Kosmos Energy(KOS) - 2019 Q4 - Annual Report

Financial Position - The company reported a net liability position of $5.2 million in open commodity derivative instruments as of December 31, 2019[470]. - The company had outstanding indebtedness of $1.4 billion under a facility with an interest rate of approximately 5.3% as of December 31, 2019[472]. - The fair value of contracts outstanding as of December 31, 2019, was a net liability of $8,522,000, reflecting changes in contract fair value and contract maturities[463]. - The Company's asset retirement obligations totaled $235.1 million as of December 31, 2019, reflecting significant estimation challenges in determining the present value of dismantlement and reclamation activities[484]. - The Company's long-term debt decreased to $2.008 billion in 2019 from $2.121 billion in 2018, indicating improved financial leverage[496]. - As of December 31, 2019, the company's total oil and gas properties amounted to $5.72 billion, with proved properties valued at $4.90 billion[582]. - The company had outstanding letters of credit totaling $3.1 million as of December 31, 2019, under the LC Facility[614]. - As of December 31, 2019, the total carrying value of the company's debt was $2,042.55 million, with a fair value of $2,064.96 million, compared to a carrying value of $2,161.87 million and a fair value of $2,175.03 million as of December 31, 2018[641]. Revenue and Profitability - Oil and gas revenue for 2019 was $1,499,416, a 69% increase from $886,666 in 2018[500]. - Total revenues and other income reached $1,509,909 in 2019, up from $902,369 in 2018, marking a 67% increase[500]. - Net loss for 2019 was $55,777, an improvement from a net loss of $93,991 in 2018[500]. - The accumulated deficit increased to $1.223 billion in 2019 from $1.167 billion in 2018, indicating ongoing challenges in profitability[498]. - The company recognized $11.5 million in restructuring charges during 2019 related to employee severance and benefits as part of a corporate reorganization[547]. Cash Flow and Assets - Net cash provided by operating activities was $628,150 in 2019, significantly higher than $260,491 in 2018[505]. - Total current assets increased to $566.6 million in 2019 from $509.7 million in 2018, driven by higher cash and receivables[496]. - Cash, cash equivalents, and restricted cash at the end of 2019 totaled $229,346, up from $185,616 at the end of 2018[505]. - The company reported receivables of $2.7 million for doubtful accounts in joint interest billings as of December 31, 2019, compared to $1.2 million in 2018[518]. - The company reported a significant increase in inventories, which rose to $114.4 million in 2019 from $84.8 million in 2018, indicating potential growth in production capacity[496]. Derivative Instruments and Risk Management - The company utilized various oil derivative contracts, including collars, put options, call options, and swaps, to mitigate exposure to commodity price risk[465]. - A hypothetical 10% increase in commodity futures prices would decrease future pre-tax earnings by approximately $54.6 million, while a 10% decrease would increase future pre-tax earnings by approximately $49.2 million[470]. - The company reported a loss of $70.7 million from derivatives not designated as hedging instruments in 2019[635]. - The company had derivative assets valued at $12.9 million and liabilities of $20.4 million as of December 31, 2019[634]. - The company’s total derivatives not designated as hedging instruments resulted in a gain of $1.2 million from oil and gas revenue in 2019[635]. Capital Expenditures and Investments - The company’s capitalized exploratory well costs increased to $445.79 million as of December 31, 2019, with additions of $78.13 million during the year[585]. - The DGE acquisition in September 2018 was valued at $1.275 billion, with $952.6 million in cash and $307.9 million in common stock[562]. - The company completed a farm-out agreement with Shell in November 2019, resulting in a 20% participating interest in Block 6 and a 30% participating interest in Block 11 offshore Sao Tome and Principe[559]. - The company entered into put option contracts for 3.7 million barrels at a weighted average price of $50.00 per barrel for 2020[632]. - The company adopted ASU 2016-02, resulting in a $21.7 million increase in assets and liabilities related to leasing activities[553]. Personnel and Management - The company’s ability to attract and retain qualified technical personnel is critical for its operational success[24]. - The company’s management is focused on risk management activities, including the use of derivative financial instruments to hedge commodity and interest rate risks[27]. Tax and Regulatory Matters - The Tax Cut and Jobs Act reduced the U.S. corporate income tax rate from 35% to 21%, resulting in a $16.7 million charge to deferred tax expense due to adjustments in deferred tax assets[653].