Kosmos Energy announced today its financial and operating results for the first quarter of 2021. For the quarter, the Company generated a net loss of $91 million, or $0.22 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss(1) of $33 million, or $0.08 per diluted share for the first quarter of 2021.

FIRST QUARTER 2021 HIGHLIGHTS

• Net Production(2) - 53,100 barrels of oil equivalent per day (boepd) with sales of 36,500 boepd, resulting in a material net underlift position of approximately 1.3 million barrels of oil
• Phase One of the Greater Tortue LNG project ~58% complete at quarter end
• Completion of an upsized $450 million offering of senior notes due 2028
• Post-quarter end, successful reserve-based lending (RBL) redetermination and extension
• Revenues - $176 million, or $53.66 per boe
• Production expense - $46 million, or $13.91 per boe
• General and administrative expenses - $22 million, $14 million cash expense and $8 million non-cash
• Net cash used in operating activities - $47 million

 
Capital expenditures:

• $44 million Base Business capital expenditures
• $73 million Mauritania and Senegal 

Commenting on the Company's first quarter 2021 performance, Chairman and Chief Executive Officer Andrew G. Inglis said:
"This month marks the tenth anniversary of Kosmos' listing on the New York Stock Exchange. In those ten years, Kosmos has evolved from a frontier explorer to a full-cycle E&P with a diverse reserve base that has increased nearly seven-fold, building the platform for continued success over the next ten years. In the first decade of the company's history, we maintained a strong focus on corporate responsibility, leading on transparency and positioning the business to deliver value to our stakeholders through the energy transition.

2021 is off to a strong start with momentum building across the business. We have begun infill drilling activities in Ghana and the Gulf of Mexico, will soon begin drilling in Equatorial Guinea, and are on track to deliver our production and cash flow targets for the year. Progress also continues on the Greater Tortue Project in Mauritania and Senegal, with Phase one 58% complete at the end of the first quarter. We have taken important steps to create a more permanent capital structure with the bond offering and the recently-completed RBL extension, which increased liquidity and cleared all material near-term debt maturities."

FINANCIAL UPDATE

In the first quarter of 2021, 1.5 cargos were lifted from a forecast 12.5 cargos for the full year 2021. As a result of the timing mismatch between production and the lifting of cargos, there was a material underlift of approximately 1.3 million barrels of oil in the first quarter.

In March 2021, Kosmos successfully closed a $450 million offering of senior notes due 2028.  The net proceeds from the offering were used to partially pay down the RBL facility and revolving credit facility as well as for working capital purposes.    

In May 2021, Kosmos successfully completed an amendment and restatement of the RBL facility in conjunction with the spring redetermination. The amendment reduced the facility size to $1.25 billion and extended the facility by two years, with a final maturity of March 2027. The borrowing base was finalized, with a more conservative price deck, at $1.24 billion with $1.0 billion currently outstanding.  

The base business net capital expenditure for the first quarter of 2021 was approximately $44 million, in-line with Company guidance. Net capital expenditures related to Mauritania and Senegal in the first quarter were $73 million. 

Kosmos exited the first quarter of 2021 with approximately $2.2 billion of net debt(1) and available liquidity of around $0.8 billion. The increase in net debt in the quarter was driven by the material underlift, Mauritania and Senegal capital expenditures and the National Oil Company loan payments, as well as working capital. Kosmos base business free cash flow guidance for 2021 remains unchanged.

OPERATIONAL UPDATE

Production
Total net production in the first quarter of 2021 averaged approximately 53,100 boepd(2), in line with prior guidance.

Ghana
Production in Ghana averaged approximately 22,400 barrels of oil per day (bopd) net in the first quarter of 2021. As forecasted, Kosmos lifted one cargo from Ghana during the first quarter.

At Jubilee, production averaged approximately 70,400 bopd gross during the quarter. Kosmos and its partners continue to focus on higher reliability in Ghana as demonstrated by floating production, storage and offloading (FPSO) vessel uptime at Jubilee of around 98% in the first quarter and consistent water injection at the highest levels since 2012. Gas offtake to the government of Ghana of around 110 million standard cubic feet per day in the quarter is almost double the level seen in 2019. At TEN, production averaged approximately 38,800 bopd gross for the first quarter with FPSO uptime of 99%.

In early 2021, the Jubilee Catenary Anchor Leg Mooring (CALM) buoy was commissioned with the first offloading taking place in February. The CALM buoy will replace the need for shuttle tankers and is expected to reduce operating expenses going forward. 

Infill drilling has resumed in the second quarter with drilling planned for three wells on Jubilee and one on TEN in 2021. A long-term rig contract has been entered into for the Maersk Venturer, which arrived on location early in the second quarter. A Jubilee producer well has finished drilling and the rig has now moved to drill a water injector well at Jubilee, after which we expect to complete both wells. The expected impact of these two wells is to increase production by 15,000-20,000 barrels of oil per day gross.

U.S. Gulf of Mexico 
Production in the U.S. Gulf of Mexico averaged approximately 20,500 boepd net (81% oil) during the first quarter.

In late-February, the Kodiak-2 well was brought back online after successful remediation of the subsea infrastructure issue identified in the fourth quarter of 2020. In April, the Kodiak-3 infill well was also brought online.

After the encouraging results from the Tornado-4 water injection well last year, drilling of the Tornado-5 infill well is now planned by the operator in the second quarter and expected online in the third quarter.

In January 2021, Kosmos announced an oil discovery at the Winterfell infrastructure-led exploration (ILX) well (drilled at a Kosmos working interest 17.5%), which encountered approximately 26 meters (85 feet) of net oil pay in two intervals. During the first quarter, Kosmos worked with partners on an appraisal plan for Winterfell, which is expected to begin with a well in the third quarter. This appraisal well is expected to drill the fault block to the northwest of the discovery, which has the same seismic signature as Winterfell, with an exploration tail into a deeper horizon. The Winterfell discovery is located within tie back distance to several existing and planned host facilities.

Kosmos plans to drill a second ILX well at Zora with a 37.5% operated working interest in the third quarter. The Zora prospect is a Miocene target in the same play as nearby analogous fields such as Odd Job, Horn Mountain and Marmalard. The permits to drill the well have all been received and a rig has been contracted. The Zora prospect is located near multiple other prospects where Kosmos has built a material interest and is in close proximity to several potential host facilities, which could facilitate a low cost and lower carbon development in the event of success.

Equatorial Guinea
Production in Equatorial Guinea averaged approximately 30,200 bopd gross and 10,200 bopd net in the first quarter of 2021. As forecasted, Kosmos lifted 0.5 cargos from Equatorial Guinea during the quarter.

The Okume upgrade project is nearing completion, adding additional power, water injection and gas lift capacity necessary for further facilities de-bottlenecking and additional electrical submersible pumps (ESPs). In April, partners commenced the second phase of the planned ESP program and upgraded the G-19 flowline, which has significantly enhanced production from that well.

A rig has also been contracted for the upcoming infill drilling campaign, which is expected to arrive in country later this quarter to drill the three wells planned this year.

Mauritania & Senegal
The momentum in Kosmos' production activities in the first quarter can also be seen in the Company's development project. Phase one of the Greater Tortue Ahmeyim LNG project ended the first quarter around 58% complete with material progress across all of the major workstreams, including the FPSO, Floating LNG vessel, hub terminal (concrete breakwater) and subsea infrastructure. The partnership is targeting Phase one to be around 80% complete by year end.

Kosmos expects completion of the FPSO sale and lease-back in the second quarter of 2021 as previously communicated. The process remains on track with documentation being finalized and the government approval process well underway.

(1) A 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.

KeyFacts Energy: Kosmos Energy US Gulf of Mexico country profile