TALOS PETROLEUM LLC

9 Apr 2013production update● NeutralMajor

On April 8, 2013 Stone said it had contracted an ENSCO 8500 series deep water rig for the Cardona oil program at Mississippi Canyon 29 (65% working interest, Stone operator), with the first well starting in the second half of 2013 and production projected for late 2014 via tie-back to the Pompano platform. It also reported that the Malachite deep water well (40% non-operated interest, net cost about $22 million) found only marginal hydrocarbons and is being plugged and abandoned. In Appalachia, third-party pipeline failures and a plant outage cut first-quarter net volumes by about 20 MMcfe/d, and about 20 MMcfe/d remains curtailed in the Mary field until a Williams 24-inch line is repaired. First-quarter production guidance of 38-40 MBoe/d is said to remain within range, and the La Cantera third well is expected on production in June 2013.

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8 Nov 2012security holder rights change▲ GoodMajor

Stone closed the $300 million 7.500% Senior Notes due 2022 on November 8, 2012 (maturing November 15, 2022, net proceeds about $288 million), and bought about $136.1 million (68%) of the $200 million 2014 notes in its tender offer, paying about $140.5 million. Holders consented to remove substantially all restrictive covenants and some default provisions from the 2014 notes indenture, and Stone intends to redeem on or about December 17, 2012 any 2014 notes not tendered. This largely resolves the 2014 note refinancing thread, though the tender offer was still open until November 20, 2012 and the redemption of the rest was only intended.

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26 Oct 2012material agreement● NeutralMajor

On October 23, 2012 Stone priced a $300 million offering of 7.500% Senior Notes due 2022 at 98.277% of face (yield 7.750%), guaranteed by Stone Offshore, with closing scheduled for November 8, 2012. Net proceeds of about $288.0 million are to fund the pending tender offer for the 6 3/4% 2014 notes, redeem any 2014 notes not tendered, and cover general corporate purposes. This is the offering announced the day before, and it sets up the replacement of the 2014 subordinated notes with longer-dated debt carrying a higher stated coupon.

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22 Oct 2012debt financing● NeutralMajor

Stone amended its bank credit agreement on October 22, 2012 so that a planned $300 million Senior Notes due 2022 offering will not cut its $400 million borrowing base, and raised its notes basket from $900 million to $1.25 billion through December 31, 2012 (then $1.1 billion). If the $200 million of 6 3/4% 2014 notes are not retired by December 31, 2012, the borrowing base falls by 30% of the unretired amount. Stone also launched a cash tender offer and consent solicitation for any and all of the $200 million 2014 notes and gave preliminary Q3 2012 figures: oil, gas and NGL revenue of about $224-227 million, production of 40,000-42,000 boe/d (above the 38,000-40,000 guidance given after Hurricane Isaac), debt of $811 million and cash of $176 million at September 30. The new notes are meant to fund general purposes, which may include repaying the 2014 notes. This continues the refinancing of the 2014 notes, and it follows the 2012 convertible notes and the cut to a $317.5 million borrowing base, which is now reaffirmed at $400 million with no borrowings and $21 million of letters of credit.

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6 Mar 2012capital raising announcement● NeutralMajor

Stone issued $300 million of 1.75% Senior Convertible Notes on March 6, 2012 (net proceeds about $291.1 million), sold to initial purchasers led by Barclays and Merrill Lynch. The notes are senior unsecured, guaranteed by Stone Offshore, and convert at an initial price of about $42.65 per share (23.4449 shares per $1,000), payable in cash, shares or a mix at Stone's election. Stone paid about $70.83 million for call options and received about $40.17 million for warrants, each covering about 7,033,470 shares (warrant strike $55.91); the call options are meant to reduce dilution on conversion, while the warrants could add dilution if the share price goes above $55.91. The filing text also gives the maturity as March 1, 2012 in one place, which looks like a typo for 2017 (inference; elsewhere it says 2017).

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5 Mar 2012debt financing● NeutralMajor

Stone amended its bank credit agreement on February 28, 2012 so it can issue 1.75% Senior Convertible Notes due 2017 and enter related hedge and warrant deals, and raised its allowed notes basket from $800 million to $900 million. The priced offering was $275 million, with the $25 million over-allotment option exercised in full; once the notes close, the borrowing base automatically falls from $400 million to $317.5 million. At February 27, 2012 Stone had $70 million borrowed and $27.1 million of letters of credit, leaving $302.9 million available. The press release says the roughly $239 million of remaining net proceeds is for general corporate purposes, which may include longer-term financing for the recent Pompano, Wideberth and Appalachian acquisitions and repaying bank borrowings.

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