Kosmos Energy (KOS) 7 Aug 232023 Q2 Earnings call transcript

Good day, everyone. Welcome to Kosmos Energy's Second Quarter 2023 Conference Call.

As a reminder, today's call is being recorded.

At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos Energy.

Thank you, operator, and thanks to everyone for joining us today. our earnings issued we morning first release. quarter This presentation today's page call release our and available accompany slide the Investors This are to on website. of the

go Andy Joining the and today the me CFO. to on Neal Shah, material, Chairman Inglis, are and CEO, call through

plans, filings. differ this presentation, estimates, SEC materially documents UK refer factors note will website. in due our and annual exchange to we results in report, and Actual today's available are filings announcement, forward-looking statements to expectations. During refer to our and and presentation on our These that for Please make our and outcomes could stock details. more we SEC

call this to Andy. I turn At time, the over will

us to through today I'm We'll handing our results the good call. through quarter during to quarter run take for Jamie, you the everyone. afternoon Thanks, and joining morning second going progress and to Neil before the call financials. for we've the over for made questions. open to Thank then you

from Gulf half Mauritania come project in startup the to Winterfell stated project around the of and Starting of grow With last on asset the Ghana goal contributing growth say I'm the Last a to Senegal Jubilee Mexico. our in East we've expected our out weeks, achieve XX% with base Ghana. our South LNG in set the growth of to Tortue is to This pleased we develop first with by our material the strategy step XXXX world-class project around in and production stamp-up additional from growth baseline. Slide taken to that few production the target. year, three. target in

in all shortly. about these more detail talk I'll developments

we we CapEx cash coming nearing flow, these With fall, free significant production where our towards continue expect growth to inflection cash CapEx the lower prices. and a rising current fall. are flow expect we particularly the to As growth year. free capital to program expected over generate at We're deliver development to point in commodity target resulting projects,

disciplined priority resilience allocation growth remain down we'll grows, shareholder three funding in flow Further capital financial cash potential and towards of our return. opportunities, As through debt compelling pay areas.

So making to on a delivery months. to come with next more lot our we're the of strategy in in good nine progress summary, six

Slide to operations Turning the of across three activities there. highlights looks production quarter. upcoming the four, hubs quarter, was our which guidance around oil during of at XX,XXX consistent for the production our per with barrels day Net equivalent and

across Our producing well. assets the business performed

a gross of delay However, In the Jubilee's averaged Ghana, flat startup with quarter. barrels around East. per was short the in by day the first impacted South Jubilee, quarter oil production XX,XXX

year the May well production. starting completed In in first the was Jubilee this growth

two for barrels to Jubilee oil on day. South XXX,XXX lifting on More that online first per East around wells The Jubilee gross production came following producer mid-July, the of slide.

At around in TEN first gross line XX,XXX barrels per day oil production averaged the quarter. with

expected Energy, sales second agreement a the development to combined the additional at is into maintain of activity This Ministry to draft plan the levels TEN. but the set submitted a oil During current through wells of the of increased for high-grade operators amended domestic around or TEN production market gas gas set GSA. activity quarter

$X.XX the both GSA per month, progress. TEN amended the on while TEN good of make Last XXXX the continue at covers future the a agreement. conclude sales plan signed for agreement gas temporary delivery gas all from Ministry through the Discussions and MMBtu, we we The with GSA final Jubilee field. September to Jubilee and development

that infill of day lifting for Equatorial partnership the mid-July, major the during well field to fourth Moving the two is quarter and next achievement XX,XXX the end Ahead drilling with expected to one Equatorial the of on the into just averaged of cargo planned of around first the workovers In the Guinea, XXX through end and three production right a to campaign production year. the first in are begin over should support XXXX. oil year the government there per from gross help base, Guinea. quarter. rates the quarter, scheduled The which barrels

exploration Akeng the planned The drilling deep the at infill infrastructure to well spud campaign. following is completion of

expected XX,XXX net production line Kodiak Gulf has the guidance. in better On this with per Lastly, oil of of day, been barrels Mexico was in approximately than performance equivalent year.

the increased us capture increased has from drawdown portion well, we ST-X a production to planned from the steadily we've allowing As workout. what expected good of

good up timing the to half in of we've ramping activity year. progress mid-XXXX Winterfell mid-XXXX, as second this Odd allow I'll more into about into The optimized planned of intervention. more the upside job well the make and planned. in subsea following capture and to expected over talk continues third online project As the on move producing Tiberius a of zone Mexico the as us and we the to pump work result, a slide add with is Gulf from

Turning to five. Slide

gross startup announced initial for taking South As the a per government partners, month, major started barrels XXX,XXX the well chapter people Shortly production the start prolific I for up day. the around last earlier Jubilee the East of is project of second milestone Jubilee and next mentioned Ghana the a in Jubilee the field. to successful oil we Ghana. announcement of after and JSC This the

and Starting production at enhance are water Jubilee, one later would quarter. producer which quarter, wells, expected this further injectors the online fourth in more two three

The given This Jubilee to year. of water accelerated program this add a XXXX. into drilling to is second Ghana in will we pressure move well XXXX, as East support efficiency injector that been South has the injection from XXXX the late

updated of our the year. this chart ramp up The right guidance on Jubilee shows of the

XQ start from to and around cargo anticipated. As XQ And early resulting a mentioned, production, on later impact XXXX. Jubilee slight XQ deferral South than to has in East did a this up XQ had month and from a XQ

with than of the still the in be for at XX% quarter production, production year, exciting the years. Jubilee now higher partnership not first impact an half the with at online. coming wells is the Forecast several new fourth seen time around of the expected to levels for It's

six, our the of Turning infrastructure months month, million at is which outboard interest. Wilcox is which we wells to well significantly to expect Trend, drilling Kosmos Mexico, the barrels quarter. structural Winterfell. Tiberius results in of focuses the four-way we increases and in started this operator on early oil in estimated exploration Last equivalent. trap well, expected Gulf and activity lead expected two The in on around hit target, this Tiberius the Slide drilling gross the month, is set is was where XX% targeting development XXX with an commence around Later of to to September. take spud July resource a

The three initial XXX the of gross first phase The key of in our targeting equivalent. is growth second campaign the three around million drilling plan of wells of resource five oil projects. barrels the

There case XXXX. the around of production The across greater to at is area. remains an upside track first the XXX on start oil end Winterfell million project quarter of barrels the equivalent of

to the status Tortue quarters seven, project. couple the of the workstreams of key last Turning views of LNG this on update provide a Slide slide

to subsea through This workstream, completion XQ path operator As first to first now we was is communicated the the the critical of works of the the of second targeted in quarter their first driver last subsea in by quarter. and quarter, main Due CapEx is XXXX. a last project of Phase gas gas the our planned week in the results lower the in I the go. on delay

operator this the other with closely to subsea and fit working XQ timetable. are with one gas first delay optimize the We address to streams the work

vessel with better shipyards a On the arrival continue subsea revised for line delivery now FPSO quarter is we the timeline scope. work of for scheduled as work and pre-commissioning the and resource the fourth

On the handover Hub complete is ongoing. currently construction operations Terminal with to now

finishing mechanical and year vessel the of the FLNG, underway. the work third around arrival expected finally planned with pre-commissioning Sailaway and in is And the hookup construction of end. is on end of around quarter, completion

hand to over you now take financial. Neal through to the I'll

Thanks Andy.

our XQ in Turning to with Slide eight. line guidance. financials prior were

CapEx the the by in X we in of largely related XXX scope lower came the in As million, to under we accruals half subsea was normalize on that quarter million the outlier XXX of million to work guidance around million will The $XXX project. notable range expected, barrels quarter the expect the year. second in oil, of materially were below which on lifted Tortue only of the

forward are wanted included presentation, Looking is as points to our XQ I which an at this guidance, flag. a to appendix few there

the be we've production in in to of production higher the XQ in step the expect around XX% second quarter weeks. recent back Ghana than we on seen change First,

fourth Jubilee. expected. should quarter cargo OpEx and barrel quarter-on-quarter is due then higher in again the no in fall levels the increase XQ from per cargo the in TEN scheduled barrel production per as scheduled Second, OpEx with TEN to

XQ the ramp-up the is in East. of of similar be second in as completion South expected result offsetting activity CapEx Jubilee the the Third, to GoM, with a quarter

CapEx to the fourth We Tortue also expect XQ be and deferred XXXX. into quarter from early reduced the Subsea

business. opening in for the are projects and remarks, to production growing complete, the with the his growth flow Andy expected point mentioned cash important inflection as nearing As CapEx we fall free

close With Andy to back presentation. that, to it today's hand I'll

Thanks, Neal.

to first Jubilee beginning was our start-up Turning with online come The portfolio key in presentation. a X a of year, our step-up four production multiple XX%. across development to units. to of of Slide business meaningful of target XXXX At around the the production, projects catalysts growth conclude presented three half East today's with of we material the recent delivering South

production in Additional increase. later year wells further support on Jubilee should a the

has to In ILX at first very on six of with Equatorial a campaign continue while year. online subsea drilling work end track optimizing at Gulf of well to remaining quarter. Mexico, Winterfell on the expected we expect commenced expected first Guinea, to first the the infill end scopes. the year later months well the around next In quarter progress development of commence drilling the the to Tortue, start around installation the also And drilling is this Tiberius the prospect the as the active we nine with finally,

the which going of the increased our supports of the material development slide shown Delivery alongside completion flow drive multiyear various forward. spend, generation a free catalysts on should cash production

grows, flow compelling funding we'll financial cash through opportunities allocation potential As areas; our returns. shareholder three further in paydown, priority of resilience debt capital growth remain and disciplined towards

to operator now the over open you, turn call the like and I'd to questions. Thank for session the to

you. Thank

be first Johnson Meade now a question. Rice. will with Our of line We proceed questions your session. Please [Operator the question-and-answer come conducting from Charles with Instructions]

to barrels there. there. reservoirs the And XX,XXX Andy are developments can and kind but I about that direction from what Gulf our morning, question and of could there's you of What that's recent first rate a data is be would the production off for of a Winterfell two the if day Neal expectations Kosmos in oil wells. how I two team no that calibrate doing no Good our or rest and of my tieback you recognize about point? or like, seven calibrate subsea of Mexico Andy, think,

Yes. But think about us. around We're a actually, to I'll do XX% first Charles, I of do share, wells, to X,XXX barrels think you about, if gross think of would the I be it will that's it barrels XX,XXX in day. way level a that simplest of three sort it. out the net so

pipeline ultimately constrained. flowline It's It's installing.

flowline Yes. constrained. It's

opportunity phase think And flowline. actually additional at success, the with of two I And look so see another beyond be more would that. will sort we we adding The wells. second

of upside think I continuing there's So to sort Winterfell.

a ultimately said we it's As remarks, XXX-million-barrel gross our resource. in

first the a flowline to as at three then the day XX,XXX So think Neal to project. I the barrels debottleneck opportunity continue with wells, constrained said,

That Right. makes Right. sense.

it's want be is I'm over-interpreting ask, Second this, of This X. with the question to of that I favorites. end -- closed about the like right the have first I one to But bottom looks cash, kind my at like Is of the but you right, perhaps read? the have 'XX. you Tortue. that it XQ, you Slide And on going

the Yes. question, Look, I Chuck. appreciate

there [indiscernible] So is over-interpreting material.

gas week, XQ on I is 'XX, now Charles. expected that think where that in as we in which noted it XQ first is results put last VP chart,

rely should you what that's on. think I So

line your of Barclays. James question. Our come from next Hosie questions with Please proceed the with

the increase Tortue about to capacity, we think on oil day then on should sales firstly, on also barrels XXX,XXX guess, to gas delayed year-end. lower by I of facility inflation mean the expecting longer-term price And agreement for production in a price due was think Ghana, I receive actually and schedule? then Phase are additional in you delays you could you're looking say finalizing? subsea got I And under there's change you it's that what wondering the you've currently Jubilee, and the I. just you're the any we if CapEx expect

if look to FLNG That work Thanks, the drilled. we at Right. Phase the CapEx just On most the on complete, of remaining impact, FPSO the remind Tortue I, to the Okay. The the the and vessels. is CapEx machine of wells sort project subsea related James. are hub gun. lease a is been was terminal have just

So ultimately, the line on remarks, the as was it's the work. subsea this the CapEx complete subsea in delay in to CapEx, due to Neal his of But XQ, through said accruals about remaining sort the to lower due activity. in we're with guidance. XQ

of see of XQ our why therefore, that's to the XQ to guidance rephasing some unchanged. year subsea from is So delay CapEx you should sort reflect and full 'XX

will going there the back be the that and you will IQ an depending residual sort for provide 'XX Charles' that update really of process give go CapEx you we'll subsea subsea I the 'XX into James, then for on some question, completing timing of we think the to when guidance. work of And of the

we're if sort barrels just Jubilee, wells. of up, started up had gone and On XX,XXX entered from XXX,XXX Jubilee in Jubilee. at July, from of that then We per that three of we're the East. gross. I and bigger in now barrels the wells trying picture, South think we've with main had give the We've I to day, in one year, pleased performance sort very more is two field a back We up step

support we higher be field. expect with main of bump injectors, will one levels will water the be followed and Jubilee main well And South on production. of in East as production, in that, one provide fields, come it wells to another by two then in next The the those in another sort

is to close now to that your profile more we're cycle we've other We're to that reliability. around forward level South going wells is drilling which time decade, and set think So be performance is deliver [ph], maintain pleased the as got getting remainder very a it East, the opportunities. a with very on it's look sort question. the [XD] the opportunities. third And message bringing Jubilee facility program us every of drilling of to bump clearly ultimately facility I limit the of for Jubilee the forward to very really the our we the strong of We're up of the Jubilee so in high of on limit,

So strong to goal, the that's opportunity, the and think I that's we're off a start, actually.

in on the And gas XXX then the to place through September. us price, finally, all the is you're a of allow question to finalize there to to us The It's of period TEN and take price. correct. integral the forward an the and conversations around of gas Ghana POD, the Jubilee cover part government XX it, of with has as sales agreement which same the Gas end a at going

above investment everything, that in TEN. of price increment an Do there the cover believe be XXX then the James? think enables for I base get Good. I to we So started. will And us ongoing

Thank did. it you. Yes,

Neil come of Our Please question. proceed the Sachs. questions from with Mehta next your Goldman with line

Yes. helpful Thanks question is there a like first was the very if any just around guess I softness so in cash It under-lift. Andy, of the update. much, flow, the lot just It's lost about it's how make just fair you through cargo. of XQ. for XQ you'll will us up and can trajectories pick just was remind it up those And timing assume cargoes. that seemed to

pick ask I'll to up. Yes, Neal that

Yes.

So Neil, right. you're

forward. then as second ultimately, two cargo large TEN increase in And third which will XQ, we five quarter the as we quarter. timing look to Cargos, the in Jubilee lift three only really and around is first quarter, of part to we The XQ go in then half, didn't in a second the will listed just the included progress which the

lift We cargo sort half a one XQ in forward. cargo lifted haven't in going will which EG, net of XQ,

of they first the very higher component, than year. better So in much of or have considering year been the yes, back half there's is overlift end price the in an the which the

our and that square partially away, in will least yes, So XQ. XQ forecast at on in

maybe explain as productivity certainly, where can have ask an non-engineer, then about subsea. been very question, this which there I layman's area how the investment is community should fix the some Andy, in can what's And there That's helpful. a that's mind the that in confidence Okay. just and going you and addressable? terms, it's And been issues on clear there's get easily

vessel. Yes. the late Thanks, Neil. pipeline of XQ subsea that results, the we to work deepwater was delayed scope due find arrival

the straightforward of that's sort issue. So first

driving timeline. back minute. project As streams the a the work stream and a is result, come to the path work in I'll moved critical overall to the therefore,

last to VP result it's is results now noted work of in fairly with with simply gas week, And as address first XQ the looking expected and As date XQ. that then issue in in the streams pipeline. that delays further gas optimize focused the fit And and contingencies the operators delay first on timetable. the deepwater other a both the overall XQ to

sort it's basic being very together put the singular with 'XX. base So allow the plan, dealing Neil, It's of to both first on contingencies I the with getting issue. we're in XQ addresses clearly issue a plan the that's good attention of requires issue they from very of moment, the in a terms operator at think and which for a focused gas

FPSOs derisked. us the been the it hub made Mauritania for in ability the us than with in shipyards installation, handed areas we've gives creates Senegal, obviously and yard part streams, an And a level other which as -- I And where with to clearly of progress work a shouldn't work currently lot where support rather that subsea FLNG delay items completion. work of on greater to The has bringing opportunity to imports But to in been left take back, major operations the large work construction of several The it. at offshore with in focus complete been higher we any have wells major arrive an over a sailaway. pipeline flowed we're together and the even close drilled think project, clearly, across now. and and several terminal that streams has complete is got the is

that we're it's work the the disappointed other accordingly. attention the proceeding streams and needs getting delay, whilst with So subsea it are

Please line next question. proceed Our Benchmark. your the from with Chandra of with questions come Subash

the on sort of independent into that in year but of second be million clarity in Should mentioned some I next first also up under Just you shows the of at overflow $XX CapEx think that think there's we of quarter then issue. quarter. July. that additional you probably XQ CapEx some And came

I'd gets will in into well. the up then refaced that million some first and underspent there show say Subash, Yes, $XX-ish are XQ XQ CapEx probably we additional quarter in that that as the partially

to fourth get So think, than we But as again, in be provide going XX within and the we'll we some be will residual that and I then guidance the or through year get on time frame. quarter think a first that to out will get XQ clarity the I quarter and there quarter, when are again, first budget lower XQ period cycle. the

Okay, great.

And right, any keep color there? into aspects over paper X all Phase and any sort just that on politics, on is here it? the Second the the update of making secondly, week past Senegal go

expansion again, pipeline can sort to gas X. infrastructure fundamentals. say gas FPSO back that would going in We're on terminal additional a is export and sort capacity I the processing. more is of the Subash, the accommodate Phase gas to X Yes, of processing the where hub the Phase capacity brownfield putting X place Yes. on of additional Phase

of we've optimize So account moment brownfield is properly all important the in. at thing concept capital take the that the laid of most the to we

the on the is would So of sanction and which moment. from be that's ourselves concept optimized, formal that as the nothing's with that's going would the nature spend the next project regard [indiscernible] we changed VP fully the the work given at a point. year, objective increasing lines And to which at previously, gave then

the of about gas So I it's cost, again, one projects globally. X because lower feel fundamentally lowest carbon good Phase expansion

of the politics a history of around long process, the and obviously, democratic we're leading stability government up an to Senegal, the aligned terms in a next year. changes In country has as history election that. of

I flow election being no So democracy that this that demonstrated And and just normal a the one cycles part will most and of is of it's ebb politics the country. several has through be stable see it important and very as the this in thing different.

come Jefferies. questions Wilson from of [Operator with proceed Instructions] Please Our question. Mark your line next the with

for first Neal. My question

So quarter-on-quarter net watermark high to, debt given QX all this assume to from and variables is spoke from would that fair Kosmos, it you the we'll here? be see that delever the

think I we're that mean I pretty to mark. close Yes.

says at prices of where and sort clearly, right think fall. some I we're CapEx to get now is we're that production that oil inflection starting point and rising of it

to grow So high to again, that that to we're think I continue or continue up think rise in expand as right around the level. will fall. production I Yes, continues the capital

Okay. regarding And the Cool. been at Thanks. Tortue. there's questions schedule

the this health as pipeline? facilities to shipyards? that's the gas introducing In like Or of of What something has the into all time the you that's commissioning XQ. the same in or that you FLNG in gas it for extended place, XQ the time, middle and expected in sounds of it in of once system of with going was these terms original time did is happen vessels into in shortened terms various think given get plan the

Mark, Yes. take the doing we're because FPSO China work the we that. to I'll from some short, time. Senegal, it's liquidate as to on No, manage Mark, journey

would then actually, hookup And So gas the you the FPSO. say, of the gas day, goes front first introduce will into sort obviously, a of as actual it be then as shortened you result. in

of minus, of shorten the probably But that the gas of I of sort or where, FPSO. to plus FLNG again, cooldown into vessel And of around there's hope sort months first think sort timeframe. we three the it's then from sort

the down period lead You've still cargo. to X-month got cool of then first a that would around sort about

been So I shortened. it's yes, think,

inspect, because down of thing it's the derisked the ultimately doing think. think that's of me to walk I removed has away, And important for risk a lot to you're most points prepare I is startup. work take the on been and think I one

you. showing a questions time. close. to call further with that, bring Thanks no like would I'm the everyone And today. Thank to I this to at joining

your and this for time your participation. at thank lines disconnect you may You