Kosmos Energy(US:KOS)2023-08-07 17:31Financial Data and Key Metrics Changes - The company reported a CapEx of $170 million in Q2, which was below the guidance range of $200 million to $225 million, primarily due to lower accruals on the subsea work scope for the Tortue project [37] - The company experienced an under-lift of approximately 1 million barrels in Q2, which is expected to normalize in the second half of the year [37] - OpEx per barrel increased quarter-on-quarter due to scheduled TEN cargo in Q3, but is expected to decrease again in Q4 with higher production levels from Jubilee [38] Business Line Data and Key Metrics Changes - Jubilee gross production averaged around 100,000 barrels of oil per day, contributing significantly to the company's growth target [28][46] - In the Gulf of Mexico, net production was approximately 16,000 barrels of oil equivalent per day, consistent with guidance [30] - The company plans to commence drilling three more wells at Jubilee, which is expected to enhance production further in Q4 [56] Market Data and Key Metrics Changes - The company signed a temporary agreement for Jubilee gas delivery at $2.90 per MMBtu through September 2023, while finalizing a long-term gas sales agreement [29] - The gas price in Ghana is expected to stabilize as discussions with the government progress [7][46] Company Strategy and Development Direction - The company aims to grow production by around 50% from the 2022 baseline, with significant contributions expected from the Jubilee South East project and the Tortue LNG project [26][27] - The strategy includes disciplined capital allocation towards debt paydown, funding growth opportunities, and potential shareholder returns [27][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the performance of Jubilee, noting an increase from 70,000 barrels gross at the beginning of the year to 100,000 barrels per day [46] - The company is nearing a free cash flow inflection point as production rises and CapEx is expected to fall [39][51] Other Important Information - The first gas from the Tortue project is now expected in Q1 2024 due to delays in the subsea workstream [35] - The company is working closely with the operator to address the subsea delay and optimize other work streams [80] Q&A Session Summary Question: Can you provide clarity on the CapEx issue related to Tortue and Jubilee production capacity? - Management indicated that additional CapEx is expected due to delays, and Jubilee production capacity is targeted at 120,000 barrels per day by year-end [45][46] Question: What is the expected timeline for first gas from Tortue? - First gas is now targeted for Q1 2024, with a focus on addressing the subsea delay [35][95] Question: How will the company manage the under-lift and cash flow in the second half of the year? - Management noted that the under-lift was primarily due to timing of cargoes and is expected to normalize in Q3 and Q4 [9][93]