Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 26, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | Kosmos Energy Ltd. | |
Entity Central Index Key | 1,509,991 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 385,055,559 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 366,035 | $ 554,831 |
Restricted cash | 36,770 | 15,926 |
Receivables: | ||
Joint interest billings | 96,484 | 60,592 |
Oil sales | 61,731 | |
Other | 32,520 | 41,221 |
Inventories | 76,366 | 55,354 |
Prepaid expenses and other | 32,736 | 25,278 |
Deferred tax assets | 12,319 | 32,268 |
Derivatives | 164,172 | 163,275 |
Total current assets | 817,402 | 1,010,476 |
Property and equipment: | ||
Oil and gas properties, net | 2,111,367 | 1,773,186 |
Other property, net | 9,174 | 11,660 |
Property and equipment, net | 2,120,541 | 1,784,846 |
Other assets: | ||
Restricted cash | 4,875 | 16,125 |
Long-term receivables - joint interest billings | 31,343 | 14,174 |
Deferred financing costs, net of accumulated amortization of $40,341 and $33,389 at September 30, 2015 and December 31, 2014, respectively | 49,864 | 48,753 |
Long-term deferred tax assets | 14,773 | 9,182 |
Derivatives | 66,247 | 89,210 |
Total assets | 3,105,045 | 2,972,766 |
Current liabilities: | ||
Accounts payable | 259,336 | 184,400 |
Accrued liabilities | 130,195 | 201,967 |
Deferred tax liability | 64,435 | 61,683 |
Derivatives | 1,386 | 721 |
Total current liabilities | 455,352 | 448,771 |
Long-term liabilities: | ||
Long-term debt | 899,355 | 794,269 |
Derivatives | 3,463 | 68 |
Asset retirement obligations | 50,368 | 44,023 |
Deferred tax liability | 398,081 | 337,961 |
Other long-term liabilities | 9,474 | 8,715 |
Total long-term liabilities | $ 1,360,741 | $ 1,185,036 |
Shareholders' equity: | ||
Preference shares, $0.01 par value; 200,000,000 authorized shares; zero issued at September 30, 2015 and December 31, 2014 | ||
Common shares, $0.01 par value; 2,000,000,000 authorized shares; 393,866,094 and 392,443,048 issued at September 30, 2015 and December 31, 2014, respectively | $ 3,939 | $ 3,924 |
Additional paid-in capital | 1,920,589 | 1,860,190 |
Accumulated deficit | (588,686) | (494,850) |
Accumulated other comprehensive income | 767 | |
Treasury stock, at cost, 8,797,511 and 5,555,088 shares at September 30, 2015 and December 31, 2014, respectively | (46,890) | (31,072) |
Total shareholders' equity | 1,288,952 | 1,338,959 |
Total liabilities and shareholders' equity | $ 3,105,045 | $ 2,972,766 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Deferred financing costs, accumulated amortization (in dollars) | $ 40,341 | $ 33,389 |
Preference shares, par value (in dollars per share) | $ 0.01 | |
Preference shares, authorized shares | 200,000,000 | 200,000,000 |
Preference shares, issued shares | 0 | 0 |
Common shares, par value (in dollars per share) | $ 0.01 | |
Common shares, authorized shares | 2,000,000,000 | 2,000,000,000 |
Common shares, issued shares | 393,866,094 | 392,443,048 |
Treasury stock, shares | 8,797,511 | 5,555,088 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues and other income: | ||||
Oil and gas revenue | $ 96,584 | $ 137,485 | $ 324,948 | $ 678,635 |
Gain on sale of assets | 24,651 | 23,769 | ||
Other income | (1,266) | 882 | 89 | 2,190 |
Total revenues and other income | 95,318 | 138,367 | 349,688 | 704,594 |
Costs and expenses: | ||||
Oil and gas production | 23,157 | 15,097 | 75,481 | 54,366 |
Exploration expenses | 18,904 | 21,334 | 132,384 | 57,652 |
General and administrative | 26,692 | 35,148 | 106,538 | 95,041 |
Depletion and depreciation | 35,995 | 36,959 | 110,534 | 152,883 |
Interest and other financing costs, net | 9,926 | 12,362 | 29,675 | 31,497 |
Derivatives, net | (142,129) | (40,407) | (129,579) | (20,869) |
Restructuring charges | (46) | 11,758 | ||
Other expenses, net | 290 | 329 | 5,184 | 1,632 |
Total costs and expenses | (27,165) | 80,776 | 330,217 | 383,960 |
Income before income taxes | 122,483 | 57,591 | 19,471 | 320,634 |
Income tax expense | 62,218 | 38,468 | 113,307 | 170,035 |
Net income (loss) | $ 60,265 | $ 19,123 | $ (93,836) | $ 150,599 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.16 | $ 0.05 | $ (0.25) | $ 0.39 |
Diluted (in dollars per share) | $ 0.15 | $ 0.05 | $ (0.25) | $ 0.39 |
Weighted average number of shares used to compute net income (loss) per share: | ||||
Basic (in shares) | 383,924 | 379,969 | 382,603 | 378,881 |
Diluted (in shares) | 390,586 | 382,190 | 382,603 | 382,287 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income (loss) | $ 60,265 | $ 19,123 | $ (93,836) | $ 150,599 |
Other comprehensive loss: | ||||
Reclassification adjustments for derivative gains included in net income (loss) | (378) | (290) | (767) | (1,101) |
Other comprehensive loss | (378) | (290) | (767) | (1,101) |
Comprehensive income (loss) | $ 59,887 | $ 18,833 | $ (94,603) | $ 149,498 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 9 months ended Sep. 30, 2015 - USD ($) shares in Thousands, $ in Thousands | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Treasury Stock | Total |
Balance at Dec. 31, 2014 | $ 3,924 | $ 1,860,190 | $ (494,850) | $ 767 | $ (31,072) | $ 1,338,959 |
Balance (in shares) at Dec. 31, 2014 | 392,443 | |||||
Increase (Decrease) in Shareholders' Equity | ||||||
Equity-based compensation | 62,577 | 62,577 | ||||
Derivatives, net | $ (767) | (767) | ||||
Restricted stock awards and units | $ 15 | (15) | ||||
Restricted stock awards and units (in shares) | 1,423 | |||||
Restricted stock forfeitures | 16 | (16) | ||||
Purchase of treasury stock | (2,179) | (15,802) | (17,981) | |||
Net loss | (93,836) | (93,836) | ||||
Balance at Sep. 30, 2015 | $ 3,939 | $ 1,920,589 | $ (588,686) | $ (46,890) | $ 1,288,952 | |
Balance (in shares) at Sep. 30, 2015 | 393,866 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating activities | ||
Net income (loss) | $ (93,836) | $ 150,599 |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depletion, depreciation and amortization | 118,307 | 160,821 |
Deferred income taxes | 77,229 | 103,372 |
Unsuccessful well costs | 87,379 | 3,091 |
Change in fair value of derivatives | (127,706) | (13,508) |
Cash settlements on derivatives (including $154.3 million and $(0.2) million on commodity hedges) | 153,065 | (9,661) |
Equity-based compensation | 62,400 | 59,941 |
Gain on sale of assets | (24,651) | (23,769) |
Loss on extinguishment of debt | 165 | 2,898 |
Other | 6,731 | (4,368) |
Changes in assets and liabilities: | ||
(Increase) decrease in receivables | 17,548 | (104,708) |
Increase in inventories | (21,059) | (10,197) |
(Increase) decrease in prepaid expenses and other | (7,458) | 6,924 |
Increase (decrease) in accounts payable | 74,936 | (4,334) |
Increase (decrease) in accrued liabilities | (50,571) | 55,133 |
Net cash provided by operating activities | 272,479 | 372,234 |
Investing activities | ||
Oil and gas assets | (559,342) | (290,218) |
Other property | (793) | (1,403) |
Proceeds on sale of assets | 28,692 | 58,315 |
Restricted cash | (9,594) | 2,229 |
Net cash used in investing activities | (541,037) | (231,077) |
Financing activities | ||
Borrowings under long-term debt | 100,000 | |
Payments on long-term debt | (200,000) | (400,000) |
Net proceeds from issuance of senior secured notes | 206,774 | 294,000 |
Purchase of treasury stock | (17,981) | (11,067) |
Deferred financing costs | (9,031) | (21,572) |
Net cash provided by (used in) financing activities | 79,762 | (138,639) |
Net increase (decrease) in cash and cash equivalents | (188,796) | 2,518 |
Cash and cash equivalents at beginning of period | 554,831 | 598,108 |
Cash and cash equivalents at end of period | 366,035 | 600,626 |
Cash paid for: | ||
Interest | 39,341 | 20,192 |
Income taxes | $ 28,744 | $ 101,068 |
CONSOLIDATED STATEMENTS OF CAS8
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
Cash settlements on derivatives (including $154.3 million and $(0.2) million on commodity hedges) | $ 154.3 | $ (0.2) |
Organization
Organization | 9 Months Ended |
Sep. 30, 2015 | |
Organization | |
Organization | 1. Organization Kosmos Energy Ltd. was incorporated pursuant to the laws of Bermuda in January 2011 to become a holding company for Kosmos Energy Holdings. Kosmos Energy Holdings is a privately held Cayman Islands company that was formed in March 2004. As a holding company, Kosmos Energy Ltd.’s management operations are conducted through a wholly owned subsidiary, Kosmos Energy, LLC. The terms “Kosmos,” the “Company,” “we,” “us,” “our,” “ours,” and similar terms refer to Kosmos Energy Ltd. and its wholly owned subsidiaries, unless the context indicates otherwise. Kosmos is a leading independent oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margin. Our assets include existing production and other major development projects offshore Ghana, as well as exploration licenses with significant hydrocarbon potential offshore Mauritania, Portugal, Sao Tome, Senegal, Suriname, Morocco and Western Sahara. Kosmos is listed on the New York Stock Exchange and is traded under the ticker symbol KOS. We have one reportable segment, which is the exploration and production of oil and natural gas. Substantially all of our long-lived assets and product sales are currently related to production located offshore Ghana. |
Accounting Policies
Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies | |
Accounting Policies | 2. Accounting Policies General The interim-period financial information presented in the consolidated financial statements included in this report is unaudited and, in the opinion of management, includes all adjustments of a normal recurring nature necessary to present fairly the consolidated financial position as of September 30, 2015 , the changes in the consolidated statements of shareholders’ equity for the nine months ended September 30, 2015 , the consolidated results of operations for the three and nine months ended September 30, 2015 and 2014 , and consolidated cash flows for the nine months ended September 30, 2015 and 2014 . The results of the interim periods shown in this report are not necessarily indicative of the final results to be expected for the full year. The consolidated financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by Generally Accepted Accounting Principles in the United States of America (“GAAP”) have been condensed or omitted from these interim consolidated financial statements. These consolidated financial statements and the accompanying notes should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2014 , included in our annual report on Form 10-K. Reclassifications Certain prior period amounts have been reclassified to conform with the current year presentation. Such reclassifications had no impact on our reported net income (loss), current assets, total assets, current liabilities, total liabilities or shareholders’ equity. Restricted Cash In accordance with our commercial debt facility (the “Facility”), we are required to maintain a restricted cash balance that is sufficient to meet the payment of interest and fees for the next six -month period on the 7.875% Senior Secured Notes due 2021 (“Senior Notes”) plus the Corporate Revolver or the Facility, whichever is greater. As of September 30, 2015 and December 31, 2014 , we had $24.4 million and $15.9 million, respectively, in current restricted cash to meet this requirement. In addition, in accordance with certain of our petroleum contracts, we have posted letters of credit related to performance guarantees for our minimum work obligations. These letters of credit are cash collateralized in accounts held by us and as such are classified as restricted cash. Upon completion of the minimum work obligations and/or entering into the next phase of the petroleum contract, the requirement to post the existing letters of credit will be satisfied and the cash collateral will be released. However, additional letters of credit may be required should we choose to move into the next phase of certain of our petroleum contracts. As of September 30, 2015 and December 31, 2014 , we had $12.4 million and zero , respectively, of short-term restricted cash and $4.9 million and $16.1 million, respectively, of long-term restricted cash used to collateralize performance guarantees related to our petroleum contracts. Inventories Inventories consisted of $71.9 million and $55.3 million of materials and supplies and $4.5 million and $0.1 million of hydrocarbons as of September 30, 2015 and December 31, 2014 , respectively. The Company’s materials and supplies inventory primarily consists of casing and wellheads and is stated at the lower of cost, using the weighted average cost method, or market. Hydrocarbon inventory is carried at the lower of cost, using the weighted average cost method, or market. Hydrocarbon inventory costs include expenditures and other charges incurred in bringing the inventory to its existing condition. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory costs. Recent Accounting Standards In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) — Simplifying the Measurement of Inventory.” ASU 2015-11 changes the measurement principle for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date.” ASU 2015-14 defers the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017 with early adoption permitted for periods beginning after December 15, 2016. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2015, the FASB issued ASU 2015-15, “Interest – Imputation of Interest (Subtopic 835-30) — Presentation and Subsequent Measurement of Debt Issuance Costs Associated with the Line-of-Credit Arrangements.” ASU 2015-15 clarifies the guidance regarding line-of-credit arrangements with regards to the recently issued ASU 2015-03 to incorporate statements made by the SEC Staff during their June 18, 2015 Emerging Issues Task Force meeting. The SEC Staff has clarified they would not object to an entity deferring and presenting debt issue costs as an asset and subsequently amortizing the deferred debt issue costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of credit arrangement. The adoption of this standard will result in $41.2 million of net deferred financing costs (as of September 30, 2015 ) being reclassified as a direct reduction of debt on the balance sheet upon adoption of ASU 2015-03 during the first quarter of 2016. |
Acquisitions and Divestitures
Acquisitions and Divestitures | 9 Months Ended |
Sep. 30, 2015 | |
Acquisitions and Divestitures | |
Acquisitions and Divestitures | 3. Acquisitions and Divestitures In March 2015, we closed a farm-in agreement with Repsol Exploraci o n, S.A. (“Repsol”), acquiring a non-operated interest in the Camarao, Ameijoa, Mexilhao and Ostra blocks in the Peniche Basin offshore Portugal. As part of the agreement, we will reimburse a portion of Repsol’s previously incurred exploration costs, as well as partially carry Repsol’s share of the costs of a planned 3D seismic program. After giving effect to the farm-in agreement, our participating interest is 31% in each of the blocks. In March 2015, we closed a farm-out agreement with Chevron Mauritania Exploration Limited, a wholly owned subsidiary of Chevron Corporation (“Chevron”), covering the C8, C12 and C13 petroleum contracts offshore Mauritania. Under the terms of the farm-out agreement, Chevron acquired a 30% non-operated working interest in each of the contract areas. Chevron will pay a disproportionate share of the costs of one exploration well and a second contingent exploration well, subject to maximum expenditure caps. In addition, Chevron paid its proportionate share of certain previously incurred exploration costs. Chevron did not fund drilling of the Tortue prospect, but retains the option to elect to participate in this prospect subject to Chevron paying a disproportionate share of its costs related to the Tortue prospect. After giving effect to the farm-out agreements, Kosmos, Chevron and Societ e Mauritanienne des Hydrocarbures et de Patrimoine Minier’s (“SMHPM”) (Mauritania’s national oil company) participating interest in Block C8 , Block C12 and Block C13 is 60% , 30% and 10% , respectively, and we remain as operator. The final allocation resulted in sales proceeds of $28.7 million, which exceeded our book basis in the assets, resulting in a $24.7 million gain on the transaction. In October 2015, we closed a sale and purchase agreement with ERHC Energy EEZ, LDA, whereby we acquired an 85% participating interest and operatorship in Block 11 offshore Sao Tome. The National Petroleum Agency, Ag e ncia Nacional Do Petr o leo De S a o Tom e E Príncipe (“ANPSTP”), has a 15% carried interest. |
Joint Interest Billings
Joint Interest Billings | 9 Months Ended |
Sep. 30, 2015 | |
Joint Interest Billings | |
Joint Interest Billings | 4. Joint Interest Billings The Company’s joint interest billings consist of receivables from partners with interests in common oil and gas properties operated by the Company. Joint interest billings are classified on the face of the consolidated balance sheets as current and long-term receivables based on when collection is expected to occur. In 2014, the Ghana National Petroleum Corporation (“GNPC”) notified us and our block partners that it would exercise its right for the contractor group to pay its 5% share of the Tweneboa, Enyenra and Ntomme (“TEN”) development costs. We will be reimbursed for our portion of such costs plus interest from GNPC’s TEN production revenues under the terms of the Deepwater Tano (“DT”) petroleum contract. As of September 30, 2015 and December 31, 2014 , the joint interest billing receivables due from GNPC for the TEN development costs were $31.3 million and $14.2 million, respectively, which are classified as long-term on the consolidated balance sheets. |
Property and Equipment
Property and Equipment | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment is stated at cost and consisted of the following: September 30, December 31, 2015 2014 (In thousands) Oil and gas properties: Proved properties $ $ Unproved properties Support equipment and facilities Total oil and gas properties Less: accumulated depletion Oil and gas properties, net Other property Less: accumulated depreciation Other property, net Property and equipment, net $ $ We recorded depletion expense of $33.6 million and $34.6 million for the three months ended September 30, 2015 and 2014, respectively, and $103.4 million and $145.8 million for the nine months ended September 30, 2014 and 2015, respectively. |
Suspended Well Costs
Suspended Well Costs | 9 Months Ended |
Sep. 30, 2015 | |
Suspended Well Costs | |
Suspended Well Costs | 6. Suspended Well Costs The following table reflects the Company’s capitalized exploratory well costs on completed wells as of and during the nine months ended September 30, 2015 . The table excludes $62.7 million in costs that were capitalized and subsequently expensed during the same period. Nine Months Ended September 30, 2015 (In thousands) Beginning balance $ Additions to capitalized exploratory well costs pending the determination of proved reserves Reclassification due to determination of proved reserves — Capitalized exploratory well costs charged to expense Ending balance $ The following table provides an aging of capitalized exploratory well costs based on the date drilling was completed and the number of projects for which exploratory well costs have been capitalized for more than one year since the completion of drilling: September 30, 2015 December 31, 2014 (In thousands, except well counts) Exploratory well costs capital ized for a period of one year or less $ $ Exploratory well costs capitalized for a period of one to two years Exploratory well costs capitalized for a period of three to six years Ending balance $ $ Number of projects that have exploratory well costs that have been capitalized for a period greater than one year As of September 30, 2015 , the projects with exploratory well costs capitalized for more than one year since the completion of drilling are related to the Mahogany, Teak (formerly Teak-1 and Teak-2) and Akasa discoveries in the West Cape Three Points (“WCTP”) Block and the Wawa discovery in the DT Block, which are all in Ghana. Mahogany— In March 2015, we submitted a declaration of commerciality to Ghana’s Ministry of Petroleum (formerly Ghana’s Ministry of Energy and Petroleum) and expect to submit a PoD incorporating the Mahogany discovery later this year. Teak Discovery—In March 2015, we submitted a declaration of commerciality to Ghana’s Ministry of Petroleum and expect to submit a PoD incorporating the Teak discovery later this year. Akasa Discovery— We are currently in discussions with the government of Ghana regarding additional technical studies and evaluation that we want to conduct before we are able to make a determination regarding commerciality of the discovery. If we determine the discovery to be commercial, a declaration of commerciality would be provided and a PoD would be prepared and submitted to Ghana’s Ministry of Petroleum, as required under the WCTP petroleum contract. Wawa Discovery—In April 2015, the Special Chamber of the International Tribunal of the Law of the Sea (“ITLOS”) issued an order in response to the provisional measures sought by the government of Cote d’Ivoire in its pending maritime boundary dispute with the government of Ghana. ITLOS rejected the request that Ghana suspend all ongoing exploration and development operations in the disputed area in which the Wawa Discovery is situated until ITLOS gives its decision on the maritime boundary dispute, which is expected in late 2017. ITLOS did order Ghana to suspend new drilling in the disputed area. We plan to discuss with the government of Ghana the effects of the ITLOS order on the proposed Wawa appraisal activities so that we can more clearly define our future plans and corresponding timeline. In the meantime, we continue to reprocess seismic data and have acquired a high resolution seismic survey over the discovery area. Following additional evaluation and potential appraisal activities, a decision regarding commerciality of the Wawa discovery will be made by the DT Block partners. Within nine months of a declaration of commerciality, a PoD would be prepared and submitted to Ghana’s Ministry of Petroleum, as required under the DT petroleum contract. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Accrued Liabilities | 7. Accrued Liabilities Accrued liabilities consisted of the following: September 30, December 31, 2015 2014 (In thousands) Accrued liabilities: Exploration, development and production $ $ General and administrative expenses Interest Income taxes Taxes other than income Other — $ $ |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt | |
Debt | 8. Debt September 30, December 31, 2015 2014 (In thousands) Outstanding debt principal balances: Facility $ $ Senior Notes Total Unamortized issuance discounts Long-term debt $ $ Facility In March 2014, the Company amended and restated the Facility with a total commitment of $1.5 billion from a number of financial institutions, including the International Finance Corporation. The Facility supports our oil and gas exploration, appraisal and development programs and corporate activities. As part of the debt refinancing in March 2014, the repayment of borrowings under the existing facility attributable to financial institutions that did not participate in the amended Facility was accounted for as an extinguishment of debt, and existing unamortized debt issuance costs attributable to those participants were expensed. As a result, we recorded a $2.9 million loss on the extinguishment of debt. As of September 30, 2015 , we have $39.2 million of net deferred financing costs related to the Facility, which will be amortized over the remaining term of the Facility, including certain costs related to the amendment. As of September 30, 2015 , borrowings under the Facility totaled $400.0 million and the undrawn availability under the Facility was $1.1 billion. The Facility provides a revolving-credit and letter of credit facility. The availability period for the revolving-credit facility, as amended in March 2014 expires on March 31, 2018. However the Facility has a revolving-credit sublimit, which will be the lesser of $500.0 million and the total available facility at that time, that will be available for drawing until the date falling one month prior to the final maturity date. The letter of credit facility expires on the final maturity date. The available facility amount is subject to borrowing base constraints and, beginning on March 31, 2018, outstanding borrowings will be constrained by an amortization schedule. The Facility has a final maturity date of March 31, 2021 . As of September 30, 2015 , we had no letters of credit issued under the Facility. We were in compliance with the financial covenants contained in the Facility as of September 30, 2015 (the most recent assessment date). The Facility contains customary cross default provisions. Corporate Revolver In June 2015, we amended and restated the Corporate Revolver from a number of financial institutions, increasing the borrowing capacity to $400.0 million, extending the maturity date to November 2018 and lowering the commitment fees on the undrawn portion of the total commitments to 30% per annum of the respective margin. The Corporate Revolver is available for all subsidiaries for general corporate purposes and for oil and gas exploration; appraisal and development programs. As of September 30, 2015 , we have $8.7 million of net deferred financing costs related to the Corporate Revolver, which will be amortized over the remaining term. Additionally, a negative covenant was added that restricts our ability to incur additional indebtedness that would not be permitted by the indenture governing our 7.875% senior secured notes due 2021. As of September 30, 2015 , there were no borrowings outstanding under the Corporate Revolver and the undrawn availability under the Corporate Revolver was $400.0 million. We were in compliance with the financial covenants contained in the Corporate Revolver as of September 30, 2015 (the most recent assessment date). The Corporate Revolver contains customary cross default provisions. Revolving Letter of Credit Facility In July 2013, we entered into a revolving letter of credit facility agreement (“LC Facility”). The size of the LC Facility is $100.0 million, with additional commitments up to $50.0 million being available if the existing lender increases its commitment or if commitments from new financial institutions are added. In July 2015, we reduced the size of our LC Facility by $25.0 million to $75.0 million, with additional commitments up to $50.0 million being available if the existing lender increases its commitment or if commitments from new financial institutions are added. As of September 30, 2015 , there were eight outstanding letters of credit totaling $23.1 million under the LC Facility. The LC Facility contains customary cross default provisions. 7.875% Senior Secured Notes due 2021 In August 2014, the Company issued $300.0 million of Senior Notes and received net proceeds of approximately $292.5 million after deducting discounts, commissions and deferred financing costs. The Company used the net proceeds to repay a portion of the outstanding indebtedness under the Facility and for general corporate purposes. In April 2015, we issued an additional $225.0 million Senior Notes and received net proceeds of $206.8 million after deducting discounts, commissions and other expenses. The net proceeds were used to repay a portion of the outstanding indebtedness under the Facility and for general corporate purposes. The additional $ 225.0 million of Senior Notes have identical terms to the initial $ 300.0 million of Senior Notes, other than the date of issue, the initial price, the first interest payment date and the first date from which interest will accrue. The Senior Notes mature on August 1, 2021. Interest is payable semi-annually in arrears each February 1 and August 1 commencing on February 1, 2015 for the initial $ 300.0 million Senior Notes and August 1, 2015 for the additional $225.0 million Senior Notes. The Senior Notes are secured (subject to certain exceptions and permitted liens) by a first ranking fixed equitable charge on all shares held by us in our direct subsidiary, Kosmos Energy Holdings. The Senior Notes are currently guaranteed on a subordinated, unsecured basis by our existing restricted subsidiaries that guarantee the Facility and the Corporate Revolver, and, in certain circumstances, the Senior Notes will become guaranteed by certain of our other existing or future restricted subsidiaries. At September 30, 2015 , the estimated repayments of debt during the five fiscal year periods and thereafter are as follows: Payments Due by Year 2015(2) 2016 2017 2018 2019 Thereafter (In thousands) Principal debt repayments(1) $ — $ — $ — $ — $ — $ (1) Includes the scheduled principal maturities for the $525.0 million aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on the level of borrowings and the estimated future available borrowing base as of September 30, 2015 . Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of September 30, 2015 , there were no borrowings under the Corporate Revolver. (2) Represents payments for the period October 1, 2015 through December 31, 2015 . Interest and other financing costs, net Interest and other financing costs, net incurred during the period comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (In thousands) Interest expense $ $ $ $ Amortization—deferred financing costs Loss on extinguishment of debt — — Capitalized interest Deferred interest Interest income Other, net Interest and other financing costs, net $ $ $ $ |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | 9. Derivative Financial Instruments We use financial derivative contracts to manage exposures to commodity price and interest rate fluctuations. We do not hold or issue derivative financial instruments for trading purposes. We manage market and counterparty credit risk in accordance with our policies and guidelines. In accordance with these policies and guidelines, our management determines the appropriate timing and extent of derivative transactions. Oil Derivative Contracts The following table sets forth the volumes in barrels underlying the Company’s outstanding oil derivative contracts and the weighted average Dated Brent prices per Bbl for those contracts as of September 30, 2015 . Weighted Average Dated Brent Price per Bbl Net Deferred Premium Term Type of Contract MBbl Payable Swap Put Floor Ceiling Call 2015 : October — December Three-way collars $ $ — $ — $ $ $ October — December Swaps with calls — — — — 2016 : January — December Purchased puts $ $ — $ — $ $ — $ — January — December Three-way collars — — — January — December Swaps with puts — — — — 2017 : January — December Swap with puts/calls $ $ $ $ — $ — $ January — December Swap with puts — — — — January — December Sold calls(1) — — — — — (1) Represents call option contracts sold to counterparties to enhance other derivative positions. Interest Rate Derivative Contracts The following table summarizes our open interest rate swaps, whereby we pay a fixed rate of interest and the counterparty pays a variable LIBOR-based rate, and our capped interest rate swaps whereby we pay a fixed rate of interest if LIBOR is below the cap, and pay the market rate less the spread between the cap (sold call) and the fixed rate of interest if LIBOR is above the cap as of September 30, 2015 : Weighted Average Term Type of Contract Floating Rate Notional Swap Sold Call (In thousands) October 2015 — December 2015 Swap 6-month LIBOR $ % — January 2016 — June 2016 Swap 6-month LIBOR % — January 2016 — December 2018 Capped swap 1-month LIBOR % % The following tables disclose the Company’s derivative instruments as of September 30, 2015 and December 31, 2014 and gain/(loss) from derivatives during the three and nine months ended September 30, 2015 and 2014 , respectively: Estimated Fair Value Asset (Liability) September 30, December 31, Type of Contract Balance Sheet Location 2015 2014 (In thousands) Derivatives not designated as hedging instruments: Derivative assets: Commodity(1) Derivatives assets—current $ $ Commodity(2) Derivatives assets—long-term Interest rate Derivatives assets—long-term — — Derivative liabilities: Interest rate Derivatives liabilities—current Commodity Derivatives liabilities—long-term — Interest rate Derivatives liabilities—long-term Total derivatives not designated as hedging instruments $ $ (1) Includes net deferred premiums payable of $5.0 million and $1.8 million related to commodity derivative contracts as of September 30, 2015 and December 31, 2014 , respectively. (2) Includes net deferred premiums payable of $6.5 million and $6.9 million related to commodity derivative contracts as of September 30, 2015 and December 31, 2014 , respectively. Amount of Gain/(Loss) Amount of Gain/(Loss) Three Months Ended Nine Months Ended September 30, September 30, Type of Contract Location of Gain/(Loss) 2015 2014 2015 2014 (In thousands) Derivatives in cash flow hedging relationships: Interest rate(1) Interest expense $ $ $ $ Total derivatives in cash flow hedging relationships $ $ $ $ Derivatives not designated as hedging instruments: Commodity(2) Oil and gas revenue $ $ $ $ Commodity Derivatives, net Interest rate Interest expense Total derivatives not designated as hedging instruments $ $ $ $ (1) Amounts were reclassified from accumulated other comprehensive income or loss (“AOCI”) into earnings upon settlement. (2) Amounts represent the mark-to-market portion of our provisional oil sales contracts. Offsetting of Derivative Assets and Derivative Liabilities Our derivative instruments which are subject to master netting arrangements with our counterparties only have the right of offset when there is an event of default. As of September 30, 2015 and December 31, 2014 , there was not an event of default and, therefore, the associated gross asset or gross liability amounts related to these arrangements are presented on the consolidated balance sheets. Additionally, if an event of default occurred the offsetting amounts would be immaterial as of September 30, 2015 and December 31, 2014 . |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | |
Fair Value Measurements | 10. Fair Value Measurements In accordance with ASC Topic 820, “Fair Value Measurements and Disclosures”, fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. We prioritize the inputs used in measuring fair value into the following fair value hierarchy: · Level 1—quoted prices for identical assets or liabilities in active markets. · Level 2—quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means. · Level 3—unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety. The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 , for each fair value hierarchy level: Fair Value Measurements Using: Quoted Prices in Active Markets for Significant Other Significant Identical Assets Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total (In thousands) September 30, 2015 Assets: Commodity derivatives $ — $ $ — $ Liabilities: Commodity derivatives — — Interest rate derivatives — — Total $ — $ $ — $ December 31, 2014 Assets: Commodity derivatives $ — $ $ — $ Liabilities: Interest rate derivatives — — Total $ — $ $ — $ The book values of cash and cash equivalents and restricted cash approximate fair value based on Level 1 inputs. Joint interest billings, oil sales and other receivables, and accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. Our long-term receivables, if any, after any allowances for doubtful accounts approximate fair value. The estimates of fair value of these items are based on Level 2 inputs. Commodity Derivatives Our commodity derivatives represent crude oil three-way collars, put options, call options and swaps for notional barrels of oil at fixed Dated Brent oil prices. The values attributable to the our oil derivatives are based on (i) the contracted notional volumes, (ii) independent active futures price quotes for Dated Brent, (iii) a credit-adjusted yield curve applicable to each counterparty by reference to the credit default swap (“CDS”) market and (iv) an independently sourced estimate of volatility for Dated Brent. The volatility estimate was provided by certain independent brokers who are active in buying and selling oil options and was corroborated by market-quoted volatility factors. The deferred premium is included in the fair market value of the commodity derivatives. See Note 9—Derivative Financial Instruments for additional information regarding the Company’s derivative instruments. Provisional Oil Sales The value attributable to the provisional oil sales derivative is based on (i) the sales volumes and (ii) the difference in the independent active futures price quotes for Dated Brent over the term of the pricing period designated in the sales contract and the spot price on the lifting date. Interest Rate Derivatives We have interest rate swaps, whereby the Company pays a fixed rate of interest and the counterparty pays a variable LIBOR-based rate. We also have capped interest rate swaps, whereby the Company pays a fixed rate of interest if LIBOR is below the cap, and pays the market rate less the spread between the cap and the fixed rate of interest if LIBOR is above the cap. The values attributable to the Company’s interest rate derivative contracts are based on (i) the contracted notional amounts, (ii) LIBOR yield curves provided by independent third parties and corroborated with forward active market-quoted LIBOR yield curves and (iii) a credit-adjusted yield curve as applicable to each counterparty by reference to the CDS market. Debt The following table presents the carrying values and fair values of financial instruments that are not carried at fair value in the consolidated balance sheets: September 30, 2015 December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Long-term debt $ $ $ $ The carrying value of the Facility approximates fair value since it is subject to short-term floating interest rates that approximate the rates available to us for those periods. The fair value of our Senior Notes is based on quoted market prices, which results in a Level 1 fair value measurement. |
Equity-based Compensation
Equity-based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Equity-based Compensation | |
Equity-based Compensation | 11. Equity-based Compensation Restricted Stock Awards and Restricted Stock Units We record compensation expense equal to the fair value of share-based payments over the vesting periods of the Long-Term Incentive Plan (“LTIP”) awards. We recorded compensation expense from awards granted under our LTIP of $13.9 million and $19.0 million during the three months ended September 30, 2015 and 2014 , respectively, and $62.4 million and $55.0 million for the nine months ended September 30, 2015 and 2014 , respectively. The total tax benefit for the three months ended September 30, 2015 and 2014 was $4.7 million and $6.7 million, respectively, and $21.1 million and $1 9.2 million for the nine months ended September 30, 2015 and 2014 , respectively. Additionally, we expensed a tax shortfall related to equity-based compensation of $0.1 million and zero for the three months ended September 30, 2015 and 2014 respectively, and $18.5 million and $6.5 million for the nine months ended September 30, 2015 and 2014 , respectively. The fair value of awards vested during the three months ended September 30, 2015 and 2014 was approximately $1.0 million and $1.3 million, respectively, and $51.8 million and $34.6 million for the nine months ended September 30, 2015 and 2014 , respectively. The Company has granted both restricted stock awards and restricted stock units with service vesting criteria and granted both restricted stock awards and restricted stock units with a combination of market and service criteria under the LTIP. Our outstanding awards vest over a three or four year period. Restricted stock awards are issued and included in the number of outstanding shares upon the date of grant and, if such awards are forfeited, they become treasury stock. Upon vesting, restricted stock units become issued and outstanding stock. The following table reflects the outstanding restricted stock awards as of September 30, 2015 : Weighted- Market / Service Weighted- Service Vesting Average Vesting Average Restricted Stock Grant-Date Restricted Stock Grant-Date Awards Fair Value Awards Fair Value (In thousands) (In thousands) Outstanding at December 31, 2014 $ $ Granted — — Forfeited Vested Outstanding at September 30, 2015 The following table reflects the outstanding restricted stock units as of September 30, 2015 : Weighted- Market / Service Weighted- Service Vesting Average Vesting Average Restricted Stock Grant-Date Restricted Stock Grant-Date Units Fair Value Units Fair Value (In thousands) (In thousands) Outstanding at December 31, 2014 $ $ Granted Forfeited Vested — — Outstanding at September 30, 2015 As of September 30, 2015 , total equity-based compensation to be recognized on unvested restricted stock awards and restricted stock units is $64.1 million over a weighted average period of 1.90 years. In January 2015, the board of directors approved an amendment to the May 16, 2011 LTIP to add 15.0 million shares to the plan, which was approved at the Annual General Meeting in June 2015. At September 30, 2015 , the Company had approximately 11.5 million shares that remain available for issuance under the LTIP. For restricted stock awards and restricted stock units with a combination of market and service vesting criteria, the number of common shares to be issued is determined by comparing the Company’s total shareholder return with the total shareholder return of a predetermined group of peer companies over the performance period and can vest in up to 100% of the awards granted for restricted stock awards and up to 200% of the awards granted for restricted stock units. The grant date fair value of these awards ranged from $6.7 0 to $13.57 per award for restricted stock awards and $12.96 to $15.81 per award for restricted stock units. The Monte Carlo simulation model utilizes multiple input variables that determine the probability of satisfying the market condition stipulated in the award grant and calculates the fair value of the award. The expected volatility utilized in the model was estimated using a combination of our historical volatility and implied volatility and the historical and implied volatilities of our peer companies and ranged from 30% to 76% . The risk-free interest rate was based on the U.S. treasury rate for a term commensurate with the expected life of the grant and ranged from 0.5% to 1.1% for restricted stock awards and 0.5% to 1.2% for restricted stock units. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Income Taxes | 12. Income Taxes Income tax expense was $62.2 million and $38.5 million for the three months ended September 30, 2015 and 2014 , respectively, and $113.3 million and $170.0 million for the nine months ended September 30, 2015 and 2014 , respectively. The income tax provision consists of United States and Ghanaian income and Texas margin taxes. The components of income (loss) before income taxes were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (In thousands) Bermuda $ $ $ $ United States Foreign—other Income before income taxes $ $ $ $ Our effective tax rate for the three months ended September 30, 2015 and 2014 is 51% and 67% , respectively. For the nine months ended September 30, 2015 and 2014, our effective tax rate is 582% and 53% , respectively. The effective tax rate for the United States is approximately 44% and 38% for the three months ended September 30, 2015 and 2014, respectively, and 202% and 102% for the nine months ended September 30, 2015 and 2014, respectively. The effective tax rate in the United States is impacted by the effect of tax shortfalls related to equity-based compensation. The effective tax rate for Ghana is approximately 35% and 33% for the three months ended September 30, 2015 and 2014, respectively and 35% for the nine months ended September 30, 2015 and 2014. Our other foreign jurisdictions have a 0% effective tax rate because they reside in countries with a 0% statutory rate, or we have experienced losses in those countries and have a full valuation allowance reserved against the corresponding net deferred tax assets. A subsidiary of the Company files a U.S. federal income tax return and a Texas margin tax return. In addition to the United States, the Company files income tax returns in the countries in which we operate. The Company is open to U.S. federal income tax examinations for tax years 2012 through 2014 and to Texas margin tax examinations for the tax years 2010 through 2014. In addition, the Company is open to income tax examinations for years 2011 through 2014 in its significant other foreign jurisdictions. As of September 30, 2015 , the Company had no material uncertain tax positions. The Company’s policy is to recognize interest and penalties related to income tax matters in income tax expense. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | 13. Net Income (Loss) Per Share The following table is a reconciliation between net income and the amounts used to compute basic and diluted net income per share and the weighted average shares outstanding used to compute basic and diluted net income (loss) per share: Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (In thousands, except per share data) Numerator: Net income (loss) $ $ $ $ Less: Basic income allocable to participating securities(1) — Basic net income (loss) allocable to common shareholders Diluted adjustments to income allocable to participating securities(1) — — Diluted net income (loss) allocable to common shareholders $ $ $ $ Denominator: Weighted average number of shares used to compute net income (loss) per share: Basic Restricted stock awards and units(1)(2) — Diluted Net income (loss) per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Our service vesting restricted stock awards represent participating securities because they participate in non-forfeitable dividends with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Our restricted stock awards with market and service vesting criteria and all restricted stock units are not considered to be participating securities and, therefore, are excluded from the basic net income per common share calculation. Our service vesting restricted stock awards do not participate in undistributed net losses and, therefore, are excluded from the basic net income per common share calculation in periods we are in a net loss position. (2) We excluded outstanding restricted stock awards and units of 1.8 million and 6.8 million for the three months ended September 30, 2015 and 2014 , respectively, and 11.5 million and 4.7 million for the nine months ended September 30, 2015 and 2014 , respectively, from the computations of diluted net income per share because the effect would have been anti-dilutive. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies From time to time, we are involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of our business in jurisdictions in which we do business. Although the outcome of these matters cannot be predicted with certainty, management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s financial position; however, an unfavorable outcome could have a material adverse effect on our results from operations for a specific interim period or year. In June 2013, we signed a long-term rig agreement with a subsidiary of Atwood Oceanics, Inc. for the new build 6 th generation drillship “Atwood Achiever.” We took delivery of the Atwood Achiever in September 2014. The rig agreement originally covered an initial period of three years at a day rate of approximately $0.6 million, with an option to extend the agreement for an additional three -year term. In September 2015, we amended the rig agreement effective October 1, 2015 to extend the contract end date by one year and reduce the rate to approximately $0.5 million per day. We have the option exercisable any time before October 1, 2016 to revert to the original day rate and original agreement end date, and would be required to make a payment that would account for the difference in day rate, taxes and administrative costs during the period the reduced day rate was effective. The estimated future minimum commitments as of September 30, 2015 , are: Payments Due By Year(1) Total 2015(2) 2016 2017 2018 2019 Thereafter (In thousands) Operating leases(3) $ $ $ $ $ $ $ — Atwood Achiever drilling rig contract(4) — — (1) Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts. (2) Represents payments for the period from October 1, 2015 through December 31, 2015 . (3) Primarily relates to corporate office and foreign office leases. (4) Commitments calculated using the amended day rate of $ 0.5 million effective October 1, 2015, excluding applicable taxes. |
Accounting Policies (Policies)
Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies | |
General | General The interim-period financial information presented in the consolidated financial statements included in this report is unaudited and, in the opinion of management, includes all adjustments of a normal recurring nature necessary to present fairly the consolidated financial position as of September 30, 2015 , the changes in the consolidated statements of shareholders’ equity for the nine months ended September 30, 2015 , the consolidated results of operations for the three and nine months ended September 30, 2015 and 2014 , and consolidated cash flows for the nine months ended September 30, 2015 and 2014 . The results of the interim periods shown in this report are not necessarily indicative of the final results to be expected for the full year. The consolidated financial statements were prepared in accordance with the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by Generally Accepted Accounting Principles in the United States of America (“GAAP”) have been condensed or omitted from these interim consolidated financial statements. These consolidated financial statements and the accompanying notes should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2014 , included in our annual report on Form 10-K. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform with the current year presentation. Such reclassifications had no impact on our reported net income (loss), current assets, total assets, current liabilities, total liabilities or shareholders’ equity. |
Restricted Cash | Restricted Cash In accordance with our commercial debt facility (the “Facility”), we are required to maintain a restricted cash balance that is sufficient to meet the payment of interest and fees for the next six -month period on the 7.875% Senior Secured Notes due 2021 (“Senior Notes”) plus the Corporate Revolver or the Facility, whichever is greater. As of September 30, 2015 and December 31, 2014 , we had $24.4 million and $15.9 million, respectively, in current restricted cash to meet this requirement. In addition, in accordance with certain of our petroleum contracts, we have posted letters of credit related to performance guarantees for our minimum work obligations. These letters of credit are cash collateralized in accounts held by us and as such are classified as restricted cash. Upon completion of the minimum work obligations and/or entering into the next phase of the petroleum contract, the requirement to post the existing letters of credit will be satisfied and the cash collateral will be released. However, additional letters of credit may be required should we choose to move into the next phase of certain of our petroleum contracts. As of September 30, 2015 and December 31, 2014 , we had $12.4 million and zero , respectively, of short-term restricted cash and $4.9 million and $16.1 million, respectively, of long-term restricted cash used to collateralize performance guarantees related to our petroleum contracts. |
Inventories | Inventories Inventories consisted of $71.9 million and $55.3 million of materials and supplies and $4.5 million and $0.1 million of hydrocarbons as of September 30, 2015 and December 31, 2014 , respectively. The Company’s materials and supplies inventory primarily consists of casing and wellheads and is stated at the lower of cost, using the weighted average cost method, or market. Hydrocarbon inventory is carried at the lower of cost, using the weighted average cost method, or market. Hydrocarbon inventory costs include expenditures and other charges incurred in bringing the inventory to its existing condition. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory costs. |
Recent Accounting Standards | Recent Accounting Standards In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330) — Simplifying the Measurement of Inventory.” ASU 2015-11 changes the measurement principle for entities that do not measure inventory using the last-in, first-out (LIFO) or retail inventory method from the lower of cost or market to lower of cost and net realizable value. The ASU also eliminates the requirement for these entities to consider replacement cost or net realizable value less an approximately normal profit margin when measuring inventory. The ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2015, the FASB issued ASU 2015-14, “Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date.” ASU 2015-14 defers the effective date of ASU 2014-09 by one year to annual reporting periods beginning after December 15, 2017 with early adoption permitted for periods beginning after December 15, 2016. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements. In August 2015, the FASB issued ASU 2015-15, “Interest – Imputation of Interest (Subtopic 835-30) — Presentation and Subsequent Measurement of Debt Issuance Costs Associated with the Line-of-Credit Arrangements.” ASU 2015-15 clarifies the guidance regarding line-of-credit arrangements with regards to the recently issued ASU 2015-03 to incorporate statements made by the SEC Staff during their June 18, 2015 Emerging Issues Task Force meeting. The SEC Staff has clarified they would not object to an entity deferring and presenting debt issue costs as an asset and subsequently amortizing the deferred debt issue costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of credit arrangement. The adoption of this standard will result in $41.2 million of net deferred financing costs (as of September 30, 2015 ) being reclassified as a direct reduction of debt on the balance sheet upon adoption of ASU 2015-03 during the first quarter of 2016. |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Property and Equipment | |
Schedule of property and equipment | September 30, December 31, 2015 2014 (In thousands) Oil and gas properties: Proved properties $ $ Unproved properties Support equipment and facilities Total oil and gas properties Less: accumulated depletion Oil and gas properties, net Other property Less: accumulated depreciation Other property, net Property and equipment, net $ $ |
Suspended Well Costs (Tables)
Suspended Well Costs (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Suspended Well Costs | |
Schedule of capitalized exploratory well costs | Nine Months Ended September 30, 2015 (In thousands) Beginning balance $ Additions to capitalized exploratory well costs pending the determination of proved reserves Reclassification due to determination of proved reserves — Capitalized exploratory well costs charged to expense Ending balance $ |
Schedule of aging of capitalized exploratory well costs and number of projects for which exploratory well costs were capitalized for more than one year | September 30, 2015 December 31, 2014 (In thousands, except well counts) Exploratory well costs capital ized for a period of one year or less $ $ Exploratory well costs capitalized for a period of one to two years Exploratory well costs capitalized for a period of three to six years Ending balance $ $ Number of projects that have exploratory well costs that have been capitalized for a period greater than one year |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Accrued Liabilities | |
Accrued Liabilities | September 30, December 31, 2015 2014 (In thousands) Accrued liabilities: Exploration, development and production $ $ General and administrative expenses Interest Income taxes Taxes other than income Other — $ $ |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt | |
Schedule of debt | September 30, December 31, 2015 2014 (In thousands) Outstanding debt principal balances: Facility $ $ Senior Notes Total Unamortized issuance discounts Long-term debt $ $ |
Schedule of estimated repayments of debt | Payments Due by Year 2015(2) 2016 2017 2018 2019 Thereafter (In thousands) Principal debt repayments(1) $ — $ — $ — $ — $ — $ (1) Includes the scheduled principal maturities for the $525.0 million aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on the level of borrowings and the estimated future available borrowing base as of September 30, 2015 . Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of September 30, 2015 , there were no borrowings under the Corporate Revolver. (2) Represents payments for the period October 1, 2015 through December 31, 2015 . |
Schedule of interest and other financing costs, net | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (In thousands) Interest expense $ $ $ $ Amortization—deferred financing costs Loss on extinguishment of debt — — Capitalized interest Deferred interest Interest income Other, net Interest and other financing costs, net $ $ $ $ |
Derivative Financial Instrume28
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Financial Instruments | |
Schedule of oil derivative contracts | Weighted Average Dated Brent Price per Bbl Net Deferred Premium Term Type of Contract MBbl Payable Swap Put Floor Ceiling Call 2015 : October — December Three-way collars $ $ — $ — $ $ $ October — December Swaps with calls — — — — 2016 : January — December Purchased puts $ $ — $ — $ $ — $ — January — December Three-way collars — — — January — December Swaps with puts — — — — 2017 : January — December Swap with puts/calls $ $ $ $ — $ — $ January — December Swap with puts — — — — January — December Sold calls(1) — — — — — |
Schedule of interest rate derivative contracts | Weighted Average Term Type of Contract Floating Rate Notional Swap Sold Call (In thousands) October 2015 — December 2015 Swap 6-month LIBOR $ % — January 2016 — June 2016 Swap 6-month LIBOR % — January 2016 — December 2018 Capped swap 1-month LIBOR % % |
Schedule of derivative instruments by balance sheet location | Estimated Fair Value Asset (Liability) September 30, December 31, Type of Contract Balance Sheet Location 2015 2014 (In thousands) Derivatives not designated as hedging instruments: Derivative assets: Commodity(1) Derivatives assets—current $ $ Commodity(2) Derivatives assets—long-term Interest rate Derivatives assets—long-term — — Derivative liabilities: Interest rate Derivatives liabilities—current Commodity Derivatives liabilities—long-term — Interest rate Derivatives liabilities—long-term Total derivatives not designated as hedging instruments $ $ (1) Includes net deferred premiums payable of $5.0 million and $1.8 million related to commodity derivative contracts as of September 30, 2015 and December 31, 2014 , respectively. (2) Includes net deferred premiums payable of $6.5 million and $6.9 million related to commodity derivative contracts as of September 30, 2015 and December 31, 2014 , respectively. |
Schedule of derivative instruments by location of gain/(loss) | Amount of Gain/(Loss) Amount of Gain/(Loss) Three Months Ended Nine Months Ended September 30, September 30, Type of Contract Location of Gain/(Loss) 2015 2014 2015 2014 (In thousands) Derivatives in cash flow hedging relationships: Interest rate(1) Interest expense $ $ $ $ Total derivatives in cash flow hedging relationships $ $ $ $ Derivatives not designated as hedging instruments: Commodity(2) Oil and gas revenue $ $ $ $ Commodity Derivatives, net Interest rate Interest expense Total derivatives not designated as hedging instruments $ $ $ $ (1) Amounts were reclassified from accumulated other comprehensive income or loss (“AOCI”) into earnings upon settlement. (2) Amounts represent the mark-to-market portion of our provisional oil sales contracts. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Measurements | |
Schedule of Company's assets and liabilities that are measured at fair value on a recurring basis | Fair Value Measurements Using: Quoted Prices in Active Markets for Significant Other Significant Identical Assets Observable Inputs Unobservable Inputs (Level 1) (Level 2) (Level 3) Total (In thousands) September 30, 2015 Assets: Commodity derivatives $ — $ $ — $ Liabilities: Commodity derivatives — — Interest rate derivatives — — Total $ — $ $ — $ December 31, 2014 Assets: Commodity derivatives $ — $ $ — $ Liabilities: Interest rate derivatives — — Total $ — $ $ — $ |
Schedule of carrying values and fair values of financial instruments that are not carried at fair value | September 30, 2015 December 31, 2014 Carrying Value Fair Value Carrying Value Fair Value (In thousands) Long-term debt $ $ $ $ |
Equity-based Compensation (Tabl
Equity-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restricted stock awards | |
Equity-based Compensation | |
Schedule of plan activity | Weighted- Market / Service Weighted- Service Vesting Average Vesting Average Restricted Stock Grant-Date Restricted Stock Grant-Date Awards Fair Value Awards Fair Value (In thousands) (In thousands) Outstanding at December 31, 2014 $ $ Granted — — Forfeited Vested Outstanding at September 30, 2015 |
Restricted stock units | |
Equity-based Compensation | |
Schedule of plan activity | Weighted- Market / Service Weighted- Service Vesting Average Vesting Average Restricted Stock Grant-Date Restricted Stock Grant-Date Units Fair Value Units Fair Value (In thousands) (In thousands) Outstanding at December 31, 2014 $ $ Granted Forfeited Vested — — Outstanding at September 30, 2015 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income Taxes | |
Schedule of components of income (loss) before income taxes | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 (In thousands) Bermuda $ $ $ $ United States Foreign—other Income before income taxes $ $ $ $ |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Net Income (Loss) Per Share | |
Schedule of reconciliation between net income and the amounts used to compute basic and diluted net income per share and the weighted average shares outstanding used to compute basic and diluted net income per share | Three Months Ended Nine Months Ended September 30, September 30, 2015 2014 2015 2014 (In thousands, except per share data) Numerator: Net income (loss) $ $ $ $ Less: Basic income allocable to participating securities(1) — Basic net income (loss) allocable to common shareholders Diluted adjustments to income allocable to participating securities(1) — — Diluted net income (loss) allocable to common shareholders $ $ $ $ Denominator: Weighted average number of shares used to compute net income (loss) per share: Basic Restricted stock awards and units(1)(2) — Diluted Net income (loss) per share: Basic $ $ $ $ Diluted $ $ $ $ (1) Our service vesting restricted stock awards represent participating securities because they participate in non-forfeitable dividends with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Our restricted stock awards with market and service vesting criteria and all restricted stock units are not considered to be participating securities and, therefore, are excluded from the basic net income per common share calculation. Our service vesting restricted stock awards do not participate in undistributed net losses and, therefore, are excluded from the basic net income per common share calculation in periods we are in a net loss position. We excluded outstanding restricted stock awards and units of 1.8 million and 6.8 million for the three months ended September 30, 2015 and 2014 , respectively, and 11.5 million and 4.7 million for the nine months ended September 30, 2015 and 2014 , respectively, from the computations of diluted net income per share because the effect would have been anti-dilutive. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies | |
Schedule of estimated future minimum commitments | Payments Due By Year(1) Total 2015(2) 2016 2017 2018 2019 Thereafter (In thousands) Operating leases(3) $ $ $ $ $ $ $ — Atwood Achiever drilling rig contract(4) — — (1) Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts. (2) Represents payments for the period from October 1, 2015 through December 31, 2015 . (3) Primarily relates to corporate office and foreign office leases. (4) Commitments calculated using the amended day rate of $ 0.5 million effective October 1, 2015, excluding applicable taxes. |
Organization (Details)
Organization (Details) | 9 Months Ended |
Sep. 30, 2015segment | |
Organization | |
Number of reportable segments | 1 |
Accounting Policies (Details)
Accounting Policies (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Restricted Cash | ||
Current restricted cash | $ 36,770 | $ 15,926 |
Long-term restricted cash | 4,875 | 16,125 |
Inventories | ||
Materials and supplies inventory | 71,900 | 55,300 |
Hydrocarbons inventory | $ 4,500 | 100 |
Restricted Cash | Facility interest or the Senior Notes plus the Corporate Revolver interest | ||
Restricted Cash | ||
Restricted cash period required as per commercial debt facility to meet interest and commitment fee payments | 6 months | |
Current restricted cash | $ 24,400 | 15,900 |
Restricted Cash | Petroleum agreements - performance guarantees | ||
Restricted Cash | ||
Current restricted cash | 12,400 | 0 |
Long-term restricted cash | $ 4,900 | $ 16,100 |
Senior Notes | 7.875% senior notes due 2021 | ||
Restricted Cash | ||
Interest rate | 7.875% |
Accounting Policies (Details 2)
Accounting Policies (Details 2) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
New Accounting Pronouncements or Change in Accounting Principles | ||
Deferred finance costs, noncurrent, net | $ 49,864 | $ 48,753 |
Long-term debt | 899,355 | $ 794,269 |
Accounting standards update 2015 03 [Member] | Scenario Forecast Adjustment [Member] | ||
New Accounting Pronouncements or Change in Accounting Principles | ||
Deferred finance costs, noncurrent, net | (41,200) | |
Long-term debt | $ (41,200) |
Acquisitions and Divestitures (
Acquisitions and Divestitures (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2015 | Mar. 31, 2015USD ($)item | Mar. 31, 2015 | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Acquisitions and Divestitures | |||||
Proceeds on sale of assets | $ 28,692 | $ 58,315 | |||
Gain on sale of assets | $ 24,651 | $ 23,769 | |||
Farm-in agreement | Camarao, Ameijoa, Mexilhao and Ostra blocks | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 31.00% | ||||
Farm-in agreement | Block 11 | |||||
Acquisitions and Divestitures | |||||
Participation interest acquired (as a percent) | 85.00% | ||||
Farm-out agreements | Block C8 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 60.00% | ||||
Farm-out agreements | Block C12 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 60.00% | ||||
Farm-out agreements | Block C13 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 60.00% | ||||
Chevron | Farm-out agreements | Block C8, Block 12 and Block 13 | |||||
Acquisitions and Divestitures | |||||
Participation interest acquired (as a percent) | 30.00% | ||||
Number of exploration wells for which a third party will pay a disproportionate amount | item | 1 | ||||
Proceeds on sale of assets | $ 28,700 | ||||
Gain on sale of assets | $ 24,700 | ||||
Chevron | Farm-out agreements | Block C8 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 30.00% | ||||
Chevron | Farm-out agreements | Block C12 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 30.00% | ||||
Chevron | Farm-out agreements | Block C13 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 30.00% | ||||
SMHPM | Farm-out agreements | Block C8 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 10.00% | ||||
SMHPM | Farm-out agreements | Block C12 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 10.00% | ||||
SMHPM | Farm-out agreements | Block C13 | |||||
Acquisitions and Divestitures | |||||
Participating interests (as a percent) | 10.00% | ||||
Agencia Nacional Do Petroleo De Sao Tome E Principe [Member] | Farm-in agreement | Block 11 | |||||
Acquisitions and Divestitures | |||||
Carried interest held by National Petroleum Agency | 15.00% |
Joint Interest Billings (Detail
Joint Interest Billings (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2014 | Sep. 30, 2015 | |
Joint interest billings | ||
Long-term receivables - joint interest billings | $ 14,174 | $ 31,343 |
TEN Discoveries | GNPC | ||
Joint interest billings | ||
Long-term receivables - joint interest billings | $ 14,200 | $ 31,300 |
TEN Discoveries | GNPC | ||
Joint interest billings | ||
GNPC's paying interest (as a percent) | 5.00% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Oil and gas properties: | |||||
Proved properties | $ 1,285,424 | $ 1,285,424 | $ 1,156,868 | ||
Unproved properties | 493,769 | 493,769 | 363,717 | ||
Support equipment and facilities | 1,147,467 | 1,147,467 | 968,722 | ||
Total oil and gas properties | 2,926,660 | 2,926,660 | 2,489,307 | ||
Less: accumulated depletion | (815,293) | (815,293) | (716,121) | ||
Oil and gas properties, net | 2,111,367 | 2,111,367 | 1,773,186 | ||
Other property | 34,603 | 34,603 | 33,718 | ||
Less: accumulated depreciation | (25,429) | (25,429) | (22,058) | ||
Other property, net | 9,174 | 9,174 | 11,660 | ||
Property and equipment, net | 2,120,541 | 2,120,541 | $ 1,784,846 | ||
Depletion expense | $ 33,600 | $ 34,600 | $ 103,400 | $ 145,800 |
Suspended Well Costs (Details)
Suspended Well Costs (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($)project | Dec. 31, 2014USD ($)project | |
Suspended Well Costs | |||
Capitalized exploratory well costs subsequently expensed in the same period | $ 62,700 | ||
Reconciliation of capitalized exploratory well costs on completed wells | |||
Beginning balance | 226,714 | ||
Additions to capitalized exploratory well costs pending the determination of proved reserves | 153,815 | ||
Capitalized exploratory well costs charged to expense | (23,375) | ||
Balance at the end of the period | 357,154 | ||
Aging of capitalized exploratory well costs and number of projects for which exploratory well costs were capitalized for more than one year | |||
Exploratory well costs capitalized for a period of one year or less | $ 143,558 | $ 16,814 | |
Exploratory well costs capitalized for a period one to two years | 3,790 | 40,865 | |
Exploratory well costs capitalized for a period three to six years | 209,806 | 169,035 | |
Ending balance | $ 226,714 | $ 357,154 | $ 226,714 |
Number of projects that have exploratory well costs that have been capitalized for a period greater than one year | project | 4 | 5 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accrued liabilities: | ||
Exploration, development and production | $ 99,947 | $ 139,393 |
General and administrative expenses | 19,675 | 21,926 |
Income taxes | 2,129 | 9,233 |
Interest | 7,120 | 10,271 |
Taxes other than income | 1,324 | 20,315 |
Other | 829 | |
Accrued liabilities | $ 130,195 | $ 201,967 |
Debt (Details)
Debt (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | |||||||
Jul. 31, 2015USD ($) | Jun. 30, 2015USD ($) | Apr. 30, 2015USD ($) | Aug. 31, 2014USD ($) | Mar. 31, 2014USD ($) | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Jul. 31, 2013USD ($) | |
Debt | |||||||||
Outstanding debt principal | $ 925,000 | $ 800,000 | |||||||
Unamortized issuance discounts | (25,645) | (5,731) | |||||||
Long-term debt | 899,355 | 794,269 | |||||||
Loss on extinguishment of debt | 165 | $ 2,898 | |||||||
Net deferred financing costs | 49,864 | 48,753 | |||||||
Scheduled maturities of debt during the five year period and thereafter | |||||||||
Thereafter | 925,000 | ||||||||
Facility | |||||||||
Debt | |||||||||
Outstanding debt principal | 400,000 | 500,000 | |||||||
Total commitment | $ 1,500,000 | ||||||||
Loss on extinguishment of debt | $ 2,900 | ||||||||
Net deferred financing costs | 39,200 | ||||||||
Amount outstanding | 400,000 | ||||||||
Undrawn availability | 1,100,000 | ||||||||
Revolving-credit sublimit amount after March 31, 2018 | $ 500,000 | ||||||||
Availability period of revolving-credit sublimit | 1 month | ||||||||
Amount outstanding under letters of credit | $ 0 | ||||||||
Corporate Revolver | |||||||||
Debt | |||||||||
Total commitment | $ 400,000 | ||||||||
Percentage of the margin used to calculate commitment fees | 30.00% | ||||||||
Net deferred financing costs | 8,700 | ||||||||
Amount outstanding | 0 | ||||||||
Undrawn availability | 400,000 | ||||||||
Revolving Letter of Credit Facility | |||||||||
Debt | |||||||||
Total commitment | $ 75,000 | $ 100,000 | |||||||
Reduction in borrowing capacity | 25,000 | ||||||||
Amount outstanding | $ 23,100 | ||||||||
Number of letters of credit | item | 8 | ||||||||
Additional commitments | $ 50,000 | ||||||||
Revolving Letter of Credit Facility | Maximum | |||||||||
Debt | |||||||||
Additional commitments | $ 50,000 | ||||||||
Senior Notes | |||||||||
Debt | |||||||||
Outstanding debt principal | $ 525,000 | $ 300,000 | |||||||
Senior Notes | 7.875% senior notes due 2021 | |||||||||
Debt | |||||||||
Interest rate | 7.875% | ||||||||
Senior notes offering face amount | $ 225,000 | $ 300,000 | |||||||
Proceeds, net of offering discounts and deferred financing costs | $ 206,800 | $ 292,500 |
Debt (Details 2)
Debt (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Debt | ||||
Interest expense | $ 20,031 | $ 14,406 | $ 54,687 | $ 36,400 |
Amortization-deferred financing costs | 2,554 | 2,593 | 7,773 | 7,938 |
Loss on extinguishment of debt | 165 | 2,898 | ||
Capitalized interest | (15,152) | (4,904) | (37,146) | (13,007) |
Deferred interest | 129 | (118) | 1,421 | (3,964) |
Interest income | (168) | (69) | (508) | (323) |
Other, net | 2,532 | 454 | 3,283 | 1,555 |
Interest and other financing costs, net | $ 9,926 | $ 12,362 | $ 29,675 | $ 31,497 |
Derivative Financial Instrume44
Derivative Financial Instruments (Details) - Price risk derivatives | 9 Months Ended |
Sep. 30, 2015$ / bblMBbls | |
Three-way Collars | Term October 2015 To December 2015 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 1,064 |
Weighted average deferred premium payable per Bbl | 0.46 |
Weighted average floor price per Bbl | 87.43 |
Weighted average ceiling price per Bbl | 110 |
Weighted average purchased call price per Bbl | 133.82 |
Purchased puts | Term January 2016 to December 2016 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average deferred premium payable per Bbl | 3.41 |
Weighted average floor price per Bbl | 85 |
Swaps with calls | Term October 2015 To December 2015 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 503 |
Weighted average swap price per Bbl | 93.59 |
Weighted average purchased call price per Bbl | 115 |
Three-way collars | Term January 2016 to December 2016 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average floor price per Bbl | 85 |
Weighted average ceiling price per Bbl | 110 |
Weighted average purchased call price per Bbl | 135 |
Swaps with puts | Term January 2016 to December 2016 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average swap price per Bbl | 75 |
Weighted average sold put price per Bbl | 60 |
Swaps with puts | Term January 2017 to December 2017 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average swap price per Bbl | 64.95 |
Weighted average sold put price per Bbl | 50 |
Sold calls | Term January 2017 to December 2017 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average ceiling price per Bbl | 85 |
Swap with puts/calls | Term January 2017 to December 2017 | |
Derivative Financial Instruments | |
Volumes (in MBbl) | MBbls | 2,000 |
Weighted average deferred premium payable per Bbl | 2.13 |
Weighted average swap price per Bbl | 72.50 |
Weighted average sold put price per Bbl | 55 |
Weighted average purchased call price per Bbl | 90 |
Derivative Financial Instrume45
Derivative Financial Instruments (Details 2) - Interest Rate Swap $ in Thousands | Sep. 30, 2015USD ($) |
6-month LIBOR | Term October 2015 To December 2015 | |
Derivative Financial Instruments | |
Weighted Average Notional Amount | $ 25,000 |
Weighted Average Fixed Rate (as a percent) | 2.27% |
6-month LIBOR | Term January 2016 to June 2016 | |
Derivative Financial Instruments | |
Weighted Average Notional Amount | $ 12,500 |
Weighted Average Fixed Rate (as a percent) | 2.27% |
1-month LIBOR | Interest Rate Cap | Term January 2016 to December 2018 | |
Derivative Financial Instruments | |
Weighted Average Notional Amount | $ 200,000 |
Weighted Average Fixed Rate (as a percent) | 1.23% |
Interest rate cap | 3.00% |
Derivative Financial Instrume46
Derivative Financial Instruments (Details 3) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Derivative instruments, Balance Sheet Location | ||
Derivatives assets - current | $ 164,172 | $ 163,275 |
Derivatives assets-long-term | 66,247 | 89,210 |
Derivatives liabilities - current | (1,386) | (721) |
Derivatives liabilities - long-term | (3,463) | (68) |
Not designated as hedging instruments | ||
Derivative instruments, Balance Sheet Location | ||
Total | 225,570 | 251,696 |
Commodity derivatives | Not designated as hedging instruments | ||
Derivative instruments, Balance Sheet Location | ||
Derivatives assets - current | 164,172 | 163,275 |
Derivatives assets-long-term | 66,247 | 89,210 |
Derivatives liabilities - long-term | (2,679) | |
Net deferred premiums payable related to commodity derivative contracts | 5,000 | 1,800 |
Net deferred premiums payable related to commodity derivative contracts | 6,500 | 6,900 |
Interest rate contracts | Not designated as hedging instruments | ||
Derivative instruments, Balance Sheet Location | ||
Derivatives liabilities - current | (1,386) | (721) |
Derivatives liabilities - long-term | $ (784) | $ (68) |
Derivative Financial Instrume47
Derivative Financial Instruments (Details 4) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Derivative instruments, Location of Gain/(Loss) | ||||
Amount of Gain/(Loss), derivatives not designated as hedging instruments | $ 138,934 | $ 35,519 | $ 126,940 | $ 12,407 |
Commodity derivatives | Oil and gas revenue | ||||
Derivative instruments, Location of Gain/(Loss) | ||||
Amount of Gain/(Loss), derivatives not designated as hedging instruments | (1,033) | (4,886) | (736) | (8,253) |
Commodity derivatives | Derivatives, net | ||||
Derivative instruments, Location of Gain/(Loss) | ||||
Amount of Gain/(Loss), derivatives not designated as hedging instruments | 142,129 | 40,407 | 129,579 | 20,869 |
Interest rate contracts | Interest expense | ||||
Derivative instruments, Location of Gain/(Loss) | ||||
Amount of Gain/(Loss), derivatives not designated as hedging instruments | (2,162) | (2) | (1,903) | (209) |
Derivatives in cash flow hedging relationships | ||||
Derivative instruments, Location of Gain/(Loss) | ||||
Interest rate derivatives, net | 378 | 290 | 767 | 1,101 |
Derivatives in cash flow hedging relationships | Interest rate contracts | Interest expense | ||||
Derivative instruments, Location of Gain/(Loss) | ||||
Amount of Gain/(Loss) reclassified from AOCI into earnings | $ 378 | $ 290 | $ 767 | $ 1,101 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Carrying Value | ||
Liabilities: | ||
Long-term debt | $ 899,355 | $ 794,269 |
Total Fair Value | ||
Liabilities: | ||
Long-term debt | 848,875 | 755,000 |
Recurring basis | ||
Liabilities: | ||
Total fair value, net | 225,570 | 251,696 |
Recurring basis | Commodity derivatives | ||
Assets: | ||
Derivative asset, fair value | 230,419 | 252,485 |
Liabilities: | ||
Derivative liability, fair value | (2,679) | |
Recurring basis | Interest rate contracts | ||
Liabilities: | ||
Derivative liability, fair value | (2,170) | (789) |
Recurring basis | Level 2 | ||
Liabilities: | ||
Total fair value, net | 225,570 | 251,696 |
Recurring basis | Level 2 | Commodity derivatives | ||
Assets: | ||
Derivative asset, fair value | 230,419 | 252,485 |
Liabilities: | ||
Derivative liability, fair value | (2,679) | |
Recurring basis | Level 2 | Interest rate contracts | ||
Liabilities: | ||
Derivative liability, fair value | $ (2,170) | $ (789) |
Equity-based Compensation (Deta
Equity-based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jan. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
LTIP | |||||
Compensation agreement | |||||
Compensation expense recognized | $ 13.9 | $ 19 | $ 62.4 | $ 55 | |
Tax benefit | 4.7 | 6.7 | 21.1 | 19.2 | |
Tax shortfall related to equity-based compensation | 0.1 | 0 | 18.5 | 6.5 | |
Fair value of awards vested | $ 1 | $ 1.3 | $ 51.8 | $ 34.6 | |
Other disclosures | |||||
Additional shares authorized | 15,000 | ||||
Number of shares remaining available for grant | 11,500 | 11,500 | |||
Minimum | LTIP | |||||
Significant assumptions used to calculate fair values | |||||
Vesting period | 3 years | ||||
Maximum | LTIP | |||||
Significant assumptions used to calculate fair values | |||||
Vesting period | 4 years | ||||
Service Vesting Restricted Stock Awards | LTIP | |||||
Outstanding unvested awards activity | |||||
Outstanding at the beginning of the period (in shares) | 3,240 | 3,240 | |||
Granted (in shares) | 660 | ||||
Forfeited (in shares) | (2) | ||||
Vested (in shares) | (3,065) | ||||
Outstanding at the end of the period (in shares) | 833 | 833 | |||
Weighted-Average Grant-Date Fair Value | |||||
Outstanding at beginning of the period (in dollars per share) | $ 16.95 | $ 16.95 | |||
Granted (in dollars per share) | 8.64 | ||||
Forfeited (in dollars per share) | 8.85 | ||||
Vested (in dollars per share) | 17.26 | ||||
Outstanding at the end of the period (in dollars per share) | $ 9.27 | $ 9.27 | |||
Market/Service Vesting Restricted Stock Awards | LTIP | |||||
Outstanding unvested awards activity | |||||
Outstanding at the beginning of the period (in shares) | 3,361 | 3,361 | |||
Forfeited (in shares) | (1,554) | ||||
Vested (in shares) | (1,546) | ||||
Outstanding at the end of the period (in shares) | 261 | 261 | |||
Weighted-Average Grant-Date Fair Value | |||||
Outstanding at beginning of the period (in dollars per share) | $ 13 | $ 13 | |||
Forfeited (in dollars per share) | 13.29 | ||||
Vested (in dollars per share) | 13.30 | ||||
Outstanding at the end of the period (in dollars per share) | $ 9.44 | 9.44 | |||
Market/Service Vesting Restricted Stock Awards | Minimum | LTIP | |||||
Weighted-Average Grant-Date Fair Value | |||||
Granted (in dollars per share) | $ 6.70 | ||||
Significant assumptions used to calculate fair values | |||||
Expected volatility (as a percent) | 30.00% | ||||
Risk-free interest rate (as a percent) | 0.50% | ||||
Market/Service Vesting Restricted Stock Awards | Maximum | LTIP | |||||
Weighted-Average Grant-Date Fair Value | |||||
Granted (in dollars per share) | $ 13.57 | ||||
Other disclosures | |||||
Vesting percentage of the awards granted | 100.00% | ||||
Significant assumptions used to calculate fair values | |||||
Expected volatility (as a percent) | 76.00% | ||||
Risk-free interest rate (as a percent) | 1.10% | ||||
Service Vesting Restricted Stock Units | LTIP | |||||
Outstanding unvested awards activity | |||||
Outstanding at the beginning of the period (in shares) | 3,367 | 3,367 | |||
Granted (in shares) | 1,454 | ||||
Forfeited (in shares) | (89) | ||||
Vested (in shares) | (1,010) | ||||
Outstanding at the end of the period (in shares) | 3,722 | 3,722 | |||
Weighted-Average Grant-Date Fair Value | |||||
Outstanding at beginning of the period (in dollars per share) | $ 10.76 | $ 10.76 | |||
Granted (in dollars per share) | 8.46 | ||||
Forfeited (in dollars per share) | 10.22 | ||||
Vested (in dollars per share) | 10.78 | ||||
Outstanding at the end of the period (in dollars per share) | $ 9.87 | $ 9.87 | |||
Market/Service Vesting Restricted Stock Units | LTIP | |||||
Outstanding unvested awards activity | |||||
Outstanding at the beginning of the period (in shares) | 3,246 | 3,246 | |||
Granted (in shares) | 3,498 | ||||
Forfeited (in shares) | (68) | ||||
Outstanding at the end of the period (in shares) | 6,676 | 6,676 | |||
Weighted-Average Grant-Date Fair Value | |||||
Outstanding at beginning of the period (in dollars per share) | $ 15.66 | $ 15.66 | |||
Granted (in dollars per share) | 12.96 | ||||
Forfeited (in dollars per share) | 14.72 | ||||
Outstanding at the end of the period (in dollars per share) | $ 14.25 | 14.25 | |||
Market/Service Vesting Restricted Stock Units | Minimum | LTIP | |||||
Weighted-Average Grant-Date Fair Value | |||||
Granted (in dollars per share) | $ 12.96 | ||||
Significant assumptions used to calculate fair values | |||||
Risk-free interest rate (as a percent) | 0.50% | ||||
Market/Service Vesting Restricted Stock Units | Maximum | LTIP | |||||
Weighted-Average Grant-Date Fair Value | |||||
Granted (in dollars per share) | $ 15.81 | ||||
Other disclosures | |||||
Vesting percentage of the awards granted | 200.00% | ||||
Significant assumptions used to calculate fair values | |||||
Risk-free interest rate (as a percent) | 1.20% | ||||
Restricted Stock Awards and Restricted Stock Units | |||||
Other disclosures | |||||
Compensation expense not yet recognized | $ 64.1 | $ 64.1 | |||
Weighted average period over which compensation expense is to be recognized | 1 year 10 months 24 days |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Taxes | ||||
Income tax expense | $ 62,218 | $ 38,468 | $ 113,307 | $ 170,035 |
Income (loss) before income taxes | $ 122,483 | $ 57,591 | $ 19,471 | $ 320,634 |
Effective tax rate (as a percent) | 51.00% | 67.00% | 582.00% | 53.00% |
Bermuda | ||||
Income Taxes | ||||
Income (loss) before income taxes | $ (16,268) | $ (8,368) | $ (47,304) | $ (20,588) |
United States | ||||
Income Taxes | ||||
Income (loss) before income taxes | $ 2,903 | $ 3,049 | $ 11,457 | $ 10,542 |
Effective tax rate (as a percent) | 44.00% | 38.00% | 202.00% | 102.00% |
Foreign-other | ||||
Income Taxes | ||||
Income (loss) before income taxes | $ 135,848 | $ 62,910 | $ 55,318 | $ 330,680 |
Effective tax rate (as a percent) | 0.00% | |||
Statutory tax rate (as a percent) | 0.00% | |||
Ghana | ||||
Income Taxes | ||||
Effective tax rate (as a percent) | 35.00% | 33.00% | 35.00% | 35.00% |
Net Income (Loss) Per Share (De
Net Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Numerator: | ||||
Net income (loss) | $ 60,265 | $ 19,123 | $ (93,836) | $ 150,599 |
Less: Basic income allocable to participating securities | (131) | (174) | (1,919) | |
Basic net income (loss) allocable to common shareholders | 60,134 | 18,949 | (93,836) | 148,680 |
Diluted adjustments to income allocable to participating securities | 1 | 17 | ||
Diluted net income (loss) allocable to common shareholders | $ 60,134 | $ 18,950 | $ (93,836) | $ 148,697 |
Weighted average number of shares used to compute net income (loss) per share: | ||||
Basic (in shares) | 383,924 | 379,969 | 382,603 | 378,881 |
Restricted stock awards and units (in shares) | 6,662 | 2,221 | 3,406 | |
Diluted (in shares) | 390,586 | 382,190 | 382,603 | 382,287 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ 0.16 | $ 0.05 | $ (0.25) | $ 0.39 |
Diluted (in dollars per share) | $ 0.15 | $ 0.05 | $ (0.25) | $ 0.39 |
Outstanding restricted stock awards and units excluded from the computations of diluted net income per share (in shares) | 1,800 | 6,800 | 11,500 | 4,700 |
Commitments and Contingencies52
Commitments and Contingencies (Details) - USD ($) $ in Thousands | Oct. 01, 2015 | Sep. 30, 2015 |
Offshore drilling rig contract commitments | ||
Contract end date extension | 1 year | |
Future minimum rental commitments | ||
Rig rate per day | $ 500 | |
Operating leases | ||
Future minimum rental commitments | ||
Total | $ 13,656 | |
2,015 | 821 | |
2,016 | 3,158 | |
2,017 | 3,223 | |
2,018 | 3,323 | |
2,019 | $ 3,131 | |
Atwood Achiever drilling rig contract | ||
Offshore drilling rig contract commitments | ||
Drilling rig contract period | 3 years | |
Initial rig rate per day | $ 600 | |
Optional extension period | 3 years | |
Future minimum rental commitments | ||
Total | $ 564,455 | |
2,015 | 45,593 | |
2,016 | 181,379 | |
2,017 | 180,883 | |
2,018 | $ 156,600 |