Kosmos Energy is set 2024 to increase its oil and gas production to around 50 per cent via investment in its differentiated portfolio across West Africa and US Gulf of Mexico.
Following this schedule, Kosmos projected oil production to rise to about 100,000boe/d in 2024, CEO Andrew G. Inglis said. This projection rides on the back of a solid Q1 2022 performance. Kosmos exited Q1 2022 with net production of 72,600 boe/d, at the top end of guidance.
“Kosmos had a strong first quarter operationally and financially, with production at the top end of guidance and free cash flow of around $220 million. We are continuing to invest in our differentiated portfolio which has the potential to grow production around 50% between 2022 and 2024 while increasing the gas weighting of our portfolio.”
CEO, Kosmos
LNG Project in Progress
Regarding its Greater Tortue LNG project, the company stated in its Q1 2022 report that phase one of the project is near (75%) completion with first production marked for 2023.
“We are well positioned for the energy transition and believe we will have an increasingly important role to play in providing energy security to countries looking to diversify from current supply sources with cost competitive and geographically advantaged LNG.”
CEO, Kosmos
As cited by S&P Global, Inglis said LNG demand is expected to grow sharply over the coming years, almost doubling by 2035, adding demand has grown markedly in the last few months as “a direct result of countries in Europe looking to reduce their dependence on pipeline gas and replace it with LNG from international markets on the back of the war in Ukraine.”
Additionally, Kosmos Energy noted that close to the end of the quarter, it successfully completed the semi-annual redetermination of the Reserve Based Lending (RBL) and refinancing of the Reserve Credit Facility (RCF).
Kosmos’ Upped Stake in Jubilee and TEN
During the quarter, Kosmos received approximately $118 million from Tullow following the completion of pre-emption for the additional Ghana interests acquired in October 2021. Kosmos’ interest in the Jubilee and TEN fields has now been reduced by approximately 3.5% and 7.7%, respectively. PetroSA’s pre-emption process is still ongoing, however the impact is expected to be immaterial.
The company exited the quarter with a net debt of $2.2 billion and available liquidity of approximately $0.9 billion, the company disclosed in its report. Leverage fell from around 2.5x at year end 2021 to around 1.9x at the end of the first quarter of 2022.
“We made good progress with the balance sheet during the quarter, with the successful redetermination of the RBL and re-financing of the RCF. We also reduced net debt by over $300 million in the quarter, which coupled with strong EBITDAX performance, helped reduce leverage to around 1.9x. We remain well on track to meet our target of less than 1.5x by year end.
“With low-cost, high margin oil assets that generate cash to pay down debt and invest in our deep portfolio of world-class gas assets, we believe we have the right portfolio at the right time.”
CEO, Kosmos
Production in Ghana averaged approximately 42,300 barrels of oil per day (bopd) net in the first quarter of 2022, lifting four cargos from Ghana during the quarter. At Jubilee, gross production averaged approximately 91,200 bopd during the quarter whereas production averaged approximately 25,000 bopd gross for the first quarter.
Production in the U.S. Gulf of Mexico averaged approximately 18,800 boepd net (83% oil) during the first quarter, impacted by unplanned facility downtime. The Winterfell-2 appraisal well completed drilling during the first quarter and encountered approximately 40 meters of net oil pay in the first and second horizons. Due to the upside potential of the Winterfell-2 portfolio, Kosmos acquired an additional 5.5 per cent working interest from Red Willow, an existing partner in the field.
“We’re clear about pursuing deals where we believe they are consistent with the strategy of the company: shorter term, high margin oil growth… supported by longer dated quality gas,” Inglis said. “We’re looking to deepen in areas that we understand, and therefore, where there is true economic value that we can add.”
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