TIDMKOS
RNS Number : 4903D
Kosmos Energy Limited
10 October 2018
NEWS RELEASE
Kosmos Energy Announces results of Pontoenoe-1 well AND provides
operational and financial update
DALLAS, Texas, October 10, 2018 - Kosmos Energy (NYSE/LSE: KOS)
announced today that it has completed drilling the Pontoenoe-1
exploration well in Block 42 offshore Suriname.
Pontoenoe-1 was designed to test late Cretaceous reservoirs in a
stratigraphic trap charged from oil mature Albian and
Cenomanian-Turonian source kitchens. The well was located offshore
Suriname approximately 280 kilometers northwest of Paramaribo in
approximately 2,497 meters of water and has been drilled to a total
depth of approximately 6,194 meters.
The prospect was fully tested but did not discover commercial
hydrocarbons. High-quality reservoir was encountered, but the
primary exploration objective proved to be water bearing. Kosmos
believes there was evidence of a working source kitchen and the
prospect failed due to a lack of trap. The well will now be plugged
and abandoned and the well results integrated into the ongoing
evaluation of the remaining prospectivity in Kosmos' acreage
position.
Andrew G. Inglis, chairman and chief executive officer, said:
"We are in the early stages of exploring the emerging
Suriname-Guyana basin, and given the indications of a mature
source, quality cretaceous reservoir, and the independent nature of
the prospectivity we believe there is significant remaining
potential in Block 42. Our current plan is to test the next
prospect in 2020."
Kosmos holds rights in the Block 42 contract area under a
production sharing contract with the Government of Suriname's
Staatsolie Maatschappij Suriname N.V. ("Staatsolie"). The block
ranges in water depth between approximately 2,000 and 2,500 meters
and covers an area of over 6,000 square kilometers gross. Kosmos
(33.3 percent) is the exploration operator of Block 42 and is
joined by its partners Hess (NYSE:HES) (33.3 percent) and Chevron
(NYSE:CVX) (33.3 percent).
In addition, Kosmos today provides an operational and financial
update in advance of releasing its third quarter 2018 results given
the closure of the Deep Gulf Energy ("DGE") acquisition on
September 14, and the incorporation of the assets into Kosmos'
third quarter results from closure to quarter end:
BUSINESS UPDATE
Kosmos continues its evolution into a full-cycle exploration and
production company positioned to deliver sustainable growth from a
balanced portfolio. For the full year 2018, Kosmos expects to
generate substantial free cash flow and remains on track to meet
the Company's previously communicated year-end 2018 net leverage
target. This strong cash flow generation will allow Kosmos to
initiate a dividend in the first quarter of 2019.
Production Optimization & Exploitation - well work and
infill drilling
Ghana production continues to grow
Production in Ghana continues to grow following the Jubilee
turret remediation work and the new wells brought online at both
Jubilee and TEN during the quarter.
At Jubilee, production averaged approximately 94,500 barrels of
oil per day (bopd) for the quarter, delivering two cargos net to
Kosmos, as expected. One new producer well at Jubilee was brought
online in the third quarter, with a second expected in the fourth
quarter. Production from these wells, together with enhancements to
gas handling capacity, is expected to increase Jubilee production
towards the FPSO nameplate capacity of 120,000 bopd.
At TEN, production averaged approximately 62,600 bopd for the
quarter, delivering one cargo net to Kosmos, as expected. One new
producer well at Ntomme came online in August. Kosmos expects this
well to support current production levels of approximately 70,000
bopd through the end of the year when a second new production well
is due to be brought onstream to increase production towards the
FPSO nameplate capacity. The TEN FPSO has previously been tested at
rates above the 80,000 bopd nameplate capacity, and Kosmos expects
to further test this capacity in 2019 as additional wells come
onstream.
The Partnership approved a second rig in Ghana, which arrived in
late-September. The second rig will be used for drilling
operations, with the current rig set up for a continuous completion
program. Taking advantage of low rig rates in the current
environment enables the Partnership to accelerate the addition of
new wells in Ghana, increasing production towards FPSO capacity
sooner, with the goal of maintaining gross production from Jubilee
and TEN of 180,000 to 200,000 bopd over the next three years.
Equatorial Guinea on track for one-year payback
Production in Equatorial Guinea averaged approximately 42,500
bopd in the third quarter, and with strong performance in the first
half of the year the company remains on track to meet guidance for
the year of 43,000 bopd. The installation of electrical submersible
pumps ("ESP") to increase artificial lift capacity and enhance
production is expected to begin early in the fourth quarter. As of
the end of the third quarter, Kosmos has received approximately
$208 million in dividends from the Kosmos-Trident joint venture (90
percent of the purchase price) and remains on track for a one-year
payback.
Gulf of Mexico delivering early growth
At Odd Job (Kosmos 55% WI), a second development well was
brought online in late September and connected to the Delta House
Floating Production System (FPS), providing near-term growth at the
field. A third Odd Job well was drilled in May, exceeding pre-drill
resource estimates, and is expected to start production through
existing subsea infrastructure to the Delta House FPS by early
2020.
Gulf of Mexico production during the period from transaction
close until the end of the third quarter averaged approximately
24,000 barrels of oil equivalent per day (boepd). Production in the
Gulf of Mexico during the third quarter, including periods prior to
the transaction closing, was approximately 24,200 boepd.
Short-Cycle Production Growth - infrastructure-led
exploration
Gulf of Mexico short-cycle tie-back strategy delivering
results
As part of the DGE transaction, Kosmos acquired a portfolio of
short-cycle growth assets, including a high-quality inventory of
exploration prospects. During the third quarter, the Nearly
Headless Nick prospect (Kosmos 21.95% WI) was successfully drilled
to a total depth of 5,807 meters (19,052 feet) and encountered 26
meters (85 feet) of net pay in the Middle Miocene objective. Nearly
Headless Nick is a sub-sea tie back, which is expected to be
brought online through the Delta House facility in 2020, adding
near-term reserves and production growth. Early delivery of this
short-term growth opportunity highlights the value of the DGE
acquisition.
Competition for basin access remains near historical lows and,
in August, Kosmos expanded its inventory as one of the most active
participants in Gulf of Mexico Lease Sale 251 with apparent high
bids on seven deepwater blocks. These blocks include three with low
risk prospects and one with a Wilcox discovery relinquished by a
major. As part of the Company's strategy to expand its position in
the Gulf of Mexico, in the third quarter Kosmos incurred
approximately $50 million of exploration expense to acquire seismic
over new prospective areas and to re-license seismic over existing
fields.
Equatorial Guinea seismic acquisition to identify short-cycle
tie-back prospects complete
During the quarter, Kosmos continued acquiring seismic over
Blocks S, W, EG-21 and EG-24 and the company will process the
seismic with the objective of high grading prospects for drilling
in 2019.
Development of World-Scale Discoveries - Potential for multiple
LNG hubs provides long-term growth
Tortue Phase 1 targeting FID around year-end
In partnership with BP, the Company continues to make progress
in Senegal and Mauritania with the Tortue LNG development. The
first phase Unit Development Plan has been submitted to the energy
ministries of both countries and all parties are aligned and
actively working to achieve a final investment decision (FID)
around year-end.
Longer-Cycle Frontier Exploration - Potential for hub-scale
discoveries creates future optionality
Kosmos continues to advance its frontier exploration program
with a strong portfolio of high-impact exploration opportunities
for long-term, sustainable growth and expects to be active in 2019
with a number of exploration and appraisal opportunities. Kosmos
maintains an active new ventures and seismic acquisition program to
enable drilling in 2020 and beyond.
Financial Update
Balance sheet remains strong, supported by disciplined capital
allocation
Excluding the DGE acquisition purchase price, Kosmos now expects
2018 capital expenditures to total approximately $400 million. This
amount includes Kosmos' original 2018 budget of approximately $300
million, as well as $100 million in the Gulf of Mexico. As
referenced above, the Gulf of Mexico capital budget is comprised of
approximately $50 million of seismic expenditures and $50 million
of drilling and completion expenditures.
For the full year 2018, Kosmos expects to generate substantial
free cash flow and is on track to meet the Company's previously
communicated year-end 2018 net leverage target. This strong cash
flow generation will allow Kosmos to initiate a dividend in the
first quarter of 2019. Kosmos exited the quarter with net debt of
approximately $2.0 billion and liquidity of approximately $650
million.
The table provides a current estimate of operational and
financial performance for the third quarter of 2018, including the
stub period inclusive of the Company's Gulf of Mexico assets.
Exploration expense includes approximately $12 million of
unsuccessful well costs attributed to Suriname drilling.
Third Quarter Financial Update
http://www.rns-pdf.londonstockexchange.com/rns/4903D_1-2018-10-9.pdf
About Kosmos Energy
Kosmos is a well-capitalized, pure play deepwater oil and gas
company with growing production, a pipeline of development
opportunities and a balanced exploration portfolio along the
Atlantic Margins. Our assets include production offshore Ghana,
Equatorial Guinea and Gulf of Mexico, a competitively positioned
Tortue gas project in Mauritania and Senegal and a sustainable
exploration program balanced between proven basins (Gulf of Mexico
and Equatorial Guinea), emerging basins (Mauritania, Senegal and
Suriname) and frontier basins (Cote d'Ivoire and Sao Tome and
Principe). 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 2017 Corporate Responsibility Report. For additional
information, visit www.kosmosenergy.com.
Inside Information
This announcement contains inside information. The person
responsible for arranging the release of this announcement is Jamie
Buckland, Vice President, Investor Relations and Rhys Williams,
Senior Manager, Investor Relations.
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.
###
CONTACT:
Investor Relations
Jamie Buckland
+44 (0) 203 954 2831
jbuckland@kosmosenergy.com
Rhys Williams
+1-214-445-9693
rwilliams@kosmosenergy.com
Media Relations
Thomas Golembeski
+1-214-445-9674
tgolembeski@kosmosenergy.com
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END
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