folks thought, "You know, what are these guys doing?" Now since then, we've built out a portfolio that Robin's gonna talk about, and I think it satisfies the company that we wanna be in the future, which is complete energy solutions, both on the oil and gas side, and then again, what we're trying to do in sequestration and storage. These are the hallmarks of, again, the boxes we think we check. We like a conventional offshore strategy. We know it's different. I'll talk about that. You know, we like what we're doing on the CCS side. Obviously, we wanna, you know, reinvestment rate matters. We know that. Shane's gonna talk about that. We think we can manage that offshore similar to how they manage that onshore. Balance sheets have always mattered. It's how we've survived over multiple commodity crises.
We've got catalysts, and we think we're a natural consolidator, particularly when you think about the Gulf of Mexico. We'll walk through all of these elements over the next several hours. A little history. Look, this is busy. If there were a couple of things that I would have you take away from this slide, first of all, when we started this in 2012, and we thought about the level of financial distress in this business over the last decade, I think we could say the carnage was vast and the carnage was real. We've never had any financial distress. We've never breached or got close to breaching a financial covenant. I mean, I think that's something that's interesting about us.
In a basin where there has been some distress, I think we've done maybe 11 M&A deals, and a good handful of those were in distressed situations where we were a buyer. We've done that because we believe in the setup of how we explore and how we do M&A, how they complement each other, how infrastructure matters, how operations matter. We'll walk you through all of that. A couple other things I would point out, and I'm gonna take the pointer. I didn't dry run this. That's what you get with us. You get live action. Is our first transaction in 2013, then you'll notice a big discovery related to that transaction in 2016. That was the ERT transaction. Stone transaction in 2018, then you'll notice a discovery here in 2021 with Puma West related to that transaction.
That's not, you know, that's by design. You know, the way we think about doing M&A, then picking up more acreage, then how we do reprocessing and how that goes into capital allocation is the strategy. It's what we're gonna talk a great deal about today so that you can embrace, hey, look, you know, onshore is gonna talk about all this stuff is repeatable, all of it's manufacturing. Tell me exactly what your inventory life is, and we understand that. In offshore, it's about acreage, it's about a process, and that process repeats itself. Part of that is what is the process? We're gonna walk through a lot of that today, and then you can see the advancement of what we're doing on the CCS side in 2021, which leads us to where we are today.
Shane's gonna have a lot of history in the back of the book on, you know, kind of how we've looked as a public company, both from a leverage statistic, from a production growth standpoint, so you'll have all that in the back as well. This is a little snapshot of the acreage set. You know, things that we're going to highlight throughout this presentation is the amount of acreage we have and why that's good for us. Look, we will absolutely address a bit of the elephant in the room in terms of lease sales and how we manage that. We'll talk about seismic, the role it plays, and how much we believe in having a vast amount of seismic inventory. You can see some of those statistics here. Light blue is seismic, dark blue is acreage.
You can see the deepwater fairway that we play in here. Then you can see that because we've built companies our entire careers in the Gulf Coast and in the Gulf of Mexico, our expertise around conventional geology is what allows us to quickly build out and execute in the sequestration and storage on the CCS side. There's a lot of talk about, you know, CCS and capture technologies. Robin's gonna talk about that. There's even discussion around direct air capture technology. Certainly there's usage related to CO2. The easiest thing you can do and the thing you can do now, if you have permits and when it's ready, is put it into the ground. That requires drilling skill. It requires the geological skill that we think we possess and we think is very important. That enabled us to get.
That enabled us, let me go backwards, to really get into the acreage position that we have on CCS. Basic stats, 162 million barrels approved reserve. We're gonna spend some time today talking about the resource and peeling the onion back on where we have prospects, where we build inventory. John's gonna talk about how we build inventory and the process that works for us. You guys already know the guidance for the year, a little more about our acreage position, where it exists, and kind of a little bit about the inventory. You know, and that's static. That's today. That number changes two months from now, you know. As we think about, as we do exploration and have discoveries, those locations move into development.
There's a process where the categories shrink here, and then these categories increase and volumes increase with time. All of that is the education process that we hope a good analyst day is about. It's about understanding us, understanding the business, understanding the strategy, why we operate where we operate, and how we operate where we operate. I wanna let my team in the back know that I did that first part with a minute to spare. Let's talk a little bit about just the Gulf. Again, if I said, "Hey, let's talk about West Texas," you guys would say, "Let's skip that section." Because we all subscribe to some database that allows us to pull anything we want. In fact, we've already formed an opinion of who's got the best rock and the best county, and we understand all that.
What makes our basin interesting in our view are several things. One is it's huge. It's not just huge in the fact that it has a huge geological column. It's got great rock properties, and I'm gonna talk about the impact of what rock properties do and why that matters. It's huge geographically. It covers a big area. It's been left for dead at least 5-10 times in all of our careers. Then the beauty of technology and Moore's law and computing speed is that we've been able to redefine what the next geological play is. It's got a great amount of infrastructure and it started in shallow water, which is why our companies that we built 20 years ago, John and I have been doing this since I was a young reservoir engineer, and he was a senior geologist.
You know, we were prospecting in 10 feet of water in the year 2000, and now we're making discoveries together in 4,000 feet of water in 2021 and 2022, and that's not by accident. You know, the majors lead the way. They put in the infrastructure. Someone has to come in behind that. We're gonna talk a lot about seismic technology. A couple fun facts. When you think about us, we've never actually shot seismic offshore. We've never actually underwritten a seismic survey. We take seismic data, and we reprocess it. We believe in that technology. CGG's phenomenal at that technology. We haven't put in a new platform as a company in 15 years.
We do M&A, hopefully at the right price and the right process, take that infrastructure, and then figure out what we can find in that asset or within 15 miles of that asset, typically in deep water as a subsea tieback. There's a lot of what we do that people, you know, see the big projects, and they think, "Well, how does a smaller company participate in something so big?" By figuring out where the right spot is for us, capital discipline, balance sheet discipline, and then we can go execute our strategy. Our strategy includes the benefit of advancing technologies in subsea production. It benefits from advancing technologies in seismic. Look, we think it's the best place to produce a barrel of oil from an environmental and emissions standpoint. We think that's been well substantiated. It's not discussed enough.
It's starting to get in the news because of lease sales, and we'll talk about that, but we're certainly proud of that. If you think about a well in 3,000 feet of water, subsea, flowing to infrastructure 15 miles away, that well doesn't have any emissions at the seabed floor, and it's being aggregated in a similar footprint when it shows up at that producing facility. This just gives you an example of that. I mean, you know, look, obviously, the border is here on Mexico, in the Gulf of Mexico, but you could certainly put the Permian just in terms of scale. You could probably stick the Bakken, move some things around. But the point being, it's an enormous basin, and again, it's got an enormous geological column. This kinda gives you a sense of that.
You know, when the basin was developed, it was developed. Here's the geological section, it was developed on the Pleistocene and the Pliocene, and that was running all through this shallow water area. We went deeper into the section. Somewhere in here, you got into the Miocene. You had layers of salt that you really started to realize. I would say 25 years ago, you'd see that layer of salt on seismic, you'd say, "Well, I guess that's where the end is." Because once you hit salt, there's nothing left to do. We figured out how to image the image around that salt, and then we figured how to image under that salt.
A lot of that was technology that was advanced by seismic companies, it was advanced by the majors, and a lot of it's around frequencies and data and the things we studied in high school and tried to run away from in college. But they matter out here. You know, look, if our friends at Shell is trying to shoot a survey imaging at 25-30,000 feet, we don't necessarily need to join them in that imaging. They're gonna lead the way. What we may get is the survey they shot 5 years ago, where they were trying to image at 20,000 feet. Then maybe we buy an asset that's producing at 15,000 feet, and we're looking in that section. We want a better image of salt velocities and imaging so we can de-risk.
Maybe we don't need to look for 100 million barrels. Maybe we can look for 10 million barrels because that's material to us, it wasn't material to the major. That's the evolution of how we can fit in the space. We don't need to move first here. We needed to move first in CCS. We don't need to move first on a $100 million well. We can follow. We just have to be smart on how we trail the majors. All these plays are in play for us. We get into the sub-salt window of the Miocene. We've gotten into some Wilcox plays through our Stone transaction and through our Bernardi transaction. Everything we do is related to, you know, kinda how we got started, how we think about the technology, and how we think about our operational excellence.
We think the offshore is the right place to continue to do it. This is pretty interesting. A lot of these are just, I think, interesting facts a lot of people don't know about. Look, I've got conclusions on this page, and you can draw some of your own conclusions, but there are over 60 facilities in greater than 1,000 feet of water. I don't know if everybody understands that. All of these are. If not all of these, but the vast majority of these were put in by the majors. At some point, these assets become a little more disregarded, a little less strategic. Totally understandable. That's when we fit in. That's where we can transact. If you look at, you know, all the refining capacity, obviously, as we think about, you know, everyone's got a view on oil price.
Typically, when you really pull in a trader, if we had some of our friends from the big trading houses, and then you started to get what's your idea of the commodity in the next five years, they would tell you about refining capacity. We may not study it. We kinda think about demand, and we think about where's the supply come from. Their grave concern is around refining capacity. But a lot of that's right on the Gulf Coast. We feed into that refining capacity. Let's look at production. You know, a lot of folks still don't know, and maybe everybody in this room knows, and maybe certainly those listening in on the webcast know, but the top three producers in the basin are still Chevron, BP, and Shell.
Oxy's not too far behind, and I think they've actually managed the transaction fairly well with Anadarko, and there's Hess. These are all big companies. If we get into BHP Woodside, if we think about ExxonMobil, and here are some other big companies. As you look at that list and ask yourself, are these guys net buyers of more production in the Gulf of Mexico, or are they ultimately gonna be net sellers of production in the Gulf of Mexico? They're certainly net explorers, and we know that, and we wanna join them in that, and we have joined them in that. If they're net sellers, who's their counterparty? We think that's where we fit in. We think we are a natural counterparty to these companies. To be a good counterparty to those type of companies, they need to know exactly who you are.
You need to have a track record. They need to understand your balance sheet. They need to understand what you're going to do with the asset. I think there was a time 10 years ago where you only had to satisfy that treasury group inside a major. Now you're gonna have to satisfy that treasury team and that ESG team. What is that track record look like? What are you going to do with these assets to give us some assurances what we've done maybe even improves under your watch and your leadership?
You know, one of the biggest things that I get excited about in the Gulf is where we've come in the last 10 years, starting somewhere over here at zero and working our way into 65,000 barrels equivalent a day, hoping to be somewhere in here knowing that we can do that both inorganically and organically, and that's the goal. You know, there was a guy that I admired, if you guys have been out there for a while, and some of you have. I see some veterans, and I see some young faces, but Joe Foster, if you remember Joe, started a company called Newfield Exploration. It started with a similar, you know, private equity backer that we started our first company with 20 years ago, Warburg Pincus, ultimately became an onshore company when it finally monetized, but it was an offshore company.
Joe Foster used to say, "Look, we're better at M&A because we do exploration, and we're better at exploration because we do M&A," and that's kinda how our model's built. Just a couple things, and again, this is the goal of what we try to do at an annual state. This isn't really about our strategy. I'm gonna talk about our strategy in a minute. We're covering parts of our strategy now. This just gets into kind of fundamentals. A couple things here that I think are interesting, and one is look, we're not gonna show decline curves of all of our wells because every one of them is different. We have gas wells and oil wells. We have shallow wells and deep wells. We have bigger reservoir pools and smaller reservoir pools.
One thing that makes the Gulf tricky is they're all unique. They have different drive mechanisms. Some have water support. Some are depletion. What's interesting about all of this is because they start with conventional rock, they aren't flying off the curve right off the bat. They typically follow a volume. If you have a million barrels and you've got typically better reservoir support, so you have better, you know, higher reservoir pressures when you go deeper into the section in deep water. We have, for example, in some of our wells at 20,000 feet, we may start with 14,000 pounds of reservoir pressure. Then you've got good rock properties. These are choke controlled. They flow naturally. We could put a little sand and water away, but we're not fracking these at four million pounds.
They flow because of the rock properties that they have. When we drilled the Tornado well, which I'll talk about in a minute, after we did the ERT and the Phoenix transaction, that well came online at 14,000 barrels a day. It had a big tank. Three years later, it was making 14,000 barrels a day because it's about how you deplete the tank. Typically, you know, that first part of the curve has nominal decline. You've got good operating pressures, you've got good rock property, and then you have exponential decline. Certainly, that needs to be managed, and then there's a little tail at the end. Maybe you have a water cut or something that you can manage through. Different looking profile, each one different. This speaks to the volume, the EUR.
You can't put a time on any of these. If we stack some of these, and John will talk about our portfolio later, we might have a development well that has 800,000 barrels. It'll have a profile that looks like this. We might have exploration success where a well comes online at 8,000 barrels a day, and it has an 11 million barrel tank, a subsea well tieback. It'll have a profile like this. It's just a different way the rocks work, the working and operating pressures work. If you stack in enough new wells, you know, that makes for the type of business that we like to have. The mature side of the business, people ask about corporate declines all the time. You are gonna have some wells that are in this side of the curve.
We're gonna have some wells that are in this side of the curve. Now, if I don't do exploration, if all I wanna be is an M&A aggregator, you know, I can buy things inexpensively. I'm a good counterparty. I just wanna go buy stuff. Drilling has dry holes. Drilling is hard. I'm just gonna be buying that part of the curve, and I've got to manage that part of the curve. If I just do exploration, that's fantastic. I get some of this. If I spend money on a high cost of goods environment, and I wait five years and the commodity environment falls away from us, then although I get this, I may get this at a price that doesn't make those original economics work. Our model is, look, let's buy here and buy inexpensively, underwrite that, hedge that. We'll talk about that.
Let's explore and add that piece. If you do that, we think you get a better corporate decline profile than maybe what you can get on shore. That's a little bit of understanding how this works. Why do we do exploration? Because ultimately, you can get differentiated returns. You know, we will always start, and John will talk about having a development inventory. What can we do to arrest our current decline? How do we think about exploitation? Typically, those are ideas that maybe aren't right in the asset we bought. If we bought an old 100 million barrel field, maybe it's making 3,000 barrels a day, we're always looking for a development well in those reservoirs. Exploitation is gonna be maybe five miles away. It looks like the stuff we bought, but we can't claim it to be a development well.
It kinda looks like a duck and walks like a duck. Exploration typically happens later in the cycle, and those are bigger, you know, a little more risk, but much bigger reward. If it's successful, it carries through and adds to the exploitation and development, but it's got differentiating returns. If you don't have this in your portfolio, you're not getting the benefit of what the Gulf has to offer, and you want all the benefit of what the Gulf of Mexico has to offer. There's a great ESG story here. This is global data, and globally, and this is WoodMac's data, the deep water, it produces the lowest emitting barrel. Our emissions profile that Robin will talk about certainly much lower than this.
As a general matter, if this matters in your portfolio, then we think the spacing matters and finding the right team that's committed to this matters. Come to find out, the previous administration, the Obama administration, absolutely understood that. What they're saying here is, look, U.S. GHG emissions are gonna be lower if we produce from the Gulf of Mexico than if we go do that somewhere else. That's why we're having lease sales. That was the Obama administration in 2016. We're still struggling a little bit with the current administration remembering this line from the Obama administration. Hopefully, we can get back there. We'll talk about it, but we all know that that's gotta be the case.
You don't wanna be with a barrel from a different jurisdiction that doesn't care about the regulatory environment like we do, transporting that all the way in here to show up the same Gulf Coast refineries. Then again, why do we like the Gulf? Look, why does the Gulf matter? It's a great resource for our country. It has a lot of jobs. The landowner is the federal government, so they're the mineral owner. They collect the receipts. It's over $30 billion a year in GDP impact. This is a low number this year. That's at probably a $60 price. At a $100 price, that number looks like it's closer to $9 billion into the treasury.
Because the supply chain is all over the country, there's somewhere in every state across the company that's impacted by Gulf of Mexico policy and Gulf of Mexico activity. We're gonna get into a little bit about just strategy and, you know, how do we take everything in the Gulf, and I've talked about this quite a bit so far. You know, how we put it to work. Let me find my notes. A couple things that, you know, we're gonna hone in on. To do well in the Gulf, you absolutely have to have a technical expertise. You know, there's a lot of engineers, there's a lot of geologists. Certainly on the onshore environment, you have a lot of that as well, certainly on the drilling side.
Here, that technical expertise on the geoscience and the geophysics really has to be there, or you end up gravitating to one of those two strategies. You just become an M&A model, or maybe you just explore. If you have good operations and good technical expertise, you can combine those models. We think it's that combination that delivers the best returns. Again, operations matter. We take both of these very seriously. We had an announcement today on our CCS project in the Beaumont and Port Arthur area. Certainly proud to have Chevron as a partner. There's a lot of interesting things in that announcement. Robin will walk through that later when we have our cocktail hour. We can answer some questions about that.
One thing hopefully that gets noticed in that is Chevron being absolutely comfortable with us maintaining operations, even though they will own 50% of that project. I think that speaks to who we are in terms of their eyes and our capabilities, and we think that can transfer to other parts of our business. It's a big shot of John. That's really close to you right here. Again, you know, John will get up and do his part. You know, Look, I forget the big award he got from AAPG, Lifetime Achievement. There's not a lot of great explorers actively working. John's one of them. You know, he's been a partner of mine for a long time. We've had a lot of success together. That's just in this company.
If we go back to previous companies, there's a lot of stories and some fun ones. We've had a high success rate. We don't just run out there and explore. I mean, you know, when we've built an inventory that can toggle if we're in a low commodity environment like we were in 2020 and 2021, we shifted everything into development. That's great. They're gonna be smaller targets. We can't just build a company through that. As we have a more constructive commodity environment, we shift things back to exploration, which we're doing a little bit more of this year, particularly in the second half of this year. Last year, we had our highest level of PDP value. That's where you see that growth in PDP reserves.
Look, it's one of the reasons we were able to get through an RBL redetermination, where you saw some of them fall apart in the Gulf of Mexico, we kept it together. We actually added banks last year in our RBL, which we're very proud of, and several of those banks actually stepped up with more commitments in our most recent redetermination. So again, the credit can get comfortable if they know you're managing risk in a way that manages your capital allocation, focusing on risk first, credit first, and then moving into growth and equity value, which is kinda how we always try to manage it. You know, these operations are complex. I mean, this just kinda gives you an idea. You know, those who've been around have seen this graphic. Here's the waterline. Here's the different types of platforms.
We were installing stuff like that however many years ago, 20, 25 years ago. Now it's TLP's and really it's deep water, you know, subsea tie backs to these TLP's. We manage and operate one of the few floating production units in the Gulf. It does come with a little higher operating costs. I think that's why having the right commodity mix matters. You don't wanna be weighted in natural gas right now in the Gulf of Mexico. We have, think about this for a second, 400 vessel load outs every month, where four helicopters are taking 1,300 flights a month. You really have to focus on cost control. With all that, what Shane's gonna show you later is our unhedged net back EBITDA margin is in the top quartile in the entire E&P sector.
If you're weighted in the right commodity, you get the benefit of good pricing, lower transportation costs, offset by a little higher operating costs. If you manage it right, you're gonna end up delivering very competitive margins. You've got to think about really managing the infrastructure you have, and part of that strategy is finding new volumes to flow through a lot of what's more fixed costs. There's not a ton of variable in this. I can't take that and make it 600 flights out of 1,300 and still run an operation. You really have to focus on being efficient, and you have to focus on new volumes running through a fixed cost infrastructure. That's a bit of the life cycle. I mean, this graphic, again, starts with seismic. You know, we're gonna talk about having a ton of seismic.
Once we have that seismic, we typically get that as delivered, and then we'll go look for M&A. When we focused on where we do M&A, we will then immediately think about managing the declines of what we just bought. How do we, you know, change tubing? How do we change the gas lift mandrels? What can we do to arrest decline, to buy us time to do the next phase, which is local reprocessing around an M&A deal that then leads us to development drilling, step out exploitation, and ultimately high impact exploration? That's the cycle. Starts with seismic, does M&A, hardcore engineering, and then we get back into capital allocation after we do some reprocessing. Again, this is another mix of the acreage. We talked about that. It's a huge acreage position, 1.2 million acres. You can look at the expirations.
A good chunk of this is expiring in 2024, 2025, and 2026 and beyond. We're comfortable with where we are and certainly can talk about, I think it's on the next slide, how do we think about lease sales? Let's skip that one. No, we'll go back. Just make sure everyone's paying attention. Look, we understand that, you know, we can call it whatever we want. We can call it a pause, we can call it a moratorium, we call it politics. It really doesn't matter. It's every administration's prerogative to decide how they wanna manage the natural resource that is the Gulf of Mexico or that is OCS lands. We think the way to manage that is what's written in the law.
The law is that there has to be a five-year plan that has to be produced, and that expectation in offshore through the Outer Continental Shelf Lands Act is there's gonna be two lease sales a year, and there's been two lease sales a year for the last 50 years. This is the first administration that's kinda missed the mark on the five-year plan. They can't miss it forever. You'll see hearings, you'll see lawsuits, and that's just part of what it is because this is something that's been legislated. You know, we think they're coming back. We know that there's a bit of a pause. We have a tremendous amount of acreage. We have 1.2 million gross acres, and I would tell you an interesting fact about that. 80% of the current acres position that we have came through M&A.
What's really neat about how we buy assets is we don't pay for acreage. All the transaction is happening inside the proved reserves. All the acreages, as John would say, from South Louisiana line up to that. It's just stuff that we're getting and trying to figure out how to make that work. As we try to stay patient, as we try to educate, you know, our regulators and educate folks on why lease sales matter and why they're important, we're gonna work with the acreage we have, which is plentiful, to allocate capital for years to come. I am fully confident lease sales are gonna come back. What form they take, what royalties they take, we don't know. But this is too many jobs. There's a revenue that this is just barely slices it back on the revenue loss.
There's a real environmental and emissions story that if we have to deal with more inflation, deal with less production, when you've got groups that are willing to explore, you need lease sales. Again, we know it's a little bit of a cloud. I would say on the permitting side, we've talked about this with many of you that are following the story. We haven't had any permitting delays. There's this too prescriptive. It's happened for too many years. If you have permitting delays, you're really gonna have some heavy screaming and yelling. A lot of these guys that work for the Department of the Interior on the permitting side or in New Orleans or in Lake Jackson, they've been doing this for years. They work very hard.
We haven't seen any real delays on the permitting side. This is the seismic. It's an enormous seismic database that's important to us. Over 50 million acres covering all the plays that matter to us. Why is that? Again, we're gonna buy something, we're gonna reprocess around that. These where the shades get darker, that's because we have seismic surveys overlaying one another. We're really believing in that. Now you can see some seismic that's legacy onshore. This is where that site is, where we did the General Land Office. That's our Bayou Bend CCS site. Why did we compete? Why did we decide to do that? We already had seismic. Hell, I had two dry holes in the seismic set from 10 years ago. We knew what the geology looked like.
We knew it was ready and available for carbon sequestration. We could actually 3-D model the plume. In the bid we put together for the state of Texas, all that was built out. Now, those who didn't have the seismic but just maybe wanted to be involved, certainly probably put together competitive bids. I would tell you our bid package was very, very advanced because we already had the seismic, and we had the expertise, and we were lucky enough to be awarded the winner of the first ever, you know, U.S. offshore sequestration site. So having that seismic and having that expertise doesn't just serve us well on what we're doing in E&P. It absolutely serves us well on what we're doing in CCS. Facilities matter.
We talked about the Helix Producer I floating production unit owned by Helix, operated on the facility side by us. When we bought that lease, it was flowing around 11,000-12,000 barrels a day. We got it up to 45,000 barrels a day, four years later. This is an Exxon facility. These are in Mississippi Canyon. They're gonna be the foundation of our 2022 and 2023 program. Pompano and Ram Powell, that's BP, that's Shell, and this is BP and Amberjack, and this is gonna be part of the 2024, 2025 campaign. All of these have spare capacity. What's also interesting about these that if we bring in partners and we, you know, peel off, maybe we own a hundred percent, we bring in a one-third partner, they will pay us handling fees that will offset our operating costs.
We host third-party discoveries, almost like a midstream asset. They will pay us handling fees, and that offsets our operating costs. All that gets us to where we are utilizing, you know, infrastructure where all that upside wasn't paid for, and it also, you know, raises our operating margins. A couple of super quick examples, and I think I still have time, although I don't know if I'm running behind. This one, GC-18. Look, we didn't pay a lot of money. It was making about 1,800 barrels a day. I think we paid maybe $15 million of cash. There was a surety. You know, some things moved around on the surety trade, and it was right down here. Hopefully you can see it, but we bought it right there at the dot. Now you'll see it flattens out.
That's the asset management. Buy our guys some time to reprocess the data, start a drilling campaign that we talked about last year with a platform rig, sticks right on top of that, and then we added 10,000 barrels a day. This thing saw more production than it hadn't seen in probably 20 years. The production started somewhere back in 1988 or something like that. That's one example. Obviously, the example that we love to talk about, can't expect this every time, was the Phoenix Field, an old Chevron field. When we got it had been producing around 45 million barrels, had maybe another 20 million barrels. That's the curve we bought. That's the production we added through a combination of exploitation, so subsea tiebacks maybe a mile away from the production.
We reprocessed the data, and we saw something interesting about 3,000 feet deeper. This production is around 18,000-19,000 feet, somewhere around 20,000-21,000 feet. We saw something that maybe years and years ago looked like salt. Is it sediment? Better reprocessing. That led to the Tornado discovery. Even more interesting than that is after the Tornado reservoir pressures dropped to a certain point, we engaged in one of the only all subsea water floods in the world. We don't source any of the water in the Tornado water flood from any outside source. We source it from an aquifer about 1,500 feet above the producing reservoir. Made a completion in the aquifer at a higher pressure. That water moves down into the lower pressure reservoir, and then it floods the production a mile and a mile and a half away.
That's the uplift of the Tornado waterflood. Here's a field that people thought, "Well, it's probably gonna be done. I bought it in 2013. It'll be done in 2020," and this thing could last through 2030. Again, same infrastructure. We put in some subsea infrastructure, but the host facility is the same host facility from the original transaction. This is about seismic. This is about use of infrastructure. It's about operational excellence. You don't get these all the time, but absolutely, it's what we're looking for. A little snapshot of the proved reserves. Again, 162 million barrels a year in SEC, $3.9 billion, $4.9 billion in a more representative commodity environment. Probable reserves, we've talked about the split, very weighted to proved developed.
Don't get me into where our enterprise value is relative to the stack 'cause I'll lose my mind. It's one of the reasons we think obviously we've got deep value. A little track record about what we do in M&A. We've done 12 transactions over the last nine years or so. We try to be patient. Look, I'd love to do a deal every year. We haven't probably done a deal, Shane, probably about a year and a half, maybe mid-2020, so maybe even two years. If the bid-ask spread is wonky, if sources and uses on how we think about funding a transaction doesn't check the right boxes, if it's not accretive enough at the right time, then we'll just wait, and we'll be patient.
If we can check that box of being leverage accretive, you know, being value-added accretive of, you know, kind of something that is a benefit to the company, we're gonna look at engaging. Sources and uses matter. How do we think about equity? How do we think about debt? All those things matter. When we transact, we've had a lot of success. These are net barrels, and we transacted on 183 million net barrels. We produced a handful of that. Then you look at 1P reserves, and where all that fits, and we found certainly a lot. Where do we wanna do it? Obviously, we wanna do it in our own backyard. We get that. We know how to hit the synergies.
We have deep relationships. You know, but through some of the activity, even in Mexico, which I'll talk about in a minute, I think we've developed more of an understanding of how things can work in different jurisdictions, how the geology works in areas like the Atlantic margin, and we're not gonna run away from that possibility. We think with a good ESG track record and being a good counterparty, the majors are gonna decarbonize, and we wanna be available for the right M&A deal in the right spot. We're certainly not forecasting anything. We would just tell you that if you really follow. You know, we looked at some areas around the Brazil area. We've certainly looked around the West Africa area.
Again, we're always thinking about the Gulf of Mexico, but we just wanna be able to effect, you know, a good accretive transaction, and we'll be patient and announce one when the time's right. As we go into the next phase of this presentation, again, I'm gonna leave you with, you know, we just talked about M&A, why we think we're a good counterparty, why we think we can consolidate. We're gonna talk about, you know, how we think about the E&P and the upstream side of the business, and then we're really gonna dive into why we're super excited about how we're evolving as a company on the low carbon side of the business. With that, I'm gonna hand it over to Robin to talk a little bit about ESG. You can come up. I'll come down.
Great. Thanks, Tim. It's great to be back in person in New York for Analyst Day. See some familiar faces in the crowd. After watching that video, and for those of you on the webcast, I can confirm the camera adds about 10 pounds, but I will assure you I'm in my pre-COVID attire, so things are good. But excited here to be here and talk a little bit about how we think about sustainability. As mentioned, we went public in 2018, and since then, we've really been rapidly enhancing our processes and our disclosures, and really mapping towards various sustainability standards such as GRI and SASB, but also highlighting our ambitions and our progress along this ESG journey. We're a couple of reports in. We reported the last two years.
As we're preparing and thinking about our 2022 report for this year, we're looking at implementing some additional disclosure around TCFD. Really trying to align with the newly proposed SEC climate disclosure and trying to stay ahead. You know, we're already reporting Scope 1 and 2, so we've been ahead, but we wanna maintain that pace of thinking out ahead and making sure we're really doing a great job of telling our story and getting that message out. There's been a lot of focus on this. Environmental health and safety performance is really critical for us as any operator, but to maintain that social license to operate, particularly as a deep water operator. We've continued to commit to reduce our Scope 1 greenhouse gas intensity.
We originally set a target to get for a 25% reduction by the year 2025 from a 2018 baseline. Because we've had such great progress there, we've since reset that to a 30% target with a 40% stretch goal. A lot of that's driven by just recent performance. Last year over year, from 2020 to 2021, we had a 9% improvement on these emissions reductions. We're just excited to be leading the way when you look at how we're doing compared to our independent upstream peer group. You know, we're really setting aggressive targets that are meaningful on these reductions and then demonstrating progress along the way. We've got a couple of examples of some of the work that we've been doing to achieve these continued improvements.
You know, things like minimizing venting, identifying and eliminating leaks, enhancing some of our data gathering for better disclosure and better dissemination, but also leveraging some renewable energy sources. You've got a nice picture here of an example where we've got a combined wind and solar power remote site, that allows us to bring in that renewable energy into some of our platforms. We demonstrated this last year. We were able to do it in a very short time cycle. Now it's an option for us to be able to continue and implement this at other locations. This is just one of many examples of the things that our emissions team is focused on as part of our day-to-day operations.
it's just beyond our own emissions, and so we've got some bold dreams here too when we think about this beyond net zero. As we're developing a decarbonization portfolio, which I'll touch on later today, which includes CCS as a service, as we're thinking about servicing large industrial partners, all these emissions sources, we can really make a meaningful impact. As we start to develop the four announced projects that we have along the U.S. Gulf Coast, and as we bring those up to peak injection, we will actually be injecting and sequestering 50 times the amount of our current upstream emissions today. Again, it's really about moving that needle, showing we can make an impact, and describing our view and take on sustainability and bringing in sustainability into our portfolio. I mentioned HSE.
As we talk through safety, no matter the metric, whether it's lost time, total recordable incident rates, we wanna continue to drive those down. The real goal is really for zero incidents. We do need to benchmark. You have to measure if you want to improve, and we want to demonstrate that we continue to outperform our peers in the Gulf of Mexico, but also to kind of beat ourselves each year. All of this is achieved through enhancements on our policies and procedures, but it really comes down to what we do day to day in practice. Things like engaging our workforce in some of our safety trainings and then actually going out and testing this via drill is really important. We gotta keep our programs fresh.
This example you'll see here with the Keystones to Saving Lives, it's really about pre-job readiness assessments and making sure people are refocused right before we begin work. Again, the goal here is to send our folks home safe and healthy each and every night. As we touch on the S, the social piece, we have a continued focus in the communities in which we live and work, and that's expanding now that we're moving back into the onshore with these CCS projects. That community is growing with us. We do this a number of ways, obviously through some volunteer hours. You've got a nice photo of one of the examples for some Sunshine Kids work we did here, but also through our dollars.
These charitable donations to some of these nonprofits we partner with is very important. Being located along the Gulf Coast, certainly there are situations from time to time with hurricanes where we can help participate with disaster relief. Also not just here at home, but globally, when you think about we're now providing some opportunities for employees to get matches if they're supporting Ukrainian aid and relief internationally.
We've got a lot of partners here that we've worked with, but we also leave the option back on our workforce, and so they can choose to get their match with any nonprofit partner that they feel has a compelling mission or they have a passion to partner with, and so they can drive and direct their dollars there to what matters to them, and that's important to us. Just a little bit more on our people. When you think about the H of HSE, the health piece, there's been a lot of talk and focus on mental health, particularly coming out of COVID. You know, I think the real key here is providing a high-energy workplace and a real equitable workplace where everybody can come and win and do some fun things together.
Feeling that positive motivation, and it's about attracting that top talent, so we can continue to innovate and do the next layer, and I'll talk a little bit more about that in the CCS section. But we're thrilled and honored to have been named by the Houston Chronicle a top workplace nine consecutive years as voted on by survey from our employees. As we're celebrating our tenth anniversary, we hope to make this year year number 10, and very proud of that achievement. The last piece I'll touch on here is the G, so governance. Since going public, we've taken quite a few steps to continue to enhance that governance piece.
We've added specific focus on sustainability into one of our board of directors subcommittees, and we touch on various ESG matters and discuss it thoroughly each and every quarter. As we've had some private equity transition out of the stock, it's enhanced our independence when you look at the profile of our board directors, but it's also enhanced our trading liquidity. We've got a new diversified shareholder base, and we hope to use this to continue to attract new names into the stock, including some sustainability and ESG funds, as we really get out and tell our story and grow up these platforms. All right, with that, I will now invite John Parker to the stage to introduce our guest speaker.
Good afternoon. John Parker, Executive Vice President of Exploration for Talos. Tim already covered how important seismic reprocessing and imaging is to what we do. It literally is the backbone and the tools that we use to generate opportunities, whether it's development, exploitation, or exploration. Some of the past and current projects that we have working on, we're doing with CGG. We're happy to have Sophie as our guest speaker to kind of give you an overview of what that entails. It's not trivial at all. It's very high tech, and CGG is one of the leaders, in fact, I would say the leader in the world right now on seismic reprocessing, and she'll dive into some of that and give you kind of an idea. You don't have to be complete, you know, technical.
I love to see this stuff, but a lot of the images that she's shown, we ask where, you know, you see a before and after, and it's eye-popping. Then towards the end, I'll just kinda ad lib on how important that is, and specifically, you can play explorer when you see the images, like, here's what we're going for and why it's so important. Sophie Zurquiyah is CEO of CGG. They're leading, as I said, leading technology company on geology, geophysics, and reservoir work. She's had over 30 years' experience in oil and gas service industry. She joined CGG in 2013.
Previously was with Schlumberger for quite a while and led one of their global divisions then, and then became CEO in 2018. I present to you, Sophie Zurquiyah.
Thank you very much. It's great to be here in person, and it's great to be with clients that are such strong believers in seismic and to what we do. We provide CGG, Talos with some of the data that they use for the exploration in the Gulf of Mexico. Again, as John said, we're here to kind of show you the capability and the technologies that goes behind the data that they use. CGG is a geoscience leading company, and we use our expertise in earth science to solve some of the most complex subsurface challenges for our clients. We're specialized in oil and gas, but expanding beyond, and in particular into energy transition. We serve our clients through three business lines.
Geoscience is where we deliver, we go from the data into the images of the subsurface that our clients use through the life of their fields. Earth data is our data library, and this is where we provide with data to our clients for them to do their exploration and production activities. Sensing and monitoring is an activity where we engineer and manufacture equipment for the seismic industry. We have a global footprint, and we work close to our clients, and we work close to the producing and the active basins. This gives us both a global expertise and a local expertise. Geoscience, here you see subsurface imaging, which represents about 80% of that geoscience activity. We have major hubs in Houston, London, Singapore, and Rio de Janeiro, with Houston being our largest hub.
We have presence in the Gulf of Mexico, working hand-in-hand with our clients since 1965, so quite a long time. Earth data has more than 1.2 million square kilometers of high-end seismic data, and the Gulf of Mexico represents more than a third of our data library. We invest around $200 million every year to acquire new seismic data and reprocess some of the older seismic data. That's quite a lot of money to expand our library. The two businesses support each other in the sense that we use the latest technology to process the data that we acquire, and which in turn brings value to our processing business by the ability to advance technology.
In the context of the Gulf of Mexico, and you see some images here and then the shapes, you know, kind of in orangey that are sticking out as salt bodies. As Tim mentioned earlier, we're trying to understand those salt bodies, and we're trying to image and get a good understanding of the sediments below the salt, and that's what the clients have been trying to solve in the Gulf of Mexico over the years. It's both for placing the wells in the right place and of course, exploration, placing the wells and de-risking the drilling activity. Now let me zoom in to the processing activity and what makes it a kind of unique recipe. This is what allows us to produce some of these striking images.
This is really a combination of using advanced high-performance computing hub power together with leading algorithms and software and with outstanding people. Those people you'll see later, a lot of them have advanced degrees, PhDs and master's degree. Starting with the first pillar, with the high-performance computing, it's not very known that CGG has 300 petaflops of compute power, and that puts us in the top 15 computing power in the world, all industries included. Why is that we have so much computing power? Because the processing algorithm, sorry, the processing is transforming seismic data, enormous amount of data into those images and is one of the most demanding types of algorithms in compute power.
To give you an idea of what 300 petaflops of data represent, peta is 10 to the 15, so that's a lot, and it's about 200,000 iPhone 13s, so there's a lot of iPhone 13 around you. The 200,000 of them you need or 300,000 just regular laptop computers. It's a lot of computing power. That's the first pillar. The second pillar is the software and algorithms. You see on the top there of the arrow, let me see. These are the advances in the acquisition technology over the years. The industry, the seismic industry has been working hand-in-hand with the clients to solve and understand that subsurface in the Gulf of Mexico and solve those challenges.
Here you see more and more advanced acquisition technique, which provide more and more quality data and actually more and more volume of data over the years. The latest and greatest technology is actually OBN, where you have the sensors sitting on the bottom of the seafloor. This is quite challenging because this is quite ultra-deep water that we have in the Gulf of Mexico in some areas. Also together with it, we've been advancing the processing technologies in order to be able to extract optimally insights from these new data types. Here in CGG, we're really the only service company out there that has the most advanced technologies and is able to make the best of the seismic data.
We're the only company that has the commercial version of the Elastic Full-Waveform Inversion that uses the most advanced physics, and I would say it gets truer to the reality. Of course, you never know the reality until you've drilled the well, but that's, I think, what makes the difference, that's where we make the difference is our images are closer and closer to reality. Another way to look at it is through benchmarks, and we do benchmarks every couple of years with our competitors. This is just one angle of the benchmark, which shows where we stand in terms of the technology. CGG is in the blue in the back, and we're pretty much leading in all aspects of technologies.
I spoke to you about the computers, the algorithm, and the third pillar is the people and the outstanding people we have. We have about 26% of PhDs that are working on the projects. What makes the difference is we integrate the R&D into every project. Every project is kind of an R&D project. In Houston, we have a higher percentage of PhDs because the Gulf of Mexico needs that. It's more than 70% PhD there. The culture that we have as well is a culture that's been groomed over the years, of service quality and focus on the client. Now that processing technology is used, as I mentioned to you, in the Gulf of Mexico on our database.
We have over 400,000 square kilometer of data in the Gulf of Mexico, similar to the image that you saw earlier. These are different vintages of data, but that's quite a large coverage that we have. We've calculated that almost two-thirds of the discoveries in the Gulf of Mexico since 2012 have been on CGG data. You know, I'll make a comment on working with Talos. What makes us different from other clients is that we work hand-in-hand together. Talos interpreters work hand-in-hand with our interpreters to make sure we share our knowledge and we can respond to the questions that Talos has. It's a really great partnership, and I wanna thank you for that.
Now, examples, which is the most fun part. These are images that we generate. You'll see a before and after, if you want. This is the older image. I wanna start with the production setting because the processing actually brings value through the life of the field from exploration to development to production. I'm starting with Atlantis field, which is a known field, and this is an image from 2016. You see on the left side a velocity model, and these are in yellowish salt bodies, very complex shapes. This is the seismic image that's generated with this velocity model. Very difficult. That's the reservoir. The reservoir is in the sediment below the salt or on the sides of the salt. It's very difficult to understand.
This is a highly faulted reservoir, and the clients are trying to understand the dips, the faults, and the compartments where the oil and gas are sitting. It's like you have the wrong glasses, right? You see here, fast-forward only three years. Now it is another data set, so this is OBN data processed three years later, and here's the huge difference. You see huge difference in the velocity model, a lot more detail. You see some inclusions, sediment inclusions inserted inside the salt bodies and a much clearer. All of a sudden you see what's going on, you see the layers, you see the compartments. This is helping clients with delineation of their reservoir, often finding new reserves, identifying new reserves.
It is about well placement to extract more production and making sure those wells are placed in the right place to optimally produce. This is the Talos example, this Talos Camellia prospect. We're in the Walker Ridge area, so in the kinda deeper area in the Gulf of Mexico. This is data from 2008. This is the same data that we reprocessed 13 years apart, 2008, 2013. You see the same thing. Here is the velocity model. You see the salt bodies, and this is the image that's generated from this velocity model. Very difficult to understand the structure of the salt, the layers and the sediments packages below the salt where the reservoirs would be. We did a reprocessing in 2021. Again, same data.
This is an area where there isn't well data because it's an exploration area. Look at all the sort of enhanced resolution of the velocity model, which then allows to get a much cleaner image of the sediments where the reservoirs will sit, potential reservoir, and then the, especially the boundaries between the sediment and the salt layer. What that allows to do is to de-risk the exploration process, to evaluate the prospects, and to also really understand the drilling and the well placement, so de-risk the drilling itself. We're even able to see some of the inclusions inside the salt. Those are sediment inclusions inside the salt, and they present drilling hazards. You don't wanna be drilling through them. It helps also to understand, you know, the prospect itself, but also the drilling side of the equation. Quick one.
This is one where you have the before and after in the North Sea. This example is interesting because you see that the reprocessing brings a lot more geological view of that reservoir, and we have well data. This reprocessing really enhances the correlation between the seismic data and the well data. That gives us confidence that this newer technology increase the trueness of the seismic image. In conclusion, high-definition seismic plays a key role in the exploration and development process. It is particularly true in those very complex areas, like the Gulf of Mexico. They help de-risk exploration, evaluating the prospects, improving the well placement, and de-risking the drilling side.
Through the life of the field, you're also able to monitor the evolution of the reservoir and check the evolution of the reservoir over the time and identify bypass oil. Another way also to think about it is through the ESG lens, that the fact that we help our client optimize their spending and their dollars and make sure they spend it in the right places, and also reduce their footprint because they're drilling less wells and more efficient wells. Thank you very much. I'll pass it on to you.
Thank you, Sophie. I really like these examples. I'm gonna go back real quick to this image. Yeah, here we go. All right. For everybody in the room, the Elastic Full-Waveform Inversion, there'll be a test tonight at the cocktail hour. Really key to what they're doing and within the industry. Five years ago, you just didn't have that. It's really made a difference. I'm gonna just point out here briefly, if you look at this area. All right, where's the laser? There it is. All right. Key area here, several things to point out. We pointed out the salt. This is the salt body. This is the before. It's kinda hard to image the base of salt in through here. This is the prospect we're looking at.
We're trying to image what's going on in here for the structure. You got flat dip in here. I mean, not flat, but you got straight horizontal reflectors in through here that are dipping against the salt. But what's going on against the base of salt? I'm gonna go back to the after. Here. Yeah, that's just phenomenal difference. In through here, you couldn't really see what's going on at all. Look at the dip change in through here. It's coming up and then kinda curling up against the base of salt. Much better definition of base salt in through here. As she mentioned, some inclusions that our drillers wanna avoid. Not only does it give us better structural definition of the prospect, we're seeing, you know, where we wanna be, but also well placement specifically.
This is the main target interval in through here, below salt. You know, how are you gonna drill this well? You're gonna go through here? Well, there's an inclusion. You're gonna have to avoid that. But also, you wanna stay high on structure and make sure that you have this section very well-imaged. A great visual to see the before and after and understand that this is what we're dealing with. When we have this improvement, and sometimes it'll be every version of the reprocessing will be a new improvement. Our interpreters work with CGG on that to make sure that it's well okay. We have ideas and exchange of ideas, which winds up with a great product. This results in a lot better inventory and lower risk profile for our prospects. Thank you.
We're gonna take a quick five-minute break.
Yeah, it's all right.
Um, so-
Yeah. We ready to start?
Yeah.
Okay. All right. Give you an overview of some of our upstream activities. Basically divide our opportunities into development, exploitation, and exploration. Have some slides on there tell you exactly why we do that. The ratio between the two, capital allocation, et cetera. Talos, we've been in business. Tim and I, we started this company 10 years ago. Kind of that 10 years flew by. We've been very successful. Tim mentioned about the skill sets. We've got all the skill sets needed for this. We have a good track record. The geoscience team I have that works for me, I have the best team I've ever worked with in my 35-plus-year career, which is really great. They're all really good. They're fantastic. They're insightful.
Not only that, they work well together as a team, which I find actually kind of rare among our peers. It's really great. We have a solid asset base. Tim mentioned part of it, you know, is basically you do an acquisition, buy good assets, and then from that base, you explore and exploit outboard and within those assets, and then outboard from that. We have a commitment to environmental responsibility, and I think Robin's already covered that. I'm not gonna belabor some of that. On the process, how do we I get asked all the time at functions, not industry functions in oil and gas, but outboard people go, "How do you do that? How do you know where to drill?
What do you do?" Well, we have a process that we've been developing, evolving, and then perfecting over 22 years together. It's a very good process that works quite well. We already talked about the importance of the seismic data. We basically start out with reviewing the seismic data, load it up, start looking at it, and then map out prospects, ideas, and leads. From that, we start with evaluation of the known analogs. Calibrating I tell my guys all the time, "Calibrate, calibrate." Calibrating to existing fields, known production, as well as dry holes, why didn't something work, is a very important part of the process and also reduces the risk. Once we've got prospects generated, we integrate with our engineering, drilling, and operations group. This is also in the next process is simultaneous. Let's see.
Yeah, these two are simultaneous. You work with the engineers, get the reservoir engineers involved, look at the known fields. Okay, the parameters for that field and the reservoir, does that match where we are with our prospect? Then, of course, the drillers. "Okay, here's where we wanna drill." Get a drill plan together. Then at the same time, we will reprocess the seismic, which takes a while. Doesn't happen overnight. Takes anywhere from nine months to a year to reprocess some data. Sophie already went through that about and how intensive that is. Then we do a rigorous peer review process to get all of our geoscientists and some of our engineers into one room, present the prospect, and then just tear it apart. Which, you know, what about this? What about that?
What about that well? That actually strengthens it. I can tell you that process actually winds up. It either gets a lot better or we wound up deciding it's too high risk, and we kill it. We've been actually very good at this. When we look at ideas or prospects that we've turned down, especially from third party, quite often we made the right call. Formal reviews. Once a prospect gets to that point where we say, "Yes, let's put it on the drill calendar. We're ready to move forward," then formal reviews by our technical leadership. Project selection, very rigorous process of our portfolio management, asset control, timing, and also, capital allocation of where we wanna spend our money. Whoops. Okay, what did I do here?
There we go. All right. Just kind of slicing, dicing some of the inventory. We've got an excellent inventory of projects, of 95 projects, with significant resource potential. This is kind of just slicing, dicing where it is. You can see here, large part of it is Mississippi Canyon, good chunk in Green Canyon as well. Then by project type, development, the really good balance of this, which is important to have that balance. Exploitation in the orange, and then exploration in the blue. As it's been covered before, that if you only do these two, you're just gonna kind of produce yourself out of existence. You have to have the exploration which successful exploration, which we have been, then good successful exploration and discoveries lead to development and exploitation. That's part of our process that has been working very well.
Of resource size, by the size of your ultimate resource that you get, you can see how lopsided that is. That's where the exploration comes in. You have a big discovery like Tornado or Puma West, which we are very excited about, then that leads to appraisal and then exploitation and development. Again, further slicing and dicing some of the parameters on this. I'm not gonna belabor this too much, but just go to approximate balance of how we allocate capital, number of prospects, resource size. Development tends to be on the small side, but quick hookup and quick cash flow. Exploitation kinda in the middle, and then exploration much higher with lots of upside. We've act
I'm gonna actually show you some examples of exploitation that have really nice reserve size potential and low risk for fairly quick capital or quick tieback and quick cash flow. Probabilities of success, kinda obvious. Development is all mostly low risk. Exploitation kind of in the middle. Then generally with exploration, it's less than 50%, typically, you know, 35-50%. Lead time. Lead time's important. This doesn't happen overnight. Development, we can usually get done pretty quickly with quick hookup. Exploitation is in the middle. Then some of the prospects are stranded discoveries or discoveries that happen, you can be looking at mainly because of long leads and the equipment needed for tiebacks can take between one-two years. Rate of returns. Higher rate of return because of quicker cash flow and development.
Exploitation in the middle, and then exploration takes a little more. Now keep in mind, these numbers are from $60 and $3 in Mcf. So current prices being higher, these would go higher. Kind of just a map of where we are. Geography, Mississippi River Delta here, and then we're on the kinda the shelf edge, deep water into kind of our asset base, Amberjack Pompano. Pompano is a big field for us. The drilling program, I'm gonna show you some examples of or from a platform rig on Pompano. Ram Powell asset we got from Shell has generated a nice exploitation example I'm gonna show you. Open Water program is just within that area, one closer to Pompano, but two that are gonna tie into Ram Powell.
Delta House, a key infrastructure that LLOG put in years ago. Infrastructure is becoming more and more a key to our development programs. We already showed you an example in Green Canyon 18, Phoenix Basin here, where we did the water flood from the Tornado discovery, here in Green Canyon. We've got some assets out here, some prospects. Here's Puma West with the big upside. That's in the southern Green Canyon. The Shenandoah, we have some Wilcox leases in through here, from the Shenandoah development that's ongoing. All right, we're starting here, with our Seville well on the Pompano rig program. Important to kind of tell you that these prospects take a while to develop.
What you're gonna see today is basically the result of intensive evaluation, seismic reprocessing, remapping the prospect, and then going through the peer review process, putting it on the drill calendar. Zevallos exploitation opportunity, again, this is from the platform rig at Pompano. Here's the target. For non-seismic, non-technical people, basically what you wanna look at, these are the layers, the sedimentary layers that we or where the sands and shales are. Here is base salt. We have to image all of that pretty well. This prospect, what you wanna look for is the red over black or red over green. That's an amplitude. This map is basically an amplitude in three dimensions of that horizon. This horizon is the M74. It does produce sub-regionally, but not right at Pompano.
This is kinda, again, the exploitation size prospect. The good thing about this is that if this works and we find what we think we will here, then this de-risks other opportunities in and around the whole Pompano area, which would be additive to the value creation. Greater map here. We have 100% working interest on this program. You can see the rates here. Basically, a resource range fits into that range that we saw on the table before this. 5-10 million barrels equivalent and production of about 4,000-6,000 barrels a day equivalent. Second one is Mount Hunter. This is a development opportunity. This reservoir, the M85 produces in the field. Pompano Field is a large field.
It's produced over 200 million barrels to date, and this specific reservoir has produced over 115 million barrels. These are two type logs. This well was Providence, a successful development well we drilled a couple of years ago. You see this red reflector kind of dim out here, so that was the M85 shaled out at that well. Then you see this bright yellow over green, that's this pay zone and the M83. We hit this high on structure, really nice development and good cash flow. The development well we're gonna drill here with Mount Hunter is doing very similar idea, but we're gonna target this upper reflector that was shaled out in the Providence well. This is just a type log showing when you have both the M85 and the M83 sands together.
Yellow's the sand, green's the oil and the resistivity curve. That's what we're looking to do is just drill from the platform, tag into this crestal position on the M85. Again, 100% working interest and gas will help increase production at Pompano. Third quarter spud date, estimate first oil first quarter 2023. Lime Rock. These are, I mean, the next few are exploration and one, yeah, well, basically both exploration examples, where we use the reprocess seismic and have developed the prospect. We really like this. This is one of the lower risk opportunities that we have this year. Again, right near Ram Powell, this will be part of the Open Water program. I think our rig is scheduled to show up in July.
Seismically, you have a large fault here, down through one closure, excellent amplitude, Class 3 AVO, yellow over the blue. What de-risks this prospect is, here's the seismic amplitude map, structural contours. Years ago, Vastar drilled this well, it's called the Sting Well, high up on structure and right within a dimmer part of the amplitude. They found pay in this M66 interval, but did not develop it. This de-risks it because this is the same zone. We think it's slightly separate from this pod, but we do think that this whole area could be on the upside. That would be the whole area you could drain. It's just 700 acres. Spud date third quarter this year. This is part of our Open Water program. First oil, second quarter 2024. You can see the resource range.
This one could be sizable again, 'cause we're looking at 700 acres. One, two after this is Rigolets, it's gonna be 900 acres. So a lot of size to this. Basically, on resource size, you just take area times H times the recovery factor, and that gives you the reserve size. But then you can do we do involve statistical analysis on P90, P10, P mean. But then I also like to have my team check it with a deterministic. It's just simplistically, what are we looking at? And that helps refine that process and keep those accurate. Again, working interest on this one, not 100% on some of these, for capital allocation and also risk reduction, we get partners, and we've sold, the next three that I'm gonna show you, this one as well.
We have a partner, but we're keeping 60% of it. We think very highly of this one, and this one will be interesting to see how this turns out. Key seismic thing that you see on here, see this where you see the dip rates on these reflectors, but look at this, you have a flat spot. That is this edge down here. That's a good geophysical diagnostic indicator that reduces the risk. Then this is Tim's mentioned Ram Powell before. This is a field that we got from Shell Oil Company. Excellent field, multiple reservoirs, almost all of them amplitude supported. This particular opportunity has been de-risked by a well that Shell drilled many years ago. It's 8-13 sidetrack. They were going for several targets. The M8 was one of them.
The P is where it's a thinner gas sand, and then the Q was their main target. What happened was they drilled into this, and they had their velocities probably slightly off, and they did not drill all the way through the Q sand target. They tagged into the top of it, had some mud log shows, which we like to see and reduce the risk, but they did not log it. Our plan is to drill a straight hole through this G, the G zone, which is actually a producer in the field. The M eight was also a producer in the field, but segmented and separate from the main part of the field, so this would be a secondary target, and then penetrate the Q sand on crestal position.
This reflector, this map is basically the map on that reflector, which you see here is a four-way closure, which is outstanding for risk reduction, and then the amplitude mapping through here. We're drilling high on structure and the amplitude. Again, we have a partner. We're keeping 60% of this. You can see the resource range, sizable. We're actually expecting gas with rich condensate yields on this one. And again, these opportunities, part of the synergy is that these tie back to our own facilities, and so our partners would be paying PHA fees to help with the economics of the whole thing. Rigolets. This is a very interesting prospect, mainly because we had already alluded to short-term lack of lease sales ongoing forward. This was a sought-after prospect.
Chevron went after it and bid. Well, they were high bidder on this prospect. They've had it for a couple of years. Our getting this prospect was the result of over a year of building a business development relationship with Chevron, and we got a farm-in from this. There was a trade that we've negotiated with Chevron. They think very highly of us. They like working with us as a partner. They watch what we've been doing at Tornado. I've been told this by Chevron management. They also like to know that we were one of the few explorers left in the basin, so we negotiated a farm-in. This is an outstanding prospect. It targets the M58 sand, which is regionally known reservoir sand in the area. This would follow the Lime Rock and Venice operations.
Again, sizable, this is the one I mentioned that you have 900-acre amplitude on a structural nose, with a slight flat spot at the bottom. Excellent Class three AVO. The good part of this is that a well drilled years ago, not produced, actually found oil in the M85. This is the same sand that produces at Pompano Field. They found oil in a structural trap in this position, but was not developed. We have another zone here that could be a secondary production zone for later in the life of the field, given success here. You can see the reserve range. I mean, our estimated gross resource range is 20-30 million barrels. Excellent flow rates in this reservoir, basin-wide. Ten to fifteen thousand barrels a day.
We're not that deep, 15,000 feet. Again, this would tie back to Pompano host facility, which is really value added to Talos. Puma West, now we go to the big upside opportunities. We actually had this and acquired this through the acquisition and the merger of Stone Energy. Stone had this, but we were unable to sell it. We had the lease, and the lease that, you know, lease sales are important. This lease was a primary term lease, not held by production, and it was expiring. We went ahead and permitted it and said, "You know what? Let's just go after this and see what happens." As soon as we permitted it, 24 hours later, BP's knocking on our door saying, "What are you guys doing?
We wanna join together and get, you know, drill a well together." We did. We drilled the discovery well, which is here at Puma West. Just regionally, here's Mad Dog Field. Mad Dog Field is one of the largest fields in the Green Canyon area, over 4 billion barrels in place. These leases are our leases that we have now with BP. Chevron is a partner as well. Key component to this is you don't wanna be building host facilities and TLPs every time you make a discovery. This has the optionality of having several tieback options. Heidelberg, Holstein, Tahiti are all tieback opportunities. Furthermore, Chevron is the owner of two of these, so they have incentive to get this done as well. First oil will be pending appraisal.
We're not quite sure of where that would be, but we have multiple layers in this. We discovered oil in one main sand, and then two sands below that were much thinner. The concept here is we're gonna go down structure, test a different part of the structure, and look for oil in up to three more layers below the key discovery zone. This could have quite a bit of upside. We'll keep you apprised on how this works. We're looking forward to this. This well, which BP is operator, spud later this year. We're very excited about this. We've crossed aside some of our acreage, so we're winding up with 25% over this bigger area.
I will say that given success here at and finding more oil at Puma West would also, I think, de-risk and add upside opportunity in other fault blocks in these two leases. This could be quite impactful. Oh, yeah, little bit of color on it. The Ocean BlackHornet is the rig that's contracted by BP. I think we've been told October spud for this one. We're having partner meetings together, work out the details in the well planning, placement, target placement, all of that. We have established really good relations with Chevron and BP, going forward on this, and it's kinda leading to other opportunities in the greater area. Other prospects they want us in, it definitely is value added for us.
Just going into kind of the slicing and dicing some of the inventory. This is not all of it. This is just examples of some of the stuff we've got in each category. In-field development, you can see the numbers here are current working interest, high working interest on several of these. Then by area, by well count, quite a few again, Mississippi Canyon, that's our main hunting ground. But also Green Canyon is big by resource. When you just look at the resource range, again, Mississippi Canyon's huge. Nice balance into Green Canyon.
Not as much on the shelf in the Gulf Coast, but we have had some very economic gas discoveries in through here that have worked quite well. Exploitation assets mainly the Lime Rock, Venice, and Rigolets examples I just showed you. Those all fall into this category of exploitation. Seville, we're currently drilling, that's ongoing. Venice, Lime Rock, Rigolets, those are the ones I showed you. Excuse me. By area, again, takes up the majority of the prospects are in our deep water Green Canyon and Mississippi Canyon areas. Resource range can see some of the same thing. It's been a really good area for us. Again, the seismic reprocessing has reduced the risk on this to the point where we're very excited about this and finally get this on the drill calendar. Exploration. Upside.
I already talked a lot about Puma West. This has many. I think success on the appraisal well will give, generate probably 4-5 more wells that could be drilled in the area to size up other opportunities. Coronado is part of the Wilcox play that I had mentioned. LLOG is very active in that area. We've got one discovery, stranded discovery that de-risks the Coronado prospect, which is just fault removed from that. We have quite a few acreage blocks in there. We've actually been approached by one operator in the area. Camellia Prospect is a large structural play that we have the crestal position on. That was the one I showed you the seismic example, the before and after, of how impactful that was on really getting a lot better image for structural definition.
Coronado East, sorry, that's the offset, the prospect that's offset from the Coronado discovery. This is some of the other Wilcox leases. We have, you know, again, quite an inventory of opportunities to follow up on. We'll say again, reiterate that when we buy data over a certain area and then reprocess it, you're looking at anywhere from 9 months to a year just to get the output of that reprocessing. It doesn't happen overnight, but we think it's highly valuable to do that because it definitely de-risks the prospects. Occasionally, you'll have a reprocessing that comes in, and it kills a prospect. That's disappointing because you don't add that to your inventory, but it saves a dry hole cost that was highly probable if you kill the prospect.
It gives and it takes. Sometimes it adds quite a bit of value 'cause it'll add another area that you didn't know about 'cause you couldn't image it well. Zama well. You wanna take this one?
You want it?
Nope. I will say it was one of the most exciting discoveries I've ever been in. Tim mentioned, you know, Talos, we were awarded the Wood Mackenzie Discovery of the Year award. It was thrilling for us all to be in the same room, drilling through it over the July Fourth weekend in 2017, just to see that much oil was just fascinating. Our technical team did great. Unfortunately, it's in a jurisdiction that's not the best in the world, and I'll hand that off to Tim.
Yeah. Don't say anything else, please. Look, John and I have done this a long time. We're showing you here, John. We're peeling the onion back a little bit for you guys. You know, one, when you invest in a company like ours, we get, we understand, obviously, I'm fairly familiar with the onshore model and you guys have an area, you know your area, it doesn't matter where that is. Is it Haynesville? Is it Eagle Ford? Is it Bakken? Fine. You're familiar with the counties, and you can build that out. Here, you've got to be familiar with the process. You got to have some faith in the process, team matters, all that matters.
We wanted to spend a little time, and look, John and I have been arm wrestling forever, you know, and we've developed the process together. We're the final, you know, allocator of capital. We know that. We take responsibility for that. We have to have a process. We have to have a belief in how we do it technically. Now, you know, a question came up as we entered into 2014 and 2015 and 2016, and we knew a commodity crisis, obviously was there. We were in the middle of it. We had a good balance sheet going in for all the reasons we talked about on how we think about M&A, how we think about sources and uses. We knew we would make it out of there.
The question was, what we're gonna do on the other side. Stone merger was an example of what we were able to do on the other side with the reverse merger going public. We also thought, look, to make what we do interesting, we need to think about, can we take that model and move it to other jurisdictions? We saw Mexico opening up. We thought about going into Mexico. We knew there was a large Miocene and Pliocene section that wasn't explored by Pemex. That was really, you know, what they built the foundation of their oil and gas system on was a different geology to the east, an older geology.
We got some data that was provided in the process, and our guys immediately said, "Hey, look, we see a flat spot," like you saw earlier. I'm like, "That's pretty interesting." We bid on it. All of a sudden, we were the first, you know, contract in 80 years by a private sector company. Guess what the guys did? We reprocessed some seismic. It took about a year. We drilled a well and, you know, John and I and the team drank some beer and ate wings for 40-something straight hours while we were drilling through pay. All of that was great. We appraised it. Again, the Wood Mackenzie Award, I think they ran out of Exxon-led awards for 1 year.
We were able to get the award from them on Global Discovery of the Year. All that, it makes us very proud. At a minimum, it validates who we are and how we do it. The challenge was this discovery was big enough, as you guys know, and maybe we don't have to go through all this. Part of it was on the acreage to the east. You know, we appraised everything. We've locked this down. Netherland, Sewell & Associates, Inc. did a big third-party report on that. But you still have to go through a unitization. When you're in an area like Mexico that went through a government change, obviously, you have a different president, and that process of unitizing became complicated. You guys know the story. You have to pick equity splits. You have to pick an operator.
You can redetermine the equity splits. That I'm less concerned about. Operatorship matters to us. For all the reasons we talked about earlier, having control of that project matters to us. You saw some reporting last week. I don't know if that's. You might find this shocking. I don't know if that was totally accurate. What we've put in is a notice of dispute. The idea here is we believe we should be operator. Obviously, there's been $350 million spent on this side by us and our partners. There has been zero on this side. You know, we discovered it. Three of those wells are on the seabed floor waiting to be reentered and developed. That was by us. We believe we should be the operator, and we would think best practices would allow that.
The country of Mexico so far doesn't believe that, and our argument was, "Look, we're gonna put in a notice of dispute." It doesn't mean we're litigating. It's an option to think about arbitration because we, you know, we don't know if we've been treated fairly. There wasn't a transparent process. Now, we can cool off on that. It doesn't mean we're pulling anything or not pulling anything. That notice of dispute's still out there. That option is still out there. We're trying to work with our partners and Pemex to figure out the right development plan. Obviously, we had a full FEED study. We think we know exactly what that plan looks like. They have an opinion. A lot of that's workable, so that's fairly close. We think we have to have roles that speak to the influence of the partnership.
It ultimately will help that project get financed and then get that to FID. If we can't get it financed, then we can't get it FID. It doesn't mean we may or may not participate. Certainly, we also think there's a market for this asset as well. What I would leave you with, it's still a catalyst. It's a catalyst in our portfolio. It's something we're very proud of. There's gonna be different routes and ways we can monetize this, and we haven't given up. That said, we're not gonna let it be in the news flow every day, again, because then when it's in the news flow, there's a decent chance it may not be accurate. Stay tuned, but I wanted to, you know, obviously give some update about that.
I think what's interesting for this process and having this Analyst Day, now that you've seen a little bit from Sophie and John about how we think about our business, you can kind of see how we got here, you know, and we're very proud of that. Right. Now I'm gonna get to what a lot of folks were interested in, CCS, bring Robin back in here, who's doing a great job leading this effort. I will hand this. I won't make you stare at our three-way closure.
Thanks, Tim. We formed this newly formed entity within Talos, the Talos Low Carbon Solutions, earlier this year. As Tim said, I have the privilege of leading a very fast-paced, ambitious, and forward-thinking team that's made a lot of quick progress in this space. One of the reasons we wanted to start with ESG is obviously sustainability is very important, but also because our CCS business was really birthed out of our one of our ESG subcommittees. We had a whole task force on figuring out how Talos Energy could best participate in the energy transition space.
As we kept looking at different alternatives, we really just kept coming back to CCS as a really natural fit for us, leveraging our existing skill sets, starting with the footprint along the Gulf Coast and in the Gulf of Mexico, and partnering. First, I just wanted to pause and make sure we talk about the value chain of CCS, carbon capture and sequestration or storage. I'll use those words interchangeably. You know, it all starts with the capture piece, and in our case, we're capturing point source from various industrial sources. There are some direct air capture projects out there, but we haven't yet endeavored into that space. Capture is a known process. There are existing techniques today.
There's known amines, solvents, sorbents, processes we can do to really scrub out the CO2 from these various emission sources. The next piece of that is really just getting that infrastructure or leveraging some existing infrastructure when you've got that, and we'll talk more with Bob Ferguson in EnLink later for that transport piece. Getting those CO2 molecules from the emission source to our storage locations. The last piece is really where we come in with some of our expertise. We're gonna be targeting these large saline aquifers all along the Gulf Coast. Really, we're talking about permitting, drilling, and monitoring these classic sequestration wells all in accordance with the EPA.
Things that are all within our normal energy value chain, we're just kind of putting them into a slightly different order and reversing the flow, if you will. Even backing up a step further, you know, why CCS? You know, is there demand here? I think as we look across, no matter if it's the Global CCS Institute or the EIA, there's various predictions out there, but they're certainly showing demand. Where you see today at this light blue is we're at 40 million tons per annum of sequestration projects around the globe. That's it. If we stay on our current trajectory, we're gonna fall very short. You see by 2030, we need almost three times as much in the hopper of that development pipeline.
If we're gonna meet these very ambitious climate goals globally by 2050, we need a whole order of magnitude more projects into that pipeline. We're talking about scaling from the 40 million ton per annum to the gigaton scale. The demand and the need out there is great, and so there's a lot of emissions to be serviced here and for us to participate. Next, the question is, well, you know, why traditional energy industry?
I think as you kind of reflect back on history and look at where we've come from the development of these mega projects in the ultra-deep water or globally all around the world in different locations to moving into shale oil and moving into manufacturing mode and being able to do that in an efficient development manner, to even leveraging big data with artificial intelligence and machine learning. You heard some of Sophie's presentation on that processing speed allows us to do much more, better, faster, cheaper, and smarter. So it's kind of the next step of the evolution for us to get into the ESG space and to really participate and innovate. When you really think about it and think back to some of the previous presentations, we are technology companies. This is what we do.
We leverage technology. We harness that. We take some very talented technical folks and solve big problems. Getting even more specific to upstream and how these CCS key skill sets and needs pair with upstream or E&Ps, you'll see it checks a lot of boxes when you look across that value chain. Certainly, we've got the subsurface expertise when it comes to geology, geophysics, reservoir evaluation. We do a lot of partnering in the deepwater, already very commercially focused on moving product up and downstream of us, and certainly on the project execution piece of being able to deliver safe, prudent operations as a deepwater player, but also we're gonna have to ensure reliability for these long-term CCS projects over time. It's really a natural fit for us. Location.
As we think about the U.S. being one of the largest industrialized nations with emissions concentrated along the Gulf Coast, we've got a grand opportunity here. There's a huge need, and we also happen to be sitting on top of some of the best geology in the whole world. When you marry those two together, and you can get away from old wellbores, you've got all the ingredients you have to have a commercially successful CCS project. Really, it's leveraging these premium rock properties, getting into the right locales close to these emission hubs, and really getting there early and being that first mover. I'll say, although it looks like a lot of this is offshore, but certainly these sands are pervasive and go into the onshore as well.
In fact, three of our announced four projects are starting with onshore sites. Earlier this year, our team did some strategy work and really, you know, took a step back to say, "Who are we trying to be here?" We're certainly starting with CCS in our backyard along the Gulf Coast. Again, it's a natural fit from us from a skill set and expertise standpoint, but could really be a springboard for us to getting into other, even a blue vertical economy. We're looking in different jurisdictions, but also different service solutions along this value chain. You know, for us, it's really about starting with the CCS, but thinking more broadly as far as building out a decarbonization portfolio, being low cost and really attractive to a new customer base.
Our four pillars I mentioned in the video earlier, it's really about that agility, being very collaborative with all of our stakeholders, including even some of the regulatory bodies as we're navigating some of our very first permits. Demonstrate that reliability, again, to our customers is important. We're gonna have to demonstrate that to regulatory bodies as well. Lastly, making sure we have financial optionality on how we go and fund these projects and leave some room there for a little bit of creativeness. As we've been on this journey, two different project types have emerged. You've got kind of this traditional regional hub where you've got a collection of industrial emissions, these clusters, as they're often referred to in the North Sea.
You'll have a number of parties will basically be gathering these CO2 emissions into a network to get it to our injection site. These are pretty large scale projects. They're gonna take a little bit longer to develop, but they're very large scale. Contrast that to what we're doing with one of our examples I'll touch on in a minute as a point source. This is very customer centric, a single emission source. In many cases, a lot of these large industrials have a footprint larger than their current surface equipment. In some cases, we can actually inject on their own lease if they own that acreage and around, or we can provide a storage location right adjacent to you to keep that transportation cost minimal.
That allows these to be very short cycle time and cost effective. I'll note that both of these project types can be phased. As we think about those cycle times, again, the point source, much shorter cycle, but still about three years. You know, the biggest difference going from a point source to the regional hub is this backbone infrastructure we need to either put in place or repurpose or a little bit of both. We'll talk about that on the project specifics. And then hopefully, as we can scale, much like LNG can scale with additional trains, we can scale with additional injection and monitoring wells to surface the regional emissions. What you'll notice here in the middle of both of these charts is the big arrow is on the Class VI permitting.
While it's uncertain today, you know, we're really hopeful for the state to get primacy on these Class VI sequestration permits, really to help with the enhanced resources to expedite the timing here. If we're going to be addressing emissions at a global scale, and we want to be really making an impact here in the U.S., we're gonna need support here to get this done in a timely manner, and to help our customers meet their goals. You know, a lot of them have net zero ambitions out there, and so we're helping them achieve those with these CCS solutions. Okay, one of the top questions we get is. How will this work commercially? How would these economics look like? First, a little bit of setup of how we're thinking about this.
Certainly, there's certain government programs that work as the various incentives, whether it's the tax incentives, the grants, but there's also the voluntary markets. You know, while we don't have a carbon tax in place here in the U.S., many of our neighbors do, and we've already seen some others demonstrate the ability to play in an emerging voluntary carbon market. So there's certainly some incentives there. But what we recognize as we're talking to our customers, in many cases, they wanna do their own capture, which is great, but it's a high cost to them. As we look out at the current 45Q tax code over here, if we are injecting into saline aquifers like we are for this dedicated geological storage, we're working up to a $50 per ton credit.
If you look at this bottom chart, what you see is there's only a few different sub-industries that really work at the $50 when you're talking about natural gas, ethanol, ammonia, those work today inside that $50 target. If you get into a lot more of the emissions, when we're talking about the power sector, the harder to abate cement, coal, that's a lot of our building materials globally, there's some work to be done. That's why we're very hopeful we can get enhancement on this, these climate tax incentives. We certainly saw those proposed in some past legislation that didn't make it in yet, are still optimistic that at some point, we'll get that in and hopefully, certainly before we get to first injection on these projects.
We have a little bit of runway there. The good news is there's lots of bipartisan support to get these things underway. Diving down one more step. As we're approaching these agreements, again, we're very commercial, very customer-facing as far as doing this as CCS as a solution. We're approaching this really in the mindset of a midstream tolling model. As we go and find out how can we help them achieve their net zero goals, we're gonna be out spending a little bit in advance as far as doing some of this early lease acquisition, gathering the data for these Class VI permits, for instance. And then what we'll be needing is to get our volume subscribed.
It's really finding those anchor tenants, if you will, those anchor emissions, to help underwrite these projects and get them signed up. As you know, a lot of these large industrials, they're very highly credit-rated counterparties, so that helps in the financing options. We expect to have the option to do project-level financing for each of these as well. As we build out this service agreement portfolio, we're, you know, what we're really targeting here are these infrastructure midstream-like returns because what we've got here are these long-term contracted cash flows that many of you who deal in infrastructure investing are quite familiar with. Here's a snapshot of where we are today.
We have now amassed a portfolio of more than 800 million metric tons of CO2 pore space or storage across the US Gulf Coast. It's supporting 150 million tons per annum in four industrial regions. What you see is we've got a variety of stakeholders involved, including the State of Texas themselves. I'll briefly touch on each of these. Our first endeavor into CCS was an RFP the Texas General Land Office from the State of Texas put out last year. We partnered up with Carbonvert and went out and made several bids here.
Again, as alluded to earlier, I think a lot of the good technical work that was put forth in here really gave the confidence and one of the reasons we were awarded this bid for 40,000+ contiguous acres starting at the beach and going into the state waters offshore Texas. I'll reemphasize, this is the first and only U.S. offshore CCS location to date. We're thrilled and excited about this, and there's a lot of attention around it. We're continuing to move this ahead, working on FEED, getting all the data for these strat wells. Back to that attention piece. You know, earlier this month, we announced an MOU with Chevron to come in and join ourselves and our partner, Carbonvert.
Just this morning, we announced we closed that transaction in a record 3-week time. Again, really demonstrating our agility here and our attempt to maintain that first-mover advantage in this space because we recognize it's very important to make, to push these projects through. We were excited. We don't have the details here because it was after we had printed these lovely books you have. The consideration was $30 million in cash and $20 million of carry, which carries us through our FID for 50% of the equity. That's a read-through of $100 million on this pre-FID project that's still pretty immature.
It's very exciting to be in this space, and we are thrilled to have Chevron on board, not just their brand and balance sheet, but their wealth of global CCS experience, as we're all doing projects together, so we can learn together and move these and move forward this very important hub for the East Texas region. Late last year, we announced our second project. This is one of those point source projects with Freeport LNG as our sole customer for this project. This will be a full value chain solution, meaning we will actually do the capture for them. Again, pretty straightforward pre-combustion CO2 stream, so we can use some traditional amine on the capture piece. Limited transport because we're basically doing it on-site, and then drill an injection and monitoring well near location.
We're working with one of our technical alliance partners, TechnipFMC, moving out of pre-FEED into FEED and rapidly advancing this project, which we think could potentially be the very first commercial CCS project in the entire United States. That's pretty exciting for us, or at least along the Gulf Coast. With our EnLink guest here, we'll talk some more about the Riverbend project. This is a great area when you think about the Mississippi River Corridor and between Baton Rouge and New Orleans. We're talking more than 80 million tons per annum of regional emissions as it stands today. That's before any other new greenfield investment. Again, a huge prize here with our partners, Storegga and EnLink. Bringing in EnLink was very strategic when you look at what they're bringing.
We obviously have the leases that we've pointed out here and some ROFR acreage surrounding that. They've got that last mile of pipe, more than 4,000 miles of pipe in the region. It's really about being able to leverage what the pieces that each of us can bring to this project, coming at it together, and then approaching the customers together to help rapidly develop these projects. This one's pretty exciting for us. Lastly, Coastal Bend. This is the one we most recently announced earlier this year in partnership and with the lease option with the Port of Corpus Christi themselves. They're very excited about this. We're partnering up here with Howard Energy Partners, another midstream. You can see the footprint of their pipe.
They are also tied in kind of last mile along what's called Refinery Row on the south side of the bay here. It's critical that it's a natural fit for us from a infrastructure footprint, even if it's just the existing right of way that we can leverage to help jumpstart these projects. We'll be working this, and you know, one of the reasons the Port of Corpus Christi is so excited here is we really see CCS as an enabler for new industrial investments and even perhaps blue hydrogen, blue ammonia. We know this is a huge export hub for the U.S. and can continue to grow into new energy sources as well. The main theme across all of this is there's a lot of partnering, a lot of collaboration. We wanna learn fast together.
I'll pause here for what I think we're gonna take a break, but when we come back from break, Bob Ferguson from EnLink will join me on stage, and we'll talk a little bit about that partnering and collaboration.
We'll see everybody again in 5 minutes.
Welcome back, everyone. We're gonna move on to our kind of fireside chat here with Bob Ferguson and Robin. Let's kinda dive right in. Bob and Robin, what advantages positions your company to succeed at a low carbon solution, skill sets, asset relationships, et cetera?
Well, I'll.
Yeah.
I'll start the question. Robin did a great job of covering kind of key components of it as we look at it. You know, we start with kind of four key components to a successful project. First, it's relationships. You know, if you think about it, from our perspective serving the Louisiana Gulf Coast, we own two intrastate pipelines that have been delivering gas for four decades to the same customers, these petrochemical complex that we talk about as our customer. Having a connection with the customer first, having that relationship, and then being able to provide a second connection that takes carbon away is one of the real relationship pieces that you know, we bring to the table.
We also need another relationship, and that's the one we have with Talos, so we can provide a full meal deal to our customers and be able to not only take their carbon away, but put it in the ground. It all starts with relationships. I think the second thing is expertise. When we think about expertise, our company's been running gas treating equipment as a midstream company all its life. 40 years ago, I started designing gas treating equipment as my kind of beginning technical expertise. It's, as Robin said, very proven technology on the capture stuff. That expertise comes through not only in capture, but in delivering and capturing and transporting the CO2. This is not new pipelining. The CO2 transport is something that we've been doing, not only the EOR side, but across, you know, the industry.
CO2 transportation is not different from what we already do. You know, you take those two components and build on it, and the last two are having the right assets. As we mentioned, 4,000 miles of pipeline that cover a 200-mile spread where this second-largest emissions pocket in the U.S. is, you know, not only a great asset, but it's the final piece in its location. Having our pipelines located with the industrial players, and then in our partnership with Talos, we specifically targeted resource that's located on our pipe. That location element plays both in our assets, but in the partnership, what we bring to the table to kind of bring that full package. We think you check those four boxes, and you got the foundation to really build a great business.
Yeah, I spoke to a lot of our advantages earlier. It was really about our expertise in the subsurface. To take it a step further, as we're submitting these Class VI sequestration permits, there's a whole monitoring and verification plan that's required. We're talking about fully characterizing the subsurface, building a model, and then once we start injection, actually history matching that model and kind of proving that we know where that CO2 is migrating over time and validating back to the IRS and our customer that, you know, this CO2 molecule is still now being permanently stored over here in this reservoir. Just marrying those two together, having a fully bundled solution for our customer base is really important, and we're happy to be partnered up.
That's great. Starting with Robin this time. Like, we've seen the term CCS as a service before. Why don't you talk a little bit about how that relates to kind of the partnership alignment, joint venture, and ultimately, customer service?
Yeah, just kind of expanding further what I was just mentioning. We're fully embedded here as equity partners. As we go and present to a customer a term sheet or a plan, it's really a fully baked solution, especially because many of these customers want to do the capture inside their own fence line. They're doing their own FEED studies today, and so they'll do that on their own timeline, but they wanna see that they've got a storage location. They wanna know how it's going to get there, and they'd like to have a flat single fee to do that instead of stacking fees or having to hope that there's multiple pieces of that value chain. It's great when you can put all the pieces together for them and offer that as a single solution.
Bob, you talked a little bit about this before, but why don't you kind of touch on kind of the Riverbend project that we have together in Louisiana and what does that opportunity represent to EnLink?
I think, you know, we touched at the highest level that 80 million tons of CO2 in this proximal location is available today without project expansions. That's across the whole cost curve that Robin put up on the, you know, on the slides here earlier. Today, we're going after the first phase, which is CO2 that is already captured. I think that's the thing people miss. You know, on the ethylene plants that are there, the ammonia plants, they already capture this CO2, but today they're venting it. The first step has been done for, you know, somewhere between 20%-30% of this addressable CO2. All we need to do is have that compressed, convert our pipeline, and then put it in the hole. That's the actionable piece of the, you know, the source that we're going after.
Then we can talk about how that market grows from there. Our focus right now is let's get this easy stuff, and let's get started.
That's great. Kind of similar question to you, Robin, kind of how do you see that as a benefit to Talos as well?
Yeah, I'll just build on that. I think it's really about establishing these hubs, showing that you've got scalability. You can start with phase one and really leverage that existing backbone of infrastructure, but also really being able to very quickly add incremental injection wells. That's not as time-consuming as laying additional brand-new infrastructure. As new emissions become available for us to gather and inject, we can very quickly meet those customer needs and add to the project.
That's great. Can you guys talk a little bit about how's the day-to-day relationship between the two companies, kind of what are we kind of working on together and kind of how's that working?
It's a team. You know, we put the folks in front of the customer as a team, so we can address all of their questions and make sure that we can bring a full solution. Then, you know, as I work with Robin and Bob and the rest of the senior team, we're integrated to try to find solutions.
That's right. I'll just add both on the commercial side as far as drumming up the new business with the customers and with leveraging the existing relationships there, but also on the technical team as we're starting to actually do some of the physical work here and preparing for our first permits and all the various steps that are gonna be needed to get all this pipe in place or.
Yeah.
ready for CO2 service.
Sure. You both already mentioned a little bit of this, but I think the question that's on everybody's mind is, what are the next milestones for the project? What people should be expecting to see kinda coming out in the near future?
Well, you know, as indicated, the teams are in front of the customers today have hard proposals in front of them, and we're waiting for that first emitter to make the decision to dive in. They can't wait forever because this 45Q tax credit expires in 2027. We think that puts a little bit of pressure on them to start thinking about, "Hey, I better do this now. I can't wait around forever." You know, it's where we are in the development. The biggest piece, though, in terms of project timeline, is not us converting our pipelines, it's the permitting side.
Yeah. Before we submit these permit applications, we wanna make sure we've got all the sufficient data which may include drilling a stratigraphy well that we can collect additional core and well logs in the area, again, to help validate that model that we're gonna show for the modeling, for the monitoring aspect that's really key to these permits. We're gonna be out collecting that data now, so by the time we get our permit ready for submission, we've got all the components that's in there. We don't wanna be kicking these permits back and forth.
We wanna make sure we've got a really good data set, and continue to engage early and often with the regulatory bodies, both, at the EPA and even at the state, in hopes that the state of Louisiana can achieve primacy sometime soon. That way, as that process evolves, we won't be starting back over. It'll just be lobbed over to who's taking the lead as we continue to progress these permits.
I'd like to thank Bob for joining us here today. Really appreciate it. Thank you very much.
Good. Thank you.
Yeah. Thanks.
Gonna move on to our kinda last section of the presentation here. Shane is gonna talk to us about our financial principles.
That's great. Thank you, Sergio, and I'd like to join my partners in thanking all of you for joining us today. It's great to see everybody face-to-face again. It's great to see so many familiar faces, and really look forward to joining everybody at the cocktail hour immediately following this. I think I'm the last thing standing between you and Tim's closing remarks and then cocktails. I'm gonna try and keep it crisp, and sort of stay on track here. What I would like to do is try to pull together all the things that we've heard today. You heard Tim talk about strategy and really lay out the vision, how we got started, where we're headed. You heard John really talk about the portfolio and the exciting opportunities that are in there.
You heard Robin talk about the continued accelerated growth of the CCS business for us. I think sometimes watching Robin and her team work is like watching a movie, Fast & Furious because things move so quickly. If you don't believe me, just sign up for our email alerts, and you'll sort of see on a pretty regular basis, they're hitting new stuff. It's exciting time to be there. I think the three themes that you'll see over the next 10 pages or so as we go through here are a couple things. One, on the financial side, keep it simple. John and Robin both have a lot of complexity in the things they do.
I don't necessarily wanna add a lot more complexity on the financial side, the balance side of the balance sheet side of the equation. I try to keep it very simple. I think the one thing we do have in common with what the guys are doing on the operations side is discipline. You'll see that theme kinda roll through there. The second thing that we try to focus on or that you'll see in the next few pages is free cash flow generation. I mean, this is a business that inherently generates a lot of free cash flow, which gives us a lot of optionality for what we do with it on a go-forward basis. We'll talk about how we get there, what those building blocks are.
Then the third thing that I'll hit on in the coming pages is a compelling valuation. I think you'll see that both on a relative basis as well as on an absolute basis in terms of where this company trades today. I hope I get the right buttons here, but yeah, there we go. Starting with the building blocks of this has been consistent really over the 10 years of Talos, certainly as long as I've been at Talos, but really building on four key principles that we have. You know, one is appropriate capital reinvestment into the business, and that reinvestment is always designed with an eye towards building free cash flow.
We adopt and adapt when the commodity price changes to make sure that we're constantly leading to a business plan for the year that generates free cash flow to the business and to the stakeholders of the business. Second thing is maintain low leverage and high liquidity, and you'll see that. The third thing is managing maturity profiles, and when we have opportunities to extend those maturity profiles out, we take advantage of those opportunities and go ahead and do that and continue to push that, push on that. Finally is responsible risk management, and that really has to do. We'll get into the hedge book. Sometimes the hedge book really works for us in a strong way.
Sometimes we take our lumps on that, but we try to be consistent in terms of managing that risk through the cycle. We also take advantage of insurance products as well, and we try to manage any long-term commitments, not have long-term commitments for things like rigs that we may get upside down on if the market moves on us. Turning to the financial highlights, and there's a little mix of the past, the present, and the future as I'll go through it. The first thing, and we'll peel this onion a little bit more in a few minutes, is free cash flow generation. Over the next four years, we anticipate this business, under current market conditions, will generate over $1.5 billion of free cash flow over the period.
On the liquidity side, we have and intend to maintain over half a billion dollars of liquidity, primarily in the form of undrawn RBL, but also as well with a mix of cash. Now, the third thing I just wanna highlight from a financial perspective is over the last 12 months, we've repaid over $160 million of debt or of net debt. I'll tell you, that translates to $2, roughly $2 a share, and I would anticipate that number's gonna continue to grow as we get through the rest of this year.
The fourth thing is we intend to have 1x leverage by year-end, and I think the thing to point out on that 1x leverage or better by year-end is that that's really based on a hedged price and a realized price that when blended together are probably in the low 70s. That's not 1x leverage at $100 a barrel or $100 or greater. That's really $100 a barrel at a blended realized price of about 70-72 dollars a barrel. The final thing we'll get into is this year's capital program. John's talked a lot about the projects specifically.
I think the thing I would highlight financially is of our development or drilling and completion budget, which is about half our budget, about half of that is dedicated to projects that won't come online until 2023 and 2024, really building on that conveyor belt of projects that not just support sort of current year production, but support future year production as well. A lot going on this page. I think the one thing I think you could summarize this page in as we've got a very strong financial position, and it's rapidly getting stronger. Those are the two things that I would make sure that as we leave this page that just keep with you.
Going back to the keep it simple mantra, you'll see our balance sheet's really comprised of our first lien RBL debt and high yield notes. Today, that's roughly one-third, two-thirds between the two. Our RBL facility, I would note recently, was redetermined, and we increased our borrowing base on the RBL from $950 million to $1.1 billion, and we have 14 very supportive banks and great partners to us on the financial side that have been very, very good to us.
On the 2L notes, those have a 12% coupon, which is a little higher than I think we all want, but I would tell you from a trading standpoint, they're recently in the 107.5 area, which leads to a yield of roughly 8.5, 8.75, 8.8%, somewhere in that range. I'll tell you, that's after a little bit of a recent pullback in the high yield bond market. Those were very recently trading about 7.5, 7.75. Again, as we think forward into the future and a refinancing, we're gonna wanna maintain as strong a credit exiting this year as possible.
If I take you to the lower left, net debt to EBITDA, you go back pre-pandemic, we like to live in that 1 to 1.5 times leverage range back pre-pandemic. Yet people would always ask us, what, why is that? Why aren't you going out and you can lever up the balance sheet, buy a big asset? Look, all the peers are at 2.5 times. Well, the thing we found that is, if your margins get cut in half, which they did in the global pandemic, you can get from 1.5 to maybe 2.5 and come back down and survive that very successfully, where we can manage a 1 to a 2.5 if we have to.
We can't manage a 4x, can't manage a 5x, so we never wanted to push that leverage in the past. I'll tell you, we brought that down from 2.7x down to 1.4x. As I said, rapidly approaching 1x. I'll tell you that 1x or less is the new 1x to 1.5x from a Talos perspective. So I think you'll see that fairly prevalent in some of the things that we talk about going forward. On the liquidity side, again, in 2019, we had over $500 million, over half a billion dollars in liquidity fairly consistently. I think as we went through our redetermination about a year ago, we lost a couple of our legacy banks and that came down a bit.
We built that back up to half a billion dollars, and I think you'll continue to see that go higher. The other thing I'd say is on the RBL balance, historically, you probably saw us closer to 50/50 RBL and bond. I think, as we said today, we're probably 1/3 RBL, 2/3 bond. I think going forward, that's another number that you'll see more in the 25/75 or maybe even 20/80 range, but we'll continue to pay that RBL down. At the end of the first quarter, we're at $340 million on our RBL, relatively healthy utilization relative to those commitments and those borrowing bases.
I think if you read through the notes in the, in the Q, I think you'd see we already paid off another $20 million from there, and again, that's gonna be a theme I think you'll continue to hear from us, as we get through the rest of this year. Looking quickly at 2022, I'll just highlight three quick things for you. On production, 60-64 thousand barrels a day, roughly flat to 2021, impacted negatively by 3,000-4,000 BOE per day of downtime.
A big chunk of that is the Helix Producer I, our big floating production unit that we have in the Gulf, and we're going in for our regularly scheduled required maintenance that we have on that for 45-60 days, and so that'll take off roughly 3,000 barrels a day from that. There was also some unplanned third-party downtime that we experienced primarily in the first quarter that we had previously disclosed, and we disclosed most of it before this guidance was announced. I think at the time we announced the guidance, we were probably 30 days of downtime. We ended up with 40, but that's still been absorbed into that production range that we've put out to The Street. On the cost side, a couple things. We had a blowout quarter on the LOE side.
In the first quarter, we ran about $60 million, around $10.50 all in, per BOE produced. That benefited a little bit from that downtime, so the downtime cost us some production, but it saved us some cost. I would say we're still sticking with the full year guidance that we have here. That's gonna probably run closer to the old run rate of 70+ as we go through the rest of the year, plus an additional $20 million of repair and maintenance work that we're doing on the Helix Producer I when it goes into that dry dock. That $20 million will probably be spread relatively evenly among the second and the third quarter while the ship is in dry dock.
On the capital expenditures, for the year, we're at $450 million-$480 million. Again, a couple of things to note in there. You know, one, and we'll get into some more detail, but that's not just E&P capital, that's also Robin and her team's CCS capital. I'd also say that capital program is weighted towards the second half of the year. Again, we spent about $85 million in the first quarter. I think as you get the second quarter results, and we move into the third and fourth quarter, you're gonna see that number a little bit higher. We're still gonna end up landing in that $450-$480 band.
Getting into the 2022 capital program in a little bit more detail and peeling it back. I think one of the things we're really excited about this program is the ability to add some of those higher impact categories that John talked about back to the capital program. I would tell you, in 2020, we had a very exciting program. Two months into that program, we went into a global pandemic. We peeled back the higher risk. We protected the cash flow of the business and the PDP value of the business that Tim talked about. Last year, we started dialing a little bit more in. We had the Puma West project. We went one for one, successful on that discovery. That was very, very exciting.
You know, this year, 2022, you know, you're gonna see a lot more higher impact projects. You see 5-6 up listed on the page. John talked about many of those in his discussion. Why is that important? You know, because it's great with these shorter cycle time projects that add immediate production, can turn it on quickly. What that allows us to do is have more of a conveyor belt that has production built in in 2023, production built in in 2024 for growth as we have success in that particular program. Going to CCS just for a moment here. Robin talked a lot about what they're doing, and again, this is this sort of calculated speed, or sort of controlled turn we're taking here.
You know, we're allocating about $30 million or 5% of the budget for 2022 to the program, and that's probably until we hit some of these FIDs, where you really begin to see both the capital call going up and also the financing options going up, you know, that's probably a healthy run rate to be working at to get some of those early project milestones met. All right, it's the ten-year anniversary, it felt like the right time to put the ten-year production profile on there. It's been really a march of consistent growth over the time period, and that's a mix between some acquisitions and some drilling, really playing into the strategy that Tim talked about early on of trying to really excel at both of those.
You know, 2013, we had about 18,000 barrels a day production with our foundational acquisition. We merged with Stone in 2018. You know, you saw that step up to about 46,000 barrels equivalent per day, moving higher from there, and then last year hitting at about 64,000 barrels a day.
As we sit today, as we go through some of the projects and the reinvestment rate that we talked about that maintains high free cash flow, we think that we can sustainably deliver sort of that low- to mid-single-digit production growth rates in the existing portfolio that we have today, really based on the existing leasehold that we have today, for the foreseeable future. Going to realizations, Tim talked about a lot of the advantages of the Gulf of Mexico as a basin in terms of what it delivered and what it sort of gave us availability to. You know, as you think about LLS, HLS, and Bonito, sort of our three main crude grades, you know, these are grades that have typically traded at a premium to WTI.
Still today, you've got HLS and LLS trading at a premium to WTI, which gives us a distinct advantage as it comes to realizations into margins. I think the other things that come into play in that are the fact that on the offshore, we don't have the severance taxes, we don't have the ad valorem taxes. Frankly, as you see our realized prices flow through our financials, that's after transportation. So that's really, you know, not only you start with a premium price, you know, our after transportation, you end up with a premium to WTI still, which sometimes has been as much as three, four, five dollars a barrel. So a very big advantage on margins and realized pricing. So the hedge book.
Again, we talked about having a consistent policy and wanting to execute on that consistent policy. This is on the lower right. I just wanna highlight, this is a graphic of the history of the company and the hedge realizations that we saw. What you see is really the period from 2015 through 2017, we realized net gains on our hedge book of roughly $400 million. Frankly, as we got into the second quarter of 2020, in sort of the heart of the commodity crisis of the pandemic, we made almost $100 million in that single quarter alone. You see that translate through.
Now, that all feels like a long time ago now when we're sort of having a quarter like we did last quarter, and we're losing roughly $125 million in that quarter. Nonetheless, this shows that interestingly, over time, and I was a little shocked to find this myself, particularly given the fresher quarter seemed to stick in my mind a little more. You know, net of all of that, to date, Talos has pretty much broken even on its hedge book. Sometimes we've been ahead, sometimes we've been behind. I think that'll probably dip a little negative as we get through the rest of this year. Certainly, as we sit at the end of the first quarter, we're roughly break even.
You know, the philosophy we've taken, in addition to sort of protecting, you know, our balance sheet and protecting our drilling commitments in any given year is to really follow, at a minimum, our RBL bank requirements, which currently stand at 50% of PDP production for the next four quarters and at 25% of PDP expected production for then the next two quarters. We'll start to build out really a little bit even as we get beyond there, so that we're not stepping up to a full 25%, as quarter seven becomes quarter six. We also sculpt a little bit for the hurricane months.
What you see for 2022, just so you have it, is the first couple of quarters are gonna be the high quarters hedge-wise in terms of volumes that you see. You'll really begin to see that step down in the third quarter and the fourth quarter, which is gonna be a real benefit to free cash flow for the business. Then you'll see that stay down and continue to move down in 2023, and also see those hedges coming in at much higher prices, really things not quite current market, but much closer to current market. Hedge is a very important part of our business and our risk management strategy.
Getting that $1.5 billion of free cash flow, and you might say, you know, listen, you know, last year, Talos generated $135 million of free cash flow, and that was wonderful. You know, really over the next three, four years, how do you get to $1.5 billion? Because that seems like a big leap. Really, it comes back down to the hedge book that we talked about. Last year, we generated $135 million of free cash flow, but at the same time, we had $290 million of realized losses. Again, that's a 425 annualized pre-hedge rate. As some of this hedge book continues to roll off, you're gonna see that translate through.
If you really wanna see it in terms of a mark-to-market, look at the first quarter results, and you'll see we had $90 million of free cash flow. You know, at the same time, we had about $125 million of hedge losses. For the quarter, that's over $200 million of unhedged free cash flow, and you'll see how we can get to a business as that hedge book rolls off that can generate $1.5 billion of free cash flow over the next three, four years. You know, what does that represent? What is one and a half billion dollars? Well, that represents our entirety of our market cap today.
It represents paying off our debt one and a half times from what our balance is today. There's a lot of options. I'll tell you, just to give a preview, it's consistent with what we said in the past, that essentially our 2022 priorities are gonna continue to be debt repayment as we sort of meet some of those goals we talked about a little bit earlier. We are very big advocates of return of capital policies and have very big ambitions around that after we've met those targets we've set for ourselves. This is the final page that we've got today and sort of a bit of the wrap-up page. How do we pull it all together?
I guess I would summarize it as saying, listen, this is a business that generates, you know, first quartile, if not top decile EBITDA margins on a very consistent basis. You know, that's $59 a barrel that you see in the chart on the upper left. The leverage profile, we think is one of the best, certainly one of the best that didn't put itself in harm's way during the pandemic and the commodity crisis caused by the pandemic. You can see some of the names that maybe had a little bit of financial distress or restructuring in the darker shade there. If you take those away, you know, there's not many that sort of fared the way that we did.
Yet, if I look down the bottom of the page and say, where are we in terms of valuation? On an EBITDA multiple basis, we're roughly 2.7x, about 35%, if you translate that to equity below the industry average. On a price for cash flow basis, we're roughly 2x, about 50% lower than the industry average as well. On a relative basis, we probably have 35%-50% upside just to get back to an industry median or get up to a market level, if you will. At the same time, you think back to those pages that Tim showed earlier in terms of the proved assets, the proved asset value, where we had even at SEC pricing of last year, $4 billion of 1P.
You mark that to market for $80 a barrel oil, get $5 billion of NPV value. Again, we're trading roughly half that today in terms of our enterprise value of our business. We're proud of the business. We think we have a very compelling business plan. We think we've got a simple balance sheet, very easy to understand, and we think we've got a lot of opportunity for our shareholders and our stakeholders going forward. With that, I'll hand it back to Tim.
Hey, look, it's been three hours and I think we did a good job. I really wanna encourage you to join us for a cocktail. You've earned it. I would tell you that, look, we have guests here, Bob Abendschein, who's one of the architects of CCS, and our CEO is here. John Spath, who runs our operations, is here. We have, you know, our team up front. You know, Sergio Maiworm and Jordan from Mayer is here. Our VP of Corporate Development, Gordon Lindsey's here. We have some folks here, and it's meant to be a chance to, you know, ask questions about the business. I think we've all been trained up on Reg FD stuff, so you know you're not gonna squeeze anything out of them. Please hang around. I think it would be good.
You know, I'll leave you with a couple stories, and then I wanna thank everyone for being here. I wanna thank the support staff who made this happen. You know, we went back and forth on should we do this live? Should we just do virtual? There's a big virtual audience and we're glad they joined, but we really wanted to try. I'm glad we tried and I appreciate you coming. A couple quick stories. I was flying United. If you've flown United lately, they talk about, you know, what they're doing from an ESG perspective, and they talk about how important carbon sequestration is. You know, my wife nudged me the other day, she's like, "Is that y'all's stuff?" I'm like, "Well, we're not doing it for United." You know, yeah, look, it's cool.
We're happy that it's cool. You know, everything we do, we think is still important, and we think it's still, you know, pretty cool. I would the other story combined in that is, you know, because we are doing some of that, we are having some interesting, you know, one-on-ones. We had a one-on-one with, I would say, a very large billionaire tech company family office, and they were focused in large low carbon investments and those that are playing in the public space. You know, we met with those guys. Super good meeting. It was fine. A little frustration on their part, I think, not intended, just on I'm thinking about an oil and gas company from a sequestration perspective.
We walked through it and why you need us and why you have to drill a well, put the supercritical fluid in the ground, how it works, and then, you know, while we were having that conversation and talking about tech, you know, we could talk a little bit about deep water and the tech involved in that. It just gave us an opportunity to remind anyone we get a chance to remind that it's all important. What we do on the front end of that, what we saw in the video, and trying to deliver reliable energy from this basin that we think is so important to the country is important. Trying to, you know, protect our communities, protect the planet, you know, lower the overall emissions profile is important. We don't discriminate between that.
We also know what's important to you is making sure we're generating a lot of free cash flow. We have the right level of reinvestment rate. We know that's important to investors that are coming back to the energy space. We wanna build the oil and gas side. We wanna lower our cost of capital. It's been frustrating sometimes being a smaller company, but we're a young company. We've got a long way to go. I would tell you, I think there's probably still employees listening to this. Those back at home, we thank you for listening. We're proud of you. If you are an investor or someone who covers us, thank you.
If you are an investor thinking about the company or thinking about covering us, we would encourage you to ask as many questions as you can, and let us answer those and build your interest because we think there's a great story with great people, and we're proud of what we're doing. Thanks for coming. Again, join us without falling down. Join us for cocktails next door. Thanks, everybody.