Kosmos Energy Ltd. (“Kosmos”) (NYSE: KOS) announced today
financial and operating results for the third quarter of 2018.
For the third quarter of 2018, the Company generated a net
loss of $126.1 million, or $0.31 per diluted share
as compared to net loss of $63.4 million or $0.16 per diluted share
in the same period last year. When adjusted for certain items
that impact the comparability of results, the Company
generated an adjusted net loss(1) of $91.5 million or
$0.23 per diluted share for the third quarter of
2018.
Andrew G. Inglis, chairman and chief executive officer, said:
“The third quarter has been one of transition for Kosmos, closing
the Gulf of Mexico acquisition, integrating the assets and people
into the Kosmos organization and ensuring we are positioned to take
advantage of a high-quality portfolio across our growing businesses
in Ghana, Equatorial Guinea, Gulf of Mexico, Mauritania and
Senegal, and our Atlantic Margin exploration portfolio. In 2018, we
expect to generate substantial free cash flow and remain on track
to meet our previously communicated year-end 2018 net leverage
target. Our 2019 capital budget is prioritized on our high-return
opportunities with around 85% of the spend on infill drilling and
infrastructure led exploration. With this focus on high-return
projects we expect to deliver short and medium-term production and
cash flow growth and shareholder returns, beginning with our
inaugural dividend payment in the first quarter of 2019."
Third quarter 2018 revenues were $243 million versus $151
million in the same quarter of 2017, on sales of 3.3 million
barrels of oil equivalent (boe) in 2018 as compared to 2.9 million
barrels in 2017. Including the impact of the Company’s hedging
program, revenue was $58.04 per boe in the third quarter of 2018.
At quarter end, the Company was in a net underlift position of
approximately 0.2 million barrels of oil.
Production expense for the third quarter was $55 million, or
$16.57 per boe, versus $39 million, or $13.33 per barrel, in the
third quarter of 2017. Production expense per boe increased in the
third quarter of 2018 compared to the same quarter a year ago
primarily because the year ago quarter included insurance proceeds
received related to the Jubilee FPSO turret bearing issue, and a
credit accrual adjustment from the operator of the Jubilee and TEN
fields.
Exploration expenses totaled $148 million for the third quarter.
This total comprises amounts related to ongoing seismic and
geologic and geophysical costs, approximately $50 million of
seismic purchases in the Gulf of Mexico, unsuccessful well costs of
approximately $13 million related to Suriname drilling, and $58
million of expense related to the non-cash write off of capitalized
costs associated with the Akasa and Wawa fields.
Depletion and depreciation expense for the quarter was $80
million, or $24.09 per boe compared to $25.01 per barrel in the
third quarter of 2017.
General and administrative expenses were $26 million during the
third quarter. This amount includes approximately $17 million in
cash expense and $9 million in non-cash equity based compensation
expense.
Third quarter results included a mark-to-market loss of $57
million related to the Company’s oil derivative contracts. At
September 30, 2018, the Company’s hedging position had a total
commodity net liability value of approximately $267 million, which
includes hedges assumed as part of the Gulf of Mexico acquisition.
As of the quarter end and including recently executed hedges,
Kosmos had approximately 19 million barrels of oil hedged covering
2018 through 2020.
Gain on our equity method investments net during the third
quarter was approximately $25 million and represents Kosmos' 50
percent ownership of our equity method investment in Kosmos Trident
International Petroleum Inc. (KTIPI), which holds our production
interests in Equatorial Guinea. Under the equity method of
accounting, Kosmos only recognizes its share of the adjusted net
income of KTIPI, including basis difference amortization, which is
recorded in the Gain on equity method investments, net in the
consolidated statement of operations. Year to date through the end
of October, the assets have delivered approximately $240 million of
cash dividend distributions to Kosmos, resulting in a payback of
under one year for the Equatorial Guinea acquisition, which closed
in November 2017.
Total capital expenditures in the third quarter were $109
million, bringing the total year to date capital expenditures to
$264 million.
Kosmos exited the third quarter of 2018 with approximately $668
million of liquidity and $1,943 million of net debt. Liquidity
includes $200 million of additional firm commitments under the
Company's reserves-based loan facility.
OPERATIONAL UPDATE
Ghana
Production Optimization &
Exploitation
During the third quarter of 2018, gross sales volumes from the
Jubilee and TEN fields averaged approximately 156,900 barrels of
oil per day (bopd). Production in Ghana continues to grow following
the Jubilee turret remediation work and the new wells brought
online at both Jubilee and TEN during the quarter.
At Jubilee, production averaged approximately 94,300 barrels of
oil per day (bopd) for the quarter, delivering two cargos net to
Kosmos, as expected. One new producer well at Jubilee was brought
online in the third quarter, with a second expected in the fourth
quarter. Production from these wells, together with enhancements to
gas handling capacity, is expected to increase Jubilee production
towards the FPSO nameplate capacity of 120,000 bopd.
At TEN, production averaged approximately 62,600 bopd for the
quarter, delivering one cargo net to Kosmos, as expected. One new
producer well at Ntomme came online in August. Kosmos expects this
well to support current production levels of approximately 65,000
to 70,000 bopd through the end of the year when a second new
production well is scheduled to be brought onstream to increase
production towards the FPSO nameplate capacity. The TEN FPSO has
previously been tested at rates above the 80,000 bopd nameplate
capacity, and Kosmos expects to further test this capacity in 2019
as additional wells come on stream.
A second rig, which arrived in September, is being used for
drilling operations, with the current rig set up for a continuous
completion program. Taking advantage of low rig rates in the
current environment is expected to accelerate the addition of new
wells in Ghana, increasing production towards FPSO capacity
sooner, with the goal of achieving gross production from Jubilee
and TEN of 180,000 to 200,000 bopd over the next three years.
Equatorial Guinea
Production Optimization &
Exploitation
Production in Equatorial Guinea averaged approximately 42,600
bopd in the third quarter, and with strong performance in the first
half of the year, the company is on track to slightly exceed its
gross 43,000 bopd 2018 annual guidance. The installation of
electrical submersible pumps (“ESP”) to increase artificial lift
capacity and enhance production is expected to begin early in the
fourth quarter. As of the end of the third quarter, Kosmos has
received approximately $208 million in dividends from the
Kosmos-Trident joint venture and had received $240 million in
dividends through the end of October.
Short-Cycle Production Growth
During the quarter, Kosmos continued acquiring seismic over
Blocks S, W, and EG-21 and the Company will use processed seismic
to high grade prospects for drilling planned in the latter part of
2019.
Gulf of Mexico
Production Optimization &
Exploitation
At Odd Job (Kosmos 55% WI), a second development well was
brought online in late September and connected to the Delta House
Floating Production System (FPS), providing near-term growth at the
field. A third Odd Job well was drilled in May, exceeding pre-drill
resource estimates, and is expected to start production through
existing subsea infrastructure to the Delta House FPS by early
2020.
Gulf of Mexico production during the period from transaction
close until the end of the third quarter averaged approximately
24,200 barrels of oil equivalent per day (boepd).
Short Cycle Production Growth
As part of the Gulf of Mexico transaction, Kosmos acquired a
portfolio of short-cycle growth assets, including a high-quality
inventory of exploration prospects. During the third quarter, the
Nearly Headless Nick prospect (Kosmos 21.95% WI), located in
Mississippi Canyon Block 387, was successfully drilled to a total
depth of 5,807 meters (19,052 feet) and encountered approximately
26 meters (85 feet) of net pay in the Middle Miocene objective.
Nearly Headless Nick is a subsea tieback oil discovery, which is
expected to be brought online through the Delta House facility in
2020, adding near-term reserves and production growth. Early
delivery of this short-term growth opportunity highlights the value
of the acquisition.
Competition for basin access remains near historical lows and,
in August, Kosmos expanded its inventory as one of the most active
participants in Gulf of Mexico Lease Sale 251 with apparent high
bids on seven deepwater blocks. As part of the Company’s strategy
to expand its position in the Gulf of Mexico, in the third quarter
Kosmos incurred approximately $50 million of exploration expense to
acquire seismic over new prospective areas and to re-license
seismic over existing fields.
Mauritania & Senegal
Development of World-Scale Discoveries -
Tortue
In partnership with BP, the Company continues to make progress
in Senegal and Mauritania with the Tortue LNG development. The FEED
work for phase 1 is substantially complete. The Unit Development
Plan has been submitted to both governments, and the partnership
has reached agreement with the Governments of Mauritania and
Senegal on the non-PSA fiscal terms for this cross border project.
The Tortue project remains on track for phase 1 FID around year-end
2018. With the non-PSA fiscal terms agreed, the partnership intends
to submit the Declaration of Commerciality. The next key step is
for the governments to grant the Exclusive Exploitation
Authorization which would enable FID. In parallel, the partnership
is progressing the LNG offtake agreement.
Longer-Cycle Frontier Exploration
Kosmos continues to advance its frontier exploration program
with a strong portfolio of high-impact opportunities and expects to
be active in 2019 with a number of exploration and appraisal
opportunities. Kosmos maintains an active new ventures and seismic
acquisition program to enable a sustainable drilling program in
2020 and beyond.
Strategic Exploration Alliance
In October 2018, Kosmos entered into a strategic exploration
alliance with Shell Exploration Company B.V. (“Shell”) to jointly
explore in Southern West Africa. Initially, the alliance will focus
on Namibia, where Kosmos has completed the farm-in to Shell's
acreage in PEL 39, and Sao Tome & Principe where we have
entered into exclusive negotiations for Shell to take an interest
in Kosmos’ acreage in Blocks 5, 6, 11, and 12. As part of the
alliance, the two companies will also jointly evaluate
opportunities in adjacent geographies. This alliance is consistent
with Kosmos’ strategy of partnering with supermajors to leverage
complimentary skillsets. Shell has deep expertise in carbonate
plays, while Kosmos brings significant knowledge of the Cretaceous
in West Africa. Furthermore by working with Shell, Kosmos has a
partner with the expertise to move exploration successes through
the development stage efficiently.
2019 Capital Program
Kosmos expects to invest approximately $500 to $600 million of
net capital in 2019. The 2019 budget is weighted towards
high-return short-cycle development and exploration activity that
delivers near-term production and cash flow growth. This budget is
the outcome of a disciplined capital allocation process, the
objective of which is to deliver on the Company's short- and
medium-term growth targets, ensure the long-term sustainability of
the Company, and deliver consistent returns to shareholders.
Activity Type % Production
Optimization & Exploitation ~55% Short-Cycle Production Growth
~30% Development of World-Scale Discoveries ~5% Longer-Cycle
Frontier Exploration ~10%
Area % Ghana ~30%
Equatorial Guinea ~15% Gulf of Mexico ~40% Mauritania / Senegal ~5%
Longer-Cycle Exploration ~10% (1) A Non-GAAP measure, see attached
reconciliation of adjusted net income.
Conference Call and Webcast Information
Kosmos will host a conference call and webcast to discuss third
quarter 2018 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 investors.kosmosenergy.com. 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
Margin. 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
short-cycle 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 2017 Corporate Responsibility Report. For additional
information, visit www.kosmosenergy.com.
Non-GAAP Financial Measures
EBITDAX, Adjusted net income (loss) and Adjusted net income
(loss) per share 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 Facility EBITDAX definition includes 50%
of the EBITDAX adjustments of Kosmos-Trident International
Petroleum Inc. The Company defines adjusted net income (loss) as
net income (loss) after adjusting for the impact of certain
non-cash and non-recurring items, including non-cash changes in the
fair value of derivative instruments, cash settlements on commodity
derivatives, gain on sale of assets, and other similar non-cash and
non-recurring charges, and then the non-cash and related tax
impacts in the same period.
We believe that EBITDAX, Adjusted net income (loss), and
Adjusted net income (loss) per share 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. Because
EBITDAX, Adjusted net income (loss), and Adjusted net income (loss)
per share excludes some, but not all, items that affect net income,
these measures 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, 2018
2017 2018 2017 Revenues and other
income: Oil and gas revenue $ 242,833 $ 151,240 $ 585,220 $
391,035 Gain on sale of assets 7,666 — 7,666 — Other income, net
(280 ) 2 (17 ) 58,697 Total revenues and other income
250,219 151,242 592,869 449,732
Costs and expenses:
Oil and gas production 55,078 39,187 151,661 80,677 Facilities
insurance modifications, net 12,334 (3,906 ) 21,812 (1,334 )
Exploration expenses 148,238 36,983 246,912 162,679 General and
administrative 25,963 20,029 65,343 50,555 Depletion and
depreciation 80,041 73,490 208,607 180,909 Interest and other
financing costs, net 23,549 18,478 68,113 54,729 Derivatives, net
57,357 26,864 236,107 (36,404 ) (Gain) loss on equity method
investments, net (24,841 ) 4,804 (59,637 ) 11,230 Other expenses,
net (12,807 ) 233 (8,164 ) 3,003 Total costs and
expenses 364,912 216,162 930,754 506,044
Loss before income taxes (114,693 ) (64,920 )
(337,885 ) (56,312 ) Income tax expense (benefit) 11,364
(1,515 ) (58,329 ) 44,401 Net loss $ (126,057 ) $ (63,405 )
$ (279,556 ) $ (100,713 )
Net loss per share: Basic $
(0.31 ) $ (0.16 ) $ (0.70 ) $ (0.26 ) Diluted $ (0.31 ) $ (0.16 ) $
(0.70 ) $ (0.26 ) Weighted average number of shares
used to compute net loss per share: Basic 404,536 389,058
399,026 388,114 Diluted 404,536 389,058
399,026 388,114
Kosmos Energy Ltd.
Condensed Consolidated Balance
Sheets
(In thousands, unaudited)
September 30, December 31, 2018
2017 Assets Current assets: Cash and cash equivalents
$ 192,646 $ 233,412 Receivables, net 252,339 160,961 Other current
assets 195,794 139,229 Total current assets 640,779 533,602
Property and equipment, net 3,509,537 2,317,828 Other
non-current assets 179,148 341,173
Total assets $
4,329,464 $ 3,192,603
Liabilities and
shareholders’ equity Current liabilities: Accounts payable $
153,922 $ 141,787 Accrued liabilities 262,310 219,412 Other current
liabilities 212,217 67,531 Total current liabilities 628,449
428,730 Long-term liabilities: Long-term debt, net 2,094,534
1,282,797 Deferred tax liabilities 401,826 476,548 Other
non-current liabilities 269,722 107,416 Total long-term
liabilities 2,766,082 1,866,761 Total shareholders’ equity
934,933 897,112
Total liabilities and shareholders’
equity $ 4,329,464 $ 3,192,603
Kosmos Energy Ltd.
Condensed Consolidated Statements of
Cash Flow
(In thousands, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Operating
activities: Net loss $ (126,057 ) $ (63,405 ) $
(279,556 ) $ (100,713 ) Adjustments to reconcile net loss to net
cash provided by operating activities: Depletion, depreciation and
amortization 82,387 76,042 215,676 188,563 Deferred income taxes
(2,219 ) (8,197 ) (84,095 ) 32,820 Unsuccessful well costs 70,294
20,910 114,948 24,515 Change in fair value of derivatives 54,267
33,020 232,057 (25,924 ) Cash settlements on derivatives, net(1)
(46,484 ) 5,858 (102,705 ) 25,275 Equity-based compensation 8,890
9,616 25,975 29,945 Gain on sale of assets (7,666 ) — (7,666 ) —
Loss on extinguishment of debt 268 — 4,324 — Distributions in
excess of equity in earnings 1 4,804 5,235 11,230 Other 788 898
1,237 3,412 Changes in assets and liabilities: Net changes in
working capital 55,345 32,380 (35,183 ) (94,711 ) Net
cash provided by operating activities 89,814 111,926 90,247 94,412
Investing activities Oil and gas assets (56,655 )
(57,907 ) (149,305 ) (100,712 ) Other property (745 ) (185 ) (3,560
) (1,639 ) 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 —
13,703 222,068 Net cash provided by (used in)
investing activities (942,803 ) (58,092 ) (958,298 ) 119,717
Financing activities: Borrowings on long-term debt 1,000,000
— 1,000,000 — Payments on long-term debt (75,000 ) (50,000 )
(175,000 ) (250,000 ) Purchase of treasury stock 0 (171 ) (17,695 )
(2,116 ) Deferred financing costs (11,002 ) — (36,745 ) —
Net cash provided by (used in) financing activities 913,998
(50,171 ) 770,560 (252,116 ) Net increase
(decrease) in cash, cash equivalents and restricted cash 61,009
3,663 (97,491 ) (37,987 ) Cash, cash equivalents and restricted
cash at beginning of period 146,486 231,545 304,986
273,195 Cash, cash equivalents and restricted cash at
end of period $ 207,495 $ 235,208 $ 207,495 $
235,208
_________________________
(1) Cash settlements on commodity hedges were $(50.0) million and
$12.1 million for the three months ended September 30, 2018 and
2017, respectively, and $(107.3) million and $36.4 million for the
nine months ended September 30, 2018 and 2017.
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 amortize the basis difference
using the unit-of-production method.
Kosmos Energy Ltd.
EBITDAX
(In thousands, unaudited)
Three Months Ended September 30, 2018
2017 Kosmos
EquatorialGuinea(Equity Method)(1)
Total Kosmos Net income (loss) $ (126,057 ) $ 24,841 $
(101,216 ) $ (63,405 ) Exploration expenses 148,238 — 148,238
36,983 Facilities insurance modifications, net 12,334 — 12,334
(3,906 ) Depletion and depreciation 80,041 37,291 117,332 73,490
Equity-based compensation 8,890 — 8,890 9,616 Derivatives, net
57,357 — 57,357 26,864 Cash settlements on commodity derivatives
(49,994 ) — (49,994 ) 12,078 Inventory impairment and other (2 ) —
(2 ) (501 ) Disputed charges and related costs (12,682 ) — (12,682
) 821 Gain on sale of assets (7,666 ) — (7,666 ) — Loss on equity
method investment - KBSL — — — 4,804 Gain on equity method
investment - KTIPI (24,841 ) — (24,841 ) — Interest and other
financing costs, net 23,549 — 23,549 18,478 Income tax expense
(benefit) 11,364 25,398 36,762 (1,515 )
EBITDAX $ 120,531 $ 87,530 $ 208,061 $ 113,807
Nine months ended September 30,
2018 2017 Kosmos
EquatorialGuinea(Equity Method)(1)
Total(2) Kosmos Net income (loss) $ (279,556 ) $ 59,637 $ (219,919
) $ (100,713 ) Exploration expenses 246,912 — 246,912 162,679
Facilities insurance modifications, net 21,812 — 21,812 (1,334 )
Depletion and depreciation 208,607 115,862 324,469 180,909
Equity-based compensation 25,975 — 25,975 29,945 Derivatives, net
236,107 — 236,107 (36,404 ) Cash settlements on commodity
derivatives (107,259 ) — (107,259 ) 36,426 Inventory impairment and
other (7 ) — (7 ) (417 ) Disputed charges and related costs (9,721
) — (9,721 ) 3,260 Gain on sale of assets (7,666 ) — (7,666 ) —
Loss on equity method investment - KBSL — — — 11,230 Gain on equity
method investment - KTIPI (59,637 ) — (59,637 ) — Interest and
other financing costs, net 68,113 — 68,113 54,729 Income tax
expense (benefit) (58,329 ) 67,024 8,695 44,401
EBITDAX $ 285,351 $ 242,523 $ 527,874 $
384,711
Twelve Months
Ended September 30, 2018 Kosmos
EquatorialGuinea(Equity Method)(2)
Total Net income (loss) $ (401,635 ) $ 64,871 $ (336,764 )
Exploration expenses 300,283 — 300,283 Facilities insurance
modifications, net 22,326 — 22,326 Depletion and depreciation
282,901 127,043 409,944 Equity-based compensation 35,943 — 35,943
Derivatives, net 332,479 — 332,479 Cash settlements on commodity
derivatives (104,948 ) — (104,948 ) Inventory impairment and other
813 — 813 Disputed charges and related costs (8,019 ) — (8,019 )
Gain on sale of assets (7,666 ) — (7,666 ) Loss on equity method
investment - KBSL 256 — 256 Gain on equity method investment -
KTIPI (64,871 ) — (64,871 ) Interest and other financing costs, net
90,979 — 90,979 Income tax expense (benefit) (57,793 ) 70,318
12,525 EBITDAX $ 421,048 $ 262,232 $
683,280
_________________________
(1) For the three 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 account for such investment under the equity
method. (2) For the twelve 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 from the date of acquisition, November 28, 2017 through
September 30, 2018, as we account for such investment under the
equity method.
Adjusted Net Income
(In thousands, except per share
amounts, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Net loss $ (126,057 ) $
(63,405 ) $ (279,556 ) $ (100,713 ) Derivatives, net 57,357
26,864 236,107 (36,404 ) Cash settlements on commodity derivatives
(49,994 ) 12,078 (107,259 ) 36,426 Gain on sale of assets (7,666 )
— (7,666 ) — Facilities insurance modifications, net 12,334 (3,906
) 21,812 (1,334 ) Inventory impairment and other (2 ) (501 ) (7 )
(417 ) Disputed charges and related costs (12,682 ) 821 (9,721 )
3,260 Impairment of suspended well costs 57,772 — 57,772 — Loss on
extinguishment of debt 268 — 4,324 — Loss on equity method
investments, net — 4,804 — 11,230 Total
selected items before tax 57,387 40,160 195,362
12,761 Income tax expense on adjustments(1)
(22,798 ) (13,630 ) (64,446 ) (8 ) Adjusted net loss $ (91,468 ) $
(36,875 ) $ (148,640 ) $ (87,960 ) Net loss per diluted
share $ (0.31 ) $ (0.16 ) $ (0.70 ) $ (0.26 ) Derivatives,
net 0.14 0.07 0.59 (0.09 ) Cash settlements on commodity
derivatives (0.12 ) 0.04 (0.27 ) 0.09 Gain on sale of assets (0.02
) — (0.02 ) — Facilities insurance modifications, net 0.03 (0.01 )
0.05 — Inventory impairment and other — — — — Disputed charges and
related costs (0.03 ) — (0.03 ) 0.01 Impairment of suspended well
costs 0.14 — 0.13 — Loss on extinguishment of debt — — 0.01 — Loss
on equity method investments, net — 0.01 —
0.02 Total selected items before tax 0.14 0.11
0.46 0.03 Income tax expense on adjustments(1)
(0.06 ) (0.04 ) (0.15 ) 0.00 Adjusted net loss per diluted
share $ (0.23 ) $ (0.09 ) $ (0.39 ) $ (0.23 ) Weighted
average number of diluted shares 404,536 389,058 399,026 388,114
_________________________
(1) Income tax expense is calculated at the statutory rate in which
such item(s) reside. Statutory rate for Ghana is 35%.
Operational Summary(1)
(In thousands, except barrel and per
barrel data, unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, 2018
2017 2018 2017 Net Volume Sold
Oil (MMBbl) Kosmos 3.247 2.939 8.076 7.830 Equity method investment
- Equatorial Guinea 1.448 N/A 4.278 N/A Total Oil
(MMBbl) 4.695 2.939 12.354 7.830 Gas (MMcf) 0.309 — 0.309 — NGL
(MMBbl) 0.024 — 0.024 — Total (MMBoe) 4.771
2.939 12.430 7.830
Revenue Oil sales: Kosmos $
241,139 $ 151,240 $ 583,526 $ 391,035 Equity method investment -
Equatorial Guinea 107,704 N/A 300,079 N/A Total Oil
sales 348,843 151,240 883,605 391,035 Gas sales 975 — 975 — NGL
sales 719 — 719 — Total sales 350,537 151,240 885,299
391,035 Cash settlements on commodity derivatives (49,994 ) 12,078
(107,259 ) 36,426 Realized revenue $ 300,543 $ 163,318 $
778,040 $ 427,461
Oil and Gas Production Costs
Kosmos $ 55,078 $ 38,118 $ 151,661 $ 79,110 Equity method
investment - Equatorial Guinea 20,167 1,069 57,683
1.567 Total oil and gas production costs $ 75,245 $ 39,187 $
209,344 $ 80,677 Oil sales per Bbl: Kosmos $ 74.27 $
51.46 $ 72.25 $ 49.94 Equity method investment - Equatorial Guinea
74.38 — 70.14 — Total Oil sales per Bbl 74.30 51.46 71.52 49.94 Gas
sales per Mcf 3.16 — 3.16 — NGL sales per Bbl 29.96 — 29.96 — Total
sales per Boe 73.47 51.46 71.22 49.94 Cash settlements on commodity
derivatives per oil Bbl(2) (15.40 ) 4.11 (13.28 ) 4.65 Realized
revenue per Boe(3) 62.99 55.57 62.59 54.59 Oil and gas
production costs per Boe: Kosmos $ 16.57 $ 13.33 $ 18.60 $ 10.30
Equity method investment - Equatorial Guinea 13.93 N/A 13.48 N/A
Total oil and gas production costs 15.77 13.33 16.84 10.30
_________________________
(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 account for such
investment under the equity method. (2) Cash settlements on
commodity derivatives are only related to Kosmos and are calculated
on a per barrel basis using Kosmos's 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).
Ghana was underlifted by approximately 206
thousand barrels as of September 30, 2018.
Hedging Summary
As of September 30,
2018(1)
(Unaudited)
Weighted Average Price
per Bbl Index Volume Floor(2)
Sold Put Ceiling
Call 2018: (MBbl) Swap with puts Dated
Brent 1,500 $ 56.75 $ 43.33 $ — $ — Three-way collars Dated Brent
733 56.57 41.57 65.91 — Four-way collars Dated Brent 751 50.00
40.00 61.33 70.00 Purchased Puts NYMEX WTI 141 53.00 — — — Collars
NYMEX WTI 35 62.29 — 66.35 — Swaps NYMEX WTI 698 54.69 — — —
2019: Three-way collars Dated Brent 10,500 $ 53.33 $ 43.81 $
73.58 $ — Swaps NYMEX WTI 1,747 52.31 — — — Collars NYMEX WTI 339
57.77 — 63.70 — Collars Argus LLS 1,000 60.00 — 88.75 —
2020:
Three-way collars
Dated Brent 2,000 $ 60.00 $ 50.00 $ 90.54 $ —
_________________________
(1) Please see the Company’s filed 10-Q for full disclosure on
hedging material. Includes hedging position as of September 30,
2018 and hedges added since quarter-end. (2) “Floor” represents
floor price for collars or swaps and strike price for purchased
puts. Note: Excludes 0.5 MMBbls of sold (short) calls with a
strike price of $65.00/Bbl in 2018, 0.5 MMBbls of purchased (long)
calls with a strike price of $70.00/Bbl in 2018, 0.9 MMBbls of sold
(short) calls with a strike price of $80.00/Bbl in 2019 and 8.0
MMBbls of sold (short) calls with a strike price of $80.00/Bbl in
2020.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181104005038/en/
Kosmos Energy Ltd.Investor RelationsJamie
Buckland+44 (0) 203 954 2831jbuckland@kosmosenergy.comorRhys
Williams+1-214-445-9693rwilliams@kosmosenergy.comorMedia
RelationsThomas
Golembeski+1-214-445-9674tgolembeski@kosmosenergy.com
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