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Kosmos Energy Ltd - FOURTH QUARTER AND FULL YEAR 2017 RESULTS

02/26/18 07:00 GMT
RNS Number : 8868F
Kosmos Energy Limited
26 February 2018
 

 

 

KOSMOS ENERGY ANNOUNCES FOURTH QUARTER AND

FULL YEAR 2017 RESULTS

 

DALLAS-February 26, 2018-- Kosmos Energy Ltd. ("Kosmos") (NYSE: KOS) announced today financial and operating results for the fourth quarter of 2017. For the fourth quarter of 2017, the Company generated a net loss of $122.1 million, or $0.31 per diluted share as compared to net loss of $56.7 million or $0.15 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 $37.9 million or $0.10 per diluted share for the fourth quarter of 2017.

 

"2017 was a year of strong operational and strategic delivery," said Andrew G. Inglis, chairman and chief executive officer. "We delivered more than $300 million in net cash flow which was used to diversify our production base and create another source of growth through the acquisition of assets offshore Equatorial Guinea, and reduce our net debt. In Ghana, Kosmos replaced more than 200 percent of production on a net proved basis. In exploration, we completed the second phase of drilling offshore Mauritania and Senegal, which resulted in the largest hydrocarbon discovery of the year. With growing production, the Tortue development advancing at pace with the approval of the ICA, and an exploration portfolio that provides a sustainable, multi-year drilling program, Kosmos is stronger than ever."

 

Fourth quarter 2017 oil revenues were $187.1 million versus $156.1 million in the same quarter of 2016, on sales of 2.9 million barrels of oil in 2017 as compared to 3.0 million barrels in 2016. Fourth quarter 2017 oil revenues exclude $2.3 million of derivative settlements. Realized oil revenues, including the impact of the Company's hedging program, were $64.63 per barrel of oil sold in the fourth quarter of 2017. At the end of the quarter, the Company was in a net underlift position of approximately 0.4 million barrels of oil.

 

Production expense for the fourth quarter was $46 million, or $15.75 per barrel, versus $44 million, or $14.75 per barrel, in the fourth quarter of 2016. Production expense per barrel increased in the fourth quarter of 2017 compared to the same quarter a year ago primarily because there were no LOPI claim reimbursements received in the fourth quarter of 2017.

 

Exploration expenses totaled $53 million for the fourth quarter, compared to $76 million in the same period of 2016 primarily the result of lower geologic and geophysical costs. While Kosmos was carried for the Hippocampe-1 and Lamantin-1 exploration wells, $19 million of expenses related to the drilling rig that are not eligible for reimbursement were expensed during the quarter. Also included in the quarter was $18 million of expense related to our withdrawal from the Boujdour Maritime licenses.

 

Depletion and depreciation expense for the quarter was $74 million, or $25.35 per barrel. This was a slight increase from $25.08 per barrel in the fourth quarter of 2016.

 

General and administrative expenses were $18 million during the fourth quarter, slightly less than the previous quarter. This amount includes approximately $8 million in cash expense and $10 million in non-cash equity based compensation expense.

 

Fourth quarter results included a mark-to-market loss of $96 million related to the Company's oil derivative contracts. At December 31, 2017, the Company's hedging position had a total commodity net liability value of $97 million. As of the quarter end and including recently executed hedges, Kosmos had approximately 20 million barrels of oil hedged covering 2018 and 2019.

 

Gain on equity method investments, net during the fourth quarter was approximately $5.0 million and relates primarily to Kosmos' 50 percent ownership of our equity method investment in Kosmos Trident International Petroleum Inc. (KTIPI), which holds our 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) loss on equity method investments, net in the consolidated statement of operations.

 

Total capital expenditures in the fourth quarter were $62 million. Full year capital expenditures totaled $57 million, net of the initial proceeds from the BP transaction of $222 million.

 

Kosmos exited the fourth quarter of 2017 with approximately $1.1 billion of liquidity and $1,020 million of net debt. In early February 2018, Kosmos refinanced its reserve based lending facility (RBL). The borrowing capacity has been increased to $1.5 billion, up from $1.3 billion, resulting in Kosmos' overall liquidity increasing to $1.3 billion.

 

Year-End 2017 Reserves

 

The Company's proved net reserves at the end of 2017 were 110 million barrels of oil equivalent (MMBoe), including 89 MMBoe of net reserves in Ghana and 21 MMBoe of reserves in Equatorial Guinea. These volumes also include natural gas reserves of approximately 10 million barrels of oil equivalent, which represent the gas anticipated to be used for power generation on the Jubilee and TEN FPSO vessels and Ceiba/Okume complex, as well as sales gas from the TEN fields.

 

In Ghana, Kosmos replaced 214 percent of production, on a net proved basis, primarily related to the approval of the Greater Jubilee Full Field Development Plan and positive revisions at TEN. The Company's reported reserves are prepared by Ryder Scott Company, L.P., an independent reserve engineering firm.

 

Operational Update

 

Ghana

 

During the fourth quarter of 2017, gross sales volumes from Ghana averaged approximately 159,000 barrels of oil per day (bopd), including volumes from the Jubilee and TEN fields which averaged approximately 92,000 bopd and 67,000 bopd, respectively. For the full year, volumes from the Jubilee and TEN fields averaged approximately 90,000 bopd and 56,000 bopd, respectively.

 

Throughout 2017 the Jubilee FPSO turret remediation project made significant progress, and following the spread mooring of the FPSO at its current heading in late February, optimization of the offtake procedures has allowed the Jubilee field to regularly produce in excess of 100,000 bopd. The Jubilee partners and the Government of Ghana agreed on the need to stabilize the turret bearing and rotate the FPSO. The operator estimates stabilization will require a shutdown, in two phases in early 2018, resulting in approximately four weeks of oil production downtime. The initial phase of this shutdown commenced in early 2018. Kosmos now expects the rotation of the vessel to its optimal heading to take place around the end of the year with minimal impact to production in 2018.

 

In mid-October, the partnership received approval for the Greater Jubilee Full Field Development Plan (GJFFDP) from the Government of Ghana. The approval of the GJFFDP establishes a price for gas sales and allows for drilling to resume in 2018, which is expected to increase production, extend the field production profile, and allowed the Company to book additional proved reserves.

 

Production from TEN in the fourth quarter averaged approximately 67,000 bopd. TEN development drilling is expected to resume imminently and the addition of new wells coming online is expected to allow production to increase towards the FPSO capacity of 80,000 bopd.

 

Equatorial Guinea

 

In October 2017 Kosmos announced that, in partnership with Trident Energy (Trident), it had agreed to acquire an interest in three exploration licenses (Blocks W, S, and EG-21), as well as Hess Corporation's interest in the adjacent Ceiba Field and Okume Complex assets offshore Equatorial Guinea on a 50-50 basis. Under the terms of the agreements, Kosmos is primarily responsible for exploration and subsurface evaluation while Trident is primarily responsible for production operations and optimization. The transactions capture a material position in a proven but under-explored oil basin originally discovered and operated by members of the Kosmos management team.

 

The transaction expanded our position in the Gulf of Guinea and provides immediate cash flow through existing production with upside potential from optimizing current production operations, infill drilling, and step-out exploration opportunities with the potential for low cost tie-backs through existing infrastructure. The gross acquisition price of $650 million was effective as of January 1, 2017. Kosmos paid net cash consideration of approximately $231 from cash on hand and proceeds from the Company's reserves-based lending facility at close on November 28, 2017. Oil production from the Ceiba Field and Okume Complex averaged approximately 45,000 bopd (gross) during the period Kosmos held an interest in 2017.

 

Portfolio Additions

 

In December 2017, Kosmos expanded its portfolio with petroleum contracts covering Blocks CI-526, CI-602, CI-603, CI-707 and CI-708 with the Government of Cote d'Ivoire.  Kosmos holds a 45% participating interest and is the operator in all five blocks. BP has a 45% participating interest in the blocks and the Cote d'Ivoire national oil company, PETROCI Holding ("PETROCI"), currently has a 10% carried interest. The petroleum contracts cover approximately 17,000 square kilometers.

 

Inter-Governmental Cooperation Agreement

 

Also in February 2018, the governments of Mauritania and Senegal signed an Inter-Governmental Cooperation Agreement (ICA) which enables the development of the cross-border Tortue natural gas field to continue moving forward. With this agreement in place, we expect a final investment decision for the Greater Tortue project around the end of 2018 and are aiming for first gas in late 2021.

 

(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 with accompanying slides to discuss fourth quarter 2017 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 leading independent oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margins. Our assets include existing production and development projects offshore Ghana and Equatorial Guinea, large discoveries and significant further exploration potential offshore Mauritania and Senegal, as well as exploration licenses offshore Cote d'Ivoire, Equatorial Guinea, Morocco, Sao Tome and Principe, and Suriname.  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 2016 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) equitybased 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.

 

Inside Information

 

This announcement contains inside information. The person responsible for arranging the release of this announcement is Jamie Buckland, Vice President, Investor Relations.

 

 

 

 

###

 

 

 

 

Kosmos Energy Ltd.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

2017

 

2016

 

2017

 

2016

Revenues and other income:

 

 

 

 

 

 

 

 

Oil and gas revenue

 

$

187,104

 

 

$

156,118

 

 

$

578,139

 

 

$

310,377

 

Other income, net

 

-

 

 

54,799

 

 

58,697

 

 

74,978

 

Total revenues and other income

 

187,104

 

 

210,917

 

 

636,836

 

 

385,355

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Oil and gas production

 

46,173

 

 

43,720

 

 

126,850

 

 

119,367

 

Facilities insurance modifications, net

 

514

 

 

9,015

 

 

(820

)

 

14,961

 

Exploration expenses

 

53,371

 

 

75,782

 

 

216,050

 

 

202,280

 

General and administrative

 

17,747

 

 

27,951

 

 

68,302

 

 

87,623

 

Depletion and depreciation

 

74,294

 

 

74,373

 

 

255,203

 

 

140,404

 

Interest and other financing costs, net

 

22,866

 

 

13,879

 

 

77,595

 

 

44,147

 

Derivatives, net

 

96,372

 

 

14,269

 

 

59,968

 

 

48,021

 

(Gain) loss on equity method investments, net

 

(4,978

)

 

-

 

 

6,252

 

 

-

 

Other expenses, net

 

2,288

 

 

9,348

 

 

5,291

 

 

23,116

 

Total costs and expenses

 

308,647

 

 

268,337

 

 

814,691

 

 

679,919

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(121,543

)

 

(57,420

)

 

(177,855

)

 

(294,564

)

Income tax expense (benefit)

 

536

 

 

(720

)

 

44,937

 

 

(10,784

)

Net loss

 

$

(122,079

)

 

$

(56,700

)

 

$

(222,792

)

 

$

(283,780

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.31

)

 

$

(0.15

)

 

$

(0.57

)

 

$

(0.74

)

Diluted

 

$

(0.31

)

 

$

(0.15

)

 

$

(0.57

)

 

$

(0.74

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares used to compute net loss per share:

 

 

 

 

 

 

 

 

Basic

 

389,149

 

 

386,214

 

 

388,375

 

 

385,402

 

Diluted

 

389,149

 

 

386,214

 

 

388,375

 

 

385,402

 

 

 

 

Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 

 

 

December 31,

 

December 31,

 

 

2017

 

2016

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

233,412

 

 

$

194,057

 

Receivables, net

 

160,961

 

 

143,337

 

Other current assets

 

139,229

 

 

137,793

 

Total current assets

 

533,602

 

 

475,187

 

 

 

 

 

 

Property and equipment, net

 

2,317,828

 

 

2,708,892

 

Other non-current assets

 

341,173

 

 

157,386

 

Total assets

 

$

3,192,603

 

 

$

3,341,465

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

141,787

 

 

$

220,627

 

Accrued liabilities

 

219,412

 

 

129,706

 

Other current liabilities

 

67,531

 

 

19,692

 

Total current liabilities

 

428,730

 

 

370,025

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, net

 

1,282,797

 

 

1,321,874

 

Deferred tax liabilities

 

476,548

 

 

482,221

 

Other non-current liabilities

 

107,416

 

 

86,146

 

Total long-term liabilities

 

1,866,761

 

 

1,890,241

 

 

 

 

 

 

Total shareholders' equity

 

897,112

 

 

1,081,199

 

Total liabilities and shareholders' equity

 

$

3,192,603

 

 

$

3,341,465

 

 

 

 

Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flow

(In thousands, unaudited)

 

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

2017

 

2016

 

2017

 

2016

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(122,079

)

 

$

(56,700

)

 

$

(222,792

)

 

$

(283,780

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depletion, depreciation and amortization

 

76,844

 

 

76,924

 

 

265,407

 

 

150,608

 

Deferred income taxes

 

(23,315

)

 

(6,740

)

 

9,505

 

 

(23,561

)

Unsuccessful well costs

 

18,686

 

 

3,470

 

 

43,201

 

 

6,079

 

Change in fair value of derivatives

 

97,746

 

 

9,380

 

 

71,822

 

 

46,559

 

Cash settlements on derivatives, net(1)

 

613

 

 

44,373

 

 

25,888

 

 

188,895

 

Equity-based compensation

 

9,968

 

 

9,693

 

 

39,913

 

 

40,084

 

(Gain) loss on equity method investments, net

 

(4,978

)

 

-

 

 

6,252

 

 

-

 

Other

 

2,540

 

 

(3

)

 

5,952

 

 

13,355

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Net changes in working capital

 

86,180

 

 

37,303

 

 

(8,531

)

 

(86,162

)

Net cash provided by operating activities

 

142,205

 

 

117,700

 

 

236,617

 

 

52,077

 

 

 

 

 

 

 

 

 

 

Investing activities:

 

 

 

 

 

 

 

 

Oil and gas assets

 

(39,783

)

 

(29,719

)

 

(140,495

)

 

(535,975

)

Other property

 

(1,219

)

 

(995

)

 

(2,858

)

 

(1,998

)

Equity method investments

 

(231,280

)

 

-

 

 

(231,280

)

 

-

 

Proceeds from sale of assets

 

-

 

 

-

 

 

222,068

 

 

210

 

Net cash used in investing activities

 

(272,282

)

 

(30,714

)

 

(152,565

)

 

(537,763

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Borrowings on long-term debt

 

200,000

 

 

-

 

 

200,000

 

 

450,000

 

Payments on long-term debt

 

-

 

 

-

 

 

(250,000

)

 

-

 

Purchase of treasury stock

 

(78

)

 

(51

)

 

(2,194

)

 

(1,981

)

Deferred financing costs

 

(67

)

 

-

 

 

(67

)

 

-

 

Net cash provided by (used in) financing activities

 

199,855

 

 

(51

)

 

(52,261

)

 

448,019

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

69,778

 

 

86,935

 

 

31,791

 

 

(37,667

)

Cash, cash equivalents and restricted cash at beginning of period

 

235,208

 

 

186,260

 

 

273,195

 

 

310,862

 

Cash, cash equivalents and restricted cash at end of period

 

$

304,986

 

 

$

273,195

 

 

$

304,986

 

 

$

273,195

 

 

 

(1)   Cash settlements on commodity hedges were $2.3 million and $41.4 million for the three months ended December 31, 2017 and 2016, respectively, and $38.7 million and $188.0 million for the years ended December 31, 2017 and 2016.

 

 

Kosmos Energy Ltd.

Equity Method Investment

(In thousands, unaudited)

 

 

Period

November 28, 2017 through

December 31, 2017

Revenues and other income:

 

Oil and gas revenue

$

54,615

 

Other income

294

Total revenues and other income

54,909

 

 

 

Costs and expenses:

 

Oil and gas production

15,509

 

Depletion and depreciation

10,738

 

Other expenses, net

(19

)

Total costs and expenses

26,228

 

 

 

Income before income taxes

28,681

 

Income tax expense

6,588

Net income

$

22,093

 

 

 

Kosmos' share of net income

$

11,046

 

Basis difference amortization(1)

5,812

 

Equity in earnings - KTIPI

$

5,234

 

 

 

(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

 

 

December 31,

 

 

2017

 

2016

 

Kosmos

 

Equatorial Guinea (Equity Method)(1)

 

Total(2)

 

Kosmos

 

Net income (loss)

$

(122,079

)

 

$

5,234

 

 

$

(116,845

)

 

$

(56,700

)

 

Exploration expenses

53,371

 

 

-

 

 

53,371

 

 

75,782

 

 

Facilities insurance modifications, net

514

 

 

-

 

 

514

 

 

9,015

 

 

Depletion and depreciation

74,294

 

 

11,181

 

 

85,475

 

 

74,373

 

 

Equity-based compensation

9,968

 

 

-

 

 

9,968

 

 

9,693

 

 

Derivatives, net

96,372

 

 

-

 

 

96,372

 

 

14,269

 

 

Cash settlements on commodity derivatives

2,311

 

 

-

 

 

2,311

 

 

41,436

 

 

Inventory impairment and other

820

 

 

-

 

 

820

 

 

(279

)

 

Disputed charges and related costs

1,702

 

 

-

 

 

1,702

 

 

9,473

 

 

Loss on equity method investment - KBSL

256

 

 

-

 

 

256

 

 

-

 

 

Gain on equity method investment - KTIPI

(5,234

)

 

-

 

 

(5,234

)

 

-

 

 

Interest and other financing costs, net

22,866

 

 

-

 

 

22,866

 

 

13,879

 

 

Income tax expense (benefit)

536

 

 

3,294

 

 

3,830

 

 

(720

)

 

EBITDAX

$

135,697

 

 

$

19,709

 

 

$

155,406

 

 

$

190,221

 

 

 

 

Years Ended

 

 

December 31,

 

 

2017

 

2016

 

 

Kosmos

 

Equatorial Guinea (Equity Method)(1)

 

Total(2)

 

Kosmos

 

Net income (loss)

$

(222,792

)

 

$

5,234

 

 

$

(217,558

)

 

$

(283,780

)

 

Exploration expenses

216,050

 

 

-

 

 

216,050

 

 

202,280

 

 

Facilities insurance modifications, net

(820

)

 

-

 

 

(820

)

 

14,961

 

 

Depletion and depreciation

255,203

 

 

11,181

 

 

266,384

 

 

140,404

 

 

Equity-based compensation

39,913

 

 

-

 

 

39,913

 

 

40,084

 

 

Derivatives, net

59,968

 

 

-

 

 

59,968

 

 

48,021

 

 

Cash settlements on commodity derivatives

38,737

 

 

-

 

 

38,737

 

 

187,950

 

 

Inventory impairment and other

403

 

 

-

 

 

403

 

 

10,718

 

 

Disputed charges and related costs

4,962

 

 

-

 

 

4,962

 

 

11,299

 

 

Loss on equity method investment - KBSL

11,486

 

 

-

 

 

11,486

 

 

-

 

 

Gain on equity method investment - KTIPI

(5,234

)

 

-

 

 

(5,234

)

 

-

 

 

Interest and other financing costs, net

77,595

 

 

-

 

 

77,595

 

 

44,147

 

 

Income tax expense (benefit)

44,937

 

 

3,294

 

 

48,231

 

 

(10,784

)

 

EBITDAX

$

520,408

 

 

$

19,709

 

 

$

540,117

 

 

$

405,300

 

 

 

 

(1)   For the three months and years ended December 31, 2017, 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 December 31, 2017, as we account for such investment under the equity method.

(2)   Pro forma EBITDAX, including Kosmos' 50% interest in KTEGI for 2017, for the purposes of calculation of our covenants under our RBL facility would be $695 million and $183 million for the year ended 2017 and three months ended December 31, 2017, respectively. 

 

 

Adjusted Net Income

(In thousands, except per share amounts, unaudited)

 

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

 

2017

 

2016

 

2017

 

2016

Net loss

$

(122,079

)

 

$

(56,700

)

 

$

(222,792

)

 

$

(283,780

)

 

 

 

 

 

 

 

 

Derivatives, net

96,372

 

 

14,269

 

 

59,968

 

 

48,021

 

Cash settlements on commodity derivatives

2,311

 

 

41,436

 

 

38,737

 

 

187,950

 

Facilities insurance modifications, net

514

 

 

9,015

 

 

(820

)

 

14,961

 

Inventory impairment and other

820

 

 

(279

)

 

403

 

 

10,718

 

Disputed charges and related costs

1,702

 

 

9,473

 

 

4,962

 

 

11,299

 

Loss on equity method investments, net

256

 

 

-

 

 

11,486

 

 

-

 

Total selected items before tax

101,975

 

 

73,914

 

 

114,736

 

 

272,949

 

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(34,539

)

 

(22,812

)

 

(34,547

)

 

(89,581

)

Impact of U.S. tax law change

16,721

 

 

-

 

 

16,721

 

 

-

 

Adjusted net loss

$

(37,922

)

 

$

(5,598

)

 

$

(125,882

)

 

$

(100,412

)

 

 

 

 

 

 

 

 

Net loss per diluted share

$

(0.31

)

 

$

(0.15

)

 

$

(0.57

)

 

$

(0.74

)

 

 

 

 

 

 

 

 

Derivatives, net

0.25

 

 

0.04

 

 

0.15

 

 

0.12

 

Cash settlements on commodity derivatives

0.01

 

 

0.11

 

 

0.10

 

 

0.49

 

Facilities insurance modifications, net

-

 

 

0.02

 

 

-

 

 

0.04

 

Inventory impairment and other

-

 

 

-

 

 

-

 

 

0.03

 

Disputed charges and related costs

-

 

 

0.02

 

 

0.01

 

 

0.03

 

Loss on equity method investments, net

-

 

 

-

 

 

0.03

 

 

-

 

Total selected items before tax

0.26

 

 

0.19

 

 

0.29

 

 

0.71

 

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(0.09

)

 

(0.05

)

 

(0.09

)

 

(0.23

)

Impact of U.S. tax law change

0.04

 

 

-

 

 

0.04

 

 

-

 

Adjusted net loss per diluted share

$

(0.10

)

 

$

(0.01

)

 

$

(0.33

)

 

$

(0.26

)

 

 

 

 

 

 

 

 

Weighted average number of diluted shares

389,149

 

 

386,214

 

 

388,375

 

 

385,402

 

 

 

(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

 

Years Ended

 

December 31,

 

December 31,

 

2017

 

2016

 

2017

 

2016

Net Oil Volume Sold (MMBbls)

 

 

 

 

 

 

 

Jubilee

1.944

 

 

1.969

 

 

7.782

 

 

5.760

 

TEN

0.987

 

 

0.996

 

 

2.979

 

 

0.996

 

Ceiba / Okume

0.405

 

 

N/A

 

0.405

 

 

N/A

Total

3.336

 

 

2.965

 

 

11.166

 

 

6.756

 

 

 

 

 

 

 

 

 

Oil revenue

 

 

 

 

 

 

 

Ghana

$

187,104

 

 

$

156,118

 

 

$

578,139

 

 

$

310,377

 

Ceiba / Okume

27,307

 

 

N/A

 

27,307

 

 

N/A

Total

214,411

 

 

156,118

 

 

605,446

 

 

310,377

 

Cash settlements on commodity derivatives

2,311

 

 

41,436

 

 

38,737

 

 

187,950

 

Realized oil revenue

$

216,722

 

 

$

197,554

 

 

$

644,183

 

 

$

498,327

 

 

 

 

 

 

 

 

 

Oil production costs

 

 

 

 

 

 

 

Ghana

$

46,173

 

 

$

43,720

 

 

$

126,850

 

 

$

119,367

 

Ceiba / Okume

7,755

 

 

N/A

 

7,755

 

 

N/A

Total

$

53,928

 

 

$

43,720

 

 

$

134,605

 

 

$

119,367

 

 

 

 

 

 

 

 

 

Per Barrel:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil revenue

 

 

 

 

 

 

 

Ghana

$

63.84

 

 

$

52.65

 

 

$

53.73

 

 

$

45.94

 

Ceiba / Okume

67.42

 

 

N/A

 

67.42

 

 

N/A

Total

64.27

 

 

52.65

 

 

54.22

 

 

45.94

 

Cash settlements on commodity derivatives

0.79

 

 

13.98

 

 

3.60

 

 

27.82

 

Realized oil revenue

$

65.06

 

 

$

66.63

 

 

$

57.82

 

 

$

73.76

 

 

 

 

 

 

 

 

 

Oil production costs

 

 

 

 

 

 

 

Ghana

$

15.75

 

 

$

14.75

 

 

$

11.78

 

 

$

17.67

 

Ceiba / Okume

19.15

 

 

N/A

 

19.15

 

 

N/A

Total

$

16.17

 

 

$

14.75

 

 

$

12.05

 

 

$

17.67

 

 

 

(1)   For the three months and years ended December 31, 2017, we have presented separately our 50% share of the results from operations for the Equatorial Guinea investment from the date of acquisition, November 28, 2017 through December 31, 2017, as we account for such investment under the equity method.

 

Ghana was underlifted by approximately 428 thousand barrels as of December 31, 2017.

 

 

 

Hedging Summary

As of December 31, 2017(1)

(Unaudited)

 

 

 

Volume

 

Floor(2)

 

Short Put

 

Ceiling

 

Long Call

 

 

(MMBbls)

 

 

 

 

 

 

 

 

2018 :

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

2.913

 

$

56.57

 

 

$

41.57

 

 

$

65.90

 

 

$

-

 

Four-way collars

 

3.000

 

$

50.00

 

 

$

40.00

 

 

$

61.33

 

 

$

70.00

 

Swaps

 

1.000

 

$

57.25

 

 

 

 

 

 

 

Swaps with puts

 

4.000

 

$

56.14

 

 

$

42.50

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2019 :

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

9.500

 

$

52.63

 

 

$

43.16

 

 

$

65.01

 

 

$

-

 

 

 

(1)   Please see the Company's filed 10-K for full disclosure on hedging material. Includes hedging position as of December 31, 2017 and hedges added since year-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 $65.00/Bbl in 2018, 1.0 MMBbls of purchased (long) calls with a strike price of $70.00/Bbl in the second half of 2018 and 0.9 MMBbls of sold (short) calls with a strike price of $80.00/Bbl in 2019.

 

2018 Guidance

 

 

1Q

 

FY

 

 

 

1Q

 

FY

 

 

2018

 

2018

 

 

 

2018

 

2018

 

 

 

 

 

 

 

 

 

 

 

Kosmos

 

 

 

 

 

Equatorial Guinea - Equity Method Investment(1)

Cargos

 

 

 

 

 

 

 

 

 

 

Jubilee

 

1

 

7

 

Gross Production (Bopd)

 

 

 

43,000

TEN

 

1

 

4

 

 

 

 

 

 

Ghana

 

2

 

11

 

Cargos(2)

 

3

 

10

 

 

 

 

 

 

 

 

 

 

 

Avg. Cargo Size (MBbls)

 

~975

 

~975

 

Avg. Cargo Size (MBbls)

 

~1,000

 

~1,000

 

 

 

 

 

 

 

 

 

 

 

Opex ($/bbl)

 

$21.00 - $23.00

 

$14.00 - $17.00

 

Opex ($/bbl)

 

 

 

$13.00 - $15.00

 

 

 

 

 

 

 

 

 

 

 

DD&A ($/bbl)

 

$27.00 - $28.00

 

$24.00 - $26.00

 

DD&A ($/bbl)

 

 

 

$24.00 - $26.00

 

 

 

 

 

 

 

 

 

 

 

G&A ($MM)

 

$30

 

$100

 

Taxes ($/bbl)

 

 

 

$11.00 - $13.00

% Cash

 

65%

 

65%

 

% Cash

 

 

 

60

%

 

 

 

 

 

 

 

 

 

 

 

Exploration Expense

 

Average of $30mm per quarter

 

Capex ($MM)

 

 

 

$5

(Non Dry Hole)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes ($/bbl)

 

$2.50 - $3.50

 

$3.00 - $4.00

 

 

 

 

 

 

% Current

 

100%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capex ($MM)

 

 

 

$300

 

 

 

 

 

 

Ghana

 

 

 

$110

 

 

 

 

 

 

Exploration

 

 

 

 

 

 

 

 

 

 

Suriname Drilling

 

 

 

$50

 

 

 

 

 

 

Seismic

 

 

 

$80

 

 

 

 

 

 

New Ventures

 

 

 

$50

 

 

 

 

 

 

Corporate

 

 

 

$10

 

 

 

 

 

 

 

 

(1)   Represents 100% interest in our equity method investment Kosmos Trident International Petroleum Inc. ("KTIPI"). Kosmos owns a 50% interest in KTIPI which holds an 85% participating interest in the Ceiba Field and Okume Complex through its wholly-owned subsidiary, Kosmos-Trident Equatorial Guinea Inc. ("KTEGI"), representing a 40.375% net indirect interest to Kosmos.

(2)   Entitlement share of production net to KTIPI in which Kosmos holds a 50% interest.

 

 

Source: Kosmos Energy Ltd.

 

 

Investor Relations

Jamie Buckland

+44 (0) 203 954 2831

jbuckland@kosmosenergy.com

 

           

Rhys Williams

+1-214-445-9693

rwilliams@kosmosenergy.com

 

 

Media Relations

Thomas Golembeski

+1-214-445-9674

tgolembeski@kosmosenergy.com

 


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