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Kosmos Energy (KOS) Announces Operation Updates for 2021

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Kosmos Energy KOS provided an update on the 2021 production, development and exploration activities of its prolific offshore resources in Ghana, Equatorial Guinea and the U.S. Gulf of Mexico.

In second-quarter 2021, the company achieved net production of 52,000 barrels of oil equivalent per day (boepd), slightly below the previous guidance due to decreased production in Equatorial Guinea. Notably, the company’s gross production in Equatorial Guinea amounted to 29,000 barrels of oil per day (bopd) in the second quarter, with significant outages related to facility upgrades. Kosmos Energy started drilling the first of three infill wells planned for 2021, which are expected to add gross production of 4,000 bopd.

The company delivered a strong operational performance in Ghana. It obtained gross production of 106,000 bopd, which includes 71,000 bopd at the Jubilee oilfield and 35,000 bopd at TEN offshore Ghana. Moreover, the first two wells in the company’s four-well campaign have been drilled and the rig commenced completion operations. Notably, the wells are expected to add gross production of 15,000-20,000 bopd.

Beside this, the rig is scheduled to drill and complete a TEN gas injector well and a second Jubilee producer well, with the latter expected to come online at the end of the year. Notably, the reliability of the Ghana production facilities continues to improve, with the uptime of the Jubilee and TEN floating production, storage and offtake vessels averaging about 98% year to date.

The company’s net production in the U.S. Gulf of Mexico averaged nearly 20,300 boepd in the second quarter. In April, the Kodiak-3 infill well came online, with one of two zones inconstantly producing. The company also announced the successful drilling of the Tornado-5 infill well, which is likely to add around 8,000-10,000 boepd gross, with initiation expected in the third quarter.

Kosmos Energy’s Greater Tortue Ahmeyim project offshore Mauritania and Senegal, which is being developed in partnership with BP Plc BP, was on track for first gas in the first half of 2023. However, the timing of the first gas is now expected in the third quarter of 2023 due to supplier delays and cost inflation.

Notably, the company’s full-year production guidance has been unchanged at 53,000-57,000 barrels a day, with a year-end exit rate of 60,000 barrels once new wells become operational. Sales volumes averaged nearly 66,000 boepd in the second quarter, which are in line with the prior guidance. The company generated positive cash flow from operations and reduced net debt by nearly $100 million.

Kosmos Energy has a strong financial position and impressive liquidity of more than $775 million. The company is currently about 60% hedged for the rest of 2021, with growing exposure to higher oil prices as hedges roll-off.

Company Profile & Price Performance

Headquartered in Dallas, TX, Kosmos Energy is a leading oil and gas exploration and production company.

Shares of the company have underperformed the industry in the past six months. Its stock has gained 2.4% compared with the industry’s 26.1% growth.

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Zacks Rank & Stocks to Consider

Kosmos Energy currently carries a Zack Rank #4 (Sell).

Some better-ranked players in the energy space are Enerplus Corporation ERF and ConocoPhillips COP, both currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Enerplus’ earnings for 2021 are expected to increase 41.4% year over year.

Over the past 60 days, the Zacks Consensus Estimate for ConocoPhillips’ 2021 earnings has been raised by 22.5%.

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