Kosmos narrows losses in Q1
Texas-based Kosmos Energy more than halved its net loss to $90.8mn in the first quarter from $182.7mn a year earlier, on the back of reduced taxes and costs. The company's share price on the New York stock exchange was up almost 8% within the first hour of trading on May 10.
Kosmos, which primarily works off the coast of west Africa, earned $176.5mn in revenues in the three-month period, only slightly down from $177.8mn in the corresponding quarter of last year. A drop in production to 36,540 barrels of oil equivalent/day from 43,660 boe/d was more than offset by higher prices.
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Total cost and expenses came to $284mn, versus $295mn, as Kosmos avoid impairments on long-lived assets, after suffering $150.8mn in charges a year earlier. It also reduced its production costs to $13.9/boe from $15.5/boe. However, the company also booked $102.5mn in derivatives expenses.
The company's core earnings (Ebitdax) fell to $88mn from $113.8mn, when the benefit of a reduction in exploration expenses to $8.2mn from $44.6mn a year earlier was excluded. Free cash flow was also negative $197.2mn, having widened from a loss of $124.5mn a year before. But the company received an income tax benefit of $16.7mn in the three months, versus a $65.5mn expense the year before.
CEO Andrew Inglis said Kosmos was "off to a strong start" in 2021, "with momentum building across the business."
"We have begun infill drilling activities in Ghana and the Gulf of Mexico, will soon begin drilling in Equatorial Guinea, and are on track to deliver our production and cash flow targets for the year," he said in a statement. He added that the first phase of the BP-operated Greater Tortue LNG project in Mauritania and Senegal, in which Kosmos has a shareholding, was 58% complete by the end of March.
"We have taken important steps to create a more permanent capital structure with the bond offering and the recently-completed reserve-based lending (RBL) extension, which increased liquidity and cleared all material near-term debt maturities," he continued.
Kosmos extended the tenor of the RBL by two years, with maturity now due in March 2027. It also elected to reduce the facility's overall size from $1.5bn to $1.25bn. The company finished the first quarter with $2.2bn in net debt and around $0.8bn in liquidity.