Kosmos Energy Ltd. has announced financial and operating results for the first quarter of 2018. For the first quarter of 2018, the company generated a net loss of US$50.2 million, or US$0.13 per diluted share as compared to net loss of US$28.8 million or US$0.07 per diluted share in the same period last year. When adjusted for certain items that impact the comparability of results, the company generated an adjusted net loss of US$23.2 million or US$0.06 per diluted share for the first quarter of 2018.
“Kosmos is off to a good start in 2018 across all three areas of our business,” said Andrew G. Inglis, chairman and chief executive officer. “Strong and growing production from our high-margin assets in Ghana and Equatorial Guinea continues to generate significant free cash flow, underpinning our solid financial position. The Tortue gas development, which represents the next phase of major production growth for Kosmos, continues to move forward at pace with all FEED contracts now awarded and a clear path to FID around year end. In addition, we have a balanced exploration portfolio with multiple, visible opportunities in proven, emerging, and frontier basins, including two exploration wells offshore Suriname this year.”
First quarter 2018 oil revenues were US$127.2 million versus US$103.4 million in the same quarter of 2017, on sales of 1.9 million barrels of oil in 2018 as compared to 2.0 million barrels in 2017. Including the impact of the company’s hedging program, hedged revenue was US$55.56 per barrel of oil sold in the first quarter of 2018. At the end of the quarter, the company was in a net underlift position of approximately 0.8 million barrels of oil.
Production expense for the first quarter was US$47 million, or US$24.18 per barrel, versus US$20 million, or US$10.06 per barrel, in the first quarter of 2017. Production expense per barrel increased in the first quarter of 2018 compared to the same quarter a year ago primarily related to TEN, which has a higher operating cost than Jubilee, and because Kosmos did not have a TEN lifting during the three months ended 31 March 2017. In addition, the operator accelerated workover activity into the first quarter of 2018, while there were no workovers performed in first quarter of 2017.
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Exploration expenses totalled US$21 million for the first quarter, and was primarily related to ongoing seismic and geologic and geophysical costs.
Depletion and depreciation expense for the quarter was US$54 million, or US$28.06 per barrel. This was an increase from US$17.70 per barrel in the first quarter of 2017, and reflects the heavier weighting of TEN cargos to the total number of cargos in the current quarter.
General and administrative expenses were US$22 million during the first quarter. This amount includes approximately US$14 million in cash expense and US$8 million in non-cash equity based compensation expense.
First quarter results included a mark-to-market loss of US$38 million related to the company’s oil derivative contracts. At 31 March 2018, the company’s hedging position had a total commodity net liability value of US$116 million. As of the quarter end and including recently executed hedges, Kosmos had approximately 19 million barrels of oil hedged covering 2018 and 2019.
Gain on equity method investments, net during the first quarter was approximately US$19 million and represents Kosmos' 50 percent ownership of our equity method investment in Kosmos Trident International Petroleum Inc. (KTIPI), which holds our interests in Equatorial Guinea. Under the equity method of accounting, Kosmos only recognizes its share of the adjusted net income of KTIPI, including basis difference amortization, which is recorded in the Gain on equity method investments, net in the consolidated statement of operations. Year to date through the end of April, the assets have delivered US$88 million of cash dividend distributions to Kosmos.
Total capital expenditures in the first quarter were US$58 million.
Kosmos exited the first quarter of 2018 with approximately US$1.3 billion of liquidity and US$1069 million of net debt. In early February 2018, Kosmos refinanced its reserve based lending facility (RBL), which has been increased to US$1.5 billion, up from US$1.3 billion.
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