Kosmos Energy (NYSE/LSE: KOS) (“Kosmos” or the “Company”) today
provided an operational update on its production, development and
exploration activities. This is in advance of the Company’s second
quarter results, which are scheduled for release on August 9,
Andrew G. Inglis, Chairman and Chief Executive Officer of Kosmos
said: “Kosmos had a solid second quarter, generating positive cash
flow which reduced net debt by around $100 million, driven by
higher sales volumes, strong operational performance in Ghana and
improving realized oil prices. We continue to see momentum build
across our producing hubs with new wells drilled in Ghana and the
U.S. Gulf of Mexico during the quarter and the arrival of the rig
for development drilling in Equatorial Guinea.
“In Mauritania and Senegal, the Greater Tortue Ahmeyim project
continued to make steady progress during the quarter with key
milestones achieved across all major workstreams. However, we are
seeing cost inflation and supplier delays in the current
environment together with some scope growth and, as a result, we
are updating our estimates, with first gas now expected in the
third quarter of 2023. Tortue is the right project at the right
time with Phases 1 & 2 expected to deliver attractive returns
in a strengthening LNG market.
“Kosmos has an active second half of the year with planned
infill wells in all three hubs supporting our near-term production
growth. We also expect to restart exploration and appraisal
drilling in the U.S. Gulf of Mexico this quarter with the
Winterfell appraisal and Zora ILX wells.
With rising oil prices and a robust financial position, we are
well placed to create shareholder value through the rest of 2021.”
Sales volumes in the second quarter averaged around 66,000
barrels of oil equivalent per day (boepd) with 4.5 cargos lifted,
in line with guidance.
Total net production in the second quarter averaged
approximately 52,000 boepd, slightly below prior guidance primarily
due to lower production in Equatorial Guinea.
Full year company production guidance of 53,000-57,000 boepd is
unchanged with a year-end exit rate of approximately 60,000 boepd
expected as new wells come online.
In Ghana, performance in the quarter was strong with gross
production of approximately 106,000 barrels of oil per day (bopd)
in the second quarter (22,000 bopd net) including 71,000 bopd at
Jubilee and 35,000 bopd at TEN.
The first two wells in our four-well campaign have been drilled
and the rig has now begun completion operations. The first Jubilee
producer well (J-56P) is expected online shortly and the Jubilee
injector well (J-55W) is expected online later in the third
quarter. These wells are expected to add gross production of around
15,000-20,000 bopd. The rig is then scheduled to drill and complete
a TEN gas injector well and a second Jubilee producer well later in
the year with the Jubilee producer well expected online around the
end of the year.
The reliability of the Ghana production facilities continues to
improve, with uptime of the Jubilee and TEN floating production,
storage and offtake vessels (FPSOs) averaging about 98%
Consistently high levels of water injection (>200,000
barrels/day) and gas offtake from the Government of Ghana (>110
mmscf/day) are helping to optimize reservoir performance at
Jubilee, which is expected to support long-term production
In Equatorial Guinea, gross production averaged around 29,000
bopd in the second quarter with significant downtime related to
facilities upgrades which are now substantially complete. Net
production was 9,400 bopd, also impacted by lower entitlement as a
result of higher oil prices. The drilling rig arrived in late June
and has started drilling the first of three infill wells planned
for 2021. Once online, these wells are expected to add gross
production of around 4,000 bopd.
U.S. Gulf of Mexico
In the U.S. Gulf of Mexico, net production averaged around
20,300 boepd in the second quarter, in line with the first quarter.
In April, the Kodiak-3 infill well was brought online with one of
two zones intermittently producing. We are currently working with
our partners to evaluate the best intervention options to enhance
production from the first zone and enable production from the
second zone. In June, the operator announced the successful
drilling of the Tornado-5 infill well, with results consistent with
expectations. The well is expected to add around 8,000-10,000 boepd
gross with planned start-up in the third quarter.
Earlier in the year, Kosmos and its partners made the Winterfell
discovery in the U.S. Gulf of Mexico with the first appraisal well
planned for the third quarter.
Kosmos also plans to drill the Zora infrastructure-led
exploration (ILX) well early in the third quarter and a rig has
been contracted for this activity.
Mauritania & Senegal
The Greater Tortue Ahmeyim (“GTA”) liquified natural gas (LNG)
project has made steady progress year-to-date with the following
milestones achieved in the second quarter:
- Floating LNG vessel: The four remaining sponsons have been
integrated in the final dry dock
- FPSO: The living quarters have been installed
- Breakwater: Five caissons have now been transported offshore
with the first caisson installed
- Subsea: All subsea trees have been constructed
Project partners have received a revised forecast from the EPCIC
contractor, TechnipFMC, that the delivery of the FPSO is likely to
be slightly delayed due to labor shortages at the COSCO yard in
China following a ramp up in activity at the shipyard as the
pandemic recedes. This delay, currently anticipated to be around
three months, is expected to push the timing of first gas to the
third quarter of 2023.
BP, as operator of the GTA project, has informed partners that
due to the impacts of COVID-19 (including the FPSO delay), cost
inflation and scope growth, Phase 1 project costs are expected to
increase. On the basis of the revised schedule, Kosmos currently
expects the gross cost for the project to be approximately 15%
higher, resulting in an estimated increase of Phase 1 costs to
first gas net to Kosmos of around $100 million, coming primarily in
The FPSO sale and lease back transaction is now expected to
close this quarter upon the finalization of the documentation
between the governments and partners. Following the closing of the
FPSO sale and lease back transaction, the company will work to
complete the re-financing of the National Oil Company loans.
In addition, partners continue to make progress on Phase 2 of
the GTA LNG project and we are targeting a final investment
decision in late 2022 as previously communicated.
Following the completion of the $450 million senior notes
issuance in March and the reserve-based lending amendment and
extension in May, Kosmos has a robust financial position and
increased liquidity. At the end of the second quarter, Kosmos had
total liquidity of over $775 million.
The Company is currently around 60% hedged for the remainder of
2021 with growing exposure to higher oil prices as hedges roll off.
We have taken advantage of rising oil prices to hedge 4.5 million
barrels of 2022 production.
1. The Company defines net debt as the sum of notes outstanding
issued at par and borrowings on the RBL Facility and Corporate
revolver less cash and cash equivalents and restricted cash.
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. 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 our Corporate Responsibility
Report. For additional information, visit www.kosmosenergy.com.
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
version on businesswire.com: https://www.businesswire.com/news/home/20210705005310/en/
Investor Relations Jamie Buckland +44 (0) 203 954 2831
firstname.lastname@example.org Media Relations Thomas Golembeski
Kosmos Energy (NYSE:KOS)
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