Tortue field reserves approx. 25 Tcf, fairway may hold more than 50 Tcf of natural gas potential
Monday was a busy day for Texas-based Kosmos Energy Ltd. The company announced more drilling success for its “world-class basin” offshore Mauritania and Senegal and released its Q1 financial results, which showed a smaller loss compared to the same period last year.
“With the announcement of our Teranga-1 result today we continue our exploration success in opening a world-class basin offshore Mauritania and Senegal,” said CEO Andrew G. Inglis in a release.
“We completed our appraisal drilling of the Tortue West discovery and delineated a world-class LNG resource with fewer wells than anticipated. The TEN project is over 90 percent complete and is on schedule to produce first oil in the third quarter of 2016. Our rich opportunity set coupled with our financial strength leaves us well positioned to capitalize on the opportunities ahead of us.”
Located in the Cayar Offshore Profond block approximately 65 kilometers northwest of Dakar in nearly 1,800 meters of water, the Teranga-1 well was drilled to a total depth of 4,485 meters.
The well encountered 31 meters (102 feet) of net gas pay in good quality reservoir in the Lower Cenomanian objective. Well results confirm that a prolific inboard gas fairway extends approximately 200 kilometers from the Marsouin-1 well in Mauritania through the Greater Tortue area on the maritime boundary to the Teranga-1 well in Senegal.
Inglis says Kosmos has now drilled five consecutive successful exploration and appraisal wells in this fairway with a 100 percent success rate. In the process, the company has discovered a gross Pmean resource of approximately 25 Tcf and estimates the fairway may hold more than 50 Tcf of resource potential.
“Our continuing exploration success demonstrates we have opened a super-major scale basin offshore Mauritania and Senegal with world-class resource potential,” said Inglis.
“Given the scale and quality of the gas resource discovered along the inboard trend, our focus is to move this resource through to development. Our forward exploration plan is to mature the two independent tests with oil potential in northern Mauritania and in the outboard of Mauritania and Senegal for drilling in 2017.”
Q1 financial results
For Q1 2016, the company generated a net loss of $59.0 million, or $0.15 per diluted share as compared to a net loss of $78.9 million or $0.21 per share in the same period last year.
When adjusted for certain items that impact the comparability of results, the company generated an adjusted net loss of $14.6 million or $0.04 per diluted share for Q1 2016.
Q1 2016 oil revenues were $62 million versus $109 million in the same quarter of 2015, on sales of 1.9 million barrels of oil for 2016 as compared to 1.9 million barrels in 2015.
Production expense for the current quarter was $29 million, or $15.50 per barrel, versus $32 million, or $16.90 per barrel, in Q1 2015.
Exploration expenses totaled $24 million for the first quarter, compared to $99 million in the same period of 2015.
Depletion and depreciation expense for the quarter was $31 million, or $16.49 per barrel. This was a decrease from $19.48 per barrel in the first quarter of 2015, primarily attributable to reserve additions at Jubilee in 2015.
General and administrative expenses decreased from $30 million in the fourth quarter of 2015 to $18 million this quarter, driven primarily by a decline in equity compensation expense and lower cash expenses.
Kosmos recognized an income tax benefit for the first quarter of 2016 of $2.0 million, primarily related to lower realized oil prices.
Total capital expenditures in the first quarter were $250 million, which reflects a full quarter of spend on exploration and appraisal drilling program and the TEN project.
Capital expenditures are expected to ramp down in the second half of the year as the drilling program is paused in the second quarter and expect to see a reduction of TEN spending post planned first production in the third quarter.
The forecast for full-year 2016 capital expenditures remains approximately $650 million.
Kosmos exited the first quarter of 2016 with $1.5 billion of liquidity and $826 million of net debt. This compares to $1.8 billion of liquidity and $614 million of net debt as of Dec. 31, 2015.