Kosmos Spends More than it Earns in Q3

Africa-focused explorer Kosmos reported November 7 a third-quarter net loss of $59.8mn as compared with net income of $60.3mn in the same period last year. Revenues from oil and gas had more than halved to $46.7mn while exploration costs had gone up from $18.9mn to $66.2mn as its drilling programme for Mauritania's gas gets underway.

When adjusted for certain items that impact the comparability of results, it generated an adjusted net loss of $36.5mn. Income during the quarter included a payment of $20mn, under a loss of production income insurance claim brought by partner Tullow, the operator of the Jubilee field, where the vessel's turret failed leading to a lengthy outage. Tullow is to provide more information when it reports on November 9.

Jubilee FPSO

(Credit: Tullow)

Kosmos CEO Andrew Inglis said that its oil assets in Ghana were now generating the free cash flow that will enable the company to continue to grow organically. “And following our world-class gas discoveries offshore Mauritania and Senegal, we are currently designing a multi-well drilling programme, to begin mid-2017, that we believe will target some of the largest un-drilled exploration prospects identified along the Atlantic Margins.”

Oil production began at Ghana's TEN field. Water injection has risen to allow a gradual ramp-up in oil production around the end of the year. Gas commissioning is ongoing with the objective to begin gas injection into the Ntomme reservoir by year-end. Kosmos anticipates to lift its first cargo from TEN in the fourth quarter.

General and administrative expenses were $22mn during the third quarter, an 18% decrease compared with the same period in 2015.The third quarter results included a mark-to-market gain of $16.9mn related to oil derivative contracts. At September 30, 2016, its hedging position had a total mark-to-market value of $57mn.

William Powell