KOS - Earnings call transcript Q2 2019

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Operator

Greetings. Welcome to the Kosmos Energy Second Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

the to turn Buckland. host, now will conference your over Jamie I you. Thank

You may begin.

Jamie Buckland

and today. for Page XX-Q release with you This you, available filing accompany thank Thank operator, our materials Both all kosmosenergy.com presentation – issued SEC are the website. second today's anticipate call. slide the morning, our quarter, joining the quarter for a earnings Investors the on on today later to of we today. us We

go to Tom through materials me Officer. on today Joining Chief and call Inglis, Andy Officer; and Chambers, the Chairman the are Financial Executive Chief

Before the like based measures conference on in get management release and commonly measures industry SEC looking our earnings have associated may conjunction are in mention statements read with call expectations. and believes current that statements with these The at important historical risks and in refer financial measures in the we this our performance and non-GAAP and started, Company's filings. We the to I'd certain our with in filings. forward-looking in includes also discussion outlined certain are SEC our should addition forward-looking to provided referred contained GAAP statements our be such prepared in financial to are accordance in in and included to information These metrics. future been

to over At call I'll Andy. this the turn time,

Andy Inglis

reinforcing the we Markets consistent that Capital and everyone. are outlined February. start characteristics Thanks, call I'd key morning, in our good by Kosmos's to Day at Jamie themes proposition. unique like define the with They investment the

million on million prices. XXXX to quarter, is the model deliver over flow and current highly are In business track second First, cash we at $XXX delivered approximately free generative. of $XXX in Kosmos's cash

Our third of year a free positive row flow. cash in

compared represents other cash free companies other is XX%, around which this yield very in indeed sectors. contacts flow of to XXXX, competitive E&P For a and

well expect drill brought and a Gladden the million program And equivalent. exploration in rest we GOM the wells Second total second quarter. ILX is the first or through resource to led working. in four ILX oil targeting net barrels year, our XXX around success Deep EG The the infrastructure the of

to Third, our Senegal add base. value asset to we Mauritania continue

the to drilling good expanded progress Tortue industry and our we remains The recent quality of on Our resource of to significant the the sell-down led appraisal has at around further make assets scale continue interest with position and to the and track. process XX%.

value opening part a creating through our basin remains exploration key of Fourth, transformational business.

Later will oil onwards. two and drill to per We have mature continue portfolio and Mauritania, we high-grade from year the tests basin-opening which gas well and we'll diverse a drill to of opportunities, expect deep Orca test. this in XXXX year,

our April, bonds opportunistically sheet to strength conservative were Kosmos. pushing of in approach our strategic not the XXXX, out asset sheet finally, due to refinanced the continues And be we changed. In balance until managing has maturity that XXXX. Balance a

day. per Turning share equivalent the to the had XX,XXX to our now entitlement second during Kosmos X, production record approximately of barrels discuss quarter. quarter, averaging slide like I'd with oil

and In TEN. from gross and TEN quarter at Ghana, day per in resulting XX,XXX oil averaged plant Jubilee one cargos Jubilee XX,XXX second production from two of barrels the at

into above oil allowing should increase the Jubilee, XXX enhancements handling enhancement these per is XXXX. year. thereby accelerate day, partnership production gas of in to fourth increase to quarter feet At to and cubic the million the this of standard planning projects quarter into Implementation gas the fourth capacity

were the previously completion reported well operator being EN-XX not to TEN, the well, problems as the experienced resulting issues due mechanical At at in completed.

lift field mechanical and four the full-year reduced cargoes five. These TEN for wells be TEN, expect drilling of expectations potential deferred. the potential our expectation is deferral two In from has to the TEN for previous to addition, from the other of issues and we down there now

result, expect corporate of our be low for to level guidance end now range. the As at we the XXXX production a

range In high-end the day record second oil demonstrating Gulf guidance the row. the XX,XXX average the quarter in business last quarter net was GOM the of Mexico, in the a of The our production assets for exceed barrels expectations, year. growth continue acquiring the our since second in equivalent the to of EG per for daily a beating unit, business

to drydock the driven spare the Tornado expectations. increase in aboard of by Delta in Odd capacity was during House coming we Equatorial where increased in Performance able primarily field was XQ. back after production quarter Guinea its quarter-on-quarter The at with planned take Job were and advantage online line

Our Electrical installations program Pump quarter. is or ESP with ESP ongoing this further Submersible two

program stimulation delivered facilities XXX% These of cash excess enhance are just recently in low upgrade of the invested cost payback has currently ESP to under program months. facilities the program. in and of and is has Okume support payback XXXX seven addition, In XXXX Okume the begun XXXX capital the the program projects in and way ESP rapid

payable approximately cash This to at strong remain during price. into of the in prices paid the for current share At exceed flow quarter. track to at September. equates around for year. this and translated the yield production X% dividend a forecast today's performance We we finally, $XXX the And million our dividend full flow announced $X.XXX cash of our free on late $XXX third year, million free during quarter quarter $X.XX today

to Turning X. slide

remarks, our great As to oil first is I program around expect start. a Gladden Deep six opening ILX months from discovery. off from my in we And mentioned

sale. the through our high-quality inventory in March was of Our prospects GOM in the lease broadened participation

leases During nine we the bidder. awarded high all were same apparent Kosmos where quarter, was

now awards, years XX than over of XX equivalent are drilling new total we prospects with blocks more five these approximately in With activity. future

plan about in prospects, have prospect. minute. the drilling in drill talk we're In drill the I'll half, three to of our first target well Equatorial and Guinea, a we second these to G-XX an ILX program the which in GOM In active planning

to rig to contracted have well is We quarter. late the in third expected which now the this spud drill

Senegal, on three and In one further the process resource The Mauritania is following December. our recent progressing project sell-down well. February Tortue in ongoing Ahmeyim we announced at of and remains have two Greater track Tortue on Ahmeyim. phases expanded phase Pre-FEED drilling is significant base results FID in and Greater work

class resource garnered base interest to As significant industry by world has transaction we expect end. year a announce

and X. our contribution Turning to action. speed and still be in the the of but This first ILX production infrastructure-led Deep demonstrates it's XXXX cash slide smallest portfolio. slide exploration may program our flow shows meaningful growing to of our Gladden prospects,

to of very the X,XXX The around attractive. from economics well to approximately months production discovery. expect deliver per barrels day are net incremental Kosmos of We oil six equivalent

we -- At Brent, XX precisely and cycle we we of success has payback months barrel lifting from Gladden per to $X.XX Mexico $XX.XX cost, up the with ramp as and forward $XX Deep a barrel look around first well why full cost cycle the and half. a activity enter XX% with second expected oil. Gulf the of IRR around are Opportunity full like more in F&D in per

million equivalent three Slide in resource, oil X XXX followed net We the detail. barrels by approximately shows and reserve in total this activity base GOM. oil In Moneypenny in Oldfield spud XP million of our in XX will barrel these tax wells Resolution plan greater than current November. more October to

would meaningful. So be of wells success at any these

Hess finalizing assignment cross -- the the with process Hess interest of in with XX% adjacent on of a two Kosmos specifically, oilfield in on interest in blocks Interestingly our we're the and block taking XX%.

significant As that be talked believe equivalent, to upside about. of Hess the million that now XX there area, could a new we barrel oil initially seismic result data in has processed the we

Kosmos's of behalf Hess BP. of prospect the development larger we initial license the Hess example another strong Mexico, often Oldfield, to operate plan operate within with during and exploration on Gulf phase. of is Oilfield players to much the like and With

available of of cost barrel their point important oil around average prospects only The of which note, IRRs cost average barrel. be capacity. these infrastructure F&D with an have per located in full can $X cycle quickly. discoveries is And One XX%. If generate per brought of online barrel the three to per existing an of wells Brent successful prices has $XX $XX around average around lifting and each

deepwater to infrastructure. in underutilized of lot There the of abundance is an oil a yet GOM, be found

As I've ever active been there's in don't presentations, previous to a be the time GOM. believe better I said in

take ILX wells advantage X attractive X backdrop year, of XX plan unrisked a year. of to this a We and to to drilling by XXX growing each net million set oil targeting equivalent opportunity resource barrels million

with equivalent area is drilled G-XX field XXX up I'd discuss time the Turning opportunity This XX a legacy today previously meter around Guinea. ILX of of barrels The The around G-XX which improved like a were oil in column. in Slide three million X wells successful. drilled includes Equatorial opportunity another four oil discovery. this wells have to unique a

we our database model. survey. survey. depositional XXXX previous better acquired the much and This Today, prospect new vintage trap of a has in has calibrated the system a up we XXXX survey understanding area. of sand have were clearer A delivered well seismic that a given new into us The reservoir image drilled in seismic wells the resolution enhanced

be what The were now to that upside channel, the providing drilled the believe identifying edge discovery. the new information wells on of considerable is being reservoir we to main the in previous key

field. with potential for element barrels to the the resource together stratigraphic XXX million the around increases This gross

expected million well first in XX barrels The and to will test spud quarter. gross third the around

make three have to building and million believe XXX in continue we basin in XX we we're progress to partners, to major separate place, ton annum Tcf significant XX LNG of the per Senegal. with Mauritania business a underpin shows X our LNG gas hubs. across initially the gas Slide we enough With Tcf

once to using scheme, can the The Greater many other Ahmeyim a replicated and BirAllah Tortue approach. two using at we're the innovative hubs: development design Yakaar-Teranga be build

Our base successful exploration appraisal on a well. Ahmeyim with focused Greater expanding and resource Tortue at therefore this year first which our we've are GTA-X done appraisal activities

after where development second planned, Second, rise at Yakaar is the an maintenance. in appraisal Senegal but LNG securing month well completing defining and the and next BOP area, rig a

in -- the And by to progressing transaction I said process announce expected end. in Mauritania, and hope my in next BirAllah remarks, we do a we which Orca February as year we we with we October. the to opening to announced And hub well the in which third well, is sell-down expect spud underpinning LNG

years, a to position the same evolution nine, remaining was period. to the that Kosmos. shareholder June, slide in Turning of shift business mirrors sold Blackstone last highlight rapid our the over two Blackstone in our the base and In we I'd over gone. set their XXX% have of substantial Warburg flows one like this almost a public shareholders have equity overhang that free founding two a of now is their all but of and equity year, broader exit Today investors. diverse shareholding we post and Pincus private more any earlier change

Kosmos believe soon presentation the of our for for more we With the year the appendix for be the that you with that bring that should third will assets at guidance float, the an look benefits full quarter and to included encourage we when enhanced in domicile, inclusion We've base. rest modeling and the U.S. and U.S. the meaningful index business year. eligible the to to shareholder

So perhaps same significant quarter last record slide. both most for turning with increase with to last for modest been has final EBITDAX XQ compared the a shareholders summary, over our in XX% year. was minimal and only leverage, This quarter over a the In production growth dilution. higher XX the importantly months done Kosmos, with to

times. to target strong move busy is of full exciting half forward And X.X company. toward With very to that transformational leverage our which times generation, the for a cash we to look we range could second expect of be -- the many catalysts, very second a of X company's

operator for open now I the like to turn call the session questions. And to you. the over Thank to

Operator

Thank with you. question question. from Our with [Operator Instructions] David proceed is Markets. Round Capital Please first your BMO

David Round

Good Andy. morning,

couple Just me. a from

on I one it's Are the And going currently there? the of the rest year. and you strong of Obviously, to quite the particularly year Gulf looks following TEN quarter mean how which added second a to detail schedule able Gladden any first at in The further see now you contribute do Ghana. XX for Deep, add question, the well. you've this on plans And Mexico. drilling like and the into XXXX?

around do the how confidence think guidance your production year in we about the there? half? So second full And what's

Andy Inglis

Okay. David. Yes. Thanks,

of what take think think look was view We're it'd like. the a support EN-XX I full second previously Ghana, couldn't could well. we to prior sort And on the had problems decision that the operators' month. the give that well delayed good we complete where a on disappointed EN-XX, a out that time obviously by been you of to completion we half be a

is TEN EN-XX to on plan remediation. out for with with time the And a back right taking the actually do. need right think we I So a thing to come

drilling back delivered I design think that budget. with to and for time an also we be completing appropriate on we're need can on confident come

operational can get a it's think do cost-effective reservoir. reserves emphasize important to this are TEN need to on The to just the sure we we with issue there, I at is an way. them in make nothing

What will producer I I for think, is We're from year. J-XX. think actually perspective to Jubilee on the the that start-up rig rest means, about our Jubilee work a on the of

I think there's a of to on take maintenance some you would -- series the I that through then, there's the And of planned maintenance recompletions the rig. end think, year.

Jubilee us for sort on on and a together increase Jubilee rate of capacity into above for at combination with year and cubic gas should a throughput standard give that XXXX. to the additional well Jubilee million strong exit Jubilee, of the the So production XXX the good in feet, end

from clearly important. that's perspective, a And Kosmos

larger that have it's strong Jubilee. base maintain than do a a Jubilee so we in production We in TEN, share in we important

I of story. So, Ghana think that's sort the

In has through acquisition, the in means made the outperformed strong quarter wells it expectations year Headless record was Nearly GOM, we're Deep which when in exit Nick, a outperformed that rate Gladden business And the the our Gulf we got obviously XQ. yeah, end, production. expectations -- more we've we with should up, then starting exit our two pleased, a and very

I'm It's to genuinely deals has We've seize it's brand the Kosmos of build. with the about I mitigating think strong in there we've the dimensions. through team. to -- all that opportunity companies some And the of managed building think from obviously a pleased I to impact into up through done great to Gulf TEN. larger the round some great on So, prospects we're get and performance the feel of licensing some been contributed business and brought

inventory neat said I as out year acquisition built we've is than less got remarks, which And my in pretty five-year the a a is drilling through. given

So, all Gulf. start from it's a been strong the in dimensions

David Round

Andy. Thanks helpful. really that's Great,

Andy Inglis

Great thanks.

Operator

is question with from with next your Please Carmichael Our question. proceed James Macquarie Group.

James Carmichael

Hi Andy. morning good

of Just one Gulf quickly the Mexico. on

is rather of in Gunnison that to of Resolution to interested what discover ensure you stand need at help it you to any sort spar. the Just resource simply scale than back at think tying production

well Thanks. bore still et cetera And the it then also work, just would that future? Sioux you the in Gatlinburg doesn't that the in and event Resolution further Falls, consider drill targets of as

Andy Inglis

James. questions Good

I think important to the it's at standalone a versus look newbuild.

So, be versus a think standalone I irrespective newbuild Gunnison almost the pursued is could scale. something of that

would spar prospects existing sort to The Gunnison have an with opportunity believe a success for us in. resolution of the full capacity came at the even I use surrounding and infrastructure. be would it

a thing. So, I it's scale don't think

got a or full there. go it's optionality either today. terms And Gunnison in newbuild? are So, think life ultimately route. we've and in is the bringing I think debottlenecking both think decision could is good most valid decision what -- economic the I of around economic utilizing news I it it potentially -- about is We

at the million gross. And to around then surrounding XXX we could have billion sort up Resolution of have And barrels. barrels prospectivity X.X we

a So, area Resolution opportunity significant be success, it's individual this for prospects. itself. not And It think were us. is a the about will I about not if

is obviously, and cetera, Obviously, et the around trap the are probably ongoing Gulf still will Mexico Sioux of prospects, therefore Falls be valid.

on the to the the we forward like in optionality ability the IRRs. the able thing is development want would the tie is So, to and retain It's And to And driving time that we Resolution. to area. with that distinguishes which like quickly. be with that -- economics high of Gulf the to we ultimately success We scale Mexico. the with to production like success me move

James Carmichael

Very helpful. Thanks a lot.

Andy Inglis

James. Thanks Great.

Operator

question Please next Our Richard proceed. One. is from Tullis Capital with

Richard Tullis

Good on thanks. quarter. morning Andy. Hey Congrats a nice

of the bids Are point? the late at sell-down Looking at still this summer process. Tortue LNG expected

Andy Inglis

on on It interest Yes, and dayroom Mauritania been of lots which that's been been a of people process work in Richard, the I'd the on. set say the and a the data plus the in level we've busy to of We actually been has May process. going management and it's -- the announced sell-down minus. that months, and of Senegal industry couple working lots a room, of obviously a presentations it's means, is significant, through that

trading transition had it? It's fuel, portfolio have being in. been the interests actually strategic we've see me real NOCs I been So access driver. the gas is get the the from to that not assets. of gas, a been as IOCs, to balanced. The houses. those to we've did conversations to of How interesting And people's is they me that the interest diversity in And think importance

process. process transaction So the being lot have have can of -- through of end, all the done And on we're year. done. been hope by to we've lot we're -- therefore, that that level interest had work be working therefore, remain announce. of that A sort we to we done. transaction has get it and that year We're we our a of the really in a the track And on work by way track we But of strong. to will a announce we that the end can hopeful

Richard Tullis

you transaction, mostly potential the it could what what Would parameters cash structure deal, at And or a for look sort of like? you take? helpful. in That's be look when would a looking

Andy Inglis

aspects sort think competitive views should a process. my it. of therefore, talk I respect And different this we'll then early I hopefully we that. is people position different -- about Different you'll different to look and of days Yes, value think you it's have I will think on Look say. put

fact a bid. the that part say believe is to and a right you of the I the that forward project that's So Tortue, the cash X exactly with important the us. strong we think structure we're Phase discovered resource to And are moving But there think element important X, deal. an in I clear. that Phase part early an that X going I in to place think of is transaction how push it's is for That's too

are not described Equally while fully today. are there some pieces that

I think instance. significant Mauritania upside base for to resource in the there is

capture do we do are there encapture -- how we in mechanisms that. can So And which that?

have in combination, you're FID real think to being move appraisal at I it forward Greater Yes, underpinned flows cash as with December. a we real think resource that So by the it an project resource. when real I right moving things Ahmeyim value, well look we but Tortue a underpin that on

So the that cash an think the I is part of transaction. element important of

Richard Tullis

That's appreciate the quarter of much lastly, third how also do guidance into downtime just helpful. there. Gulf factored you have range? the sensitivity Mexico I And of

Andy Inglis

oil sufficient. to indication give basis have XXX Barry, a We impact We per of as a barrels -- -- the on an full day. let's say you Yes. of year the just Barry was

And in plus a so that we of have another plus similar incident and size. event built an

So of I think we're impact well from covered hurricanes. the in terms

Richard Tullis

me. All right, so much. for Andy. that's Thanks Well all

Andy Inglis

Thanks. Great.

Operator

Neil Please is with Our from next Sachs. question proceed. Mehta Goldman

Neil Mehta

flow you And to free allocation reinvest shareholders some generation maybe the want of of thank question first the much substantial time is period of a you're talking even versus environment cash see lower in flow about a where guess to cash amount to getting you oil model. much. we spend return Hey, free I and business? very the price a how at that

Andy Inglis

being Neil. this. we're Thanks, on clear Yes. think I And

on think think I following through that plan. clear on we're Day Markets -- I at and Capital the

it's on. on strong I I good for And company, it's distinctive. comes that recognize good are ensuring the flow And which see cash primarily XQ what think you strongly. is first we're Tom from on to is the focused we I that. deliver focused the something That's absolutely half think through that to and is free

We're And in We've grow announced the that in the paying line $X.XX a with we've year. growth business. per announced dividend. would it the

backward on I clear leverage the we the then the the cash target cash dividend. about around looking So range. basis graph for showed around be view of on a too. next track We're think the shareholders setting the we've bring through delivery our I been to think as down to will And return into the

is X.X one times on X.X year to X.X get by times to a times – to at objective journey times. sorry get Our end one times the to end to to to get to – X.X year to

the -- have the It's us a I allowed been of forward Gulf think we themselves So when that looking be the about in to think think Neil, and sheet out available. We've have. opportunities drill be the strength Mexico. I And there distinctive success from organic has of strategy. balance opportunistic talked made will part I Kosmos' opportunities

prospects to to that inorganic opportunities have been of is significant debt And is I confidently and one on Success down terms X.X we present And of across three to the year excluding underpin of the into we're by to the bring the at will around in But the end. first think any opportunistic current all prices the those target opportunities. where business. the clearly of thing X.X. be Mauritania/Senegal confidently us dividend range going proceeds X.X

Neil Mehta

by is, is of that that the But a And Senegal, the on that's public can forum want think won't have virtue investors I out are asset story as Tortue you sale that I around response been appreciate something question to But for you on course still very and Because up, well follow-up and respond. headlines. feel these as does BP call? disrupted it. give showing I from conviction frame you would come who that to you be imagine like your it in is you the this I risk BBC to on guys that. Panorama

Andy Inglis

the me appreciate question. you asking let So -- I

business our in I right Senegal. were inaccurate program. clear think misleading a is response it portrayal our and to in We we the of feel

has equally so of Government BP has Senegal. clear and the been

entity, government which fact recently question the fully their moves to of focused they're ensuring the focused is Senegal the on BP. the issued sector the forward. that no been They Kosmos is that that as supports. clear in on sector, or is very absolutely of governance far project very concerned COS-Petrogaz Government the very been As the governs licenses which And through to intention Kosmos there much the have

is the propagation to they in X that and that we come of the project progress and terms the proceeding X. that's important And made room led being on the planned. into occurring buyers Phase cut Phases pre-FEED contracts is data X talk as thing steel that the is The as work absolutely on most occurring being with potential and

So changed. nothing has

Neil Mehta

Inglis. Appreciate

Operator

Our Bob next with Please question from AllianceBernstein. proceed. is Brackett

Bob Brackett

around that target that that Question Equatorial that X. fairly and you're I'll block Is slide in within specifically guess, fall I for fall Guinea SX. targeting start specifically block? barrel the XX all million fairway

Andy Inglis

Yes.

Bob Brackett

on going then color number get both two fairways. And what and of and would lowest unpenetrated if with. So successful, One see what's away what scale of fall I'll And broader the prospective I question are? that think oil? S-X chart I those sort see see a the follow how is two represents on opportunity? do I'll you penetrated be, blocks known fairways of

Andy Inglis

Yeah.

good yeah, Bob. think, I questions

if think S-X go successful where the is sort is I would we up-dip. next that -- is of think I

years. for section across got haven't We

that If you trap. And the additional resource. to us where went resource has is going up map, allowed the stratigraphic seismic upside up-dip on come from would to new that's that see which actually that in data the east

Bob Brackett

of block prospective? And east the that G-XX-X, unpenetrated that is fall

Andy Inglis

Yes. is. It

Bob Brackett

Okay. the Great. color Thanks for

Andy Inglis

Yeah.

S-X targeting has from have well I the don't then lowest volume. targeted. I with the right? look. questions, been then good well we're want which A back, I we tie what is And that the we So there economic. to would resource, good up-dip allows us a where believe think which the is success So first then significant think risk can And in the in compartment, which there test additional add to go. is call place

of the recognize. to I And other think sort thing is

that wells were years original Actually As off yeah. XX old. old, seismic drilled remarks I said was in the that my years XX

huge. And quality so is the step changing

with space. wasn't And that So the facilities in our the days was by cyber at involved days, we're full Hess better. it actually reasons a wasn't because this actually Triton and pursued and to of image and Hess ability team we Okume why in in those the handover the there was clearly, were one have a little

think well other think -- to that enhanced the the similar back I data we're So I are to is be interesting. there on starting of set. going And were now there of define a this opportunities

Bob Brackett

pester do to a with What of you for reserves? the cutoff in one. sorry think tie viable final is And one back terms economic

Andy Inglis

It's it's around mark. more around it's million around than Yeah, million Yeah, the mark. barrel it's XX -- that XX enough. barrel

is it Bob. question So good a

been We bid of million we've done, the are but work would pre-FEED yeah. able that around that of to century, haven't barrel terms at XX in it's mark, all say we where we

Bob Brackett

Great. Thanks, again.

Andy Inglis

Great. Thanks.

Operator

Stanton next RBC your proceed Al question. with Capital question your RBC proceed Please Al from Markets. is with Please Our Markets. with question. with Stanton Capital

Al Stanton

guys. afternoon Good Yes.

Gulf Just a very of the quick question on Mexico.

years. number a drilling I a you've inventory times of six got mentioned the think -- that You or an of targets for next years five

any full we production reserves adding new and much that in Mexico inorganically? on should exploration? the is mean focused flow does to Gulf And with anticipate additions respect plate So very cash of your

Andy Inglis

Great question, Al.

in we're think an I position. enviable

I access pleased opportunities. I portfolio strong that couldn't advantage. We've And think, really in we we've way the really of a built low took be cost. which more

-- the Gulf interesting that. almost of interest now in lay to see It's the do low sort real of the to in post more of think Mexico I deepwater. acquisition

timed really I think we can't be it well.

I And will be actually inorganic will that think there up. come opportunities

I think portfolios. the the constantly I majors, reevaluating think

add that to with in returns we answer think good. pretty to returns. compete I has organic the anything So think And think those say are that demonstrated, I I inorganic we've simple is the

have I driven we're do inorganic an not it's choices choices. have we And great from perspective. to anything to believe So and

And match that great look high-quality foundation we at now. look I the obviously, obviously have will at additions built We have then things. that it. And to new if that believe any internally we would think we it's can

think huge we initial Gulf I But that it's growth And I important. be Gulf. in our think – think the we've discipline, to discipline, demonstrated I discipline through interesting times is So and and of going discipline the Mexico. ownership in

Al Stanton

Okay. you. Thank

Andy Inglis

Good. All thanks. right,

Operator

Molchanov Our is proceed. from with Raymond question James. next Please Pavel

Pavel Molchanov

a you think QX something as your It is like XXXX of that that and coincidence to of weighted the with be Thanks that pace Are prospects? I this of whole XXXX, is just – question. into schedule or going September that. or happens has exploration for a year it taking between sustaining large just activity prospects of company number a the November, drilling kind exploration four so very such backend for

Andy Inglis

good operated Mexico. – of Mexico. little if a the it actually of of there It's Yeah, are it's well bit the Pavel. Gulf five – three it three think from are And question, just of of you Gulf Yeah. Yeah. the obviously,

the DGE, acquisition post building BP, access progressing things, it's – then we're drilling Moneypenny always to point of to access the the it Hess wells sort the sort it, operated with us mention the get making the conversations sort required program hub on of But actually those the other and portfolio, to two deals of is, get rigs. Oilfield. where So sure really opportunities. done we was. rigs was use equity actually, right in equity of getting of Resolution the And the high-grading with

actually rates not get – we can good very So locked into so that's to happening we're drive program rig. and rig that a the

acquisition feature of DGE. of this think the is spool the post I a up So

or once five XXXX I Now, four would Mexico. Gulf in described outlined for prospects as very we the of clearly got strong

rateable in the data then wells will opening So program. you in more that on – or EG-XX time the will a is the will on success we matures. follow then SX. as And what see And basin depend what EG

is rateable – program built-off a going of see So Gulf the the through a program drilling XXXX rateable the XXXX think more answer more and a to more back of you're in I see you'll Mexico. so

Pavel Molchanov

with and low to look cash out trading at the perhaps numbers deleveraging? operations we Brent that opportunity times flow flow your Back by an the in QX share Okay. to obviously on That's curious, from anybody's standards. your your $XX's cash allocation three question, around I'm if are as stock's thoughts at buyback annualize with helpful. just multiple balance pretty what

Andy Inglis

company at talked dilution. We Yeah. use over share we by the with We've as have production versus what we And we've – XX% XX% the address minimal dilution that obviously of acquisition of discount actually quarter the back buybacks EBITDAX brought about, to – XXXX that in stock used proportion past. bought XQ and XQ, a in the XXXX Tom, grown DGE, deal. to we

and that an option. So in not out It we've way. Pavel. option, I'm rule remains opportunistically it an going used to it remains Yes, it

debt been after I then the it an dividend, option think remains get clear right and I in place think the we've that.

So we We've share on remains clearly Tom, it add the like an to would depending performance And it think out. past. it don't option. in rule anything? used I the you price

Tom Chambers

No.

of kind Andy that we think stand. where I summarizes from

Andy Inglis

-- good Yes. ourselves is and since we think that the an for share went sheet would us helped for strength. option. I Kosmos think balance clear And been and be And distinguish the then that's balance I we're us sheet and strength public. And in dividend buybacks has it's something our sector then

Pavel Molchanov

it. appreciate I Great.

Andy Inglis

Thanks.

Operator

Our is Barclays. James Please next with question from Hosie proceed.

James Hosie

given these planning Hi there for drilling there. the just extent afternoon Good Good which feel of depending the are. you're the I'm where divestment, process? guess Senegal/Mauritania HX impact activity you morning. I wondering on sales firstly, to you

Andy Inglis

James. question good Yes,

remarks I think we've that Orca anticipate announce we the on having a before we result transaction. would careful been our

believe with would were which which cope the commercial in can things Clearly, if you are of be you in So, we what mechanisms outcome. to mechanisms that. accelerate, -- can that's sort there

that So, step. it It's rate accommodate. a doesn't determining can we simply become one

James Hosie

Okay.

So just could timing it's next of on possible announcement the into activity? timing the that year the you of see slip

Andy Inglis

the we'll this -- year. Orca result No. know Orca

James Hosie

scale that? plans, Okay. some And expect the uplift Jubilee and of second production us can Jubilee from at on the throughput of I had you be on give the may you achieve question gas the enhancement color to capacity

Andy Inglis

Yes.

So million It's XXX don't but to around on engineering, into million. to sort much of Today, a the those million to is gas to would XXX -- too Jubilee is XXX to debottlenecking handling -- the if constrained the XXX get to in few. million. want you we get hope I through

day will oil and actually, increase. get on on barrels the uplift production depend if of you oil or So the of a sort sort margin of the it's well. you But of then side GOR the XX,XXX that saw a

James Hosie

Okay. much that. very for Thanks

Andy Inglis

existing From wells. being on existing brought new wells. not It's from wells

than So, on helps sort you one you get important that it rather of most it's constant is decline. It's part break material. the a going sort it'd And that be of forward.

James Hosie

you. Right. Very Thank clear.

Andy Inglis

Great. Thanks.

Operator

to of for session. would the management I conference reached over have question-and-answer closing end to back turn We like the our remarks.

Jamie Buckland

appreciate your today. interest operator. Thanks thanks Great. Kosmos. We And in us you all the for call on joining

in get further contact If and to you've much. don't thanks got any very get hesitate me questions, please in with -- contact

Operator

today's concludes This you. Thank conference.

You may disconnect your for you your thank lines at this time and participation.

Kosmos Energy (KOS) 5 Aug 192019 Q2 Earnings call transcript