Kosmos Energy(US:KOS)2024-08-05 15:50Production and Revenue - The company reported an average production of approximately 123,400 Boepd gross (41,900 Boepd net) from Ghana during Q2 2024[120]. - U.S. Gulf of Mexico production averaged approximately 11,700 Boepd net (~83% oil) for Q2 2024[122]. - Equatorial Guinea production averaged approximately 24,200 Bopd gross (8,500 Bopd net) in Q2 2024[126]. - Total oil and gas revenue for Q2 2024 was $450.9 million, a significant increase from $273.3 million in Q2 2023[132]. - Average oil sales price per barrel was $83.51 in Q2 2024, compared to $75.32 in Q2 2023[132]. - Oil and gas revenue increased by $177.6 million to $450.9 million for the three months ended June 30, 2024, compared to $273.3 million for the same period in 2023, driven by higher sales volumes and prices[134]. - The company sold 5,954 MBoe at an average realized price of $75.73 per barrel equivalent during the three months ended June 30, 2024, compared to 4,116 MBoe at $66.38 per barrel equivalent in the prior year[135]. - For the six months ended June 30, 2024, oil and gas revenue increased by $202.5 million to $870.0 million compared to $667.5 million in the same period of 2023[139]. Costs and Expenses - Total costs and expenses rose by $95.7 million to $315.8 million for the three months ended June 30, 2024, compared to $220.1 million in the same period of 2023[134]. - Oil and gas production costs increased by $87.2 million during the three months ended June 30, 2024, primarily due to higher sales volumes and production costs[136]. Net Income and Financial Performance - Net income for the three months ended June 30, 2024, was $59.8 million, an increase of $36.4 million from $23.3 million in the same period of 2023[134]. - Net cash provided by operating activities for the six months ended June 30, 2024, was $496.2 million, a significant increase from $222.0 million in the same period of 2023, driven by higher sales volumes and oil prices[150]. Debt and Financial Flexibility - The company executed an amendment increasing the borrowing base capacity to approximately $1.35 billion in April 2024[120]. - As of June 30, 2024, borrowings under the Facility totaled $750.0 million, with undrawn availability of $455.0 million[149]. - Total long-term debt as of June 30, 2024, increased to $2.65 billion from $2.43 billion as of December 31, 2023, reflecting ongoing financing activities[152]. - The borrowing base capacity of the Facility was increased to $1.35 billion, with $750 million drawn as of June 30, 2024, providing additional financial flexibility[158]. - The company has no outstanding borrowings under the Corporate Revolver as of June 30, 2024, with undrawn availability of approximately $165 million[161]. Capital Expenditures and Projects - The company plans to spend approximately $750 million on capital expenditures in 2024, including $300 million for maintenance activities and $350-$400 million for the development of key projects in Mauritania and Senegal[155]. - The capital budget for 2024 is based on exploitation and production plans in Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico[147]. - The company expects to incur capital costs for drilling additional wells and executing production activities in Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico[153]. - The Jubilee Field gas sales agreement was extended to November 2025 at a price of approximately $3.00 per MMBtu[121]. - The Greater Tortue liquefied natural gas project is on track for first gas expected in August 2024[127]. - The Tiberius project in the U.S. Gulf of Mexico is progressing with a final investment decision expected later in 2024[124]. - The company plans to conduct a new 4D seismic survey in Ghana starting in early 2025[121]. Derivatives and Risk Management - The company recorded a loss of $21.0 million on derivatives for the six months ended June 30, 2024, compared to a gain of $3.8 million in the same period of 2023[143]. - The fair value of outstanding derivative contracts was a net liability of $6.975 million, reflecting the company's exposure to commodity price risk[183][187]. - The company utilizes various oil derivative contracts, including collars, put options, and call options, to mitigate exposure to commodity price risk[185]. - The company entered into Dated Brent two-way collar contracts for 2.0 million barrels from January 2025 through June 2025, with a floor price of $70.00 and a ceiling price of $95.00 per barrel[187]. - A hypothetical 10% increase in commodity futures prices would decrease future pre-tax earnings by approximately $14.2 million, while a 10% decrease would increase future pre-tax earnings by approximately $8.1 million[187]. - The company manages market and counterparty credit risk in accordance with established policies, determining the timing and extent of derivative transactions[182]. Compliance and Financial Covenants - The company remains in compliance with financial covenants under its Facility and Corporate Revolver as of March 31, 2024[159]. - The company is actively monitoring macroeconomic conditions that could impact liquidity and financial performance, particularly in credit and equity markets[163]. Convertible Senior Notes - The company has issued 3.125% Convertible Senior Notes with an initial conversion price of approximately $7.02 per share, allowing holders to convert notes into 142.4501 shares per $1,000 principal amount[169]. - The company may redeem the 3.125% Convertible Senior Notes for cash after March 22, 2027, if the stock price exceeds 130% of the conversion price for at least 20 trading days[172]. - The company has entered into capped call transactions to reduce potential dilution upon conversion of the 3.125% Convertible Senior Notes, with an initial cap price of $10.80 per share[174]. Risks and Accounting Policies - The company is subject to various risks including macroeconomic conditions, oil price volatility, and regulatory changes that may impact future performance[178]. - The company has critical accounting policies related to revenue recognition and estimates of proved oil and natural gas reserves, which may change based on new information[177]. - The company's revenues and future growth rates are highly dependent on crude oil prices, which have historically been volatile[184].