Kosmos Energy Announces Results of Pontoenoe-1 Well and Provides Operational and Financial Update
Pontoenoe-1 was designed to test late Cretaceous reservoirs in a
stratigraphic trap charged from oil mature Albian and
Cenomanian-Turonian source kitchens. The well was located offshore
Suriname approximately 280 kilometers northwest of
The prospect was fully tested but did not discover commercial hydrocarbons. High-quality reservoir was encountered, but the primary exploration objective proved to be water bearing. Kosmos believes there was evidence of a working source kitchen and the prospect failed due to a lack of trap. The well will now be plugged and abandoned and the well results integrated into the ongoing evaluation of the remaining prospectivity in Kosmos’ acreage position.
Kosmos holds rights in the Block 42 contract area under a production
sharing contract with the Government of Suriname’s
In addition, Kosmos today provides an operational and financial update
in advance of releasing its third quarter 2018 results given the closure
of the Deep Gulf Energy (“DGE”) acquisition on
Kosmos continues its evolution into a full-cycle exploration and production company positioned to deliver sustainable growth from a balanced portfolio. For the full year 2018, Kosmos expects to generate substantial free cash flow and remains on track to meet the Company’s previously communicated year-end 2018 net leverage target. This strong cash flow generation will allow Kosmos to initiate a dividend in the first quarter of 2019.
Production Optimization & Exploitation – well work and infill drilling
At Jubilee, production averaged approximately 94,500 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 70,000 bopd through the end of the year when a second new production well is due 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 onstream.
The Partnership approved a second rig in
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.
Short-Cycle Production Growth – infrastructure-led exploration
As part of the DGE 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) was successfully drilled to a total depth of 5,807 meters (19,052 feet) and encountered 26 meters (85 feet) of net pay in the Middle Miocene objective. Nearly Headless Nick is a sub-sea tie back, 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 DGE 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. These blocks include three with low risk
prospects and one with a
During the quarter, Kosmos continued acquiring seismic over Blocks S, W, EG-21 and EG-24 and the company will process the seismic with the objective of high grading prospects for drilling in 2019.
Development of World-Scale Discoveries – Potential for multiple LNG hubs provides long-term growth
Tortue Phase 1 targeting FID around year-end
In partnership with BP, the Company continues to make progress in
Longer-Cycle Frontier Exploration – Potential for hub-scale discoveries creates future optionality
Kosmos continues to advance its frontier exploration program with a strong portfolio of high-impact exploration opportunities for long-term, sustainable growth 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 drilling in 2020 and beyond.
Balance sheet remains strong, supported by disciplined capital allocation
Excluding the DGE acquisition purchase price, Kosmos now expects 2018
capital expenditures to total approximately
For the full year 2018, Kosmos expects to generate substantial free cash
flow and is on track to meet the Company’s previously communicated
year-end 2018 net leverage target. This strong cash flow generation will
allow Kosmos to initiate a dividend in the first quarter of 2019. Kosmos
exited the quarter with net debt of approximately
The following table provides a current estimate of operational and
financial performance for the third quarter of 2018, including the stub
period inclusive of the Company’s Gulf of
Third Quarter Financial Update
|Kosmos||Gulf of Mexico||Total||Equatorial Guinea|
|Gross (Bopd)||Gross (Bopd)||42,500|
|NGLs (MBbls)||27||-||33||27||-||33||Revenue ($MM)||$210||-||$220|
|Oil Equivalent (Mboe)||2,920||-||2,950||365||405||3,285||-||3,355||Opex ($/boe)||$13.75||-||$15.75|
|Basis Difference Amortization ($/boe)||$13.75||-||$15.75|
|Income tax expense (benefit) ($/boe)||$16.00||-||$18.00|
|Opex ($/boe)||$15.00||-||$19.00||$10.00||-||$12.00||$15.00||-||$18.00||% Cash||0%|
|Facilities modifications ($MM)||$10||-||$12||$10||-||$12|
|Exploration expense ($MM)||$36||-||$40||$48||-||$52||$84||-||$92|
|Interest expense, net ($MM)||$20||-||$25|
|Derivatives (gain) loss, net ($MM)||$44||-||$50||$8||-||$12||$52||-||$62|
|Income tax expense (benefit) ($/boe)|
|Cash settlements on commodity derivatives ($MM)||$44||-||$48||$3||-||$5||$47||-||$53|
Kosmos is a well-capitalized, pure play deepwater oil and gas company
with growing production, a pipeline of development opportunities and a
balanced exploration portfolio along the Atlantic Margins. Our assets
include production offshore
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’
Jamie Buckland,+44 (0) 203 954 2831
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