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Kosmos Energy(KOS) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported net production of approximately 59,000 barrels of oil equivalent per day, consistent with guidance, with full-year guidance remaining unchanged at 65,000 to 69,000 barrels of oil equivalent per day [10][17][27] - Realized pricing was lower quarter-on-quarter due to lower commodity prices during Q1, offset by lower operating expenses [27][40] Business Line Data and Key Metrics Changes - Jubilee gross oil production averaged around 72,000 barrels per day, down from the previous quarter due to reduced water injection [10][17] - TEN gross oil production averaged just over 20,000 barrels per day, with plans for additional wells to maintain production levels [3] - Equatorial Guinea's gross oil production averaged just over 27,000 barrels per day, with a three-well infill drilling campaign expected to begin in Q4 [4] Market Data and Key Metrics Changes - The company expects production growth primarily from Jubilee, with gross production anticipated to rise over 50% from Q1 to more than 110,000 barrels of oil per day in Q4 [20][21] - The Gulf of Mexico net production was approximately 16,000 barrels of oil equivalent per day, in line with guidance [5] Company Strategy and Development Direction - The company is focused on near-term development projects, including Jubilee Southeast, Tortue Phase 1, and Winterfell, which are expected to collectively increase production by around 50% from now to 2024 [17][18] - The company plans to drill the Tiberius ILX well in the Gulf of Mexico next quarter and is progressing on the second phase of Tortue with partners in Mauritania and Senegal [18][24] Management's Comments on Operating Environment and Future Outlook - Management highlighted the importance of maintaining production levels and extending the plateau at Jubilee, with a target to keep gross production above 100,000 barrels per day through the end of the decade [21][22] - The company anticipates a free cash flow inflection point in the second half of the year as production increases and capital expenditures decrease [40] Other Important Information - The company has identified over 30 development drilling opportunities at Jubilee, aiming to maintain production levels [21] - Recent transactions in the sector have underscored the value of strategic gas assets, with the company emphasizing its unique portfolio across Mauritania and Senegal [37][38] Q&A Session Summary Question: Update on free cash flow outlook for the year - Management indicated that free cash flow is expected to ramp up in the second half of the year as production increases and capital expenditures decrease [40][70] Question: Insights on Jubilee production guidance - Management confirmed that reaching 110,000 barrels per day by Q4 is consistent with operator guidance, with better knowledge of well performance contributing to confidence [48][49] Question: Update on Tortue Phase 1 and critical path items - Management clarified that the subsea installation is now the critical path to first gas, with good progress being made [55][94] Question: Expectations for Equatorial Guinea infill campaign - Management expects marginal growth from the infill campaign, with significant production increases anticipated from the Akeng Deep well [62] Question: Update on LNG forward selling - Management stated that there are currently no plans for forward selling LNG from Phase 1, with ongoing discussions with various parties [93]