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Kosmos Energy Announces Third Quarter 2012 Results, Including Two Jubilee Liftings



  Kosmos Energy Announces Third Quarter 2012 Results, Including Two Jubilee
  Liftings

Business Wire

DALLAS -- November 05, 2012

Kosmos Energy (NYSE: KOS) announced today financial and operating results for
the third quarter of 2012. The Company reported a net loss attributable to
common shareholders of $36 million, or $0.10 per basic and diluted share.
Included in the results for the third quarter of 2012 was a $25 million
pre-tax charge related to the Company’s oil derivative contracts. For the
third quarter of 2011, Kosmos reported net income attributable to common
shareholders of $52 million, or $0.13 per basic and diluted share.

Highlights for the quarter ended September 30, 2012, include:

  * Sold approximately two million barrels of oil net to Kosmos
  * Performed two additional successful acid treatments on Jubilee production
    wells
  * Exited the quarter with Jubilee production of over 85,000 barrels of oil
    per day (Bopd) gross
  * Discovered Wawa, a new crude oil and gas-condensate field on the Deepwater
    Tano Block
  * Successfully flow-tested the Akasa-1 well on the West Cape Three Points
    Block, indicating productive capacity in excess of 10,000 Bopd
  * Substantially completed a 3,800 square kilometer 3D seismic program on
    Blocks 42 and 45, offshore Suriname
  * Closed the acquisition of an additional 18.75 percent interest in the Foum
    Assaka Block, offshore Morocco, increasing the Company’s participating
    interest to 56.25 percent
  * Executed an agreement to acquire an additional 37.5 percent interest in
    the Essaouira Block, offshore Morocco, which will increase the Company’s
    participating interest to 75 percent, subject to final government
    approvals

Brian F. Maxted, Chief Executive Officer, commented, “Kosmos’ third quarter
results were led by strong, sustained production and a number of key
exploration successes throughout our portfolio. Jubilee continues to perform
at a high level as we advance towards first production from the Phase 1A
development. We anticipate submitting the Plan of Development for our second
oil project in the near future, and our exploration drilling plans include two
exciting upcoming prospects in Ghana, with Okure currently drilling and the
Sapele prospect following shortly. In other areas, our teams are preparing to
spud the Sipo prospect in Cameroon by the end of the year, and we recently
completed a 3D seismic acquisition on our blocks offshore Suriname. In
addition, we were able to materially grow our leading acreage position in the
Agadir Basin, offshore Morocco. As we close in on the end of 2012, we’ve made
great progress in all areas of our business, readying Kosmos for significant
future success.”

Third quarter 2012 oil revenues were $222 million versus $230 million in the
same quarter of 2011, on sales of nearly two million barrels of oil for each
period. The average third quarter 2012 realized oil price was approximately
$112 per barrel versus $116 in the third quarter of 2011, excluding the impact
of the Company’s strategic hedging program. At the end of September 2012, the
Company was in a net underlift position of approximately 128,000 barrels of
oil since field startup.

Production expense for the third quarter of 2012 was $45 million, with over 60
percent of the amount related to the Company’s production enhancement program
for Phase 1 wells at the Jubilee field. During 2012, highly successful acid
stimulation treatments have been performed on five of the nine Phase 1
production wells. The third quarter 2012 amount expensed includes costs from
the last three procedures performed. Excluding these costs, production expense
was $8.53 per barrel sold. The reduction from the third quarter 2011 per
barrel rate is primarily attributable to the purchase of the Jubilee floating
production, storage and offloading vessel (FPSO) at year-end 2011, which
capitalized the asset and ceased all forward lease payments.

Exploration expense in the third quarter of 2012 was $37 million, with the
majority of the amount resulting from the Company’s 3D seismic program
offshore Suriname. General and administrative (G&A) expense was $41 million
for the third quarter of 2012. Consistent with prior periods, approximately 50
percent of the G&A total related to non-cash, equity-based compensation
expense. Depletion and depreciation expense was $64 million in the third
quarter of 2012, or $32.14 per barrel sold. The per barrel increase, versus
the third quarter of 2011, is a result of the purchase of the Jubilee FPSO and
the ongoing capital spending for development of the Jubilee field. In
addition, the recording of year-end 2011 reserves impacted the 2012 depletion
rate.

Derivative expense for the third quarter of this year was approximately $25
million, which represents the mark to market of the Company’s oil derivative
contracts as of September 30, 2012. Since the end of the second quarter of
2012, Kosmos has added new hedge positions for 2013 production totaling 3.5
million barrels of oil.

Income tax expense for the third quarter of 2012 was approximately $26
million, with the majority of the amount resulting from the Company’s Ghana
operations.

Conference Call and Webcast Information

Kosmos will host a conference call and webcast to discuss third quarter 2012
financial and operating results today at 10:00 a.m. Central time (11:00 a.m.
Eastern time). A live webcast of the event can be accessed on the Investors
page of Kosmos’ website at www.kosmosenergy.com. The dial-in telephone number
for the call is +1.877.407.3982. Callers outside the United States should dial
+1.201.493.6780. A replay of the webcast will be available on the Investors
page of Kosmos’ website for approximately 90 days following the event.

About Kosmos Energy

Kosmos Energy is a leading independent oil and gas exploration and production
company focused on frontier and emerging areas in Africa and South America.
The Company’s asset portfolio includes existing production, major discoveries
and exploration prospects offshore Ghana, as well as exploration licenses with
significant hydrocarbon potential offshore Mauritania, Morocco and Suriname
and onshore Cameroon. Kosmos is listed on the New York Stock Exchange and is
traded under the ticker symbol KOS. For additional information, visit
www.kosmosenergy.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of historical
facts, included in this press release that address activities, events or
developments that the Company expects, believes or anticipates will or may
occur in the future are forward-looking statements. The Company’s estimates
and forward-looking statements are mainly based on its current expectations
and estimates of future events and trends, which affect or may affect its
businesses and operations. Although the Company believes that these estimates
and forward-looking statements are based upon reasonable assumptions, they are
subject to several risks and uncertainties and are made in light of
information currently available to the Company. When used in this press
release, the words “anticipate,” “believe,” “intend,” “expect,” “plan,” “will”
or other similar words are intended to identify forward-looking statements.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Company, which may
cause actual results to differ materially from those implied or expressed by
the forward-looking statements. Further information on such assumptions, risks
and uncertainties is available in the Company’s Securities and Exchange
Commission (“SEC”) filings. The Company’s SEC filings are available on the
Company’s website at www.kosmosenergy.com. Kosmos undertakes no obligation and
does not intend to update or correct these forward-looking statements to
reflect events or circumstances occurring after the date of this press
release, except as required by applicable law. You are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date of this press release. All forward-looking statements are qualified in
their entirety by this cautionary statement.

 
Kosmos Energy Ltd.
Consolidated Statement of Operations
(in thousands, except per share amounts, unaudited)
                                                                  
                         Three Months Ended          Nine Months Ended
                         September 30,               September 30,
                         2012          2011          2012          2011
Revenues and other
income:
Oil and gas revenue      $ 222,375     $ 230,262     $ 450,360     $ 446,914
Interest income            137           2,492         1,165         7,459
Other income               725           91            930           735      
Total revenues and         223,237       232,845       452,455       455,108
other income
                                                                    
Costs and expenses:
Oil and gas production     44,873        24,185        71,791        58,481
Exploration expenses       37,359        11,005        93,904        104,657
General and                40,666        39,093        114,788       72,140
administrative
Depletion and              63,794        42,593        128,442       88,960
depreciation
Amortization -
deferred financing         2,194         2,194         6,582         13,999
costs
Interest expense           20,213        16,581        43,717        55,239
Derivatives, net           24,529        (4,984  )     26,407        5,250
Loss on extinguishment     —             —             —             59,643
of debt
Doubtful accounts          —             —             —             (39,782 )
expense
Other expenses, net        (64     )     (79     )     728           (18     )
Total costs and            233,564       130,588       486,359       418,569  
expenses
                                                                    
Income (loss) before       (10,327 )     102,257       (33,904 )     36,539
income taxes
Income tax expense         25,923        50,481        64,730        48,505   
                                                                    
Net income (loss)          (36,250 )     51,776        (98,634 )     (11,966 )
                                                                    
Accretion to
redemption value of        —             —             —             (24,442 )
convertible preferred
units
                                                                    
Net income (loss)
attributable to common   $ (36,250 )   $ 51,776      $ (98,634 )   $ (36,408 )
shareholders/unit
holders
                                                                    
Net income (loss) per
share attributable to
common shareholders:
Basic                    $ (0.10   )   $ 0.13        $ (0.27   )
Diluted                  $ (0.10   )   $ 0.13        $ (0.27   )
Pro forma basic                                                    $ (0.03   )
Pro forma diluted                                                  $ (0.03   )
                                                                    
Weighted average
number of shares used
to compute net
(income) loss per
share:
Basic                      373,448       368,996       371,140  
Diluted                    373,448       369,341       371,140  
Pro forma basic                                                      349,792  
Pro forma diluted                                                    349,792  
                                                                              
                                                                              

Kosmos Energy Ltd.
Condensed Consolidated Balance Sheets
(in thousands, unaudited)
                                                            
                                             September 30,   December 31,
                                             2012            2011
                                                              
Assets
Current assets:
Cash and cash equivalents                    $  399,650      $  673,092
Receivables                                     222,067         310,155
Other current assets                            120,354         129,234
Total current assets                            742,071         1,112,481
                                                              
Property and equipment, net                     1,490,400       1,377,041
Other noncurrent assets                         86,689          62,412
Total assets                                 $  2,319,160    $  2,551,934
                                                              
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable                             $  128,231      $  278,006
Accrued liabilities                             64,693          37,194
Other current liabilities                       24,722          24,407
Total current liabilities                       217,646         339,607
                                                              
Long-term liabilities:
Long-term debt                                  1,000,000       1,110,000
Deferred tax liability                          88,027          47,608
Other noncurrent liabilities                    41,263          33,993
Total long-term liabilities                     1,129,290       1,191,601
                                                              
Total shareholders’ equity                      972,224         1,020,726
Total liabilities and shareholders’ equity   $  2,319,160    $  2,551,934
                                                                 
                                                                 

Kosmos Energy Ltd.
Condensed Consolidated Statements of Cash Flows
(in thousands, unaudited)
                                                               
                   Three Months Ended            Nine Months Ended
                   September 30,                 September 30,
                   2012           2011           2012           2011
Operating
Activities:
Net income         $ (36,250  )   $ 51,776       $ (98,634  )   $ (11,966    )
(loss)
Adjustments to
reconcile net
income (loss) to
net cash
provided by
(used in)
operating
activities:
Depletion,
depreciation and     65,988         44,787         135,024        102,959
amortization
Deferred income      18,420         39,467         51,867         37,176
taxes
Unsuccessful         120            4,528          19,357         87,845
well costs
Non-cash change
in fair value of     13,833         (1,190   )     13,847         16,946
derivatives
Cash settlements     (11,674  )     (1,161   )     (18,755  )     (4,779     )
on derivatives
Equity-based         19,364         20,144         58,215         29,264
compensation
Doubtful             —              —              —              (39,782    )
accounts expense
Loss on
extinguishment       —              —              —              59,643
of debt
Other                2,756          916            7,739          1,939
Changes in
assets and
liabilities:
Net changes in       (83,132  )     53,380         (18,550  )     (12,099    )
working capital
Net cash
provided by
(used in)            (10,575  )     212,647        150,110        267,146
operating
activities
                                                                 
Investing
activities:
Oil and gas          (84,606  )     (75,335  )     (272,681 )     (282,098   )
assets
Other property       (2,118   )     (1,081   )     (9,030   )     (1,928     )
Notes receivable     —              667            —              4,448
Restricted cash      (23,882  )     1,265          (23,089  )     85,551      
Net cash used in
investing            (110,606 )     (74,484  )     (304,800 )     (194,027   )
activities
                                                                 
Financing
activities:
Borrowings under     —              —              —              1,393,000
long-term debt
Payments on          (110,000 )     (300,000 )     (110,000 )     (1,438,000 )
long-term debt
Net proceeds
from the initial     —              —              —              580,374
public offering
Purchase of          —              —              (8,378   )     —
treasury stock
Deferred             880            —              (374     )     (52,466    )
financing costs
Net cash
provided by
(used in)            (109,120 )     (300,000 )     (118,752 )     482,908     
financing
activities
                                                                 
Net increase
(decrease) in        (230,301 )     (161,837 )     (273,442 )     556,027
cash and cash
equivalents
Cash and cash
equivalents at       629,951        818,279        673,092        100,415     
beginning of
period
Cash and cash
equivalents at     $ 399,650      $ 656,442      $ 399,650      $ 656,442     
end of period

Contact:

Kosmos Energy
Investor Relations
Brad Whitmarsh, +1-214-445-9772
bwhitmarsh@kosmosenergy.com
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