Kosmos Energy Announces Third Quarter 2013 Results

  Kosmos Energy Announces Third Quarter 2013 Results

                     Company Provides Operational Update

Business Wire

DALLAS -- November 5, 2013

Kosmos Energy Ltd. (“Kosmos”) (NYSE: KOS) announced today financial and
operating results for the third quarter of 2013, which included a net loss of
$44 million, or $0.12 per basic share on the sale of approximately 1.9 million
barrels of oil. For the third quarter of 2012, Kosmos reported a net loss of
$36 million, or $0.10 per basic share on the sale of nearly two million
barrels of oil.

Oil and gas revenue in the third quarter of 2013 was $215 million compared
with $222 million in the third quarter of 2012. The slight decrease in oil
sales volume and revenue was associated with vessel capacity limitations on
one of the crude oil liftings in the third quarter. Realized pricing was
$112.52 per barrel of oil sold in the third quarter of 2013 versus $112.01 per
barrel of oil sold in the third quarter of 2012.

Brian F. Maxted, Chief Executive Officer, commented, “The Jubilee and TEN
field developments in Ghana are progressing on time and budget, providing
continued growth in our reserves, production and cash flow from this
world-class, highly valuable asset.We are successfully leveraging the funds
generated, as well as our strong balance sheet, to steadily and surely advance
our portfolio of transformational exploration opportunities. We are poised to
commence a multi-well high impact drilling campaign early next year, having
recently completed the farm-out of our Morocco exploration licenses and
secured rig capacity.”

Production expense, which included certain well workover costs, was $33
million in the third quarter of 2013 versus $45 million in the third quarter
of 2012. Excluding well workover costs, production expense per barrel of oil
sold was $6.82 in the third quarter of 2013 and $8.53 in the third quarter of
2012.

Exploration expenses in the third quarter of 2013 totaled $78 million compared
with $38 million in the prior year quarter. Current quarter expense included
large 3D seismic surveys in Ireland and Mauritania; the cost of the successful
Akasa-2A appraisal well which confirmed the oil-water contact in the field;
and, ongoing seismic acquisition, processing, and interpretation expenditures
throughout the portfolio.

General and administrative expenses in the third quarter of 2013 were $36
million versus $40 million in the third quarter of 2012. Depletion and
depreciation expense was $58 million, or $30.52 per barrel of oil sold versus
$32.14 per barrel sold in the third quarter of 2012.

Derivative expense for the third quarter of 2013 was approximately $8 million,
which represents the mark-to-market of the Company’s oil derivative contracts
as of September 30, 2013. Income tax expense for the third quarter of 2013 was
$34 million; the majority of the amount was related to the Company’s
operations in Ghana.

In the third quarter, Kosmos added new hedge positions for 2014 production
totaling 2.5 million barrels. Subsequent to quarter-end, an additional 1.7
million barrels of 2015 production were hedged.

Operational Update

The planned maintenance program on the Jubilee Field floating production,
storage, and offloading (FPSO) vessel was successfully completed in late
September. As a result of production being shut-in during the maintenance
period, gross Jubilee Field production averaged approximately 88,000 barrels
of oil per day during the third quarter of 2013.

Phase 1A drilling and completion operations continued in the third quarter
with three production wells and one water injection well associated with the
Phase 1A campaign currently online. Expansion of the gas handling capacity
associated with the Jubilee FPSO continues and a third gas injection well is
scheduled to be operational in the fourth quarter. With these enhancements,
Kosmos is targeting a Jubilee year-end 2013 production rate of more than
120,000 barrels of oil per day gross.

Appraisal of the Mahogany-Teak-Akasa (MTA) Pre-Development Area continued in
the third quarter with the drilling of the Akasa-2A appraisal well. The well
successfully tested the down-dip extent of the Akasa accumulation, and a water
injectivity test is being conducted to confirm reservoir communication with
the Akasa-1 discovery well.

Major contracts for the Tweneboa-Enyenra-Ntomme (TEN) Project have been
awarded including the FPSO; subsea systems; and umbilicals, flowlines, and
risers. TEN represents the second major deepwater oil development project in
Ghana, and is forecast to deliver first oil in 2016 with production staged up
to a facilities-designed production target of 80,000 barrels of oil per day.

Darrell McKenna, Chief Operating Officer, commented, “In support of our
development projects, we remain focused on continuing both our near-term and
longer-term de-bottlenecking initiatives at Jubilee, and we are progressing
the TEN and MTA programs. Exploration pre-drill activities are ongoing and we
are in the process of finalizing a rig slot for our initial exploration well
in Morocco early next year. In combination with our long-term rig agreement
for the Atwood Achiever,  we have the rig resources in place to fulfill the
Company’s activities in Morocco, as well as our long-term exploration
strategy.”

In preparation for our 2014 drilling campaign, the farm-out of our Morocco
license acreage was completed in October with BP acquiring a non-operating
interest in the Essaouira Offshore, Foum Assaka Offshore and Tarhazoute
Offshore blocks in the Agadir Basin, and Cairn Energy acquiring a
non-operating interest in the Cap Boujdour Contract Area in the Aaiun Basin.
In addition, a petroleum agreement was finalized for the Tarhazoute Offshore
block, which Kosmos previously held under a reconnaissance contract.

Kosmos continues to progress a number of high impact exploration initiatives
in Ireland, Mauritania and Suriname. A 5,000 square kilometer 3D seismic
program in the Porcupine Basin offshore western Ireland was completed in
October. Offshore Mauritania, a 10,300 square kilometer 3D seismic survey is
scheduled for completion in the fourth quarter, and in August, a 1,400
kilometer 2D seismic program was completed offshore Suriname.

Conference Call and Webcast Information

Kosmos will host a conference call and webcast to discuss third quarter 2013
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 along the Atlantic Margin. The
Company’s asset portfolio includes existing production and other major
development projects offshore Ghana, as well as exploration licenses with
significant hydrocarbon potential offshore Ireland, Mauritania, Morocco
(including Western Sahara) and Suriname. As an ethical and transparent
company, Kosmos is committed to doing things the right way. The Company’s
Business Principles articulate our commitment to transparency, ethics, human
rights, safety and the environment. Read more about this commitment in the
Kosmos 2012 Corporate Responsibility Report. 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
Section27A of the Securities Act of 1933 and Section21E 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 Kosmos expects, believes or anticipates will or may occur in
the future are forward-looking statements.Kosmos’ 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 Kosmos 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 Kosmos. 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 Kosmos, 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 Kosmos’ Securities and Exchange Commission (“SEC”) filings.
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,
                       2013         2012            2013         2012
Revenues and other
income:
Oil and gas revenue    $ 215,169     $ 222,375       $ 636,648     $ 450,360
Interest income          77            137             191           1,165
Other income            133         725           708         930     
Total revenues and       215,379       223,237         637,547       452,455
other income
                                                                   
Costs and expenses:
Oil and gas              32,576        44,873          79,651        71,791
production
Exploration expenses     78,038        38,127          194,384       96,134
General and              35,646        39,898          118,787       112,558
administrative
Depletion and            58,367        63,794          175,578       128,442
depreciation
Amortization -
deferred financing       2,786         2,194           8,269         6,582
costs
Interest expense         8,781         20,213          27,789        43,717
Derivatives, net         7,585         24,529          386           26,407
Other expenses, net     1,864       (64     )      3,345       728     
Total costs and         225,643     233,564       608,189     486,359 
expenses
                                                                   
Income (loss) before     (10,264 )     (10,327 )       29,358        (33,904 )
income taxes
Income tax expense      34,224      25,923        124,568     64,730  
                                                                   
Net loss               $ (44,488 )   $ (36,250 )     $ (95,210 )   $ (98,634 )
                                                                   
Net loss per share:
Basic                  $ (0.12   )   $ (0.10   )     $ (0.25   )   $ (0.27   )
Diluted                $ (0.12   )   $ (0.10   )     $ (0.25   )   $ (0.27   )
                                                                   
                                                                   
Weighted average
number of shares
used to
compute net loss per
share:
Basic                   377,654     373,448       376,509     371,140 
Diluted                 377,654     373,448       376,509     371,140 

                                                          
                                                             
Kosmos Energy Ltd.

Condensed Consolidated Balance Sheets

(in thousands, unaudited)
                                                             
                                             September 30,   December 31,
                                             2013            2012
                                                             
Assets
Current assets:
Cash and cash equivalents                    $  440,267      $  515,164
Receivables                                     189,653         134,216
Other current assets                           79,523         100,738
Total current assets                            709,443         750,118
                                                             
Property and equipment, net                     1,501,714       1,525,762
Other noncurrent assets                        83,922         90,243
Total assets                                 $  2,295,079    $  2,366,123
                                                             
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable                             $  98,818       $  128,855
Accrued liabilities                             115,866         41,021
Other current liabilities                      9,458          20,377
Total current liabilities                       224,142         190,253
                                                             
Long-term liabilities:
Long-term debt                                  900,000         1,000,000
Deferred tax liability                          145,193         104,137
Other noncurrent liabilities                   55,447         42,827
Total long-term liabilities                     1,100,640       1,146,964
                                                             
Total shareholders’ equity                     970,297        1,028,906
Total liabilities and shareholders’ equity   $  2,295,079    $  2,366,123

                                               
                                                   
Kosmos Energy Ltd.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)
                                                   
                    Three Months Ended             Nine Months Ended
                    September 30,                  September 30,
                    2013         2012             2013          2012
Operating
Activities:
Net loss            $ (44,488 )   $ (36,250  )     $ (95,210  )   $ (98,634  )
Adjustments to
reconcile net
loss to net cash
provided by (used
in) operating
activities:
Depletion,
depreciation and      61,153        65,988           183,847        135,024
amortization
Deferred income       10,111        18,420           62,757         51,867
taxes
Unsuccessful well     13,244        120              98,912         19,357
costs
Change in fair
value of              8,054         13,833           4,752          13,847
derivatives
Cash settlements      (3,514  )     (11,674  )       (18,658  )     (18,755  )
on derivatives
Equity-based          13,792        19,364           50,792         58,215
compensation
Other                 1,641         2,756            4,468          7,739
Changes in assets
and liabilities:
Net changes in       (55,514 )    (83,132  )      (10,311  )    (18,550  )
working capital
Net cash provided
by (used in)          4,479         (10,575  )       281,349        150,110
operating
activities
                                                                  
Investing
activities:
Oil and gas           (77,871 )     (84,606  )       (244,452 )     (272,681 )
assets
Other property        (434    )     (2,118   )       (3,712   )     (9,030   )
Restricted cash      5,249       (23,882  )      7,214        (23,089  )
Net cash used in
investing             (73,056 )     (110,606 )       (240,950 )     (304,800 )
activities
                                                                  
Financing
activities:
Payments on           —             (110,000 )       (100,000 )     (110,000 )
long-term debt
Purchase of           (28     )     —                (13,069  )     (8,378   )
treasury stock
Deferred             (2      )    880            (2,227   )    (374     )
financing costs
Net cash used in
financing            (30     )    (109,120 )      (115,296 )    (118,752 )
activities
                                                                  
Net decrease in
cash and cash         (68,607 )     (230,301 )       (74,897  )     (273,442 )
equivalents
Cash and cash
equivalents at       508,874     629,951        515,164      673,092  
beginning of
period
Cash and cash
equivalents at      $ 440,267    $ 399,650       $ 440,267     $ 399,650  
end of period

Contact:

Kosmos Energy Ltd.
Investor Relations
Jon Cappon, +1-214-445-9669
jcappon@kosmosenergy.com
 
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