Low oil production causes Kosmos Energy net loss of $108m

KosmosDue to low oil production, Kosmos Energy, one of the oil companies operating at Ghana’s Jubilee fields has announced a net loss of $108.3 million for the second quarter of 2016.

The company sold one cargo of oil in 2016 as against two cargoes the same period in 2016.

On its second quarter 2016 oil revenues, the company stated $46 million versus $119 million in the same quarter of 2015, on sales of one cargo of 0.9 million barrels of oil for 2016 as compared to two cargos totalling 1.9 million barrels in 2015.

In a press release issued in Texas, and copied to ghanabusinessnews.com, announcing the oil producer’s financial and operating results for the period, Kosmos said it generated a net loss of $108.3 million, or $0.28 per diluted share as compared to a net loss of $75.2 million or $0.20 per share in the same period last year.

“When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net loss of $43.8 million or $0.11 per diluted share for the second quarter of 2016,” it said.

Its second quarter 2016 oil revenues exclude $45 million of derivative settlements, it said.

According to Kosmos, realized oil revenue, including the impact of the Company’s hedging programme, was $95.61 per barrel of oil sold in the second quarter of 2016 compared to $82.96 per barrel of oil sold in the year-ago quarter.

“At the end of the quarter, the Company was in a net overlift position of approximately 110 thousand barrels of oil,” it added.

The company’s production expense for the current quarter was $33 million, or $34.47 per barrel, versus $20 million, or $10.40 per barrel, in the second quarter of 2015.

It notes that the overall increase in production expense during the second quarter was primarily attributable to the cost of additional operating procedures related to the turret bearing issue, as well as the impacts associated with lower production.

Kosmos Energy indicates that exploration expenses totalled $36 million for the second quarter, compared to $15 million in the same period of 2015. Included in the quarter were approximately $16 million of costs associated with the warm stacking of the Atwood Achiever beginning in late May.

“Depletion and depreciation expense for the quarter was $17 million, or $17.86 per barrel. This was a decrease from $19.29 per barrel in the second quarter of 2015, which was primarily attributable to reserve additions at Jubilee in 2015.

General and administrative expenses were $20 million during the second quarter, a 52 percent decrease compared to the same period in 2015,” it said.

On its Ghana asset, Kosmos said it continues to be a solid foundation, delivering near-term production and cash flow growth.

“With the revised operating procedures at Jubilee working as anticipated, the start-up of the Tweneboa, Enyenra and Ntomme (TEN) project shortly, and our comprehensive hedging and insurance programmes, our financial position remains strong.

In addition, the quality of our exploration prospectivity continues to improve with the addition of new data following our drilling success over the past year and recently acquired seismic data. As a result, Kosmos is well positioned to deliver value from both our discovered gas resource offshore Mauritania and Senegal, as well as from new high-graded opportunities our team has identified,” it said.

The oil producer notes that the second quarter results included a mark-to-market loss of $55 million related to the Company’s oil derivative contracts. At June 30, 2016, the Company’s hedging position included 11.9 million barrels through 2018 and had a total mark-to-market value of $85 million.

 “We recognized an income tax benefit for the second quarter of 2016 of $16 million, primarily related to lower realized oil revenues and higher costs.

Total capital expenditures in the second quarter were $184 million, which primarily reflects spend on our exploration and appraisal drilling program and the TEN project. Capital expenditures are expected to ramp down in the second half of the year as we paused our drilling programme in late May and expect to see a reduction of TEN spending after achieving first production during the third quarter. The forecast for full-year 2016 capital expenditures remains approximately $650 million.

Kosmos exited the second quarter of 2016 with $1.2 billion of liquidity and $1,058 million of net debt,” it said.

By Emmanuel K. Dogbevi

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