Cobalt International Energy, Inc. (“Cobalt”) (NYSE:CIE) today
announced a net loss of $186 million, or $6.28 per basic and
diluted share for the second quarter of 2017, compared to a net
loss of $206 million, or $7.52 per basic and diluted share, for the
second quarter of 2016. This decrease in net loss compared to the
same period in 2016 was largely driven by a $113 million reduction
in dry hole costs and impairments offset by a $26 million increase
in interest expense and a $72 million non-cash loss on debt related
embedded derivatives associated with the recently completed debt
exchanges and an increase in the market value of secured debt
during the quarter.
As of June 30, 2017, cash, cash equivalents, short term
investments and restricted cash were approximately $597 million.
This includes $250 million of Angolan sale proceeds received
pursuant to the purchase and sale agreement with Sonangol, but
excludes $159 million in receivables owed to us by Sonangol.
We expect capital expenditures to be approximately $250 million
in 2017, which excludes general and administrative expenses and
interest expense. Of this amount, approximately $206 million has
been spent as of June 30, 2017; however, given that drilling
activities have been completed at Shenandoah, Anchor and North
Platte, cash outlays for capital expenditures are expected to
significantly decrease for the remainder of 2017. Total 2017 cash
outlays are currently expected to be approximately $550 million, of
which approximately $359 million has been spent as of June 30,
2017.
Operational Update
In the deepwater Gulf of Mexico, Cobalt completed its North
Platte #4 Sidetrack 2 operations in May 2017. This well was drilled
approximately one–half mile updip of the North Platte #4 Sidetrack
1 location and encountered approximately 400 feet of high quality
Lower Wilcox pay. In June 2017, Cobalt completed a bypass for core
operation adjacent to the North Platte #4 Sidetrack 2 location and
recovered approximately 200 feet of Lower Wilcox conventional core.
Following the abandonment of the wellbore, the Rowan Reliance rig
was released from operations in late June.
In July 2017, Cobalt entered into an agreement with Chevron and
the other co–owners in the Anchor development to unitize Cobalt’s
two leases immediately south of the existing Anchor unit (Green
Canyon blocks 850 and 851) into such Anchor unit. Cobalt believes
the inclusion of these leases in the Anchor unit will optimize the
development plan and maximize oil recovery from the Anchor
development. The transfer of these interests and the revised Anchor
unit remain subject to customary regulatory approval, following
which Cobalt would retain its 20% working interest in the revised
Anchor unit.
At Shenandoah, Cobalt and its co–owners are continuing to
explore development options for the field. Well planning is
underway for a drilling operation expected in the first six months
of 2018.
Marketing efforts with respect to Cobalt’s Gulf of Mexico assets
continue and it is expected that these efforts will conclude in
late third quarter of 2017.
With regard to Angola, the previously announced arbitration
process between Cobalt and Sonangol is progressing as planned and
currently the arbitral tribunals are being constituted. In
addition, Cobalt recently met with representatives from Sonangol
and the Angolan government and it appears that all parties share a
common goal to resolve this matter amicably. However, until this
matter is resolved in a satisfactory manner, Cobalt will continue
to vigorously prosecute these claims in arbitration and seek all
available remedies.
Conference Call
A conference call for investors will be held today at 9:00 a.m.
Central Time (10:00 a.m. Eastern Time) to discuss Cobalt’s second
quarter 2017 results. Hosting the call will be Timothy J. Cutt,
Chief Executive Officer, and David D. Powell, Chief Financial
Officer.
The call can be accessed live over the telephone by dialing
(877) 407-9039, or for international callers (201) 689-8470. A
replay will be available shortly after the call and can be accessed
by dialing (844) 512-2921 or for international callers (412)
317-6671. The passcode for the replay is 13667710. The replay will
be available until August 22, 2017.
Interested parties may also listen to a simultaneous webcast of
the conference call by accessing the Newsroom-Events & Speeches
section of Cobalt’s website at www.cobaltintl.com. A replay of the
webcast will also be available for approximately 30 days following
the call.
About Cobalt
Cobalt International Energy, Inc. (NYSE: CIE) is an independent
exploration and production company active in the deepwater U.S.
Gulf of Mexico and offshore West Africa. Cobalt was formed in 2005
and is headquartered in Houston, Texas.
Forward-Looking Statements
This press release includes “forward-looking statements” within
the meaning of the federal securities laws, including the safe
harbor provisions of the Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934 — that is,
statements related to future, not past, events. Forward-looking
statements are based on current expectations and include any
statement that does not directly relate to a current or historical
fact. In this context, forward-looking statements often address
Cobalt’s expected future business and financial performance, and
often contain words such as “anticipate,” “believe,” “may,” “will,”
“aim,” “estimate,” “continue,” “intend,” “could,” “expect,” “plan,”
and other similar words. These forward-looking statements involve
certain risks and uncertainties that ultimately may not prove to be
accurate. Actual results and future events could differ materially
from those anticipated in such statements. For further discussion
of risks and uncertainties, individuals should refer to Cobalt’s
SEC filings. Cobalt disclaims any obligation or undertaking, and
does not intend, to update these forward-looking statements to
reflect events or circumstances occurring after this press release,
other than as required by 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.
Consolidated Statement of Operations Information:
Three Months Ended Six Months Ended
June 30, June 30, 2017 2016
2017 2016 (in thousands, except per share
amounts) Oil, natural gas and natural gas liquids revenues
$
13,749
$
3,173
$
23,616
$
4,809
Operating costs and expenses: Seismic and exploration
14,064 9,428 21,083 15,491 Lease operating expenses 3,035 1,702
5,733 2,658 Dry hole costs and impairments 42,486 155,814 279,591
155,389 General and administrative expenses 27,698 22,864 46,624
51,320 Accretion expense 297 102 587 204 Depreciation, depletion
and amortization 10,093 4,289
18,972 7,459 Total operating costs and
expenses 97,673 194,199 372,590
232,521 Operating loss (83,924 )
(191,026 ) (348,974 ) (227,712 ) Other (expense) income,
net: Other income 10,762 – 10,701 4,375 Loss on embedded
derivatives (72,436 ) – (70,530 ) – Interest income 1,771 1,453
3,205 2,791 Interest expense (41,741 ) (15,974 )
(86,225 ) (31,616 ) Total other expense, net
(101,644 ) (14,521 ) (142,849 ) (24,450 )
Net loss $ (185,568 ) $ (205,547 ) $ (491,823 ) $ (252,162 )
Basic and diluted loss per share $ (6.28 ) $ (7.52 ) $
(16.68 ) $ (9.23 ) Weighted average common shares
outstanding (basis and diluted)
29,526
27,338
29,494
27,316
Consolidated Balance Sheet Information:
June 30, December 31, 2017
2016 ($ in thousands) Cash and cash equivalents $ 191,608 $
613,534 Restricted cash 11,274 2,517 Short-term investments 383,766
340,418 Total current assets 798,414 1,147,191 Oil and natural gas
properties 961,849 1,078,885 Total assets 1,774,348 2,230,478 Total
current liabilities 456,178 533,954 Total long-term liabilities
2,644,702 2,537,858 Total stockholders’ equity (29,528,008 and
29,422,864 shares issued and outstanding as of June 30, 2017 and
December 31, 2016, respectively) (1,326,532 ) (841,334 ) Total
liabilities and stockholders’ equity $ 1,774,348 $ 2,230,478
Consolidated Statement of Cash Flows Information:
Six Months Ended June 30, 2017
2016 ($ in thousands)
Net cash (used in) provided by:
Operating activities $ (151,287 ) $ (51,323 ) Investing activities
(251,482 ) 137,109 Financing activities – –
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Cobalt International Energy, Inc.Investor Relations:Aaron
Skidmore, +1 713-457-4426Director, Investor RelationsorMedia
Relations:Lynne L. Hackedorn, +1 713-579-9115Vice President,
Government and Public Affairs