Kosmos Energy Ltd. (NYSE: KOS) announced its financial and operating results for the first-quarter of 2016, showing that the Company generated a net loss of $59.0 million, or $0.15 per diluted share as compared to a net loss of $78.9 million or $0.21 per 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 $14.6 million or $0.04 per diluted share for the first-quarter of 2016.
Highlights for the quarter ended March 31, 2016, include:
• Maintained strong financial position, exiting the first quarter with approximately $1.5 billion in liquidity
• Sold 1.9 million barrels of oil, net to Kosmos
• Progressed the TEN development project to approximately 90 percent complete and on budget with first oil expected in third quarter 2016
• Completed drilling operations on the Guembeul-1 and Ahmeyim-2 wells, which increased our discovered resource and concluded our appraisal drilling of the Tortue West structure
• Concluded the semi-annual redetermination process for the reserves-based lending facility with less than a five percent change in borrowing capacity
“Kosmos continued to build momentum in the first quarter,” said Andrew G. Inglis, chairman and chief executive officer. “With the announcement of our Teranga-1 result today we continue our exploration success in opening a world-class basin offshoreMauritania and Senegal. We completed our appraisal drilling of the Tortue West discovery and delineated a world-class LNG resource with fewer wells than anticipated. The TEN project is over 90 percent complete and is on schedule to produce first oil in the third quarter of 2016. Our rich opportunity set coupled with our financial strength leaves us well positioned to capitalize on the opportunities ahead of us.”
First-quarter 2016 oil revenues were $62 million versus $109 million in the same quarter of 2015, on sales of 1.9 million barrels of oil for 2016 as compared to 1.9 million barrels in 2015.
First-quarter 2016 oil revenues exclude $57 million of derivative settlements. Realised oil revenue, including the impact of the Company’s hedging program, were$62.64 per barrel of oil sold in the first quarter of 2016 compared to $84.47 per barrel of oil sold in the year-ago quarter. At the end of the quarter, the Company was in a net overlift position of approximately 107 thousand barrels of oil.
Production expense for the current quarter was $29 million, or $15.50 per barrel, versus$32 million, or $16.90 per barrel, in the first quarter of 2015. “The decrease in operating expense is related to a reduction in non-routine workover activity that occurred in 2015 which more than offset the increase in operating costs related to our overlift position, the planned two-week shutdown, and the FPSO turret bearing issue,” Kosmos, which is one of the partners working in Ghana’s Jubilee Oil fields said.
Exploration expenses totaled $24 million for the first quarter, compared to $99 million in the same period of 2015. Included in the quarter were costs related to the new 3D seismic survey in the outboard Senegal area, as well as ongoing seismic processing and interpretation.
Depletion and depreciation expense for the quarter was $31 million, or $16.49 per barrel. This was a decrease from $19.48 per barrel in the first-quarter of 2015, primarily attributable to reserve additions at Jubilee in 2015.
General and administrative expenses decreased from $30 million in the fourth-quarter of 2015 to $18 million this quarter, driven primarily by a decline in equity compensation expense and lower cash expenses.
The first-quarter results included a mark-to-market gain of $4 million related to the Company’s oil derivative contracts. At March 31, 2016, the Company’s hedging position included 11.4 million barrels through 2018 and had a total mark-to-market value of $185 million.
Tullow said it recognised an income tax benefit for the first-quarter of 2016 of $2.0 million, primarily related to lower realised oil prices.
“Total capital expenditures in the first-quarter were $250 million, which reflects a full-quarter of spend on our exploration and appraisal drilling programme and the TEN project. Capital expenditures are expected to ramp down in the second-half of the year, as we plan to pause our drilling programme in the second-quarter and expect to see a reduction of TEN spending post planned first production in the third-quarter. The forecast for full-year 2016 capital expenditures remains approximately $650 million.
“During the first-quarter Kosmos concluded the semi-annual bank re-determination process on our reserves-based lending facility which resulted in a less than five percent change to the borrowing base. The borrowing base is now approximately $1,427 million with $877 million of undrawn availability as of March 31, 2016.
“Kosmos exited the first-quarter of 2016 with $1.5 billion of liquidity and $826 million of net debt. This compares to $1.8 billion of liquidity and $614 million of net debt as of December 31, 2015.”