Business News of Thursday, 26 February 2015
Oil exploration giant Kosmos Energy is to spend about 500 million dollars of its operations in Ghana. This is more than half of the 800 million the company is planning to spend on exploration activities across the world.
This announcement is coming at a time when several oil firms are cutting down on their expenditure because of declining crude prices.
According to Kosmos’ 2014 financial report, a chunk of the 500 million dollars will go into the development of the country’s second biggest oil area after Jubilee Field , that is the Tweneboa-Enyenra-Ntomme (TEN), which is about 50 percent complete to pour its first commercial oil by next year.
Kosmos also says that the Jubilee Field was able to produce about 100 thousand barrels of crude oil a day on the average, adding it was able to pay 129 million dollars in taxes to Government.
The oil firm is projecting that it will be able to produce more gas for the infrastructure project at Atuabo, meaning that the current 154 million standard cubic feet of gas a day currently being produced could be going up soon.
Kosmos, according to the financial report, ended the year with revenue of 855 million dollars. For many the decision by Kosmos to invest heavily in Ghana means the country will not hurt badly during planned suspension oil exploration projects later this year due to the recent decline in prices of crude oil.
“2014 was a strong year for Kosmos,” said Andrew G. Inglis, Chairman and Chief Executive of Kosmos Energy.
“We successfully delivered our operations plan in Ghana, maintaining gross production above 100,000 barrels of oil per day and delivering nine cargoes net to Kosmos. Good progress was made growing the reserves of our Ghana asset and preparing for future production to come on-stream from the TEN development and MTA discoveries.
We also continued to mature our exploration portfolio during 2014 and its quality was recently validated by our successful Mauritania farm-out at a time when the industry is slowing their exploration programs. With a strong balance sheet and access to $1.9 billion in liquidity, Kosmos enters 2015 in a position of financial strength, with the opportunity to create significant value as we push ahead to drill the most promising prospects in our exploration portfolio”, he said.
Fourth quarter 2014 oil revenues for Kosmos were $177 million versus $215 million in the same quarter of 2013, representing sales of 2.4 million barrels of oil for 2014 as compared to 1.9 million barrels in 2013.
Realized pricing was $72.89 per barrel of oil sold in the fourth quarter of 2014 versus $111.13 per barrel of oil sold in the fourth quarter of 2013, excluding the impact of the company’s hedging program.
“Including the impact of our settled hedges, realized pricing was $80.52 per barrel in the fourth quarter of 2014. At the end of 2014, the Company was in a net under lift position of approximately 99,000 barrels of oil”, the Kosmos financial report said.
Production expense for the fourth quarter of 2014 was $46 million, or $18.82 per barrel sold, versus $17 million in the fourth quarter of 2013, due to additional work over activities in the latest quarter as well as an additional lifting. For the year, production expense averaged $11.48 per barrel.
Exploration expenses in the fourth quarter of 2014 totaled $36 million. Included in the quarter were costs related to the large 3D seismic survey in Senegal, as well as ongoing seismic processing and interpretation expenditures throughout the company’s portfolio.
Depletion and depreciation expense was $45 million or $18.59 per barrel of oil sold versus $24.33 per barrel sold in the fourth quarter of 2013. The decrease in the fourth quarter 2014 depletion rate was as a result of the increase in proved reserves as of year-end 2014.
General and administrative expenses stood at $40 million for the fourth quarter of 2014, consistent with the fourth quarter of 2013. General and administrative expenses for the year were $135 million, representing a 15% reduction over 2013.
The fourth quarter results benefited from the non-cash mark-to-market gain of $244 million related to the Company’s oil derivative contracts. The Company’s hedging position as of January 15, 2015 included 6.2 million barrels of 2015 production and 6.0 million barrels of 2016 production.
Income tax expense for the fourth quarter of 2014 was $129 million. The majority of the amount was related to deferred taxes in Ghana. Total capital expenditures, including exploration expenses, came in under budget at $528 million in 2014. The reduction is primarily attributable to reduced Ghana expenditure as they were able to maintain production without incremental capital expenditures.
Kosmos exited 2014 with $1.9 billion of liquidity and $213 million of net debt compared to $1.2 billion of liquidity and $249 million of net debt as of year-end 2013.