SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|(Mark One)|| |
|☒||ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934|
For the fiscal year ended December 31, 2022
|☐||TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934|
|For the transition period from to |
Commission file number: 001-35167
Kosmos Energy Ltd.
(Exact name of registrant as specified in its charter)
|(State or other jurisdiction of|| ||(I.R.S. Employer|
|incorporation or organization)|| ||Identification No.)|
|8176 Park Lane|
|(Address of principal executive offices)||(Zip Code)|
Registrant’s telephone number, including area code: +1 214 445 9600
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol||Name of each exchange on which registered:|
|Common Stock $0.01 par value||KOS||New York Stock Exchange|
|London Stock Exchange|
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b‑2 of the Exchange Act.
|Large accelerated filer ||☒|| ||Accelerated filer ||☐|
|Non-accelerated filer ||☐|| ||Smaller reporting company ||☐|
|(Do not check if a smaller reporting company)|| || |
| || ||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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non‑voting common stock held by non‑affiliates, based on the per‑share closing price of the registrant’s common stock as of the last business day of the registrant’s most recently completed second fiscal quarter was $2,764,469,395.
The number of the registrant’s Common Stock outstanding as of February 23, 2023 was 459,584,934.
DOCUMENTS INCORPORATED BY REFERENCE
Part III, Items 10‑14, is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2022.
Certain exhibits previously filed with the Securities and Exchange Commission are incorporated by reference into Part IV of this report.
TABLE OF CONTENTS
Unless otherwise stated in this report, references to “Kosmos,” “we,” “us” or “the company” refer to Kosmos Energy Ltd. and its subsidiaries. In addition, we have provided definitions for some of the industry terms used in this report in the “Glossary and Selected Abbreviations” beginning on page 4.
KOSMOS ENERGY LTD.
GLOSSARY AND SELECTED ABBREVIATIONS
The following are abbreviations and definitions of certain terms that may be used in this report. Unless listed below, all defined terms under Rule 4‑10(a) of Regulation S‑X shall have their statutorily prescribed meanings.
|“2D seismic data”||Two‑dimensional seismic data, serving as interpretive data that allows a view of a vertical cross‑section beneath a prospective area.|
|“3D seismic data”||Three‑dimensional seismic data, serving as geophysical data that depicts the subsurface strata in three dimensions. 3D seismic data typically provides a more detailed and accurate interpretation of the subsurface strata than 2D seismic data.|
|“ANP-STP”||Agencia Nacional Do Petroleo De Sao Tome E Principe.|
|“API”||A specific gravity scale, expressed in degrees, that denotes the relative density of various petroleum liquids. The scale increases inversely with density. Thus lighter petroleum liquids will have a higher API than heavier ones.|
|“Asset Coverage Ratio”||The “Asset Coverage Ratio” as defined in the GoM Term Loan means, as of each March 31, June 30, September 30 and December 31 of each Fiscal Year, commencing December 31, 2020, the ratio of (a) Total PDP PV-10 (as defined in the GoM Term Loan) as of such date to (b) outstanding principal amount of Loans (as defined in the GoM Term Loan) as of such date.|
|“ASC”||Financial Accounting Standards Board Accounting Standards Codification.|
|“ASU”||Financial Accounting Standards Board Accounting Standards Update.|
|“Barrel” or “Bbl”||A standard measure of volume for petroleum corresponding to approximately 42 gallons at 60 degrees Fahrenheit.|
|“BBbl”||Billion barrels of oil.|
|“BBoe”||Billion barrels of oil equivalent.|
|“Bcf”||Billion cubic feet.|
|“Boe”||Barrels of oil equivalent. Volumes of natural gas converted to barrels of oil using a conversion factor of 6,000 cubic feet of natural gas to one barrel of oil.|
|“BOEM”||Bureau of Ocean Energy Management.|
|“Boepd”||Barrels of oil equivalent per day.|
|“Bopd”||Barrels of oil per day.|
|“BP”||BP p.l.c. and related subsidiaries.|
|“Bwpd”||Barrels of water per day.|
|“Corporate Revolver”||Revolving Credit Facility Agreement dated November 23, 2012 (as amended or as amended and restated from time to time).|
|“COVID-19”||Coronavirus disease 2019.|
|“Debt cover ratio”||The “debt cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) total long‑term debt less cash and cash equivalents and restricted cash, to (y) the aggregate EBITDAX (see below) of the Company for the previous twelve months.|
|“Developed acreage”||The number of acres that are allocated or assignable to productive wells or wells capable of production.|
|“Development”||The phase in which an oil or natural gas field is brought into production by drilling development wells and installing appropriate production systems.|
|“DST”||Drill stem test.|
|“Dry hole” or “Unsuccessful well”||A well that has not encountered a hydrocarbon bearing reservoir expected to produce in commercial quantities.|
|“EBITDAX”||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.|
|“ESG”||Environmental, social, and governance.|
|“ESP”||Electric submersible pump.|
|“E&P”||Exploration and production.|
|“Facility”||Facility agreement dated March 28, 2011 (as amended or as amended and restated from time to time).|
|“FASB”||Financial Accounting Standards Board.|
|“Farm‑in”||An agreement whereby a party acquires a portion of the participating interest in a block from the owner of such interest, usually in return for cash and/or for taking on a portion of future costs or other performance by the assignee as a condition of the assignment.|
|“Farm‑out”||An agreement whereby the owner of the participating interest agrees to assign a portion of its participating interest in a block to another party for cash and/or for the assignee taking on a portion of future costs and/or other work as a condition of the assignment.|
|“FEED”||Front End Engineering Design.|
|“Field life cover ratio”|
The “field life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) the forecasted net present value of net cash flow through depletion plus the net present value of the forecast of certain capital expenditures incurred in relation to the Ghana and Equatorial Guinea assets, to (y) the aggregate loan amounts outstanding under the Facility.
|“FLNG”||Floating liquefied natural gas.|
|“FPS”||Floating production system.|
|“FPSO”||Floating production, storage and offloading vessel.|
|“GAAP”||Generally Accepted Accounting Principles in the United States of America.|
|“GEPetrol”||Guinea Equatorial De Petroleos.|
|“GJFFDP”||Greater Jubilee Full Field Development Plan.|
|“GNPC”||Ghana National Petroleum Corporation.|
|“GoM Term Loan”||Senior Secured Term Loan Credit Agreement dated September 30, 2020.|
|“Greater Tortue Ahmeyim”||Ahmeyim and Guembeul discoveries.|
|“GTA UUOA”||Unitization and Unit Operating Agreement covering the Greater Tortue Ahmeyim Unit.|
|“HLS”||Heavy Louisiana Sweet.|
|“Jubilee UUOA”||Unitization and Unit Operating Agreement covering the Jubilee Unit.|
|“Interest cover ratio”||The “interest cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) the aggregate EBITDAX (see above) of the Company for the previous twelve months, to (y) interest expense less interest income for the Company for the previous twelve months.|
|“LNG”||Liquefied natural gas.|
|“Loan life cover ratio”|
The “loan life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) net present value of forecasted net cash flow through the final maturity date of the Facility plus the net present value of forecasted capital expenditures incurred in relation to the Ghana and Equatorial Guinea assets, however, forecasted capital expenditures in relation to the additional interests in Ghana acquired in the October 2021 acquisition of Anadarko WCTP are not included, to (y) the aggregate loan amounts outstanding under the Facility.
London Interbank Offered Rate
|“LSE”||London Stock Exchange.|
|“LTIP”||Long Term Incentive Plan.|
|“MBbl”||Thousand barrels of oil.|
|“MBoe”||Thousand barrels of oil equivalent.|
|“Mcf”||Thousand cubic feet of natural gas.|
|“Mcfpd”||Thousand cubic feet per day of natural gas.|
|“MMBbl”||Million barrels of oil.|
|“MMBoe”||Million barrels of oil equivalent.|
|“MMBtu”||Million British thermal units.|
|“MMcf”||Million cubic feet of natural gas.|
|“MMcfd”||Million cubic feet per day of natural gas.|
|“MMTPA”||Million metric tonnes per annum.|
|“Natural gas liquid” or “NGL”||Components of natural gas that are separated from the gas state in the form of liquids. These include propane, butane, and ethane, among others.|
|“NYSE”||New York Stock Exchange.|
|“Petroleum contract”||A contract in which the owner of hydrocarbons gives an E&P company temporary and limited rights, including an exclusive option to explore for, develop, and produce hydrocarbons from the lease area.|
|“Petroleum system”||A petroleum system consists of organic material that has been buried at a sufficient depth to allow adequate temperature and pressure to expel hydrocarbons and cause the movement of oil and natural gas from the area in which it was formed to a reservoir rock where it can accumulate.|
|“Plan of development” or “PoD”||A written document outlining the steps to be undertaken to develop a field.|
|“Productive well”||An exploratory or development well found to be capable of producing either oil or natural gas in sufficient quantities to justify completion as an oil or natural gas well.|
|“Prospect(s)”||A potential trap that may contain hydrocarbons and is supported by the necessary amount and quality of geologic and geophysical data to indicate a probability of oil and/or natural gas accumulation ready to be drilled. The five required elements (generation, migration, reservoir, seal and trap) must be present for a prospect to work and if any of these fail neither oil nor natural gas may be present, at least not in commercial volumes.|
|“Proved reserves”||Estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be economically recoverable in future years from known reservoirs under existing economic and operating conditions, as well as additional reserves expected to be obtained through confirmed improved recovery techniques, as defined in SEC Regulation S‑X 4‑10(a)(2).|
|“Proved developed reserves”||Those proved reserves that can be expected to be recovered through existing wells and facilities and by existing operating methods.|
|“Proved undeveloped reserves”||Those proved reserves that are expected to be recovered from future wells and facilities, including future improved recovery projects which are anticipated with a high degree of certainty in reservoirs which have previously shown favorable response to improved recovery projects.|
|“RSC”||Ryder Scott Company, L.P.|
Secured Overnight Financing Rate
|“SEC”||Securities and Exchange Commission.|
|“7.125% Senior Notes”||7.125% Senior Notes due 2026.|
|“7.750% Senior Notes”||7.750% Senior Notes due 2027.|
|“7.500% Senior Notes”||7.500% Senior Notes due 2028.|
|“Shelf margin”||The path created by the change in direction of the shoreline in reaction to the filling of a sedimentary basin.|
|“Shell”||Royal Dutch Shell and related subsidiaries.|
|“SMH”||Societe Mauritanienne des Hydrocarbures|
|“Stratigraphy”||The study of the composition, relative ages and distribution of layers of sedimentary rock.|
|“Stratigraphic trap”||A stratigraphic trap is formed from a change in the character of the rock rather than faulting or folding of the rock and oil is held in place by changes in the porosity and permeability of overlying rocks.|
|“Structural trap”||A topographic feature in the earth’s subsurface that forms a high point in the rock strata. This facilitates the accumulation of oil and gas in the strata.|
|“Structural‑stratigraphic trap”||A structural‑stratigraphic trap is a combination trap with structural and stratigraphic features.|
|“Submarine fan”||A fan‑shaped deposit of sediments occurring in a deep water setting where sediments have been transported via mass flow, gravity induced, processes from the shallow to deep water. These systems commonly develop at the bottom of sedimentary basins or at the end of large rivers.|
|“TAG GSA”||TEN Associated Gas - Gas Sales Agreement.|
|“TEN”||Tweneboa, Enyenra and Ntomme.|
|“Three‑way fault trap”||A structural trap where at least one of the components of closure is formed by offset of rock layers across a fault.|
“Tortue Phase 1 SPA”
|Greater Tortue Ahmeyim Agreement for a Long Term Sale and Purchase of LNG.|
|“Trafigura”||Trafigura Group PTD, Ltd. and related subsidiaries including Trafigura Trading LLC.|
|“Trap”||A configuration of rocks suitable for containing hydrocarbons and sealed by a relatively impermeable formation through which hydrocarbons will not migrate.|
|“Undeveloped acreage”||Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of natural gas and oil regardless of whether such acreage contains discovered resources.|
|“WCTP”||West Cape Three Points.|
Cautionary Statement Regarding Forward‑Looking Statements
This annual report on Form 10‑K contains estimates and forward‑looking statements, principally in “Item 1. Business,” “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our estimates and forward‑looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. Although we believe 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 us. Many important factors, in addition to the factors described in our annual report on Form 10‑K, may adversely affect our results as indicated in forward‑looking statements. You should read this annual report on Form 10‑K and the documents that we have filed as exhibits hereto completely and with the understanding that our actual future results may be materially different from what we expect. Our estimates and forward‑looking statements may be influenced by the following factors, among others:
•the impact of a potential regional or global recession, inflationary pressures and other varying macroeconomic conditions on us and the overall business environment;
•the impact of Russia’s invasion of Ukraine and the effects it has on the oil and gas industry as a whole, including increased volatility with respect to oil, natural gas and NGL prices and operating and capital expenditures;
•our ability to find, acquire or gain access to other discoveries and prospects and to successfully develop and produce from our current discoveries and prospects;
•uncertainties inherent in making estimates of our oil and natural gas data;
•the successful implementation of our and our block partners’ prospect discovery and development and drilling plans;
•projected and targeted capital expenditures and other costs, commitments and revenues;
•termination of or intervention in concessions, rights or authorizations granted to us by the governments of the countries in which we operate (or their respective national oil companies) or any other federal, state or local governments or authorities;
•our dependence on our key management personnel and our ability to attract and retain qualified technical personnel;
•the ability to obtain financing and to comply with the terms under which such financing may be available;
•the volatility of oil, natural gas and NGL prices, as well as our ability to implement hedges addressing such volatility on commercially reasonable terms;
•the availability, cost, function and reliability of developing appropriate infrastructure around and transportation to our discoveries and prospects;
•the availability and cost of drilling rigs, production equipment, supplies, personnel and oilfield services;
•other competitive pressures;
•potential liabilities inherent in oil and natural gas operations, including drilling and production risks and other operational and environmental risks and hazards;
•current and future government regulation of the oil and gas industry, applicable monetary/foreign exchange sectors or regulation of the investment in or ability to do business with certain countries or regimes;
•cost of compliance with laws and regulations;
•changes in, or new, environmental, health and safety or climate change or GHG laws, regulations and executive orders, or the implementation, or interpretation, of those laws, regulations and executive orders;
•adverse effects of sovereign boundary disputes in the jurisdictions in which we operate;
•geological, geophysical and other technical and operations problems including drilling and oil and gas production and processing;
•military operations, civil unrest, outbreaks of disease, including the impact of the COVID-19 pandemic, terrorist acts, wars or embargoes;
•the cost and availability of adequate insurance coverage and whether such coverage is enough to sufficiently mitigate potential losses and whether our insurers comply with their obligations under our coverage agreements;
•our vulnerability to severe weather events, including, but not limited to, tropical storms and hurricanes, and the physical effects of climate change;
•our ability to meet our obligations under the agreements governing our indebtedness;
•the availability and cost of financing and refinancing our indebtedness;
•the amount of collateral required to be posted from time to time in our hedging transactions, letters of credit, performance bonds and other secured debt;
•our ability to obtain surety or performance bonds on commercially reasonable terms;
•the result of any legal proceedings, arbitrations, or investigations we may be subject to or involved in;
•our success in risk management activities, including the use of derivative financial instruments to hedge commodity and interest rate risks; and
•other risk factors discussed in the “Item 1A. Risk Factors” section of this annual report on Form 10‑K.
The words “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “plan” and similar words are intended to identify estimates and forward‑looking statements. Estimates and forward‑looking statements speak only as of the date they were made, and, except to the extent required by law, we undertake no obligation to update or to review any estimate and/or forward‑looking statement because of new information, future events or other factors. Estimates and forward‑looking statements involve risks and uncertainties and are not guarantees of future performance. As a result of the risks and uncertainties described above, the estimates and forward‑looking statements discussed in this annual report on Form 10‑K might not occur, and our future results and our performance may differ materially from those expressed in these forward‑looking statements due to, including, but not limited to, the factors mentioned above. Because of these uncertainties, you should not place undue reliance on these forward‑looking statements.
Item 1. Business
Kosmos is a full-cycle, deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as world-class gas projects offshore Mauritania and Senegal. We also pursue a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos is listed on the NYSE and LSE and is traded under the ticker symbol KOS.
Kosmos was founded in 2003 to find oil in under‑explored or overlooked parts of West Africa. In its relatively brief history, we have successfully opened two new hydrocarbon basins through the discovery of the Jubilee field offshore Ghana in 2007 and the Greater Tortue Ahmeyim field in 2015 (which includes the Ahmeyim and Guembeul-1 discovery wells offshore Mauritania and Senegal in 2015 and 2016, respectively). Jubilee was one of the largest oil discoveries worldwide in 2007 and is considered one of the largest finds offshore West Africa discovered during that decade. The Greater Tortue Ahmeyim discovery was one of the largest natural gas discoveries worldwide in 2015 and is one of the largest gas discoveries ever offshore West Africa.
Over the past few years, our business strategy has evolved to focus on production enhancing infill drilling and well work, infrastructure-led exploration as well as value-accretive acquisitions. This strategic evolution was initially enabled by our acquisition of the Ceiba Field and Okume Complex assets offshore Equatorial Guinea in 2017, together with access to surrounding exploration licenses, and bolstered by the 2018 acquisition of Deep Gulf Energy, a deepwater company operating in the U.S. Gulf of Mexico, which further enhanced our production, exploitation and infrastructure-led exploration capabilities. Most recently, this strategy was demonstrated by the acquisition of additional interests in the Jubilee and TEN fields offshore Ghana in 2021 and the Kodiak and Winterfell fields in the U.S. Gulf of Mexico in 2022.
Our Business Strategy
As a full-cycle deepwater E&P company, our mission is to safely deliver production and free cash flow from a portfolio rich in opportunities through a disciplined allocation of capital and optimal portfolio management for the benefit of our shareholders and stakeholders. As a responsible company, we are working to supply the energy the world needs today, find and develop affordable and cleaner energy to advance the energy transition, and be a force for good in our host countries.
Our business strategy is designed to accomplish this mission by focusing on three key objectives: (1) maximize the value of our producing assets; (2) progress our discovered resources toward project sanction and into proved reserves, production, and cash flow through efficient appraisal, development and exploitation; and (3) add new lower carbon resources through an efficient low cost exploration program in proven basins or acquisitions. We are focused on increasing production, cash flows and reserves from our producing assets in Equatorial Guinea, Ghana, and the U.S. Gulf of Mexico. In Mauritania and Senegal, we are progressing our Greater Tortue Ahmeyim development with first gas for the project targeted in the fourth quarter of 2023 while advancing the second phase of the development, as well as advancing first phase development concepts for the BirAllah and Orca discoveries in Mauritania and the Yakaar-Teranga discoveries in Senegal. In addition, our portfolio contains an inventory of prospects, which we plan to continue to mature and high-grade for future drilling and development, providing us access to additional high return growth potential in the coming years. We are also working with our partners and host governments on projects to reduce the carbon intensity of our production assets, such as the elimination of routine flaring in Ghana and Equatorial Guinea.
Grow cash flow, proved reserves and production through exploitation, development and infrastructure-led exploration activities with increasing exposure to natural gas and LNG
We plan to grow cash flow, proved reserves and production by further exploiting our fields offshore Equatorial Guinea, Ghana, and the U.S. Gulf of Mexico. In Equatorial Guinea, our activity set is expanding beyond production optimization projects, such as utilizing electrical submersible pumps, to include development drilling and infrastructure-led exploration which, if successful, can be brought online quickly via subsea tieback to existing infrastructure. In Ghana, we plan to continue drilling additional development wells at the Jubilee field in the near term while working with partners to evaluate and high grade the future activity set to maximize value from the TEN fields. In the U.S. Gulf of Mexico, we plan to progress the Winterfell Field Development Plan, continue development drilling in existing fields and pursue a deep inventory of infrastructure-led exploration targets. In addition, the development of the first phase of the Greater Tortue Ahmeyim
development offshore Mauritania and Senegal continues to make good progress. Beyond the Phase 1 development of Greater Tortue Ahmeyim, growth is also expected to be realized through additional development phases of Greater Tortue Ahmeyim and through the phased development of our other natural gas discoveries in Mauritania and Senegal including the BirAllah and Orca discoveries in Mauritania and the Yakaar and Teranga discoveries in Senegal. During 2023, we plan to continue to mature development concepts for our existing discoveries in Mauritania, Senegal, the U.S. Gulf of Mexico and Equatorial Guinea, as well as mature additional infrastructure-led prospects in the U.S. Gulf of Mexico and Equatorial Guinea.
Focus on optimally developing our discoveries to initial production
Our approach to development is designed to deliver first production on an accelerated timeline, with low cost, lower carbon solutions, where we can leverage early learnings to improve future outcomes and maximize returns. In certain circumstances, we believe a phased approach can be employed to optimize full‑field development. A phased approach facilitates refinement of the development plans based on experience gained in initial phases of production and by leveraging existing infrastructure as subsequent phases of development are implemented. Production and reservoir performance from the initial phases are monitored closely to determine the most efficient and effective techniques to maximize the recovery of reserves and returns. Other benefits include minimizing upfront capital costs, reducing execution risks through smaller initial infrastructure requirements, and enabling cash flow from the initial phases of production to fund a portion of capital costs for subsequent phases. Our development of the Jubilee Field is an example of this approach. The Greater Tortue Ahmeyim development is also being developed in a capitally efficient phased approach, consistent with our business strategy. This is anticipated to result in first gas approximately eight years after initial discovery. Finally, our approach to discoveries in the U.S. Gulf of Mexico is to develop them via subsea tie-back to existing host facilities with spare capacity, which reduces development costs and the average timeline to first production. The Winterfell discovery (2021) and subsequent appraisal success (early 2022) is an example of this, with development expected to deliver first production in around three years after initial discovery.
Apply our entrepreneurial culture, which fosters innovation and creativity, to continue our successful exploration and development program
Our employees are critical to the success of our business strategy, and we have created an environment that enables them to focus their knowledge, skills and experience on finding, developing and producing new fields and optimizing production from existing fields. Culturally, we have an open, team‑oriented work environment that fosters entrepreneurial, creative and contrarian thinking. This approach enables us to fully consider and understand both risk and reward, as well as deliberately and collectively pursue ideas that create and maximize value and free cash flow.
We are led by an experienced management team with a successful track record. Our management team members average over 25 years of industry experience and have participated in discovering, developing, and maximizing the value of multiple large-scale upstream projects around the world. Our experience, industry relationships and technical expertise are our core competitive strengths and are crucial to our success.
Our returns focused exploration approach
Our exploration activity, which is deeply rooted in a fundamental, geologic approach, is focused on proven basins with high-graded infrastructure-led prospects and material play extension opportunities. We target specific areas with sufficient size to manage exploration risks and provide scale should the exploration concept prove successful. We also look for: (i) long‑term contract durations to enable the “right” exploration program to be executed, (ii) play type diversity to provide multiple exploration concept options, (iii) prospect dependency to enhance the chance of replicating success, and (iv) attractive fiscal terms to maximize the commercial viability of discovered hydrocarbons. Alongside the subsurface analysis, Kosmos gains a thorough understanding of the “above‑ground” dynamics in each of the countries in which we operate, which may influence a particular country’s relative desirability from an overall oil and natural gas operating and risk adjusted return perspective.
Our approach is aimed at areas where we have existing production and where there is sufficient infrastructure capacity to enable the development of new discoveries via subsea tieback. Acquisition of the Ceiba Field and Okume Complex in Equatorial Guinea and assets in the U.S. Gulf of Mexico have added high-quality prospectivity to our inventory of infrastructure-led exploration opportunities given their attractive acreage positions within proximity of existing infrastructure with excess capacity available. Existing infrastructure allows us to shorten the time cycle from discovery to first production, lower the capital requirements and increase the returns.
Pursuing value accretive, opportunistic transactions that meet our strategic and financial objectives
Since 2017, we have completed three separate significant acquisitions of oil and natural gas producing properties for total value of approximately $2.0 billion dollars, as of the effective date of the acquisitions. These acquisitions were targeted to increase and complement our existing properties, providing production diversification while increasing the quality of investment opportunities in our portfolio. Our experienced team of management and technical professionals intend to continue identifying, evaluating and pursuing transactions involving oil and natural gas properties that are complementary to our core operating areas, as well as opportunities in other basins where we can apply our existing knowledge, expertise and relationships to create shareholder value. Our focus is on transactions where we can leverage our operational experience and expertise to provide productivity and cost improvements, invest in additional developmental opportunities in such assets and implement an infrastructure-led exploration program for nearby prospects.
Secure a premium license to operate through industry-leading ESG performance
We recognize that advancing the societies in which we work and operating in a manner that protects the environment is critical for creating long-term returns. We aim to continuously improve our ESG credentials by working with a range of stakeholders, including shareholders, partners, suppliers, host governments and civil society organizations.
We aim to act as a force for good by advancing a “Just Energy Transition” in our host countries and communities – namely by supporting economic and social development in the places where we work through supplying affordable and cleaner energy while lowering emissions. We use the United Nations Sustainable Development Goals to understand how our activities promote economic and social progress in host countries. Our Business Principles reflect our shared values as a company, define how we conduct our business and set the standards to which we hold ourselves accountable. Our Business Principles are supported by more detailed policies, procedures, and management systems. Each year, we report on our ESG approach and performance in our Sustainability Report and on our website.
Most recently, we have focused on evaluating the costs, benefits, risks, and opportunities that climate change and the global energy transition may present to our business and integrating them into our business strategy. As part of this effort, we established governance structures to monitor and manage climate-related risks and opportunities; developed a strategy to measure and reduce greenhouse gas emissions from our own operations and mitigate remaining emissions through innovative nature-based solutions. We have published a Climate Risk and Resilience Report that adheres to the recommendations of the Task Force on Climate-related Disclosure (“TCFD”). The report reviews how we are identifying and managing climate-related risks and opportunities across four categories: Governance, Strategy, Risk Management, and Metrics and Targets. The report sets forth a scenario analysis demonstrating the resilience of our portfolio under a scenario aligned with the Paris Agreement’s goals, and our goal to achieve operated Scope 1 and Scope 2 carbon neutrality by 2030 or sooner. We achieved this goal in 2021, significantly earlier than expected, and have identified a pathway to maintain it through continual monitoring of emissions, assessment of emission reduction opportunities, and, for residual emissions, investment in high-quality carbon offsets. We recognize most of our production, and the associated GHG emissions, is derived from assets in which we are non-operating partners. We are therefore working with our partners to develop a consistent measurement approach to improve our understanding of these emissions and implement opportunities to reduce them.
Maintain financial discipline
Execution of our strategy requires us to maintain a conservative financial approach with a strong balance sheet, ample liquidity, and a commitment to low leverage. As of December 31, 2022, our liquidity was approximately $1 billion.
Additionally, we use derivative instruments to partially limit our exposure to fluctuations in oil prices. We have an active commodity hedging program where we aim to hedge a portion of our anticipated sales volumes on a one to two year rolling basis, with the goal to protect against the downside price scenario while still retaining partial exposure to the upside. As of December 31, 2022, we have hedged positions covering approximately 10.0 million barrels of oil production in 2023. We also maintain insurance to partially protect against loss of production revenues from certain of our producing assets.
Operations by Geographic Area
We currently have operations in Africa and the U.S. Gulf of Mexico. Presently, our operating revenues are generated from our operations offshore Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico. The following tables provide a summary of certain key 2022 data for our geographic areas.
|Geographic Area||Percentage of BOE Sales Volumes ||Sales Volumes (Net to Kosmos)||Average Oil||Production ||Depletion, depreciation and amortization per Boe|
|Oil||NGL||Gas||Total||Oil||NGL||Gas||Total||Revenue||costs per |
|(MMBbls)||(Bcf)||(MMBoe)||(per Bbl)||(per Bcf)||(per Boe)||(in Thousands)||Boe(3)|
|For the year ended December 31, 2022|
|Jubilee ||49 ||%||11.40 ||— ||— ||11.40 ||101.23 ||— ||— ||101.23 ||$||1,162,416 ||9.93 ||20.32 |
|TEN||9 ||%||2.00 ||— ||— ||2.00 ||96.83 ||— ||— ||96.83 ||188,546 ||47.48 ||28.57 |
|Ghana(1)||58 ||%||13.40 ||— ||— ||13.40 ||100.59 ||— ||— ||100.59 ||$||1,350,962 ||15.37 ||21.52 |
|Equatorial Guinea||14 ||%||3.30 ||— ||— ||3.30 ||104.24 ||— ||— ||104.24 ||346,783 ||27.23 ||16.16 |
|Mauritania/Senegal||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico ||28 ||%||5.30 ||0.40 ||4.10 ||6.40 ||95.80 ||34.37 ||7.24 ||86.09 ||547,610 ||16.50 ||24.12 |
|Total||100 ||%||22.00 ||0.40 ||4.10 ||23.10 ||100.00 ||34.37 ||7.24 ||97.13 ||$||2,245,355 ||17.39 ||21.55 |
|For the year ended December 31, 2021|
|Jubilee ||35 ||%||7.0 ||— ||— ||7.0 ||$||71.21 ||— ||— ||$||71.21 ||$||500,541 ||$||11.12 ||$||23.93 |
|TEN||10 ||%||2.0 ||— ||— ||2.0 ||73.82 ||— ||— ||73.82 ||143,691 ||37.47 ||37.30 |
|Ghana(2)||45 ||%||9.0 ||— ||— ||9.0 ||$||71.77 ||— ||— ||$||71.77 ||$||644,232 ||$||16.83 ||$||26.84 |
|Equatorial Guinea||19 ||%||3.7 ||— ||— ||3.7 ||70.39 ||— ||— ||70.39 ||260,520 ||25.13 ||15.26 |
|Mauritania/Senegal||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico||36 ||%||5.8 ||0.5 ||4.9 ||7.2 ||67.35 ||28.62 ||3.85 ||59.57 ||427,261 ||14.21 ||23.44 |
|Total||100 ||%||18.5 ||0.5 ||4.9 ||19.9 ||$||70.10 ||$||28.62 ||$||3.85 ||$||67.10 ||$||1,332,013 ||$||17.44 ||$||23.54 |
|For the year ended December 31, 2020|
|Jubilee||31 ||%||6.7 ||— ||— ||6.7 ||$||38.84 ||— ||— ||$||38.84 ||$||261,540 ||$||14.60 ||$||20.00 |
|TEN||13 ||%||3.0 ||— ||— ||3.0 ||35.23 ||— ||— ||35.23 ||104,975 ||23.85 ||33.81 |
|Ghana||44 ||%||9.7 ||— ||— ||9.7 ||$||37.73 ||— ||— ||$||37.73 ||$||366,515 ||$||17.44 ||$||24.27 |
|Equatorial Guinea||18 ||%||4.0 ||— ||— ||4.0 ||37.79 ||— ||— ||37.79 ||152,501 ||20.02 ||16.05 |
|Mauritania/Senegal||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico||38 ||%||6.8 ||0.6 ||5.9 ||8.4 ||39.39 ||10.25 ||2.00 ||34.08 ||285,017 ||10.56 ||21.74 |
|Total||100 ||%||20.5 ||0.6 ||5.9 ||22.1 ||$||38.29 ||$||10.25 ||$||2.00 ||$||36.36 ||$||804,033 ||$||15.31 ||$||21.97 |
(1)Our sales volumes during 2022 includes activity related to the interest pre-empted by Tullow prior to the March 17, 2022 closing date of the Tullow pre-emption transaction.
(2)Our sales volumes during 2021 includes activity related to our acquisition of additional interests in Ghana from October 13, 2021, the acquisition date, through December 31, 2021. Our year-end proved reserves also include the additional interests acquired.
(3)Substantially all NGLs and natural gas sales are associated production from our oil wells and, therefore, production costs metrics are presented under a common unit of measure.
Information about our deepwater fields is summarized in the following table.
| || || ||Kosmos|| || || || |
| || || ||Participating|| || || || ||License|
|Fields||License|| ||Interest|| ||Operator|| ||Stage||Expiration|
|Ghana(1)|| || || || || || || |
|Jubilee||WCTP/DT||(2)||38.6 ||%||(2)||Tullow|| ||Production||2034|
|TEN||DT|| ||20.4 ||%||(4)||Tullow|| ||Production||2036|
|U.S. Gulf of Mexico(1)|
|Barataria||MC 521||22.5 ||%||Kosmos||Production||(8)|
|Big Bend||MC 697 / 698 / 742||5.3 ||%||QuarterNorth||Production||(8)|
|Gladden ||MC 800||20.0 ||%||W&T||Production||(8)|
|Kodiak||MC 727 / 771||35.0 ||%||Kosmos||Production||(8)|
|Marmalard||MC 255 / 300||11.4 ||%||Murphy||Production||(8)|
|Nearly Headless Nick||MC 387||21.9 ||%||Murphy||Production||(8)|
|Danny Noonan||EC 381 / GB 506||30.0 ||%||Talos||Production||(8)|
|Odd Job||MC 214 / 215||Various||(5)||Kosmos||Production||(8)|
|SOB II||MC 431||11.8 ||%||Murphy||Production||(8)|
|S. Santa Cruz||MC 563||40.5 ||%||Kosmos||Production||(8)|
|Tornado||GC 281||35.0 ||%||Talos||Production||(8)|
|Winterfell||GC 943 / 944||25.0 ||%||Beacon||Appraisal||(8)|
|Mauritania|| || || || || || || |
|Greater Tortue Ahmeyim(1)||Block C8||(3)||26.8 ||%||BP|| ||Development||2049(9)|
|BirAllah||BirAllah|| ||28.0 ||%||(6)||BP|| ||Appraisal||2025|
|Senegal|| || || || || || || |
|Greater Tortue Ahmeyim(1)||Saint Louis Offshore Profond||(3)||26.7 ||%||BP||Development||2044(10)|
|Teranga||Cayar Offshore Profond|| ||30.0 ||%||(7)||BP||Appraisal||2024|
|Yakaar||Cayar Offshore Profond||30.0 ||%||(7)||BP||Appraisal||2024|
|Ceiba Field and Okume Complex(1)||Block G||40.4 ||%||Trident||Production||2040|
|Asam||Block S||40.0 ||%||Kosmos||Appraisal||2024|
(1)For information concerning our estimated proved reserves as of December 31, 2022, see “—Our Reserves.”
(2)The Jubilee Field straddles the boundary between the WCTP petroleum contract and the DT petroleum contract offshore Ghana. To optimize resource recovery in this field, we entered into the Jubilee UUOA in July 2009 with GNPC and the other block partners of each of these two blocks. The Jubilee UUOA governs the interests in and development of the Jubilee Field and created the Jubilee Unit from portions of the WCTP petroleum contract and the DT petroleum contract areas. The interest percentage is subject to redetermination of the participating interests in the Jubilee Field pursuant to the terms of the Jubilee UUOA. Our current paying interest on development activities in the Jubilee Field is 43.05%.
(3)The Greater Tortue Ahmeyim Unit, which includes the Ahmeyim discovery in Mauritania Block C8 and the Guembeul discovery in the Senegal Saint Louis Offshore Profond Block, straddles the border between Mauritania and Senegal. To optimize resource recovery in this field, we entered into the GTA UUOA in February 2019 with the governments of Mauritania and Senegal and the other block partners of each of these two blocks. The GTA UUOA governs interests in and development of the Greater Tortue Ahmeyim Field and created the Greater Tortue Ahmeyim Unit from portions of the Mauritania Block C8 and the Senegal Saint Louis Offshore Profond Block areas. These interest percentages are subject to redetermination of the participating interests in the Greater Tortue Ahmeyim Field pursuant to the terms of the GTA UUOA.
(4)Our paying interest on development activities in the TEN fields is 22.8%. The table above reflects the acquisition of additional interests in Ghana in October 2021 and the pre-emption transaction with Tullow in March 2022. See “Item
8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of pre-emption transaction with Tullow.
(5)Our interests in blocks MC 214 and MC 215 are 61.1% and 54.9%, respectively.
(6)The new PSC covering the BirAllah and Orca discoveries contains provisions for back-in rights for the Government of Mauritania. Kosmos’ participating interest in the new PSC is currently 28.0% and this interest percentage does not give effect to the exercise of such back-in rights. Full election by SMH of their back-in rights would reduce Kosmos’ participating interest to approximately 22.1%.
(7)PETROSEN has the option to acquire up to an additional 10% participating interest in a commercial development on the Saint Louis Offshore Profond and Cayar Offshore Profond Blocks. The interest percentage does not give effect to the exercise of such option.
(8)Our U.S. Gulf of Mexico blocks are held by production/operations, and the lease periods extend as long as production/governmental approved operations continue on the relevant block.
(9)License expiration date can be extended by an additional ten years subject to certain conditions being met.
(10)License expiration date can be extended by an additional twenty years subject to certain conditions being met.
Exploration License and Lease Areas
| ||Kosmos Average|| || |
| ||Number of||Participating|| || ||Current Phase|
|Country||Blocks||Interest|| ||Operator(s)||Expiration Range|
|Sao Tome and Principe||1||58.9%||(3)||Kosmos||2023|
|U.S. Gulf of Mexico||49||39.3%||Kosmos, Murphy, Talos, QuarterNorth, Occidental, W&T Offshore, LLOG, Beacon, Houston Energy||through 2032||(5)|
(1)Should a commercial discovery be made, GEPetrol's 20% carried interest will convert to a 20% participating interest for all development and production operations.
(2)Full election by SMH of their back-in rights would reduce Kosmos’ participating interest to approximately 22.1%. SMH will pay its portion of development and production costs in a commercial development on the block. The interest percentage does not give effect to the exercise of such options.
(3)ANP-STP's carried interest may be converted to a full participating interest at any time. ANP-STP will reimburse any costs, expenses and any amount incurred on its behalf prior to the election.
(4)PETROSEN has the option to obtain up to an additional 10% paying interest in a commercial development on the Cayar Offshore Profond Block. The interest percentage does not give effect to the exercise of such option.
(5)Our U.S. Gulf of Mexico blocks can be held by operations or commercial production, and the corresponding lease periods extend as long as governmental approved operations continue on the relevant block. This can extend the lease expiration to a date later than 2032.
The WCTP Block and DT Block are located within the Tano Basin, offshore Ghana. This basin contains a proven world‑class petroleum system as evidenced by our discoveries. In October 2021, Kosmos completed the acquisition of Anadarko WCTP Company which owned a participating interest in the WCTP Block and DT Block offshore Ghana, including an 18.0% participating interest in the Jubilee Unit Area and an 11.1% participating interest in the TEN fields. Following closing of the acquisition, Kosmos’ interest in the Jubilee Unit Area increased from 24.1% to 42.1%, and Kosmos’ interest in the TEN fields increased from 17.0% to 28.1%. In November 2021, we received notice from Tullow Oil plc (“Tullow”) and PetroSA that they were exercising their pre-emption rights in relation to Kosmos’ acquisition of Anadarko WCTP. After execution of definitive transaction documentation and receipt of governmental approvals, Kosmos concluded the pre-emption transaction with Tullow in March 2022. Following completion of the pre-emption process, Kosmos’ interest in the Jubilee Unit Area decreased from 42.1% to 38.6% and Kosmos’ interest in the TEN fields decreased from 28.1% to 20.4%. The following is a brief discussion of our discoveries on our license areas offshore Ghana.
The Jubilee Field was discovered by Kosmos in 2007, with first oil produced in 2010. Appraisal activities confirmed that the Jubilee discovery straddled the WCTP and DT Blocks. Pursuant to the terms of the Jubilee UUOA, the discovery area was unitized for purposes of joint development by the WCTP and DT Block partners.
The Jubilee Field is located approximately 60 kilometers offshore Ghana in water depths of approximately 1,000 to 1,800 meters, which led to the decision to implement an FPSO based development. The FPSO is designed to provide water and natural gas injection to support reservoir pressure, to process and store oil and to export gas through a pipeline to the mainland. The Jubilee Field is being developed in a phased approach. The initial phase provided subsea infrastructure capacity for additional production and injection wells to be drilled in future phases of development. During 2022, we drilled two Jubilee Southeast wells, with a third drilled in January 2023. The two producer wells are expected to commence production in the middle of the year, after installation and tie-in to the subsea infrastructure.
The Government of Ghana completed the construction and connection of a gas pipeline from the Jubilee Field to transport natural gas to the mainland for processing and sale. In 2022, the partnership exported approximately 98 million standard cubic feet per day (gross) on average from the Jubilee field to the mainland. In December 2022, an interim gas sales agreement for 19 bcf (gross) was executed with the Government of Ghana, which allowed for gas to be sold at $0.50 per mmbtu. The 19 bcf is expected to be exported by the middle of 2023. The partnership is currently in discussions with the Government of Ghana regarding a future gas sales agreement covering both the Jubilee and TEN fields. Our inability to continuously export associated natural gas from the Jubilee Field could eventually impact our oil production and could cause us to re-inject or flare any natural gas we cannot export.
Oil production from the Jubilee Field averaged approximately 83,600 Bopd gross (31,300 Bopd net) during 2022.
The TEN fields are located in the western and central portions of the DT Block, approximately 48 kilometers offshore Ghana in water depths of approximately 1,000 to 1,700 meters. The discoveries are being jointly developed with shared infrastructure and a single FPSO, with first oil produced in 2016.
Similar to Jubilee, the TEN fields are being developed in a phased manner. The TEN PoD was designed to include an expandable subsea system that could provide for multiple phases. During the second quarter of 2022, the partnership drilled two new riser base wells at TEN to define the extent of the Ntomme reservoir supporting future TEN development. The first well was drilled to test two separate reservoir objectives and encountered better reservoir quality and thickness than expected but was water bearing. In October 2022, a second well targeting a different fairway was drilled. The well encountered approximately 5 meters of net oil pay with poorer than expected reservoir quality. Both wells have been plugged and abandoned. The partnership will continue to evaluate the full results of the two wells to high-grade and optimize the future drilling plans for TEN.
Oil production from TEN averaged approximately 23,600 Bopd gross (5,000 Bopd net) during 2022.
The construction and connection of a gas pipeline between the Jubilee and TEN fields to transport natural gas to the mainland for processing and sale was completed in 2017. In December 2017, we signed the TAG GSA. The partnership is currently in discussions with the Government of Ghana regarding a future gas sales agreement covering both the Jubilee and
TEN fields. Our inability to continuously export associated natural gas from the TEN fields could eventually impact our oil production and could cause us to re-inject or flare any natural gas we cannot export.
U.S. Gulf of Mexico
In the U.S. Gulf of Mexico, Kosmos maintains: (i) a portfolio of producing assets that Kosmos can continue to exploit, (ii) discovered resource opportunities, and (iii) a high-quality inventory of infrastructure-led exploration prospects across the DeSoto Canyon, Green Canyon, Keathley Canyon, Mississippi Canyon and Walker Ridge protraction areas. We expand our inventory through the U.S. Gulf of Mexico Federal lease sales and farm-in transactions. Our U.S. Gulf of Mexico assets averaged approximately 17,400 Boepd net (~ 83% oil) from 11 fields during 2022.
The following is a brief discussion of our key fields in the U.S. Gulf of Mexico.
The Odd Job field is producing from three Middle Miocene wells through the Delta House FPS, operated by Murphy. In June 2022, we executed, as operator of the Odd Job field, a contract for $131.6 million (gross) with Subsea 7 (US) LLC and OneSubsea LLC to fabricate and install a subsea pump in the Odd Job field. The project commenced in July 2022 with an expected online date around the middle of 2024. Net production during 2022 averaged approximately 4,700 Boepd net.
The Tornado field is producing from three Pliocene wells through the Helix Producer I, a ship-shaped, dynamically-positioned production platform in the deepwater U.S. Gulf of Mexico, which is operated by Talos Energy. To help enhance overall recoveries in the Tornado field, the Tornado 4 water injection well was drilled and came online in 2020. During 2021, the Tornado 5 infill well was successfully drilled, completed and brought online. Net production during 2022 averaged approximately 5,000 Boepd net.
The Kodiak field is producing from two wells, which are completed in the Middle Miocene sands. These wells are flowing through the Devils Tower Spar platform, which is operated by ENI US Operating Co. Inc. (“ENI”). One of these wells, the Kodiak-3 infill well, was brought online in April 2021. The well experienced production issues and was shut-in. In March 2022, the Company commenced operations to plug back and side-track the original Kodiak-3 infill well. The well was sidetracked, and the Kodiak-3ST well was brought online in September 2022, with insurance proceeds covering a substantial portion of the costs incurred to return the well to production. Well results and initial production were in line with expectations, however well productivity declined through the end of the fourth quarter of 2022 and workover plans have been developed for remediation in the second half of 2023. Net production during 2022 averaged approximately 3,200 Boepd net.
In January 2021, we announced the Winterfell-1 exploration well encountered approximately 26 meters (85 feet) of net oil pay in two intervals. Winterfell was designed to test a sub-salt Upper Miocene prospect located in Green Canyon Block 944. In January 2022, the Winterfell-2 appraisal well in Green Canyon Block 943 was drilled to evaluate the adjacent fault block to the northwest of the original Winterfell discovery and was designed to test two horizons that were oil bearing in the Winterfell-1 well, with an exploration tail into a deeper horizon. The well discovered approximately 40 meters (120 feet) of net oil pay in the first and second horizons with better oil saturation and porosity than pre-drill expectations. The exploration tail discovered an additional oil-bearing horizon in a deeper reservoir which is also prospective in the blocks immediately to the north. During the third quarter of 2022, the Field Development Plan for the Winterfell field was approved by all partners and a drilling rig was secured by BOE Exploration & Production LLC (“Beacon”), the operator of the Winterfell field, to undertake the development drilling, including the sidetrack and completion of the Winterfell-1 well, completion of the Winterfell-2 well and drilling and completion of the Winterfell-3 well in an adjacent fault block to the southeast of the Winterfell-1 discovery well as part of the Field Development Plan. Host facility production handling agreement and midstream export agreement are expected to be completed within the next several months with first production for the project targeted to be in the first quarter of 2024.
The C8 and BirAllah blocks are located on the western margin of the Mauritania Salt Basin offshore Mauritania and range in water depths from 100 to 3,000 meters. These blocks are located in a proven petroleum system, with our primary targets being Cretaceous sands in structural and stratigraphic traps.
The C8 and BirAllah blocks cover an aggregate area of approximately 735 thousand acres (gross). We have acquired approximately 580 line-kilometers of 2D seismic data and 3,000 square kilometers of 3D seismic data covering portions of our blocks in Mauritania. Based on these 2D and 3D seismic programs, we have drilled three successful exploration wells and an appraisal well in Block C8 and what is now the BirAllah block.
In June 2022, at the conclusion of the second exploration period, Block C12, offshore Mauritania, was relinquished.
The Saint Louis Offshore Profond and Cayar Offshore Profond Blocks are located in the Senegal River Cretaceous petroleum system and range in water depth from 300 to 3,100 meters. The area is an extension of the working petroleum system in the Mauritania Salt Basin. We acquired approximately 3,700 square kilometers of 3D seismic data over these Senegal blocks in 2015 and 2016. We have drilled three successful exploration wells and two appraisal wells.
The following is a brief discussion of our discoveries to date offshore Mauritania and Senegal.
Greater Tortue Ahmeyim Development
The Greater Tortue Ahmeyim discoveries are significant, play-opening gas discoveries for the outboard Cretaceous petroleum system and are located approximately 120 kilometers offshore Mauritania and Senegal. The Greater Tortue Ahmeyim development straddles Block C8 offshore Mauritania and Saint Louis Offshore Profond Block offshore Senegal.
We have drilled four exploration and appraisal wells within the Greater Tortue Ahmeyim development, Tortue-1, Guembeul-1, Ahmeyim-2 and Greater Tortue Ahmeyim-1 (GTA-1). The wells penetrated multiple, excellent quality gas reservoirs, including the Lower Cenomanian, Upper Cenomanian and underlying Albian. The wells successfully delineated the Ahmeyim and Guembeul gas discoveries and demonstrated reservoir continuity, as well as static pressure communication between the three wells drilled within the Lower Cenomanian reservoir. The discoveries range in water depths from approximately 2,700 meters to 2,800 meters, with total depths drilled ranging from approximately 5,100 meters to 5,250 meters.
The Tortue-1 discovery well, located in Block C8 offshore Mauritania, intersected approximately 117 meters of net hydrocarbon pay. A single gas pool was encountered in the Lower Cenomanian objective, which is comprised of three reservoirs totaling 88 meters in thickness over a gross hydrocarbon interval of 160 meters. A fourth reservoir totaling 19 meters was penetrated within the Upper Cenomanian target over a gross hydrocarbon interval of 150 meters. The exploration well also intersected an additional 10 meters of net hydrocarbon pay in the lower Albian section, which is interpreted to be gas.
The Guembeul-1 discovery well, located in the northern part of the Saint Louis Offshore Profond area in Senegal, is located approximately five kilometers south of the Tortue-1 exploration well in Mauritania. The well encountered 101 meters of net gas pay in two excellent quality reservoirs, including 56 meters in the Lower Cenomanian and 45 meters in the underlying Albian, with no water encountered.
The Ahmeyim-2 appraisal well is located in Block C8 offshore Mauritania, approximately five kilometers northwest, and 200 meters down-dip of the basin-opening Tortue-1 discovery. The well confirmed significant thickening of the gross reservoir sequences down-dip. The Ahmeyim-2 well encountered 78 meters of net gas pay in two excellent quality reservoirs, including 46 meters in the Lower Cenomanian and 32 meters in the underlying Albian.
The Greater Tortue Ahmeyim-1 (GTA-1) appraisal well was drilled on the eastern anticline within the unit development area of Greater Tortue Ahmeyim field. The GTA-1 well encountered approximately 30 meters of net gas pay in high quality Albian reservoir. The well was drilled in approximately 2,500 meters of water, approximately 10 kilometers inboard of the Guembeul-1A and Tortue-1 wells, to a total depth of 4,884 meters.
In 2017, we completed a DST on the Tortue-1 well, demonstrating that the Tortue field is a world-class resource and confirming key development parameters including well deliverability, reservoir connectivity, and fluid composition. The Tortue-1 well flowed at a sustained, equipment-constrained rate of approximately 60 MMcfd during the main extended flow period, with minimal pressure drawdown, providing confidence in well designs that are each capable of producing approximately 200 MMcfd. The DST results confirmed a connected volume per well consistent with the current development
scheme, which together with the high well rate is expected to result in a low number of development wells compared to equivalent schemes. Initial analysis of fluid samples collected during the test indicate Tortue gas is well suited for liquefaction given low levels of liquids and minimal impurities.
In December 2018, we and our partners announced that a final investment decision for Phase 1 of the Greater Tortue Ahmeyim project had been agreed. The Greater Tortue Ahmeyim project is designed to produce gas from a deepwater subsea system to a mid-water FPSO, which processes the gas to make it liquefaction ready, and sends the gas through a pipeline to a FLNG facility. The FLNG facility is protected behind a nearshore hub (which serves as a breakwater and LNG terminal) and is located on the Mauritania and Senegal maritime border. The FLNG facility for Phase 1 is designed to produce approximately 2.5 million tons per annum on average. The project will provide LNG for global export, as well as make gas available for domestic use in both Mauritania and Senegal. Following a competitive tender process, BP Gas Marketing (“BPGM”) was selected as the buyer for the LNG offtake for Greater Tortue Ahmeyim Phase 1, and the Tortue Phase 1 SPA was executed in February 2020 with an initial term of 10 years with a seller’s option to extend the term for an additional 10 years. Additionally, to optimize the commercial value of sales for the gas production from the first phase of Greater Tortue Ahmeyim, Kosmos has commenced a process with prospective buyers to utilize existing contractual rights under our existing Tortue Phase 1 SPA to potentially sell cargos in order to benefit from the robust forward gas price outlook, while meeting our contractual obligations to BPGM. BPGM has disagreed with our position, and we have agreed with BPGM to pursue international arbitration to interpret the relevant terms of the SPA.
Phase 1 of the project was approximately 90% complete at year-end 2022, with first gas for the project targeted in the fourth quarter of 2023. The FLNG is on track for sailaway in the first half of 2023, the hub terminal is largely complete and commissioning activities progressing, the subsea shallow water gas export pipeline from the FPSO to the hub terminal has been installed, and all four wells needed for first gas have been successfully drilled and completed. In January 2023, the FPSO departed from the COSCO yard in China to commence its 12,000 nautical mile journey to offshore Mauritania/Senegal. The partnership has also been focused on optimizing Phase 2 of the project to deliver competitive returns in the current environment. On Phase 2 of the Greater Tortue Ahmeyim LNG project, the partners (SMH, Petrosen, BP and Kosmos) have confirmed the development concept and will progress a gravity-based structure (GBS) with total capacity of between 2.5-3.0 million tonnes per annum. GBS LNG developments have a static connection to the seabed with the structure base providing LNG storage and a foundation for liquefaction facilities. The concept design will also include new wells and subsea equipment, maximizing the use of existing Phase 1 infrastructure. In July 2021, the Greater Tortue Ahmeyim project was granted the status of ‘National Project of Strategic Importance’ by the Presidents of Mauritania and Senegal, demonstrating the commitment of the host governments and the significance of the project to both countries.
Other Mauritania and Senegal Discoveries
BirAllah and Orca Discoveries
The BirAllah discovery (formerly known as Marsouin), located in the BirAllah block offshore Mauritania, is a significant, play-extending gas discovery, building on our successful exploration program in the outboard Cretaceous petroleum system offshore Mauritania. In November 2015, the Marsouin-1 well, located approximately 60 kilometers north of the Ahmeyim discovery, and was drilled to a total depth of 5,150 meters in nearly 2,400 meters of water. Based on analysis of drilling results and logging data, Marsouin-1 encountered at least 70 meters of net gas pay in Upper and Lower Cenomanian intervals comprised of excellent quality reservoir sands.
The Orca-1 well, located in the BirAllah block offshore Mauritania, was drilled in October 2019 and delivered a major gas discovery. The Orca-1 well, which targeted a previously untested Albian play, encountered 36 meters of net gas pay in excellent quality reservoirs. In addition, the well extended the Cenomanian play fairway by confirming 11 meters of net gas pay in a down-structure position relative to the original Marsouin-1 discovery well. The location of the Orca-1 well proved both the structural and stratigraphic components of the trap are working, thereby supporting a significant volume. The Orca-1 well was drilled in approximately 2,510 meters of water to a total measured depth of around 5,266 meters.
In total, we believe that Marsouin-1 and Orca-1 have de-risked more than sufficient resource to support a world-scale LNG project from the Cenomanian and Albian plays in the BirAllah area. The BirAllah and Orca discoveries are being analyzed as a potential joint development. In October 2022, the partnership and the government of Mauritania executed a new Production Sharing Contract (“PSC”) covering the BirAllah and Orca discoveries. The new PSC provides the partnership up to thirty months to submit a development plan covering the BirAllah and/or Orca discoveries with the terms of the new PSC substantially similar to the former PSC for Block C8 with additional provisions for enhanced back-in rights for the Government of Mauritania, local content, SMH’s capacity building and an environmental fund.
Yakaar and Teranga Discoveries
The Teranga discovery is located in the Cayar Offshore Profond block approximately 65 kilometers northwest of Dakar and was our second exploration well offshore Senegal. The Teranga-1 discovery well is located in nearly 1,800 meters of water and was drilled to a total depth of approximately 4,850 meters. The well encountered 31 meters of net gas pay in good quality reservoir in the Lower Cenomanian objective. Well results confirm that a prolific inboard gas fairway extends approximately 200 kilometers south from the Marsouin-1 well in Mauritania through the Greater Tortue Ahmeyim area on the maritime boundary to the Teranga-1 well in Senegal.
The Yakaar discovery is located in the Cayar Offshore Profond block offshore Senegal, approximately 95 kilometers northwest of Dakar in approximately 2,600 meters of water. The Yakaar-1 discovery well was drilled to a total depth of approximately 4,900 meters. The well intersected a gross hydrocarbon column of 120 meters in three pools within the primary Lower Cenomanian objective and encountered 45 meters of net pay. In September 2019, we completed the Yakaar-2 appraisal well, which encountered approximately 30 meters of net gas pay. The Yakaar-2 well was drilled approximately nine kilometers from the Yakaar-1 exploration well and further delineated the southern extension of the field.
The results of the Yakaar-2 well underpin our view that the Yakaar-Teranga resource base is world-scale and has the potential to support an LNG project that provides significant volumes of natural gas to both domestic and export markets. Development of Yakaar-Teranga is being considered in a phased approach with Phase 1 providing domestic gas and data to optimize the development of future phases. It could also support the country’s “Plan Emergent Senegal” launched by the President of Senegal in 2014.
The EG-21, EG-24, and S blocks are located in the southern part of the Gulf of Guinea, in the Republic of Equatorial Guinea, west of the Rio Muni petroleum province with water depths up to 2,300 meters. These blocks are located in a proven petroleum system, with our primary targets being Cretaceous sands in structural and stratigraphic traps. We have over 7,500 square kilometers of 3D seismic over the blocks. The seismic data is being interpreted and high graded prospects for future drilling are being matured.
Ceiba Field and Okume Complex
In Equatorial Guinea, we maintain a 40.4% undivided participating interest in the Ceiba Field and Okume Complex. These offshore assets in the Gulf of Guinea provide cash flow through production with the potential to increase production through exploration opportunities with potential low cost tie-backs through the existing infrastructure.
The shared development of the Ceiba Field and Okume Complex consists of six subsea-well clusters that feed production to the Ceiba FPSO which is shared by both fields through a system of risers. The Okume Complex includes six platforms with an export line to move Okume production to the Ceiba FPSO.
In May 2022, Kosmos and its joint venture partners agreed with the Ministry of Mines and Hydrocarbons of Equatorial Guinea to extend the Block G petroleum contract term; harmonizing the expiration of the Ceiba Field and Okume Complex production licenses (from 2029 and 2034 respectively) to 2040. The license extensions support the next phase of investment in the licenses.
Oil production from the Ceiba Field and Okume Complex averaged approximately 30,900 Bopd gross (9,900 Bopd net) during 2022.
In October 2019, the S-5 exploration well was drilled to a total depth of 4,400 meters in Block S offshore Equatorial Guinea, encountering 39 meters of net oil pay in good-quality Santonian reservoir. The discovery was subsequently named Asam. In July 2020, an appraisal work program was approved by the government of Equatorial Guinea. The well is located within tieback range of the Ceiba FPSO and the appraisal work program is currently ongoing to establish the scale of the discovered resource and evaluate the optimum development solution. In December 2022, as part of the appraisal work program, the Asam field appraisal report was submitted to the government of Equatorial Guinea.
Sao Tome and Principe
We are the operator for the petroleum contract covering Block 5, offshore Sao Tome and Principe in the Gulf of Guinea. The block covers an area of approximately 0.5 million acres (gross) in water depths ranging from 2,150 to 3,000 meters.
Our block is adjacent to, and represents a potential extension of, a proven and prolific petroleum system offshore Equatorial Guinea and northern Gabon comprising Cretaceous post-rift source rocks and Late Cretaceous reservoirs.
In August 2017, we completed a 3D seismic survey of approximately 2,500 square kilometers offshore Sao Tome and Principe. Processing has been completed and the 3D seismic data has been integrated into our geological evaluation. We continue to mature an inventory of prospects on the license area in Sao Tome and Principe and will continue to refine and assess the prospectivity. In the fourth quarter of 2021, we received approval for a six month extension to the exploration phase for Block 5 offshore Sao Tome and Principe through November 2022. In the second quarter of 2022, we received approval for a second six month extension to May 2023 for the current exploration phase for Block 5 offshore Sao Tome and Principe.
The following table sets forth summary information about our estimated proved reserves as of December 31, 2022. See “Item 8. Financial Statements and Supplementary Data—Supplemental Oil and Gas Data (Unaudited)” for additional information.
Our estimated proved reserves as of December 31, 2022, 2021, and 2020 were associated with our fields in Ghana, Equatorial Guinea, Mauritania, Senegal and the U.S. Gulf of Mexico.
Summary of Oil and Gas Reserves
2022 Net Proved Reserves(1)
2021 Net Proved Reserves(1)
2020 Net Proved Reserves(1)
|Reserves Category|| || || || || || || || || |
|Ghana(2)||43 ||40 ||50 ||52 ||56 ||61 ||26 ||23 ||30 |
|Equatorial Guinea||20 ||16 ||23 ||20 ||11 ||22 ||21 ||11 ||23 |
|Mauritania/Senegal||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico||21 ||17 ||24 ||28 ||20 ||31 ||32 ||25 ||36 |
|Total proved developed||84 ||73 ||96 ||100 ||87 ||115 ||79 ||60 ||89 |
|Ghana(2)||56 ||9 ||58 ||68 ||12 ||70 ||42 ||8 ||43 |
|Equatorial Guinea||5 ||— ||5 ||5 ||— ||5 ||4 ||— ||4 |
|Mauritania/Senegal(4)||7 ||618 ||110 ||8 ||590 ||106 ||— ||— ||— |
|U.S. Gulf of Mexico||6 ||7 ||8 ||4 ||6 ||5 ||2 ||2 ||3 |
|Total proved undeveloped(5)||74 ||634 ||180 ||85 ||608 ||186 ||48 ||10 ||50 |
|Total Kosmos proved reserves||158 ||707 ||276 ||185 ||695 ||301 ||127 ||70 ||139 |
(1)Totals within the table may not add as a result of rounding.
(2)Our reserves associated with the Jubilee Field are based on the 54.4%/45.6% redetermination split between the WCTP Block and DT Block. Table above reflects the acquisition of additional interests in Ghana in October 2021 and the pre-emption transaction with Tullow in March 2022. See “Item 8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of pre-emption transaction with Tullow.
(3)These reserves include the estimated quantity of gas to be exported as LNG from the Greater Tortue Ahmeyim project, as a result of the Tortue SPA finalized in February of 2020. These reserves also include the estimated quantities of fuel gas required to operate the Jubilee and TEN FPSOs and Equatorial Guinea facilities during normal field operations and the
associated gas forecasted to be exported from TEN. Total proved natural gas reserves include fuel gas associated with the Jubilee and TEN fields offshore Ghana of approximately 22.9 Bcf, 30.0 Bcf and 14.0 Bcf for 2022, 2021 and 2020, respectively. Our natural gas reserves in Equatorial Guinea are all associated with fuel gas. If and when a subsequent gas sales agreement is executed for Jubilee, a portion of the remaining Jubilee gas may be recognized as reserves. If and when a gas sales agreement and the related infrastructure are in place for the TEN fields non-associated gas, a portion of the non-associated gas may be recognized as reserves.
(4)The Mauritania/Senegal Natural Gas reserves presented consists of LNG and Fuel Gas of approximately 51.0 Bcf and 51.0 Bcf in 2022 and 2021, respectively. We note that the LNG is presented as Plant Products in Mboe in our 2021 reserve report.
(5)Proved undeveloped reserves as of December 31, 2022 expected to be developed beyond five years since initial disclosure are all related to the Greater Tortue Ahmeyim project in Mauritania and Senegal which is a long-term project being developed under a continuous drilling program with long-term LNG sales obligations.
(6)Natural gas liquids proved reserves represent an immaterial amount of our total proved reserves. Therefore, we have aggregated natural gas liquids and crude oil/condensate reserves information.
Changes during the year ended December 31, 2022, at Greater Jubilee include a positive revision of 11.7 MMBoe primarily due to positive drilling results and field performance, offset by a negative revision of 7.5 MMBoe resulting from the conclusion of the Tullow pre-emption transaction in March 2022, as well as Jubilee net production of 11.3 MMBoe. These revisions resulted in the overall decrease in reserves of 7.1 MMBoe. Changes at TEN include a negative revision of 5.5 MMBoe, driven primarily by recent well performance. Additional negative revisions of 9.1 MMBoe resulted from the conclusion of the Tullow pre-emption transaction in March 2022, along with net TEN production of 2.0 MMBoe. These revisions resulted in the overall decrease in reserves of 16.7 MMBoe. Changes at Equatorial Guinea included a positive revision of 4.0 MMBoe driven by the Block G petroleum license extension and improved commodity prices. An additional positive revision of 0.9 MMBoe due to Ceiba production performance and topsides optimization was offset by net Equatorial Guinea production of 3.7 MMBoe. These revisions resulted in the overall increase in reserves of 1.2 MMBoe and changes in gas reserves were negligible. Changes at Mauritania/Senegal include a positive revision of 4.7 MMBoe of gas due to field extension resulting from the drilling of production wells, as well as a negative revision of 0.7 MMBoe in condensate based on an updated yield estimate. These revisions resulted in the overall increase in reserves of 4.0 MMBoe. Changes at the U.S. Gulf of Mexico include positive revisions of 3.0 MMBoe associated with the Winterfell discovery and 0.8 MMBoe related to the acquisition of an additional interest in the Kodiak field. These changes were offset by a negative revision of 2.0 MMBoe based on recent water breakthrough in Odd Job and Tornado, and Kodiak production issues. The U.S. Gulf of Mexico net production for the year ended December 31, 2022 was 6.4 MMBoe. These revisions resulted in the overall decrease in reserves of 4.6 MMBoe.
During the year ended December 31, 2022, we had an overall proved undeveloped reserves decrease of 5.6 MMBoe, as a result of several factors, including the impact of the Tullow pre-emption transaction in March 2022 (-7.9 MMBoe), optimization of future drilling in Jubilee (+4.0 MMBoe) and TEN (+2.1 MMBoe), Greater Tortue field extension that resulted from drilling of production wells and a downward condensate adjustment (+4.0 MMBoe), optimizing future development plans in the U.S. Gulf of Mexico (+1.3 MMBoe), purchase of minerals-in-place during 2022 in the Kodiak field (+0.2 MMBoe) and the Winterfell discovery (+3.0 MMBoe). Drilling activity impact on proved undeveloped volume change includes the drilling of three wells in Jubilee (-4.6 MMBoe), one well in TEN (-5.8 MMBoe), and one well in Kodiak (-2.0 MMBoe). We note that the changes in the proved undeveloped reserves in Equatorial Guinea were negligible.
In Greater Jubilee, we converted 4.6 MMBoe of proved undeveloped reserves to proved developed with the drilling of three wells at a cost of approximately $75.1 million. In TEN, we converted 5.8 MMBoe of proved undeveloped reserves to proved developed with the drilling of one well at a cost of approximately $13.6 million. In the U.S. Gulf of Mexico, we converted 2.0 MMBoe of proved undeveloped reserves to proved developed with the drilling of one well in Kodiak at a cost of $13.6 million.
Changes during the year ended December 31, 2021, at Greater Jubilee include a positive revision of 49.1 MMBoe, of which 39.9 MMBoe were acquired on October 13, 2021 in the acquisition of additional interests in Ghana. The other 9.2 MMBoe of additions were primarily due to field performance, positive drilling results, and optimization of future development plans. The additions were partially offset by net Greater Jubilee production of 7.4 MMBoe which includes production related to our acquisition of additional interests in Ghana commencing October 13, 2021, the acquisition date. Changes at TEN include a positive revision of 18.2 MMBoe, of which 16.2 MMBoe were acquired in the acquisition of additional interests in Ghana. The other 2.0 MMBoe of additions were primarily due to an increase in estimated associated gas sales. The additions were partially offset by net TEN production of 2.2 MMBoe. Changes at Equatorial Guinea included an increase of 3.7 MMBoe related to Okume Complex performance and drilling results, which was offset by 3.6 MMBoe of net production. Changes at the U.S. Gulf
of Mexico included an increase of 4.4 MMBoe related to strong performance of certain fields, offset by net U.S. Gulf of Mexico production of 7.2 MMBoe.
During the year ended December 31, 2021, we had an overall proved undeveloped reserves increase of 136.3 MMBoe as a result of several factors, including the acquisition of additional interests in Ghana (+22.7 MMBoe for Greater Jubilee and +6.6 MMBoe for TEN), optimization of future drilling in Greater Jubilee (+17.8 MMBoe), adding a future development well and optimizing future development plans in the U.S. Gulf of Mexico and Equatorial Guinea (+6.8 MMBoe), and the economic status of the Greater Tortue Ahmeyim project due to project progress and improved oil price (+106.5 MMBoe). Drilling activity impact on proved undeveloped volume change includes the drilling of two wells in Greater Jubilee (-17.1 MMBoe), one well in TEN (-3.6 MMBoe), two wells in Equatorial Guinea (-1.2 MMBoe), and one well in Tornado in the U.S. Gulf of Mexico (-2.1 MMBoe).
In Greater Jubilee, we converted 17.1 MMBoe of proved undeveloped reserves to proved developed with the drilling of two wells at a cost of $25.2 million. In TEN, we converted 3.6 MMBoe of proved undeveloped reserves with the drilling of one well at a cost of $8.9 million. In Equatorial Guinea we spent $35.6 million to drill two wells and to replace certain subsea infrastructure, which converted 1.8 MMBoe of proved undeveloped reserves to proved developed. In the U.S. Gulf of Mexico, we converted 2.1 MMBoe of proved undeveloped reserves to proved developed with the drilling of one well in Tornado at a cost of $19.0 million.
Changes during the year ended December 31, 2020, were primarily due to 2020 production as well as lower prices. Greater Jubilee includes a negative revision of 0.3 MMBoe related to delayed drilling of water injection wells that will provide needed pressure support to certain production wells, in addition to net Greater Jubilee production of 7.0 MMBoe. Changes at TEN included a decrease of 12.0 MMBoe related to performance, delayed drilling and alterations to future development plans, in addition to net TEN production of 2.9 MMBoe. Changes at Equatorial Guinea included an increase of 2.0 MMBoe due to strong base performance and positive stimulation results, offset by 4.0 MMBoe of net Equatorial Guinea production. Changes at the U.S. Gulf of Mexico included an increase of 2.0 MMBoe primarily due to positive drilling and performance at Kodiak and Tornado, offset by net U.S. Gulf of Mexico production of 8.3 MMBoe.
During the year ended December 31, 2020, we had an overall proved undeveloped reserves decrease of 3.3 MMBoe as a result of several factors, including adding additional wells to future development of Greater Jubilee (+4.7 MMBoe), a negative revision in TEN (-0.3 MMBoe), drilling of one well in TEN (-3.0 MMBoe), one well in the Kodiak field (-1.6 MMboe) and one well in the Tornado field (-0.9 MMBoe), and loss due to lower SEC pricing (-2.2 MMboe).
In TEN, we converted 3.0 MMBoe of proved undeveloped reserves to proved developed with the drilling of a new well, at a cost of $28.5 million. In the U.S. Gulf of Mexico, we spent $79.2 million to drill two new wells, which converted 2.5 MMBoe of proved undeveloped reserves to proved developed.
The Tortue Phase 1 SPA was signed on February 11, 2020, resulting in approximately 100 MMBoe of proved undeveloped reserves being recognized at that time as evaluated by the Company's independent reserve auditor, Ryder Scott, LP. Due to the decrease in commodity prices during 2020 and the related commodity price utilized to calculate proved reserves for SEC purposes, the field did not have proved reserves recognition as of December 31, 2020.
Estimated proved reserves
Unless otherwise specifically identified in this report, the summary data with respect to our estimated net proved reserves for the years ended December 31, 2022, 2021 and 2020 has been prepared by RSC, our independent reserve engineering firm for such years, in accordance with the rules and regulations of the SEC applicable to companies involved in oil and natural gas producing activities. These rules require SEC reporting companies to prepare their reserve estimates using reserve definitions and pricing based on 12‑month historical unweighted first‑day‑of‑the‑month average prices, rather than year‑end prices. For a definition of proved reserves under the SEC rules, see the “Glossary and Selected Abbreviations.” For more information regarding our independent reserve engineers, please see “—Independent petroleum engineers” below.
Our estimated proved reserves and related future net revenues, PV‑10 and Standardized Measure were determined in accordance with SEC rules for proved reserves.
Future net revenues represent projected revenues from the sale of proved reserves net of production and development costs (including operating expenses and production taxes). Such calculations at December 31, 2022 are based on costs in effect at December 31, 2022 and the 12‑month unweighted arithmetic average of the first‑day‑of‑the‑month price for the year ended December 31, 2022, adjusted for anticipated market premium, without giving effect to derivative transactions, and are held constant throughout the life of the assets. There can be no assurance that the proved reserves will be produced within the periods indicated or prices and costs will remain constant.
Independent petroleum engineers
Ryder Scott Company, L.P.
RSC, our independent reserve engineers for the years ended December 31, 2022, 2021 and 2020, was established in 1937. For over 80 years, RSC has provided services to the worldwide petroleum industry that include the issuance of reserves reports and audits, appraisal of oil and gas properties including fair market value determination, reservoir simulation studies, enhanced recovery services, expert witness testimony, and management advisory services. RSC professionals subscribe to a code of professional conduct and RSC is a Registered Engineering Firm in the State of Texas.
For the years ended December 31, 2022, 2021 and 2020, we engaged RSC to prepare independent estimates of the extent and value of the proved reserves of certain of our oil and gas properties. These reports were prepared at our request to estimate our reserves and related future net revenues and PV‑10 for the periods indicated therein. Our estimated reserves at December 31, 2022, 2021 and 2020 and related future net revenues and PV‑10 at December 31, 2022, 2021 and 2020 are taken from reports prepared by RSC, in accordance with petroleum engineering and evaluation principles which RSC believes are commonly used in the industry and definitions and current regulations established by the SEC. The December 31, 2022 reserve report was completed on January 20, 2023, and a copy is included as an exhibit to this report.
In connection with the preparation of the December 31, 2022, 2021 and 2020 reserves report, RSC prepared its own estimates of our proved reserves. In the process of the reserves evaluation, RSC did not independently verify the accuracy and completeness of information and data furnished by us with respect to ownership interests, oil and gas production, well test data, historical costs of operation and development, product prices or any agreements relating to current and future operations of the fields and sales of production. However, if in the course of the examination something came to the attention of RSC which brought into question the validity or sufficiency of any such information or data, RSC did not rely on such information or data until it had satisfactorily resolved its questions relating thereto or had independently verified such information or data. RSC independently prepared reserves estimates to conform to the guidelines of the SEC, including the criteria of “reasonable certainty,” as it pertains to expectations about the recoverability of reserves in future years, under existing economic and operating conditions, consistent with the definition in Rule 4‑10(a)(2) of Regulation S‑X. RSC issued a report on our proved reserves at December 31, 2022, based upon its evaluation. RSC’s primary economic assumptions in estimates included an ability to sell hydrocarbons at their respective adjusted benchmark prices and certain levels of future capital expenditures. The assumptions, data, methods and precedents were appropriate for the purpose served by these reports, and RSC used all methods and procedures as it considered necessary under the circumstances to prepare the report.
Technology used to establish proved reserves
Under the SEC rules, proved reserves are those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and/or natural gas actually recovered will equal or exceed the estimate. Reasonable certainty can be established using techniques that have proved effective by actual comparison of production from projects in the same reservoir interval, an analogous reservoir or by other evidence using reliable technology that establishes reasonable certainty. Reliable technology is a grouping of one or more technologies (including computational methods) that have been field tested and have been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.
In order to establish reasonable certainty with respect to our estimated proved reserves, RSC employed technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used in the estimation of our proved reserves include, but are not limited to, production and injection data, electrical logs, radioactivity logs, acoustic logs, whole core analysis, sidewall core analysis, downhole pressure and temperature measurements, reservoir fluid samples, geochemical information, geologic maps, seismic data, well test and interference pressure and rate data. Reserves attributable to undeveloped locations were estimated using performance from analogous wells with similar geologic depositional environments, rock quality, appraisal plans and development plans to assess the estimated ultimate recoverable reserves as a function of the original oil in place. These qualitative measures are benchmarked and validated against sound petroleum reservoir engineering principles and equations to estimate the ultimate recoverable reserves volume. These techniques include, but are not limited to, nodal analysis, material balance, and numerical flow simulation.
Internal controls over reserves estimation process
In our Reservoir Engineering team, we maintain an internal staff of petroleum engineering and geoscience professionals with significant experience that contribute to our internal reserve and resource estimates. This team works closely with our independent petroleum engineers to ensure the integrity, accuracy and timeliness of data furnished in their reserve and resource estimation process. Our Reservoir Engineering team is responsible for overseeing the preparation of our reserves estimates and has over 100 combined years of industry experience among them with positions of increasing responsibility in engineering and evaluations. Each member of our team holds a minimum of a Bachelor of Science degree in petroleum engineering or geology. The person primarily responsible for our Reservoir Engineering team is Mr. Douglas Trumbauer. Mr. Trumbauer is a Licensed Professional Engineer in the State of Texas (No. 78735) and has over 37 years of practical experience in petroleum engineering. He graduated from Pennsylvania State University in 1985 with a Bachelor of Science degree in Petroleum and Natural Gas Engineering. Mr. Trumbauer worked for DeGolyer and MacNaughton for 20 years prior to joining Kosmos Energy, and we believe he is proficient in applying industry standard practices to engineering and geoscience evaluations as well as understanding and applying SEC and other industry reserves definitions and guidelines.
The RSC technical person primarily responsible for preparing the estimates set forth in the RSC reserves report incorporated herein is Mr. Tosin Famurewa. Mr. Famurewa has been practicing consulting petroleum engineering at RSC since 2006. Mr. Famurewa is a Licensed Professional Engineer in the State of Texas (No. 100569) and has over 19 years of practical experience in petroleum engineering. He graduated from University of California at Berkeley in 2000 with Bachelor of Science Degrees in Chemical Engineering and Material Science Engineering, and he received a Master of Science degree in Petroleum Engineering from University of Southern California in 2007. Mr. Famurewa meets or exceeds the education, training, and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers and is proficient in judiciously applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserves definitions and guidelines.
The Audit Committee provides oversight on the processes utilized in the development of our internal reserve and resource estimates on an annual basis. In addition, our Reservoir Engineering team meets with representatives of our independent reserve engineers to review our assets and discuss methods and assumptions used in preparation of the reserve and resource estimates. Finally, our senior management reviews reserve and resource estimates on an annual basis.
Gross and Net Undeveloped and Developed Acreage
The following table sets forth certain information regarding the developed and undeveloped portions of our license and lease areas as of December 31, 2022 for the countries in which we currently operate.
| ||Developed Area||Undeveloped Area|| || ||Current Phase|
| ||(Acres)||(Acres)||Total Area (Acres)||Exploration|
| ||(In thousands)|
|Ghana(2)||163 ||53 ||34 ||11 ||197 ||64 ||— ||(2)|
|Equatorial Guinea||65 ||26 ||1,798 ||1,297 ||1,863 ||1,323 ||2024|
|Mauritania||— ||— ||735 ||204 ||735 ||204 ||2025|
|Sao Tome and Principe||— ||— ||527 ||310 ||527 ||310 ||2023|
|Senegal||— ||— ||917 ||271 ||917 ||271 ||2024|
|U.S. Gulf of Mexico(3)||81 ||22 ||189 ||87 ||270 ||109 ||through 2032||(3)|
|Total||309 ||101 ||4,200 ||2,180 ||4,509 ||2,281 |
(1)Net acreage based on Kosmos’ participating interests, including any options or back-in rights which have been exercised (Jubilee, TEN, and Greater Tortue Ahmeyim fields), but before the exercise of any options or back‑in rights that exist, but have not been exercised. Our net acreage in Ghana may be affected by any redetermination of interests in the Jubilee Unit and our net acreage in Mauritania and Senegal may be affected by any redetermination of interests in the Greater Tortue Ahmeyim Unit.
(2)The Exploration Period of the WCTP petroleum contract and DT petroleum contract has expired. The undeveloped area reflected in the table above represents acreage within our discovery areas that were not subject to relinquishment on the expiry of the Exploration Period. Table above reflects the acquisition of additional interests in Ghana in October 2021 and the pre-emption transaction with Tullow in March 2022. See “Item 8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of pre-emption transaction with Tullow.
(3)Our developed U.S. Gulf of Mexico blocks are held by production/operations, and the lease periods extend as long as production/governmental approved operations continue on the relevant block. For undeveloped areas, the licenses are immaterial with various exploration phases, with all ending by 2032. Table above reflects additional interests acquired in U.S Gulf of Mexico. See “Item 8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of acquisitions.
Productive wells consist of producing wells and wells capable of production, including wells awaiting connections. For wells that produce both oil and gas, the well is classified as an oil well. The following table sets forth the number of productive oil and gas wells in which we held an interest at December 31, 2022:
| ||Productive||Productive|| || |
| ||Oil Wells||Gas Wells||Total|
|Ghana(2)||53 ||17.18 ||— ||— ||53 ||17.18 |
|Equatorial Guinea||83 ||33.53 ||— ||— ||83 ||33.53 |
|U.S. Gulf of Mexico(2)||21 ||5.99 ||— ||— ||21 ||5.99 |
|Total(1)||157 ||56.70 ||— ||— ||157 ||56.70 |
(1)Of the 157 productive wells, 41 (gross) or 10.00 (net) have multiple completions within the wellbore.
(2)Table above reflects our additional interests acquired in Ghana and U.S. Gulf of Mexico. See “Item 8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of potential pre-emption impact.
The results of oil and natural gas wells drilled and completed for each of the last three years were as follows:
| ||Exploratory and Appraisal Wells(1)||Development Wells(1)|| || |
Year Ended December 31, 2022
| || || || || || || || || || || || || || |
|Ghana(4)(5)||— ||— ||2 ||0.41 ||2 ||0.41 ||5 ||1.57 ||— ||— ||5 ||1.57 ||7 ||1.98 |
|Equatorial Guinea||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|Mauritania/Senegal||— ||— ||— ||— ||— ||— ||3 ||0.80 ||— ||— ||3 ||0.80 ||3 ||0.80 |
|Total||— ||— ||2.00 ||0.41 ||2.00 ||0.41 ||8.00 ||2.37 ||— ||— ||8.00 ||2.37 ||10.00 ||2.78 |
Year Ended December 31, 2021
| || || || || || || || || || || || || || |
|Ghana(4)||— ||— ||— ||— ||— ||— ||4 ||1.54 ||— ||— ||4 ||1.54 ||4 ||1.54 |
|Equatorial Guinea||— ||— ||— ||— ||— ||— ||2 ||0.80 ||— ||— ||2 ||0.80 ||2 ||0.80 |
|U.S. Gulf of Mexico||— ||— ||1 ||0.38 ||1 ||0.38 ||1 ||0.29 ||— ||— ||1 ||0.29 ||2 ||0.67 |
|Total||— ||— ||1 ||0.38 ||1 ||0.38 ||7 ||2.63 ||— ||— ||7 ||2.63 ||8 ||3.01 |
Year Ended December 31, 2020
| || || || || || || || || || || || || || |
|Ghana||— ||— ||— ||— ||— ||— ||1 ||0.17 ||2 ||0.34 ||3 ||0.51 ||3 ||0.51 |
|Equatorial Guinea||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— ||— |
|U.S. Gulf of Mexico||— ||— ||1 ||0.40 ||1 ||0.40 ||1 ||0.35 ||— ||— ||1 ||0.35 ||2 ||0.75 |
|Total||— ||— ||1 ||0.40 ||1 ||0.40 ||2 ||0.52 ||2 ||0.34 ||4 ||0.86 ||5 ||1.26 |
(1)As of December 31, 2022, 9 exploratory and appraisal wells have been excluded from the table until a determination is made if the wells have found proved reserves. Also excluded from the table are 15 development wells awaiting completion. These wells are shown as “Wells Suspended or Waiting on Completion” in the table below.
(2)A productive well is an exploratory or development well found to be capable of producing either oil or natural gas in sufficient quantities to justify completion as an oil or natural gas producing well. Productive wells are included in the table in the year they were determined to be productive, as opposed to the year the well was drilled.
(3)A dry well is an exploratory or development well that is not a productive well. Dry wells are included in the table in the year they were determined not to be a productive well, as opposed to the year the well was drilled.
(4)Table above reflects the acquisition of additional interests in Ghana in October 2021 and the pre-emption transaction with Tullow in March 2022. See “Item 8. Financial Statements and Supplementary Data—Note 3—Acquisitions and Divestitures” for discussion of pre-emption transaction with Tullow.
(5)Includes the NT-10 and NT-11 wells which are considered step out wells from an accounting perspective but were drilled as part of the TEN Plan of Development.
The following table shows the number of wells that are in the process of being drilled or are in active completion stages, and the number of wells suspended or waiting on completion as of December 31, 2022.
| ||Actively Drilling or||Wells Suspended or|
| ||Completing||Waiting on Completion|
|Ghana(1)|| || || || || || || || |
|Jubilee Unit||— ||— ||1 ||0.39 ||— ||— ||9 ||3.47 |
|TEN||— ||— ||— ||— ||— ||— ||5 ||1.02 |
|Block S||— ||— ||— ||— ||1 ||0.40 ||— ||— |
|Okume||— ||— ||— ||— ||— ||— ||1 ||0.40 |
|U.S. Gulf of Mexico|
|Winterfell ||— ||— ||— ||— ||2 ||0.50 ||— ||— |
|Mauritania / Senegal|| || || || || || || || |
|Mauritania BirAllah Block||— ||— ||— ||— ||2 ||0.56 ||— ||— |
|Greater Tortue Ahmeyim Unit||— ||— ||1 ||0.27 ||1 ||0.27 |