Talos Energy (TALO)

Interest coverage

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	299,872	211,730	463,926	626,249	509,885	584,692	320,161	-77	-51,485	-512,771	-584,198	-656,305	-330,615	7,219	160,567	450,081	120,445	206,109	200,250	113,768
Interest expense (ttm)	US$ in thousands	173,145	162,817	146,445	131,589	125,498	124,633	127,758	130,552	133,138	123,287	115,021	107,641	99,415	100,738	99,737	98,479	97,847	97,130	98,844	95,590
Interest coverage		1.73	1.30	3.17	4.76	4.06	4.69	2.51	-0.00	-0.39	-4.16	-5.08	-6.10	-3.33	0.07	1.61	4.57	1.23	2.12	2.03	1.19

December 31, 2023 calculation

Interest coverage = EBIT (ttm) ÷ Interest expense (ttm)
= $299,872K ÷ $173,145K
= 1.73

The interest coverage ratio of Talos Energy Inc has shown fluctuations over the past eight quarters. The ratio measures the company's ability to meet its interest obligations using its earnings before interest and taxes (EBIT).

In Q4 2023, the interest coverage ratio was 1.19, indicating that the company generated just enough EBIT to cover its interest expenses. This is a concerning level as it suggests a limited buffer to cover interest payments.

The interest coverage improved in the preceding quarters from Q3 2023 to Q1 2023, indicating a better ability to meet interest obligations. The peak in recent periods was seen in Q4 2022 with a ratio of 5.98, suggesting a strong ability to cover interest expenses.

The trend in interest coverage ratios from Q4 2022 to Q1 2023 reflects an improving financial position, but the subsequent decrease in Q2 and Q3 2023 raises some concerns. Management should monitor this ratio closely to ensure the company's financial health and ability to handle debt obligations.