Kosmos eyes wider investor base with secondary listing plans
Kosmos Energy plans to broaden its international investor base by pursuing a secondary listing on the standard segment of the main market of the London Stock Exchange (LSE).
Founded in 2003, Kosmos is an independent oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margins.
In 2007, Kosmos discovered the Jubilee field offshore Ghana, one of the largest oil discoveries offshore West Africa during the last decade. Oil production began in 2010, just 42 months after discovery, a record for a deepwater development in this water depth in West Africa.
Kosmos undertook an initial public offering of its shares, with trading beginning on the New York Stock Exchange (NYSE) on May 11, 2011.
Kosmos opened a new basin offshore Mauritania and Senegal in 2015-2016 with major discoveries of natural gas, including the Greater Tortue area. According to Kosmos’ estimates, it has now discovered approximately 40 trillion cubic feet of gross pmean resource through the drilling of six consecutive successful exploration and appraisal wells offshore Mauritania and Senegal at a 100% success rate.
In December 2016, Kosmos announced a partnership with BP in Mauritania and Senegal following a competitive farm-down process. As a result of the transactions, Kosmos’ balance sheet has been strengthened by materially reducing its capital expenditure requirements, effectively funding its Mauritania-Senegal exploration and development work program for the next several years. This includes three consecutive high impact exploration wells beginning in the third quarter of 2017, and the development of the Greater Tortue field.
According to the company, its solid balance sheet with $1.2 billion in liquidity, low leverage, and strong free cash flow generation has enabled management to consistently execute its growth strategy in a low commodity price environment.
Currently, all of Kosmos’ operating revenues are generated from its operations offshore Ghana. During the first half of 2017, gross sales volumes from Ghana averaged approximately 132,000 barrels of oil per day (net: 26,900 bopd).
Reasons for new listing
Kosmos has continued to develop since its IPO in 2011 and has now become one of the few independent international E&P companies listed in the United States, the company emphasized. Consequently, the company believes it is now the right time to obtain a secondary listing on the LSE.
“Kosmos benefits from a diverse and supportive shareholder base built over a sustained period since listing on the NYSE in 2011. However, Kosmos believes there are a number of European investment funds and specialist international oil and gas investors that are currently unable to hold Kosmos’ shares due to their listing outside of a European regulated market,” the company explained.
Kosmos anticipates that the number of analysts providing independent investment research on the company will increase following the listing of Kosmos’ shares on the LSE, in line with the level of analyst coverage that the company’s London listed peers currently attract.
As a result, the listing is expected to broaden Kosmos’ international investor base, said Kosmos.
Andrew G. Inglis, Chairman and Chief Executive Officer of Kosmos Energy, said: “We believe that Kosmos represents a compelling investment proposition both in terms of its upcoming high-impact exploration program and the development of recent gas discoveries. We have experienced tremendous growth over the years driven by increasing production and cash flow in Ghana and recent discoveries offshore Mauritania and Senegal.
“This secondary listing is the next step in the company’s evolution. Our NYSE listing has enabled Kosmos to attract blue chip investors and given us access to significant opportunities. We selected the LSE for our secondary listing because of its strong liquidity, reputation for transparency, and participants’ knowledge of the role of frontier exploration and development in our industry.”
The listing process is expected to be completed later in the third quarter of 2017.