UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices) | (Zip Code) | ||||||||||
| Title of each class | Trading Symbol | Name of each exchange on which registered: | ||||||||||||
| London Stock Exchange | ||||||||||||||
Registrant’s telephone number, including area code: +1 214 445 9600
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On November 8, 2021, Kosmos Energy Ltd. (the “Company”) issued a news release announcing results for the fiscal quarter ended September 30, 2021. A copy of the news release issued by the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
Item 7.01 Regulation FD Disclosure.
On November 8, 2021, the Company issued a news release announcing results for the fiscal quarter ended September 30, 2021. A copy of the news release issued by the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. | The following exhibit is furnished as part of this current report on Form 8-K: | ||||||
| 99.1 | ||||||||
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 8, 2021
| KOSMOS ENERGY LTD. | |||||||||||
| By: | /s/ NEAL D. SHAH | ||||||||||
| Neal D. Shah | |||||||||||
| Senior Vice President and Chief Financial Officer | |||||||||||
3
INDEX TO EXHIBITS
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
4
Exhibit 99.1
| NEWS RELEASE | |||||
KOSMOS ENERGY ANNOUNCES THIRD QUARTER 2021 RESULTS
DALLAS--(BUSINESS WIRE)—November 8, 2021-- Kosmos Energy Ltd. (“Kosmos” or the “Company”) (NYSE: KOS) announced today its financial and operating results for the third quarter of 2021. For the quarter, the Company generated a net loss of $29 million, or $0.07 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss(1) of $43 million, or $0.11 per diluted share for the third quarter of 2021.
Commenting on the Company’s third quarter 2021 performance and subsequent events, Chairman and Chief Executive Officer Andrew G. Inglis said: “With the recently executed transactions, Kosmos has significantly enhanced the outlook for the Company. The Oxy Ghana transaction accelerates our strategic delivery with increased near-term production and cash flow driving down leverage. The cash flow from the acquired assets also supports our portfolio transition to LNG at a time of increasing global gas demand.
Operationally, Kosmos delivered in line with expectations for the quarter, taking account of the impact of Hurricane Ida in the Gulf of Mexico. At Tortue, the project continued to make good progress, and we now have a clear funding path to first gas following the successful completion of the FPSO sale and leaseback announced in the third quarter. This transaction materially reduces our outstanding capital to first gas with the remainder expected to be funded through organic free cash flow.
Looking forward, growing production and increased exposure to current oil prices as 2021 hedges roll off give us visibility to materially higher EBITDAX and cash flow in 2022, with leverage expected to continue to fall. Over the next year, we also expect to substantially de-risk the delivery of Tortue Phase 1 while advancing Phase 2 to maximize the value of our significant gas resources in Mauritania and Senegal. With the right portfolio for the future and a strengthened balance sheet, we are excited about the outlook for Kosmos.”
THIRD QUARTER 2021 HIGHLIGHTS
•Completed Greater Tortue Ahmeyim (GTA) floating production, storage and offloading vessel (FPSO) transaction, reducing GTA project capital expenditure to first gas
•Net Production(2): 49,300 barrels of oil equivalent per day (boepd) with sales of 32,700 boepd, resulting in a material net underlift position of approximately 1.5 million barrels of oil (excluding impact of Ghana acquisition)
•Revenues: $199 million, or $66.10 per boe (excluding the impact of derivative cash settlements)
•Production expense: $50 million, or $16.72 per boe
•General and administrative expenses: $22 million, $14 million cash expense and $8 million non-cash
•Capital expenditures:
•$72 million Base Business
•$14 million Mauritania and Senegal
•Post quarter end, announced and completed the acquisition of additional interests in Ghana from Occidental Petroleum ("Oxy") for approximately $550 million
FINANCIAL UPDATE
In August 2021, Kosmos successfully completed the GTA FPSO transaction, a major step in the funding path for the project. The transaction significantly reduces the outstanding capital expenditures net to Kosmos with any remaining cash calls for the project in 2021 covered by the proceeds. The remaining benefits of the transaction reduce project cash calls in 2022.
The base business net capital expenditure for the third quarter of 2021 was approximately $72 million, in-line with Company guidance. Net capital expenditure related to Mauritania and Senegal in the third quarter was $14 million.
Kosmos exited the third quarter of 2021 with $2.3 billion of net debt(1) and available liquidity of approximately $0.6 billion. The increase in net debt in the quarter was primarily driven by the low sales volumes in the quarter, in line with previous guidance, as well as a working capital outflow largely due to the material underlift position and cash calls relating to the GTA project prior to the conclusion of the FPSO transaction.
Post quarter end, Kosmos announced the acquisition of additional interests in the Jubilee and TEN fields in Ghana from Oxy for approximately $550 million. Consideration due to Oxy at completion was approximately $460 million after taking into account closing adjustments.
To fund the transaction, Kosmos successfully announced and closed an equity offering of approximately $140 million and a $400 million senior notes offering.
OPERATIONAL UPDATE
Production
Total net production(2) in the third quarter of 2021 averaged approximately 49,300 boepd. Pro forma net production including the additional interest acquired in Ghana would have been approximately 65,800 boepd.
Ghana(3)
Production in Ghana averaged approximately 22,700 barrels of oil per day (bopd) net in the third quarter of 2021. As forecast, Kosmos lifted one cargo from Ghana during the third quarter.
At Jubilee, production averaged approximately 77,800 bopd gross during the quarter. At TEN, production averaged approximately 30,400 bopd gross for the third quarter.
The first Jubilee producer well (J-56P) came online early in the third quarter, adding around 10,000 bopd gross with Jubilee currently producing above 80,000 bopd. The Jubilee injector well (J-55W) came online around the end of the third quarter and is already supporting increased production levels. The second Jubilee producer well is expected to be drilled in the fourth quarter, with gross Jubilee production expected to rise to over 85,000 bopd gross once this well is online around the end of the year.
At TEN, a gas injector well came online early in the fourth quarter and is expected to add pressure support to the Ntomme field going forwards.
High reliability of the Ghana production facilities continues, with uptime of the Jubilee and TEN FPSOs averaging around 98% to the end of the third quarter. Consistently high levels of water injection (>200,000 barrels/day) and gas offtake from the Government of Ghana (>110 mmscf/day) over the same period are helping to optimize reservoir performance at Jubilee.
U.S. Gulf of Mexico
Production in the U.S. Gulf of Mexico averaged approximately 17,000 boepd net (81% oil) during the third quarter, including the previously announced impact of Hurricane Ida, which shut in production across the Gulf of Mexico for several weeks. The net impact for the quarter was around 4,000 boepd. Gulf of Mexico production was restored to around pre-hurricane levels in September.
In September, Kosmos and its partners started drilling an appraisal well on the Winterfell discovery. The appraisal well will evaluate the adjacent fault block to the northwest of the original discovery, which has the same seismic signature as Winterfell, with an exploration tail into a deeper horizon. The Winterfell discovery is located within tie back distance to several existing and planned host facilities.
Equatorial Guinea
Production in Equatorial Guinea averaged approximately 29,900 bopd gross and 9,600 bopd net in the third quarter of 2021. As forecast, Kosmos lifted 0.5 cargos from Equatorial Guinea during the quarter.
The first of three planned infill wells in the Okume Complex was completed in August 2021 with hookup currently in progress. In the third quarter of 2021, the operator commenced drilling an additional well, which is expected to be online in the fourth quarter of 2021. The third planned well is now expected to be deferred, as the rig is being utilized to plug and abandon an existing well in Equatorial Guinea and is required to mobilize for its next contract before it can complete the drilling of the last well.
Mauritania & Senegal
The Greater Tortue Ahmeyim liquified natural gas (LNG) project has made steady progress year-to-date with the following milestones achieved in the third quarter and post quarter-end.
•FLNG: Mechanical completion activities have commenced with instrument loop checks
•FPSO: Topsides integration and hull and living quarters mechanical completion activities have commenced
•Breakwater: Commenced fabrication of the 20th caisson (of 21) with 12 installed
•Subsea: Nouakchott and Dakar marine supply bases established
The Company is currently working to re-finance the National Oil Company loans.
(1) A Non-GAAP measure, see attached reconciliation of non-GAAP measure
(2) Production means net entitlement volumes. In Ghana and Equatorial Guinea, this means those volumes net to Kosmos' working interest or participating interest and net of royalty or production sharing contract effect. In the Gulf of Mexico, this means those volumes net to Kosmos' working interest and net of royalty.
(3) 3Q net production numbers exclude any impact from the Oxy Ghana acquisition
Conference Call and Webcast Information
Kosmos will host a conference call and webcast to discuss third quarter 2021 financial and operating results today at 10:00 a.m. Central time (11:00 a.m. Eastern time). The live webcast of the event can be accessed on the Investors page of Kosmos’ website at http://investors.kosmosenergy.com/investor-events. The dial-in telephone number for the call is +1-877-407-0784. Callers in the United Kingdom should call 0800 756 3429. Callers outside the United States should dial +1-201-689-8560. 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 full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal. We also maintain a sustainable proven basin exploration program in Equatorial Guinea, Ghana and the U.S. Gulf of Mexico. Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. 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 Sustainability Report. For additional information, visit www.kosmosenergy.com.
Non-GAAP Financial Measures
EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt 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 Company defines Adjusted net income (loss) as Net income (loss) adjusted for certain items that impact the comparability of results. The Company defines free cash flow as net cash provided by operating activities less Oil and gas assets, Other property, and certain other items that may affect the comparability of results. The Company defines net debt as the sum of notes outstanding issued at par and borrowings on the RBL Facility, Corporate revolver, and GoM Term Loan less cash and cash equivalents and restricted cash.
We believe that EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, Net debt 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. EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt 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 (including, but not limited to, the impact of the COVID-19 pandemic), 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 | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Revenues and other income: | ||||||||||||||||||||||||||
| Oil and gas revenue | $ | 198,936 | $ | 224,786 | $ | 759,455 | $ | 529,880 | ||||||||||||||||||
| Gain on sale of assets | 1,538 | — | 1,564 | — | ||||||||||||||||||||||
| Other income, net | 66 | 1 | 210 | 2 | ||||||||||||||||||||||
| Total revenues and other income | 200,540 | 224,787 | 761,229 | 529,882 | ||||||||||||||||||||||
| Costs and expenses: | ||||||||||||||||||||||||||
| Oil and gas production | 50,316 | 84,277 | 211,871 | 234,627 | ||||||||||||||||||||||
| Facilities insurance modifications, net | 1,554 | 2,465 | 3,495 | 10,555 | ||||||||||||||||||||||
| Exploration expenses | 23,982 | 13,977 | 41,452 | 74,293 | ||||||||||||||||||||||
| General and administrative | 22,459 | 18,269 | 66,628 | 57,366 | ||||||||||||||||||||||
| Depletion, depreciation and amortization | 64,914 | 111,231 | 292,616 | 326,390 | ||||||||||||||||||||||
| Impairment of long-lived assets | — | — | — | 150,820 | ||||||||||||||||||||||
| Interest and other financing costs, net | 26,873 | 27,068 | 90,727 | 83,177 | ||||||||||||||||||||||
| Derivatives, net | 38,224 | 1,187 | 252,606 | (34,776) | ||||||||||||||||||||||
| Other expenses, net | 194 | 2,805 | 1,003 | 27,962 | ||||||||||||||||||||||
| Total costs and expenses | 228,516 | 261,279 | 960,398 | 930,414 | ||||||||||||||||||||||
| Loss before income taxes | (27,976) | (36,492) | (199,169) | (400,532) | ||||||||||||||||||||||
| Income tax expense (benefit) | 621 | 892 | (22,617) | 19,010 | ||||||||||||||||||||||
| Net loss | $ | (28,597) | $ | (37,384) | $ | (176,552) | $ | (419,542) | ||||||||||||||||||
| Net loss per share: | ||||||||||||||||||||||||||
| Basic | $ | (0.07) | $ | (0.09) | $ | (0.43) | $ | (1.04) | ||||||||||||||||||
| Diluted | $ | (0.07) | $ | (0.09) | $ | (0.43) | $ | (1.04) | ||||||||||||||||||
Weighted average number of shares used to compute net loss per share: | ||||||||||||||||||||||||||
| Basic | 408,520 | 405,409 | 408,009 | 405,131 | ||||||||||||||||||||||
| Diluted | 408,520 | 405,409 | 408,009 | 405,131 | ||||||||||||||||||||||
| Dividends declared per common share | $ | — | $ | — | $ | — | $ | 0.0452 | ||||||||||||||||||
Kosmos Energy Ltd.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
| September 30, | December 31, | |||||||||||||
| 2021 | 2020 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 111,329 | $ | 149,027 | ||||||||||
| Receivables, net | 75,857 | 78,813 | ||||||||||||
| Other current assets | 228,735 | 172,451 | ||||||||||||
| Total current assets | 415,921 | 400,291 | ||||||||||||
| Property and equipment, net | 3,442,897 | 3,320,913 | ||||||||||||
| Other non-current assets | 294,906 | 146,389 | ||||||||||||
| Total assets | $ | 4,153,724 | $ | 3,867,593 | ||||||||||
| Liabilities and stockholders’ equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 143,155 | $ | 221,430 | ||||||||||
| Accrued liabilities | 180,725 | 203,260 | ||||||||||||
| Current maturities of long-term debt | 30,000 | 7,500 | ||||||||||||
| Other current liabilities | 107,863 | 28,009 | ||||||||||||
| Total current liabilities | 461,743 | 460,199 | ||||||||||||
| Long-term liabilities: | ||||||||||||||
| Long-term debt, net | 2,368,240 | 2,103,931 | ||||||||||||
| Deferred tax liabilities | 505,253 | 573,619 | ||||||||||||
| Other non-current liabilities | 531,736 | 289,690 | ||||||||||||
| Total long-term liabilities | 3,405,229 | 2,967,240 | ||||||||||||
| Total stockholders’ equity | 286,752 | 440,154 | ||||||||||||
| Total liabilities and stockholders’ equity | $ | 4,153,724 | $ | 3,867,593 | ||||||||||
Kosmos Energy Ltd.
Condensed Consolidated Statements of Cash Flow
(In thousands, unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||
| Operating activities: | ||||||||||||||||||||||||||
| Net loss | $ | (28,597) | $ | (37,384) | $ | (176,552) | $ | (419,542) | ||||||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||||||||
| Depletion, depreciation and amortization (including deferred financing costs) | 67,511 | 113,486 | 300,404 | 333,120 | ||||||||||||||||||||||
| Deferred income taxes | 1,119 | (19,935) | (68,366) | 3,715 | ||||||||||||||||||||||
| Unsuccessful well costs and leasehold impairments | 11,907 | 3,483 | 16,772 | 24,338 | ||||||||||||||||||||||
| Impairment of long-lived assets | — | — | — | 150,820 | ||||||||||||||||||||||
| Change in fair value of derivatives | 36,130 | (541) | 259,289 | (32,156) | ||||||||||||||||||||||
| Cash settlements on derivatives, net(1) | (53,640) | (17,910) | (150,255) | 16,904 | ||||||||||||||||||||||
| Equity-based compensation | 8,122 | 8,699 | 24,011 | 26,392 | ||||||||||||||||||||||
| Gain on sale of assets | (1,538) | — | (1,564) | — | ||||||||||||||||||||||
| Loss on extinguishment of debt | — | 678 | 15,223 | 2,893 | ||||||||||||||||||||||
| Other | (2,097) | 144 | (2,763) | 6,673 | ||||||||||||||||||||||
| Changes in assets and liabilities: | ||||||||||||||||||||||||||
| Net changes in working capital | (137,331) | 32,773 | (72,358) | (92,500) | ||||||||||||||||||||||
| Net cash provided by (used in) operating activities | (98,414) | 83,493 | 143,841 | 20,657 | ||||||||||||||||||||||
| Investing activities | ||||||||||||||||||||||||||
| Oil and gas assets | (86,726) | (80,183) | (377,125) | (215,425) | ||||||||||||||||||||||
| Other property | (585) | (302) | (725) | (1,838) | ||||||||||||||||||||||
| Proceeds on sale of assets | 3,395 | — | 5,327 | 1,713 | ||||||||||||||||||||||
| Notes receivable from partners | (5,531) | (11,212) | (41,712) | (53,574) | ||||||||||||||||||||||
| Net cash used in investing activities | (89,447) | (91,697) | (414,235) | (269,124) | ||||||||||||||||||||||
| Financing activities: | ||||||||||||||||||||||||||
| Borrowings on long-term debt | 150,000 | 150,000 | 250,000 | 300,000 | ||||||||||||||||||||||
| Payments on long-term debt | — | — | (400,000) | — | ||||||||||||||||||||||
| Advances under production prepayment agreement | — | — | — | 50,000 | ||||||||||||||||||||||
| Net proceeds from issuance of senior notes | — | — | 444,375 | — | ||||||||||||||||||||||
| Redemption of senior secured notes | — | — | — | — | ||||||||||||||||||||||
| Purchase of treasury stock / tax withholdings | (63) | — | (1,100) | (4,947) | ||||||||||||||||||||||
| Dividends | (68) | 7 | (512) | (19,174) | ||||||||||||||||||||||
| Deferred financing costs | (229) | (4,434) | (17,291) | (4,570) | ||||||||||||||||||||||
| Net cash provided by financing activities | 149,640 | 145,573 | 275,472 | 321,309 | ||||||||||||||||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (38,221) | 137,369 | 5,078 | 72,842 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 193,063 | 164,819 | 149,764 | 229,346 | ||||||||||||||||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 154,842 | $ | 302,188 | $ | 154,842 | $ | 302,188 | ||||||||||||||||||
(1)Cash settlements on commodity hedges were $(55.4) million and $(19.6) million for the three months ended September 30, 2021 and 2020, respectively, and $(142.9) million and $22.8 million for the nine months ended September 30, 2021 and 2020, respectively.
Kosmos Energy Ltd.
EBITDAX
(In thousands, unaudited)
| Three months ended | Nine months ended | Twelve Months Ended | ||||||||||||||||||||||||||||||
| September 30, 2021 | September 30, 2020 | September 30, 2021 | September 30, 2020 | September 30, 2021 | ||||||||||||||||||||||||||||
| Net loss | $ | (28,597) | $ | (37,384) | $ | (176,552) | $ | (419,542) | $ | (168,596) | ||||||||||||||||||||||
| Exploration expenses | 23,982 | 13,977 | 41,452 | 74,293 | 51,775 | |||||||||||||||||||||||||||
| Facilities insurance modifications, net | 1,554 | 2,465 | 3,495 | 10,555 | 6,101 | |||||||||||||||||||||||||||
| Depletion, depreciation and amortization | 64,914 | 111,231 | 292,616 | 326,390 | 452,088 | |||||||||||||||||||||||||||
| Impairment of long-lived assets | — | — | — | 150,820 | 3,139 | |||||||||||||||||||||||||||
| Equity-based compensation | 8,122 | 8,699 | 24,011 | 26,392 | 30,325 | |||||||||||||||||||||||||||
| Derivatives, net | 38,224 | 1,187 | 252,606 | (34,776) | 304,562 | |||||||||||||||||||||||||||
| Cash settlements on commodity derivatives | (55,446) | (19,637) | (142,892) | 22,811 | (168,418) | |||||||||||||||||||||||||||
| Restructuring and other | (407) | 1,158 | 1,012 | 18,959 | 11,220 | |||||||||||||||||||||||||||
| Other, net | 601 | 1,542 | (9) | 5,472 | 4,734 | |||||||||||||||||||||||||||
| Gain on sale of assets | (1,538) | — | (1,564) | — | (93,727) | |||||||||||||||||||||||||||
| Interest and other financing costs, net | 26,873 | 27,068 | 90,727 | 83,177 | 117,344 | |||||||||||||||||||||||||||
| Income tax expense (benefit) | 621 | 892 | (22,617) | 19,010 | (46,836) | |||||||||||||||||||||||||||
| EBITDAX | 78,903 | $ | 111,198 | $ | 362,285 | $ | 283,561 | $ | 503,711 | |||||||||||||||||||||||
| Acquired Ghana Interest EBITDAX(1) | 315,485 | |||||||||||||||||||||||||||||||
| Pro Forma EBITDAX | $ | 819,196 | ||||||||||||||||||||||||||||||
(1)Twelve Months Ended September 30, 2021 EBITDAX for the Acquired Ghana Interest of $315.5 million is comprised of Revenues of $410.8 million less direct operating expenses of $95.3 million for the acquired properties. Consistent with the definition of EBITDAX, $3.6 million of Facilities insurance modifications, net has been excluded from the results to present the Acquired Ghana Interests Twelve Months Ended September 30, 2021 EBITDAX. The results are presented on the accrual basis of accounting, however as the acquired properties were not accounted for or operated as a separate segment, division, or entity, complete financial statements under U.S. generally accepted accounting principles are not available or practicable to produce. The results are not intended to be a complete presentation of the results of operations of the acquired properties and may not be representative of future operations as they do not include general and administrative expenses; interest expense; depreciation, depletion, and amortization; provision for income taxes; and certain other revenues and expenses not directly associated with revenues from the sale of crude oil.
Kosmos Energy Ltd.
Adjusted Net Income
(In thousands, except per share amounts, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net loss | $ | (28,597) | $ | (37,384) | $ | (176,552) | $ | (419,542) | |||||||||||||||
| Derivatives, net | 38,224 | 1,187 | 252,606 | (34,776) | |||||||||||||||||||
| Cash settlements on commodity derivatives | (55,446) | (19,637) | (142,892) | 22,811 | |||||||||||||||||||
| Gain on sale of assets | (1,538) | — | (1,564) | — | |||||||||||||||||||
| Facilities insurance modifications, net | 1,554 | 2,465 | 3,495 | 10,555 | |||||||||||||||||||
| Impairment of long-lived assets | — | — | — | 150,820 | |||||||||||||||||||
| Restructuring and other | (407) | 1,158 | 1,012 | 18,959 | |||||||||||||||||||
| Other, net | 579 | 1,542 | (208) | 5,472 | |||||||||||||||||||
| Loss on extinguishment of debt | — | 678 | 15,223 | 2,893 | |||||||||||||||||||
| Total selected items before tax | (17,034) | (12,607) | 127,672 | 176,734 | |||||||||||||||||||
| Income tax expense (benefit) on adjustments(1) | 2,677 | 335 | (37,545) | 5,768 | |||||||||||||||||||
| Impact of valuation adjustments and U.S. tax law changes | — | — | — | 26,001 | |||||||||||||||||||
| Adjusted net loss | $ | (42,954) | (49,656) | (86,425) | (211,039) | ||||||||||||||||||
| Net loss per diluted share | $ | (0.07) | $ | (0.09) | $ | (0.43) | $ | (1.04) | |||||||||||||||
| Derivatives, net | 0.09 | — | 0.62 | (0.09) | |||||||||||||||||||
| Cash settlements on commodity derivatives | (0.14) | (0.04) | (0.35) | 0.06 | |||||||||||||||||||
| Gain on sale of assets | — | — | — | — | |||||||||||||||||||
| Facilities insurance modifications, net | — | 0.01 | — | 0.03 | |||||||||||||||||||
| Impairment of long-lived assets | — | — | — | 0.37 | |||||||||||||||||||
| Restructuring and other | — | — | — | 0.06 | |||||||||||||||||||
| Other, net | — | — | — | 0.01 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | 0.04 | 0.01 | |||||||||||||||||||
| Total selected items before tax | (0.05) | (0.03) | 0.31 | 0.45 | |||||||||||||||||||
| Income tax expense (benefit) on adjustments(1) | 0.01 | — | (0.09) | 0.01 | |||||||||||||||||||
| Impact of valuation adjustments and U.S. tax law changes | — | — | — | 0.06 | |||||||||||||||||||
| Adjusted net loss per diluted share | $ | (0.11) | $ | (0.12) | $ | (0.21) | $ | (0.52) | |||||||||||||||
| Weighted average number of diluted shares | 408,520 | 405,409 | 408,009 | 405,131 | |||||||||||||||||||
(1)Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rates for the U.S. and Ghana/Equatorial Guinea are 21% and 35%, respectively.
Kosmos Energy Ltd.
Free Cash Flow
(In thousands, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Reconciliation of net cash provided by operating activities to free cash flow: | |||||||||||||||||||||||
Net cash provided by (used in) operating activities | $ | (98,414) | $ | 83,493 | $ | 143,841 | $ | 20,657 | |||||||||||||||
Net cash used in investing activities - base business | (65,337) | (66,498) | (182,065) | (187,184) | |||||||||||||||||||
Net cash used in investing activities - Mauritania/Senegal | (24,110) | (25,199) | (232,170) | (81,940) | |||||||||||||||||||
| Free cash flow | $ | (187,861) | $ | (8,204) | $ | (270,394) | $ | (248,467) | |||||||||||||||
Operational Summary
(In thousands, except barrel and per barrel data, unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net Volume Sold | |||||||||||||||||||||||
| Oil (MMBbl) | 2.719 | 5.160 | 11.349 | 14.361 | |||||||||||||||||||
| Gas (MMcf) | 1.078 | 1.167 | 3.624 | 4.451 | |||||||||||||||||||
| NGL (MMBbl) | 0.111 | 0.122 | 0.365 | 0.457 | |||||||||||||||||||
| Total (MMBoe) | 3.010 | 5.477 | 12.318 | 15.560 | |||||||||||||||||||
| Total (Boepd) | 32.714 | 59.527 | 45.121 | 56.788 | |||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Oil sales | $ | 190,599 | $ | 220,653 | $ | 737,381 | $ | 517,382 | |||||||||||||||
| Gas sales | 4,508 | 2,314 | 12,727 | 8,146 | |||||||||||||||||||
| NGL sales | 3,829 | 1,819 | 9,347 | 4,352 | |||||||||||||||||||
| Total sales | 198,936 | 224,786 | 759,455 | 529,880 | |||||||||||||||||||
| Cash settlements on commodity derivatives | (55,446) | (19,637) | (142,892) | 22,811 | |||||||||||||||||||
| Realized revenue | $ | 143,490 | $ | 205,149 | $ | 616,563 | $ | 552,691 | |||||||||||||||
| Oil and Gas Production Costs | $ | 50,316 | $ | 84,277 | $ | 211,871 | $ | 234,627 | |||||||||||||||
| Sales per Bbl/Mcf/Boe | |||||||||||||||||||||||
| Oil sales per Bbl | $ | 70.10 | $ | 42.76 | $ | 64.97 | $ | 36.03 | |||||||||||||||
| Gas sales per Mcf | 4.18 | 1.98 | 3.51 | 1.83 | |||||||||||||||||||
| NGL sales per Bbl | 34.50 | 14.91 | 25.61 | 9.52 | |||||||||||||||||||
| Total sales per Boe | 66.10 | 41.05 | 61.65 | 34.05 | |||||||||||||||||||
| Cash settlements on commodity derivatives per oil Bbl(1) | (20.39) | (3.81) | (12.59) | 1.59 | |||||||||||||||||||
| Realized revenue per Boe | 47.68 | 37.46 | 50.05 | 35.52 | |||||||||||||||||||
| Oil and gas production costs per Boe | $ | 16.72 | $ | 15.39 | $ | 17.20 | $ | 15.08 | |||||||||||||||
(1)Cash settlements on commodity derivatives are only related to Kosmos and are calculated on a per barrel basis using Kosmos' Net Oil Volumes Sold.
Kosmos was underlifted by approximately 1.5 million barrels as of September 30, 2021.
Hedging Summary
As of September 30, 2021(1)
(Unaudited)
| Weighted Average Price per Bbl | |||||||||||||||||||||||||||||||||||
| Index | MBbl | Floor(2) | Sold Put | Ceiling | |||||||||||||||||||||||||||||||
| 2021: | |||||||||||||||||||||||||||||||||||
| Swaps with sold puts | Dated Brent | 1,500 | $ | 53.96 | $ | 42.92 | $ | — | |||||||||||||||||||||||||||
| Three-way collars | Dated Brent | 750 | 40.00 | 32.50 | 53.47 | ||||||||||||||||||||||||||||||
| Three-way collars | NYMEX WTI | 250 | 45.00 | 37.50 | 55.00 | ||||||||||||||||||||||||||||||
| 2022: | |||||||||||||||||||||||||||||||||||
| Three-way collars | Dated Brent | 4,500 | 56.67 | 43.33 | 76.91 | ||||||||||||||||||||||||||||||
| Two-way collars | Dated Brent | 5,000 | 61.00 | — | 82.00 | ||||||||||||||||||||||||||||||
(1)Please see the Company’s filed 10-Q for full disclosure on hedging material. Includes hedging position as of September 30, 2021 and hedges added since quarter-end.
(2)“Floor” represents floor price for collars or swaps and strike price for purchased puts.
Note: Excludes 1.8 MMBbls of sold (short) calls with a strike price of $70.09 per Bbl in 2021 and 1.6 MMBbls of sold (short) calls with a strike price of $60.00 per Bbl in 2022.
2021 Guidance
| 4Q 2021(1) | |||||
| Production(2,3) | 70,000 - 72,000 boe per day | ||||
| Opex | $17.00 - $18.50 per boe | ||||
| DD&A | $23.00 - $25.00 per boe | ||||
| G&A(~60% cash) | $24 - $26 million | ||||
| Exploration Expense(4) | $20 - $22 million | ||||
| Net Interest(5) | ~$45 million | ||||
| Tax | $7.00 - $9.00 per boe | ||||
| Base Business Capex(6) | ~$115 million | ||||
Note: Ghana / Equatorial Guinea revenue calculated by number of cargos.
(1)Assumes no pre-emption.
(2)Production assumes Oxy Ghana contribution from October 1, 2021. 4Q 2021 cargos forecast - Ghana: 4 cargos / Equatorial Guinea: 1.5 cargos. FY 2021 Ghana: 9 cargos (includes 1 Oxy Ghana cargo in 4Q) / Equatorial Guinea 4.0 cargos. Average 4Q cargo size ~900,000 barrels of oil (accounting for one Oxy Ghana cargo that was co-lifted)
(3)U.S. Gulf of Mexico Production - 4Q 2021 forecast 20,000-21,500 boe per day. Oil/Gas/NGL split for 2021: ~80%/~15%/~5%.
(4)Excludes dry hole costs. Includes Gulf of Mexico seismic acquisition deferred from 3Q.
(5)Includes ~$5 million of one off financing costs associated with the Oxy Ghana acquisition
(6)Excludes Mauritania and Senegal capital expenditures of ~$10 million and includes capital expenditures associated with the additional Ghana interests.
Source: Kosmos Energy Ltd.
Investor Relations
Jamie Buckland
+44 (0) 203 954 2831
jbuckland@kosmosenergy.com
Media Relations
Thomas Golembeski
+1-214-445-9674
tgolembeski@kosmosenergy.com