Kosmos Energy Announces Fourth Quarter and Full Year 2019 Results

Nachrichtenquelle: Business Wire (engl.)
24.02.2020, 08:00  |  114   |   |   

Kosmos Energy Ltd. (“Kosmos”) (NYSE: KOS) announced today the financial and operating results for the fourth quarter of 2019. For the quarter, the Company generated a net loss of $36 million, or $0.09 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss(1) of $37 million or $0.09 per diluted share for the fourth quarter of 2019.

FOURTH QUARTER 2019 HIGHLIGHTS

  • Net cash provided by operating activities - $228 million; free cash flow1 (non-GAAP) - $139 million
  • Sales - 7.5 million barrels of oil equivalent (boe)
  • Revenues - $450 million
  • Realized oil and gas revenues, excluding the impact of hedging program - $59.76 per boe
  • Production expense - $136 million, or $18.12 per boe
  • General and administrative expenses - $21 million, $16 million cash expense and $5 million non-cash equity based compensation expense
  • Capital expenditure - $122 million

At quarter end, the Company was in a net overlift position of approximately 0.3 million barrels of oil.

Fourth quarter results included a mark-to-market loss of $36 million related to the Company’s oil derivative contracts. As of the quarter end and including recently executed hedges, Kosmos has approximately 18.0 million barrels of Brent oil hedged covering 2020 and 2021.

Kosmos exited the fourth quarter of 2019 with approximately $825 million of liquidity, total debt of $2.05 billion, and $1.82 billion of net debt.

Commenting on the company’s 2019 performance, Chairman and Chief Executive Officer Andrew G. Inglis said: “2019 was a strong year for Kosmos with the business generating approximately $250 million of free cash flow, the third successive year of material organic cash generation. Our free cash flow enabled us to reduce our leverage and initiate the payment of our dividend, in line with our strategy of protecting the balance sheet and delivering shareholder returns.

It was also one of the most active years in the company’s history with over 1.7 million man hours operating five wells. Importantly, this activity was executed with zero lost time or recordable incidents, a best-in-class safety performance. Our exploration and appraisal program delivered five successes from seven wells drilled and we continue to make excellent progress with our developments in Mauritania and Senegal with Tortue Phase 1 around 25 percent complete at year-end.

Kosmos is integrating climate risk into its business strategy and we see the energy transition as a major opportunity for progressive companies like Kosmos to play an important role. Today, we will present our climate policy as part of our wider environmental, social and governance responsibilities, with a commitment to both transparency and emissions reduction. With a diverse portfolio of advantaged oil and gas assets, Kosmos is well-positioned to deliver shareholder value while advancing the societies in which we work.”

OPERATIONAL UPDATE

Total net production in the fourth quarter of 2019 averaged approximately 65,200 barrels of oil equivalent per day (boepd)(2).

U.S. Gulf of Mexico

U.S. Gulf of Mexico production averaged approximately 26,000 boepd net (82% oil) during the fourth quarter. Record fourth quarter production was driven by strong performance at Odd Job and initial production from new wells from the Odd Job, Gladden, and Nearly Headless Nick fields. During the fourth quarter, Kosmos recorded approximately $75 million of exploration expense related to the Resolution-1 and Oldfield-1 unsuccessful wells.

Ghana

During the fourth quarter of 2019, net production from Ghana averaged approximately 27,800 barrels of oil per day (bopd). As forecast, Kosmos lifted four cargos from Ghana during the fourth quarter. The Jubilee gas enhancement work program that was rescheduled from the fourth quarter of 2019 into the first quarter of 2020, was completed in early February with production rates of around 90,000 bopd now being achieved.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 11,400 bopd net in the fourth quarter of 2019 and Kosmos lifted one and a half cargos from Equatorial Guinea during the quarter.

In late October, the S-5 well encountered approximately 39 meters of net oil pay in good-quality Santonian reservoir. The well is located within tieback range of the Ceiba FPSO and work is currently ongoing to establish the scale of the discovered resource and evaluate the optimal development solution. The well was drilled in approximately 800 meters of water to a total measured depth of around 4,400 meters.

Mauritania & Senegal

The Greater Tortue Ahmeyim project located offshore Mauritania and Senegal remains on track with Phase 1 approximately 25 percent complete. Pre-FEED work is ongoing for Phases 2 and 3 and these phases are expected to expand capacity to almost 10 MTPA of LNG export capacity.

On February 11, 2020, Kosmos and its partners signed a Sale and Purchase Agreement (SPA) with BP Gas Marketing Limited for 2.45 million tonnes per annum of liquified natural gas from Phase 1 of the project for an initial term of up to 20 years. Signing the SPA has allowed Kosmos to book approximately 100 mmboe of proven reserves associated with the project.

In October, Kosmos announced that the Orca-1 exploration well made a major gas discovery offshore Mauritania in the BirAllah area. Orca was the largest deepwater hydrocarbon discovery in 2019 and the results continue the 100 percent success rate from nine wells targeting the inboard gas trend in Mauritania/Senegal.

2020 Capital Expenditure Budget

Kosmos expects to spend approximately $325 to $375 million in 2020, excluding Mauritania and Senegal, with spending focused on maintaining existing production and growth through infrastructure led exploration. In Mauritania and Senegal, total 2020 capital expenditure for Kosmos' approximately 30 percent working interest is expected to be around $250 million and is expected to be funded from proceeds from the previously announced and ongoing farm-down process.

(1) A Non-GAAP measure, see attached reconciliation of non-GAAP measure

(2) Production means net entitlement volumes. In Ghana and Equatorial Guinea, this means those volumes net to Kosmos' working interest or participating interest and net of royalty or production sharing contract effect. In the Gulf of Mexico, this means those volumes net to Kosmos' working interest and net of royalty.

Conference Call and Webcast Information

Kosmos will host a conference call and webcast to discuss fourth quarter 2019 financial and operating results today at 10:00 a.m. Central time (11:00 a.m. Eastern time). The live webcast of the event is expected to last around 90 minutes and slides can be accessed on the Investors page of Kosmos’ website at http://investors.kosmosenergy.com/investor-events. The dial-in telephone number for the call is +1.877.407.3982. Callers outside the United States should dial +1.201.493.6780. A replay of the webcast will be available on the Investors page of Kosmos’ website for approximately 90 days following the event.

About Kosmos Energy

Kosmos is a full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal. We also maintain a sustainable exploration program balanced between proven basin infrastructure-led exploration (Equatorial Guinea and U.S. Gulf of Mexico), emerging basins (Mauritania, Senegal and Suriname) and frontier basins (Cote d'Ivoire, Namibia, Sao Tome and Principe, and South Africa). Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. As an ethical and transparent company, Kosmos is committed to doing things the right way. The Company’s Business Principles articulate our commitment to transparency, ethics, human rights, safety and the environment. Read more about this commitment in the Kosmos 2018 Corporate Responsibility Report. For additional information, visit www.kosmosenergy.com.

Non-GAAP Financial Measures

EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt are supplemental non-GAAP financial measures used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines EBITDAX as Net income (loss) plus (i) exploration expense, (ii) depletion, depreciation and amortization expense, (iii) equity based compensation expense, (iv) unrealized (gain) loss on commodity derivatives (realized losses are deducted and realized gains are added back), (v) (gain) loss on sale of oil and gas properties, (vi) interest (income) expense, (vii) income taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts expense and (x) similar other material items which management believes affect the comparability of operating results. The Company defines Adjusted net income (loss) as Net income (loss) adjusted for certain items that impact the comparability of results. The Company defines free cash flow as net cash provided by operating activities less Oil and gas assets, Other property, Change in restricted cash, and certain other items that may affect the comparability of results. The Company defines net debt as the sum of notes outstanding issued at par and borrowings on the Facility and Corporate revolver less cash and cash equivalents and restricted cash.

We believe that EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, Net debt and other similar measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the oil and gas sector and will provide investors with a useful tool for assessing the comparability between periods, among securities analysts, as well as company by company. EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt as presented by us may not be comparable to similarly titled measures of other companies.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Kosmos expects, believes or anticipates will or may occur in the future are forward-looking statements. Kosmos’ estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Kosmos believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to Kosmos. When used in this press release, the words “anticipate,” “believe,” “intend,” “expect,” “plan,” “will” or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Kosmos, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Kosmos’ Securities and Exchange Commission (“SEC”) filings. Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

Kosmos Energy Ltd.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

Revenues and other income:

 

 

 

 

 

 

 

 

Oil and gas revenue

 

$

449,657

 

 

$

301,446

 

 

$

1,499,416

 

 

$

886,666

 

Gain on sale of assets

 

10,528

 

 

 

 

10,528

 

 

7,666

 

Other income, net

 

30

 

 

8,054

 

 

(35

)

 

8,037

 

Total revenues and other income

 

460,215

 

 

309,500

 

 

1,509,909

 

 

902,369

 

 

 

 

 

 

 

 

 

 

Costs and expenses:

 

 

 

 

 

 

 

 

Oil and gas production

 

136,297

 

 

73,066

 

 

402,613

 

 

224,727

 

Facilities insurance modifications, net

 

(19,080

)

 

(14,857

)

 

(24,254

)

 

6,955

 

Exploration expenses

 

97,933

 

 

54,580

 

 

180,955

 

 

301,492

 

General and administrative

 

21,307

 

 

34,513

 

 

110,010

 

 

99,856

 

Depletion, depreciation and amortization

 

147,675

 

 

121,228

 

 

563,861

 

 

329,835

 

Interest and other financing costs, net

 

29,509

 

 

33,063

 

 

155,074

 

 

101,176

 

Derivatives, net

 

36,001

 

 

(267,537

)

 

71,885

 

 

(31,430

)

Gain on equity method investments, net

 

 

 

(13,244

)

 

 

 

(72,881

)

Other expenses, net

 

12,850

 

 

1,663

 

 

24,648

 

 

(6,501

)

Total costs and expenses

 

462,492

 

 

22,475

 

 

1,484,792

 

 

953,229

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(2,277

)

 

287,025

 

 

25,117

 

 

(50,860

)

Income tax expense

 

33,496

 

 

101,460

 

 

80,894

 

 

43,131

 

Net income (loss)

 

$

(35,773

)

 

$

185,565

 

 

$

(55,777

)

 

$

(93,991

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.09

)

 

$

0.44

 

 

$

(0.14

)

 

$

(0.23

)

Diluted

 

$

(0.09

)

 

$

0.43

 

 

$

(0.14

)

 

$

(0.23

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic

 

401,516

 

 

421,067

 

 

401,368

 

 

404,585

 

Diluted

 

401,516

 

 

426,826

 

 

401,368

 

 

404,585

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

$

0.0452

 

 

$

 

 

$

0.1808

 

 

$

 

Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 

 

December 31,

 

December 31,

 

 

2019

 

2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

224,502

 

 

$

173,515

 

Receivables, net

 

174,293

 

 

140,006

 

Other current assets

 

167,762

 

 

196,179

 

Total current assets

 

566,557

 

 

509,700

 

 

 

 

 

 

Property and equipment, net

 

3,642,332

 

 

3,459,701

 

Other non-current assets

 

108,343

 

 

118,788

 

Total assets

 

$

4,317,232

 

 

$

4,088,189

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

149,483

 

 

$

176,540

 

Accrued liabilities

 

380,704

 

 

195,596

 

Other current liabilities

 

8,914

 

 

12,172

 

Total current liabilities

 

539,101

 

 

384,308

 

 

 

 

 

 

Long-term liabilities:

 

 

 

 

Long-term debt, net

 

2,008,063

 

 

2,120,547

 

Deferred tax liabilities

 

653,221

 

 

477,179

 

Other non-current liabilities

 

275,145

 

 

164,677

 

Total long-term liabilities

 

2,936,429

 

 

2,762,403

 

 

 

 

 

 

Total stockholders’ equity

 

841,702

 

 

941,478

 

Total liabilities and stockholders’ equity

 

$

4,317,232

 

 

$

4,088,189

 

Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flow

(In thousands, unaudited)

 

 

Three Months Ended

 

Years Ended

 

 

December 31,

 

December 31,

 

 

2019

 

2018

 

2019

 

2018

Operating activities:

 

 

 

 

 

 

 

 

Net income (loss)

 

$

(35,773

)

 

$

185,565

 

 

$

(55,777

)

 

$

(93,991

)

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

 

 

 

 

 

 

 

 

Depletion, depreciation and amortization (including deferred financing costs)

 

149,958

 

 

123,538

 

 

573,118

 

 

339,214

 

Deferred income taxes

 

(20,530

)

 

93,240

 

 

(90,370

)

 

9,145

 

Unsuccessful well costs and leasehold impairments

 

80,452

 

 

8,251

 

 

87,813

 

 

123,199

 

Change in fair value of derivatives

 

33,433

 

 

(262,017

)

 

67,436

 

 

(29,960

)

Cash settlements on derivatives, net(1)

 

(6,757

)

 

(35,237

)

 

(31,458

)

 

(137,942

)

Equity-based compensation

 

4,988

 

 

9,255

 

 

32,370

 

 

35,230

 

Gain on sale of assets

 

(10,528

)

 

 

 

(10,528

)

 

(7,666

)

Loss on extinguishment of debt

 

 

 

 

 

24,794

 

 

4,324

 

Undistributed equity in earnings

 

 

 

(5,280

)

 

 

 

(45

)

Other

 

(531

)

 

1,628

 

 

9,069

 

 

2,865

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Net changes in working capital

 

33,162

 

 

51,301

 

 

21,683

 

 

16,118

 

Net cash provided by operating activities

 

227,874

 

 

170,244

 

 

628,150

 

 

260,491

 

 

 

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

 

 

Oil and gas assets

 

(99,575

)

 

(64,501

)

 

(340,217

)

 

(213,806

)

Other property

 

(3,505

)

 

(4,375

)

 

(11,796

)

 

(7,935

)

Acquisition of oil and gas properties, net of cash acquired

 

 

 

 

 

 

 

(961,764

)

Return of investment from KTIPI

 

 

 

42,036

 

 

 

 

184,664

 

Proceeds on sale of assets

 

15,000

 

 

 

 

15,000

 

 

13,703

 

Notes receivable from partners

 

(7,353

)

 

 

 

(26,918

)

 

 

Net cash used in investing activities

 

(95,433

)

 

(26,840

)

 

(363,931

)

 

(985,138

)

 

 

 

 

 

 

 

 

 

Financing activities:

 

 

 

 

 

 

 

 

Borrowings on long-term debt

 

 

 

175,000

 

 

175,000

 

 

1,175,000

 

Payments on long-term debt

 

(100,000

)

 

(150,000

)

 

(425,000

)

 

(325,000

)

Net proceeds from issuance of senior notes

 

 

 

 

 

641,875

 

 

 

Redemption of senior secured notes

 

 

 

 

 

(535,338

)

 

 

Purchase of treasury stock / tax withholdings

 

 

 

(188,356

)

 

(1,983

)

 

(206,051

)

Dividends

 

(18,152

)

 

 

 

(72,599

)

 

 

Deferred financing costs

 

(1

)

 

(1,927

)

 

(2,444

)

 

(38,672

)

Net cash provided by (used in) financing activities

 

(118,153

)

 

(165,283

)

 

(220,489

)

 

605,277

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

14,288

 

 

(21,879

)

 

43,730

 

 

(119,370

)

Cash, cash equivalents and restricted cash at beginning of period

 

215,058

 

 

207,495

 

 

185,616

 

 

304,986

 

Cash, cash equivalents and restricted cash at end of period

 

$

229,346

 

 

$

185,616

 

 

$

229,346

 

 

$

185,616

 

_____________________________________

(1)

Cash settlements on commodity hedges were $(9.3) million and $(29.8) million for the three months ended December 31, 2019 and 2018, respectively, and $(36.3) million and $(137.1) million for the years ended December 31, 2019 and 2018, respectively.

Kosmos Energy Ltd.

Equity Method Investment

(In thousands, unaudited)

 

Three months ended

 

Year ended

 

December 31,
2018

 

December 31,
2018

Revenues and other income:

 

 

 

Oil and gas revenue

$

121,141

 

 

$

721,299

 

Other income

(521

)

 

(477

)

Total revenues and other income

120,620

 

 

720,822

 

 

 

 

 

Costs and expenses:

 

 

 

Oil and gas production

32,319

 

 

147,685

 

Depletion and depreciation

17,988

 

 

126,983

 

Other expenses, net

639

 

 

429

 

Total costs and expenses

50,946

 

 

275,097

 

 

 

 

 

Income before income taxes

69,674

 

 

445,725

 

Income tax expense

22,933

 

 

156,981

 

Net income

$

46,741

 

 

$

288,744

 

 

 

 

 

Kosmos' share of net income

$

23,371

 

 

$

144,372

 

Basis difference amortization(1)

10,127

 

 

71,491

 

Equity in earnings - KTIPI

$

13,244

 

 

$

72,881

 

_____________________________________

(1)

The basis difference, which is associated with oil and gas properties and subject to amortization, has been allocated to the Ceiba Field and Okume Complex. We amortized the basis difference using the unit-of-production method.

Kosmos Energy Ltd.

EBITDAX

(In thousands, unaudited)

 

Three Months Ended

 

Three Months Ended

 

December 31, 2019

 

December 31, 2018

 

Kosmos

 

Kosmos

 

Equatorial
Guinea (Equity
Method)(1)

 

Total

Net income (loss)

$

(35,773

)

 

$

185,565

 

 

$

13,244

 

 

$

198,809

 

Exploration expenses

97,933

 

 

54,580

 

 

352

 

 

54,932

 

Facilities insurance modifications, net

(19,080

)

 

(14,857

)

 

 

 

(14,857

)

Depletion, depreciation and amortization

147,675

 

 

121,228

 

 

19,120

 

 

140,348

 

Equity-based compensation

4,988

 

 

9,255

 

 

 

 

9,255

 

Derivatives, net

36,001

 

 

(267,537

)

 

 

 

(267,537

)

Cash settlements on commodity derivatives

(9,324

)

 

(29,794

)

 

 

 

(29,794

)

Inventory impairment and other

17,182

 

 

295

 

 

 

 

295

 

Disputed charges and related costs

2,486

 

 

(32

)

 

 

 

(32

)

Gain on sale of assets

(10,528

)

 

 

 

 

 

 

Gain on equity method investment - KTIPI

 

 

(13,244

)

 

 

 

(13,244

)

Interest and other financing costs, net

29,509

 

 

33,063

 

 

 

 

33,063

 

Income tax expense

33,496

 

 

101,460

 

 

11,467

 

 

112,927

 

EBITDAX

$

294,565

 

 

$

179,982

 

 

$

44,183

 

 

$

224,165

 

 

 

 

 

 

 

 

 

 

 

Years ended

 

Years ended

 

December 31, 2019

 

December 31, 2018

 

Kosmos

 

Kosmos

 

Equatorial
Guinea (Equity
Method)(2)

 

Total

Net income (loss)

$

(55,777

)

 

$

(93,991

)

 

$

72,881

 

 

$

(21,110

)

Exploration expenses

180,955

 

 

301,492

 

 

352

 

 

301,844

 

Facilities insurance modifications, net

(24,254

)

 

6,955

 

 

 

 

6,955

 

Depletion, depreciation and amortization

563,861

 

 

329,835

 

 

134,982

 

 

464,817

 

Equity-based compensation

32,370

 

 

35,230

 

 

 

 

35,230

 

Derivatives, net

71,885

 

 

(31,430

)

 

 

 

(31,430

)

Cash settlements on commodity derivatives

(36,341

)

 

(137,053

)

 

 

 

(137,053

)

Inventory impairment and other

27,350

 

 

288

 

 

 

 

288

 

Disputed charges and related costs

4,149

 

 

(9,753

)

 

 

 

(9,753

)

Gain on sale of assets

(10,528

)

 

(7,666

)

 

 

 

(7,666

)

Gain on equity method investment - KTIPI

 

 

(72,881

)

 

 

 

(72,881

)

Interest and other financing costs, net

155,074

 

 

101,176

 

 

 

 

101,176

 

Income tax expense

80,894

 

 

43,131

 

 

78,491

 

 

121,622

 

EBITDAX

$

989,638

 

 

$

465,333

 

 

$

286,706

 

 

$

752,039

 

_____________________________________

(1)

For the three months ended December 31, 2018 we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment as we accounted for such investment under the equity method during this period.

(2)

For the year ended December 31, 2018, we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment, as we accounted for such investment under the equity method through this date.

Kosmos Energy Ltd.

Adjusted Net Income

(In thousands, except per share amounts, unaudited)

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Net income (loss)

$

(35,773

)

 

$

185,565

 

 

$

(55,777

)

 

$

(93,991

)

 

 

 

 

 

 

 

 

Derivatives, net

36,001

 

 

(267,537

)

 

71,885

 

 

(31,430

)

Cash settlements on commodity derivatives

(9,324

)

 

(29,794

)

 

(36,341

)

 

(137,053

)

Gain on sale of assets

(10,528

)

 

 

 

(10,528

)

 

(7,666

)

Facilities insurance modifications, net

(19,080

)

 

(14,857

)

 

(24,254

)

 

6,955

 

Inventory impairment and other

17,182

 

 

295

 

 

27,350

 

 

288

 

Disputed charges and related costs

2,486

 

 

(32

)

 

4,149

 

 

(9,753

)

Impairment of suspended well costs

 

 

 

 

 

 

57,772

 

Gain on exit of Essaouira

 

 

(8,043

)

 

0

 

 

(8,043

)

Loss on extinguishment of debt

 

 

 

 

24,794

 

 

4,324

 

Total selected items before tax

16,737

 

 

(319,968

)

 

57,055

 

 

(124,606

)

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(17,593

)

 

94,977

 

 

(22,573

)

 

29,653

 

Adjusted net loss

$

(36,629

)

 

$

(39,426

)

 

$

(21,295

)

 

$

(188,944

)

 

 

 

 

 

 

 

 

Net income (loss) per diluted share

$

(0.09

)

 

$

0.43

 

 

$

(0.14

)

 

$

(0.23

)

 

 

 

 

 

 

 

 

Derivatives, net

0.09

 

 

(0.62

)

 

0.18

 

 

(0.08

)

Cash settlements on commodity derivatives

(0.02

)

 

(0.07

)

 

(0.09

)

 

(0.34

)

Gain on sale of assets

(0.03

)

 

 

 

(0.03

)

 

(0.02

)

Facilities insurance modifications, net

(0.05

)

 

(0.03

)

 

(0.06

)

 

0.02

 

Inventory impairment and other

0.04

 

 

 

 

0.07

 

 

 

Disputed charges and related costs

0.01

 

 

 

 

0.01

 

 

(0.02

)

Impairment of suspended well costs

 

 

 

 

 

 

0.14

 

Gain on exit of Essaouira

 

 

(0.02

)

 

 

 

(0.02

)

Loss on extinguishment of debt

 

 

 

 

0.06

 

 

0.01

 

Total selected items before tax

0.04

 

 

(0.74

)

 

0.14

 

 

(0.31

)

 

 

 

 

 

 

 

 

Income tax expense on adjustments(1)

(0.04

)

 

0.22

 

 

(0.05

)

 

0.07

 

Adjusted net loss per diluted share

$

(0.09

)

 

$

(0.09

)

 

$

(0.05

)

 

$

(0.47

)

 

 

 

 

 

 

 

 

Weighted average number of diluted shares

401,516

 

 

426,826

 

 

401,368

 

 

404,585

 

_____________________________________

(1)

Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rates for the U.S. and Ghana/Equatorial Guinea are 21% and 35%, respectively.

Kosmos Energy Ltd.

Free Cash Flow

(In thousands, unaudited)

 

Three months ended

 

Year ended

 

December 31,

2019

 

December 31,

2019

Reconciliation of net cash provided by operating activities to free cash flow:

 

 

 

Net cash provided by operating activities

$

227,874

 

 

$

628,150

 

Net cash used in investing activities

(95,433

)

 

(363,931

)

Other cash used in financing activities(1)

(1

)

 

(22,889

)

Change in restricted cash

6,568

 

 

7,256

 

Free cash flow (before dividends)

$

139,008

 

 

$

248,586

 

_____________________________________

(1)

Amounts consist of costs related to the redemption of the senior secured notes, issuance of senior notes and other long-term debt and the purchase of treasury stock.

Operational Summary(1)

(In thousands, except barrel and per barrel data, unaudited)

 

Three Months Ended

 

Years Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Net Volume Sold

 

 

 

 

 

 

 

Oil (MMBbl)

 

 

 

 

 

 

 

Kosmos

7.092

 

 

4.596

 

 

23.331

 

 

12.673

 

Equity method investment - Equatorial Guinea

 

 

0.950

 

 

 

 

5.228

 

Total Oil (MMBbl)

7.092

 

 

5.546

 

 

23.331

 

 

17.901

 

Gas (MMcf)

1.671

 

 

1.959

 

 

6.323

 

 

2.268

 

NGL (MMBbl)

0.154

 

 

0.154

 

 

0.548

 

 

0.179

 

Total (MMBoe)

7.525

 

 

6.027

 

 

24.933

 

 

18.458

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

Oil sales:

 

 

 

 

 

 

 

Kosmos

$

444,019

 

 

$

290,856

 

 

$

1,475,706

 

 

$

874,382

 

Equity method investment - Equatorial Guinea

 

 

60,570

 

 

 

 

360,649

 

Total Oil sales

444,019

 

 

351,426

 

 

1,475,706

 

 

1,235,031

 

Gas sales

3,823

 

 

6,126

 

 

15,599

 

 

7,101

 

NGL sales

1,815

 

 

4,464

 

 

8,111

 

 

5,183

 

Total sales

449,657

 

 

362,016

 

 

1,499,416

 

 

1,247,315

 

Cash settlements on commodity derivatives

(9,324

)

 

(29,794

)

 

(36,341

)

 

(137,053

)

Realized revenue

$

440,333

 

 

$

332,222

 

 

$

1,463,075

 

 

$

1,110,262

 

 

 

 

 

 

 

 

 

Oil and Gas Production Costs

 

 

 

 

 

 

 

Kosmos

$

136,297

 

 

$

73,066

 

 

$

402,613

 

 

$

224,727

 

Equity method investment - Equatorial Guinea

 

 

16,160

 

 

 

 

73,843

 

Total oil and gas production costs

$

136,297

 

 

$

89,226

 

 

$

402,613

 

 

$

298,570

 

 

 

 

 

 

 

 

 

Oil sales per Bbl:

 

 

 

 

 

 

 

Kosmos

$

62.61

 

 

$

63.28

 

 

$

63.25

 

 

$

69.00

 

Equity method investment - Equatorial Guinea

 

 

63.76

 

 

 

 

68.98

 

Total Oil sales per Bbl

62.61

 

 

63.37

 

 

63.25

 

 

68.99

 

Gas sales per Mcf

2.29

 

 

3.13

 

 

2.47

 

 

3.13

 

NGL sales per Bbl

11.79

 

 

28.91

 

 

14.80

 

 

28.96

 

Total sales per Boe

59.76

 

 

60.06

 

 

60.14

 

 

67.58

 

Cash settlements on commodity derivatives per oil Bbl(2)

(1.31

)

 

(6.48

)

 

(1.56

)

 

(10.81

)

Realized revenue per Boe(3)

58.52

 

 

55.12

 

 

58.68

 

 

60.15

 

 

 

 

 

 

 

 

 

Oil and gas production costs per Boe:

 

 

 

 

 

 

 

Kosmos

$

18.12

 

 

$

14.39

 

 

$

16.15

 

 

$

16.98

 

Equity method investment - Equatorial Guinea

 

 

$

17.01

 

 

 

 

$

14.12

 

Total oil and gas production costs

18.12

 

 

14.80

 

 

16.15

 

 

16.18

 

_____________________________________

(1)

For the three months and year ended December 31, 2018, we have presented separately our 50% share of the results from operations for the Equatorial Guinea investment, as we accounted for such investment under the equity method during these periods.

(2)

Cash settlements on commodity derivatives are only related to Kosmos and are calculated on a per barrel basis using Kosmos' Net Oil Volumes Sold.

(3)

Realized revenue includes revenue from Kosmos, Equatorial Guinea (equity method investment), and Cash settlements on commodity derivatives; on a per Boe basis realized revenue is calculated using the total Net Volume Sold from both Kosmos and Equatorial Guinea (equity method investment).

Kosmos was overlifted by approximately 323 thousand barrels as of December 31, 2019.

Hedging Summary

As of December 31, 2019(1)

(Unaudited)

 

 

 

 

 

 

Weighted Average Price per Bbl

 

 

Index

 

MBbl

 

Floor(2)

 

Sold Put

 

Ceiling

2020:

 

 

 

 

 

 

 

 

 

 

Three-way collars

 

Dated Brent

 

6,000

 

 

$

57.50

 

 

$

49.58

 

 

$

80.18

 

Swaps with sold puts

 

Dated Brent

 

2,000

 

 

60.53

 

 

48.75

 

 

 

Put spread

 

Dated Brent

 

6,000

 

 

59.17

 

 

50.00

 

 

 

2021:

 

 

 

 

 

 

 

 

 

 

Swaps with sold puts

 

Dated Brent

 

4,000

 

 

$

60.28

 

 

$

48.75

 

 

$

 

_____________________________________

(1)

Please see the Company’s filed 10-K for full disclosure on hedging material. Includes hedging position as of December 31, 2019 and hedges added since year-end.

(2)

“Floor” represents floor price for collars or swaps and strike price for purchased puts.

Note: Excludes 8.0 MMBbls of sold (short) calls with a strike price of $85.00 per Bbl in 2020 and 6.0 MMBbls of sold (short) calls with a strike price of $71.67 per Bbl in 2021.

2020 Guidance

 

1Q2020

 

FY 2020

 

 

 

 

Production(1,2)

63,000 - 67,000 boe per day

 

62,000 - 70,000 boe per day

 

 

 

 

Opex

$14.50 - $16.50 per boe

 

$14.50 - $16.50 per boe

 

 

 

 

DD&A

$22.00 - $24.00 per boe

 

$22.00 - $24.00 per boe

 

 

 

 

G&A(3)

$30 - $34 million

 

$115 - $125 million

 

 

 

 

Exploration Expense

~$36 - $40 million(4)

 

~$120 million

 

 

 

 

Net Interest

$26 - $30 million per quarter

 

 

 

 

Tax

$2.00 - $4.00 per boe

 

 

 

 

Capex(5)

$325 - $375 million in FY 2020

_____________________________________

Note: Ghana / Equatorial Guinea revenue calculated by number of cargos.

(1)

 

1Q 2020 cargo forecast - Ghana: 1 cargo / Equatorial Guinea 1 cargo. FY 2020 Ghana: 10 cargos / Equatorial Guinea 4.5 cargos. Average cargo sizes 950,000 barrels of oil.

(2)

 

GoM Production - 1Q 2020: 26,000-29,000 boe per day / FY 2020: 24,000 - 28,000 boe per day. Oil/Gas/NGL split for 2020: GoM: ~80%/~15%/~5%.

(3)

 

G&A - Approximately 70% cash.

(4)

 

Excludes dry hole expense of approximately $10 million in 1Q 2020 related to Oldfield.

(5)

 

Excludes Mauritania and Senegal

 

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