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    Kosmos Earnings Slide in Q1 on Weaker Sales


The company's core earnings were down 37%, and its net loss deepened.

by: Joseph Murphy

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Kosmos Earnings Slide in Q1 on Weaker Sales

Texas-based Kosmos Energy registered a 37% decline in core earnings in the three months ending on March, it said on May 11, as a result of lower sales volumes and weaker prices.

The company, which primarily works off the west coast of Africa, reported earnings before interest, tax, depreciation, amortisation and exploration expenses (Ebitdax) of $113.8mn in the period, versus $180.3mn a year earlier. This decrease came on the back of a 40% slump in revenues to $177.8mn.

Kosmos' sales volumes were down 22% at 43,659 boe/d, despite production rising 11.4% to 59,500 boe/d. The price at which Kosmos sells its oil was $49.83/b in the period, propped up by the company's hedging position, compared with $62.02 a year earlier. Its average gas price fell to $1.88/'000 ft3, from $2.03.

The producer's net loss deepened to $182.8mn, owing to increased impairments, from a loss of $52.9mn in the first quarter of 2019.

"Kosmos' operations performed well during the first quarter with production across our three hubs in line or at the top end of expectations," CEO Andrew Inglis said in a statement. "Our differentiated portfolio of low-cost, low decline conventional assets is well positioned to withstand the lower price environment we are in today." 

"In response to the volatile market conditions, we have taken decisive actions to protect the business in 2020 and position it for increased activity in 2021," he continued. "These measures include materially reducing costs and restructuring our hedging portfolio. We completed our [reserve-based lending] re-determination in difficult market conditions in April and have no near-term debt maturities."

Kosmos ended the quarter with $677mn in liquidity and $1.97bn of net debt.