Kosmos Energy Announces First Quarter 2017 Results
“Kosmos is off to a strong start executing on our plan in 2017,” said
First quarter 2017 oil revenues were
Other income, net during the quarter was
Production expense for the first quarter was
Facilities insurance modifications expense during the first quarter was
Exploration expenses totaled
Depletion and depreciation expense for the quarter was
General and administrative expenses were
First quarter results included a mark-to-market gain of
Total capital expenditures in the first quarter were
Kosmos exited the first quarter of 2017 with
Operational Update
During the first quarter of 2017, gross sales volumes from
The Jubilee FPSO turret remediation work made good progress during the quarter. The FPSO was temporarily spread moored at its current heading in late February, which allowed the tugboats previously required to hold the vessel on a fixed heading to be removed, simplifying operations and reducing costs.
The next phase of the remediation work involves modifications to the
turret for long-term spread-moored operations and planning for this work
is ongoing amongst the partnership and the Government of
Kosmos anticipates that the financial impact of lower Jubilee production
as well as the additional expenditures associated with the repair to the
FPSO and the additional costs of the interim operating procedures will
continue to be mitigated through a combination of the Hull and Machinery
(H&M) insurance, procured on behalf of the partnership, and the Loss of
Production Income (LOPI) insurance procured by Kosmos. As of the first
quarter of 2017, Kosmos has net approved claims of
Production from TEN in the first quarter averaged approximately 50,000 bopd and is on track to achieve the operator’s 2017 guidance of 50,000 bopd. During periods throughout the quarter production levels exceeded 50,000 bopd and the partnership is continuing to optimize topside equipment to increase field production levels.
In February, Kosmos received government approval and completed its
previously announced transaction with BP in
In the first quarter, Kosmos also completed the acquisition of over 11,500 square kilometers of 3D seismic surveys over a portion of Blocks C6, C8, C12, and C13.
Suriname &
In Suriname, Kosmos completed 3D seismic surveys in January across Block 42 and Block 45 totaling over 6,500 square kilometers and volumes are now being processed to mature prospects for drilling in 2018.
In
2017 Capital Program
Kosmos has reduced its net capex budget for 2017 to
(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
2017 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
Margins. 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.
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Kosmos Energy Ltd. Consolidated Statements of Operations (In thousands, except per share amounts, unaudited) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Revenues and other income: | ||||||||
| Oil and gas revenue | $ | 103,432 | $ | 62,125 | ||||
| Other income, net | 48,534 | 8 | ||||||
| Total revenues and other income | 151,966 | 62,133 | ||||||
| Costs and expenses: | ||||||||
| Oil and gas production | 19,886 | 29,392 | ||||||
| Facilities insurance modifications, net | 2,574 | — | ||||||
| Exploration expenses | 105,714 | 23,858 | ||||||
| General and administrative | 15,787 | 17,920 | ||||||
| Depletion and depreciation | 34,978 | 31,266 | ||||||
| Interest and other financing costs, net | 16,786 | 10,324 | ||||||
| Derivatives, net | (37,857) | (4,345) | ||||||
| Other expenses, net | 762 | 14,733 | ||||||
| Total costs and expenses | 158,630 | 123,148 | ||||||
| Loss before income taxes | (6,664) | (61,015) | ||||||
| Income tax expense (benefit) | 22,177 | (2,022) | ||||||
| Net loss | $ | (28,841) | $ | (58,993) | ||||
| Net loss per share: | ||||||||
| Basic | $ | (0.07) | $ | (0.15) | ||||
| Diluted | $ | (0.07) | $ | (0.15) | ||||
| Weighted average number of shares used to compute net loss per share: | ||||||||
| Basic | 387,312 | 384,435 | ||||||
| Diluted | 387,312 | 384,435 | ||||||
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Kosmos Energy Ltd. Condensed Consolidated Balance Sheets (In thousands, unaudited) |
||||||||
| March 31, | December 31, | |||||||
| 2017 | 2016 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 153,194 | $ | 194,057 | ||||
| Receivables, net | 200,582 | 143,337 | ||||||
| Other current assets | 192,015 | 137,793 | ||||||
| Total current assets | 545,791 | 475,187 | ||||||
| Property and equipment, net | 2,344,833 | 2,708,892 | ||||||
| Other non-current assets | 292,425 | 157,386 | ||||||
| Total assets | $ | 3,183,049 | $ | 3,341,465 | ||||
| Liabilities and shareholders’ equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 217,722 | $ | 220,627 | ||||
| Accrued liabilities | 118,114 | 129,706 | ||||||
| Other current liabilities | 8,916 | 19,692 | ||||||
| Total current liabilities | 344,752 | 370,025 | ||||||
| Long-term liabilities: | ||||||||
| Long-term debt, net | 1,174,677 | 1,321,874 | ||||||
| Deferred tax liabilities | 506,122 | 482,221 | ||||||
| Other non-current liabilities | 96,186 | 86,146 | ||||||
| Total long-term liabilities | 1,776,985 | 1,890,241 | ||||||
| Total shareholders’ equity | 1,061,312 | 1,081,199 | ||||||
| Total liabilities and shareholders’ equity | $ | 3,183,049 | $ | 3,341,465 | ||||
|
Kosmos Energy Ltd. Condensed Consolidated Statements of Cash Flow (In thousands, unaudited) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Operating activities: | ||||||||
| Net loss | $ | (28,841) | $ | (58,993) | ||||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depletion, depreciation and amortization | 37,529 | 33,817 | ||||||
| Deferred income taxes | 22,133 | (1,951) | ||||||
| Unsuccessful well costs | 88 | 2,222 | ||||||
| Change in fair value of derivatives | (38,177) | (2,377) | ||||||
| Cash settlements on derivatives, net(1) | 11,153 | 56,901 | ||||||
| Equity-based compensation | 9,830 | 10,635 | ||||||
| Other | 621 | 14,969 | ||||||
| Changes in assets and liabilities: | ||||||||
| Net changes in working capital | (44,718) | (39,606) | ||||||
| Net cash provided by (used in) operating activities | (30,382) | 15,617 | ||||||
| Investing activities: | ||||||||
| Oil and gas assets | (31,810) | (226,571) | ||||||
| Other property | (271) | (47) | ||||||
| Proceeds from sale of assets | 203,919 | — | ||||||
| Net cash provided by (used in) investing activities | 171,838 | (226,618) | ||||||
| Financing activities: | ||||||||
| Borrowings on long-term debt | — | 150,000 | ||||||
| Payments on long-term debt | (150,000) | — | ||||||
| Purchase of treasury stock | (1,115) | (1,074) | ||||||
| Net cash provided by (used in) financing activities | (151,115) | 148,926 | ||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (9,659) | (62,075) | ||||||
| Cash, cash equivalents and restricted cash at beginning of period | 273,195 | 310,862 | ||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 263,536 | $ | 248,787 | ||||
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_______________ |
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| (1) | Cash settlements on commodity hedges were $11.4 million and $56.6 million for the three months ended March 31, 2017 and 2016, respectively. |
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Kosmos Energy Ltd. EBITDAX (In thousands, unaudited) |
||||||||||||
| Twelve Months | ||||||||||||
| Three Months Ended | Ended | |||||||||||
| March 31, | March 31, | |||||||||||
| 2017 | 2016 | 2017 | ||||||||||
| Net loss | $ | (28,841) | $ | (58,993) | $ | (253,628) | ||||||
| Exploration expenses | 105,714 | 23,858 | 284,136 | |||||||||
| Facilities insurance modifications, net | 2,574 | — | 17,535 | |||||||||
| Depletion and depreciation | 34,978 | 31,266 | 144,116 | |||||||||
| Equity-based compensation | 9,830 | 10,635 | 39,279 | |||||||||
| Derivatives, net | (37,857) | (4,345) | 14,509 | |||||||||
| Cash settlements on commodity derivatives | 11,420 | 56,630 | 142,740 | |||||||||
| Inventory impairment and other | (461) | 14,746 | (4,489) | |||||||||
| Disputed charges and related costs | 1,230 | — | 12,529 | |||||||||
| Interest and other financing costs, net | 16,786 | 10,324 | 50,609 | |||||||||
| Income tax expense (benefit) | 22,177 | (2,022) | 13,415 | |||||||||
| EBITDAX | $ | 137,550 | $ | 82,099 | $ | 460,751 | ||||||
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Adjusted Net Income (In thousands, except per share amounts, unaudited) |
||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2017 | 2016 | |||||||
| Net loss | $ | (28,841) | $ | (58,993) | ||||
| Derivatives, net | (37,857) | (4,345) | ||||||
| Cash settlements on commodity derivatives | 11,420 | 56,630 | ||||||
| Facilities insurance modifications, net | 2,574 | — | ||||||
| Inventory impairment and other | (461) | 14,746 | ||||||
| Disputed charges and related costs | 1,230 | — | ||||||
| Total selected items before tax | (23,094) | 67,031 | ||||||
| Income tax expense on adjustments(1) | 9,253 | (22,589) | ||||||
| Adjusted net loss | $ | (42,682) | $ | (14,551) | ||||
| Net loss per diluted share | $ | (0.07) | $ | (0.15) | ||||
| Derivatives, net | (0.10) | (0.01) | ||||||
| Cash settlements on commodity derivatives | 0.03 | 0.14 | ||||||
| Facilities insurance modifications, net | 0.01 | — | ||||||
| Inventory impairment and other | — | 0.04 | ||||||
| Disputed charges and related costs | — | — | ||||||
| Total selected items before tax | (0.06) | 0.17 | ||||||
| Income tax expense on adjustments(1) | 0.02 | (0.06) | ||||||
| Income tax expense related to tax shortfall associated with IPO equity awards | — | — | ||||||
| Adjusted net loss per diluted share | $ | (0.11) | $ | (0.04) | ||||
| Weighted average number of diluted shares | 387,312 | 384,435 | ||||||
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_______________ |
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| (1) | Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rate for Ghana is 35%. |
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Oil Revenue Summary (In thousands, except barrel and per barrel data, unaudited) |
|||||||
| Three Months Ended | |||||||
| March 31, | |||||||
| 2017 | 2016 | ||||||
| Net Oil Volume Sold (MMBbls) | 1.976 | 1.896 | |||||
| Oil revenue | $ | 103,432 | $ | 62,125 | |||
| Cash settlements on commodity derivatives | 11,420 | 56,630 | |||||
| Realized oil revenue | $ | 114,852 | $ | 118,755 | |||
| Per Barrel: | |||||||
| Oil revenue | $ | 52.34 | $ | 32.77 | |||
| Cash settlements on commodity derivatives | 5.78 | 29.87 | |||||
| Realized oil revenue | $ | 58.12 | $ | 62.64 | |||
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Underlifted by approximately 840 thousand barrels as of March 31, 2017. |
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Hedging Summary As of March 31, 2017(1) (Unaudited) |
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| Volume | Floor(2) | Short Put | Ceiling | Long Call | ||||||||||||||||
| (MMBbls) | ||||||||||||||||||||
| 2017 : | ||||||||||||||||||||
| Swaps with puts/calls | 1.505 | $ | 72.50 | $ | 55.00 | $ | — | $ | 90.00 | |||||||||||
| Swaps with puts | 1.505 | $ | 64.95 | $ | 50.00 | $ | — | $ | — | |||||||||||
| Three-way collars | 2.012 | $ | 45.00 | $ | 30.00 | $ | 57.50 | $ | — | |||||||||||
| 2018 : | ||||||||||||||||||||
| Three-way collars | 2.913 | $ | 56.57 | $ | 41.57 | $ | 65.90 | $ | — | |||||||||||
| Four-way collars | 2.000 | $ | 50.00 | $ | 40.00 | $ | 61.00 | $ | 70.00 | |||||||||||
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_______________ |
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| (1) | Please see the Company’s filed 10-Q for full disclosure on hedging material. Includes hedging position as of March 31, 2017. |
| (2) | “Floor” represents floor price for collars or swaps and strike price for purchased puts. |
| Note: Excludes 1.5 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
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+1-214-445-9628
nshah@kosmosenergy.com
or
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Williams, +1-214-445-9693
rwilliams@kosmosenergy.com
or
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