Kosmos Energy (KOS) has lived up to its reputation as an exploration-heavy independent in recent weeks, achieving success at two offshore gas wells. But its broader performance in the September quarter showed it is closer to stable cash generation even if the balance sheet is heavy with debt.
Net income was flat quarter on quarter at $16m (£12.4m) as realised oil and gas revenues came down by $4 to $59 a barrel, on 5 per cent lower production of 6m barrels of oil equivalent (boe). The company has tempered expectations on its full-year free cash flow, however – moving from ‘exceeding’ to ‘delivering’ targets set out in February.
The BP-operated Greater Tortue Ahmeyim project in Senegal and Mauritania was the source of the exploration wins, with the Yakaar-2 and Orca-1 wells recording gas discoveries. Orca-1 and another well in the BirAllah area offshore Mauritania, Marsouin-1, have de-risked up to 50 trillion cubic feet (tcf) of gas initially in place. Berenberg analyst Ilkin Karimli said this was more than enough of a resource to pursue commercial development.
The analyst said the news wasn’t all positive from the project, however. Kosmos said last week that its plan to sell two-thirds of its 30 per cent holding of the BP joint venture would be pushed back because of the new data for bidders to analyse. Mr Karimli said this removed a near-term catalyst for Kosmos’ share price.
However, investors can look at the continued dividend payment for solace – the company has maintained its quarterly 4.5¢ a share payout.
