Kosmos Energy reports strong second-quarter production

Kosmos Energy reported net income of $60m for its second quarter on Monday, translating to 12 cents per diluted share, while on an adjusted basis, its net income reached $80m, or 17 cents per diluted share.

Its revenue for the quarter totalled $451m, reflecting strong average net production of around 62,100 barrels of oil equivalent per day, making for a 7% increase year-on-year.

The Texas-based company said the quarter saw significant operational achievements, including the successful mooring of the floating production, storage, and offloading (FPSO) vessel for the Greater Tortue Ahmeyim (GTA) liquefied natural gas (LNG) project, as well as the startup of oil production at the Winterfell project in the US Gulf of Mexico.

After the end of the quarter, Kosmos reported that current production in the Gulf of Mexico had increased to about 20,000 equivalent daily barrels, representing a 40% increase over the first quarter of the year.

In Ghana, production averaged 41,900 barrels of oil equivalent per day, with a slower-than-expected ramp-up at the Jubilee field due to underperformance in one well and a temporary reduction in water injection.

Despite that, Kosmos said it was confident in the field’s long-term potential, supported by enhanced seismic imaging and a substantial 2P reserve base.

Kosmos said its capital expenditure for the quarter totalled $215m, coming in below guidance due to the timing of spending accruals related to the GTA project.

The company said it expected capital expenditures to be materially lower in the second half of the year.

Kosmos ended the quarter with around $2.5bn in net debt and $793m in available liquidity.

Despite generating $224m in net cash from operating activities, free cash flow for the quarter was negative $15m.

Looking ahead, Kosmos said it expected significant milestones in its projects across Mauritania, Senegal, and Equatorial Guinea, with first LNG from GTA anticipated in the fourth quarter.

The company also planned to advance its Tiberius project in the Gulf of Mexico, with a final investment decision expected later this year.

“It has been a busy period for Kosmos with significant progress in the delivery of our development projects,” said chairman and chief executive officer Andrew Inglis.

“Production is rising in the US Gulf of Mexico with the startup of Winterfell and the successful completion of our production optimization activities.

“The drilling campaign in Equatorial Guinea has now commenced and we continue to see good progress across all major workstreams on the GTA project in Mauritania and Senegal.”

Inglis said that with those projects online, Kosmos expected to exit the year at its production goal of around 90,000 barrels of oil equivalent per day.

“In addition, we have completed the concept development work on Yakaar-Teranga in Senegal and are progressing Tiberius in the US Gulf of Mexico towards final investment decision, providing high-quality investment opportunities beyond 2024.

“As production ramps up and capital expenditures are expected to fall, we remain committed to delivering free cash flow within a disciplined capital framework, to further enhance the financial resilience of the company, after which we will consider shareholder returns.”

Reporting by Josh White for Sharecast.com.