Oil and gas Kosmos Energy has closed a Gulf of Mexico loan facility with Beal Bank USA and Trafigura Trading LLC ("Trafigura").
The company had in June entered into a crude oil prepayment agreement with commodities trader Trafigura for a portion of its production in the U.S. Gulf of Mexico.
The prepayment agreement provided up to $200 million of crude oil sales primarily related to a portion of the company's 2022 and 2023 Gulf of Mexico production, with $150 million committed by Trafigura.
Now, Kosmos Energy says it has restructured the previously announced Gulf of Mexico prepayment facility into a five-year $200 million term-loan facility secured against the company's U.S. Gulf of Mexico assets.
The $50 million advanced under the prepayment agreement with Trafigura announced in June has been rolled into the new facility, structured by CSG Investments, Inc., with the remaining $150 million provided by Beal Bank.
The facility, which has an interest rate of approximately 6%, increases the company's borrowing capacity by $50 million from the initial prepayment agreement, extends the tenor to five years, and includes an accordion feature allowing the facility to be expanded up to $300 million, Kosmos Energy said.
Neal Shah, Kosmos Energy's Chief Financial Officer said: "The closing and syndication of the Gulf of Mexico facility enhances the company's strong liquidity position with access to low-cost, flexible financing. Along with free cash generated by our low-cost production assets and proceeds of the recent Shell transaction expected this quarter, the company's balance sheet is expected to strengthen into 2021."
As reported earlier, Kosmos in September agreed to sell some of its frontier exploration asset interests to Shell for up to $200 million.
Shell will acquire Kosmos’ interest in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa for which will pay $100 million upfront. The deal also includes contingent payments of $50 million payable upon each commercial discovery from the first four exploration wells drilled across the asset portfolio, capped at $100 million in aggregate. Three of the four wells are currently planned for 2021.
Kosmos said Monday that, as of September 30, 2020, following the closing of the Gulf of Mexico facility, the company had approximately $650 million of available liquidity ahead of the conclusion of the fall RBL (reserve-based lending) redetermination which the company expects to conclude shortly.