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Kosmos Energy Ltd - Second Quarter 2018 Results

08/06/18 06:00 GMT
RNS Number : 8535W
Kosmos Energy Limited
06 August 2018
 

 

 

NEWS RELEASE

 

 

KOSMOS ENERGY ANNOUNCES SECOND QUARTER 2018 RESULTS

 

DALLAS--(BUSINESS WIRE)-August 6, 2018-- Kosmos Energy Ltd. ("Kosmos") (NYSE: KOS) announced today financial and operating results for the second quarter of 2018. For the second quarter of 2018, the Company generated a net loss of $103.3 million, or $0.26 per diluted share as compared to net loss of $8.5 million or $0.02 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 $34.9 million or $0.09 per diluted share for the second quarter of 2018.

 

Andrew G. Inglis, chairman and chief executive officer, said: "The business continued to perform well during the second quarter with strong production from our high-margin production assets in Ghana and Equatorial Guinea. We remain focused on implementing plans in both countries to enhance production going forward. The other parts of our business - development and exploration - continue to make progress against key objectives. The Tortue gas development offshore Mauritania and Senegal is moving forward with front end engineering design (FEED) for Phase 1 of the project progressing on schedule and the partnership's commercial teams evaluating gas marketing proposals from a range of potential buyers. We expect to make a final investment decision (FID) on the Tortue project around the end of the year. In exploration, our program is unchanged, with one remaining test this year offshore Suriname. We expect to spud the Pontoenoe prospect in Block 42 in mid-August. We remain on track to deliver $100 to $200 million of net cash flow in 2018."

 

Second quarter 2018 oil revenues were $215 million versus $136 million in the same quarter of 2017, on sales of 2.9 million barrels of oil in 2018 as compared to 2.9 million barrels in 2017. Including the impact of the Company's hedging program, revenue was $61.36 per barrel of oil sold in the second 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 second quarter was $50 million, or $17.21 per barrel, versus $22 million, or $7.41 per barrel, in the second quarter of 2017. Production expense per barrel increased in the second quarter of 2018 compared to the same quarter a year ago primarily because the year ago quarter included insurance proceeds received related to increased costs due to the Jubilee FPSO turret bearing issue, and a credit accrual adjustment from the operator of the Jubilee and TEN fields. Second quarter 2018 production expense of $17.21 per barrel decreased sequentially from the first quarter of 2018 of $24.18 due to the higher number of liftings at Jubilee, which has a lower unit production expense than TEN.

 

Exploration expenses totaled $77 million for the second quarter, and includes amounts related to ongoing seismic and geologic and geophysical costs as well as unsuccessful well costs of approximately $45 million related to the Anapai-1 and 1A wells.

 

Depletion and depreciation expense for the quarter was $74 million, or $25.66 per barrel compared to $24.85 per barrel in the second quarter of 2017.

 

General and administrative expenses were $17 million during the second quarter. This amount includes approximately $8 million in cash expense and $9 million in non-cash equity based compensation expense.

 

Second quarter results included a mark-to-market loss of $140 million related to the Company's oil derivative contracts. At June 30, 2018, the Company's hedging position had a total commodity net liability value of approximately $219 million. As of the quarter end and including recently executed hedges, Kosmos had approximately 16 million barrels of oil hedged covering 2018 and 2019.

 

Gain on equity method investments, net during the second quarter was approximately $16 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 July, the assets have delivered approximately $148 million of cash dividend distributions to Kosmos, or approximately 64 percent of the purchase price.

 

Total capital expenditures in the second quarter were $97 million, bringing the first half total to $155 million.

 

Kosmos exited the second quarter of 2018 with approximately $1.3 billion of liquidity and $1,079 million of net debt.

 

Operational Update

 

Ghana

 

During the second quarter of 2018, gross sales volumes from Ghana averaged approximately 129,400 barrels of oil per day (bopd), including volumes from the Jubilee and TEN fields.

 

Gross production from Jubilee averaged approximately 67,900 barrels of oil per day during the second quarter resulting in Kosmos lifting two cargos, as expected. During the quarter the field was shut down for the second phase turret remediation and stabilization work which was successfully completed. We continue to expect the rotation of the vessel to take place around the end of 2018 with minimal impact to production in 2018. Following the shutdown, the field has consistently produced above 100,000 bopd. The combination of the work performed during the shutdown and the completion of two producer wells, one each in the third and fourth quarter this year, is expected to allow oil production to grow towards the FPSO nameplate capacity of 120,000 bopd.

 

Gross production from TEN averaged approximately 61,500 bopd during the second quarter, resulting in Kosmos lifting one cargo, as expected. Two producer wells are expected to be completed in the field by year-end, including the Ntomme-5 well in August, which is the first well to be put on production since field startup two years ago. This drilling activity at TEN is expected to allow production to increase towards the FPSO capacity of 80,000 bopd.

 

Kosmos and its partners have decided to add a second rig, the Stena Forth, in Ghana beginning in October 2018, with the objective of accelerating the addition of new wells. There will be no impact to the 2018 capital budget as the savings from the later arrival of the first rig will offset the costs of the second rig.

 

Equatorial Guinea

 

Gross oil production from the Ceiba Field and Okume Complex averaged over 46,000 bopd during the second quarter of 2018, exceeding the full year 2018 forecast of 43,000 barrels per day for the second quarter in a row. Second quarter production resulted in two cargo liftings net to KTIPI, or one cargo net to Kosmos' 50 percent interest in KTIPI. Kosmos and it's partners are currently focused on production optimization and planning for the first phase electric submersible pump (ESP) installation with the work expected to commence in the fourth quarter of 2018. In May, Kosmos began a 3D seismic survey of approximately 10,100 square kilometers over blocks EG-21, EG-24, S and W offshore Equatorial Guinea, and approximately 200 square kilometers over Block G.

 

Suriname

 

Kosmos expects to commence drilling operations on the Pontoenoe-1 well in mid-August. Pontoenoe is the first of up to three independent prospects in Block 42 offshore Suriname and is a similar play type to the Turbot and Longtail discoveries located approximately 70 kilometers to the west in Guyana.

 

Tortue

 

Front End Engineering Design (FEED) contracts have been awarded by the operator and this work remains ongoing. In addition, Kosmos has received proposals for gas marketing from a shortlisted group of potential buyers and is in the process of evaluating these with the partners. Kosmos expects a final investment decision for the Greater Tortue project around the end of 2018 and is 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 to discuss second 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 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 growing production offshore Ghana and Equatorial Guinea, a competitively positioned Tortue gas project in Mauritania and Senegal and a sustainable exploration program balanced between proven basins (Equatorial Guinea), emerging basins (Mauritania, Senegal and Suriname) and frontier basins (Cote d'Ivoire and Sao Tome and Principe). 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) 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.

 

###

 

 

 

 

Kosmos Energy Ltd.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Revenues and other income:

 

 

 

 

 

 

 

 

Oil and gas revenue

 

$

215,191

 

 

$

136,363

 

 

$

342,387

 

 

$

239,795

 

Other income, net

 

282

 

 

10,161

 

 

263

 

 

58,695

 

Total revenues and other income

 

215,473

 

 

146,524

 

 

342,650

 

 

298,490

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Oil and gas production

 

49,815

 

 

21,604

 

 

96,583

 

 

41,490

 

Facilities insurance modifications, net

 

1,029

 

 

(2

)

 

9,478

 

 

2,572

 

Exploration expenses

 

77,481

 

 

19,982

 

 

98,674

 

 

125,696

 

General and administrative

 

17,497

 

 

14,739

 

 

39,380

 

 

30,526

 

Depletion and depreciation

 

74,289

 

 

72,441

 

 

128,566

 

 

107,419

 

Interest and other financing costs, net

 

18,870

 

 

19,465

 

 

44,564

 

 

36,251

 

Derivatives, net

 

140,272

 

 

(25,411

)

 

178,750

 

 

(63,268

)

(Gain) loss on equity method investments, net

 

(16,100

)

 

6,426

 

 

(34,796

)

 

6,426

 

Other expenses, net

 

938

 

 

2,008

 

 

4,643

 

 

2,770

 

Total costs and expenses

 

364,091

 

 

131,252

 

 

565,842

 

 

289,882

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(148,618

)

 

15,272

 

 

(223,192

)

 

8,608

 

Income tax expense (benefit)

 

(45,345

)

 

23,739

 

 

(69,693

)

 

45,916

 

Net loss

 

$

(103,273

)

 

$

(8,467

)

 

$

(153,499

)

 

$

(37,308

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.26

)

 

$

(0.02

)

 

$

(0.39

)

 

$

(0.10

)

Diluted

 

$

(0.26

)

 

$

(0.02

)

 

$

(0.39

)

 

$

(0.10

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

396,826

 

 

387,952

 

 

396,218

 

 

387,634

 

Diluted

 

396,826

 

 

387,952

 

 

396,218

 

 

387,634

 

 

 

Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 

 

 

June 30,

 

December 31,

 

 

2018

 

2017

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

116,941

 

 

$

233,412

 

Receivables, net

 

157,817

 

 

160,961

 

Other current assets

 

143,153

 

 

139,229

 

Total current assets

 

417,911

 

 

533,602

 

 

 

 

 

 

Property and equipment, net

 

2,263,064

 

 

2,317,828

 

Other non-current assets

 

222,468

 

 

341,173

 

Total assets

 

$

2,903,443

 

 

$

3,192,603

 

 

 

 

 

 

Liabilities and shareholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

128,471

 

 

$

141,787

 

Accrued liabilities

 

145,600

 

 

219,412

 

Other current liabilities

 

162,329

 

 

67,531

 

Total current liabilities

 

436,400

 

 

428,730

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, net

 

1,167,775

 

 

1,282,797

 

Deferred tax liabilities

 

392,918

 

 

476,548

 

Other non-current liabilities

 

162,219

 

 

107,416

 

Total long-term liabilities

 

1,722,912

 

 

1,866,761

 

 

 

 

 

 

Total shareholders' equity

 

744,131

 

 

897,112

 

Total liabilities and shareholders' equity

 

$

2,903,443

 

 

$

3,192,603

 

 

Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flow

(In thousands, unaudited)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30,

 

June 30,

 

 

2018

 

2017

 

2018

 

2017

Operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(103,273

)

 

$

(8,467

)

 

$

(153,499

)

 

$

(37,308

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depletion, depreciation and amortization

 

76,572

 

 

74,992

 

 

133,289

 

 

112,521

 

Deferred income taxes

 

(57,179

)

 

18,884

 

 

(81,876

)

 

41,017

 

Unsuccessful well costs

 

44,611

 

 

3,517

 

 

44,654

 

 

3,605

 

Change in fair value of derivatives

 

138,824

 

 

(20,767

)

 

177,790

 

 

(58,944

)

Cash settlements on derivatives, net(1)

 

(35,824

)

 

8,264

 

 

(56,221

)

 

19,417

 

Equity-based compensation

 

9,068

 

 

10,499

 

 

17,085

 

 

20,329

 

Loss on extinguishment of debt

 

-

 

 

-

 

 

4,056

 

 

-

 

Distributions in excess of equity in earnings

 

-

 

 

6,426

 

 

5,234

 

 

6,426

 

Other

 

927

 

 

1,893

 

 

449

 

 

2,514

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Net changes in working capital

 

(56,277

)

 

(82,373

)

 

(90,528

)

 

(127,091

)

Net cash provided by (used in) operating activities

 

17,449

 

 

12,868

 

 

433

 

 

(17,514

)

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Oil and gas assets

 

(57,938

)

 

(10,995

)

 

(92,650

)

 

(42,805

)

Other property

 

(1,058

)

 

(1,183

)

 

(2,815

)

 

(1,454

)

Return of investment from KTIPI

 

38,900

 

 

-

 

 

79,970

 

 

-

 

Proceeds on sale of assets

 

-

 

 

18,149

 

 

-

 

 

222,068

 

Net cash provided by (used in) investing activities

 

(20,096

)

 

5,971

 

 

(15,495

)

 

177,809

 

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Payments on long-term debt

 

(100,000

)

 

(50,000

)

 

(100,000

)

 

(200,000

)

Purchase of treasury stock

 

(5,821

)

 

(830

)

 

(17,695

)

 

(1,945

)

Deferred financing costs

 

(774

)

 

-

 

 

(25,743

)

 

-

 

Net cash used in financing activities

 

(106,595

)

 

(50,830

)

 

(143,438

)

 

(201,945

)

 

 

 

 

 

 

 

 

 

Net decrease in cash, cash equivalents and restricted cash

 

(109,242

)

 

(31,991

)

 

(158,500

)

 

(41,650

)

Cash, cash equivalents and restricted cash at beginning of period

 

255,728

 

 

263,536

 

 

304,986

 

 

273,195

 

Cash, cash equivalents and restricted cash at end of period

 

$

146,486

 

 

$

231,545

 

 

$

146,486

 

 

$

231,545

 

 

 

(1)   Cash settlements on commodity hedges were $(37.5) million and $12.9 million for the three months ended June 30, 2018 and 2017, respectively, and $(57.3) million and $24.3 million for the six months ended June 30, 2018 and 2017.

Kosmos Energy Ltd.

Equity Method Investment

(In thousands, unaudited)

 

 

Three months ended

Six months ended

 

June 30, 2018

June 30, 2018

Revenues and other income:

 

 

Oil and gas revenue

$

138,395

 

$

384,749

 

Other income

)

 

Total revenues and other income

138,225

 

384,866

 

 

 

 

Costs and expenses:

 

 

Oil and gas production

23,332

 

75,033

 

Depletion and depreciation

21,881

 

75,951

 

Other expenses, net

)

)

Total costs and expenses

45,140

 

150,832

 

 

 

 

Income before income taxes

93,085

 

234,034

 

Income tax expense

 

 

Net income

$

59,465

 

$

150,783

 

 

 

 

Kosmos' share of net income

$

29,733

 

$

75,392

 

Basis difference amortization(1)

13,633

 

40,596

 

Equity in earnings - KTIPI

$

16,100

 

$

34,796

 

 

 

(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

 

June 30,

 

2018

 

2017

 

Kosmos

 

Equatorial Guinea (Equity Method)(1)

 

Total

 

Kosmos

Net income (loss)

$

(103,273

)

 

$

16,100

 

 

$

(87,173

)

 

$

(8,467

)

Exploration expenses

77,481

 

 

-

 

 

77,481

 

 

19,982

 

Facilities insurance modifications, net

1,029

 

 

-

 

 

1,029

 

 

(2

)

Depletion and depreciation

74,289

 

 

24,574

 

 

98,863

 

 

72,441

 

Equity-based compensation

9,068

 

 

-

 

 

9,068

 

 

10,499

 

Derivatives, net

140,272

 

 

-

 

 

140,272

 

 

(25,411

)

Cash settlements on commodity derivatives

(37,521

)

 

-

 

 

(37,521

)

 

12,928

 

Inventory impairment and other

(24

)

 

-

 

 

(24

)

 

545

 

Disputed charges and related costs

626

 

 

-

 

 

626

 

 

1,209

 

Loss on equity method investment - KBSL

-

 

 

-

 

 

-

 

 

6,426

 

Gain on equity method investment - KTIPI

(16,100

)

 

-

 

 

(16,100

)

 

-

 

Interest and other financing costs, net

18,870

 

 

-

 

 

18,870

 

 

19,465

 

Income tax expense (benefit)

(45,345

)

 

16,810

 

 

(28,535

)

 

23,739

 

EBITDAX

$

119,372

 

 

$

57,484

 

 

$

176,856

 

 

$

133,354

 

 

 

Six months ended

 

June 30,

 

2018

 

2017

 

Kosmos

 

Equatorial Guinea (Equity Method)(1)

 

Total(2)

 

Kosmos

Net income (loss)

$

(153,499

)

 

$

34,796

 

 

$

(118,703

)

 

$

(37,308

)

Exploration expenses

98,674

 

 

-

 

 

98,674

 

 

125,696

 

Facilities insurance modifications, net

9,478

 

 

-

 

 

9,478

 

 

2,572

 

Depletion and depreciation

128,566

 

 

78,572

 

 

207,138

 

 

107,419

 

Equity-based compensation

17,085

 

 

-

 

 

17,085

 

 

20,329

 

Derivatives, net

178,750

 

 

-

 

 

178,750

 

 

(63,268

)

Cash settlements on commodity derivatives

(57,265

)

 

-

 

 

(57,265

)

 

24,348

 

Inventory impairment and other

(5

)

 

-

 

 

(5

)

 

84

 

Disputed charges and related costs

2,961

 

 

-

 

 

2,961

 

 

2,439

 

Loss on equity method investment - KBSL

-

 

 

-

 

 

-

 

 

6,426

 

Gain on equity method investment - KTIPI

(34,796

)

 

-

 

 

(34,796

)

 

-

 

Interest and other financing costs, net

44,564

 

 

-

 

 

44,564

 

 

36,251

 

Income tax expense (benefit)

(69,693

)

 

41,626

 

 

(28,067

)

 

45,916

 

EBITDAX

$

164,820

 

 

$

154,994

 

 

$

319,814

 

 

$

270,904

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

 

June 30, 2018

 

 

Kosmos

 

Equatorial Guinea (Equity Method)(2)

 

Total

 

Net income (loss)

$

(338,983

)

 

$

40,030

 

 

$

(298,953

)

 

Exploration expenses

189,028

 

 

-

 

 

189,028

 

 

Facilities insurance modifications, net

6,086

 

 

-

 

 

6,086

 

 

Depletion and depreciation

276,350

 

 

89,753

 

 

366,103

 

 

Equity-based compensation

36,669

 

 

-

 

 

36,669

 

 

Derivatives, net

301,986

 

 

-

 

 

301,986

 

 

Cash settlements on commodity derivatives

(42,876

)

 

-

 

 

(42,876

)

 

Inventory impairment and other

314

 

 

-

 

 

314

 

 

Disputed charges and related costs

5,484

 

 

-

 

 

5,484

 

 

Loss on equity method investment - KBSL

5,060

 

 

-

 

 

5,060

 

 

Gain on equity method investment - KTIPI

(40,030

)

 

-

 

 

(40,030

)

 

Interest and other financing costs, net

85,908

 

 

-

 

 

85,908

 

 

Income tax expense (benefit)

(70,672

)

 

44,920

 

 

(25,752

)

 

EBITDAX

$

414,324

 

 

$

174,703

 

 

$

589,027

 

 

 

 

(1)   For the three months ended June 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 June 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, 2107 through June 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

 

Six Months Ended

 

June 30,

 

June 30,

 

2018

 

2017

 

2018

 

2017

Net loss

$

(103,273

)

 

$

(8,467

)

 

$

(153,499

)

 

$

(37,308

)

 

 

 

 

 

 

 

 

Derivatives, net

140,272

 

 

(25,411

)

 

178,750

 

 

(63,268

)

Cash settlements on commodity derivatives

(37,521

)

 

12,928

 

 

(57,265

)

 

24,348

 

Facilities insurance modifications, net

1,029

 

 

(2

)

 

9,478

 

 

2,572

 

Inventory impairment and other

(24

)

 

545

 

 

(5

)

 

84

 

Disputed charges and related costs

626

 

 

1,209

 

 

2,961

 

 

2,439

 

Loss on extinguishment of debt

-

 

 

-

 

 

4,056

 

 

-

 

Loss on equity method investments, net

-

 

 

6,426

 

 

-

 

 

6,426

 

Total selected items before tax

104,382

 

 

(4,305

)

 

137,975

 

 

(27,399

)

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(35,963

)

 

4,369

 

 

(42,527

)

 

13,622

 

Adjusted net loss

$

(34,854

)

 

$

(8,403

)

 

$

(58,051

)

 

$

(51,085

)

 

 

 

 

 

 

 

 

Net loss per diluted share

$

(0.26

)

 

$

(0.02

)

 

$

(0.39

)

 

$

(0.10

)

 

 

 

 

 

 

 

 

Derivatives, net

0.35

 

 

(0.06

)

 

0.45

 

 

(0.16

)

Cash settlements on commodity derivatives

(0.09

)

 

0.03

 

 

(0.14

)

 

0.06

 

Facilities insurance modifications, net

-

 

 

-

 

 

0.02

 

 

-

 

Inventory impairment and other

-

 

 

-

 

 

-

 

 

-

 

Disputed charges and related costs

-

 

 

-

 

 

-

 

 

0.01

 

Loss on extinguishment of debt

-

 

 

-

 

 

0.01

 

 

-

 

Loss on equity method investments, net

-

 

 

0.02

 

 

-

 

 

0.02

 

Total selected items before tax

0.26

 

 

(0.01

)

 

0.34

 

 

(0.07

)

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(0.09

)

 

0.01

 

 

(0.10

)

 

0.04

 

Adjusted net loss per diluted share

$

(0.09

)

 

$

(0.02

)

 

$

(0.15

)

 

$

(0.13

)

 

 

 

 

 

 

 

 

Weighted average number of diluted shares

396,826

 

 

387,952

 

 

396,218

 

 

387,634

 

 

 

(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

 

Six Months Ended

 

June 30,

 

June 30,

 

2018

 

2017

 

2018

 

2017

Net Oil Volume Sold (MMBbls)

 

 

 

 

 

 

 

Jubilee

1.900

 

 

1.919

 

 

2.897

 

 

3.895

 

TEN

0.995

 

 

0.996

 

 

1.932

 

 

0.996

 

Ceiba / Okume

0.950

 

 

N/A

 

2.830

 

 

N/A

Total

3.845

 

 

2.915

 

 

7.659

 

 

4.891

 

 

 

 

 

 

 

 

 

Oil revenue

 

 

 

 

 

 

 

Ghana

$

215,191

 

 

$

136,363

 

 

$

342,387

 

 

$

239,795

 

Ceiba / Okume

69,198

 

 

N/A

 

192,375

 

 

N/A

Total

284,389

 

 

136,363

 

 

534,762

 

 

239,795

 

Cash settlements on commodity derivatives

(37,521

)

 

12,928

 

 

(57,265

)

 

24,348

 

Realized oil revenue

$

246,868

 

 

$

149,291

 

 

$

477,497

 

 

$

264,143

 

 

 

 

 

 

 

 

 

Oil production costs

 

 

 

 

 

 

 

Ghana

$

49,815

 

 

$

21,604

 

 

$

96,583

 

 

$

41,490

 

Ceiba / Okume

11,666

 

 

N/A

 

37,516

 

 

N/A

Total

$

61,481

 

 

$

21,604

 

 

$

134,099

 

 

$

41,490

 

 

 

 

 

 

 

 

 

Per Barrel:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil revenue

 

 

 

 

 

 

 

Ghana

$

74.32

 

 

$

46.78

 

 

$

70.90

 

 

$

49.03

 

Ceiba / Okume

72.84

 

 

N/A

 

67.98

 

 

N/A

Total

73.96

 

 

46.78

 

 

69.82

 

 

49.03

 

Cash settlements on commodity derivatives(2)

(12.96

)

 

4.43

 

 

(11.86

)

 

4.98

 

Realized oil revenue(3)

64.20

 

 

51.21

 

 

62.34

 

 

54.01

 

 

 

 

 

 

 

 

 

Oil production costs

 

 

 

 

 

 

 

Ghana

$

17.21

 

 

$

7.41

 

 

$

20.01

 

 

$

8.48

 

Ceiba / Okume

12.28

 

 

N/A

 

13.26

 

 

N/A

Total

15.99

 

 

7.41

 

 

$

17.51

 

 

$

8.48

 

 

 

(1)   For the three and six months June 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 Ghana and are calculated on a per barrel basis using only Ghana Net Oil Volumes Sold.

(3)   Realized oil revenue includes revenue from Ghana, Ceiba / Okume, and Cash settlements on commodity derivatives, and on a per barrel basis is calculated using the total Net Oil Volume Sold from both Ghana and Ceiba / Okume

 

Ghana was underlifted by approximately 227 thousand barrels as of June 30, 2018.

 

Hedging Summary

As of June 30, 2018(1)

(Unaudited)

 

 

 

Volume

 

Floor(2)

 

Short Put

 

Ceiling

 

Long Call

 

 

(MMBbls)

 

 

 

 

 

 

 

 

2018 :

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

1.466

 

$

56.57

 

 

$

41.57

 

 

$

65.91

 

 

$

-

 

Four-way collars

 

1.503

 

$

50.00

 

 

$

40.00

 

 

$

61.33

 

 

$

70.00

 

Swaps with puts

 

3.000

 

$

56.75

 

 

$

43.33

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

2019 :

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

10.500

 

$

53.33

 

 

$

43.81

 

 

$

73.10

 

 

$

-

 

 

 

(1)   Please see the Company's filed 10-Q for full disclosure on hedging material. Includes hedging position as of June 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 1.0 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 2018, 0.9 MMBbls of sold (short) calls with a strike price of $80.00/Bbl in 2019 and 7.5 MMBbls of sold (short) calls with a strike price of $80.00/Bbl in 2020.

2018 Guidance

 

 

FY

 

 

 

FY

 

 

2018

 

 

 

2018

 

 

 

 

 

 

 

Kosmos

 

 

 

Equatorial Guinea - Equity Method Investment(1)

Cargos

 

 

 

 

 

 

Jubilee

 

7

 

Gross Production (Bopd)

 

43,000

TEN

 

4

 

 

 

 

Ghana

 

11

 

Cargos(2)

 

10

 

 

 

 

 

 

 

Avg. Cargo Size (MBbls)

 

~975

 

Avg. Cargo Size (MBbls)

 

~1,000

 

 

 

 

 

 

 

Opex ($/bbl)

 

$14.00 - $17.00

 

Opex ($/bbl)

 

$13.00 - $15.00

 

 

 

 

 

 

 

DD&A ($/bbl)

 

$24.00 - $26.00

 

DD&A ($/bbl)

 

$24.00 - $26.00

 

 

 

 

 

 

 

G&A ($MM)

 

$100

 

Taxes ($/bbl)

 

$11.00 - $13.00

% Cash

 

65%

 

% Cash

 

60

%

 

 

 

 

 

 

 

Exploration Expense

 

Average of $30mm per quarter

 

Capex ($MM)

 

$5

(Non Dry Hole)

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes ($/bbl)

 

$3.00 - $4.00

 

 

 

 

% Current

 

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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