Kosmos 2016 Loss Widens, Benefits Ahead
US independent Kosmos Energy reported February 27 a net loss in 4Q 2016 of $56.7mn, compared with net income in the same 2015 quarter of $24mn.
Exploration expenses in 4Q 2016 totalled $76mn (year earlier: $24mn) included $44mn costs related to the stacking (rescheduling) of the Atwood Achiever drillship, which has drilled all five successful discoveries offshore Mauritania and Senegal, plus $31mn in more tangible costs offshore both countries. Kosmos announced last week it had completed its $1bn-plus farm-in agreement with BP in both countries’ offshore.
Full year net loss in 2016 quadrupled to $283.8mn, from a net loss of $69.8mn in 2015. Among highlights though from 2016 were: first oil from the TEN project in August, its second major development in Ghana; firming up a total gross discovered resource of some 25 trillion ft³ offshore Mauritania and Senegal; delivering net reserve replacement ratio of 105%, its fourth consecutive year greater than 100%; and exiting 2016 with liquidity of $1.2bn.
As of 2016 year-end, Kosmos has net approved claims from its insurers of $91mn relating to needed modification of its Jubilee production ship offshore Ghana, with $87mn of that received as cash.
Gross oil sales volumes in Ghana (so Kosmos plus partners) averaged 124,000 b/d in 4Q 2016, of which Jubilee 78,000 b/d and TEN 46,000 b/d. Net oil sales by Kosmos were 32,228 b/d in Q42016, up 4% and 18,510 b/d in full year 2016, down 21% because of the fault with Jubilee's turret oil-loading system.
Kosmos’ previously announced $175mn net capex budget for 2017 is unchanged, which is 75% less than its 2015 net capex. Some $75mn will be in Ghana, excluding remedying the Jubilee turret fault which is expected to be recovered from insurance, and $100mn on exploration. It also expects to realise one-off costs of $200mn related to the rig stacking, subsidy costs and costs related to the cancellation of the previous Atwood Achiever extension, to be offset by proceeds of the BP farm-out.
Mark Smedley