U.S. oil and fuel firm Kosmos Energy sank deeper into the purple within the first quarter of 2020 as a result of impairments and low oil costs.
According to its report on Monday, Kosmos generated a web lack of $183 million within the first quarter of 2020 in comparison with the lack of $52.9 million within the first quarter of final yr.
Kosmos has booked asset impairments within the first quarter totalling $151 million. These impairments are largely associated to the Kodiak and Tornado fields within the Gulf of Mexico and are because of the change within the oil costs since Kosmos acquired the property in late 2018.
The impairments characterize round 10% of the full consideration paid for Deep Gulf Energy on the time.
Kosmos booked revenues of $178 million within the first quarter of 2020 in comparison with revenues of $296.eight million in the identical interval of 2019.
The firm’s capital expenditure for the interval was $84 million.
In addition to the timing mismatch between manufacturing and the lifting of cargos, the primary quarter was impacted by non-cash asset impairments and restructuring expenses of $169 million.
These expenses had been partly diminished by a mark-to-market acquire of $136 million, offset by a $12 million money settlement associated to the corporate’s oil spinoff contracts. The firm additionally incurred non-cash deferred tax expense associated to a valuation allowance in opposition to deferred tax property and the elevated market worth of the hedges, totalling $72 million.
Kosmos exited the primary quarter of 2020 with roughly $677 million of liquidity and $1.97 billion of web debt.
Shut-ins in Gulf of Mexico to have an effect on 2Q
Kosmos’ web manufacturing in 1Q 2020 was 66,300 barrels of oil equal per day (boepd), on the higher finish of steerage.
This in comparison with the manufacturing of 79,799 boepd in the identical interval of 2019.
Sales in 1Q 2020 had been 43,700 boepd, leading to a cloth web underlift place of roughly 1.7 million barrels of oil equal (boe).
Production within the U.S. Gulf of Mexico was unaffected by COVID-19 and averaged roughly 28,300 boepd web (80% oil) through the first quarter, on the prime finish of steerage.
As a results of present market circumstances, the operator of the Delta House host platform within the U.S. Gulf of Mexico, Llog Exploration, has chosen to shut-in the ability through the month of May 2020 and speed up deliberate upkeep.
The shut-in of Delta House will affect the second-quarter manufacturing by roughly 5,500 boepd (web) from fields processed by means of this facility.
In addition, Kosmos will briefly shut-in roughly 1,500 boepd (web) at different amenities throughout 2Q, leading to roughly 7,000 boepd of web Kosmos manufacturing shut-in through the second quarter.
Kosmos presently expects the shut-ins to final by means of the top of May, nonetheless, timing will rely on future market circumstances.
Kosmos’ full-year web manufacturing steerage within the U.S. Gulf of Mexico is anticipated on the decrease finish of the of 24,000-28,000 boepd vary assuming the shut-ins final by means of May.
In Ghana, full-year web manufacturing steerage is 27,000-29,000 bopd and it’s unchanged.
In Equatorial Guinea, Kosmos’ full-year web manufacturing steerage is 11,000-13,000 bopd and cargo steerage of four.5 cargos is unchanged.
In response to present market volatility, Kosmos has recognized capital reductions within the base enterprise of round 40% from discretionary expenditure largely from exploration actions within the Gulf of Mexico, its basin-opening exploration portfolio, and different non-critical work that doesn’t affect security and asset integrity.
The firm is now focusing on base enterprise capital expenditure of $200-$225 million in 2020 whereas retaining 2020 manufacturing throughout the vary of earlier steerage and with the minimal anticipated affect on 2021 manufacturing.
Kosmos has taken steps with the operators of manufacturing property to focus on a discount in working bills of roughly $2-Three per barrel in 2020.
In addition, Kosmos is…