Kosmos cuts losses, slashes capex after ‘refining’ work program
American oil and gas company Kosmos Energy tightened its net loss during the first quarter 2017 boosted by an increase in oil revenues and slashed its capex for 2017 by $25 million.
According to its report on Monday, the company generated a net loss of $28.8 million for the first quarter of 2017, as compared to net loss of $59 million 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 $42.7 million for the first quarter of 2017.
Andrew G. Inglis, chairman and chief executive officer, said: “The strong cash flow generation of the business in combination with the closing of our Mauritania and Senegal transactions with BP, has allowed Kosmos to improve its financial strength. In addition, our continued exploration success with the Yakaar-1 well in Senegal, supports our belief that the basin is one of the largest petroleum systems to be opened along the Atlantic Margin.”
To remind, earlier on Monday, the company announced a ‘major’ gas discovery offshore Senegal in the Yakaar-1 well in a Cayar Offshore Profond block, which is jointly owned with BP.
Further in the quarterly report, the company said that its first quarter 2017 oil revenues were $103 million versus $62 million in the same quarter of 2016, on sales of 2 million barrels of oil in 2017 as compared to 1.9 million barrels in 2016. The company’s total revenues in 1Q 2017 were $151.97 million compared to $62.13 million in the prior-year quarter.
Exploration expenses totaled $106 million for the first quarter, compared to $24 million in the same period of 2016. Included in the quarter were approximately $42 million of costs associated with the stacking of the Atwood Achiever as well as a $48 million cancellation payment related to the exercise of the company’s election to cancel the fourth year option of the Atwood Achiever drilling rig contract.
Total capital expenditures in the first quarter were $120 million, which was offset by the initial proceeds from the BP transactions of $222 million resulting in a credit to the capital budget of $102 million for the first quarter.
Kosmos exited the first quarter of 2017 with $1.3 billion of liquidity and $961 million of net debt. This compares to $1.2 billion of liquidity and $1.1 billion of net debt as of December 31, 2016.
The company has reduced its net capex budget for 2017 to $150 million, from the previously announced $175 million, after refining cost estimates for the 2017 work program. Approximately $75 million of the budget is allocated to Ghana, excluding Jubilee Turret remediation costs which are expected to be mitigated by insurance proceeds, and approximately $75 million is allocated to exploration, including seismic and new ventures costs.
The 2017 net capex budget of $150 million represents a more than 75 percent decrease from the company’s 2016 net capex budget.