Kosmos Energy Provides Operational Update
March 17 2020 - 3:00AM
Business Wire
Following the announcement of Kosmos Energy’s (NYSE/LSE: KOS)
full year 2019 results on February 24, 2020, the company is today
providing an operational update.
In response to the current market price volatility, Kosmos is
taking the following actions to maintain balance sheet strength and
preserve flexibility:
- Reduce Capital
Expenditures: At the 4Q19 results, we guided to a 2020
capital budget for our base production business of $325-$375
million. We have identified over $100 million of discretionary
expenditure largely related to exploration activities in the Gulf
of Mexico and our basin-opening exploration portfolio. We are now
targeting to reduce our 2020 capital budget for the base business
by around 30% to under $250 million whilst keeping 2020 production
flat, in line with previous guidance and with minimal expected
impact on 2021 production. The company also has significant
flexibility in its 2021 capital program should current market
conditions persist. In Mauritania & Senegal, we are working
with the Operator to defer 2020 Tortue Phase 1 capital spending
with the goal of extending the carry of our capital obligations
through the end of this year. In addition, our priority remains to
sell down our interests to support a self-funded growing gas
business. Tortue Phases 2 and 3 are expected to take final
investment decision (FID) in mid-2022 and mid-2023 respectively
with minimal capital required ahead of FID with the objective to
project finance both thereafter.
- Reduce Both Operational Expenditures
(Opex) and General and Administrative Costs (G&A) We
plan to implement cost reductions with over $60 million of savings
expected in Opex and G&A in 2020. Whilst a significant portion
of our Opex is fixed, we are targeting a reduction of $1/boe
without impacting asset integrity or near-term production. Through
a reduction in company headcount, no planned cash bonuses for
employees in 2020 and other cost reductions we plan to
significantly reduce cash G&A in 2020.
- Suspend the Dividend Our
priority is to ensure the strength of the balance sheet in the
current market price volatility. The Board has therefore decided to
suspend the dividend after the announced 4Q’19 payment until market
conditions improve. This will provide savings of approximately $75
million annually. As a result of the actions above, and taking into
account the company’s hedging position, Kosmos believes it can be
free cash flow neutral beginning in 2Q and fund all of its
obligations at a $35/bbl Brent price. Full details of the hedging
portfolio can be found in the most recent Form 10-K document or on
the company’s website. The current cash value of the 2020 and 2021
hedges is approximately $100 million and $45 million
respectively.
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, Sao Tome and Principe and
South Africa). 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.
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20200317005201/en/
Investor Relations Jamie Buckland +44 (0) 203 954 2831
jbuckland@kosmosenergy.com
Rhys Williams +1-214-445-9693 rwilliams@kosmosenergy.com
Media Relations Thomas Golembeski +1-214-445-9674
tgolembeski@kosmosenergy.com
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