Plethora of Projects to Boost Kosmos Energy’s Future

Kosmos Energy is making headway on its goal to ramp up production in three core development projects, company executives said during the company’s Nov. 6 third-quarter earnings call.

Kosmos Chairman and CEO Andrew Inglis said the company had set a goal in the second half of 2022 to increase production by 50% by the second half of 2024. To do so, Kosmos is relying on three developments: Jubilee Southeast, Tortue Phase 1 and Winterfell.

“In the third quarter, we brought the first of the development projects, Jubilee Southeast, online, which increased Jubilee gross production to around 100,000 barrels of oil a day, up almost 50% from the production levels seen in the first half of the year,” Inglis said.

The strategy is starting to pay off, as quarter-over-quarter revenue grew to $526 million from $273 million. Capex rose by about $20 million in the third quarter to $193 million.

Jubilee South East’s robust production offshore Ghana allowed the first meaningful step up in third quarter production, raising Kosmos’ volumes by 17% compared with the previous quarter. Jubilee averaged a gross 95,900 bbl/d, an increase of more than 30% over the second quarter as three producer wells came online across the South East and the main fields.

Also in Ghana, Kosmos’ TEN Field averaged 15,000 bbl/d. Production dipped from the second quarter, but was in line with company expectations. Kosmos had planned a two-week shutdown for maintenance.

“While working on the maintenance of the FPSO, we modified the gas train, and the rerouted gas is now being re-injected into the Entome Field to support reservoir pressure and maintain production levels,” Inglis said. “This has resulted in around a 75% reduction in flaring, a major step towards our goal to eliminate routine flaring by 2026.”

Kosmos also saw production rise in several projects its involved in worldwide.

In Equatorial Guinea, Kosmos’ net production averaged 8,900 bbl/d. Gross oil production in the Ceiba and Okume fields, of which Kosmos owns a 40.375% interest, averaged 25,400 bbl/d.

An infill drilling campaign is expected to bring three wells online in the first half of 2024. The wells will add more than 10,000 bbl/d of oil, the company said. Kosmos’ Akeng Deep ILX well is also on track to spud in 2024.

In the Gulf of Mexico (GoM), net production outperformed expectations, averaging 157,000 boe/d. GoM production was able to offset some of the low production from Jubilee, Kosmos executives said.

Drilling on the Winterfell oil development also began in the quarter, with the first well completed. First oil is expected at the end of first-quarter 2024. Production in the Kodiak oil field performed in line with expectations, Inglis said. Winterfell development will be supported by a recompleted well scheduled for mid-2024.

“In recent weeks, we have deepened our portfolio of high-quality, advantaged, oil and gas investment opportunities,” Inglis said. “In October, we announced a discovery with the Tiberius well in the Gulf of Mexico, and today we announced that we had assumed operatorship and increased our working interest in the world-scale, Yakaar Teranga Fields in Senegal… We're excited by both these projects, as we expect them to create the next leg of value growth for Kosmos beyond 2024.”

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Also in Senegal, the Tortue Phase 1 project continues to progress. Earlier in the year, four wells were drilled and completed, with an expected production capacity higher than normal for first gas, Kosmos said.

Construction work on the hub terminal was also completed. After performance issues with a pipeline vessel, all subsea work has been re-contracted, with Allseas and Saipem expected to begin work on infill flowlines and subsea structures in early December. The FPSO is currently en route to the field and is expected to arrive in early 2024.

Kosmos and partners are “currently working with Golar to identify ways to advance commissioning of the vessel,” Inglis said. “The critical path to first gas on Phase 1 of the Tortue project is now through the arrival, hook-up and commissioning of the FPSO. The delivery of gas in the first quarter of 2024—as signaled by BP, the operator, in its third quarter results last week—depends on the execution of this workstream, which has the potential to slip into the second quarter of 2024.”

Project delays

Kosmos also reported delays in a few of their projects and guided full year 2023 production to approximately 63,000 boe/d. Fourth quarter GoM production is also expected to be lower than the third quarter due to planned and unplanned downtime, Inglis said.

Tortue and Winterfell are expected to drive a production uplift in 2024, with Tortue providing further portfolio diversification both geographically. The company will also add a new multi-decade LNG revenue stream once online.

Kosmos expects the projects to increase free cash flow, which will help pay down debt and enable the company to provide returns to shareholders.

“The Kosmos management team is excited by the future opportunity set in front of us and energized lever growth in value for our shareholders,” Inglis said.