KOS - Earnings call transcript Q4 2020

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Operator

Good day, everyone. Welcome to Kosmos Energy's Fourth Quarter 2020 Conference Call.

Just a reminder, today's call is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos Energy.

Jamie Buckland

Thank you, operator, and thanks to everyone for joining us today. our earnings issued we morning, fourth release. quarter This presentation today's page call release our and available accompany slide the Investors This are to on website. of the

go Andy Joining the and today the me CFO. to on Neal Shah, materials Chairman Inglis, are and CEO; call through

plans our to differ this presentation, filings estimates, over refer materially UK factors I Please note will report, in due and to we results in These stock and are Actual SEC filings. SEC the our to time, and today's forward-looking announcement annual at statements for to documents call exchange will expectations. During turn this refer and presentation details. our more that make our Andy. website. and outcomes could we available on And

Andy Inglis

COVID-related afternoon at start differentiate morning strategic and presentation and Thanks, up to today's the a our made back then good that steps momentum and the expect made financial increased the I'll quarterly reminder the year characteristics Jamie, look in active a XXXX. challenges, progress, wrap XXXX and numbers and to then everyone.I'll the through Neal presentation forward year, into of despite strategy during we with we the look XXXX we before ahead. an I'll and the the walks Kosmos. with

gas Kosmos Turning strong to with company, portfolio, characteristics a has Slide oil assets the X, which define high-quality and looks class, at unique our portfolio ESG that and world credentials. conventional

focus the Margins Our Atlantic has not development exploration changed. on offshore along production

These significantly the the carbon production benchmarks or decline Guinea, and intensity world-scaleLNG oil HLS low anoverall price in Ghana, industry Mexico MauritaniaandSenegal. that rates, Equatorial assets have We Gulf well hubs the than is in advantaged brents have lower average. as of and development as three

presentation. are our the critical core both sustainability with our Climate delivery Report world. shareholder strategy. choicesto And assets capital & deep that to hydrate lower deliver prioritizing resource and our recent about a are we to I'll infrastructure. a values Alongside we portfolio means and more returns. where are later value can technical in a showed, we two the the basins This consistent Risk decisions our LNG large talk making development, understanding, proven focus have portfolio business and carbon in producing with and Resilience on As exploration leverage Safety of a portfolio existing detail continue subjects

to hopper in infrastructure-lead and optimizing Equatorial through acquisitions base three of of targeted and production the ILX that Our Guinea exploration opportunities Gulf created through the ILX across [ph] Mexico the existing very we built the or opportunities and value basins.

cost assets Given oil our Neal healthy current will level their of free oil flow at corporate business we cash significant decline XXXX low base this prices. prices talkabout arematerially to cash generate these and the at low free quarter. cash cost low reduction Through low and free expect flow, breakeven we even flow our in initiatives, rates, later, produce a

the to portfolio the gas cash Tortue free phase in oil the to generate flow complement expected a cash-generative today. development is On side, of stream assets the long-term

and expected and with with And leverage. generate First execute to is enables to is business plans. gas this of half X schedule underpinned business came of our is maturity in maturing cash Tortue We a nothing that us balance the XXXX. staggered finally, Phase through first sheet that the liquidity, solid expected by XXXX a debt year, the ample reduced

most year, challenging the where focus Slide was to sector of environment a whole. for progress for extremely to XXXX strategic for X, and the on Turning society I'd like last as

key priorities. strategic backdrop against Kosmos that its However, delivered on

Tortue first around barrels in published impacts. track year a with with TCFD-aligned decline to per CapEx was back an X for our upside risk fourth and same sooner.This XX% proceeds neutral year-on-year, emissions carbon only this despite monetize around future decision reduction set producing COVID-related exposed. project around X% with success completed around on Report, performance a XXXX to Our bringing of on capital period. climate by exploration of We production a goal equivalent in year-end XX,XXX assets ever in XX% X the Report no is Risk million oil day. our despite Resilience portfolio supporting Climate X Scope and Sustainability be Phase potential followed over during XXXX, robust further or the delivered This in Scope with our assets, of more the analysis $XXX quarter, and

established exploration flow of interest year operator, path our know flow balance optimized in of through well, gas. an the XQ, us breakeven. as have with to cost through inflection significant the have at the point year, of year with and we payback for available read current around should free enable the drilling in positive proven well. Working now maintained we we also first second in higher a re-started fast opportunities and which the our returns Phase high-return, half as financing we we ILX significantly to X, flow. a in closely by Gulf future we term cash X, with cash sustainable CapEx, transaction, diversified Winterfell And and driven TortuePhase the with the million $XXX that we we to Mexico which well cash enhance successful lowered fund sources where on portfolio focused lowering which corporate On have expect BP, capitalwith on sheet, loan end. our And prices, we Following liquidity cash, basins the healthy reductions, finally, XQ available

requires around at base. which oil carbon reserve a total reserves-to-production low-cost, lower a over our and XX a looks XP years. strong Turning X, assets sustainably has equivalent, to we XXX E&P reserves, of both, barrels Slide Kosmos million business ratio XP reserves

online Tortue development, assets see project which XP and increase in XP top come producing the production of Year-over-year of capacity evenly the the oil can changes gas million to the split on to EquatorialGuinea you assets, Ghana, reflect XXXX slide, the X to and on annum. our should expect Gulf the in chart is optimized which As largely this Mexico XXXX. tonnes and phase reserves per second reserves we Tortue between

XP the large $XX production lower those barrel to Our limit some impacted impact from million would reserve reserve barrels SEC price XXX per around base XXXX. current we reverse assets reflects prices XXXX related the XXXX which deck, prices, SEC life. for is in expect later of changes lower At and the economic around price that in than

expected to adds further significant, equivalent an should X,which XP that and additional primarily resources prices, forward, our booked. are reserves Tortue Phase to add come XXX from million current base. at have reserve expected Looking our barrels Winterfell increase when additional would discovered Asam increase On we XP,future while are oil

the Turning is to Kosmos than I more against at five important metrics value employees The and the in of the as safety and Slide my X, industry. over remarks, said nothing our benchmarked slide contractors. years core our a opening is safety last safety shows

injured. The zero HSE journey a on was a the incident this and isa a to tragic set One is incidents “One ship in a subcontractor reminder initiative recently Our tragic deliver in in drill metrics. become accidents which wake than of Goal” Gulf working important Team, of Kosmos fatally to stark incident and even Mexico January, more the contracted HSE the has of more of excellence,

like prevent determined The investigated. again. to being company, a is learn As happening still we’re anything this incident

peer We Gulf the Mexico. learnings already with XX our of initial operators share have the more to begun with companies than engaging in

with to critical health our right-hand commitment were our the slide, and testing of the and communities. our operations, supplies. of direct teams our and with we each support kits the equipment, engage side other our quick at how to medical effort, In response Looking beyond extends safety COVID-XX countries, informs

challenge resolved way forward on quarter, the line each hunger which a of year in We of Tortue contractual In address first in operational around campaign the our that for also worse our about and food Overall, realized has to across well, this to in our and the In I'm thejourney. made and a in other the relief starting Gulf our later. safely WinterfellILX Ghana, security drilling Slide cargos by most successful people sales does and the X, with operational rose through proud of slowdown is the ended lower December, pandemic. Mauritania/Senegal set been The we with to in are XXXX. in-line and In [ph] the performance prices finalizing activity we we production up first programto include communities as XXXX of production supporting Mexico the pandemic we to was to is XXXX I'll the this line Guinea, sustained. spuddedthe half with are with relief, reliability Mauritania/Senegal, saw look were XX-month the was have talk benefit performance Equatorial was drilling In project production the complete activity in the a execute. the through entitlement in due of work slide they and XX% the royalty while to year. due and to operator oil Uptime delay. the later ability performance Phase the October expectations, numbers sequentially of received continue guidance. which in ensure the strong company X of with lower closely quarter lack been second guidance, year. number

that as return to activity few a in and building minutes. through in momentum on to However, the we fourth started quarter More move we XXXX. expect continue

Now to to Neal I'd like hand take you financials. the to over through

Neal Shah

afternoon Andy. call. on the to Thanks, and morning Good everyone good

made to with the year. Just progress talked as strategic about Andy financial like XXXX, the start during I'd progress off we the made in Kosmos

reduce have actions breakeven. early company's to costs decisive we lowered the which in cash the Specifically, took XXXX, materially

made resulting on being exploration As expense, fitter Kosmos charts cashG&A, leaner you based Page operating the and and see much business business on reductions today. significant CapEx, expenses, we to a X, in can

of more shareholder the set We working which future be price forward to objectives, people and cost returns we positions on this fewer believe as enhanced to lower base move create significantly value. a most high-graded these In the should expect environment, cash of with company most we sustainable higher savings cost a generation. concentrated

invested to are in back XXXX, XXXX normalize grow to compared production by should However, XXXX. spend, we is note production our year to potential to due pandemic, under further maintenance the to levels. which one base allow with levels point we typical In our our assets end that to in upside CapEx the planning

many spend you and before other year. slide a progress item is say last against time period this at for items consistent of significant both X, the with don't Slide quarter plan will on to same expectations the line quarter. looked the I seen have the than with the and our for to now sequentially key each were results Turning to

lower, We in on the on noted price I cost While were slide. XXXX. were production and OpEx we previous initiatives progress on our realized successful made

metrics barrel scenario per However, deliver we therefore everything fourth the wanted in operators respective a than quarter. didn't continue bit we This our we to higher are will through and to expected with work XXXX.

maintained the the year sheet to balance we million receiving looks in account production control with now In hedged oil And is on XXXX,Kosmos fourth year's around around million CapEx, an Andy. volatility on at Hedging With and of position. company Shell Turning the maintaineda future takes as our the which guidance. healthy have of of $XXX remains important that, back during with X, liquidity chart. XX% proceeds tight continuous started through and the the We line proceeds. hand balance of to with and Despite of into to Shell to transaction, it our liquidity prices levels also part our million the which can solid we've I'll this quarter, $XXX in drilling $XXX of record payable Slide low be up production. seen closed hedge strategy. success. additional XXXX CapEx around financial consideration, in year It’s the total sheet

Andy Inglis

I has year, up momentum end portfolio. picked all Neal. start XQ and activity protecting in reduced activity on The areas. focused have of XXXX operations that earlier operational and the Thanks, and across levels this the of mentioned our in people presentation in the slowed into

to already This seen start In expect higher after exit be XXXX. with shows,infill last a slide base than we year-end nine of X our year's declines at is triple three We're with returning two by production, are this end. the momentum Ghana, pause in year, XX% expected Guinea wells was the to activity total reverse Gulf the complete also the activity AtTortue to As drive-up materially Mexico. those year we and year. seeing wells Equatorial activity significant and business the expect XXXX, of amount spread of to across of with on and increase drilling planned curtailed exploration year. around this Phase or rates

drill half later already in Zora of have aim year. in and of opportunities second open Success that we to would We the in additional with Zora the we XXXX. evaluate January, Winterfell success would seen

XX, Slide oil this lower activity we've should the month. of detail. to set from offloading earlier CALM it CALM Turning the partnership that seen to a Ghana, removes tankers In successful more the The for tanker, buoy first look so move going the buoy,with the of for need result the start to in in installation FPSOto costs at forward. shuttle operating a

partnership operators well injector the expected infill plan and up wells second in to accelerate Jubilee rig a the as the years, high-quality producer to targets drilling to the injector also XXXX, the in TEN. evaluating rig rig been to is the well of communicated is two As that growth. quarter. the gas in available of contract length market, And arrive to one amounts We given in is having contracted production as Ghana. second four has on The drill a

We targeted incremental underway also operational Gulf plan Kodiak our South year production. started activity drill and continue is East production online drilling In and assets. three third In XXXX the with aim of keeping this Phase We at is the began for to can the increase completion XXXX. expect next we've through on an the of wells operator start developments and Equatorial work Guinea second with this optimizing expected infrastructure the quarters, Jubilee to deliver projects the growing month. on with program and campaign Mexico, ESP month X uptime infill enhancement the to XXXX. of we to In that

exit in momentum day mid-year, We per which equivalent well expect quarter. also expected and with around plan the is XXXX. to production further rate a increase year with online we With of drill grow barrels XX,XXX Tornado-X to this in third the into activity, oil

the in the X year concrete Turning image from image significant The complete floating started marine end complete now line the expect with the the caissons last XX% at fabrication breakwater. of in with by top the ramping was [ph] caissons for of complete two early delivery a flow steps offloading and expected the and to fabricated on to XX concrete equipment forming of breakwater. is Dakar lines areas There's by and be in end to the summer. up. show cupped Eiffage mid-January, two Phase The Tortue. Slide XX% complete to great The installed where it most caisson showing arrived shows namely for in the slide yard is subsea expect video Indonesia. of online breakwater pour a on dock being The a of slides the subsea manifolds year the end in the around early we and XX. complete XXXX. bottom XXXX at we is terminal. The structures shows one for footnotes subsea in preparations forward progress, images concrete the production the for year one the around the year, The hub the XXXX. the be of

outlining outlined signed we November, with the BP lease sale established our making path we has conditions at an our XQ sale. this in and Earlier of with progress. As results the the month, good back MOU the around FPSO funding been and terms

upon be back FPSO will cost. for BP group the sold controlled the joint The an FPSO by will the utilize communicated, partnership. previously As venture cash to and cost to back SPV lease proceeds

the the targeting cover and within close our net second XXXX requirements to proceeds of million capital expect our quarter. We $XXX in

reducing over capital into future $XXX XXXX, by further savings overall our total. will the expect in million obligations be rolled We

requirements financing, moved gives While for markets tightness. we've advancing sales Phase cash value company, future potential us in pricing we're end that flows. Phase showing the significant We value Phase XXXX. driver important capital a with We where for see of this which anticipate Phase targeting X flexibility around X funded already the be are to greater of also X very around and the signs largely X as optimized forward LNG gas still on FID the

to since recent entering XXXXs new LNG market. of of Turning supply shows market. million supply signals that which XXXX growth tonnes the XX Slide lowest only with tightening the the X were

in timed. gas. NBP $X above for Phase X three is tonnes we've on the slide a in a both from few MMBtu. JKM shows current The this stripped rally contract cash year today, the a the tightening as that We strong there's at prices only the believe LNG versus seen to FID. a LNG a recently XXXX. forecasters addition, that the million JKM set blue flow. picture million not should XX expansion The we Wood gap core next continue years, the decade. around X would up In demand. is project the around this months. and in the COVID-XX chart which gas N'gata, line was analysis forecast significant Tortue strip seen strong Even slope, still and for middle of in Gains demand rise gap is to XXXX the energy Mac of in on project North decade up significant The contracted of future prices in the opening supply the is the average one global new increase demand May line significant with bottom the XXXX, generate supply which Field for Mackenzie chart end demand the Wood November, last the an top futures despite oil showed Phase continue XXX that reflects is tonnes FID we've to future X% solid market supply impact Average dash to incorporating

of looking today’s or both against with it of So, attractive we combination retain the like a option both prices. gas, oil, pricing options

Given breakeven, this project. expect its the from significant we value of low creation phase

XXXX. in Slide XX. Turning about infill in up ramp I talked drilling to our

of Neal capital of drilling If is diverse return we the Equatorial to portfolio guidance to intensity hub about exploration that more the potential at extension increase has had are advantage in success the Winterfell. barrels averages We deepwater Now, of look for Mexico gross expected diverse plans of our across case Ghana. and of is basins. Gulf well the has year. now to around resource flexibility anticipate are Kosmos’ XXXX. information. into We payback Gulf scale and multiple the acquisition I'd expect plans second activities half shortly. which January, solution of our XXX And deep now proven next in three and for de-risked we on in partners sector and because infrastructure be hydrocarbons across to we'll DGE of invest a but will invest with and the early this activity exploration across developments development Accessing our be below talk hand to or like XXXX. significantly great opportunities to basins. back opportunities play the in a to have acreage. look year. Winterfell, example advantage inventory the high like more, year In drifted we of discovered the Kosmos late the ILX we of carbon update in Winterfell made Guinea be What’s market quick returns. have Kosmos development to success. Zora, low-cost on The One the the can a as in I'll our the equally of appraisal the more with natural Mexico, working the ILX existing why and high meaningful million tied

Neal Shah

– focus we've and included year for to I'd the Thanks, guidance year our for XX, our this Andy. detailed guidance including detailed the outcomes. Slide usual on the On appendix. key slide, On the like

earlier outlined to are Andy in production through As as with increases. dial we activity rise the XXXX, resetting the expected year

day of around oil right per reflects of XX,XXX, of to per exit rising guidance Our end. at an XX,XXX today's barrels of barrels XX,XXX day equivalent to around equivalent year XX,XXX production

CapEx with The expect an the $XXX infill expect drilling capital At on opportunities around around be sustaining Senegal being base directed business highest we and the million. the sheet. and of that use Mauritania In to spend excluding the returns. XX:XX base business, we $XXX to is in cash generate split to to between to ILX delever growth $XXX for $XXX free which to expected balance million and CapEx. and $XXX to flow, $XX to with We year million the Brent, around plan Mauritania million XXXX Senegal,

through XXXX, As the and previously we this of loans primarily Oil of sale a to funded $XXX Kosmos. National expect million Company FPSO the to communicated, the in benefit refinancing be the

the As point be in I'll Andy from FPSO sale the proceeds we quarter. mentioned, XXXX. back we to are hand second to the to which the benefit At residual to within million now planning benefiting Kosmos close net expect the XXXX FPSO sale Andy. $XXX with

Andy Inglis

towards compelling XX, that opportunities Slide future. in fitness most to deploying the and on Kosmos terms Turning for capital the plans this portfolio returns of both our

Mexico, shows which has carbon recent was the one infrastructure. world. is on believe ability is Gulf in seen assets emission orders the are flaring the of the report can the the developments mentioned This have agreement the production agreement more which major Once Gulf of utilize oil And XX, operations. on the Kosmos basis. intensity we This drive of to intensities not deepwater returned crude Mac understand we're the on in the seen of Slide positioned. to we Gulf intensity. Mexico the can on lowest it. deep that on U.S. our Mexico inventory analysis network accordingly can ILX on the carbon I believe affected energy in highlighted well of in ILX limits Wood reasons of natural to will welcome be the due these that the adjusted the the Mexico the lowest and This the in with Gulf As pipeline more aquifer be earlier of second oil be of basin existing the slide, suppliers. Mexico lowest deepwater players Gulf any has of the prospects Paris play second we carefully resilience Like the portfolio The support tested to the and We've is on Kosmos the the have against executive a in watching companies we role U.S. U.S. than high-grade acreage. its and other have new the of practical Kosmos company policies to scenarios, Paris the how existing a recent implemented slide. for our chart It XX transition. sector, administration's of

U.S. source we fewer infrastructure, As creative to these and the carbon that administration of ready deepwater Gulf oil of with carbon abundant to working advantage the supply to new makers is intensity. shapes to world important with and that policies, open costs deliver the world, are lower the engage solutions energy both policy needs develop the is Mexico delivering low emissions. With in both an its

on ESG Slide all has to Kosmos. strong managing credentials categories, a And our the across sustainability company are now we not value through changed. with XX. for the core focus Turning Sustainability a is pandemic

Looking to long-time the invest would at period risk of most of discover over Resilience the Paris drill, because this that world, various long perform significantly. capital the to The the cycle the X-degree to in country, a was needed at The scenarios. new our enter risk a Report. of three a found value our analysis increases exploration assets analysis scenario detailed price, and categories climate Climate a frames develop. value on within environment, results fare Kosmos transition in Risk We and of conclusion published the the

we early basis. not reason, decided pursue opportunities long exploration cycle that XXXX, For to new in in frontier

on in Earlier a to carbon emissions that we we're emissions a Following neutral by set measure, two sooner. cycle that to one exploration become reduce scope scope shorter and to infrastructure making across year, progress mitigate frontier monetize or target. improve business the this we opportunities with of decision, in portfolio basis. our and line target focus led assets And XXXX

its We small is program Africa One self-sustaining innovation entrepreneurs in of small businesses. up help businesses their center entrepreneurs social and the turn gas Ghana into viable subsequently on West in believe the Mauritania from Senegal. Kosmos potential. XXXX alongside its young reach into started U.S. ideas publishes that a invest We We clear our of remain and program only businesses. expanded transparency. an company them and position all in empower On full rest website, on that differentiator leading contracts flagship governance, their Kosmos the in industry our with investments we This has post oil industry. and work and a of scale to award-winning and promising governments

XX and presentation. amongst to we before both leader up in our to retain finally that challenge make strive characteristics AA rating I terms With this Newsweek Responsible to financial We all today's Companies year opening up In quartile to top Kosmos a reiterate of the be these the one We continue America's MSCI, in Slide better the areas. wrap ESG be to to turning in Kosmos ranking to recognized and from our peers. which in industry credentials. unique ourselves of puts want Q&A. us was and conclusion, by in ESG of Statista, performance Most our

world-class of assets credentials. a ESG with have advantage strong portfolio We

We and based paybacks high high portfolio focused proven a returns. of ILX graded and diverse have on exploration opportunities short as

assets over the the generate cost-cutting operator a Our have much and are year's constructive solid in with healthy commodity cost initiatives, cash we leaner a with last a And lower sheet balance environment. like price we to a and that for the through more call future. base Thank the now then into questions. will open to And we expect and hand momentum operational to to you. session XXXX support the build company liquidity

Operator

Thank you.

session. Thank [Operator Instructions] a be conducting now you. We will question-and-answer

Please proceed with first Rice. Meade of Our from comes Johnson question your the Charles line question. with

Charles Meade

Neal. and sense Andy FPSO if I your a Appreciate little morning, sale morning. wonder leaseback. you on bit could Good give the comments this of all

for two of then essentially and on guess sure the that targeted the second piece first I It's guys to it's the about be to make it'll and talk there's a what guess now after the You CapEx up – close. gone?So, understood. closing? XQ say ledger CapEx? And Will a I Can you I be wanted – parts kind that question. are steps of close Neal, the half be your going I it's until between

Andy Inglis

It’s Andy. take on first follow of the the Yes. and part I'll question Charles. the the Hi up detail Yes. Neal with CapEx. then can

laid about first talked a gas. funding out we we the path As November,

of absolutely the signing progress that with executing sale of which the involved obviously in on And key part And of for think, all MOU we I quarter. the BP, terms lot the that contained plan. a made we're first and this leaseback.

we we an the November, SPV a entity The associated articulated BP FPSO same be guarantee from The purchasing raises in it. other structure Tortue the SPV has the with and debt the have controlled a BP will it structure that – JV.

So structure a point that through straightforward important is actually, most process, set to involves the terms. BP we've the clearly, very work gone Kosmos. and the And up this and is the

we've to the we're So, going debt. that. convert forward, and And external the working in and out hard of detail’s the MOU over then raising got question that steps agreements. take into terms of it's on a Then

quarter. on well of all So, by second get that track done we're to the

Neal Shah

pretty million perspective, then your yes. for Charles, question, second the spread to year. And is From the the through CapEx readably $XXX year a

close. post recognize of we'll net the of and the via CapEx sort against that. each sale, offsetting post thereby And sort essentially are cash the sort project to funding as so, we would for FPSO noted the But you related CapEx of proceeds other currently calls the you

Charles Meade

EG Is on helpful to you're wells you question tailor any I that or That's a appreciate infill exploration show that three are its to going some I It second right the them. ILX going And doesn't detail. of assets, your noticed element an it. read? exploration have like XX where look But targets. have to it. the on then think I those exploration slide, wells. Got

Andy Inglis

focus Okume. think prior both it – Charles first work in I acreage. Yes, we're and those. think When into through is the the lot haven't opportunity opportunities in step I the production to at the we continuing could about right a the looking see and They of enhancement we Ceiba that the there's was thing went for we all owner been sort back of EG,

enhance we're in the the be the we're did and continuing as speak. existing ESP, then And second list, going increasing the identify targets. work activity getting with the those. for have We with campaign we Ceiba and campaign the our on seismic ESPs exploration to phase a had fields obviously of is targets to next we've that's So, imaging in Okume, to infill of underway

and We next quarter. So, and we shortest most I with capital about we're payback that But had is first, in optimization, come of targets it effectively, back we're part production the program interesting year and program bring right XXXX. the to because rig, ensure interregnum the is And to targets up the and sets both have rich back which deploy of important for with opportunity an things we'll forward drilling ramping of last the will then to infill ESP the the we ILX it okay. then are we're clearly in COVID. with doing the But now, in set. start way end terms activity think, those that the execute the that that drilling what's opportunity believe efficiently the the

Charles Meade

helpful That's Andy. Got you, Thank detail. it.

Andy Inglis

Charles. Great. Thanks

Operator

question comes proceed with the of Sachs. line Goldman Our Neil from with next Mehta your question. Please

Neil Mehta

guys. today. morning, great here you this detail And for Good all thank

is talk levels, want that target billion. question – around level towards you Is or or first the The levels debt want about and a net path want either Andy aim to that around there $X net to debt getting debt leverage to to you be you Neal absolute there? just

Andy Inglis

Neal? that pick up. have Neal Yes. I'll

Neal Shah

net we of, Yes, terms stated the to sort on sort we Hey, post We've good sort morning, remain were target de-leveraging path. what a of our get a COVID, combined about today path have billion of net we one-to-one Neil. debt than that same or $XXX to And in leverage $X less still half pre-COVID. with of times to is and on EBITDAX. rising

down And relatively so, of range, margin quickly. exposure good sort oil and dollar we sort as comes about XX in plus high the thing is, therefore, are our yes, leverage the have a prices of

And to need – we will the we of sort out down. time, both the of COVID at cash naturally flow price redirect improve the sort production continue the same business pay EBITDAX to of that and so, will rise And free as levels. some

commodity environment, And same can price get quickly. there answering question, constructive way on we long-winded a the sort that we of we're the of given but that's especially, So can path. pretty

Neil Mehta

the ability around risk And the asset do drill, leasing on be about between into of are bands Mexico, versus a the your how Gulf Mexico. would of and long-term of the walk on, Kosmos? questions difference your been Gulf there. second is you feedback counterpoint federal the of fitting That's just How portfolio. If question for help to see this this there's part helpful. lot story the and sizing And investor comes then in through you Tortue exposure us as a becomes smaller

Andy Inglis

Yes, Neil, pick I'll that up.

naturally we’ve the we're world's the that said carbon. Gulf long see oil Kosmos Mexico of supply being I is in. and as is an the U.S. the Paris advantaged and supported remarks lower – to is in actually, We term important pleased my back has As agreement contributor

administration to working I the with that think be on forward the we, developed. therefore, look to appropriately enable new to steps resource forward practical right

I the So, as advantage at sort medium of, were, that the it believe term term, think, it an regard. in you remains changed has look actually if and nothing you basin I long

not So around got today impacted. Kosmos to hold. XX a leasing is on From We've high how prospects opportunities We've we acreage does hopper practically got think, I of perspective, graded it deep drill. unfold? are ready existing that relatively

the steps forward. of business. that move see, actually then enable will from the no it to practical and I'm were just won't going comes to affect that have intent the if wait again, happen when a we that our that I hopeful And there what's So, leasing to administration. think, fact think that permits. drilling don't I But longer-term to

it constructive our today. we So, very from remain sits both in portfolio where

natural remains our with share competitive I analysis advantages the sits. just Mac because the actually, think very portfolio just to that it you of I and of a Wood it it where was think And interesting has.

is So, place. a I think naturally has therefore it's advantaged

over be that in a to will build did going there are that leasing work that practical of to to we're that's we be but things years confident some slowdown We the from because move done portfolio. a need perspective, drilling to robust the And last yes, forward. couple the of

actually and administration the about then have with positive base about So, the the remained very conversations result. that I as we'll a

Neil Mehta

you. thank Great guys,

Operator

comes question Research. with the Brackett your of Bernstein Please line next proceed Our with question. Bob from

Bob Brackett

Thank a you. I Good program. question had morning. on the sustaining CapEx

and decline around million, you think I internal oil equivalent the to you're XX,XXX-barrel around guiding that of day, at $XXX a rate? what sort holds say

Andy Inglis

sort maybe think right. you're in if campaigns, XXX, a sustaining I looking little XXX, at XXX that It's the Bob, more, you're of Yes. levels.

So, we're to ramping But production that gets Yes. in you you up sort sort range, XXXX of hold flat. that of that level. can

across CapEx of level production of sustain the that's Mexico, and Ghana, to So Guinea. Equatorial Gulf

Bob Brackett

rate? what of decline Against sort

Andy Inglis

decline infill split we It's out the that got production rate. to Underlying do. probably, and optimization between it you've drilling

some instance around be – But at production drilling. expensive the So, there you're as to and opposed the rates, probably look if that are are decline with overall then infill and then activities, XX%, the will Bob, capitalize. for ESPs you optimization the offsetting

Bob Brackett

carrying a concept you concept front sort FID, so be could are out before, concepts Great, that to thanks. of that several X Quick you've or laid Phase lean you FID this the running potentially bringing single is follow-up FID? on are the Tortue concept

Andy Inglis

optimizing the the clearly point well, Yes, concept. of

the BP. in use the being So we've of But done forward the way concept optimize agreed that detail. existing of is yes. the fundamental Work the is infrastructure maximizing to terms with

you're gas utilizing It that capacity the utilizing on the fully you're So, means what mean? infrastructure, processing fully that FPSO. the does available subsidy

Yes. FPSO You're shore. the to the fully utilizing from the near pipeline

So those that the of fit ultimately, there additional remains unchanged. into opportunities some And are can number wells that around that manifolds. then subsidy you

additional fully et trying facilities cetera. the infrastructure some what in we configuration that do the You can ultimately say for that of best Yes. the optimizes extensions, do But have to place. you're sort is what's reservoir subsidy

is the with issue get sort of it. of changed not concept out do the you the how most So,

Bob Brackett

Yes. clear. That's

So, horse million no a X per tonne there's concept of stalking concept. say annum

Andy Inglis

no sure No. this horse. Bob, through. let's stalking It's the optimized it's fact, Yes. make get to And the sort No. There's absolutely most the almost saying, of quite reverse No, reverse. in it's Yes. we've

Bob Brackett

you. That's clear. Yes. Thank

Andy Inglis

thanks. right, All

Operator

comes of Berenberg. Please the with next James question. line Our with from proceed question Carmichael your

James Carmichael

right. All guys. Afternoon

I'm transaction Guinea, outlined just firstly I day. a Equatorial there an couple, get guess looking XX,XXX recently the partner at ambition a sort on barrels of to the and Just incoming to

that's And your I of I million you direct well, line next get that's ambitions upside and years, timing first three us around Thanks. just to at for if potential. your understanding guess of or could structured. of or just the investments sort remind and $XXX to think wondering expectations in you maybe with if there sort your then gas as how two around the Tortue preference the the of options of

Andy Inglis

it's the asset. take one. great I'll can James. then Hi on Neal to a second that the They've And great that partner EG to handle to Yes. clearly have and have basis. the in question. the Yes, sees new it's potential first in partner actually invested

that cake of very we the We a opportunities, as there's asset. that the Charles, successfully have assets from the comments potential layer said the cake EG see I around building the round fundamental infill a optimization, the from There's a now both layer of opportunities drilling, very earlier, there's think I second similar. production layer that that cake in is cake So, ILX sit a on done from we've the we're and then which that. in layer

think it's we I a part and us. have see So, similar to good view the invest a wants very alongside of that opportunity there set, to

be a back produced of of those in and we're our bit Guinea, And remains we going talked layers of is Ceiba production, a the the opportunities. sounds So, giving opportunity that on exactly oil from third-party verification that lot long-term hold this I ultimately But there them surrounding different scale challenge in have that. was a action role the sense, view. we ILX most for and important don't having we talk a set. in now. think terms not portfolio. story we're today pace Okume I'm a about. And and guidance the the to of the because to at last the year pursued a not comment went we into out. a But that's And about about which as about back part talked we Equatorial first actually play to far when to story of is think And this that I clearly,

Neal Shah

is those piece solution. James, Yes. XXX on options Mauritania that the second we million in the just as then investment November on we to to to of sort the as Senegal. partial focused non-Tortue as we're direct sale putting the assets part the then fill the a within investment, we'll your a answer clearly of financing FPSO that of number of at then the last funding of in the last in And It and that put place place direct our and them, NSE, alternatives, that of for refer the question and puzzle including, financing, looking gas couple in quarter

we We ability have then higher ability the of within excess have cash the lastly, to sort oil put defend from to RBL. prices. And the it it

of we'll financing. do And so that is Senegal Mauritania there's a different the I ultimate solutions number optionality, of last which the we're yes, solution. But sequence the and and think keeping best within

James Carmichael

Alright, thanks.

us one a actually as how sense can And just sort you – stacks if of assets the Just West targetis onthe well? sort non-op I intensity Ghana the can,just portfolio on of against metrics that those up of another your outlined? include emission you does that African zero that give Thanks.

Andy Inglis

is definition good the around Yes. growth Yes. X, question, marked. A Scope and Scope X operated. your

got So, that's of in operated barrels, Gulf about Yes. the sort production Ghana. gross in of of play day Mexico, we've a XX,XXX and the the

being slide, one scope at the things it's around, carbon we would that scope benefits be around control that showed that tonne. kilograms a we of activity. with we per as lower of having clearly, that it can XX And So It's therefore and two course, that from intensity. target, on sort focusing and operated on covers

differentiated that look you is here. all So, the basins, around world

the XX. in the Ghana, have around yes. of you to that to As said, at for average, because export the advantage are industry assets closest you do gas, ability non-operated look more activities start are it's Yes.That instance, broadly probably the sort to

over XXX the the around So, the the currently. for power. We've probably XXX last And need probably of sort time. gas couple close increasing to gas XX the goes to through grid, gas is export from doubled to we to actually, amount are of gas toaveraging years as connected of

gas is demand there. the the So, for

to I carbon So, is the the ability intensity down think, high. theGhanaassets, of drive

start, clear a intensity fully – supported, a starting got moving and plans, route. from think, there's higher we're the I So, carbon down operator we've is Ghanaassets, the but the point,

timeframe. X Mexico is gotsignificant Scope ESG operate, things XXXX through us. there. And other of that's we're We’ve that our X, thedelivery commitments, you alongside for So,Scope about operated that and growth footprint the Gulf targeting of

James Carmichael

thanks. Great,

Andy Inglis

Great, thanks.

Operator

question comes next please question. Our from of line Wilson Mark proceed with Jefferies your with

Mark Wilson

ask the for and Mauritania Hi, I'd about to Senegal. picture good bigger like afternoon.

across bigger plans drains. for regarding you Neal those Greater now, hubs,Tortue,Yakaar Could us Thank I you. and resource tonnes last across XX place are proposed base of Obviously think it's potentially – give the TCF five a BirAllah, marketing also, the in just picture of on sale this had direct presentation on potential slide the those. XXX there Tortue a current gas sell million gas non-Tortue down last assets investment. each possible view mentioned the three a what for your one across annum year, two assets? all million Tortueis and tonnesper And the

Andy Inglis

of I same character the Yes gas and actually, different Mark, think, space assets.

next it’s I the building thing instinct utilizes to right the get for think the available X that tonnesper it's infrastructure, the Tortue most fully capital-efficient itself five million Phase annum, project as therefore, block.

would would for that that future. resource significant upside infrastructure remaining support a is so is that there the XX tonne scheme additional that, require per million annum Beyond

an pursuing think,Yakaar-Terangais domestic peninsula. first have gas Andthe I export at concept a actually would is scheme work to BP it's followed by that because the scheme. moment interesting, LNG closer theDakar

of to powered with able replace is actually important to energy carbon gas for component burning that be generation. So gas Senegal a the future and therefore, power enable an diesel Senegal plans for lower with that

obviously So, that the but carbon-friendly way. to to I desire their generating power think, in do a population of Senegal, grow significant capacity,

a the again, is And how bedrock domestic So, enables gas it development. be for exports. still you BirAllah. gas. would againdifferent, the the then full infrastructure that of actually the urban because need a right different actuallysupplement but that actually full with Terangato the thenBirAllahis major are in And to But smallpopulation the concepts And that adjacent gas scheme only of more stage development areas Yes. not Mauritania, Senegal. it's the infrastructure enable to of in scale

I concepts cost terms in as it Tortue, around today, of it's the probably, and there's of done be for look think, where in But at of the optimized work with point, as you world is thinking, very area to across supply. So, similar, cost similar to terms for the development BirAllah. up more reservoir very scheme there its density, thedevelopment economics come competitive as the

resource the So, I think, significant. is

about conversations say, it rightly both I is fits which resource flow getting Mark, resource Phase focus plans then around with our description. with first the I think And think, their cash has are project the from that the it's optimizing you how on As and the the countries, optimally been developed, X. and

Mark Wilson

Do a back you see year going sales those of had you to yourself the assets? active ago sort compared process on

Andy Inglis

think, On has one that, about discussed. is – that options this the it's Neal I of

fit it's think about the the finding I right for Yes. project.

source looking is. a And Senegal. to in be more as for to resource companies portfolios. So, concept we're energy gas Mauritania a what and about to their the there we long-term clear own transition, are to find you be what And the able that's look have

concept bringing that sort interested the support board is actually on conversations but government. it's we're the the both with process, vision not for So, when conversation and people right formal the parties, long-term with can about having those ofbid development the

Mark Wilson

Okay, a clear. lot, very Thankyou.

Andy Inglis

thanks. right, All

Operator

Our proceed question. your Stefanou Nick Please line with Capital. comes next from Renaissance with question of

Nick Stefanou

from for you thank question. my taking guys, Capital. Ren Hi Nick It’s

Asam EG, what That's looking that? your of no And up but oil of first about you in along couple Are the this the in year? the On There second It the and opportunities, time. to [indiscernible]? in question. to mention Neal. the bottom first refineRBL around for experience as be is half this drilling the this one it. that, was you How bottom was should ago from being target signal considered made a export is discovery latest is spoke you the a to the step of years infill

that's the question. yes, So

Andy Inglis

thanks yes, Nick. Okay,

appraise was to infrastructure. are now actually the sort doing properly us, figuring into out the opportunity the of best discovery it Asam the to important we work and for way an integrate

this Ceiba to all work there's position fully Okume to So, more year optimizes a those done development that and for that infrastructure. plan be

was additional which resource usit future. properly We a to for particular for think the in need the reservoir we've the the reservoir, development there. just got plan demonstration there development I a optimizes is Asam that of our of ensure

we're so, get they focusing on XXXX, the And back They opportunities are for infill into opportunities. easy platform drilled are to production. therefore, and tie

in is well production very between, time the So, completing the short.

will to look we And subsea that we sure require in as be at Asam, it, optimized we to correctly. have place. therefore, put need infrastructure some make

Neal Shah

Nick, Yes. wellso first planned, then, we do question on on end And those and discussions quarter, your we've the redetermination banks, of just they're a the with have RBL, started at the far. just going and

the was lower much a environment. done price in had you As redetermination last oil

continue And we as RBL. help and will as prices, constructive mentioned, very borrowing And in oil that been extend banks existing facility. the as capacity the the the around maturities as increase so, and part of available rightly process. will capacity, banks the of continue to on of to less as process. And have we capacity plan well, the additional an process, our but on so, refinancing, of the past.And we've of unlocks having done supportive, to that that more part you will we sort sort regular that, of And a more of speak extension

Nick Stefanou

to it. it's end guidance,are to production range, [ph] solely the quite $XXX the the partners deltas lower behind flub got and upper delta, And large. basically? other – it those that's of quicker the Okay, free there behind the due cash other $XXX, flow Is

Neal Shah

pretty even then vague. a But that mean, intentionally is I sort production. it's $XX of is is large we've at million, world left of So, just that $XX one which Yes, in the to the some is work, right? range expenses. why sensitive And it I of because the of cargo think, piece timing

Nick Stefanou

enough. so fair thanks much. That’s it, Okay,

Andy Inglis

Nick. thanks Okay,

Operator

with proceed with comes next of One Please Tullis Securities. Our your question. line question from Capital Richard

Richard Tullis

Thanks.

So good Two quickones. morning, Andy andNeal.

what's this, area? missed I the if rate major XX,XXX out day by exit a rough Sorry, break of XXXX the

Andy Inglis

to Ghana the around head, So just EG with knowns And it of to my XX% XX% to off close is Richard, pretty is is top sort around will the then historic of be XX%? XX%. XX%, GOM

Richard Tullis

you day, first to looking neighborhood to Okay. XX,XXX– where year at Gulf was a ago, day, quarter for the drilling the of due from in maybe, to that in or production follow-up, any are mainly the bringing And then when somewhere the that reduced on storm Mexicoguidance production back to me, cetera? main drivers planned of of Is there? pricing, the excuse other XXXX XX,XXX the what XX,XXX a a lack contributing a et the it downtime XX,XXX of the factors, it season, compare XX,XXX issues

Andy Inglis

you' no, right. Richard are Yes,

build production. one which yes. four, pressure, starts at well, the And course, in increase to time youlook if in it, XXXX, So, only we to had an which thatthrough of Tornado in was actually reservoir injector, actually leads

around The the repair on middle and what the at We iswhere we're was same the offstream of unplanned well, the came there us production Kodiak bring with look the year, well, weak. therefore, that of we're seeing only help be onby the that downtimeissue well, plan end which raise, the Tornado-Xwell Kodiak-X first a quarter up. forthe December. been and will had Kodiak And it the an current you know basis, finishing wellwill on though which of additional the okay, month. then quarterly So, moment, we're natural and we the completing, decline, has sort at the factwhen back which

affected that's quarter So the oneuniquely.

numbers the sort at decline XXXX lowering rating the youlook around is in I think, yearly of and versus overall, So, it if rate. at underlying XXXX the look a on the you simply basis, of

quarter the the one, has a unplanned on Kodiak-X at pacifically at look you differential If impact. downtime had well

Richard Tullis

thanks Well, very much. Okay.

Andy Inglis

Richard. Thanks, Okay.

Operator

question. comes Stanton Our with from line Please Capital Al Markets. proceed next with RBC question of your

Al Stanton

evening. Good Yes.

very I may. questions two Just simple if

you doing other you checking the rather, is strategy? just about given, probably are hedging. the lower question curve forward curve What get, about money shape the respect in when in that just should out than Neal, spot hedging so that policy you assume sale the of put sale unfortunately, So, $XXX the million, later worry the with price? think, are quarterly you Just up, we numbers. the change forward And might I we breakdown just the the the your are Tortue FPSO, to more we is you much that taking well happens, and suppose isn't about want. as a quarterly and or

Neal Shah

the a larger any so in save overall the back. Yes, takes sort $XXX yes, case. The million impact get or in before just that a to sort terms I But that mean, of benefit. expecting on it first on the from basically perspective, forecasting longer – still transaction, the you net capital there's $XXX question, you we're working million sort of of timing of us,

doesn't of be the sort So, timing this there transaction, sort pushes a how on just overall around it transaction. effect from of is around in the and benefits closes, shift depending that that of the when terms change forward. But will

Al Stanton

Yes.

Neal Shah

is I more hedging, in difficult we're so a does again, do, a it and the think, even $XX is world on and But, a a general just trying to hedge business from in little $XX so point, second great I your mean, And perspective, backwardation, to which what in into. world.

so, in the into continuing goal layer basis us the that regular hedges a we're put XXXX, as And protection to downside lets on fund business. is pretty in

dollar possible. floors to that level, upside in and putting keep we're XX-ish much so, as And around trying as

those the been per get in call to able across will last And layer in the few trades, up we've it $XX we barrel. year. to So, upside

So, to time, curves move continue in is out sort the of thing up. go is, you as the good

that in But to fund hedges. layer it done guarantee our future in and continue help so, attractive something as more we've to do, ability consistently expenses. And to it'll is the we're us will past, going

Al Stanton

we move Should from we'll and expect you goes? away see collars, or it to how swaps three-way just

Neal Shah

I think, done way pretty terms in design, going I it done it. not the we're mean, We've program Yes, of massively consistently. to change overall we've

instruments or put But that keep context, to do fund we're attractive is forecast in upside us ultimately, of the ultimately combination a as hedges be at on And will allow there the that to what's what depending most so time. trying And as within much possible. plan. again,

points look – the around will And move as attractive instruments at different so, time. look in different different prices

And of we can overall objective much same. so, shift today. normalize, structures, we started as with some And into wider colors that things of sort give us downside that as upside the other those and but stay the

Al Stanton

you. Thank Okay.

Andy Inglis

All right, Al. thanks

Operator

Thank Thanks you. joining like call at this are a everyone I time, the Since questions to bring close. there to to no would today. further

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

Kosmos Energy (KOS) 23 Feb 212020 Q4 Earnings call transcript