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Kosmos Energy Announces Third Quarter 2019 Results

November 4, 2019

DALLAS--(BUSINESS WIRE)--Nov 4, 2019--

Kosmos Energy Ltd. (“Kosmos”) (NYSE: KOS) announced today the financial and operating results for the third quarter of 2019. For the quarter, the Company generated net income of $16 million, or $0.04 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated adjusted net income (1) of $17 million or $0.04 per diluted share for the third quarter of 2019.

“Kosmos continued to build momentum in the third quarter with strong free cash flow delivery and exploration success,” said Andrew G. Inglis, chairman and chief executive officer. “At current oil prices we expect to deliver the 2019 free cash flow we set out at our capital markets day in February. Our 2019 drilling program in Mauritania and Senegal has increased the gas initially in place to the top end of our 50-100 Tcf range. Furthermore, our first infrastructure-led exploration well in Equatorial Guinea was successful and we expect this to further enhance the value of our Equatorial Guinea acquisition.”

It should be noted that beginning with the first quarter 2019, the results include the impact of proportionately consolidating the Equatorial Guinea results. Prior quarters exclude this impact and only include the minority interest gain or loss in the bottom line. In addition, the prior year quarter includes only a partial quarter from the Gulf of Mexico acquisition, which did not close until mid-September 2018.

THIRD QUARTER 2019 HIGHLIGHTS

At quarter end, the Company was in a net underlift position of approximately 1.2 million barrels of oil.

Third quarter results included a mark-to-market gain of $27 million related to the Company’s oil derivative contracts. As of the quarter end and including recently executed hedges, Kosmos has approximately 15.1 million barrels of oil hedged covering 2019 through 2020 including Brent, WTI, and LLS based hedges.

Kosmos exited the third quarter of 2019 with approximately $704 million of liquidity, total debt of $2.15 billion, and $1.93 billion of net debt.

OPERATIONAL UPDATE

Total net production in the third quarter of 2019 averaged approximately 68,800 barrels of oil equivalent per day (boepd) (2).

Ghana

During the third quarter of 2019, net production from Ghana averaged approximately 31,500 barrels of oil per day (bopd). As forecast, Kosmos lifted three cargoes from Ghana during the third quarter. The Jubilee gas enhancement work program originally scheduled for the fourth quarter of 2019 has been deferred by the operator to the first quarter of 2020.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 11,500 bopd net in the third quarter of 2019 and Kosmos lifted the forecast one cargo from Equatorial Guinea during the quarter.

In late October, the S-5 well was drilled to target depth, encountering approximately 39 meters of net oil pay in good-quality Santonian reservoir. The S-5 well was fast-tracked based on new 3D seismic acquired in 2018 and was Kosmos’ first infrastructure-led exploration (ILX) well drilled in Equatorial Guinea. The well is located within tieback range of the Ceiba FPSO and work is currently ongoing to establish the scale of the discovered resource and evaluate the optimal development solution. The well was drilled in approximately 800 meters of water to a total measured depth of around 4,400 meters.

U.S. Gulf of Mexico

U.S. Gulf of Mexico production averaged approximately 25,800 boepd net (82% oil) during the third quarter, exceeding the high end of the guidance range despite experiencing downtime from Hurricane Barry equivalent to approximately 1,500 boepd for the quarter. The strong third quarter production was driven primarily by Odd Job, capitalizing upon spare capacity aboard Delta House, as well as initial production from Gladden Deep, the first successful well in the 2019 ILX program in the basin.

The Moneypenny prospect was drilled in Mississippi Canyon Block 214 in late October 2019 and was unsuccessful. The well, which was targeting net resources of approximately 9 million barrels of oil equivalent, was designed as an inexpensive exploration tail of the Odd Job development well and cost around $3.5 million.

Kosmos was an active participant in U.S. Gulf of Mexico Lease Sale 253 in August, and was subsequently awarded the four deepwater blocks upon which it was previously deemed to be the high bidder.

Mauritania & Senegal

The Greater Tortue Ahmeyim project located offshore Mauritania and Senegal remains on track with progress being made across all Phase 1 project areas including subsea, FLNG vessel, HUB Terminal, and FPSO vessel. Overall, Phase 1 of the Tortue project is approximately 15 percent complete. Pre-FEED work is ongoing for Phases 2 and 3 and these next phases are expected to expand capacity of this hub to almost 10 MTPA of LNG for export.

In September, Kosmos announced that the Yakaar-2 appraisal well encountered approximately 30 meters of net gas pay in similar high-quality Cenomanian reservoir to the Yakaar-1 exploration well. The results of the Yakaar-2 well underpin Kosmos’ view that the Yakaar-Teranga resource base is world-scale and has the potential to support an LNG project that provides significant volumes of natural gas to both domestic and export markets. Development of Yakaar-Teranga is expected in a phased approach with Phase 1 providing domestic gas and data to optimize the development of future phases. It will also support the country’s “Plan Emergent Senegal” launched by the President of Senegal in 2014.

In October, Kosmos announced that the Orca-1 exploration well made a major gas discovery offshore Mauritania in the BirAllah area. The results continue the 100 percent success rate from nine wells targeting the inboard gas trend in Mauritania/Senegal. The Orca-1 well, which targeted a previously untested Albian play, exceeded pre-drill expectations encountering 36 meters of net gas pay in excellent quality reservoirs. In addition, the well extended the Cenomanian play fairway by confirming 11 meters of net gas pay in a down-structure position relative to the original Marsouin-1 discovery well, which was drilled on the crest of the anticline. The location of Orca-1, approximately 7.5 kilometers from the crest of the anticline, proved both the structural and stratigraphic trap of the Orca prospect, which we estimate has a mean gas initially in place (GIIP) of 13 TCF. In total, we believe that Orca-1 and Marsouin-1 have de-risked up to 50 TCF of GIIP from the Cenomanian and Albian plays in the BirAllah area, more than sufficient resource to support a world-scale LNG project. In addition, a deeper, untested Aptian play has also been identified within the area and surrounding structures.

(1) A Non-GAAP measure, see attached reconciliation of non-GAAP measure
(2) Production means net entitlement volumes. In Ghana and Equatorial Guinea, this means those volumes net to Kosmos’ working interest or participating interest and net of royalty or production sharing contract effect. In the Gulf of Mexico, this means those volumes net to Kosmos’ working interest and net of royalty.

Conference Call and Webcast Information

Kosmos will host a conference call and webcast to discuss second quarter 2019 financial and operating results today at 10:00 a.m. Central time (11:00 a.m. Eastern time). A live webcast of the event and slides can be accessed on the Investors page of Kosmos’ website at http://investors.kosmosenergy.com/investor-events. The dial-in telephone number for the call is +1.877.407.3982. Callers outside the United States should dial +1.201.493.6780. A replay of the webcast will be available on the Investors page of Kosmos’ website for approximately 90 days following the event.

About Kosmos Energy

Kosmos is a full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal. We also maintain a sustainable exploration program balanced between proven basin infrastructure-led exploration (Equatorial Guinea and U.S. Gulf of Mexico), emerging basins (Mauritania, Senegal and Suriname) and frontier basins (Cote d’Ivoire, Namibia and Sao Tome and Principe). Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. As an ethical and transparent company, Kosmos is committed to doing things the right way. The Company’s Business Principles articulate our commitment to transparency, ethics, human rights, safety and the environment. Read more about this commitment in the Kosmos 2018 Corporate Responsibility Report. For additional information, visit www.kosmosenergy.com.

Non-GAAP Financial Measures

EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt are supplemental non-GAAP financial measures used by management and external users of the Company’s consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines EBITDAX as Net income (loss) plus (i) exploration expense, (ii) depletion, depreciation and amortization expense, (iii) equity based compensation expense, (iv) unrealized (gain) loss on commodity derivatives (realized losses are deducted and realized gains are added back), (v) (gain) loss on sale of oil and gas properties, (vi) interest (income) expense, (vii) income taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts expense and (x) similar other material items which management believes affect the comparability of operating results. The Company defines Adjusted net income (loss) as Net income (loss) adjusted for certain items that impact the comparability of results. The Company defines free cash flow as net cash provided by operating activities less Oil and gas assets, Other property, Change in restricted cash, and certain other items that may affect the comparability of results. The Company defines net debt as the sum of notes outstanding issued at par and borrowings on the Facility and Corporate revolver less cash and cash equivalents and restricted cash.

We believe that EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, Net debt and other similar measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the oil and gas sector and will provide investors with a useful tool for assessing the comparability between periods, among securities analysts, as well as company by company. EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt as presented by us may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Kosmos expects, believes or anticipates will or may occur in the future are forward-looking statements. Kosmos’ estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Kosmos believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to Kosmos. When used in this press release, the words “anticipate,” “believe,” “intend,” “expect,” “plan,” “will” or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Kosmos, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Kosmos’ Securities and Exchange Commission (“SEC”) filings.Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

 

Kosmos Energy Ltd.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Revenues and other income:

 

 

 

 

 

 

 

 

Oil and gas revenue

 

$

357,036

 

 

$

242,833

 

 

$

1,049,759

 

 

$

585,220

 

Gain on sale of assets

 

 

 

7,666

 

 

 

 

7,666

 

Other income, net

 

(66

)

 

(280

)

 

(65

)

 

(17

)

Total revenues and other income

 

356,970

 

 

250,219

 

 

1,049,694

 

 

592,869

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Oil and gas production

 

95,540

 

 

55,078

 

 

266,316

 

 

151,661

 

Facilities insurance modifications, net

 

12,569

 

 

12,334

 

 

(5,174

)

 

21,812

 

Exploration expenses

 

22,773

 

 

148,238

 

 

83,022

 

 

246,912

 

General and administrative

 

24,723

 

 

25,963

 

 

88,703

 

 

65,343

 

Depletion, depreciation and amortization

 

146,653

 

 

80,041

 

 

416,186

 

 

208,607

 

Interest and other financing costs, net

 

30,721

 

 

23,549

 

 

125,565

 

 

68,113

 

Derivatives, net

 

(27,016

)

 

57,357

 

 

35,884

 

 

236,107

 

Gain on equity method investments, net

 

 

 

(24,841

)

 

 

 

(59,637

)

Other expenses, net

 

11,472

 

 

(12,807

)

 

11,798

 

 

(8,164

)

Total costs and expenses

 

317,435

 

 

364,912

 

 

1,022,300

 

 

930,754

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

39,535

 

 

(114,693

)

 

27,394

 

 

(337,885

)

Income tax expense (benefit)

 

23,470

 

 

11,364

 

 

47,398

 

 

(58,329

)

Net income (loss)

 

$

16,065

 

 

$

(126,057

)

 

$

(20,004

)

 

$

(279,556

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.04

 

 

$

(0.31

)

 

$

(0.05

)

 

$

(0.70

)

Diluted

 

$

0.04

 

 

$

(0.31

)

 

$

(0.05

)

 

$

(0.70

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used to compute net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

401,466

 

 

404,536

 

 

401,319

 

 

399,026

 

Diluted

 

410,992

 

 

404,536

 

 

401,319

 

 

399,026

 

 

 

Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 

 

 

September 30,

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

203,646

 

 

$

173,515

 

Receivables, net

 

129,037

 

 

140,006

 

Other current assets

 

217,345

 

 

196,179

 

Total current assets

 

550,028

 

 

509,700

 

 

 

 

 

 

Property and equipment, net

 

3,799,036

 

 

3,459,701

 

Other non-current assets

 

119,195

 

 

118,788

 

Total assets

 

$

4,468,259

 

 

$

4,088,189

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

171,495

 

 

$

176,540

 

Accrued liabilities

 

292,419

 

 

195,596

 

Other current liabilities

 

8,461

 

 

12,172

 

Total current liabilities

 

472,375

 

 

384,308

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, net

 

2,106,202

 

 

2,120,547

 

Deferred tax liabilities

 

678,808

 

 

477,179

 

Other non-current liabilities

 

319,844

 

 

164,677

 

Total long-term liabilities

 

3,104,854

 

 

2,762,403

 

 

 

 

 

 

Total stockholders’ equity

 

891,030

 

 

941,478

 

Total liabilities and stockholders’ equity

 

$

4,468,259

 

 

$

4,088,189

 

 

Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flow

(In thousands, unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2019

 

2018

 

2019

 

2018

Operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

16,065

 

 

$

(126,057

)

 

$

(20,004

)

 

$

(279,556

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depletion, depreciation and amortization

 

148,938

 

 

82,387

 

 

423,160

 

 

215,676

 

Deferred income taxes

 

(13,110

)

 

(2,219

)

 

(69,840

)

 

(84,095

)

Unsuccessful well costs

 

262

 

 

70,294

 

 

7,361

 

 

114,948

 

Change in fair value of derivatives

 

(31,683

)

 

54,267

 

 

34,003

 

 

232,057

 

Cash settlements on derivatives, net(1)

 

(3,657

)

 

(46,484

)

 

(24,701

)

 

(102,705

)

Equity-based compensation

 

9,450

 

 

8,890

 

 

27,382

 

 

25,975

 

Gain on sale of assets

 

 

 

(7,666

)

 

 

 

(7,666

)

Loss on extinguishment of debt

 

 

 

268

 

 

24,794

 

 

4,324

 

Distributions in excess of equity in earnings

 

 

 

1

 

 

 

 

5,235

 

Other

 

2,183

 

 

788

 

 

9,600

 

 

1,237

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Net changes in working capital

 

49,438

 

 

55,345

 

 

(11,479

)

 

(35,183

)

Net cash provided by operating activities

 

177,886

 

 

89,814

 

 

400,276

 

 

90,247

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Oil and gas assets

 

(87,374

)

 

(56,655

)

 

(240,642

)

 

(149,305

)

Other property

 

(3,061

)

 

(745

)

 

(8,291

)

 

(3,560

)

Acquisition of oil and gas properties, net of cash acquired

 

 

 

(961,764

)

 

 

 

(961,764

)

Return of investment from KTIPI

 

 

 

62,658

 

 

 

 

142,628

 

Proceeds on sale of assets

 

 

 

13,703

 

 

 

 

13,703

 

Notes receivable from partners

 

(13,582

)

 

 

 

(19,565

)

 

 

Net cash used in investing activities

 

(104,017

)

 

(942,803

)

 

(268,498

)

 

(958,298

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Borrowings on long-term debt

 

 

 

1,000,000

 

 

175,000

 

 

1,000,000

 

Payments on long-term debt

 

(25,000

)

 

(75,000

)

 

(325,000

)

 

(175,000

)

Net proceeds from issuance of senior notes

 

 

 

 

 

641,875

 

 

 

Redemption of senior secured notes

 

 

 

 

 

(535,338

)

 

 

Purchase of treasury stock

 

 

 

 

 

(1,983

)

 

(17,695

)

Dividends

 

(18,158

)

 

 

 

(54,447

)

 

 

Deferred financing costs

 

(462

)

 

(11,002

)

 

(2,443

)

 

(36,745

)

Net cash provided by (used in) financing activities

 

(43,620

)

 

913,998

 

 

(102,336

)

 

770,560

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

30,249

 

 

61,009

 

 

29,442

 

 

(97,491

)

Cash, cash equivalents and restricted cash at beginning of period

 

184,809

 

 

146,486

 

 

185,616

 

 

304,986

 

Cash, cash equivalents and restricted cash at end of period

 

$

215,058

 

 

$

207,495

 

 

$

215,058

 

 

$

207,495

 

_____________________________________

(1) 

Cash settlements on commodity hedges were $(8.3) million and $(50.0) million for the three months ended September 30, 2019 and 2018, respectively, and $(27.0) million and $(107.3) million for the nine months ended September 30, 2019 and 2018, respectively.

   

Kosmos Energy Ltd.

Equity Method Investment

(In thousands, unaudited)

   

 

 

Three months ended

 

Nine months ended

 

 

September 30, 2018

 

September 30, 2018

Revenues and other income:

 

 

 

 

Oil and gas revenue

 

$

215,408

 

 

$

600,158

 

Other income

 

(72

)

 

44

 

Total revenues and other income

 

215,336

 

 

600,202

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

Oil and gas production

 

40,334

 

 

115,366

 

Depletion and depreciation

 

33,044

 

 

108,996

 

Other expenses, net

 

(58

)

 

(211

)

Total costs and expenses

 

73,320

 

 

224,151

 

 

 

 

 

 

Income before income taxes

 

142,016

 

 

376,051

 

Income tax expense

 

50,796

 

 

134,047

 

Net income

 

$

91,220

 

 

$

242,004

 

 

 

 

 

 

Kosmos' share of net income

 

$

45,610

 

 

$

121,002

 

Basis difference amortization(1)

 

20,769

 

 

61,365

 

Equity in earnings - KTIPI

 

$

24,841

 

 

$

59,637

 

_____________________________________

 (1)The basis difference, which is associated with oil and gas properties and subject to amortization, has been allocated to the Ceiba Field and Okume Complex. We amortized the basis difference using the unit-of-production method.
 

Kosmos Energy Ltd.

EBITDAX

(In thousands, unaudited)

 

 

Three Months Ended

 

Three Months Ended

 

September 30, 2019

 

September 30, 2018

 

Kosmos

 

Kosmos

 

Equatorial
Guinea (Equity
Method)(1)

 

Total

Net income (loss)

$

16,065

 

 

$

(126,057

)

 

$

24,841

 

 

$

(101,216

)

Exploration expenses

22,773

 

 

148,238

 

 

 

 

148,238

 

Facilities insurance modifications, net

12,569

 

 

12,334

 

 

 

 

12,334

 

Depletion, depreciation and amortization

146,653

 

 

80,041

 

 

37,291

 

 

117,332

 

Equity-based compensation

9,450

 

 

8,890

 

 

 

 

8,890

 

Derivatives, net

(27,016

)

 

57,357

 

 

 

 

57,357

 

Cash settlements on commodity derivatives

(8,325

)

 

(49,994

)

 

 

 

(49,994

)

Inventory impairment and other

9,981

 

 

(2

)

 

 

 

(2

)

Disputed charges and related costs

1,677

 

 

(12,682

)

 

 

 

(12,682

)

Gain on sale of assets

 

 

(7,666

)

 

 

 

(7,666

)

Gain on equity method investment - KTIPI

 

 

(24,841

)

 

 

 

(24,841

)

Interest and other financing costs, net

30,721

 

 

23,549

 

 

 

 

23,549

 

Income tax expense (benefit)

23,470

 

 

11,364

 

 

25,398

 

 

36,762

 

EBITDAX

$

238,018

 

 

$

120,531

 

 

$

87,530

 

 

$

208,061

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

Nine months ended

 

September 30, 2019

 

September 30, 2018

 

Kosmos

 

Kosmos

 

Equatorial
Guinea (Equity
Method)(2)

 

Total

Net income (loss)

$

(20,004

)

 

$

(279,556

)

 

$

59,637

 

 

$

(219,919

)

Exploration expenses

83,022

 

 

246,912

 

 

 

 

246,912

 

Facilities insurance modifications, net

(5,174

)

 

21,812

 

 

 

 

21,812

 

Depletion, depreciation and amortization

416,186

 

 

208,607

 

 

115,862

 

 

324,469

 

Equity-based compensation

27,382

 

 

25,975

 

 

 

 

25,975

 

Derivatives, net

35,884

 

 

236,107

 

 

 

 

236,107

 

Cash settlements on commodity derivatives

(27,017

)

 

(107,259

)

 

 

 

(107,259

)

Inventory impairment and other

10,168

 

 

(7

)

 

 

 

(7

)

Disputed charges and related costs

1,663

 

 

(9,721

)

 

 

 

(9,721

)

Gain on sale of assets

 

 

(7,666

)

 

 

 

(7,666

)

Gain on equity method investment - KTIPI

 

 

(59,637

)

 

 

 

(59,637

)

Interest and other financing costs, net

125,565

 

 

68,113

 

 

 

 

68,113

 

Income tax expense (benefit)

47,398

 

 

(58,329

)

 

67,024

 

 

8,695

 

EBITDAX

$

695,073

 

 

$

285,351

 

 

$

242,523

 

 

$

527,874

 

 

Twelve Months Ended

 

September 30, 2019

 

Kosmos

 

Equatorial
Guinea (Equity
Method)(2)

 

Total

Net income (loss)

$

165,561

 

 

$

13,244

 

 

$

178,805

 

Exploration expenses

137,602

 

 

352

 

 

137,954

 

Facilities insurance modifications, net

(20,031

)

 

 

 

(20,031

)

Depletion and depreciation

537,414

 

 

19,120

 

 

556,534

 

Equity-based compensation

36,637

 

 

 

 

36,637

 

Derivatives, net

(231,653

)

 

 

 

(231,653

)

Cash settlements on commodity derivatives

(56,811

)

 

 

 

(56,811

)

Inventory impairment and other

10,463

 

 

 

 

10,463

 

Disputed charges and related costs

1,631

 

 

 

 

1,631

 

Gain on equity method investment - KTIPI

(13,244

)

 

 

 

(13,244

)

Interest and other financing costs, net

158,628

 

 

 

 

158,628

 

Income tax expense

148,858

 

 

11,467

 

 

160,325

 

EBITDAX

$

875,055

 

 

$

44,183

 

 

$

919,238

 

_____________________________________

(1)

For the three and nine months ended September 30, 2018 we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment as we accounted for such investment under the equity method during this period.

 (2)

For the twelve months ended September 30, 2019, we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment through December 31, 2018, as we accounted for such investment under the equity method through this date.

 

Kosmos Energy Ltd.

Adjusted Net Income

(In thousands, except per share amounts, unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

16,065

 

 

$

(126,057

)

 

$

(20,004

)

 

$

(279,556

)

 

 

 

 

 

 

 

 

Derivatives, net

(27,016

)

 

57,357

 

 

35,884

 

 

236,107

 

Cash settlements on commodity derivatives

(8,325

)

 

(49,994

)

 

(27,017

)

 

(107,259

)

Gain on sale of assets

 

 

(7,666

)

 

 

 

(7,666

)

Facilities insurance modifications, net

12,569

 

 

12,334

 

 

(5,174

)

 

21,812

 

Inventory impairment and other

9,981

 

 

(2

)

 

10,168

 

 

(7

)

Disputed charges and related costs

1,677

 

 

(12,682

)

 

1,663

 

 

(9,721

)

Impairment of suspended well costs

 

 

57,772

 

 

 

 

57,772

 

Loss on extinguishment of debt

 

 

268

 

 

24,794

 

 

4,324

 

Total selected items before tax

(11,114

)

 

57,387

 

 

40,318

 

 

195,362

 

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

11,594

 

 

(22,798

)

 

(4,980

)

 

(64,446

)

Adjusted net income (loss)

$

16,545

 

 

$

(91,468

)

 

$

15,334

 

 

$

(148,640

)

 

 

 

 

 

 

 

 

Net income (loss) per diluted share

$

0.04

 

 

$

(0.31

)

 

$

(0.05

)

 

$

(0.70

)

 

 

 

 

 

 

 

 

Derivatives, net

(0.06

)

 

0.14

 

 

0.09

 

 

0.59

 

Cash settlements on commodity derivatives

(0.02

)

 

(0.12

)

 

(0.07

)

 

(0.27

)

Gain on sale of assets

 

 

(0.02

)

 

 

 

(0.02

)

Facilities insurance modifications, net

0.03

 

 

0.03

 

 

(0.01

)

 

0.05

 

Inventory impairment and other

0.02

 

 

 

 

0.03

 

 

 

Disputed charges and related costs

 

 

(0.03

)

 

 

 

(0.03

)

Impairment of suspended well costs

 

 

0.14

 

 

 

 

0.13

 

Loss on extinguishment of debt

 

 

 

 

0.06

 

 

0.01

 

Total selected items before tax

(0.03

)

 

0.14

 

 

0.10

 

 

0.46

 

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

0.03

 

 

(0.06

)

 

(0.01

)

 

(0.15

)

Adjusted net income (loss) per diluted share

$

0.04

 

 

$

(0.23

)

 

$

0.04

 

 

$

(0.39

)

 

 

 

 

 

 

 

 

Weighted average number of diluted shares

410,992

 

 

404,536

 

 

401,319

 

 

399,026

 

_____________________________________

(1)

Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rates for the U.S. and Ghana/Equatorial Guinea are 21% and 35%, respectively.

 

Kosmos Energy Ltd.

Free Cash Flow

(In thousands, unaudited)

 

 

Three months ended

 

Nine months ended

 

September 30, 2019

 

September 30, 2019

Reconciliation of net cash provided by operating activities to free cash flow:

 

 

 

Net cash provided by operating activities

$

177,886

 

 

$

400,276

 

Net cash used in investing activities

(104,017

)

 

(268,498

)

Other cash used in financing activities(1)

(461

)

 

(22,888

)

Change in restricted cash

(3,512

)

 

688

 

Free cash flow (before dividends)

$

69,896

 

 

$

109,578

 

_____________________________________

(1) 

Amounts consist of costs related to the redemption of the senior secured notes, issuance of senior notes and other long-term debt and the purchase of treasury stock.

 

Operational Summary (1)

(In thousands, except barrel and per barrel data, unaudited)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2019

 

2018

 

2019

 

2018

Net Volume Sold

 

 

 

 

 

 

 

Oil (MMBbl)

 

 

 

 

 

 

 

Kosmos

5.698

 

 

3.247

 

 

16.239

 

 

8.076

 

Equity method investment - Equatorial Guinea

 

 

1.448

 

 

 

 

4.278

 

Total Oil (MMBbl)

5.698

 

 

4.695

 

 

16.239

 

 

12.354

 

Gas (MMcf)

1.189

 

 

0.309

 

 

4.653

 

 

0.309

 

NGL (MMBbl)

0.142

 

 

0.024

 

 

0.393

 

 

0.024

 

Total (MMBoe)

6.038

 

 

4.771

 

 

17.408

 

 

12.430

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Oil sales:

 

 

 

 

 

 

 

Kosmos

$

351,537

 

 

$

241,139

 

 

$

1,031,687

 

 

$

583,526

 

Equity method investment - Equatorial Guinea

 

 

107,704

 

 

 

 

300,079

 

Total Oil sales

351,537

 

 

348,843

 

 

1,031,687

 

 

883,605

 

Gas sales

3,969

 

 

0.975

 

 

11,776

 

 

0.975

 

NGL sales

1,530

 

 

0.719

 

 

6,296

 

 

0.719

 

Total sales

357,036

 

 

350,537

 

 

1,049,759

 

 

885,299

 

Cash settlements on commodity derivatives

(8,325

)

 

(49,994

)

 

(27,017

)

 

(107,259

)

Realized revenue

$

348,711

 

 

$

300,543

 

 

$

1,022,742

 

 

$

778,040

 

 

 

 

 

 

 

 

 

Oil and Gas Production Costs

 

 

 

 

 

 

 

Kosmos

$

95,540

 

 

$

55,078

 

 

$

266,316

 

 

$

151,661

 

Equity method investment - Equatorial Guinea

 

 

20,167

 

 

 

 

57,683

 

Total oil and gas production costs

$

95,540

 

 

$

75,245

 

 

$

266,316

 

 

$

209,344

 

 

 

 

 

 

 

 

 

Oil sales per Bbl:

 

 

 

 

 

 

 

Kosmos

$

61.69

 

 

$

74.27

 

 

$

63.53

 

 

$

72.25

 

Equity method investment - Equatorial Guinea

 

 

74.38

 

 

 

 

70.14

 

Total Oil sales per Bbl

61.69

 

 

74.30

 

 

63.53

 

 

71.52

 

Gas sales per Mcf

3.34

 

 

3.16

 

 

2.53

 

 

3.16

 

NGL sales per Bbl

10.77

 

 

29.96

 

 

16.02

 

 

29.96

 

Total sales per Boe

59.13

 

 

73.47

 

 

60.30

 

 

71.22

 

Cash settlements on commodity derivatives per oil Bbl(2)

(1.46

)

 

(15.40

)

 

(1.66

)

 

(13.28

)

Realized revenue per Boe(3)

57.75

 

 

62.99

 

 

58.75

 

 

62.59

 

 

 

 

 

 

 

 

 

Oil and gas production costs per Boe:

 

 

 

 

 

 

 

Kosmos

$

15.83

 

 

$

16.57

 

 

$

15.30

 

 

$

18.60

 

Equity method investment - Equatorial Guinea

 

 

$

13.93

 

 

 

 

$

13.48

 

Total oil and gas production costs

15.83

 

 

15.77

 

 

15.30

 

 

16.84

 

_____________________________________

 (1)

For the three and nine months September 30, 2018, we have presented separately our 50% share of the results from operations for the Equatorial Guinea investment, as we accounted for such investment under the equity method during this period.

 (2)

Cash settlements on commodity derivatives are only related to Kosmos and are calculated on a per barrel basis using Kosmos' Net Oil Volumes Sold.

 (3)

Realized revenue includes revenue from Kosmos, Equatorial Guinea (equity method investment), and Cash settlements on commodity derivatives; on a per Boe basis realized revenue is calculated using the total Net Volume Sold from both Kosmos and Equatorial Guinea (equity method investment).

Kosmos was underlifted by approximately 1,202 thousand barrels as of September 30, 2019.
 

Hedging Summary

As of September 30, 2019 (1)

(Unaudited)

 

 

 

 

 

 

 

Weighted Average Price per Bbl

 

 

Index

 

MBbl

 

Floor(2)

 

Sold Put

 

Ceiling

2019:

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

Dated Brent

 

2,628

 

 

$

53.33

 

 

$

43.81

 

 

$

73.57

 

Swaps

 

NYMEX WTI

 

265

 

 

51.61

 

 

 

 

 

Collars

 

Argus LLS

 

250

 

 

60.00

 

 

 

 

88.75

 

2020:

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

Dated Brent

 

6,000

 

 

$

57.50

 

 

$

45.00

 

 

$

80.18

 

Put spread

 

Dated Brent

 

4,000

 

 

58.75

 

 

50.00

 

 

 

Swaps with sold puts

 

Dated Brent

 

2,000

 

 

60.53

 

 

48.75

 

 

 

_____________________________________

(1)

Please see the Company’s filed 10-Q for full disclosure on hedging material. Includes hedging position as of September 30, 2019 and hedges added since quarter-end.

 (2)

“Floor” represents floor price for collars or swaps and strike price for purchased puts.

 
Note: Excludes 0.2 MMBbls of sold (short) calls with a strike price of $80.00 per Bbl in 2019, 8.0 MMBbls of sold (short) calls with a strike price of $85.00 per Bbl in 2020 and 4.0 MMBbls of sold (short) calls with a strike price of $72.50 per Bbl in 2021.
 

2019 Guidance

 

 

FY 2019

 

 

 

 

Production(1,2)

~67,000 boe per day

 

 

 

 

Opex

$12.00 - $15.00 per boe

 

 

 

 

DD&A

$22.00 - $25.00 per boe

 

 

 

 

G&A(3)

$115 - $125 million

 

 

 

 

Exploration Expense

~$30 million average per quarter

 

 

 

 

Net Interest

$35 - $37 million per quarter

 

 

 

 

Tax

$3.00 - $5.00 per boe

 

 

 

 

Capex

$425 - $475 million in FY 2019

_____________________________________

Note: Ghana/EG revenue calculated by number of cargos.
 (1)

4Q 2019 - Ghana: 4 cargos / Equatorial Guinea 1.5 cargos. FY 2019 Ghana: 12 cargos / Equatorial Guinea 5.0 cargos. Average cargo sizes 950,000 barrels of oil.

 (2)

GoM Production - 4Q 2019: 23,000-25,000 boe per day. Oil/Gas/NGL split for 2019: U.S. Gulf of Mexico: 80%/12%/8%.

 (3)

G&A - Approximately 70% cash.

 

View source version on businesswire.com:https://www.businesswire.com/news/home/20191103005040/en/

CONTACT: Investor Relations

Jamie Buckland

+44 (0) 203 954 2831

jbuckland@kosmosenergy.comRhys Williams

+1-214-445-9693

rwilliams@kosmosenergy.comMedia Relations

Thomas Golembeski

+1-214-445-9674

tgolembeski@kosmosenergy.com

KEYWORD: TEXAS EUROPE UNITED STATES UNITED KINGDOM NORTH AMERICA

INDUSTRY KEYWORD: OIL/GAS ENERGY

SOURCE: Kosmos Energy Ltd.

Copyright Business Wire 2019.

PUB: 11/04/2019 02:00 AM/DISC: 11/04/2019 02:00 AM

http://www.businesswire.com/news/home/20191103005040/en