UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
August 6, 2012
KOSMOS ENERGY LTD.
(Exact Name of Registrant as Specified in its Charter)
Bermuda |
|
001-35167 |
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98-0686001 |
(State or other jurisdiction |
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(Commission |
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(I.R.S. Employer |
Clarendon House |
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2 Church Street |
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Hamilton, Bermuda |
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HM 11 |
(Address of Principal Executive Offices) |
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(Zip Code) |
Registrants telephone number, including area code: +1 441 295 5950
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On August 6, 2012, Kosmos Energy Ltd. (the Company) issued a news release announcing results for the fiscal quarter ended June 30, 2012. A copy of the news release issued by the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K and Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
Item 7.01 Regulation FD Disclosure.
On May 7, 2012, the Company issued a news release announcing results for the fiscal quarter ended June 30, 2012. A copy of the news release issued by the Company is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The information in this Form 8-K and Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liabilities of that Section.
Item 9.01 Financial Statements and Exhibits.
(d) |
Exhibits. |
The following exhibit is furnished as part of this current report on Form 8-K: |
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|
|
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99.1 |
News Release dated August 6, 2012 announcing results for the fiscal quarter ended June 30, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: August 6, 2012
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KOSMOS ENERGY LTD. | |
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| |
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| |
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By: |
/s/ W. Greg Dunlevy |
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W. Greg Dunlevy |
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Executive Vice President and Chief Financial Officer |
INDEX TO EXHIBITS
Exhibit No. |
|
Description |
99.1 |
|
News Release dated August 6, 2012 announcing results for the fiscal quarter ended June 30, 2012. |
Exhibit 99.1
NEWS RELEASE
KOSMOS ENERGY ANNOUNCES SECOND QUARTER 2012 RESULTS
COMPANY ALSO PROVIDES UPDATE ON JUBILEE AND 2012 CAPITAL PROGRAM
DALLAS, Texas, August 6, 2012 Kosmos Energy (NYSE: KOS) announced today financial and operating results for the second quarter of 2012, including a net loss attributable to common shareholders of $25 million, or $0.07 per basic and diluted share. This compares to a pro forma net loss for the second quarter of 2011 of $0.03 per basic and diluted share.
Highlights for the quarter ended June 30, 2012, include:
· Sold one Jubilee lifting, totaling 997,000 barrels of oil, at a realized price of $112.60 per barrel
· Enhanced productivity of two additional Phase 1 wells at Jubilee through the acid stimulation program
· Flow tested the Ntomme-2A well at more than 20,000 barrels of oil per day combined from multiple zones
· Captured significant new acreage offshore Mauritania, adding 6.7 million gross acres to the Companys exploration portfolio
· Executed a joint exploration agreement, subject to customary closing conditions, with Chevron regarding the Companys offshore Suriname position
Brian F. Maxted, Chief Executive Officer, said, Kosmos second quarter was highly focused on progressing both our near- and long-term growth strategies. At Jubilee, the production outlook is improved as weve made good progress resolving the productivity issues impacting Phase 1 wells and we are moving quickly toward first production from Phase 1A. In addition, we anticipate submitting the TEN plan of development for approval as our second offshore development later this year. Our 2012 exploration program is off to a great start with the Wawa discovery, and we have a number of important targets remaining this year, including two significant prospects in Ghana and our first operated well onshore Cameroon. Longer-term, we are making significant progress in the exploration of our other areas, where the processing of seismic data recently acquired offshore Morocco is advancing and we are preparing to initiate a large 3D seismic acquisition program offshore Suriname in the next few weeks.
Second quarter 2012 oil revenues were $112 million versus $124 million in the second quarter of 2011, on sales of approximately 997,000 barrels of oil for each period. The second quarter 2012 lifting priced at $112.60 per barrel, or a premium to Dated Brent of approximately $0.77 per barrel. During the second quarter of 2012, Kosmos underlifted production by approximately 240,000 net barrels due to the timing of liftings versus production.
Production expense for the second quarter of 2012 was $20 million, including $10 million related to acid stimulation costs incurred on Jubilee Phase 1 wells. Excluding these costs, the Companys production expense was approximately $9.37 per barrel sold, down from $14.36 per barrel for the same period last year. This significant reduction is primarily a result of the purchase of the Jubilee floating production,
storage and offloading vessel (FPSO) at year-end 2011, which capitalized the asset and ceased all forward lease payments.
Exploration expense in the second quarter of 2012 was $17 million, which included certain seismic, geologic and geophysical studies, as well as a portion of costs associated with the Teak-4A well. In the second quarter of 2011, exploration expense was primarily composed of unsuccessful well costs. General and administrative (G&A) costs were $35 million for the second quarter of 2012, with over 50 percent related to non-cash, equity-based compensation expense. Total G&A was up from the same period last year, primarily as a result of the Companys growth and transition from a private to a public company in mid-2011. Depletion and depreciation expense was $33 million in the second quarter of 2012, up from $23 million in the second quarter of 2011. The increase is primarily a result of the capitalization of the Jubilee FPSO and the ongoing capital spending for development of the Jubilee field. In addition, the recording of year-end 2011 reserves impacted the 2012 depletion rate.
Income tax expense for the second quarter of 2012 was approximately $23 million, with approximately two-thirds incurred as a result of the taxable income associated with the Companys Ghana operations. The remainder of the amount is primarily composed of a change in the Companys deferred tax asset position related to equity compensation under the long-term incentive program.
Jubilee Update and 2012 Capital Outlook
As part of the ongoing production enhancement program at the Jubilee field offshore Ghana, Kosmos Energy and partners have performed acid stimulations on five Phase 1 production wells. Well productivity on each of the wells treated has been significantly enhanced.
Current production at the field is approximately 83,000 barrels of oil per day gross, with one well currently ramping up following acid stimulation. This represents the highest production level for the field to-date in 2012. Supported by the ongoing production enhancement program at Phase 1 and two new Phase 1A production wells to be brought online before the end of the year, Kosmos anticipates a higher production exit rate at year-end 2012.
With the success of the Companys acid stimulation program at Jubilee, Kosmos Energy does not anticipate performing any further sidetrack operations in the current year. The removal of these sidetracks, along with updated appraisal plans on the Companys West Cape Three Points Block, accounts for the majority of the reduction in the 2012 capital program, which is currently estimated to be $500 million.
Conference Call and Webcast Information
Kosmos will host a conference call and webcast to discuss second quarter 2012 financial and operating results today at 10:00 a.m. Central time (11:00 a.m. Eastern time). A live webcast of the event can be accessed on the Investors page of Kosmos website at www.kosmosenergy.com. The dial-in telephone number for the call is +1.877.407.3982. Callers outside the United States should dial +1.201.493.6780. A replay of the webcast will be available on the Investors page of Kosmos website for approximately 90 days following the event.
About Kosmos Energy
Kosmos Energy is a leading independent oil and gas exploration and production company focused on frontier and emerging areas in Africa and South America. The Companys asset portfolio includes existing production, major discoveries and exploration prospects offshore Ghana, as well as exploration licenses with significant hydrocarbon potential offshore Mauritania, Morocco and Suriname and onshore Cameroon. Kosmos is listed on the New York Stock Exchange and is traded under the ticker symbol KOS. For additional information, visit www.kosmosenergy.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. The Companys estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although the Company believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to the Company. When used in this press release, the words anticipate, believe, intend, expect, plan, will or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in the Companys Securities and Exchange Commission (SEC) filings. The Companys SEC filings are available on the Companys website at www.kosmosenergy.com. Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.
###
CONTACT:
Investor Relations
Brad Whitmarsh
+1.214.445.9772
bwhitmarsh@kosmosenergy.com
Kosmos Energy Ltd.
Consolidated Statement of Operations
(in thousands, except per share amounts, unaudited)
|
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Three Months Ended |
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Six Months Ended |
| ||||||||
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2012 |
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2011 |
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2012 |
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2011 |
| ||||
Revenues and other income: |
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|
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|
|
|
|
| ||||
Oil and gas revenue |
|
$ |
112,214 |
|
$ |
124,083 |
|
$ |
227,985 |
|
$ |
216,652 |
|
Interest income |
|
282 |
|
2,613 |
|
1,028 |
|
4,967 |
| ||||
Other income |
|
175 |
|
157 |
|
205 |
|
644 |
| ||||
Total revenues and other income |
|
112,671 |
|
126,853 |
|
229,218 |
|
222,263 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Costs and expenses: |
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|
|
|
|
|
|
|
| ||||
Oil and gas production |
|
19,592 |
|
14,301 |
|
26,918 |
|
34,296 |
| ||||
Exploration expenses |
|
16,901 |
|
85,220 |
|
56,545 |
|
93,652 |
| ||||
General and administrative |
|
34,799 |
|
19,760 |
|
74,122 |
|
33,047 |
| ||||
Depletion and depreciation |
|
32,999 |
|
22,869 |
|
64,648 |
|
46,367 |
| ||||
Amortization - deferred financing costs |
|
2,194 |
|
2,194 |
|
4,388 |
|
11,805 |
| ||||
Interest expense |
|
10,446 |
|
18,400 |
|
23,504 |
|
38,658 |
| ||||
Derivatives, net |
|
(1,982 |
) |
1,363 |
|
1,878 |
|
10,234 |
| ||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
59,643 |
| ||||
Doubtful accounts expense |
|
|
|
(39,782 |
) |
|
|
(39,782 |
) | ||||
Other expenses, net |
|
44 |
|
84 |
|
792 |
|
61 |
| ||||
Total costs and expenses |
|
114,993 |
|
124,409 |
|
252,795 |
|
287,981 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (loss) before income taxes |
|
(2,322 |
) |
2,444 |
|
(23,577 |
) |
(65,718 |
) | ||||
Income tax expense (benefit) |
|
22,521 |
|
11,535 |
|
38,807 |
|
(1,976 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
(24,843 |
) |
(9,091 |
) |
(62,384 |
) |
(63,742 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Accretion to redemption value of convertible preferred units |
|
|
|
(7,595 |
) |
|
|
(24,442 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Net loss attributable to common shareholders/unit holders |
|
$ |
(24,843 |
) |
$ |
(16,686 |
) |
$ |
(62,384 |
) |
$ |
(88,184 |
) |
|
|
|
|
|
|
|
|
|
| ||||
Net loss per share attributable to common shareholders: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
$ |
(0.07 |
) |
|
|
$ |
(0.17 |
) |
|
| ||
Diluted |
|
$ |
(0.07 |
) |
|
|
$ |
(0.17 |
) |
|
| ||
Pro forma basic |
|
|
|
$ |
(0.03 |
) |
|
|
$ |
(0.19 |
) | ||
Pro forma diluted |
|
|
|
$ |
(0.03 |
) |
|
|
$ |
(0.19 |
) | ||
|
|
|
|
|
|
|
|
|
| ||||
Weighted average number of shares used to compute net loss per share: |
|
|
|
|
|
|
|
|
| ||||
Basic |
|
370,720 |
|
|
|
369,973 |
|
|
| ||||
Diluted |
|
370,720 |
|
|
|
369,973 |
|
|
| ||||
Pro forma basic |
|
|
|
348,820 |
|
|
|
340,030 |
| ||||
Pro forma diluted |
|
|
|
348,820 |
|
|
|
340,030 |
|
Kosmos Energy Ltd.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
|
|
June 30, |
|
December 31, |
| ||
|
|
2012 |
|
2011 |
| ||
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|
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| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
629,951 |
|
$ |
673,092 |
|
Receivables, net |
|
162,327 |
|
310,155 |
| ||
Other current assets |
|
146,430 |
|
129,234 |
| ||
Total current assets |
|
938,708 |
|
1,112,481 |
| ||
|
|
|
|
|
| ||
Property and equipment, net |
|
1,459,912 |
|
1,377,041 |
| ||
Other noncurrent assets |
|
63,033 |
|
62,412 |
| ||
Total assets |
|
$ |
2,461,653 |
|
$ |
2,551,934 |
|
|
|
|
|
|
| ||
Liabilities and shareholders equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable |
|
$ |
194,808 |
|
$ |
278,006 |
|
Accrued liabilities |
|
31,346 |
|
37,194 |
| ||
Other current liabilities |
|
21,910 |
|
24,407 |
| ||
Total current liabilities |
|
248,064 |
|
339,607 |
| ||
|
|
|
|
|
| ||
Long-term liabilities: |
|
|
|
|
| ||
Long-term debt |
|
1,110,000 |
|
1,110,000 |
| ||
Deferred tax liability |
|
76,618 |
|
47,608 |
| ||
Other noncurrent liabilities |
|
37,728 |
|
33,993 |
| ||
Total long-term liabilities |
|
1,224,346 |
|
1,191,601 |
| ||
|
|
|
|
|
| ||
Total shareholders equity |
|
989,243 |
|
1,020,726 |
| ||
Total liabilities and shareholders equity |
|
$ |
2,461,653 |
|
$ |
2,551,934 |
|
Kosmos Energy Ltd.
Condensed Consolidated Statements of Cash Flow
(in thousands, unaudited)
|
|
Three Months Ended |
|
Six Months Ended |
| ||||||||
|
|
2012 |
|
2011 |
|
2012 |
|
2011 |
| ||||
Operating Activities: |
|
|
|
|
|
|
|
|
| ||||
Net loss |
|
$ |
(24,843 |
) |
$ |
(9,091 |
) |
$ |
(62,384 |
) |
$ |
(63,742 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
| ||||
Depletion, depreciation and amortization |
|
35,193 |
|
25,063 |
|
69,036 |
|
58,172 |
| ||||
Deferred income taxes |
|
25,734 |
|
11,366 |
|
33,447 |
|
(2,291 |
) | ||||
Unsuccessful well costs |
|
10,967 |
|
79,873 |
|
19,237 |
|
83,317 |
| ||||
Derivative related activity |
|
(6,690 |
) |
3,262 |
|
(7,067 |
) |
14,518 |
| ||||
Equity-based compensation |
|
17,561 |
|
8,684 |
|
38,851 |
|
9,120 |
| ||||
Doubtful accounts expense |
|
|
|
(39,782 |
) |
|
|
(39,782 |
) | ||||
Loss on extinguishment of debt |
|
|
|
|
|
|
|
59,643 |
| ||||
Other |
|
1,886 |
|
1,111 |
|
4,983 |
|
1,023 |
| ||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
| ||||
Net changes in working capital |
|
(44,026 |
) |
(15,950 |
) |
64,582 |
|
(65,479 |
) | ||||
Net cash provided by operating activities |
|
15,782 |
|
64,536 |
|
160,685 |
|
54,499 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investing activities: |
|
|
|
|
|
|
|
|
| ||||
Oil and gas assets |
|
(120,005 |
) |
(91,118 |
) |
(188,075 |
) |
(206,763 |
) | ||||
Other property |
|
(3,802 |
) |
(420 |
) |
(6,912 |
) |
(847 |
) | ||||
Notes receivable |
|
|
|
2,055 |
|
|
|
3,781 |
| ||||
Restricted cash |
|
721 |
|
(27,714 |
) |
793 |
|
84,286 |
| ||||
Net cash used in investing activities |
|
(123,086 |
) |
(117,197 |
) |
(194,194 |
) |
(119,543 |
) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Financing activities: |
|
|
|
|
|
|
|
|
| ||||
Borrowings under long-term debt |
|
|
|
|
|
|
|
1,393,000 |
| ||||
Payments on long-term debt |
|
|
|
|
|
|
|
(1,138,000 |
) | ||||
Net proceeds from the initial public offering |
|
|
|
580,374 |
|
|
|
580,374 |
| ||||
Purchase of treasury stock |
|
(8,378 |
) |
|
|
(8,378 |
) |
|
| ||||
Deferred financing costs |
|
345 |
|
(138 |
) |
(1,254 |
) |
(52,466 |
) | ||||
Net cash provided by (used in) financing activities |
|
(8,033 |
) |
580,236 |
|
(9,632 |
) |
782,908 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net increase (decrease) in cash and cash equivalents |
|
(115,337 |
) |
527,575 |
|
(43,141 |
) |
717,864 |
| ||||
Cash and cash equivalents at beginning of period |
|
745,288 |
|
290,704 |
|
673,092 |
|
100,415 |
| ||||
Cash and cash equivalents at end of period |
|
$ |
629,951 |
|
$ |
818,279 |
|
$ |
629,951 |
|
$ |
818,279 |
|