Kosmos bleeds red ink despite revenue hike

U.S.-based oil company Kosmos Energy posted a net loss for the last quarter of 2016, despite revenue increase, as opposed to the year-before period.

For the fourth quarter of 2016, Kosmos generated a net loss of $56.7 million, as compared to net income of $24 million in the same period last year.

The company’s total revenues and other income for the fourth quarter 2016 increased to $210.9 million, compared to $121.9 million in the corresponding quarter of 2015.

Fourth quarter 2016 oil revenues were $156 million versus $122 million in the same quarter of 2015, on sales of 3 million barrels of oil in 2016 as compared to 2.8 million barrels in 2015.

The company’s production expense for the fourth quarter was $44 million, or $14.75 per barrel, versus $30 million, or $10.50 per barrel, in the fourth quarter of 2015. The increase in total production expense was primarily attributable to selling its initial cargo from TEN, which included one-time startup costs associated with field commissioning. The increase on a per barrel basis was the result of higher expenses from the TEN field and the additional operating costs related to the Jubilee turret bearing issue.

Exploration expenses totaled $76 million for the fourth quarter, compared to $24 million in the same period of 2015. Included in the quarter were approximately $44 million of costs associated with the stacking of the Atwood Oceanics-owned drillship Atwood Achiever as well as $31 million in seismic and geologic and geophysical costs primarily related to Mauritania and Senegal.

Total capital expenditures in the fourth quarter were $88 million while its full year capital expenditures totaled $645 million.

Kosmos exited the fourth quarter of 2016 with $1.2 billion of liquidity and $1.1 billion of net debt.

Capex budget for 2017

Kosmos’ previously announced $175 million net capex budget for 2017 is unchanged, and represents more than a 75% reduction from 2015 net capex. Approximately $75 million of the budget is allocated to Ghana, excluding Jubilee Turret remediation costs which are expected to be recovered from insurance, and approximately $100 million is allocated to exploration, including seismic and new ventures costs.

Additionally, in 2017 the company expects one-time costs of approximately $200 million related to the rig stacking, subsidy costs and costs related to the cancellation of the previous Atwood Achiever extension which will be offset by the proceeds of the Mauritania and Senegal farm-out.

Andrew G. Inglis, Kosmos chairman and chief executive officer, said: “Looking ahead, 2017 promises to be a transformational year as we plan to drill some of the industry’s most prospective exploration wells in our second phase of exploration targeting liquids offshore Mauritania and Senegal.”