Kosmos Hints LNG Project FID Unlikely Before 2017

US independent Kosmos Energy has hinted that an investment decision for a floating LNG project 8 km from shore on the Mauritania-Senegal offshore median line, based on the 15 trillion ft³ Greater Tortue gas field which it operates and in which it is key partner, is unlikely by the end of this year.

“We’re still hoping for this,” Kosmos CEO Andrew G Inglis told analysts on an August 8 conference call: “But it depends on the seismic readings.” Such new 3D seismic surveys are to be conducted offshore Mauritania later this year, with the exact resource base expected to grow further based on fresh data. “We anticipate a new multi-well drilling programme starting mid-2017,” he said.

A final investment decision late 2016 or early 2017 would be needed to realise the floating LNG project in about 2020. Inglis however said a number of international oil companies and contractors “seek to partner us” in the project and that it was seeking one “strategically aligned to our programme”.

Kosmos CEO Andrew G Inglis since 2014 was BP's exploration chief until 2010 and in the period in between Petrofac's CEO (Photo credit: Kosmos Energy)

Kosmos on August 8 reported a net 2Q 2016 loss of $108.3mn that was even larger -- 44% larger -- than its loss of $75.2mn in 2Q 2015.

“We are at an inflection point in the company’s history with production increasing and our capital requirements decreasing. Our Ghana asset continues to be a solid foundation for Kosmos, delivering near-term production and cash flow growth. Kosmos is well positioned to deliver value from both our discovered gas resource offshore Mauritania and Senegal.”

Teranga-1 off Senegal marked Kosmos’ 5th consecutive successful exploration and appraisal well in this fairway; it said in May this meant it has discovered a gross P-mean resource of approximately 25 trillion ft³ (offshore Mauritania/Senegal, including the 15bn ft³ at Tortue) and estimates the fairway holds an aggregate 50 trillion ft³-plus of potential resources.

Revenues though were depressed – with 2Q 2016 oil revenue of $46mn from just one cargo, compared with $119mn in the same 2015 quarter from two cargoes. Production expenses were 65% higher at $33mn due to issues involving past and ongoing repairs to a ship turret on the Tullow-operated Jubilee field in Ghana, while global exploration expenses were up 140% at $36mn chiefly due to drillrig Atwood Achiever’s busy and successful drilling campaign offshore Mauritania and Senegal.

Kosmos said, after its single Jubilee cargo in this year’s 2Q, that it expects to lift two cargoes in 3Q and two more in the fourth quarter, as well as receive its first payout this September from its lost production insurance policy, and get one cargo from Ghana’s TEN project in 4Q 2016. Inglis said Tullow-operated TEN will “produce first oil shortly” and that its gross production in the remaining five months of 2016 would have average 55,000 b/d. He added that a plan was still being evaluated to export first gas from TEN in early 2017, in order to top up supplies to the Ghanaian market when Tullow takes Jubilee offline as expected for eight to 12 weeks during 1H 2017; it's believed this still requires governmental approval.

Elsewhere, Kosmos is planning to commence a 13,000km² 3D seismic programme starting January 2018 offshore Sao Tome which it says will be the company's largest ever, and one of the largest ever acquired by the industry offshore West Africa.

Mark Smedley