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Kosmos Energy sees lower net income but ups production


Kosmos Energy [LON:KOS NYSE:KOS], the Dallas-based upstream oil and gas production company published its 3Q23 results this morning (6th November).

As previously reported, Kosmos was expecting a quieter third quarter this year compared to 2022. The oil junior, with operations in Ghana, Equatorial Guinea and the US Gulf of Mexico, an offshore gas development in Mauritania and Senegal, as well as an exploration play in São Tomé and Príncipe reported net income of USD85m (GBP68.6m), down 61.7% year-on-year.

However, the company said that when adjusted for certain items that impact the comparability of results, the company generated an adjusted net income of USD126m, or USD0.26 per diluted share for 3Q23.

Kosmos produced 68,200 barrels of oil per day (bopd), selling 73,100bopd. In 3Q22 the company produced 60,900bopd. One of the more exciting developments in the quarter was Kosmos starting operations in Jubilee South East, a offshore development near Ghana.

As reported, the company was celebrating striking oil at its Tiberius exploration well in the Gulf of Mexico. The company said that the Tiberius well offered lower carbon emissions per barrel than other comparison oil.

Kosmos Energy takes ownership of Yakaar-Teranaga

As reported, the company was also expecting to take a greater role in the Yakaar-Teranga offshore development near Senegal as it was reported that BP [LON:BP.] was considering exiting its 60% share of the development, leaving Kosmos and Senegal parastatal, Petrosen as the remaining partners in the field, with Kosmos the senior partner. The company announced that it was taking a 90% stake and ownership of the “world-scale” development.

Chairman and CEO, Andrew Inglis said in a statement: “Increasing our working interest and assuming operatorship of Yakaar-Teranga is a major value creation opportunity for Kosmos. Yakaar-Teranga is one of the crown jewels of Senegal’s growing energy sector and this aligned partnership allows Kosmos and Petrosen to accelerate the development of a cost-competitive gas project supporting Senegal’s goal of providing universal and reliable access to low-cost energy.”

Kosmos is awaiting the government stamp of approval on its greater role in Yakaar-Teranga.

Capital restructuring

The quarter has also been one of capital restructuring, repaying a term loan taken out to develop its Gulf of Mexico exploration. Despite this Kosmos finished 3Q23 with USD2.4bn of long-term debt and around USD2.3bn net debt, bit still had around USD600m of liquidity to play with.

From activities, Kosmos generated net cash of USD249m, in 3Q23 with free cash flow of USD54m. This was in line with expectations.

Kosmos also completed its semi-annual redetermination of its reserve-based lending facility, deferring the first amortization period which resulted in the company having no scheduled debt maturities until 2025.

The company is continuing its spending with net capital expenditure of USD193m which remained in line with guidance.

Inglis said: “Kosmos continues to create value for its stakeholders through the consistent delivery of its strategy to grow production, advance its advantaged oil and LNG projects, and add resource through infrastructure-led exploration.”

Kosmos ended last week (3rd November) at 605p. The company has offered a 17.5% increase over the year-to-date, and -0.4% fall over one-year. The company’s shares have ranged between 426.36p and 693.25p over a 52-week period.

The company has a market capitalisation of GBP2.8bn.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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