Kosmos Energy Ltd Earnings Call Insights: Ghana Gas Infrastructure and Drilling in Morocco
Kosmos Energy Ltd (NYSE:KOS) recently reported its second quarter earnings and discussed the following topics in its earnings conference call.
Ghana Gas Infrastructure
Edward Westlake – Credit Suisse: Congrats on getting TEN sanctioned. I appreciate you are now the operator, but maybe if we could have a little bit of extra color on – generally the gas solutions for Ghana given that’s going to be a question going forward?
Brian F. Maxted – CEO: Let me ask Eric to take that one if he could.
Eric J. Haas – SVP, Production and Technical Services: Yes. Good morning. The gas infrastructure in Ghana is currently being developed under the supervision of GNGC and we are monitoring and supporting those efforts to the extent that we possibly can. The current information that we have is that completion of that infrastructure will be made sometime next year.
Edward Westlake – Credit Suisse: When you see that show based pipe and some power plants and demand onshore?
W. Greg Dunlevy – EVP and CFO: The western corridor gas infrastructure consists of pipeline running from Jubilee to (indiscernible), and then a pipeline running to (indiscernible) which is the location of the power generation plant and at (indiscernible) there is also a gas processing plant that’s under construction.
Edward Westlake – Credit Suisse: Which will be sufficient for the gas from both Jubilee and from TEN?
W. Greg Dunlevy – EVP and CFO: We will continue reinjecting some volume at Jubilee and plans are to inject a good volume of gas at TEN as well.
Edward Westlake – Credit Suisse: Then on TEN I mean your $4.9 billion CapEx is fine, and you are going to lease the FPSO I understand. What do you think is going to be the OpEx when you think of just remodeling relative to Jubilee when it’s up and running at full capacity per barrel?
W. Greg Dunlevy – EVP and CFO: Probably a little bit higher than Jubilee.
Drilling in Morocco
Brendan Warn – Jefferies: Just first question I have probably have two questions. The first question is just in terms of Morocco now that you are saying you have got that read capacity, could you give us a little bit more detail just about your first prospect, have you got all your permits are in place and what will be drilling, please?
Brian F. Maxted – CEO: Brandon, it’s Brian. We’ve got a portfolio of probably 3 wells to begin with to drill in Morocco next year from early part of the year onwards. So, we got the rig capacity when the Atwood coming later in the year, which is three year contract, and we better intent on a second rig starting in the first quarter. Final plans around the exploration program in terms of the scheduling, the ordering of the wells is kind of ongoing. My expectation is that the first well will be in the North. As we pointed out in the script a number of plays and fairways in those blocks both pre-salt and post-salt and the initial exploration program will probably designed around 2 wells to test to stand that prospect in the post-salt and to the stand that prospect in the pre-salt. For the South, we expect to be in a position to drill out later next year and that’s more straightforward, albeit dominantly structural play in the Cretaceous.
Brendan Warn – Jefferies: Second question and just going back to 10. Obviously the operated partner is looking to mitigate CapEx sold through some of sort of farm-out process. What’s your thinking about staying in the development in terms of funding CapEx or looking to monetize and is there anything sort of outstanding at the moment in terms of the license or contractual arrangement that would prevent you from monetizing or selling to another party?
Brian F. Maxted – CEO: It’s Brian. Let me take that one Brendan. Obviously, Tullow have announced plans to dilute there, potentially dilute their interests later this year. As you know, they have quite a material position in the development, I think over 50% or thereabouts. We’ve retained a 17% interest. So the idea of diluting it doesn’t make much sense. And we see – at this point we see the TEN development offering us the second slug of production beyond Jubilee. So as part of the asset in Ghana it’s quite an important piece for us and we think it’s affordable within the context of our five-year plan and we got the right capital allocated to the combination of development in Ghana in our exploration program. So at the moment we are comfortable where we are and there’s no plan to dilute at this point.