REG - Kosmos Energy Ltd - Fourth Quarter 2023 Results
26/02/2024 07:00
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RNS Number : 3531E Kosmos Energy Limited 26 February 2024
KOSMOS ENERGY ANNOUNCES FOURTH QUARTER AND FULL YEAR 2023 RESULTS
DALLAS--(BUSINESS WIRE)-February 26, 2024-- Kosmos Energy Ltd. ("Kosmos" or
the "Company") (NYSE/LSE: KOS) announced today its financial and operating
results for the fourth quarter of 2023. For the quarter, the Company
generated a net income of $22 million, or $0.04 per diluted share. When
adjusted for certain items that impact the comparability of results, the
Company generated an adjusted net income((1)) of $149 million, or $0.31 per
diluted share for the fourth quarter of 2023.
FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS
• 4Q Net Production((2)): ~66,000 barrels of oil equivalent per day
(boepd), representing ~12% growth year over year; Net sales of ~73,000 boepd
• 4Q Revenues: $508 million, or $75.64 per boe (excluding the impact
of derivative cash settlements)
• 4Q Production expense: $104 million, or $15.46 per boe
• 4Q Capital expenditures: $281 million
• 1P reserves of ~280 mmboe as of December 31, 2023, representing a
104% replacement rate ratio
• Assumed operatorship and a greater working interest at
Yakaar-Teranga offshore Senegal
• Tiberius infrastructure-led exploration (ILX) oil discovery
offshore U.S. Gulf of Mexico
• Maintained AAA rating with MSCI
Commenting on the Company's 2023 performance, Chairman and Chief Executive
Officer Andrew G. Inglis said: "In 2023, we continued to advance our
key development projects, which aim to deliver around 50% production growth
from the second half of 2022. The start-up of Jubilee Southeast was a major
step toward achieving this goal and, in the coming months, we expect
production to begin at Winterfell in the Gulf of Mexico followed by first gas
at Greater Tortue Ahmeyim offshore Mauritania and Senegal.
"Beyond advancing our development projects, we also strengthened our portfolio
of low cost, lower carbon investment opportunities. We delivered a significant
oil discovery at Tiberius in the Gulf of Mexico, which added an attractive
short-cycle oil development to our portfolio. Kosmos also assumed operatorship
and a larger working interest at Yakaar-Teranga, which is a key asset in
Senegal's 'Gas-to-Power' and 'Gas-to-Industry' initiatives.
"As we pursue these operated developments, as well as other projects in our
organic portfolio, we are confident in our ability to deliver growth through
the decade while generating strong cash flow. This is expected to strengthen
our balance sheet, help us achieve our leverage targets, while providing
flexibility around future capital allocation opportunities including returns
to shareholders.
"Kosmos is well-positioned to create value for shareholders. We have a clear
strategy, top-quality assets with greater than 20 years of 2P
reserves/production life, multiple growth catalysts, and an important role in
enabling a just and orderly energy transition in the countries where we work."
FINANCIAL UPDATE
Kosmos exited the fourth quarter of 2023 with approximately $2.4 billion of
total long-term debt and approximately $2.3 billion of net debt((1)) and
available liquidity of approximately $0.7 billion. The Company generated net
cash provided by operating activities of approximately $294 million and free
cash flow((1)) of approximately $(27) million in the fourth quarter.
Net capital expenditure for the fourth quarter of 2023 was $281 million,
higher than expected primarily due to the accelerated timing of long-lead
equipment purchases for the Equatorial Guinea infill and ILX drilling program.
Net capital expenditures for 2024 are expected to be approximately $700-$750
million, weighted towards the first half of the year as the Ghana drilling
campaign concludes and the Winterfell and Tortue projects progress to startup.
Our 2024 guidance reflects higher than anticipated subsea expenses at Torture
Phase 1 following the replacement of the previous subsea contractor that
failed to perform its contractual obligations. BP, on behalf of the partner
group, has initiated the process under its agreement with the original subsea
contractor to recover the losses incurred. The partnership will seek to
recover the maximum recoverable damages in binding arbitration. We estimate
Kosmos' net share of the recoverable damages to be up to $160.0 million.
RESERVES UPDATE
At year-end 2023, Kosmos had 1P reserves of approximately 280 million barrels
of oil equivalent (boe), representing a 1P reserves to production ratio of
around 12 years and a reserve replacement ratio of 104%, primarily as a result
of increased reserve recognition at Jubilee. 2P reserves as of year-end 2023
are approximately 520 million boe, representing a 2P reserves-to-production
ratio of over 20 years. 2P reserves do not include any recognition for the
Tiberius and Yakaar-Teranga discoveries with changes being driven by 2023
production as well as reduced future activity on TEN. Kosmos' year-end
reserves on all assets have been independently evaluated by Ryder Scott.
OPERATIONAL UPDATE
Production
Total net production((2)) in the fourth quarter of 2023 averaged approximately
66,000 boepd representing a ~12% increase compared to the fourth quarter of
2022. Production during the quarter was impacted by reduced water injection at
Jubilee, which has since been resolved. Production is expected to rise through
the year with additional wells at Jubilee coming online and the startup of the
Winterfell and Tortue LNG projects. The Company exited the quarter in a net
overlift position of approximately 0.2 million barrels.
Ghana
Production in Ghana averaged approximately 43,300 boepd net in the fourth
quarter of 2023. Kosmos lifted four cargos from Ghana during the quarter, in
line with guidance.
At Jubilee (38.6% working interest), oil production in the fourth quarter
averaged approximately 92,400 bopd gross with two water injection wells
brought online. In 2024, one new producer well and one injector well were
brought online in early 1Q with three additional wells expected online in the
coming months before we expect the current rig contract to end.
FPSO reliability remains high at approximately 99% year to date and water
injection is currently at record levels of approximately 285,000 barrels of
water per day (bwpd). This compares with ~150,000 bwpd in the fourth quarter
and ~160,000 bwpd over 2023. At current water and gas injection rates, we
expect 100% voidage replacement in 2024, providing the necessary pressure
support to maintain elevated production levels.
At TEN (20.4% working interest), production averaged approximately 18,500 bopd
gross for the fourth quarter in line with expectations.
The partnership has submitted a draft amended plan of development ("PoD") for
a high-graded activity set at TEN and a combined gas sales agreement for
Jubilee and TEN to the Government of Ghana for approval. An interim gas sales
agreement for Jubilee associated gas has been extended through May 2024 at a
price of $2.95/mmbtu while discussions are ongoing on a longer-term agreement.
In the fourth quarter, Ghana gas production net to Kosmos was approximately
5,800 boepd.
As a result of negative proved oil and gas reserve revisions at TEN, driven by
a reduction in the partnership's development work scope for the TEN Fields and
well performance, we recorded impairment charges of $222.3 million for the
year ended December 31, 2023. The impairment charges resulted in a full
impairment of the remaining book value of TEN reducing the carrying value of
the TEN Fields to zero. Jubilee 1P reserve additions more than offset the
downward revision to TEN 1P reserves during the period.
U.S. Gulf of Mexico
Production in the U.S. Gulf of Mexico averaged approximately 13,900 boepd net
(~81% oil) during the fourth quarter, in line with guidance.
The Winterfell development continues to progress with the first of three wells
completed in the fourth quarter and the second well completed in the first
quarter of 2024. First production is expected early in the second quarter of
2024 with the third well to follow later this year.
As announced in October 2023, the Tiberius ILX well in Keathley Canyon, block
964, encountered approximately 250 feet (~75 meters) of net oil pay in the
primary Wilcox target. The Tiberius well is located in approximately 7,500
feet (2,300 meters) of water and was drilled to a total vertical depth of
approximately 25,800 feet (7,800 meters). Initial fluid and core analysis
supports the production potential of the Tiberius development wells, with
characteristics analogous with similar nearby discoveries in the Wilcox
trend.
Kosmos is now working with partners on subsea development options with a
sanction decision for a phased tie-back development targeted later this year.
The discovery is located approximately 6 miles southeast of the Lucius
production facility (operated by Occidental, a partner in Tiberius) enabling a
short tie-back. In the Gulf of Mexico Lease Sale 261, Kosmos and Occidental
were awarded three blocks nearby to Tiberius, including an existing oil
discovery, Logan.
The Odd Job subsea pump project, planned to sustain long-term production from
the field, was ~90% complete at quarter end. The project remains on track to
be in service by mid-2024.
At Kodiak, workover plans for the Kodiak 3 well have been developed and are
expected to commence around the middle of 2024.
Equatorial Guinea
Production in Equatorial Guinea averaged approximately 24,800 bopd gross and
8,700 bopd net in the fourth quarter. Kosmos lifted one cargo from Equatorial
Guinea during the quarter, in line with guidance.
The 2023 Ceiba Field and Okume Complex development rig campaign commenced in
the fourth quarter of 2023. The campaign initially completed one production
well workover. However, as a result of safety issues with the drilling rig,
the operator terminated the rig contract in early February 2024. The
partnership is seeking to secure an alternative rig and drilling contractor to
resume the work, which is planned to include the drilling of infill production
wells in Block G and the Akeng Deep prospect in Block S. Given uncertainty on
the timing of procuring a rig, we have not included production related to the
drilling program in our 2024 guidance, although the partnership is eager to
complete the campaign and drill the Akeng Deep ILX well as soon as possible in
a safe, reliable, and environmentally sound manner.
Mauritania & Senegal
On Greater Tortue Ahmeyim, the project continues to make good progress. The
following milestones have been achieved:
• Drilling: The operator has successfully drilled and completed all
four wells with expected production capacity significantly higher than what is
required for first gas.
• Hub Terminal: Construction work is complete, and handover to
operations was completed in August 2023.
• Subsea: Significant progress has been made on the installation of
the infield flowlines and subsea structures. Work re-commenced in the fourth
quarter with completion expected at the end of the second quarter of 2024.
• FLNG: Construction was completed in the fourth quarter of 2023 and
the vessel arrived on location offshore Mauritania/Senegal in the first
quarter of 2024. Hookup work is now underway.
• FPSO: The vessel is currently in a shipyard in Tenerife for
inspection and repair of the fairleads. Completion of this work and transit to
the project site is expected early in the second quarter ahead of final hookup
and commissioning.
The critical path to first gas, expected in the third quarter of 2024,
continues to be through the arrival, hookup and commissioning of the FPSO.
Timely execution of this workstream is expected to allow for first LNG in the
fourth quarter.
In November 2023, Kosmos assumed operatorship and increased its working
interest in Yakaar-Teranga to 90% (from 30%), with government approvals
received in January 2024. Kosmos is working closely with Senegal's national
oil company (PETROSEN) on pre-FEED work that prioritizes cost-competitive gas
to the rapidly growing domestic market, combined with an offshore liquefied
natural gas facility targeting exports into international LNG markets. Post
completion of pre-FEED, Kosmos plans to farm down its interest in the second
half of 2024 to around 33% working interest while retaining operatorship of
the project.
(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 U.S.
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 2023
financial and operating results today, February 26, 2024, at 10:00 a.m.
Central time (11:00 a.m. Eastern time). The live webcast of the event can be
accessed on the Investors page of Kosmos' website at
http://investors.kosmosenergy.com/investor-events. The dial-in telephone
number for the call is +1-877-407-0784. Callers in the United Kingdom should
call 0800 756 3429. Callers outside the United States should dial
+1-201-689-8560. A replay of the webcast will be available on the Investors
page of Kosmos' website for approximately 90 days following the event.
About Kosmos Energy
Kosmos is a full-cycle deepwater independent oil and gas exploration and
production company focused along the Atlantic Margins. Our key assets include
production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as
well as a world-class gas development offshore Mauritania and Senegal. We also
maintain a sustainable proven basin exploration program in Equatorial Guinea,
Ghana and the U.S. Gulf of Mexico. Kosmos is listed on the New York Stock
Exchange and London Stock Exchange and is traded under the ticker symbol KOS.
As an ethical and transparent company, Kosmos is committed to doing things the
right way. The Company's Business Principles articulate our commitment to
transparency, ethics, human rights, safety and the environment. Read more
about this commitment in the Kosmos Sustainability Report. For additional
information, visit www.kosmosenergy.com.
Non-GAAP Financial Measures
EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share,
free cash flow, and net debt are supplemental non-GAAP financial measures used
by management and external users of the Company's consolidated financial
statements, such as industry analysts, investors, lenders and rating agencies.
The Company defines EBITDAX as Net income (loss) plus (i) exploration expense,
(ii) depletion, depreciation and amortization expense, (iii) equity based
compensation expense, (iv) unrealized (gain) loss on commodity derivatives
(realized losses are deducted and realized gains are added back), (v) (gain)
loss on sale of oil and gas properties, (vi) interest (income) expense, (vii)
income taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts
expense and (x) similar other material items which management believes affect
the comparability of operating results. The Company defines Adjusted net
income (loss) as Net income (loss) adjusted for certain items that impact the
comparability of results. The Company defines free cash flow as net cash
provided by operating activities less Oil and gas assets, Other property, and
certain other items that may affect the comparability of results and excludes
non-recurring activity such as acquisitions, divestitures and National Oil
Company ("NOC") financing. NOC financing refers to the amounts funded by
Kosmos under the Carry Advance Agreements that the Company has in place with
the national oil companies of each of Mauritania and Senegal related to the
financing of the respective national oil companies' share of certain
development costs at Greater Tortue Ahmeyim. The Company defines net debt as
total long-term debt less cash and cash equivalents and total 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.
This release also contains certain forward-looking non-GAAP financial
measures, including free cash flow. Due to the forward-looking nature of the
aforementioned non-GAAP financial measures, management cannot reliably or
reasonably predict certain of the necessary components of the most directly
comparable forward-looking GAAP measures, such as future impairments and
future changes in working capital. Accordingly, we are unable to present a
quantitative reconciliation of such forward-looking non-GAAP financial
measures to their most directly comparable forward-looking GAAP financial
measures. Amounts excluded from these non-GAAP measures in future periods
could be significant.
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 Years Ended
December 31, December 31,
2023 2022 2023 2022
Revenues and other income:
Oil and gas revenue $ 507,765 $ 509,916 $ 1,701,608 $ 2,245,355
Gain on sale of assets - 50,000 - 50,471
Other income, net 42 3,806 (73) 3,949
Total revenues and other income 507,807 563,722 1,701,535 2,299,775
Costs and expenses:
Oil and gas production 103,800 125,792 390,097 403,056
Facilities insurance modifications, net - (1,003) - 6,243
Exploration expenses 8,973 15,574 42,278 134,230
General and administrative 21,801 26,432 99,532 100,856
Depletion, depreciation and amortization 113,293 111,295 444,927 498,256
Impairment of long-lived assets 222,278 449,969 222,278 449,969
Interest and other financing costs, net 21,525 25,943 95,904 118,260
Derivatives, net (31,034) 17,358 11,128 260,892
Other expenses, net 5,792 (7,734) 23,656 (9,054)
Total costs and expenses 466,428 763,626 1,329,800 1,962,708
Income (loss) before income taxes 41,379 (199,904) 371,735 337,067
Income tax expense (benefit) 19,698 (85,628) 158,215 110,516
Net income (loss) $ 21,681 $ (114,276) $ 213,520 $ 226,551
Net income (loss) per share:
Basic $ 0.05 $ (0.25) $ 0.46 $ 0.50
Diluted $ 0.04 $ (0.25) $ 0.44 $ 0.48
Weighted average number of shares used to compute net income (loss) per share:
Basic 460,129 455,892 459,641 455,346
Diluted 483,252 455,892 481,070 474,857
Kosmos Energy Ltd.
Condensed Consolidated Balance Sheets
(In thousands, unaudited)
December 31, December 31,
2023 2022
Assets
Current assets:
Cash and cash equivalents $ 95,345 $ 183,405
Receivables, net 120,733 119,735
Other current assets 206,635 165,581
Total current assets 422,713 468,721
Property and equipment, net 4,160,229 3,842,647
Other non-current assets 355,192 268,620
Total assets $ 4,938,134 $ 4,579,988
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 248,912 $ 212,275
Accrued liabilities 302,815 325,206
Current maturities of long-term debt - 30,000
Other current liabilities 3,103 6,773
Total current liabilities 554,830 574,254
Long-term liabilities:
Long-term debt, net 2,390,914 2,195,911
Deferred tax liabilities 363,918 468,445
Other non-current liabilities 596,135 553,530
Total long-term liabilities 3,350,967 3,217,886
Total stockholders' equity 1,032,337 787,848
Total liabilities and stockholders' equity $ 4,938,134 $ 4,579,988
Kosmos Energy Ltd.
Condensed Consolidated Statements of Cash Flow
(In thousands, unaudited)
Three Months Ended Years Ended
December 31, December 31,
2023 2022 2023 2022
Operating activities:
Net income (loss) $ 21,681 $ (114,276) $ 213,520 $ 226,551
Adjustments to reconcile net income to net cash provided by operating
activities:
Depletion, depreciation and amortization (including deferred financing costs) 115,671 113,858 454,848 508,657
Deferred income taxes (70,079) (160,042) (107,560) (197,487)
Unsuccessful well costs and leasehold impairments (36) 3,855 2,208 86,941
Impairment of long-lived assets 222,278 449,969 222,278 449,969
Change in fair value of derivatives (24,118) 18,353 28,349 275,465
Cash settlements on derivatives, net(1) (10,948) (40,140) (32,426) (344,468)
Equity-based compensation 10,915 8,650 42,693 34,546
Gain on sale of assets - (50,000) - (50,471)
Loss on extinguishment of debt - - 1,503 192
Other 3,162 (4,159) 5,709 (10,099)
Changes in assets and liabilities:
Net changes in working capital 25,250 41,172 (65,952) 150,680
Net cash provided by operating activities 293,776 267,240 765,170 1,130,476
Investing activities
Oil and gas assets (320,689) (243,948) (932,603) (787,297)
Acquisition of oil and gas properties - (873) - (22,078)
Proceeds on sale of assets - 50,000 - 168,703
Notes receivable from partners (15,615) (34,995) (62,247) (63,183)
Net cash used in investing activities (336,304) (229,816) (994,850) (703,855)
Financing activities:
Borrowings under long-term debt - - 300,000 -
Payments on long-term debt - (82,500) (145,000) (405,000)
Dividends - - (166) (655)
Other financing costs (869) - (13,214) (9,041)
Net cash provided by (used in) financing activities (869) (82,500) 141,620 (414,696)
Net increase (decrease) in cash, cash equivalents and restricted cash (43,397) (45,076) (88,060) 11,925
Cash, cash equivalents and restricted cash at beginning of period 142,158 231,897 186,821 174,896
Cash, cash equivalents and restricted cash at end of period $ 98,761 $ 186,821 $ 98,761 $ 186,821
(1) Cash settlements on commodity hedges were $(4.1) million and $(38.0)
million for the three months ended December 31, 2023 and 2022, respectively,
and $(16.4) million and $(327.9) million for the years ended December 31,
2023 and 2022.
Kosmos Energy Ltd.
EBITDAX
(In thousands, unaudited)
Three Months Ended Years ended
December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Net income (loss) $ 21,681 $ (114,276) $ 213,520 $ 226,551
Exploration expenses 8,973 15,574 42,278 134,230
Facilities insurance modifications, net - (1,003) - 6,243
Depletion, depreciation and amortization 113,293 111,295 444,927 498,256
Impairment of long-lived assets 222,278 449,969 222,278 449,969
Equity-based compensation 10,915 8,650 42,693 34,546
Derivatives, net (31,034) 17,358 11,128 260,892
Cash settlements on commodity derivatives (4,105) (37,975) (16,448) (327,872)
Other expenses, net(2) 5,792 (7,735) 23,656 (9,055)
Gain on sale of assets - (50,000) - (50,471)
Interest and other financing costs, net 21,525 25,943 95,904 118,260
Income tax expense (benefit) 19,698 (85,628) 158,215 110,516
EBITDAX $ 389,016 $ 332,172 $ 1,238,151 $ 1,452,065
Sold Ghana & acquired Kodiak interests EBITDAX Adj(1) - - - (15,723)
Pro Forma EBITDAX $ 389,016 $ 332,172 $ 1,238,151 $ 1,436,342
(1) Adjustment to present Pro Forma EBITDAX for the impact of the revenues
less direct operating expenses from the sold Ghana interest associated with
the Ghana pre-emption and the acquired Kodiak interest, for the respective
period. The results are presented on the accrual basis of accounting, however
as the acquired properties were not accounted for or operated as a separate
segment, division, or entity, complete financial statements under U.S.
generally accepted accounting principles are not available or practicable to
produce. The results are not intended to be a complete presentation of the
results of operations of the acquired properties and may not be representative
of future operations as they do not include general and administrative
expenses; interest expense; depreciation, depletion, and amortization;
provision for income taxes; and certain other revenues and expenses not
directly associated with revenues from the sale of crude oil and natural gas.
(2) Commencing in the first quarter of 2023, the Company combined the
lines for "Restructuring and other" and "Other, net" in its presentation of
EBITDAX into a single line titled "Other expenses, net."
The following table presents our net debt as of December 31, 2023 and
December 31, 2022:
December 31, December 31,
2023 2022
Total long-term debt $ 2,425,000 $ 2,270,000
Cash and cash equivalents 95,345 183,405
Total restricted cash 3,416 3,416
Net debt $ 2,326,239 $ 2,083,179
Kosmos Energy Ltd.
Adjusted Net Income (Loss)
(In thousands, except per share amounts, unaudited)
Three Months Ended Years Ended
December 31, December 31,
2023 2022 2023 2022
Net income (loss) $ 21,681 $ (114,276) $ 213,520 $ 226,551
Derivatives, net (31,034) 17,358 11,128 260,892
Cash settlements on commodity derivatives (4,105) (37,975) (16,448) (327,872)
Gain on sale of assets - (50,000) - (50,471)
Facilities insurance modifications, net - (1,003) - 6,243
Impairment of long-lived assets 222,278 449,969 222,278 449,969
Other, net(2) 5,744 (7,557) 23,598 (8,719)
Impairment of suspended well costs - (2) - 63,892
Loss on extinguishment of debt - - 1,503 192
Total selected items before tax 192,883 370,790 242,059 394,126
Income tax (expense) benefit on adjustments(1) (65,763) (146,094) (75,608) (133,171)
Impact of valuation adjustments and U.S. tax law changes - 408 - (12,336)
Adjusted net income $ 148,801 110,828 379,971 475,170
Net income (loss) per diluted share $ 0.04 $ (0.25) $ 0.44 $ 0.48
Derivatives, net (0.06) 0.04 0.02 0.55
Cash settlements on commodity derivatives (0.01) (0.08) (0.03) (0.69)
Gain on sale of assets - (0.11) - (0.11)
Facilities insurance modifications, net - - - 0.01
Impairment of long-lived assets 0.46 0.99 0.46 0.95
Other, net(2) 0.01 (0.02) 0.05 (0.01)
Impairment of suspended well costs - - - 0.13
Loss on extinguishment of debt - - - -
Total selected items before tax 0.40 0.82 0.50 0.83
Income tax (expense) benefit on adjustments(1) (0.13) (0.32) (0.15) (0.28)
Impact of valuation adjustments and U.S. tax law changes - - - (0.03)
Adjusted net income per diluted share $ 0.31 $ 0.25 $ 0.79 $ 1.00
Weighted average number of diluted shares 483,252 455,892 481,070 474,857
(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.
(2) Commencing in the first quarter of 2023, the Company combined the
lines for "Restructuring and other" and "Other, net" in its presentation of
Adjusted net income into a single line titled "Other, net."
Kosmos Energy Ltd.
Free Cash Flow
(In thousands, unaudited)
Three Months Ended Years Ended
December 31, December 31,
2023 2022 2023 2022
Reconciliation of free cash flow:
Net cash provided by operating activities $ 293,776 $ 267,240 $ 765,170 $ 1,130,476
Net cash used for oil and gas assets - base business (204,177) (74,483) (541,665) (318,382)
Base business free cash flow 89,599 192,757 223,505 812,094
Net cash used for oil and gas assets - Mauritania/Senegal (116,512) (169,465) (390,938) (468,915)
Free cash flow $ (26,913) $ 23,292 $ (167,433) $ 343,179
Kosmos Energy Ltd.
Operational Summary
(In thousands, except barrel and per barrel data, unaudited)
Three Months Ended Years Ended
December 31, December 31,
2023 2022 2023 2022
Net Volume Sold
Oil (MMBbl) 5.937 5.985 20.385 22.012
Gas (MMcf) 4.155 0.961 13.737 4.076
NGL (MMBbl) 0.083 0.096 0.382 0.426
Total (MMBoe) 6.713 6.241 23.057 23.117
Total (Mboepd) 72.962 67.839 63.168 63.335
Revenue
Oil sales $ 491,438 $ 502,032 $ 1,658,421 $ 2,201,199
Gas sales 14,793 5,702 35,307 29,504
NGL sales 1,534 2,182 7,880 14,652
Total oil and gas revenue 507,765 509,916 1,701,608 2,245,355
Cash settlements on commodity derivatives (4,105) (37,975) (16,448) (327,872)
Realized revenue $ 503,660 $ 471,941 $ 1,685,160 $ 1,917,483
Oil and Gas Production Costs $ 103,800 $ 125,792 $ 390,097 $ 403,056
Sales per Bbl/Mcf/Boe
Average oil sales price per Bbl $ 82.78 $ 83.88 $ 81.35 $ 100.00
Average gas sales price per Mcf 3.56 5.93 2.57 7.24
Average NGL sales price per Bbl 18.48 22.73 20.61 34.39
Average total sales price per Boe 75.64 81.70 73.80 97.13
Cash settlements on commodity derivatives per Boe (0.61) (6.08) (0.71) (14.18)
Realized revenue per Boe 75.03 75.62 73.09 82.95
Oil and gas production costs per Boe $ 15.46 $ 20.15 $ 16.92 $ 17.44
(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 overlifted by approximately 0.2 million barrels as of December 31,
2023.
Kosmos Energy Ltd.
Hedging Summary
As of December 31, 2023((1))
(Unaudited)
Weighted Average Price per Bbl
Index MBbl Floor(2) Sold Put Ceiling
2024:
Three-way collars Dated Brent 4,000 $ 70.00 $ 45.00 $ 96.25
Three-way collars Dated Brent 2,000 70.00 45.00 90.00
Two-way collars Dated Brent 2,000 65.00 - 85.00
Two-way collars Dated Brent 2,000 70.00 - 100.00
(1) Please see the Company's filed 10-K for additional disclosure on
hedging material. Includes hedging position as of December 31, 2023 and
hedges put in place through filing date.
(2) "Floor" represents floor price for collars and strike price for
purchased puts.
2024 Guidance
1Q 2024 FY 2024 Guidance
Production(1,2) 65,000 - 68,000 boe per day 71,000 - 77,000 boe per day
Opex(3) $16.50 - $18 per boe ~$15 - $17 per boe
DD&A $18 - $20 per boe $18 - $20 per boe
G&A(~60% cash) $25 - $30 million $100 - $120 million
Exploration Expense(4) $10 - $15 million $40 - $60 million
Net Interest Expense(5) ~$25 million ~$150 million
Tax $10 - $12 per boe $10 - $12 per boe
Capital Expenditure(6) $275 - $325 million $700 - $750 million
Note: Ghana / Equatorial Guinea revenue calculated by number of cargos.
(1) 1Q 2024 cargo forecast - Ghana: 3 cargos / Equatorial Guinea 1 cargo.
FY 2023 Ghana: 15 cargos / Equatorial Guinea 3 cargos. Average cargo sizes
950,000 barrels of oil.
(2) U.S. Gulf of Mexico Production: 1Q 2024 forecast 14,000-15,000 boe per
day. FY2024: 15,500-17,000 boe per day. Oil/Gas/NGL split for 2023:
~83%/~11%/~6%.
(3) FY24 opex excludes operating costs associated with Greater Tortue
Ahmeyim, which are expected to commence later in the year and total
approximately $115-130 million
(4) Excludes leasehold impairments and dry hole costs
(5) Includes impact of capitalized interest in 1H24 relating to Greater
Tortue Ahmeyim development expenditure until first gas; 2H24 interest expense
expected to be ~$50 million / quarter
(6) Excludes acquisitions/sales of oil & gas assets
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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