Kosmos Energy Ltd. (NYSE:KOS) Q2 2023 Earnings Call Transcript

On Jubilee, if I just sort of step back and sort of trying to give a bigger picture, I think we’re very pleased with the performance of Jubilee. We’ve gone up from 70,000 barrels gross. We entered the year, we’re now up at 100,000 barrels per day, that is from three wells. We had one in the main field that started up, and then we’ve had in July, two more wells in Jubilee South East. The next wells come on will be another well in the main field. And with that, we expect another bump in production, and then it will be followed by two water injectors, one in the main fields, one in Jubilee South East as sort of provide support to those higher levels of production. So we’re getting close to the facility limit, which is really your question. And I think the other message to sort of deliver is that as we look forward to the Jubilee profile for the remainder of the decade, we’ve got a very strong set of drilling opportunities.

We’re in our third cycle of the [4D] [ph], every time it is bringing forward more opportunities. We’re clearly very pleased with the performance of the wells on Jubilee South East, so now it’s ultimately going to be around that drilling program on Jubilee to bump us up the facility limit and maintain a very high level of reliability. So that’s the goal, that’s the opportunity, and I think we’re off to a strong start, actually. And then finally, a question on the gas price, you’re correct. The 290 is in place to take us through the period to the end of September. It’s there to allow us to finalize all of the conversations with the government of Ghana around the 10 POD, which has as an integral part of it, a gas sales agreement and cover Jubilee and TEN Gas going forward at the same price.

So I think the base price of 290 enables us to get started. And then we believe there will be an increment above that for the ongoing investment in TEN. Good. Do I cover everything, James?

James Hosie: Yes, it did. Thank you.

Operator: Our next questions come from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Neil Mehta: Yes. Thanks so much, Andy, very helpful update. I guess the first question is just around the under-lift. It seemed like if there was any softness in the cash flow, it’s just a lot of it was just about timing of cargoes. And can you just remind us how those trajectories will pick up through 3Q and 4Q. It’s fair to assume you’ll make up for that lost cargo.

Andrew Inglis: Yes, I’ll ask Neal to pick that up.

Neal Shah: Yes. So Neil, you’re right. The first half, a large part included in the second quarter is really just around the timing of the progress as we only listed two Jubilee Cargos, which will increase to three and then ultimately, five in 3Q, 4Q as we go forward. And then we didn’t look to TEN cargo in the second quarter, which will lift in the third quarter. We haven’t lifted half a cargo in EG, which will lift sort of one net cargo in 3Q, 4Q going forward. So yes, there’s very much an overlift component, which is better considering the price or higher in the back end of the year than they have been in the first half of the year. So yes, that will square away, at least on our forecast in 3Q partially and in 4Q.

Neil Mehta: Okay. That’s very helpful. And then as the non-engineer, maybe I can ask this question, which is about the subsea. And certainly, that’s been an area where there have been some productivity issues Andy, can you just explain in layman’s terms, what’s going on there and how the investment community should get confidence that there’s a clear fix in mind and it’s easily addressable?