Kosmos Energy Announces First Quarter 2018 Results
“Kosmos is off to a good start in 2018 across all three areas of our
business,” said
First quarter 2018 oil revenues were
Production expense for 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 loss of
Gain on equity method investments, net during the first quarter was
approximately
Total capital expenditures in the first quarter were
Kosmos exited the first quarter of 2018 with approximately
Operational Update
During the first quarter of 2018, gross sales volumes from
At Jubilee, gross production averaged approximately 63,800 barrels of oil per day. The Jubilee turret remediation work is progressing as planned with the stabilization shutdown being conducted in two phases, the first of which is complete and oil production is back online. The second phase is expected to commence during the second quarter of 2018, and it is anticipated that oil production will be offline for around two weeks as a consequence of this shutdown. It is anticipated that the gas system will be shut-in for slightly longer to complete non-turret related maintenance. We now expect the rotation of the vessel to take place around the end of 2018 with minimal impact to production in 2018.
Gross production from TEN in the first quarter averaged approximately 68,600 bopd.
With drilling now resumed, the focus in
Gross oil production from the
Suriname
In
Portfolio Additions
As part of the alliance with BP, in the first quarter Kosmos entered
into petroleum contracts covering Blocks 10 and 13 offshore
Inter-Governmental Cooperation Agreement
In
| (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 first quarter 2018 financial and operating results today at
About
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
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) equity-based 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
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) |
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| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Revenues and other income: | |||||||||||
| Oil and gas revenue | $ | 127,196 | $ | 103,432 | |||||||
| Other income, net | (19 | ) | 48,534 | ||||||||
| Total revenues and other income | 127,177 | 151,966 | |||||||||
| Costs and expenses: | |||||||||||
| Oil and gas production | 46,768 | 19,886 | |||||||||
| Facilities insurance modifications, net | 8,449 | 2,574 | |||||||||
| Exploration expenses | 21,193 | 105,714 | |||||||||
| General and administrative | 21,883 | 15,787 | |||||||||
| Depletion and depreciation | 54,277 | 34,978 | |||||||||
| Interest and other financing costs, net | 25,694 | 16,786 | |||||||||
| Derivatives, net | 38,478 | (37,857 | ) | ||||||||
| Gain on equity method investments, net | (18,696 | ) | — | ||||||||
| Other expenses, net | 3,705 | 762 | |||||||||
| Total costs and expenses | 201,751 | 158,630 | |||||||||
| Loss before income taxes | (74,574 | ) | (6,664 | ) | |||||||
| Income tax expense (benefit) | (24,348 | ) | 22,177 | ||||||||
| Net loss | $ | (50,226 | ) | $ | (28,841 | ) | |||||
| Net loss per share: | |||||||||||
| Basic | $ | (0.13 | ) | $ | (0.07 | ) | |||||
| Diluted | $ | (0.13 | ) | $ | (0.07 | ) | |||||
| Weighted average number of shares used to compute net loss per share: | |||||||||||
| Basic | 395,600 | 387,312 | |||||||||
| Diluted | 395,600 | 387,312 | |||||||||
|
Kosmos Energy Ltd. Condensed Consolidated Balance Sheets (In thousands, unaudited) |
||||||||||
| March 31, | December 31, | |||||||||
| 2018 | 2017 | |||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 198,841 | $ | 233,412 | ||||||
| Receivables, net | 100,174 | 160,961 | ||||||||
| Other current assets | 149,860 | 139,229 | ||||||||
| Total current assets | 448,875 | 533,602 | ||||||||
| Property and equipment, net | 2,306,537 | 2,317,828 | ||||||||
| Other non-current assets | 275,116 | 341,173 | ||||||||
| Total assets | $ | 3,030,528 | $ | 3,192,603 | ||||||
| Liabilities and shareholders’ equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 138,233 | $ | 141,787 | ||||||
| Accrued liabilities | 136,260 | 219,412 | ||||||||
| Other current liabilities | 84,015 | 67,531 | ||||||||
| Total current liabilities | 358,508 | 428,730 | ||||||||
| Long-term liabilities: | ||||||||||
| Long-term debt, net | 1,265,196 | 1,282,797 | ||||||||
| Deferred tax liabilities | 451,574 | 476,548 | ||||||||
| Other non-current liabilities | 111,846 | 107,416 | ||||||||
| Total long-term liabilities | 1,828,616 | 1,866,761 | ||||||||
| Total shareholders’ equity | 843,404 | 897,112 | ||||||||
| Total liabilities and shareholders’ equity | $ | 3,030,528 | $ | 3,192,603 | ||||||
|
Kosmos Energy Ltd. Condensed Consolidated Statements of Cash Flow (In thousands, unaudited) |
|||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Operating activities: | |||||||||||
| Net loss | $ | (50,226 | ) | $ | (28,841 | ) | |||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depletion, depreciation and amortization | 56,717 | 37,529 | |||||||||
| Deferred income taxes | (24,697 | ) | 22,133 | ||||||||
| Unsuccessful well costs | 43 | 88 | |||||||||
| Change in fair value of derivatives | 38,966 | (38,177 | ) | ||||||||
| Cash settlements on derivatives, net(1) | (20,397 | ) | 11,153 | ||||||||
| Equity-based compensation | 8,017 | 9,830 | |||||||||
| Loss on extinguishment of debt | 4,056 | — | |||||||||
| Distributions in excess of equity in earnings | 5,234 | — | |||||||||
| Other | (478 | ) | 621 | ||||||||
| Changes in assets and liabilities: | |||||||||||
| Net changes in working capital | (34,251 | ) | (44,718 | ) | |||||||
| Net cash used in operating activities | (17,016 | ) | (30,382 | ) | |||||||
| Investing activities | |||||||||||
| Oil and gas assets | (34,712 | ) | (31,810 | ) | |||||||
| Other property | (1,757 | ) | (271 | ) | |||||||
| Return of investment from KTIPI | 41,070 | — | |||||||||
| Proceeds on sale of assets | — | 203,919 | |||||||||
| Net cash provided by investing activities | 4,601 | 171,838 | |||||||||
| Financing activities: | |||||||||||
| Payments on long-term debt | — | (150,000 | ) | ||||||||
| Purchase of treasury stock | (11,874 | ) | (1,115 | ) | |||||||
| Deferred financing costs | (24,969 | ) | — | ||||||||
| Net cash used in financing activities | (36,843 | ) | (151,115 | ) | |||||||
| Net decrease in cash, cash equivalents and restricted cash | (49,258 | ) | (9,659 | ) | |||||||
| Cash, cash equivalents and restricted cash at beginning of period | 304,986 | 273,195 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 255,728 | $ | 263,536 | |||||||
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________________________________ |
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|
(1) |
Cash settlements on commodity hedges were $(19.7) million and $11.4 million for the three months ended March 31, 2018 and 2017, respectively. |
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Kosmos Energy Ltd. Equity Method Investment (In thousands, unaudited) |
|||||||
| Three months ended | |||||||
| March 31, 2018 | |||||||
| Revenues and other income: | |||||||
| Oil and gas revenue | $ | 246,354 | |||||
| Other income | 287 | ||||||
| Total revenues and other income | 246,641 | ||||||
| Costs and expenses: | |||||||
| Oil and gas production | 51,700 | ||||||
| Depletion and depreciation | 54,070 | ||||||
| Other expenses, net | (79 | ) | |||||
| Total costs and expenses | 105,691 | ||||||
| Income before income taxes | 140,950 | ||||||
| Income tax expense | 49,632 | ||||||
| Net income | $ | 91,318 | |||||
| Kosmos' share of net income | $ | 45,659 | |||||
| Basis difference amortization(1) | 26,963 | ||||||
| Equity in earnings - KTIPI | $ | 18,696 | |||||
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____________________________________ |
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|
(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. |
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Kosmos Energy Ltd. EBITDAX (In thousands, unaudited) |
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| Three Months Ended | |||||||||||||||||||
| March 31, | |||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||
| Kosmos |
Equatorial |
Total | Kosmos | ||||||||||||||||
| Net income (loss) | $ | (50,226 | ) | $ | 18,696 | $ | (31,530 | ) | $ | (28,841 | ) | ||||||||
| Exploration expenses | 21,193 | — | 21,193 | 105,714 | |||||||||||||||
| Facilities insurance modifications, net | 8,449 | — | 8,449 | 2,574 | |||||||||||||||
| Depletion and depreciation | 54,277 | 53,997 | 108,274 | 34,978 | |||||||||||||||
| Equity-based compensation | 8,017 | — | 8,017 | 9,830 | |||||||||||||||
| Derivatives, net | 38,478 | — | 38,478 | (37,857 | ) | ||||||||||||||
| Cash settlements on commodity derivatives | (19,744 | ) | — | (19,744 | ) | 11,420 | |||||||||||||
| Inventory impairment and other | 19 | — | 19 | (461 | ) | ||||||||||||||
| Disputed charges and related costs | 2,335 | — | 2,335 | 1,230 | |||||||||||||||
| Gain on equity method investment - KTIPI | (18,696 | ) | — | (18,696 | ) | — | |||||||||||||
| Interest and other financing costs, net | 25,694 | — | 25,694 | 16,786 | |||||||||||||||
| Income tax expense (benefit) | (24,348 | ) | 24,816 | 468 | 22,177 | ||||||||||||||
| EBITDAX | $ | 45,448 | $ | 97,509 | $ | 142,957 | $ | 137,550 | |||||||||||
| Twelve Months Ended | |||||||||||||||
| March 31, 2018 | |||||||||||||||
| Kosmos |
Equatorial |
Total | |||||||||||||
| Net income (loss) | $ | (244,177 | ) | $ | 23,930 | $ | (220,247 | ) | |||||||
| Exploration expenses | 131,529 | — | 131,529 | ||||||||||||
| Facilities insurance modifications, net | 5,055 | — | 5,055 | ||||||||||||
| Depletion and depreciation | 274,502 | 65,178 | 339,680 | ||||||||||||
| Equity-based compensation | 38,100 | — | 38,100 | ||||||||||||
| Derivatives, net | 136,303 | — | 136,303 | ||||||||||||
| Cash settlements on commodity derivatives | 7,573 | — | 7,573 | ||||||||||||
| Inventory impairment and other | 883 | — | 883 | ||||||||||||
| Disputed charges and related costs | 6,067 | — | 6,067 | ||||||||||||
| Loss on equity method investment - KBSL | 11,486 | — | 11,486 | ||||||||||||
| Gain on equity method investment - KTIPI | (23,930 | ) | — | (23,930 | ) | ||||||||||
| Interest and other financing costs, net | 86,503 | — | 86,503 | ||||||||||||
| Income tax expense (benefit) | (1,588 | ) | 28,110 | 26,522 | |||||||||||
| EBITDAX | $ | 428,306 | $ | 117,218 | $ | 545,524 | |||||||||
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______________________________________ |
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|
(1) |
For the three months ended March 31, 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. |
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|
(2) |
For the twelve months ended March 31, 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 March 31, 2018, as we account for such investment under the equity method. |
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Adjusted Net Income (In thousands, except per share amounts, unaudited) |
|||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2018 | 2017 | ||||||||||
| Net loss | $ | (50,226 | ) | $ | (28,841 | ) | |||||
| Derivatives, net | 38,478 | (37,857 | ) | ||||||||
| Cash settlements on commodity derivatives | (19,744 | ) | 11,420 | ||||||||
| Facilities insurance modifications, net | 8,449 | 2,574 | |||||||||
| Inventory impairment and other | 19 | (461 | ) | ||||||||
| Disputed charges and related costs | 2,335 | 1,230 | |||||||||
| Loss on extinguishment of debt | 4,056 | — | |||||||||
| Total selected items before tax | 33,593 | (23,094 | ) | ||||||||
| Income tax expense on adjustments(1) | (6,564 | ) | 9,253 | ||||||||
| Adjusted net loss | $ | (23,197 | ) | $ | (42,682 | ) | |||||
| Net loss per diluted share | $ | (0.13 | ) | $ | (0.07 | ) | |||||
| Derivatives, net | 0.10 | (0.10 | ) | ||||||||
| Cash settlements on commodity derivatives | (0.05 | ) | 0.03 | ||||||||
| Facilities insurance modifications, net | 0.02 | 0.01 | |||||||||
| Inventory impairment and other | — | — | |||||||||
| Disputed charges and related costs | — | — | |||||||||
| Loss on extinguishment of debt | 0.01 | — | |||||||||
| Total selected items before tax | 0.08 | (0.06 | ) | ||||||||
| Income tax expense on adjustments(1) | (0.01 | ) | 0.02 | ||||||||
| Adjusted net loss per diluted share | $ | (0.06 | ) | $ | (0.11 | ) | |||||
| Weighted average number of diluted shares | 395,600 | 387,312 | |||||||||
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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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Operational Summary(1) (In thousands, except barrel and per barrel data, unaudited) |
||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2018 | 2017 | |||||||||
| Net Oil Volume Sold (MMBbls) | ||||||||||
| Jubilee | 0.997 | 1.976 | ||||||||
| TEN | 0.937 | — | ||||||||
| Ceiba / Okume | 1.880 | N/A | ||||||||
| Total | 3.814 | 1.976 | ||||||||
| Oil revenue | ||||||||||
| Ghana | $ | 127,196 | $ | 103,432 | ||||||
| Ceiba / Okume | 123,177 | N/A | ||||||||
| Total | 250,373 | 103,432 | ||||||||
| Cash settlements on commodity derivatives | (19,744 | ) | 11,420 | |||||||
| Realized oil revenue | $ | 230,629 | $ | 114,852 | ||||||
| Oil production costs | ||||||||||
| Ghana | $ | 46,768 | $ | 19,886 | ||||||
| Ceiba / Okume | 25,850 | N/A | ||||||||
| Total | $ | 72,618 | $ | 19,886 | ||||||
| Per Barrel: | ||||||||||
| Oil revenue | ||||||||||
| Ghana | $ | 65.77 | $ | 52.34 | ||||||
| Ceiba / Okume | 65.52 | N/A | ||||||||
| Total | 65.65 | 52.34 | ||||||||
| Cash settlements on commodity derivatives(2) | (10.21 | ) | 5.78 | |||||||
| Realized oil revenue(3) | 60.47 | 58.12 | ||||||||
| Oil production costs | ||||||||||
| Ghana | $ | 24.18 | $ | 10.06 | ||||||
| Ceiba / Okume | 13.75 | N/A | ||||||||
| Total | 19.04 | 10.06 | ||||||||
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__________________________________ |
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(1) |
For the three months March 31, 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. |
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(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. |
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(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 805 thousand barrels as of March 31, 2018. |
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Hedging Summary As of March 31, 2018(1) (Unaudited) |
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| Volume | Floor(2) | Short Put | Ceiling | Long Call | ||||||||||||||||
| (MMBbls) | ||||||||||||||||||||
| 2018 : | ||||||||||||||||||||
| Three-way collars | 2.193 | $ | 56.57 | $ | 41.57 | $ | 65.90 | $ | — | |||||||||||
| Four-way collars | 2.252 | $ | 50.00 | $ | 40.00 | $ | 61.33 | $ | 70.00 | |||||||||||
| Swaps | 0.500 | $ | 57.25 | $ | — | $ |
— |
$ | — | |||||||||||
| Swaps with puts | 3.500 | $ | 56.40 | $ | 42.86 | $ | — | $ | — | |||||||||||
| 2019 : | ||||||||||||||||||||
| Three-way collars | 10.500 | $ | 53.33 | $ | 43.81 | $ | 65.96 | $ | — | |||||||||||
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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, 2018 and hedges added since year-end. |
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(2) |
“Floor” represents floor price for collars or swaps and strike price for purchased puts. |
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Note: Excludes 1.5 MMBbls of sold (short) calls with a strike price of
|
2018 Guidance |
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| 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 | |||||||
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______________________________________ |
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(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. |
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(2) |
Entitlement share of production net to KTIPI in which Kosmos holds a 50% interest. |
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View source version on businesswire.com: https://www.businesswire.com/news/home/20180506005056/en/
Source:
Kosmos Energy Ltd.
Investor Relations
Jamie
Buckland, +44 (0) 203 954 2831
jbuckland@kosmosenergy.com
or
Rhys
Williams, +1-214-445-9693
rwilliams@kosmosenergy.com
or
Media
Relations
Thomas Golembeski, +1-214-445-9674
tgolembeski@kosmosenergy.com