Kosmos Energy Announces Farm Down of a Portfolio of Exploration Assets to Shell for up to $200 Million
September 09 2020 - 2:00AM
Business Wire
Transaction accelerates investment in
short-cycle, high-margin exploration opportunities and further
strengthens the balance sheet
Kosmos Energy (NYSE: KOS) (LSE: KOS) (“Kosmos” or the “Company”)
has entered into an agreement with B.V. Dordtsche Petroleum
Maatschappij (“Shell”), a wholly-owned subsidiary of Royal Dutch
Shell PLC (LSE: RDSA), to farm down interests in a portfolio of
frontier exploration assets for approximately $100 million, plus
future contingent payments of up to $100 million.
Under the terms of the agreement, Shell will acquire Kosmos’
participating interest in blocks offshore São Tomé & Príncipe,
Suriname, Namibia, and South Africa (the “Assets”). The
consideration consists of an upfront cash payment of approximately
$100 million, plus contingent payments of $50 million payable upon
each commercial discovery from the first four exploration wells
drilled across the Assets, capped at $100 million in aggregate.
Three of the four wells are currently planned for 2021.
Kosmos plans to use up to one-third of the initial proceeds to
test two high-quality infrastructure-led exploration prospects in
the Gulf of Mexico, each offering hub scale potential with a
low-cost, lower-carbon development scheme. The company expects to
use the remainder of the proceeds to reduce borrowings outstanding
under its credit facilities.
Andrew G. Inglis, Kosmos Energy’s chairman and chief executive
officer said: “With this transaction, we are continuing to focus
our exploration portfolio on proven basins that offer superior
returns with shorter payback and significant resource potential.
The proceeds enable Kosmos to accelerate high graded exploration
opportunities while strengthening the balance sheet, positioning
Kosmos to create additional shareholder value. The contingent
payments locked into the agreement with Shell ensure we retain
upside from frontier exploration with no further investment.”
Post completion of the transaction, Kosmos retains a focused
exploration portfolio with over six billion barrels of gross
resource potential in the Gulf of Mexico and West Africa. Kosmos
also expects to realize approximately $125 million in total savings
across capital expenditures and general and administrative expenses
over the next two years as a result of the transaction.
Closing of the transaction is expected in the fourth quarter of
2020 with an effective date of September 1, 2020 and is subject to
customary conditions including government approvals.
Kosmos will present at the virtual Barclays CEO Energy-Power
Conference on Wednesday, September 9, 2020 and an updated slide
presentation has been posted to Kosmos’ website this morning.
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 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.
Inside Information
This announcement contains inside information. The person
responsible for arranging the release of this announcement is Jamie
Buckland, Vice President, Investor Relations.
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version on businesswire.com: https://www.businesswire.com/news/home/20200908005917/en/
Investor Relations Jamie Buckland +44 (0) 203 954 2831
jbuckland@kosmosenergy.com
Media Relations Thomas Golembeski +1-214-445-9674
tgolembeski@kosmosenergy.com
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