Jeff Robertson: Thank you.
Tim Duncan: Jeff, if you’re ever moving your way down to Galveston in the second quarter and you’re driving down Broadway on your way to the beach, just look left.
Jeff Robertson: Thank you.
Operator: The next question comes from Tim Rezvan with KeyBanc Capital Markets. Please go ahead.
Tim Rezvan: Hey. Good morning folks. Thanks for taking my question. Tim, the $400 million debt reduction it’s a big number. It really sort of validates this acquisition. I was a little surprised there was no commentary on repurchases with a portion of that free cash flow. So I was curious if you could maybe kind of reflect sort of the Board’s thoughts on repurchases. I know you’ve been willing to do it in the past. With shares where they are today, I thought we might see some allocation there, so just any comments would be helpful.
Tim Duncan: Yes. Look, I’ll provide some comments and Sergio can provide some comments. We did those under a 10b-18 and they’re opportunistic at the time. I think doing something more prescriptive than that when you’re really trying to prioritize free cash flow generation and debt repayment isn’t probably the right move as we thought about that both as a management and a Board level. I think can we always continue to do some opportunistic things. We had a $100 million program out there. We used $52 million, but I don’t want to guide to that, that’s a priority. I think our absolute priority is making sure – when you do a transaction like this, making sure you spend those first nine to 12 months getting that balance sheet right back to where you had it.
And I think that’s just the highest priority we can have for right now. And then look, we are happy with our program. Although the reinvestment rate is lower, we like reinvesting in the business. We’ve reserved the right to always be opportunistic. I think just from a pure prioritization standpoint, debt repayment is it.
Tim Rezvan: Okay. Yes, that makes sense. Thanks. And then as my follow-up, I noticed in the release and in the presentation not a lot of commentary on Zama. We’ve heard from Pemex recently that they are pushing development until the end of 2024 or 2025. So I was curious if you could give us any update on what your understanding of that time line is today.
Tim Duncan: Yes. Look, I think it’s a project that – I’m always tend to have to guide it because it just had so many delays. But – and I know it’s frustrating for people following the company, and I can promise you it’s frustrating for me. But I would say the project is in a better spot. This is a project that we were operating, then obviously Pemex was operating and we were trying to make sure we had a spot of influence within that structure. And it’s not a secret that we were working hard on how to create that influence. Now we have Grupo Carso and they’re helping as well. And they bring a certain level of expertise. That’s an enormous industrial player in the Mexico sector. So I think this has to do with really getting the right plan in place and looking at the optionality within that plan, some of the engineering design work has taken a little longer.
But it’s at a place of effort to get it right. And I’m okay with that, and I’m okay with, and I certainly am thrilled with the partner that we brought in, in Talos Mexico as a co-owner of that business is that subsidiary in Grupo Carso. So it’s delayed, but I think it’s delayed for the right reasons. I think it’s delayed for the benefit of the project. I don’t love it, and I think we’ve actually got a couple of other options that we’re looking at, but I think it will yield the best results. And so again – look at a year honestly where I’m trying to generate as much free cash flow as I can and show the market that these Gulf of Mexico companies can be significant free cash flow yield players, putting – taking a little more time to get it right is probably okay as well.
Tim Rezvan: Okay. So no CapEx this year towards Zama?
Tim Duncan: There’s some CapEx. Look, there’s some real work happening. There’s some real engineering design work. There’s still an outside chance this could move in a little bit into 2024, but I don’t think we have to guide a material amount of CapEx and I think that’s what you saw in the breakdown of our guidance.
Tim Rezvan: Okay. I appreciate the color. Thank you.
Tim Duncan: You got it.
Operator: The next question comes from Jeff Robertson with Water Tower Research. Please go ahead.
Jeff Robertson: Thanks. Tim, just a question on TLCS, are there any regulatory hurdles that might be cleared in the next six to nine months that would impact the type of valuation that the strategic alternative process could generate?
Tim Duncan: I don’t think there are. There’s a couple of general regulatory discussions related to any potential M&A, but I don’t think we have that here. But Robin, can you think of any?
Robin Fielder: Yes. Just the main updates we provided last quarter was that we’ve got – submitted permits over at our Harvest Bend project in East Louisiana for three wells in our White Castle project that were deemed administratively complete by the EPA late last year. Since then, the State of Louisiana has received primacy, so they now have jurisdiction over those permits. And so they’re now sitting with the state regulatory body, The Louisiana Department of Energy and Natural Resources, who is now looking at it. They’ve got all the applications out on their website. And so we’re pleased with that process and look forward to moving into technical review discussions with them. So that’s all been positive. And then operationally, as you know we’re drilling a couple of wells there with our Bayou Bend partners in that project.
Tim Duncan: Yes. I mean, I think for operationally, the business is moving really at its fastest pace ever, I would tell you, both from a Bayou Bend perspective and the well that we’re drilling there, one of the first offshore dedicated injection wells right off the coast of Jefferson County. Chevron is teeing up to drill some wells onshore. We have the permits progressing in Louisiana. We have promise in Louisiana. So there’s a lot of positive movement which, of course, I think, led to that optionality as well. So I don’t want to dismiss the fact that, that business is moving at a full pace. But to answer your question, I can’t pick up the top of my head the right [ph] hurdles.
