Delaware | 001-35167 | 98-0686001 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
8176 Park Lane Dallas, Texas | 75231 | |
(Address of Principal Executive Offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered: | ||
Common Stock $0.01 par value | KOS | New York Stock Exchange | ||
London Stock Exchange |
(d) | Exhibits. | The following exhibit is furnished as part of this current report on Form 8-K: |
99.1 |
KOSMOS ENERGY LTD. | |||
By: | /s/ Thomas P. Chambers | ||
Thomas P. Chambers | |||
Senior Vice President and Chief Financial Officer |
Exhibit No. | Description | |
99.1 | ||
NEWS RELEASE |
• | Net cash provided by operating activities - $240 million; free cash flow1 (non-GAAP) - $136 million |
• | Sales - 6.3 million barrels of oil equivalent (boe) |
• | Revenues - $396 million |
• | Realized oil and gas revenues, excluding the impact of hedging program - $63.18 per boe. |
• | Production expense - $91 million, or $14.52 per boe |
• | General and administrative expenses - $28 million, $19 million cash expense and $9 million non-cash equity based compensation expense |
• | Depletion and depreciation expense - $151 million, or $24.16 per boe |
• | Exploration expenses - $30 million |
• | Capital expenditures - $101 million |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues and other income: | ||||||||||||||||
Oil and gas revenue | $ | 395,933 | $ | 215,191 | $ | 692,723 | $ | 342,387 | ||||||||
Other income, net | 1 | 282 | 1 | 263 | ||||||||||||
Total revenues and other income | 395,934 | 215,473 | 692,724 | 342,650 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Oil and gas production | 90,977 | 49,815 | 170,776 | 96,583 | ||||||||||||
Facilities insurance modifications, net | 2,278 | 1,029 | (17,743 | ) | 9,478 | |||||||||||
Exploration expenses | 29,905 | 77,481 | 60,249 | 98,674 | ||||||||||||
General and administrative | 28,072 | 17,497 | 63,980 | 39,380 | ||||||||||||
Depletion, depreciation and amortization | 151,438 | 74,289 | 269,533 | 128,566 | ||||||||||||
Interest and other financing costs, net | 59,803 | 18,870 | 94,844 | 44,564 | ||||||||||||
Derivatives, net | (14,185 | ) | 140,272 | 62,900 | 178,750 | |||||||||||
Gain on equity method investments, net | — | (16,100 | ) | — | (34,796 | ) | ||||||||||
Other expenses, net | (1,793 | ) | 938 | 326 | 4,643 | |||||||||||
Total costs and expenses | 346,495 | 364,091 | 704,865 | 565,842 | ||||||||||||
Income (loss) before income taxes | 49,439 | (148,618 | ) | (12,141 | ) | (223,192 | ) | |||||||||
Income tax expense (benefit) | 32,602 | (45,345 | ) | 23,928 | (69,693 | ) | ||||||||||
Net income (loss) | $ | 16,837 | $ | (103,273 | ) | $ | (36,069 | ) | $ | (153,499 | ) | |||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.04 | $ | (0.26 | ) | $ | (0.09 | ) | $ | (0.39 | ) | |||||
Diluted | $ | 0.04 | $ | (0.26 | ) | $ | (0.09 | ) | $ | (0.39 | ) | |||||
Weighted average number of shares used to compute net income (loss) per share: | ||||||||||||||||
Basic | 401,323 | 396,826 | 401,244 | 396,218 | ||||||||||||
Diluted | 408,230 | 396,826 | 401,244 | 396,218 |
June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 176,908 | $ | 173,515 | ||||
Receivables, net | 160,944 | 140,006 | ||||||
Other current assets | 161,862 | 196,179 | ||||||
Total current assets | 499,714 | 509,700 | ||||||
Property and equipment, net | 3,847,573 | 3,459,701 | ||||||
Other non-current assets | 118,447 | 118,788 | ||||||
Total assets | $ | 4,465,734 | $ | 4,088,189 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 157,373 | $ | 176,540 | ||||
Accrued liabilities | 258,379 | 195,596 | ||||||
Other current liabilities | 26,897 | 12,172 | ||||||
Total current liabilities | 442,649 | 384,308 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net | 2,129,340 | 2,120,547 | ||||||
Deferred tax liabilities | 697,792 | 477,179 | ||||||
Other non-current liabilities | 311,742 | 164,677 | ||||||
Total long-term liabilities | 3,138,874 | 2,762,403 | ||||||
Total stockholders’ equity | 884,211 | 941,478 | ||||||
Total liabilities and stockholders’ equity | $ | 4,465,734 | $ | 4,088,189 |
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating activities: | ||||||||||||||||
Net income (loss) | $ | 16,837 | $ | (103,273 | ) | $ | (36,069 | ) | $ | (153,499 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||||
Depletion, depreciation and amortization | 153,740 | 76,572 | 274,222 | 133,289 | ||||||||||||
Deferred income taxes | (16,897 | ) | (57,179 | ) | (56,730 | ) | (81,876 | ) | ||||||||
Unsuccessful well costs | 1,593 | 44,611 | 7,099 | 44,654 | ||||||||||||
Change in fair value of derivatives | (8,121 | ) | 138,824 | 65,686 | 177,790 | |||||||||||
Cash settlements on derivatives, net(1) | (17,468 | ) | (35,824 | ) | (21,044 | ) | (56,221 | ) | ||||||||
Equity-based compensation | 9,491 | 9,068 | 17,932 | 17,085 | ||||||||||||
Loss on extinguishment of debt | 24,794 | — | 24,794 | 4,056 | ||||||||||||
Distributions in excess of equity in earnings | — | — | — | 5,234 | ||||||||||||
Other | 2,436 | 927 | 7,417 | 449 | ||||||||||||
Changes in assets and liabilities: | ||||||||||||||||
Net changes in working capital | 73,332 | (56,277 | ) | (60,917 | ) | (90,528 | ) | |||||||||
Net cash provided by operating activities | 239,737 | 17,449 | 222,390 | 433 | ||||||||||||
Investing activities | ||||||||||||||||
Oil and gas assets | (74,891 | ) | (57,938 | ) | (153,268 | ) | (92,650 | ) | ||||||||
Other property | (4,159 | ) | (1,058 | ) | (5,230 | ) | (2,815 | ) | ||||||||
Return of investment from KTIPI | — | 38,900 | — | 79,970 | ||||||||||||
Notes receivable from partners | (5,983 | ) | — | (5,983 | ) | — | ||||||||||
Net cash used in investing activities | (85,033 | ) | (20,096 | ) | (164,481 | ) | (15,495 | ) | ||||||||
Financing activities: | ||||||||||||||||
Borrowings on long-term debt | — | — | 175,000 | — | ||||||||||||
Payments on long-term debt | (200,000 | ) | (100,000 | ) | (300,000 | ) | (100,000 | ) | ||||||||
Net proceeds from issuance of senior notes | 641,875 | — | 641,875 | — | ||||||||||||
Redemption of senior secured notes | (535,338 | ) | — | (535,338 | ) | — | ||||||||||
Purchase of treasury stock | (3 | ) | (5,821 | ) | (1,983 | ) | (17,695 | ) | ||||||||
Dividends | (18,142 | ) | — | (36,289 | ) | — | ||||||||||
Deferred financing costs | (821 | ) | (774 | ) | (1,981 | ) | (25,743 | ) | ||||||||
Net cash used in financing activities | (112,429 | ) | (106,595 | ) | (58,716 | ) | (143,438 | ) | ||||||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 42,275 | (109,242 | ) | (807 | ) | (158,500 | ) | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 142,534 | 255,728 | 185,616 | 304,986 | ||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 184,809 | $ | 146,486 | $ | 184,809 | $ | 146,486 |
(1) | Cash settlements on commodity hedges were $(11.4) million and $(37.5) million for the three months ended June 30, 2019 and 2018, respectively, and $(18.7) million and $(57.3) million for the six months ended June 30, 2019 and 2018, respectively. |
Three months ended | Six months ended | |||||
June 30, 2018 | June 30, 2018 | |||||
Revenues and other income: | ||||||
Oil and gas revenue | $ | 138,395 | $ | 384,749 | ||
Other income | (170 | ) | 117 | |||
Total revenues and other income | 138,225 | 384,866 | ||||
Costs and expenses: | ||||||
Oil and gas production | 23,332 | 75,033 | ||||
Depletion and depreciation | 21,881 | 75,951 | ||||
Other expenses, net | (73 | ) | (152 | ) | ||
Total costs and expenses | 45,140 | 150,832 | ||||
Income before income taxes | 93,085 | 234,034 | ||||
Income tax expense | 33,620 | 83,251 | ||||
Net income | $ | 59,465 | $ | 150,783 | ||
Kosmos' share of net income | $ | 29,733 | $ | 75,392 | ||
Basis difference amortization(1) | 13,633 | 40,596 | ||||
Equity in earnings - KTIPI | $ | 16,100 | $ | 34,796 |
(1) | The basis difference, which is associated with oil and gas properties and subject to amortization, has been allocated to the Ceiba Field and Okume Complex. We amortize the basis difference using the unit-of-production method. |
Three Months Ended | Three Months Ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||||
Kosmos | Kosmos | Equatorial Guinea (Equity Method)(1) | Total | ||||||||||||
Net income (loss) | $ | 16,837 | $ | (103,273 | ) | $ | 16,100 | $ | (87,173 | ) | |||||
Exploration expenses | 29,905 | 77,481 | — | 77,481 | |||||||||||
Facilities insurance modifications, net | 2,278 | 1,029 | — | 1,029 | |||||||||||
Depletion, depreciation and amortization | 151,438 | 74,289 | 24,574 | 98,863 | |||||||||||
Equity-based compensation | 9,491 | 9,068 | — | 9,068 | |||||||||||
Derivatives, net | (14,185 | ) | 140,272 | — | 140,272 | ||||||||||
Cash settlements on commodity derivatives | (11,403 | ) | (37,521 | ) | — | (37,521 | ) | ||||||||
Inventory impairment and other | — | (24 | ) | — | (24 | ) | |||||||||
Disputed charges and related costs | — | 626 | — | 626 | |||||||||||
Gain on equity method investment - KTIPI | — | (16,100 | ) | — | (16,100 | ) | |||||||||
Interest and other financing costs, net | 59,803 | 18,870 | — | 18,870 | |||||||||||
Income tax expense (benefit) | 32,602 | (45,345 | ) | 16,810 | (28,535 | ) | |||||||||
EBITDAX | $ | 276,766 | $ | 119,372 | $ | 57,484 | $ | 176,856 |
Six months ended | Six months ended | ||||||||||||||
June 30, 2019 | June 30, 2018 | ||||||||||||||
Kosmos | Kosmos | Equatorial Guinea (Equity Method)(2) | Total | ||||||||||||
Net income (loss) | $ | (36,069 | ) | $ | (153,499 | ) | $ | 34,796 | $ | (118,703 | ) | ||||
Exploration expenses | 60,249 | 98,674 | — | 98,674 | |||||||||||
Facilities insurance modifications, net | (17,743 | ) | 9,478 | — | 9,478 | ||||||||||
Depletion, depreciation and amortization | 269,533 | 128,566 | 78,572 | 207,138 | |||||||||||
Equity-based compensation | 17,932 | 17,085 | — | 17,085 | |||||||||||
Derivatives, net | 62,900 | 178,750 | — | 178,750 | |||||||||||
Cash settlements on commodity derivatives | (18,692 | ) | (57,265 | ) | — | (57,265 | ) | ||||||||
Inventory impairment and other | 187 | (5 | ) | — | (5 | ) | |||||||||
Disputed charges and related costs | (14 | ) | 2,961 | — | 2,961 | ||||||||||
Gain on sale of assets | — | — | — | — | |||||||||||
Loss on equity method investment - KBSL | — | — | — | — | |||||||||||
Gain on equity method investment - KTIPI | — | (34,796 | ) | — | (34,796 | ) | |||||||||
Interest and other financing costs, net | 94,844 | 44,564 | — | 44,564 | |||||||||||
Income tax expense (benefit) | 23,928 | (69,693 | ) | 41,626 | (28,067 | ) | |||||||||
EBITDAX | $ | 457,055 | $ | 164,820 | $ | 154,994 | $ | 319,814 |
Twelve Months Ended | ||||||||||||
June 30, 2019 | ||||||||||||
Kosmos | Equatorial Guinea (Equity Method)(2) | Total | ||||||||||
Net income (loss) | $ | 23,439 | $ | 38,085 | $ | 61,524 | ||||||
Exploration expenses | 263,067 | 352 | 263,419 | |||||||||
Facilities insurance modifications, net | (20,266 | ) | — | (20,266 | ) | |||||||
Depletion and depreciation | 470,802 | 56,410 | 527,212 | |||||||||
Equity-based compensation | 36,077 | — | 36,077 | |||||||||
Derivatives, net | (147,280 | ) | — | (147,280 | ) | |||||||
Cash settlements on commodity derivatives | (98,480 | ) | — | (98,480 | ) | |||||||
Inventory impairment and other | 480 | — | 480 | |||||||||
Disputed charges and related costs | (12,728 | ) | — | (12,728 | ) | |||||||
Gain on sale of assets | (7,666 | ) | — | (7,666 | ) | |||||||
Gain on equity method investment - KTIPI | (38,085 | ) | — | (38,085 | ) | |||||||
Interest and other financing costs, net | 151,456 | — | 151,456 | |||||||||
Income tax expense | 136,752 | 36,865 | 173,617 | |||||||||
EBITDAX | $ | 757,568 | $ | 131,712 | $ | 889,280 |
(1) | For the three and six months ended June 30, 2018 we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment as we accounted for such investment under the equity method during this period. |
(2) | For the twelve months ended June 30, 2019, we have presented separately our 50% share of the results from operations and amortization of our basis difference for the Equatorial Guinea investment through December 31, 2018, as we accounted for such investment under the equity method through this date. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | 16,837 | $ | (103,273 | ) | $ | (36,069 | ) | $ | (153,499 | ) | ||||
Derivatives, net | (14,185 | ) | 140,272 | 62,900 | 178,750 | ||||||||||
Cash settlements on commodity derivatives | (11,403 | ) | (37,521 | ) | (18,692 | ) | (57,265 | ) | |||||||
Facilities insurance modifications, net | 2,278 | 1,029 | (17,743 | ) | 9,478 | ||||||||||
Inventory impairment and other | — | (24 | ) | 187 | (5 | ) | |||||||||
Disputed charges and related costs | — | 626 | (14 | ) | 2,961 | ||||||||||
Loss on extinguishment of debt | 24,794 | — | 24,794 | 4,056 | |||||||||||
Total selected items before tax | 1,484 | 104,382 | 51,432 | 137,975 | |||||||||||
Income tax expense on adjustments(1) | 3,463 | (35,963 | ) | (16,578 | ) | (42,527 | ) | ||||||||
Impact of U.S. tax law change | — | — | — | — | |||||||||||
Adjusted net income (loss) | $ | 21,784 | $ | (34,854 | ) | $ | (1,215 | ) | $ | (58,051 | ) | ||||
Net income (loss) per diluted share | $ | 0.04 | $ | (0.26 | ) | $ | (0.09 | ) | $ | (0.39 | ) | ||||
Derivatives, net | (0.03 | ) | 0.35 | 0.16 | 0.45 | ||||||||||
Cash settlements on commodity derivatives | (0.03 | ) | (0.09 | ) | (0.05 | ) | (0.14 | ) | |||||||
Facilities insurance modifications, net | — | — | (0.04 | ) | 0.02 | ||||||||||
Loss on extinguishment of debt | 0.06 | — | 0.06 | 0.01 | |||||||||||
Total selected items before tax | — | 0.26 | 0.13 | 0.34 | |||||||||||
Income tax expense on adjustments(1) | 0.01 | (0.09 | ) | (0.04 | ) | (0.10 | ) | ||||||||
Adjusted net income (loss) per diluted share | $ | 0.05 | $ | (0.09 | ) | $ | 0.00 | $ | (0.15 | ) | |||||
Weighted average number of diluted shares | 408,230 | 396,826 | 401,244 | 396,218 |
(1) | Income tax expense is calculated at the statutory rate in which such item(s) reside. Statutory rates for the U.S. and Ghana are 21% and 35%, respectively. |
Three months ended | Six months ended | ||||||
June 30, 2019 | June 30, 2019 | ||||||
Reconciliation of net cash provided by operating activities to free cash flow: | |||||||
Net cash provided by operating activities | $ | 239,737 | $ | 222,390 | |||
Net cash used in investing activities | (85,033 | ) | (164,481 | ) | |||
Other cash used in financing activities(1) | (19,287 | ) | (22,427 | ) | |||
Change in restricted cash | 209 | 4,200 | |||||
Free cash flow (before dividends) | $ | 135,626 | $ | 39,682 |
(1) | Amounts consist of costs related to the redemption of the senior secured notes, issuance of senior notes and other long-term debt and the purchase of treasury stock. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net Volume Sold | |||||||||||||||
Oil (MMBbl) | |||||||||||||||
Kosmos | 5.851 | 2.895 | 10.541 | 4.829 | |||||||||||
Equity method investment - Equatorial Guinea | — | 0.950 | — | 2.830 | |||||||||||
Total Oil (MMBbl) | 5.851 | 3.845 | 10.541 | 7.659 | |||||||||||
Gas (MMcf) | 1.663 | — | 3.464 | — | |||||||||||
NGL (MMBbl) | 0.139 | — | 0.251 | — | |||||||||||
Total (MMBoe) | 6.267 | 3.845 | 11.369 | 7.659 | |||||||||||
Revenue | |||||||||||||||
Oil sales: | |||||||||||||||
Kosmos | $ | 389,286 | $ | 215,191 | $ | 680,150 | $ | 342,387 | |||||||
Equity method investment - Equatorial Guinea | — | 69,198 | — | 192,375 | |||||||||||
Total Oil sales | 389,286 | 284,389 | 680,150 | 534,762 | |||||||||||
Gas sales | 4,145 | — | 7,807 | — | |||||||||||
NGL sales | 2,502 | — | 4,766 | — | |||||||||||
Total sales | 395,933 | 284,389 | 692,723 | 534,762 | |||||||||||
Cash settlements on commodity derivatives | (11,403 | ) | (37,521 | ) | (18,692 | ) | (57,265 | ) | |||||||
Realized revenue | $ | 384,530 | $ | 246,868 | $ | 674,031 | $ | 477,497 | |||||||
Oil and Gas Production Costs | |||||||||||||||
Kosmos | $ | 90,977 | $ | 49,815 | $ | 170,776 | $ | 96,583 | |||||||
Equity method investment - Equatorial Guinea | — | 11,666 | — | 37,516 | |||||||||||
Total oil and gas production costs | $ | 90,977 | $ | 61,481 | $ | 170,776 | $ | 134,099 | |||||||
Oil sales per Bbl: | |||||||||||||||
Kosmos | $ | 66.53 | $ | 74.32 | $ | 64.52 | $ | 70.90 | |||||||
Equity method investment - Equatorial Guinea | — | 72.84 | — | 67.98 | |||||||||||
Total Oil sales per Bbl | 66.53 | 73.96 | 64.52 | 69.82 | |||||||||||
Gas sales per Mcf | 2.49 | — | 2.25 | — | |||||||||||
NGL sales per Bbl | 18.01 | — | 18.96 | — | |||||||||||
Total sales per Boe | 63.18 | 73.96 | 60.93 | 69.82 | |||||||||||
Cash settlements on commodity derivatives per oil Bbl(2) | (1.95 | ) | (12.96 | ) | (1.77 | ) | (11.86 | ) | |||||||
Realized revenue per Boe(3) | 61.36 | 64.20 | 59.28 | 62.34 | |||||||||||
Oil and gas production costs per Boe: | |||||||||||||||
Kosmos | $ | 14.52 | $ | 17.21 | $ | 15.02 | $ | 20.01 | |||||||
Equity method investment - Equatorial Guinea | — | $ | 12.28 | — | $ | 13.26 | |||||||||
Total oil and gas production costs | 14.52 | 15.99 | 15.02 | 17.51 |
(1) | For the three and six months June 30, 2018, we have presented separately our 50% share of the results from operations for the Equatorial Guinea investment, as we accounted for such investment under the equity method during this period. |
(2) | Cash settlements on commodity derivatives are only related to Kosmos and are calculated on a per barrel basis using Kosmos' Net Oil Volumes Sold. |
(3) | Realized revenue includes revenue from Kosmos, Equatorial Guinea (equity method investment), and Cash settlements on commodity derivatives; on a per Boe basis realized revenue is calculated using the total Net Volume Sold from both Kosmos and Equatorial Guinea (equity method investment). |
Weighted Average Price per Bbl | |||||||||||||||||
Index | MBbl | Floor(2) | Sold Put | Ceiling | |||||||||||||
2019: | |||||||||||||||||
Three-way collars | Dated Brent | 5,256 | $ | 53.33 | $ | 43.81 | $ | 73.57 | |||||||||
Swaps | NYMEX WTI | 730 | 52.01 | — | — | ||||||||||||
Collars | Argus LLS | 500 | 60.00 | — | 88.75 | ||||||||||||
2020: | |||||||||||||||||
Three-way collars | Dated Brent | 6,000 | $ | 57.50 | $ | 45.00 | $ | 80.18 | |||||||||
Put spread | Dated Brent | 2,000 | 60.00 | 50.00 | — |
(1) | Please see the Company’s filed 10-Q for full disclosure on hedging material. Includes hedging position as of June 30, 2019 and hedges added since quarter-end. |
(2) | “Floor” represents floor price for collars or swaps and strike price for purchased puts. |
FY 2019 | |||
Production(1,2) | 69,000 - 73,000 boe per day | ||
Opex | $12.00 - $15.00 per boe | ||
DD&A | $22.00 - $25.00 per boe | ||
G&A(3) | $115 - $125 million | ||
Exploration Expense | ~$30 million average per quarter | ||
Net Interest | $35 - $37 million per quarter | ||
Tax | $3.00 - $5.00 per boe | ||
Capex | $425 - $475 million in FY 2019 |
(1) | 3Q 2019 - Ghana: 4 cargos / Equatorial Guinea 1 cargo. FY 2019 Ghana: 12 cargos / Equatorial Guinea 5.5 cargos. Average cargo sizes 950,000 barrels of oil. |
(2) | GoM Production - 3Q 2019: 22,000-24,000 boe per day. FY 2019 22,000-24,000 boe per day. Oil/Gas/NGL split for 2019: U.S. Gulf of Mexico: 80%/12%/8%. |
(3) | G&A - Approximately 70% cash. |