Kosmos Energy(KOS) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Glossary and Select Abbreviations Defines key industry-specific terms and abbreviations for clarity throughout the report - The report includes a comprehensive glossary defining technical and financial terms relevant to the oil and gas industry, ensuring clarity for readers[12] Financial Statements Presents unaudited financial statements showing decreased revenue and net income due to lower oil prices Consolidated Balance Sheets Details the company's financial position, showing growth in total assets, liabilities, and equity Consolidated Balance Sheet Highlights (as of Sep 30, 2023 vs. Dec 31, 2022) | Account | Sep 30, 2023 (in thousands) | Dec 31, 2022 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $138,742 | $183,405 | | Oil and gas properties, net | $4,174,239 | $3,837,437 | | Total assets | $4,969,401 | $4,579,988 | | Long-term debt, net | $2,389,197 | $2,195,911 | | Total liabilities | $3,969,732 | $3,792,140 | | Total stockholders' equity | $999,669 | $787,848 | Consolidated Statements of Operations Summarizes operational performance, highlighting a year-over-year decline in net income and revenue Statement of Operations Summary (Unaudited) | Metric | Q3 2023 (in thousands) | Q3 2022 (in thousands) | Nine Months 2023 (in thousands) | Nine Months 2022 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Oil and gas revenue | $526,348 | $456,056 | $1,193,843 | $1,735,439 | | Net income | $85,185 | $222,254 | $191,839 | $340,827 | | Diluted EPS | $0.18 | $0.47 | $0.40 | $0.72 | Consolidated Statements of Cash Flows Outlines cash movements, showing a significant decrease in operating cash flow and a net decrease in cash Cash Flow Summary (Nine Months Ended Sep 30) | Activity | 2023 (in thousands) | 2022 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $471,394 | $863,236 | | Net cash used in investing activities | ($658,546) | ($474,039) | | Net cash provided by (used in) financing activities | $142,489 | ($332,196) | | Net increase (decrease) in cash | ($44,663) | $57,001 | Notes to Consolidated Financial Statements Provides detailed disclosures on accounting policies, debt structure, derivatives, and segment performance - The company is a deepwater independent oil and gas E&P company with key assets and production offshore Ghana, Equatorial Guinea, the U.S. Gulf of Mexico, and gas projects in Mauritania and Senegal[29] - In September 2023, the company fully repaid the remaining $137.5 million of its GoM Term Loan using cash on hand, and the loan was subsequently terminated[65] Debt Principal Balances (as of Sep 30, 2023) | Debt Instrument | Principal Balance (in thousands) | | :--- | :--- | | Facility | $925,000 | | 7.125% Senior Notes | $650,000 | | 7.750% Senior Notes | $400,000 | | 7.500% Senior Notes | $450,000 | | GoM Term Loan | $0 | | Total long-term debt | $2,425,000 | Segment Revenue and Income (Q3 2023) | Segment | Oil and Gas Revenue (in thousands) | Net Income (Loss) (in thousands) | | :--- | :--- | :--- | | Ghana | $348,366 | $78,076 | | Equatorial Guinea | $75,014 | $16,346 | | U.S. Gulf of Mexico | $102,968 | $27,209 | | Mauritania/Senegal | $0 | $21,563 | Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes financial results, attributing revenue changes to sales volumes and commodity price fluctuations - The company's 2023 capital budget is approximately $800 million, allocated to maintenance, development, and exploration projects[153][154][155] - An oil discovery was announced at the Tiberius exploration prospect in the U.S. Gulf of Mexico, with approximately 75 meters of net oil pay[122] - The Jubilee South East project in Ghana successfully started up in July 2023 with two producer wells online[116] Sales Volume and Price Comparison | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Sales (MBoe) | 6,727 | 4,685 | 16,344 | 16,877 | | Avg. Sales Price ($/Boe) | $78.24 | $97.34 | $73.04 | $102.83 | Quantitative and Qualitative Disclosures about Market Risk Details exposure to commodity price and interest rate risks and the use of derivatives for mitigation - The company actively uses derivative contracts (collars, puts, calls) to manage exposure to volatile oil prices[182] - A hypothetical 10% increase in commodity prices would decrease future pre-tax earnings by approximately $44.9 million due to hedge positions[185] - A 10% increase in the floating market rate would add an estimated $4.9 million in annual interest expense on its $925.0 million of variable-rate debt[186] Controls and Procedures Confirms the effectiveness of disclosure controls and procedures with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[188] - No material changes occurred in the company's internal control over financial reporting during the most recent fiscal quarter[189] PART II. OTHER INFORMATION Legal Proceedings Reports no material changes to legal proceedings from the latest Annual Report - There have been no material changes to legal proceedings since the last annual report[190] Risk Factors States no material changes to risk factors since the 2022 Annual Report - There have been no material changes to the company's risk factors since the 2022 Form 10-K[191] Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities during the period - None[192] Other Information Indicates no material changes requiring disclosure that were not previously reported - No material changes have occurred that have not been previously disclosed[195] Exhibits Lists exhibits filed with the report, including key agreements and required certifications - Filed exhibits include the Amended and Restated Facility Agreement dated October 19, 2023, and CEO/CFO certifications[200]