John Ankromah, in Accra
Kosmos Energy, the 10 year old American minnow, says it is in the best liquidity position it has ever been,“with total liquidity forecast to be ~$1 billion” at the end of 2013.
The statement is quite instructive for a company whose financial and operating results for the third quarter of 2013 included a net loss of $44 million, or $0.12 per basic share on the sale of approximately 1.9 million barrels of oil. For the third quarter of 2012, Kosmos reported a net loss of $36 million, or $0.10 per basic share on the sale of nearly two million barrels of oil.
A “stable free cash flow stream from Jubilee (Ghanaian oil field) contributes to our self-funded future capital expenditure programme”, the company says in an investor presentation. Jubilee produced 100,000BOPD on average in 2013. Kosmos holds 22% equity in the field.
Some of the money for exploration activity the company will carry out in 2014 has been “taken care of” in the terms of the farm outs that Kosmos executed in 2013. “While exploration activity is expected to increase in 2014, capital expenditures are shown as reduced due to the benefit of the farm-outs”, the company remarks. The British major BP acquired a non-operating interest in each of Kosmos operated Essaouira Offshore, Foum Assaka Offshore and Tarhazoute Offshore blocks off Morocco. The London listed Cairn Energy farmed into the Cap Boujdour Contract Area.
BP will fund Kosmos’ share of the cost of one exploration well in each of the three blocks, subject to a maximum cost per well. In the event a second exploration well is drilled in any block, BP shall pay a disproportionate share of the well cost subject to a maximum cost per well. BP shall also pay its proportionate share of past costs. Meanwhile, Cairn will acquire a 20% non-operated interest in the exploration permits comprising the Contract Area, pay a disproportionate share of future exploration costs including a 3D seismic survey, an initial exploration well in 2014 and, if successful, two appraisal wells, all subject to maximum expenditure caps.
Kosmos’ capital expenditures in Ghana are centered on growing the Jubilee pay as well as developing the new cluster of fields called TEN. Kosmos forecasts spending between $530MM and $590MM on these field developments in Ghana and these should cover 73% of total capital expenditure.
The Morocco capital expenditure comprises of Cap Boujdour and Agadir Basin, net of farm-out.