TIDMKOS

RNS Number : 5915E

Kosmos Energy Limited

09 November 2020

Exhibit 99.1

 
NEWS RELEASE 
============ 
 

KOSMOS ENERGY ANNOUNCES THIRD QUARTER 2020 RESULTS

DALLAS--(BUSINESS WIRE)-November 9, 2020-- Kosmos Energy Ltd. ("Kosmos") (NYSE: KOS) announced today the financial and operating results for the third quarter of 2020. For the quarter, the Company generated a net loss of $37 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 $50 million or $0.12 per diluted share for the third quarter of 2020.

THIRD QUARTER 2020 HIGHLIGHTS

-- Net Production(2) - 56,700 barrels of oil equivalent per day (boepd) with sales of 59,500 boepd

   --     Revenues - $225 million, or $41.05 per boe 
   --     Production expense - $84 million, or $15.39 per boe 

-- General and administrative expenses - $18 million, $9 million cash expense and $9 million non-cash equity-based compensation expense

   --     Capital expenditures: 
   --     $53 million Base Business capital expenditures 
   --     $47 million Mauritania and Senegal accrued non-cash capital expenditures 

At quarter end, the Company was in a net underlift position of approximately 0.8 million barrels of oil.

Commenting on the company's 3Q 2020 performance, Chairman and Chief Executive Officer Andrew G. Inglis said: "Kosmos delivered robust operational performance in the third quarter, despite elevated storm activity driving temporary shut-ins in the Gulf of Mexico. Production in Ghana and Equatorial Guinea was in line with expectations, with the reliability improvements seen in the first half of the year continuing into the second half. With the impact of COVID-19 and one of the worst storm seasons on record in the Gulf of Mexico, full year production is expected to come in at 61,000 - 62,000 barrels of oil equivalent per day.

In Mauritania and Senegal, the partnership continues to make good progress with Phase 1 of the Tortue project expected to be around 50% complete by year end. The operator has put significant effort into optimizing Phase 2, which we believe is now the most competitive brownfield LNG expansion globally. With the prospect of enhanced future returns, now is not the optimal time to reduce our interest in the project and we have established a financing path which funds Kosmos' capital obligations to first gas. This enables Kosmos to retain its current equity stake through to production. With lower costs and an improving LNG market backdrop, the Tortue project is expected to provide an excellent return on investment for Kosmos.

With the recently announced Gulf of Mexico financing facility and frontier exploration asset sale to Shell, we have taken additional steps to bolster the balance sheet and have ample liquidity to navigate the current period of low and volatile commodity prices."

FINANCIAL UPDATE

In September 2020, the Company closed a five-year $200 million Gulf of Mexico term loan with Beal Bank USA and Trafigura Trading LLC, restructuring the previously announced Gulf of Mexico prepayment facility. The agreement includes an accordion feature allowing the term loan to be expanded up to $300 million.

In October 2020, the Company successfully completed its reserve based lending (RBL) re-determination, agreeing with its bank group a borrowing base of $1.32 billion. Following the completion of the Gulf of Mexico term loan and the RBL re-determination, the company had approximately $0.5 billion of available liquidity.

Third quarter cash flow improved by over $100 million versus the second quarter due to higher realized prices, lower costs and a benefit in working capital, offset by the impact of the elevated storms in the Gulf of Mexico. Looking forward to the fourth quarter, with continued reduction in costs, high reliability in Ghana and Equatorial Guinea and improved uptime in the Gulf of Mexico, we expect positive free cash flow from the base business, enhanced by the proceeds from the Shell transaction.

Kosmos exited the third quarter of 2020 with approximately $2.1 billion of net debt. Net debt slightly increased in the third quarter, largely driven by a recategorization of the Gulf of Mexico prepayment facility as debt post restructuring.

Our base business net capital expenditure for 2020 is expected to be approximately $140-$150 million and includes the impact of the Shell proceeds, partially offset by the Winterfell infrastructure-led exploration well in the Gulf of Mexico (formerly Monarch) and the acceleration of the Kodiak completion into the fourth quarter ($20 million).

OPERATIONAL UPDATE

COVID-19 Update

Kosmos' response to the COVID-19 pandemic remains focused on safe and reliable operations by protecting the health of our employees and contractors, reducing the risk of the virus spreading in our operations, and minimizing the impact on our business. We are also working with local communities in our host countries to fight transmission of the virus.

Production

Total net production in the third quarter of 2020 averaged approximately 56,700 boepd(2) , slightly lower than previous guidance due to the elevated storm activity in the Gulf of Mexico with 2020 being one of the most active years for tropical storms on record. With the impact of COVID-19 and the Gulf of Mexico storms, full year net production is expected to be in the range of 61,000 to 62,000 boepd.

Ghana

Production in Ghana continued to be unaffected by COVID-19 and averaged approximately 28,100 barrels of oil per day (bopd) net in the third quarter of 2020, in line with guidance. As forecasted, Kosmos lifted three cargos from Ghana during the third quarter.

Jubilee continues to perform well with high reliability. Gross production rates averaged approximately 87,700 bopd during the quarter with FPSO uptime of around 98%. TEN production averaged approximately 49,600 bopd gross for the third quarter with FPSO uptime of 98%.

Full year guidance of ten cargos is unchanged.

U.S. Gulf of Mexico

Production in the U.S. Gulf of Mexico averaged approximately 17,500 boepd net (80% oil) during the third quarter, including the impact of 17 days of production shut-ins during the quarter due to the impact of increased tropical storm activity, which caused the shutdown of platforms and infrastructure with personnel evacuated.

During the quarter, the Tornado-4 water injection well came online and initial results have been positive, with the injection providing pressure support to the producing updip wells. Management also took the decision to accelerate the Kodiak completion, which will commence in the fourth quarter. The Winterfell infrastructure-led exploration well (previously named Monarch) is expected to spud this quarter with results early next year.

Equatorial Guinea

Production in Equatorial Guinea continued to be unaffected by COVID-19 and averaged approximately 33,000 bopd gross and 11,100 bopd net in the third quarter of 2020. Kosmos lifted 1 cargo from Equatorial Guinea during the quarter. Full year guidance of 4.5 cargos is unchanged.

Mauritania & Senegal

Phase 1 of the Greater Tortue Ahmeyim project continued to make good progress in the quarter and is expected to be around 50% complete by year end. Throughout 2020, Kosmos has collaborated with operator BP and the national oil companies of Mauritania and Senegal on the optimization of Phase 2. By targeting expansion to 5 million tonnes per annum and leveraging all the major infrastructure from Phase 1, capital costs for Phase 2 have been reduced and the expected returns from the project enhanced.

To fund its current interest, Kosmos has established a financing path for its capital obligations to first gas. Kosmos and BP are engaged in the sale of the FPSO to a Special Purpose Vehicle (SPV) which we plan to close in the first quarter of 2021 for the capital costs paid so far, which total approximately $160 million net, and the FPSO leased back to the project. The SPV is expected to take on the future capital obligations for the FPSO, meaning Kosmos' future obligations are reduced by a further $160 million. In addition, Kosmos intends to re-finance the national oil company loans with commercial banks in 2021, which should result in a reimbursement of an additional $100 million to Kosmos. The funds provided from these two activities are expected to fund Kosmos' capital obligations in Mauritania and Senegal through 2021. The outstanding capital balance for Phase 1 is planned to be funded by a direct investment in Kosmos' Mauritania and Senegal position with Phase 2 largely funded through Phase 1 cash flows. Kosmos plans to secure this financing by the middle of 2021.

Climate Risk and Resilience Report

As part of our commitment to strong Environmental, Social and Governance (ESG) performance, and in accordance with our Climate Change Policy, Kosmos recently published a Climate Risk and Resilience Report that adheres to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The report discusses how we are identifying and managing climate-related risks and opportunities across four categories: Governance, Strategy, Risk Management, and Metrics and Targets. In addition, the report includes a commitment to achieve Scope 1 and Scope 2 carbon neutrality by 2030 or sooner, a full scenario analysis demonstrating the resilience of our portfolio, and a description of innovative nature-based carbon capture projects used to mitigate emissions that cannot be eliminated.

(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 third quarter 2020 financial and operating results today at 10:00 a.m. Central time (11:00 a.m. Eastern time). The live webcast of the event can be accessed on the Investors page of Kosmos' website at http://investors.kosmosenergy.com/investor-events. The dial-in telephone number for the call is +1-877-407-3982. Callers in the United Kingdom should call 0800 756 3429. 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 on 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 proven basin exploration program in Equatorial Guinea, Ghana and U.S. Gulf of Mexico. Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. As an ethical and transparent company, Kosmos is committed to doing things the right way. The Company's Business Principles articulate our commitment to transparency, ethics, human rights, safety and the environment. Read more about this commitment in the Kosmos 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, 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 (including, but not limited to, the impact of the COVID-19 pandemic), which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Kosmos' Securities and Exchange Commission ("SEC") filings. Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

###

Kosmos Energy Ltd.

Consolidated Statements of Operations

(In thousands, except per share amounts, unaudited)

 
                                                Three Months Ended       Nine Months Ended 
                                                  September 30,            September 30, 
                                              ----------------------  ------------------------ 
                                                  2020        2019       2020         2019 
                                              ------------  --------  ----------  ------------ 
Revenues and other income: 
  Oil and gas revenue                         $    224,786  $357,036  $  529,880  $1,049,759 
  Other income, net                                      1      (66)           2        (65) 
                                              ------------  --------  ----------  ---------- 
   Total revenues and other income                 224,787   356,970     529,882   1,049,694 
 
Costs and expenses: 
  Oil and gas production                            84,277    95,540     234,627     266,316 
  Facilities insurance modifications, net            2,465    12,569      10,555     (5,174) 
  Exploration expenses                              13,977    22,773      74,293      83,022 
  General and administrative                        18,269    24,723      57,366      88,703 
  Depletion, depreciation and amortization         111,231   146,653     326,390     416,186 
  Impairment of long-lived assets                        -         -     150,820           - 
  Interest and other financing costs, net           27,068    30,721      83,177     125,565 
  Derivatives, net                                   1,187  (27,016)    (34,776)      35,884 
  Other expenses, net                                2,805    11,472      27,962      11,798 
                                              ------------  --------  ----------  ---------- 
   Total costs and expenses                        261,279   317,435     930,414   1,022,300 
                                              ------------  --------  ----------  ---------- 
 
Income (loss) before income taxes                 (36,492)    39,535   (400,532)      27,394 
  Income tax expense                                   892    23,470      19,010      47,398 
                                              ------------  --------  ----------  ---------- 
Net income (loss)                             $   (37,384)  $ 16,065  $(419,542)  $ (20,004) 
                                                  ========   =======   =========   ========= 
 
Net income (loss) per share: 
Basic                                         $     (0.09)  $   0.04  $   (1.04)  $   (0.05) 
                                                  ========   =======   =========   ========= 
Diluted                                       $     (0.09)  $   0.04  $   (1.04)  $   (0.05) 
                                                  ========   =======   =========   ========= 
 
 
Weighted average number of shares used 
 to compute net income (loss) per share: 
Basic                                              405,409   401,466     405,131     401,319 
                                              ============  ========  ==========  ========== 
Diluted                                            405,409   410,992     405,131     401,319 
                                              ============  ========  ==========  ========== 
 
Dividends declared per common share           $          -  $ 0.0452  $   0.0452  $   0.1356 
                                                  ========   =======   =========   ========= 
 

Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 
                                              September 
                                                  30,       December 31, 
                                                 2020           2019 
                                              ----------  ---------------- 
Assets 
Current assets: 
  Cash and cash equivalents                   $  300,819  $      224,502 
  Receivables, net                                85,283         174,293 
  Other current assets                           206,364         167,762 
                                              ----------  -------------- 
Total current assets                             592,466         566,557 
 
Property and equipment, net                    3,366,304       3,642,332 
Other non-current assets                         134,731         108,343 
                                              ----------  -------------- 
Total assets                                  $4,093,501  $    4,317,232 
                                               =========      ========== 
 
Liabilities and stockholders' equity 
Current liabilities: 
  Accounts payable                            $  184,086  $      149,483 
  Accrued liabilities                            186,630         380,704 
  Current maturities of long-term debt           169,905               - 
  Other current liabilities                       24,589           8,914 
                                              ----------  -------------- 
Total current liabilities                        565,210         539,101 
 
Long-term liabilities: 
  Long-term debt, net                          2,191,433       2,008,063 
  Deferred tax liabilities                       624,156         653,221 
  Other non-current liabilities                  287,138         275,145 
                                              ----------  -------------- 
Total long-term liabilities                    3,102,727       2,936,429 
 
Total stockholders' equity                       425,564         841,702 
                                              ----------  -------------- 
Total liabilities and stockholders' equity    $4,093,501  $    4,317,232 
                                               =========      ========== 
 

Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flow

(In thousands, unaudited)

 
                                                     Three Months Ended         Nine Months Ended 
                                                        September 30,             September 30, 
                                                  -------------------------  ----------------------- 
                                                      2020         2019         2020        2019 
                                                  ------------  -----------  ----------  ----------- 
Operating activities: 
Net income (loss)                                 $   (37,384)  $    16,065  $(419,542)  $(20,004) 
Adjustments to reconcile net income (loss) 
 to net cash provided by operating activities: 
  Depletion, depreciation and amortization 
   (including deferred financing costs)                113,486      148,938     333,120    423,160 
  Deferred income taxes                               (19,935)     (13,110)       3,715   (69,840) 
  Unsuccessful well costs and leasehold 
   impairments                                           3,483          262      24,338      7,361 
  Impairment of long-lived assets                            -            -     150,820          - 
  Change in fair value of derivatives                    (541)     (31,683)    (32,156)     34,003 
  Cash settlements on derivatives, net(1)             (17,910)      (3,657)      16,904   (24,701) 
  Equity-based compensation                              8,699        9,450      26,392     27,382 
  Loss on extinguishment of debt                           678            -       2,893     24,794 
  Other                                                    144        2,183       6,673      9,600 
Changes in assets and liabilities: 
  Net changes in working capital                        32,773       49,438    (92,500)   (11,479) 
                                                  ------------  -----------  ----------  --------- 
Net cash provided by operating activities               83,493      177,886      20,657    400,276 
 
Investing activities 
Oil and gas assets                                    (80,183)     (87,374)   (215,425)  (240,642) 
Other property                                           (302)      (3,061)     (1,838)    (8,291) 
Proceeds on sale of assets                                   -            -       1,713          - 
Notes receivable from partners                        (11,212)     (13,582)    (53,574)   (19,565) 
                                                  ------------  -----------  ----------  --------- 
Net cash used in investing activities                 (91,697)    (104,017)   (269,124)  (268,498) 
 
Financing activities: 
Borrowings on long-term debt                           150,000            -     300,000    175,000 
Payments on long-term debt                                   -     (25,000)           -  (325,000) 
Advances under production prepayment agreement               -            -      50,000          - 
Net proceeds from issuance of senior notes                   -            -           -    641,875 
Redemption of senior secured notes                           -            -           -  (535,338) 
Purchase of treasury stock / tax withholdings                -            -     (4,947)    (1,983) 
Dividends                                                    7     (18,158)    (19,174)   (54,447) 
Deferred financing costs                               (4,434)        (462)     (4,570)    (2,443) 
                                                  ------------  -----------  ----------  --------- 
Net cash provided by (used in) financing 
 activities                                            145,573     (43,620)     321,309  (102,336) 
                                                  ------------  -----------  ----------  --------- 
 
Net increase in cash, cash equivalents and 
 restricted cash                                       137,369       30,249      72,842     29,442 
Cash, cash equivalents and restricted cash 
 at beginning of period                                164,819      184,809     229,346    185,616 
                                                  ------------  -----------  ----------  --------- 
Cash, cash equivalents and restricted cash 
 at end of period                                 $    302,188  $   215,058  $  302,188  $ 215,058 
                                                      ========      =======   =========   ======== 
 
 
 
 

(1) Cash settlements on commodity hedges were $(19.6) million and $(8.3) million for the three months ended, September 30, 2020 and 2019, respectively, and $22.8 million and $(27.0) million for the nine months ended September 30, 2020 and 2019, respectively.

Kosmos Energy Ltd.

EBITDAX

(In thousands, unaudited)

 
 
                                                                                Twelve Months 
                                Three months ended        Nine months ended         Ended 
                             -------------------------  ---------------------  --------------- 
                              September     September   September   September     September 
                               30, 2020      30, 2019    30, 2020    30, 2019      30, 2020 
                             ------------  -----------  ----------  ---------  --------------- 
Net income (loss)            $   (37,384)  $    16,065  $(419,542)  $(20,004)  $     (455,315) 
  Exploration expenses             13,977       22,773      74,293     83,022          172,226 
  Facilities insurance 
   modifications, 
   net                              2,465       12,569      10,555    (5,174)          (8,525) 
  Depletion, depreciation 
   and 
   amortization                   111,231      146,653     326,390    416,186          474,065 
  Impairment of long-lived 
   assets                               -            -     150,820          -          150,820 
  Equity-based compensation         8,699        9,450      26,392     27,382           31,380 
  Derivatives, net                  1,187     (27,016)    (34,776)     35,884            1,225 
  Cash settlements on 
   commodity 
   derivatives                   (19,637)      (8,325)      22,811   (27,017)           13,487 
  Restructuring and other           1,158        9,981      18,959     10,168           36,141 
  Other, net                        1,542        1,677       5,472      1,663            7,958 
  Gain on sale of assets                -            -           -          -         (10,528) 
  Interest and other 
   financing 
   costs, net                      27,068       30,721      83,177    125,565          112,686 
  Income tax expense                  892       23,470      19,010     47,398           52,506 
                             ------------  -----------  ----------  ---------  --------------- 
EBITDAX                      $    111,198  $   238,018  $  283,561  $ 695,073  $       578,126 
                                 ========      =======   =========   ========      =========== 
 

Kosmos Energy Ltd.

Adjusted Net Income

(In thousands, except per share amounts, unaudited)

 
                                                    Three Months Ended         Nine Months Ended 
                                                       September 30,             September 30, 
                                                 -------------------------  ----------------------- 
                                                     2020          2019        2020        2019 
                                                 -------------  ----------  ----------  ----------- 
Net income (loss)                                $    (37,384)  $   16,065  $(419,542)  $(20,004) 
 
  Derivatives, net                                       1,187    (27,016)    (34,776)     35,884 
  Cash settlements on commodity derivatives           (19,637)     (8,325)      22,811   (27,017) 
  Facilities insurance modifications, 
   net                                                   2,465      12,569      10,555    (5,174) 
  Impairment of long-lived assets                            -           -     150,820          - 
  Restructuring and other                                1,158       9,981      18,959     10,168 
  Other, net                                             1,542       1,677       5,472      1,663 
  Loss on extinguishment of debt                           678           -       2,893     24,794 
Total selected items before tax                       (12,607)    (11,114)     176,734     40,318 
                                                 -------------  ----------  ----------  --------- 
 
Income tax expense (benefit) on adjustments(1)             335      11,594       5,768    (4,980) 
Impact of valuation adjustments and 
 U.S. tax law changes                                        -           -      26,001          - 
                                                 -------------  ----------  ----------  --------- 
Adjusted net income (loss)                       $    (49,656)  $   16,545  $(211,039)  $  15,334 
                                                     =========      ======   =========   ======== 
 
Net income (loss) per diluted share              $      (0.09)  $     0.04  $   (1.04)  $  (0.05) 
 
  Derivatives, net                                           -      (0.06)      (0.09)       0.09 
  Cash settlements on commodity derivatives             (0.04)      (0.02)        0.06     (0.07) 
  Facilities insurance modifications, 
   net                                                    0.01        0.03        0.03     (0.01) 
  Impairment of long-lived assets                            -           -        0.37          - 
  Restructuring and other                                    -        0.02        0.06       0.03 
  Other, net                                                 -           -        0.01          - 
  Loss on extinguishment of debt                             -           -        0.01       0.06 
Total selected items before tax                         (0.03)      (0.03)        0.45       0.10 
                                                 -------------  ----------  ----------  --------- 
 
Income tax expense (benefit) on adjustments(1)            0.00        0.03        0.01     (0.01) 
Impact of valuation adjustments and 
 U.S. tax law changes                                        -           -        0.06          - 
                                                 -------------  ----------  ----------  --------- 
Adjusted net income (loss) per diluted 
 share                                           $      (0.12)  $     0.04  $   (0.52)  $    0.04 
                                                     =========      ======   =========   ======== 
 
Weighted average number of diluted 
 shares                                                405,409     410,992     405,131    401,319 
 
 
 
 

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

Kosmos Energy Ltd.

Free Cash Flow

(In thousands, unaudited)

 
                                                 Three Months Ended          Nine Months Ended 
                                                    September 30,              September 30, 
 
                                                  2020         2019         2020         2019 
                                              ------------  -----------  ----------  ------------- 
Reconciliation of net cash provided 
 by operating activities to free cash 
 flow: 
  Net cash provided by operating activities   $     83,493  $   177,886  $   20,657  $   400,276 
  Net cash used in investing activities           (91,697)    (104,017)   (269,124)    (268,498) 
                                              ------------  -----------  ----------  ----------- 
Free cash flow(1)                             $    (8,204)  $    73,869  $(248,467)  $   131,778 
                                                  ========      =======   =========      ======= 
 
 
 
 

(1) Commencing in the second quarter of 2020, the Company no longer included restricted cash and other cash used in financing activities (deferred financing costs, the purchase of treasury stock and costs related to the redemption of the senior secured notes and issuance of senior notes) in its calculation of free cash flow to better reflect cash flow of the underlying business, consistent with general industry practice.

Operational Summary

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

 
                                                Three Months Ended      Nine Months Ended 
                                                  September 30,           September 30, 
                                              ----------------------  ---------------------- 
                                                  2020        2019      2020        2019 
                                              ------------  --------  --------  ------------ 
Net Volume Sold 
   Oil (MMBbl)                                       5.160     5.698    14.361      16.239 
   Gas (MMcf)                                        1.167     1.189     4.451       4.653 
   NGL (MMBbl)                                       0.122     0.142     0.457       0.393 
                                              ------------  --------  --------  ---------- 
      Total (MMBoe)                                  5.477     6.038    15.560      17.408 
                                              ============  ========  --------  ---------- 
      Total (Boepd)                                 59.527    65.632    56.788      63.764 
                                              ============  ========  ========  ========== 
 
Revenue 
      Oil sales                               $    220,653  $351,537  $517,382  $1,031,687 
      Gas sales                                      2,314     3,969     8,146      11,776 
      NGL sales                                      1,819     1,530     4,352       6,296 
                                              ------------  --------  --------  ---------- 
  Total sales                                      224,786   357,036   529,880   1,049,759 
  Cash settlements on commodity derivatives       (19,637)   (8,325)    22,811    (27,017) 
                                              ------------  --------  --------  ---------- 
  Realized revenue                            $    205,149  $348,711  $552,691  $1,022,742 
                                                  ========   =======   =======   ========= 
 
 
Oil and Gas Production Costs                  $     84,277  $ 95,540  $234,627  $  266,316 
 
Sales per Bbl/Mcf/Boe 
      Oil sales per Bbl                       $      42.76  $  61.69  $  36.03  $    63.53 
      Gas sales per Mcf                               1.98      3.34      1.83        2.53 
      NGL sales per Bbl                              14.91     10.77      9.52       16.02 
  Total sales per Boe                                41.05     59.13     34.05       60.30 
  Cash settlements on commodity derivatives 
   per oil Bbl(1)                                   (3.81)    (1.46)      1.59      (1.66) 
  Realized revenue per Boe                           37.46     57.75     35.52       58.75 
 
Oil and gas production costs per Boe          $      15.39  $  15.83  $  15.08  $    15.30 
 
 
 
 

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

Kosmos was underlifted by approximately 834 thousand barrels as of September 30, 2020.

Hedging Summary

As of September 30, 2020(1)

(Unaudited)

 
                                                      Weighted Average Price per Bbl 
                                        ---------------------------------------------------------- 
                                                                                       Purchased 
                     Index       MBbl         Floor(3)         Sold Put    Ceiling       Call 
                  ------------   -----  --------------------  ----------  ---------  ------------- 
2020: 
   Swaps            Dated Brent   2,637  $              42.67  $        -  $       -  $         - 
   Swaps             Argus LLS    1,500                 29.98           -          -            - 
   Call spreads      NYMEX WTI      (2)                     -           -      45.00        35.00 
   Swaps with 
    sold puts       Dated Brent     167                 35.00       25.00          -            - 
   Three-way 
    collars         Dated Brent     500                 32.50       25.00      40.00            - 
2021: 
   Swaps with 
    sold puts       Dated Brent   6,000                 53.96       42.92          -            - 
   Three-way 
    collars         Dated Brent   3,000                 40.00       30.83      53.47            - 
 
 
 
 

(1) Please see the Company's filed 10-K for full disclosure on hedging material. Includes hedging position as of September 30, 2020 and hedges added since quarter-end.

   (2)   Added call spreads on 0.5 million barrels to open upside for U.S. Gulf of Mexico production. 
   (3)   "Floor" represents floor price for collars or swaps and strike price for purchased puts. 

Note: Excludes 2.4 MMBbls of sold (short) calls with a strike price of $80.83 per Bbl in 2020, 7.0 MMBbls of sold (short) calls with a strike price of $70.09 per Bbl in 2021 and 1.6 MMBbls of sold (short) calls with a strike price of $60.00 per Bbl in 2022.

2020 Guidance

 
                           FY 2020 Guidance 
                         --------------------- 
 
                          61,000 - 62,000 boe 
Production(1,2)                 per day 
 
                          $14.50 - $15.00 per 
Opex                              boe 
 
                          $20.00 - $22.00 per 
DD&A                              boe 
 
G&A(3)                     $75 - $80 million 
 
Exploration Expense(4)       $60 million 
 
                         $26 - $30 million per 
Net Interest                    quarter 
 
Tax                      $1.00 - $2.00 per boe 
 
                          $140 - $150 million 
Base Business Capex(5)         in FY 2020 
 
 
 
 

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

(1) 4Q 2020 cargos forecast - Ghana: 3 cargos / Equatorial Guinea: 1.5 cargos. FY 2020 Ghana: 10 cargos / Equatorial Guinea 4.5 cargos. Average cargo sizes 950,000 barrels of oil.

(2) U.S. Gulf of Mexico Production - 4Q 2020: 25,000-27,000 boe per day. Oil/Gas/NGL split for 2020: 80%/12%/8%

   (3)   G&A - Approximately 50% cash. 
   (4)   Excludes dry hole expense of approximately $13 million primarily related to Oldfield. 
   (5)   Excludes Mauritania and Senegal, net of Shell proceeds 

Source: Kosmos Energy Ltd.

Investor Relations

Jamie Buckland

+44 (0) 203 954 2831

jbuckland@kosmosenergy.com

Media Relations

Thomas Golembeski

+1-214-445-9674

tgolembeski@kosmosenergy.com

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November 09, 2020 02:00 ET (07:00 GMT)

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