Kosmos Energy(US:KOS)2020-05-11 19:28PART I. FINANCIAL INFORMATION Financial Statements The company reports a Q1 2020 net loss of $182.8 million, driven by lower revenue and a significant asset impairment charge Consolidated Balance Sheets Total assets decreased to $4.18 billion while total liabilities increased, resulting in a decline in stockholders' equity Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Total Assets | $4,183,962 | $4,317,232 | | Cash and cash equivalents | $126,507 | $224,502 | | Oil and gas properties, net | $3,428,555 | $3,624,751 | | Total Liabilities | $3,538,814 | $3,475,530 | | Long-term debt, net | $2,059,929 | $2,008,063 | | Total Stockholders' Equity | $645,148 | $841,702 | Consolidated Statements of Operations The company's Q1 2020 net loss widened to $182.8 million due to lower revenue and a $150.8 million asset impairment Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Oil and gas revenue | $177,780 | $296,790 | | Impairment of long-lived assets | $150,820 | $0 | | Derivatives, net | $(136,038) | $77,085 | | Net loss | $(182,767) | $(52,906) | | Diluted net loss per share | $(0.45) | $(0.13) | Consolidated Statements of Stockholders' Equity Stockholders' equity declined to $645.1 million, primarily driven by the quarterly net loss and dividend payments - The primary drivers for the decrease in stockholders' equity during Q1 2020 were the net loss of $182.8 million and dividends of $18.9 million24 Consolidated Statements of Cash Flows Net cash used in operating activities remained stable, while a net decrease in cash of $98.6 million was recorded Cash Flow Summary (in thousands) | Activity | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(16,963) | $(17,347) | | Net cash used in investing activities | $(107,523) | $(79,448) | | Net cash provided by financing activities | $25,897 | $53,713 | | Net decrease in cash | $(98,589) | $(43,082) | Notes to Consolidated Financial Statements Notes detail a $150.8 million asset impairment, debt structure, derivative contracts, and dividend suspension - The company is a deepwater E&P company with key assets in Ghana, Equatorial Guinea, U.S. Gulf of Mexico, and a gas development in Mauritania and Senegal32 - Due to the significant decrease in oil prices, the company recorded an asset impairment of $150.8 million for proved oil and gas properties in the U.S. Gulf of Mexico5797 - In response to economic conditions, the Board of Directors suspended the quarterly dividend of $0.0452 per common share in March 2020116 - The company recorded $13.9 million in restructuring charges for employee severance and related benefit costs as part of a corporate reorganization45121 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the adverse impacts of COVID-19 and lower oil prices on operations, financials, and liquidity - The COVID-19 pandemic has significantly impacted operations, leading to project delays, suspension of drilling programs, and a delay in the Greater Tortue Ahmeyim Phase 1 project by approximately 12 months to H1 2023128129 - In response to market conditions, the company reduced its 2020 capital expenditure program by approximately 40% to an estimated $200 - $225 million159 Q1 2020 vs Q1 2019 Performance | Metric | Q1 2020 | Q1 2019 | | :--- | :--- | :--- | | Total Sales (MBoe) | 3,973 | 5,103 | | Average Sales Price (/Boe) | $44.74 | $58.16 | | Oil and Gas Revenue (thousands) | $177,780 | $296,790 | | Net Loss (thousands) | $(182,767) | $(52,906) | - In April 2020, the company's main credit facility borrowing base was redetermined and reduced from $1.6 billion to $1.5 billion, decreasing undrawn availability71157160 Quantitative and Qualitative Disclosures about Market Risk The company faces primary market risks from commodity price and interest rate fluctuations, managed via derivatives - The company's primary market risks are commodity price volatility and interest rate changes183 - As of March 31, 2020, a hypothetical 10% increase in oil prices would decrease future pre-tax earnings by approximately $28.0 million, while a 10% decrease would increase them by $15.6 million192 - In April 2020, the company restructured most of its remaining 2020 derivative contracts, converting them into 7.0 MMBbls of Dated Brent swaps at an average fixed price of $42.67/bbl85191 - At March 31, 2020, the company had $1.45 billion in floating-rate debt, where a 10% increase in LIBOR would result in an additional $1.4 million in annual interest expense193 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2020194 - No changes occurred during the fiscal quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting195 PART II. OTHER INFORMATION Legal Proceedings No material changes to legal proceedings were reported since the company's last annual filing - No material changes in legal proceedings were reported since the last annual report196 Risk Factors Key updated risks include the adverse impacts of the COVID-19 pandemic and potential limitations on NOL carryforwards - The COVID-19 pandemic poses a significant risk, potentially affecting business operations, financial condition, and liquidity through project delays and supply chain disruptions198199200 - The company's ability to use its federal and state net operating loss (NOL) carryforwards could be limited by Section 382 of the Internal Revenue Code if a future ownership change occurs202203 Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of its equity securities during the reporting period - No unregistered sales of equity securities were reported for the period205 Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the reporting period - No defaults upon senior securities were reported206 Mine Safety Disclosures This section is not applicable as the company does not engage in mining operations - Not applicable207 Other Information No material changes were required to be reported that were not previously disclosed - No material changes were reported under this item208 Exhibits This section lists all exhibits filed with the quarterly report, including required certifications