Kosmos Energy Announces First Quarter Results
Highlights for the quarter ended
-
Maintained strong financial position, exiting the first quarter with
approximately
$1.5 billion in liquidity - Sold 1.9 million barrels of oil, net to Kosmos
- Progressed the TEN development project to approximately 90 percent complete and on budget with first oil expected in third quarter 2016
- Completed drilling operations on the Guembeul-1 and Ahmeyim-2 wells, which increased our discovered resource and concluded our appraisal drilling of the Tortue West structure
- Concluded the semi-annual redetermination process for the reserves-based lending facility with less than a five percent change in borrowing capacity
“Kosmos continued to build momentum in the first quarter,” said
First quarter 2016 oil revenues were
Production expense for the current quarter was
Exploration expenses totaled
Depletion and depreciation expense for the quarter was
General and administrative expenses decreased from
The first quarter results included a mark-to-market gain of
We recognized an income tax benefit for the first quarter of 2016 of
Total capital expenditures in the first quarter were
During the first quarter Kosmos concluded the semi-annual bank
re-determination process on our reserves-based lending facility which
resulted in a less than five percent change to the borrowing base. The
borrowing base is now approximately
Kosmos exited the first quarter of 2016 with
Operational Update
In
During the first quarter, gross sales volumes from the Jubilee field averaged approximately 80,000 barrels of oil per day (bopd) and gas exports averaged approximately 72 million cubic feet per day, impacted by the planned two-week FPSO shutdown for maintenance. Jubilee gross production was also impacted late in the first quarter following a problem being identified with the FPSO turret bearing.
Although production and gas exports have resumed, second quarter production is forecast below expectations due to expected increased downtime associated with the implementation of revised operating procedures for offloading and export. In light of this issue, full year 2016 updated guidance will be provided once the new operating procedures have been fully implemented and a long-term solution for Jubilee has been selected. However, Kosmos does not expect this issue to have a significant long-term financial impact due to continued production from the field and appropriate insurance coverage in place.
A technical investigation of the Jubilee FPSO turret bearing has
confirmed that it is no longer able to rotate as originally designed
leading to the new operating procedures being implemented. These include
the vessel being put on "heading control" which requires the use of tugs
to minimize vessel rotation and revised offtake procedures, including
the use of a dynamically-positioned shuttle tanker and a storage tanker.
Jubilee oil production resumed on
A project team has been established to review the root cause analysis and determine the optimum permanent solution of the Jubilee turret issue. A decision on the permanent solution is expected in the next few months. Tullow has procured Hull and Machinery insurance on behalf of the Joint Venture which covers relevant operating and capital costs associated with damage to the FPSO. Kosmos also has procured Loss of Production Income (LOPI) insurance which covers consequent loss of production revenue. Kosmos has notified our insurers of the relevant issues.
The Tweneboa, Enyenra and Ntomme (TEN) project, the second major oil
development in
During the first quarter, Kosmos completed a 4,500 square kilometer 3D
seismic acquisition program offshore
(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 first quarter
2016 financial and operating results today at
About
Kosmos is a leading independent oil and gas exploration and production
company focused on frontier and emerging areas along the Atlantic
Margin. Our assets include existing production and development projects
offshore
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) depletion and depreciation, (ii) exploration expenses, (iii) interest and other financing costs, net, (iv) unrealized (gain) loss on commodity derivatives, (v) income tax expense, (vi) equity-based compensation, (vii) (gain) loss on sale of oil and gas properties, (viii) restructuring charges and (ix) similar other material items, which management believes affect the comparability of operating results. 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) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2016 | 2015 | |||||||||
| (Unaudited) | ||||||||||
| Revenues and other income: | ||||||||||
| Oil and gas revenue | $ | 62,125 | $ | 109,164 | ||||||
| Gain on sale of assets | — | 22,751 | ||||||||
| Other income | 8 | 642 | ||||||||
| Total revenues and other income | 62,133 | 132,557 | ||||||||
| Costs and expenses: | ||||||||||
| Oil and gas production | 29,392 | 32,100 | ||||||||
| Exploration expenses | 23,858 | 98,941 | ||||||||
| General and administrative | 17,920 | 38,667 | ||||||||
| Depletion and depreciation | 31,266 | 37,007 | ||||||||
| Interest and other financing costs, net | 10,324 | 10,751 | ||||||||
| Derivatives, net | (4,345 | ) | (32,327 | ) | ||||||
| Other expenses, net | 14,733 | 628 | ||||||||
| Total costs and expenses | 123,148 | 185,767 | ||||||||
| Loss before income taxes | (61,015 | ) | (53,210 | ) | ||||||
| Income tax expense (benefit) | (2,022 | ) | 25,699 | |||||||
| Net loss | $ | (58,993 | ) | $ | (78,909 | ) | ||||
| Net loss per share: | ||||||||||
| Basic | $ | (0.15 | ) | $ | (0.21 | ) | ||||
| Diluted | $ | (0.15 | ) | $ | (0.21 | ) | ||||
| Weighted average number of shares used to compute net loss per share: | ||||||||||
| Basic | 384,435 | 380,355 | ||||||||
| Diluted | 384,435 | 380,355 | ||||||||
| Kosmos Energy Ltd. | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| (In thousands, unaudited) | ||||||||
| March 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 212,917 | $ | 275,004 | ||||
| Receivables | 94,870 | 138,032 | ||||||
| Other current assets | 262,672 | 321,112 | ||||||
| Total current assets | 570,459 | 734,148 | ||||||
| Property and equipment, net | 2,536,252 | 2,322,839 | ||||||
| Other non-current assets | 128,108 | 146,063 | ||||||
| Total assets | $ | 3,234,819 | $ | 3,203,050 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 237,188 | $ | 295,689 | ||||
| Accrued liabilities | 142,104 | 159,897 | ||||||
| Other current liabilities | 1,473 | 1,155 | ||||||
| Total current liabilities | 380,765 | 456,741 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt | 1,013,596 | 860,878 | ||||||
| Deferred tax liabilities | 497,895 | 502,189 | ||||||
| Other non-current liabilities | 66,441 | 57,729 | ||||||
| Total long-term liabilities | 1,577,932 | 1,420,796 | ||||||
| Total shareholders’ equity | 1,276,122 | 1,325,513 | ||||||
| Total liabilities and shareholders’ equity | $ | 3,234,819 | $ | 3,203,050 | ||||
| Kosmos Energy Ltd. | ||||||||||
| Condensed Consolidated Statements of Cash Flow | ||||||||||
| (In thousands, unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Operating activities: | ||||||||||
| Net income (loss) | $ | (58,993 | ) | $ | (78,909 | ) | ||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||||
| Depletion, depreciation and amortization | 33,817 | 39,617 | ||||||||
| Deferred income taxes | (1,951 | ) | 5,783 | |||||||
| Unsuccessful well costs | 2,222 | 83,627 | ||||||||
| Change in fair value of derivatives | (2,377 | ) | (34,980 | ) | ||||||
| Cash settlements on derivatives | 56,901 | 53,932 | ||||||||
| Equity-based compensation | 10,635 | 25,183 | ||||||||
| Gain on sale of assets | — | (22,751 | ) | |||||||
| Other | 14,969 | 1,171 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Net changes in working capital | (39,606 | ) | (81,653 | ) | ||||||
| Net cash provided by (used in) operating activities | 15,617 | (8,980 | ) | |||||||
| Investing activities: | ||||||||||
| Oil and gas assets | (226,571 | ) | (184,899 | ) | ||||||
| Other property | (47 | ) | (280 | ) | ||||||
| Restricted cash | (12 | ) | (59 | ) | ||||||
| Net cash used in investing activities | (226,630 | ) | (185,238 | ) | ||||||
| Financing activities: | ||||||||||
| Borrowings on long-term debt | 150,000 | — | ||||||||
| Purchase of treasury stock | (1,074 | ) | (148 | ) | ||||||
| Net cash provided by (used in) financing activities | 148,926 | (148 | ) | |||||||
| Net decrease in cash and cash equivalents | (62,087 | ) | (194,366 | ) | ||||||
| Cash and cash equivalents at beginning of period | 275,004 | 554,831 | ||||||||
| Cash and cash equivalents at end of period | $ | 212,917 | $ | 360,465 | ||||||
| Kosmos Energy Ltd. | |||||||||||||||
| EBITDAX | |||||||||||||||
| (In thousands, unaudited) | |||||||||||||||
| Twelve Months | |||||||||||||||
| Three Months Ended | Ended | ||||||||||||||
| March 31, | March 31, | ||||||||||||||
| 2016 | 2015 | 2016 | |||||||||||||
| Net loss | $ | (58,993 | ) | $ | (78,909 | ) | $ | (49,920 | ) | ||||||
| Exploration expenses | 23,858 | 98,941 | 81,120 | ||||||||||||
| Depletion and depreciation | 31,266 | 37,007 | 150,225 | ||||||||||||
| Equity-based compensation | 10,635 | 25,183 | 60,509 | ||||||||||||
| Derivatives, net | (4,345 | ) | (32,327 | ) | (182,667 | ) | |||||||||
| Cash settlements on commodity derivatives | 56,630 | 51,298 | 230,825 | ||||||||||||
| Inventory impairment and other | 14,746 | — | 14,746 | ||||||||||||
| Gain on sale of assets | — | (22,751 | ) | (1,900 | ) | ||||||||||
| Interest and other financing costs, net | 10,324 | 10,751 | 36,782 | ||||||||||||
| Income tax expense | (2,022 | ) | 25,699 | 127,551 | |||||||||||
| EBITDAX | $ | 82,099 | $ | 114,892 | $ | 467,271 | |||||||||
| Adjusted Net Income | ||||||||||
| (In thousands, unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2016 | 2015 | |||||||||
| Net loss | $ | (58,993 | ) | $ | (78,909 | ) | ||||
| Derivatives, net | (4,345 | ) | (32,327 | ) | ||||||
| Cash settlements on commodity derivatives | 56,630 | 51,298 | ||||||||
| Gain on sale of assets | — | (22,751 | ) | |||||||
| Inventory impairment and other | 14,746 | — | ||||||||
| Total selected items before tax | 67,031 | (3,780 | ) | |||||||
| Income tax expense on adjustments(1) | (22,589 | ) | (6,640 | ) | ||||||
| Adjusted net loss | $ | (14,551 | ) | $ | (89,329 | ) | ||||
| Adjusted net loss per diluted share | $ | (0.04 | ) | $ | (0.23 | ) | ||||
| _____________ | ||
| (1) | Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rate for Ghana is 35%. | |
| Oil Revenue Summary | ||||||||
| (In thousands, except barrel and per barrel data, unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2016 | 2015 | |||||||
| Net Oil Volume Sold (MMBbls) | 1.896 | 1.900 | ||||||
| Oil revenue | $ | 62,125 | $ | 109,164 | ||||
| Cash settlements on commodity derivatives | 56,630 | 51,298 | ||||||
| Realized oil revenue | $ | 118,755 | $ | 160,462 | ||||
| Per Barrel: | ||||||||
| Oil revenue | $ | 32.77 | $ | 57.47 | ||||
| Cash settlements on commodity derivatives | 29.87 | 27.00 | ||||||
| Realized oil revenue | $ | 62.64 | $ | 84.47 | ||||
Overlifted by approximately 107 thousand barrels as of
| Hedging Summary | |||||||||||||||||||
|
As of March 31, 2016(1) |
|||||||||||||||||||
| (Unaudited) | |||||||||||||||||||
| Volume |
Floor(2) |
Short Put | Ceiling | Long Call | |||||||||||||||
| (MMBbls) | |||||||||||||||||||
| 2016 : | |||||||||||||||||||
| Three-way collars | 1.504 | $ | 85.00 | $ | — | $ | 110.00 | $ | 135.00 | ||||||||||
| Swaps with puts | 1.500 | $ | 75.00 | $ | 60.00 | $ | — | $ | — | ||||||||||
| Purchase puts | 1.501 | $ | 85.00 | $ | — | $ | — | $ | — | ||||||||||
| 2017 : | |||||||||||||||||||
| Swaps with puts/calls | 2.000 | $ | 72.50 | $ | 55.00 | $ | — | $ | 90.00 | ||||||||||
| Swaps with puts | 2.000 | $ | 64.95 | $ | 50.00 | $ | — | $ | — | ||||||||||
| Three-way collars | 4.000 | $ | 45.00 | $ | 30.00 | $ | 57.50 | $ | — | ||||||||||
| 2018 : | |||||||||||||||||||
| Three-way collars | 0.913 | $ | 60.00 | $ | 45.00 | $ | 75.00 | $ | — | ||||||||||
| _____________ |
|
(1) Please see the Company’s filed 10-Q for full disclosure on hedging material. Includes hedging position as of March 31, 2016 and hedges added since quarter-end. |
|
(2) “Floor” represents floor price for collars or swaps and strike price for purchased puts. |
| Note: Excludes 2.0 MMBbls of sold (short) calls with a strike price of $85.00/Bbl in 2017, 2.0 MMBbls of sold (short) calls with a strike price of $65.00/Bbl in 2018, and 0.9 MMBbls of sold (short) calls with a strike price of $80.00/Bbl in 2019. |
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Source:
Kosmos Energy Ltd.
Investor Relations
Neal Shah,
+1-214-445-9628
nshah@kosmosenergy.com
or
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Williams, +1-214-445-9693
rwilliams@kosmosenergy.com
or
Media
Relations
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tgolembeski@kosmosenergy.com