Kosmos posts major loss in Q3

Dallas-based Kosmos Energy posted a net loss of US$59.8 million in Q3, however, is moving forward with its plans for a multi-well drilling program next year.

Image of the Atwood Achiever, from Atwood.

The company's loss during the period is a steep fall from a net income of $60.3 million in Q3 2015.

Exploration expenses totaled $66 million for the period, compared to $19 million in the same period of 2015. Included in the quarter were approximately $47 million of costs associated with the stacking of the Atwood Achiever ultra deepwater drillship.

Kosmos also reported picking up a majority stake and operatorship in one block off Mauritania, while offloading 20% stake in three blocks offshore Africa.

“With the delivery of first oil from the TEN project and progress toward restoring full operating capability at Jubilee, our asset in Ghana has reached an important inflection point," Andrew G. Inglis, Kosmos chairman and CEO said. "Following our world-class gas discoveries offshore Mauritania Senegal, we are currently designing a multi-well drilling program, to begin mid-2017, that we believe will target some of the largest undrilled exploration prospects identified along the Atlantic Margins.”

Mauritania 

Last month, Kosmos acquired Block C6 in Mauritania with a 90% interest and operatorship. Block C6 offers an extension of the play and prospects identified in Kosmos’ Block C12, and Kosmos plans to acquire additional seismic over Blocks C12 and C6 later this year, the company said.

During Q3 Kosmos also began began 3D seismic surveys over Blocks C8 and C13 offshore Mauritania, as well as Blocks 42 and 45 in Suriname.

TEN

At Tullow’s TEN project, Kosmos said good progress has been made towards converting the Jubilee FPSO to a permanently spread moored facility. In early September locking of the turret was completed, and the remaining interim spread moor work started in early October. The first phase of work is on schedule and is expected to be complete by year-end 2016.

The partners then plan a second phase of work to permanently spread moor the FPSO at its optimal heading, subject to government review. This phase of work is expected to be completed in 1H 2017 and would require an eight to 12 week shutdown. Upon completion of the second phase, production is expected to return to the levels achieved before the turret bearing issue occurred. A deepwater offloading buoy, anticipated to be installed in 1H 2018, is intended to restore full offloading functionality and remove the need for the DP shuttle and storage tankers and associated operating costs.

In mid-August, first oil on the TEN project and the 11 development wells in the initial phase of drilling were completed as of early October. The field produced an average of 24,000 b/d gross when online during Q3 and is currently producing approximately 50,000 b/d gross. Water injection has now increased to approximately 100,000 b/d of water, which is expected to allow a gradual ramp-up in oil production to test the TEN FPSO capacity around the end of the year. Gas commissioning is ongoing with the objective to begin gas injection into the Ntomme reservoir by year-end. Kosmos anticipates to lift its first cargo from TEN in Q4.

Gross sales volumes from the Jubilee field averaged approximately 91,000 b/d. Production during the quarter was impacted by downtime associated with the turret bearing issue identified on the Jubilee FPSO in February 2016.

Galp deal

Kosmos entered a deal with Galp Energia subsidiary SPGS to farmout 20% non-operated stake in Blocks 5, 11, and 12 offshore Sao Tome and Principe. Based on the terms, Galp will pay a proportionate share of Kosmos’ past costs in the form of a partial carry on the 3D seismic survey expected to begin in Q1 2017.

The deal, which is expected to close prior to year-end, is subject to government approval and other customary closing conditions.