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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Kosmos Energy Ltd | NYSE:KOS | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-0.14 | -2.37% | 5.77 | 5.87 | 5.67 | 5.85 | 2,787,681 | 19:02:21 |
|
(Mark One)
|
|
☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Bermuda
|
|
98-0686001
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(State or other jurisdiction of
|
|
(I.R.S. Employer
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incorporation or organization)
|
|
Identification No.)
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Clarendon House
|
|
|
2 Church Street
|
|
|
Hamilton, Bermuda
|
|
HM 11
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(Address of principal executive offices)
|
|
(Zip Code)
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Large accelerated filer ☒
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|
Accelerated filer ☐
|
|
|
|
Non-accelerated filer ☐
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Smaller reporting company ☐
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(Do not check if a smaller reporting company)
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|
|
|
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Emerging growth company ☐
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Class
|
|
Outstanding at November 1, 2017
|
Common Shares, $0.01 par value
|
|
389,355,364
|
|
|
Page
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PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
|
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PART II. OTHER INFORMATION
|
|
|
|
“2D seismic data”
|
Two-dimensional seismic data, serving as interpretive data that allows a view of a vertical cross-section beneath a prospective area.
|
|
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“3D seismic data”
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Three-dimensional seismic data, serving as geophysical data that depicts the subsurface strata in three dimensions. 3D seismic data typically provides a more detailed and accurate interpretation of the subsurface strata than 2D seismic data.
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|
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“API”
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A specific gravity scale, expressed in degrees, that denotes the relative density of various petroleum liquids. The scale increases inversely with density. Thus lighter petroleum liquids will have a higher API than heavier ones.
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|
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“ASC”
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Financial Accounting Standards Board Accounting Standards Codification.
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|
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“ASU”
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Financial Accounting Standards Board Accounting Standards Update.
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|
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“Barrel” or “Bbl”
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A standard measure of volume for petroleum corresponding to approximately 42 gallons at 60 degrees Fahrenheit.
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“BBbl”
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Billion barrels of oil.
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“BBoe”
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Billion barrels of oil equivalent.
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“Bcf”
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Billion cubic feet.
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“Boe”
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Barrels of oil equivalent. Volumes of natural gas converted to barrels of oil using a conversion factor of 6,000 cubic feet of natural gas to one barrel of oil.
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“Boepd”
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Barrels of oil equivalent per day.
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“Bopd”
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Barrels of oil per day.
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“Bwpd”
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Barrels of water per day.
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“Debt cover ratio”
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The “debt cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) total long-term debt less cash and cash equivalents and restricted cash, to (y) the aggregate EBITDAX (see below) of the Company for the previous twelve months.
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“Developed acreage”
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The number of acres that are allocated or assignable to productive wells or wells capable of production.
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“Development”
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The phase in which an oil or natural gas field is brought into production by drilling development wells and installing appropriate production systems.
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“Dry hole”
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A well that has not encountered a hydrocarbon bearing reservoir expected to produce in commercial quantities.
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“EBITDAX”
|
Net income (loss) plus (i) exploration expense, (ii) depletion, depreciation and amortization expense, (iii) equity-based compensation expense, (iv) unrealized (gain) loss on commodity derivatives (realized losses are deducted and realized gains are added back), (v) (gain) loss on sale of oil and gas properties, (vi) interest (income) expense, (vii) income taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts expense and (x) similar other material items which management believes affect the comparability of operating results.
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“E&P”
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Exploration and production.
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“FASB”
|
Financial Accounting Standards Board.
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“Farm-in”
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An agreement whereby a party acquires a portion of the participating interest in a block from the owner of such interest, usually in return for cash and for taking on a portion of the drilling costs of one or more specific wells or other performance by the assignee as a condition of the assignment.
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“Farm-out”
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An agreement whereby the owner of the participating interest agrees to assign a portion of its participating interest in a block to another party for cash and/or for the assignee taking on a portion of the drilling costs of one or more specific wells and/or other work as a condition of the assignment.
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“Field life cover ratio”
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The “field life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) the forecasted net present value of net cash flow through depletion plus the net present value of the forecast of certain capital expenditures incurred in relation to the Ghana assets, to (y) the aggregate loan amounts outstanding under the Facility less the Resource Bridge, as applicable.
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“FPSO”
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Floating production, storage and offloading vessel.
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“Interest cover ratio”
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The “interest cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) the aggregate EBITDAX (see above) of the Company for the previous twelve months, to (y) interest expense less interest income for the Company for the previous twelve months.
|
|
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“Loan life cover ratio”
|
The “loan life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) net present value of forecasted net cash flow through the final maturity date of the Facility plus the net present value of forecasted capital expenditures incurred in relation to the Jubilee Field and certain other fields in Ghana, to (y) the aggregate loan amounts outstanding under the Facility less the Resource Bridge, as applicable.
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September 30,
2017 |
|
December 31,
2016 |
||||
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(Unaudited)
|
|
|
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
164,162
|
|
|
$
|
194,057
|
|
Restricted cash
|
55,852
|
|
|
24,506
|
|
||
Receivables:
|
|
|
|
||||
Joint interest billings, net
|
75,373
|
|
|
63,249
|
|
||
Oil sales
|
51,726
|
|
|
54,195
|
|
||
Related party
|
6,446
|
|
|
—
|
|
||
Other
|
15,756
|
|
|
25,893
|
|
||
Inventories
|
74,275
|
|
|
74,380
|
|
||
Prepaid expenses and other
|
9,359
|
|
|
7,209
|
|
||
Derivatives
|
16,200
|
|
|
31,698
|
|
||
Total current assets
|
469,149
|
|
|
475,187
|
|
||
Property and equipment:
|
|
|
|
|
|
||
Oil and gas properties, net
|
2,251,977
|
|
|
2,700,889
|
|
||
Other property, net
|
6,424
|
|
|
8,003
|
|
||
Property and equipment, net
|
2,258,401
|
|
|
2,708,892
|
|
||
Other assets:
|
|
|
|
|
|
||
Equity method investment
|
122,664
|
|
|
—
|
|
||
Restricted cash
|
15,194
|
|
|
54,632
|
|
||
Long-term receivables - joint interest billings
|
47,525
|
|
|
45,663
|
|
||
Deferred financing costs, net of accumulated amortization of $13,267 and $11,213 at September 30, 2017 and December 31, 2016, respectively
|
3,194
|
|
|
5,248
|
|
||
Long-term deferred tax assets
|
34,546
|
|
|
37,827
|
|
||
Derivatives
|
2,412
|
|
|
3,808
|
|
||
Other
|
17,363
|
|
|
10,208
|
|
||
Total assets
|
$
|
2,970,448
|
|
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$
|
3,341,465
|
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Liabilities and shareholders’ equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
$
|
100,302
|
|
|
$
|
220,627
|
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Accrued liabilities
|
173,804
|
|
|
129,706
|
|
||
Derivatives
|
9,016
|
|
|
19,692
|
|
||
Total current liabilities
|
283,122
|
|
|
370,025
|
|
||
Long-term liabilities:
|
|
|
|
|
|
||
Long-term debt, net
|
1,080,352
|
|
|
1,321,874
|
|
||
Derivatives
|
7,256
|
|
|
14,123
|
|
||
Asset retirement obligations
|
68,713
|
|
|
63,574
|
|
||
Deferred tax liabilities
|
511,891
|
|
|
482,221
|
|
||
Other long-term liabilities
|
9,871
|
|
|
8,449
|
|
||
Total long-term liabilities
|
1,678,083
|
|
|
1,890,241
|
|
||
Shareholders’ equity:
|
|
|
|
|
|
||
Preference shares, $0.01 par value; 200,000,000 authorized shares; zero issued at September 30, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Common shares, $0.01 par value; 2,000,000,000 authorized shares; 398,545,540 and 395,859,061 issued at September 30, 2017 and December 31, 2016, respectively
|
3,985
|
|
|
3,959
|
|
||
Additional paid-in capital
|
2,004,578
|
|
|
1,975,247
|
|
||
Accumulated deficit
|
(951,123
|
)
|
|
(850,410
|
)
|
||
Treasury stock, at cost, 9,188,819 and 9,101,395 shares at September 30, 2017 and December 31, 2016, respectively
|
(48,197
|
)
|
|
(47,597
|
)
|
||
Total shareholders’ equity
|
1,009,243
|
|
|
1,081,199
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,970,448
|
|
|
$
|
3,341,465
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenues and other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil and gas revenue
|
$
|
151,240
|
|
|
$
|
46,628
|
|
|
$
|
391,035
|
|
|
$
|
154,259
|
|
Other income, net
|
2
|
|
|
20,001
|
|
|
58,697
|
|
|
20,179
|
|
||||
Total revenues and other income
|
151,242
|
|
|
66,629
|
|
|
449,732
|
|
|
174,438
|
|
||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Oil and gas production
|
39,187
|
|
|
13,574
|
|
|
80,677
|
|
|
75,647
|
|
||||
Facilities insurance modifications, net
|
(3,906
|
)
|
|
5,946
|
|
|
(1,334
|
)
|
|
5,946
|
|
||||
Exploration expenses
|
36,983
|
|
|
66,238
|
|
|
162,679
|
|
|
126,498
|
|
||||
General and administrative
|
20,029
|
|
|
21,914
|
|
|
50,555
|
|
|
59,672
|
|
||||
Depletion and depreciation
|
73,490
|
|
|
17,838
|
|
|
180,909
|
|
|
66,031
|
|
||||
Interest and other financing costs, net
|
18,478
|
|
|
11,066
|
|
|
54,729
|
|
|
30,268
|
|
||||
Derivatives, net
|
26,864
|
|
|
(16,891
|
)
|
|
(36,404
|
)
|
|
33,752
|
|
||||
Other expenses, net
|
5,037
|
|
|
(795
|
)
|
|
14,233
|
|
|
13,768
|
|
||||
Total costs and expenses
|
216,162
|
|
|
118,890
|
|
|
506,044
|
|
|
411,582
|
|
||||
Loss before income taxes
|
(64,920
|
)
|
|
(52,261
|
)
|
|
(56,312
|
)
|
|
(237,144
|
)
|
||||
Income tax expense (benefit)
|
(1,515
|
)
|
|
7,502
|
|
|
44,401
|
|
|
(10,064
|
)
|
||||
Net loss
|
$
|
(63,405
|
)
|
|
$
|
(59,763
|
)
|
|
$
|
(100,713
|
)
|
|
$
|
(227,080
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(0.16
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
Diluted
|
$
|
(0.16
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares used to compute net loss per share:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
389,058
|
|
|
386,026
|
|
|
388,114
|
|
|
385,130
|
|
||||
Diluted
|
389,058
|
|
|
386,026
|
|
|
388,114
|
|
|
385,130
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
|
|||||||||||
|
Common Shares
|
|
Paid-in
|
|
Accumulated
|
|
Treasury
|
|
|
|||||||||||||
|
Shares
|
|
Amount
|
|
Capital
|
|
Deficit
|
|
Stock
|
|
Total
|
|||||||||||
Balance as of December 31, 2016
|
395,859
|
|
|
$
|
3,959
|
|
|
$
|
1,975,247
|
|
|
$
|
(850,410
|
)
|
|
$
|
(47,597
|
)
|
|
$
|
1,081,199
|
|
Equity-based compensation
|
—
|
|
|
—
|
|
|
30,873
|
|
|
—
|
|
|
—
|
|
|
30,873
|
|
|||||
Restricted stock awards and units
|
2,686
|
|
|
26
|
|
|
(26
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase of treasury stock
|
—
|
|
|
—
|
|
|
(1,516
|
)
|
|
—
|
|
|
(600
|
)
|
|
(2,116
|
)
|
|||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(100,713
|
)
|
|
—
|
|
|
(100,713
|
)
|
|||||
Balance as of September 30, 2017
|
398,545
|
|
|
$
|
3,985
|
|
|
$
|
2,004,578
|
|
|
$
|
(951,123
|
)
|
|
$
|
(48,197
|
)
|
|
$
|
1,009,243
|
|
|
Nine Months Ended September 30,
|
||||||
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
|
|
||
Net loss
|
$
|
(100,713
|
)
|
|
$
|
(227,080
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depletion, depreciation and amortization
|
188,563
|
|
|
73,684
|
|
||
Deferred income taxes
|
32,820
|
|
|
(16,821
|
)
|
||
Unsuccessful well costs
|
24,515
|
|
|
2,609
|
|
||
Change in fair value of derivatives
|
(25,924
|
)
|
|
37,179
|
|
||
Cash settlements on derivatives, net (including $36.4 million and $146.5 million on commodity hedges during 2017 and 2016)
|
25,275
|
|
|
144,522
|
|
||
Equity-based compensation
|
29,945
|
|
|
30,391
|
|
||
Loss on equity method investment
|
11,230
|
|
|
—
|
|
||
Other
|
3,412
|
|
|
13,358
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Decrease in receivables
|
3,232
|
|
|
29,833
|
|
||
(Increase) decrease in inventories
|
58
|
|
|
(12,066
|
)
|
||
(Increase) decrease in prepaid expenses and other
|
(19,327
|
)
|
|
15,164
|
|
||
Decrease in accounts payable
|
(120,325
|
)
|
|
(122,142
|
)
|
||
Increase (decrease) in accrued liabilities
|
41,651
|
|
|
(34,254
|
)
|
||
Net cash provided by (used in) operating activities
|
94,412
|
|
|
(65,623
|
)
|
||
Investing activities
|
|
|
|
|
|
||
Oil and gas assets
|
(100,712
|
)
|
|
(506,256
|
)
|
||
Other property
|
(1,639
|
)
|
|
(1,003
|
)
|
||
Proceeds on sale of assets
|
222,068
|
|
|
210
|
|
||
Net cash provided by (used in) investing activities
|
119,717
|
|
|
(507,049
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Borrowings under long-term debt
|
—
|
|
|
450,000
|
|
||
Payments on long-term debt
|
(250,000
|
)
|
|
—
|
|
||
Purchase of treasury stock
|
(2,116
|
)
|
|
(1,930
|
)
|
||
Net cash provided by (used in) financing activities
|
(252,116
|
)
|
|
448,070
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(37,987
|
)
|
|
(124,602
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
273,195
|
|
|
310,862
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
235,208
|
|
|
$
|
186,260
|
|
|
|
|
|
||||
Supplemental cash flow information
|
|
|
|
|
|
||
Cash paid for:
|
|
|
|
|
|
||
Interest
|
$
|
48,694
|
|
|
$
|
25,540
|
|
Income taxes
|
$
|
27,199
|
|
|
$
|
6,997
|
|
Non-cash activity:
|
|
|
|
|
|
||
Conversion of joint interest billings receivable to long-term note receivable
|
$
|
—
|
|
|
$
|
8,124
|
|
Contribution to equity method investment
|
$
|
133,893
|
|
|
$
|
—
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
164,162
|
|
|
$
|
194,057
|
|
Restricted cash - current
|
55,852
|
|
|
24,506
|
|
||
Restricted cash - long-term
|
15,194
|
|
|
54,632
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
235,208
|
|
|
$
|
273,195
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Oil and gas properties:
|
|
|
|
|
|
||
Proved properties
|
$
|
1,371,641
|
|
|
$
|
1,385,331
|
|
Unproved properties
|
651,921
|
|
|
919,056
|
|
||
Support equipment and facilities
|
1,391,613
|
|
|
1,386,448
|
|
||
Total oil and gas properties
|
3,415,175
|
|
|
3,690,835
|
|
||
Accumulated depletion
|
(1,163,198
|
)
|
|
(989,946
|
)
|
||
Oil and gas properties, net
|
2,251,977
|
|
|
2,700,889
|
|
||
|
|
|
|
||||
Other property
|
38,124
|
|
|
37,186
|
|
||
Accumulated depreciation
|
(31,700
|
)
|
|
(29,183
|
)
|
||
Other property, net
|
6,424
|
|
|
8,003
|
|
||
|
|
|
|
||||
Property and equipment, net
|
$
|
2,258,401
|
|
|
$
|
2,708,892
|
|
|
September 30,
2017 |
||
|
(In thousands)
|
||
Beginning balance
|
$
|
734,463
|
|
Additions to capitalized exploratory well costs pending the determination of proved reserves
|
67,543
|
|
|
Reclassification due to determination of proved reserves
|
—
|
|
|
Divestitures(1)
|
(206,400
|
)
|
|
Contribution of oil and gas property to equity method investment
|
(131,764
|
)
|
|
Capitalized exploratory well costs charged to expense
|
—
|
|
|
Ending balance
|
$
|
463,842
|
|
(1)
|
Represents the reduction in basis of suspended well costs associated with the Mauritania and Senegal transactions with BP.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||
|
(In thousands, except well counts)
|
||||||
Exploratory well costs capitalized for a period of one year or less
|
$
|
65,606
|
|
|
$
|
279,809
|
|
Exploratory well costs capitalized for a period of one to two years
|
184,486
|
|
|
244,804
|
|
||
Exploratory well costs capitalized for a period of three to eight years
|
213,750
|
|
|
209,850
|
|
||
Ending balance
|
$
|
463,842
|
|
|
$
|
734,463
|
|
Number of projects that have exploratory well costs that have been capitalized for a period greater than one year
|
6
|
|
|
5
|
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Outstanding debt principal balances:
|
|
|
|
|
|
||
Facility
|
$
|
600,000
|
|
|
$
|
850,000
|
|
Senior Notes
|
525,000
|
|
|
525,000
|
|
||
Total
|
1,125,000
|
|
|
1,375,000
|
|
||
Unamortized deferred financing costs and discounts(1)
|
(44,648
|
)
|
|
(53,126
|
)
|
||
Long-term debt, net
|
$
|
1,080,352
|
|
|
$
|
1,321,874
|
|
(1)
|
Includes
$25.0 million
and
$30.3 million
of unamortized deferred financing costs related to the Facility and
$19.6 million
and
$22.8 million
of unamortized deferred financing costs and discounts related to the Senior Notes as of
September 30, 2017
and
December 31, 2016
, respectively.
|
|
Payments Due by Year
|
||||||||||||||||||||||||||
|
Total
|
|
2017(2)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Principal debt repayments(1)
|
$
|
1,125,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
404,971
|
|
|
$
|
719,652
|
|
|
$
|
—
|
|
(1)
|
Includes the scheduled principal maturities for the
$525.0 million
aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on, as of
September 30, 2017
, our level of borrowings and our estimated future available borrowing base commitment levels in future periods. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of
September 30, 2017
, there were
no
borrowings under the Corporate Revolver.
|
(2)
|
Represents payments for the period
October 1, 2017
through
December 31, 2017
.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Interest expense
|
$
|
22,961
|
|
|
$
|
23,057
|
|
|
$
|
68,934
|
|
|
$
|
65,829
|
|
Amortization—deferred financing costs
|
2,551
|
|
|
2,551
|
|
|
7,653
|
|
|
7,653
|
|
||||
Capitalized interest
|
(8,563
|
)
|
|
(15,545
|
)
|
|
(25,498
|
)
|
|
(49,575
|
)
|
||||
Deferred interest
|
662
|
|
|
663
|
|
|
1,610
|
|
|
406
|
|
||||
Interest income
|
(745
|
)
|
|
(485
|
)
|
|
(2,485
|
)
|
|
(1,319
|
)
|
||||
Other, net
|
1,612
|
|
|
825
|
|
|
4,515
|
|
|
7,274
|
|
||||
Interest and other financing costs, net
|
$
|
18,478
|
|
|
$
|
11,066
|
|
|
$
|
54,729
|
|
|
$
|
30,268
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Dated Brent Price per Bbl
|
|||||||||||||||||||||||
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
Premium
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Term
|
|
Type of Contract
|
|
MBbl
|
|
Payable, Net
|
|
Swap
|
|
Sold Put
|
|
Floor
|
|
Ceiling
|
|
Call
|
|||||||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
October — December
|
|
Swap with puts/calls
|
|
503
|
|
|
$
|
2.13
|
|
|
$
|
72.50
|
|
|
$
|
55.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
90.00
|
|
October — December
|
|
Swap with puts
|
|
503
|
|
|
—
|
|
|
64.95
|
|
|
50.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
October — December
|
|
Three-way collars
|
|
1,006
|
|
|
1.72
|
|
|
—
|
|
|
30.00
|
|
|
45.00
|
|
|
60.00
|
|
|
—
|
|
||||||
October — December
|
|
Sold calls(1)
|
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85.00
|
|
|
—
|
|
||||||
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
January — December
|
|
Swap with puts
|
|
2,000
|
|
|
$
|
—
|
|
|
$
|
54.32
|
|
|
$
|
40.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
January — December
|
|
Three-way collars
|
|
2,913
|
|
|
0.74
|
|
|
—
|
|
|
41.57
|
|
|
56.57
|
|
|
65.90
|
|
|
—
|
|
||||||
January — December
|
|
Four-way collars
|
|
3,000
|
|
|
1.06
|
|
|
—
|
|
|
40.00
|
|
|
50.00
|
|
|
61.33
|
|
|
70.00
|
|
||||||
January — December
|
|
Sold calls(1)
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65.00
|
|
|
—
|
|
||||||
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
January — December
|
|
Three-way collars
|
|
4,500
|
|
|
$
|
0.26
|
|
|
$
|
—
|
|
|
$
|
40.00
|
|
|
$
|
50.00
|
|
|
$
|
62.78
|
|
|
$
|
—
|
|
January — December
|
|
Sold calls(1)
|
|
913
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.00
|
|
|
—
|
|
(1)
|
Represents call option contracts sold to counterparties to enhance other derivative positions.
|
|
|
|
|
|
|
Weighted Average
|
||||||||
Term
|
|
Type of Contract
|
|
Floating Rate
|
|
Notional
|
|
Swap
|
|
Sold Call
|
||||
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
||||
October 2017 — December 2018
|
|
Capped swap
|
|
1-month LIBOR
|
|
$
|
200,000
|
|
|
1.23
|
%
|
|
3.00
|
%
|
|
|
|
|
Estimated Fair Value
|
||||||
|
|
|
|
Asset (Liability)
|
||||||
Type of Contract
|
|
Balance Sheet Location
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
|
|
|
(In thousands)
|
||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
||||
Derivative assets:
|
|
|
|
|
|
|
||||
Commodity(1)
|
|
Derivatives assets—current
|
|
$
|
15,811
|
|
|
$
|
31,698
|
|
Interest rate
|
|
Derivatives assets—current
|
|
389
|
|
|
—
|
|
||
Commodity(2)
|
|
Derivatives assets—long-term
|
|
2,107
|
|
|
3,226
|
|
||
Interest rate
|
|
Derivatives assets—long-term
|
|
305
|
|
|
582
|
|
||
Derivative liabilities:
|
|
|
|
|
|
|
||||
Commodity(3)
|
|
Derivatives liabilities—current
|
|
(9,016
|
)
|
|
(19,163
|
)
|
||
Interest rate
|
|
Derivatives liabilities—current
|
|
—
|
|
|
(529
|
)
|
||
Commodity(4)
|
|
Derivatives liabilities—long-term
|
|
(7,256
|
)
|
|
(14,123
|
)
|
||
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
2,340
|
|
|
$
|
1,691
|
|
(1)
|
Includes net deferred premiums payable of
$2.0 million
and
$3.9 million
related to commodity derivative contracts as of
September 30, 2017
and
December 31, 2016
, respectively.
|
(2)
|
Includes net deferred premiums payable of
$0.7 million
and
$2.5 million
related to commodity derivative contracts as of
September 30, 2017
and
December 31, 2016
, respectively.
|
(3)
|
Includes
zero
and
$30.9 thousand
as of
September 30, 2017
and
December 31, 2016
, respectively, which represents our provisional oil sales contract. Also includes net deferred premiums payable of
$4.4 million
and
$6.2 million
related to commodity derivative contracts as of
September 30, 2017
and
December 31, 2016
, respectively.
|
(4)
|
Includes net deferred premiums payable of
$2.1 million
and
$0.6 million
related to commodity derivative contracts as of
September 30, 2017
and
December 31, 2016
, respectively.
|
|
|
|
|
Amount of Gain/(Loss)
|
|
Amount of Gain/(Loss)
|
||||||||||||
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
|
|
September 30,
|
|
September 30,
|
||||||||||||
Type of Contract
|
|
Location of Gain/(Loss)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
|
(In thousands)
|
||||||||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity(1)
|
|
Oil and gas revenue
|
|
$
|
(6,221
|
)
|
|
$
|
344
|
|
|
$
|
(10,781
|
)
|
|
$
|
(712
|
)
|
Commodity
|
|
Derivatives, net
|
|
(26,864
|
)
|
|
16,891
|
|
|
36,404
|
|
|
(33,752
|
)
|
||||
Interest rate
|
|
Interest expense
|
|
64
|
|
|
760
|
|
|
301
|
|
|
(2,715
|
)
|
||||
Total derivatives not designated as hedging instruments
|
|
|
|
$
|
(33,021
|
)
|
|
$
|
17,995
|
|
|
$
|
25,924
|
|
|
$
|
(37,179
|
)
|
(1)
|
Amounts represent the change in fair value of our provisional oil sales contracts.
|
•
|
Level 1 — quoted prices for identical assets or liabilities in active markets.
|
•
|
Level 2 — quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means.
|
•
|
Level 3 — unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
||||||||
|
(In thousands)
|
||||||||||||||
Senior Notes
|
$
|
506,594
|
|
|
$
|
545,874
|
|
|
$
|
503,716
|
|
|
$
|
528,938
|
|
Facility
|
600,000
|
|
|
600,000
|
|
|
850,000
|
|
|
850,000
|
|
||||
Total
|
$
|
1,106,594
|
|
|
$
|
1,145,874
|
|
|
$
|
1,353,716
|
|
|
$
|
1,378,938
|
|
|
|
|
Weighted-
|
|||
|
Service Vesting
|
|
Average
|
|||
|
Restricted Stock
|
|
Grant-Date
|
|||
|
Awards
|
|
Fair Value
|
|||
|
(In thousands)
|
|
|
|||
Outstanding at December 31, 2016
|
488
|
|
|
$
|
8.83
|
|
Granted
|
—
|
|
|
—
|
|
|
Forfeited
|
—
|
|
|
—
|
|
|
Vested
|
(268
|
)
|
|
8.97
|
|
|
Outstanding at September 30, 2017
|
220
|
|
|
8.64
|
|
|
|
|
Weighted-
|
|
Market / Service
|
|
Weighted-
|
||||||
|
Service Vesting
|
|
Average
|
|
Vesting
|
|
Average
|
||||||
|
Restricted Stock
|
|
Grant-Date
|
|
Restricted Stock
|
|
Grant-Date
|
||||||
|
Units
|
|
Fair Value
|
|
Units
|
|
Fair Value
|
||||||
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
Outstanding at December 31, 2016
|
4,160
|
|
|
$
|
6.91
|
|
|
7,194
|
|
|
$
|
12.29
|
|
Granted
|
2,063
|
|
|
6.41
|
|
|
2,170
|
|
|
9.50
|
|
||
Forfeited
|
(123
|
)
|
|
7.03
|
|
|
(27
|
)
|
|
7.76
|
|
||
Vested
|
(1,864
|
)
|
|
7.50
|
|
|
(894
|
)
|
|
15.44
|
|
||
Outstanding at September 30, 2017
|
4,236
|
|
|
6.40
|
|
|
8,443
|
|
|
11.26
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Bermuda
|
$
|
(17,740
|
)
|
|
$
|
(15,989
|
)
|
|
$
|
(50,680
|
)
|
|
$
|
(47,212
|
)
|
United States
|
1,437
|
|
|
1,132
|
|
|
4,231
|
|
|
5,447
|
|
||||
Foreign—other
|
(48,617
|
)
|
|
(37,404
|
)
|
|
(9,863
|
)
|
|
(195,379
|
)
|
||||
Income (loss) before income taxes
|
$
|
(64,920
|
)
|
|
$
|
(52,261
|
)
|
|
$
|
(56,312
|
)
|
|
$
|
(237,144
|
)
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
September 30,
|
|
September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net loss
|
$
|
(63,405
|
)
|
|
$
|
(59,763
|
)
|
|
$
|
(100,713
|
)
|
|
$
|
(227,080
|
)
|
Basic income allocable to participating securities(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Basic net loss allocable to common shareholders
|
(63,405
|
)
|
|
(59,763
|
)
|
|
(100,713
|
)
|
|
(227,080
|
)
|
||||
Diluted adjustments to income allocable to participating securities(1)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted net loss allocable to common shareholders
|
$
|
(63,405
|
)
|
|
$
|
(59,763
|
)
|
|
$
|
(100,713
|
)
|
|
$
|
(227,080
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
389,058
|
|
|
386,026
|
|
|
388,114
|
|
|
385,130
|
|
||||
Restricted stock awards and units(1)(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Diluted
|
389,058
|
|
|
386,026
|
|
|
388,114
|
|
|
385,130
|
|
||||
Net loss per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.16
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
Diluted
|
$
|
(0.16
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.59
|
)
|
(1)
|
Our service vesting restricted stock awards represent participating securities because they participate in non-forfeitable dividends with common equity owners. Income allocable to participating securities represents the distributed and undistributed earnings attributable to the participating securities. Our restricted stock awards with market and service vesting criteria and all restricted stock units are not considered to be participating securities and, therefore, are excluded from the basic net
loss
per common share calculation. Our service vesting restricted stock awards do not participate in undistributed net losses because they are not contractually obligated to do so and, therefore, are excluded from the basic net
loss
per common share calculation in periods we are in a net loss position.
|
(2)
|
We excluded outstanding restricted stock awards and units of
12.9 million
and
12.0 million
for the
three and nine
months ended
September 30, 2017
and
2016
, respectively, from the computations of diluted net
loss
per share because the effect would have been anti-dilutive
.
|
|
Payments Due By Year(1)
|
||||||||||||||||||||||||||
|
Total
|
|
2017(2)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Operating leases(3)
|
$
|
9,910
|
|
|
$
|
1,158
|
|
|
$
|
4,736
|
|
|
$
|
3,951
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ENSCO DS-12 drilling rig contract
|
25,585
|
|
|
25,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts.
|
(2)
|
Represents payments for the period from
October 1, 2017
through
December 31, 2017
.
|
(3)
|
Primarily relates to corporate office and foreign office leases.
|
|
September 30,
2017 |
|
December 31,
2016 |
||||
|
(In thousands)
|
||||||
Accrued liabilities:
|
|
|
|
|
|
||
Exploration, development and production
|
$
|
130,543
|
|
|
$
|
76,194
|
|
General and administrative expenses
|
26,823
|
|
|
31,243
|
|
||
Interest
|
9,180
|
|
|
17,247
|
|
||
Income taxes
|
3,145
|
|
|
2,579
|
|
||
Taxes other than income
|
3,941
|
|
|
1,914
|
|
||
Other
|
172
|
|
|
529
|
|
||
|
$
|
173,804
|
|
|
$
|
129,706
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands)
|
||||||||||||||
Inventory write-off
|
$
|
(500
|
)
|
|
$
|
—
|
|
|
$
|
47
|
|
|
$
|
15,177
|
|
(Gain) loss on insurance settlements
|
—
|
|
|
(3,047
|
)
|
|
(461
|
)
|
|
(4,003
|
)
|
||||
Disputed charges and related costs
|
821
|
|
|
1,826
|
|
|
3,260
|
|
|
1,826
|
|
||||
Loss on equity method investment
|
4,804
|
|
|
—
|
|
|
11,230
|
|
|
—
|
|
||||
Other, net
|
(88
|
)
|
|
426
|
|
|
157
|
|
|
768
|
|
||||
Other expenses, net
|
$
|
5,037
|
|
|
$
|
(795
|
)
|
|
$
|
14,233
|
|
|
$
|
13,768
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
(In thousands, except per barrel data)
|
||||||||||||||
Sales volumes (MBbl):
|
|
|
|
|
|
|
|
||||||||
Jubilee
|
1,943
|
|
|
947
|
|
|
5,838
|
|
|
3,791
|
|
||||
TEN
|
996
|
|
|
—
|
|
|
1,992
|
|
|
—
|
|
||||
Total sales volumes
|
2,939
|
|
|
947
|
|
|
7,830
|
|
|
3,791
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Oil and gas sales
|
$
|
151,240
|
|
|
$
|
46,628
|
|
|
$
|
391,035
|
|
|
$
|
154,259
|
|
Average sales price per Boe
|
51.46
|
|
|
49.24
|
|
|
49.94
|
|
|
40.69
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Costs:
|
|
|
|
|
|
|
|
||||||||
Oil and gas production, excluding workovers
|
$
|
38,118
|
|
|
$
|
13,525
|
|
|
$
|
79,110
|
|
|
$
|
75,587
|
|
Oil and gas production, workovers
|
1,069
|
|
|
49
|
|
|
1,567
|
|
|
60
|
|
||||
Total oil and gas production costs
|
$
|
39,187
|
|
|
$
|
13,574
|
|
|
$
|
80,677
|
|
|
$
|
75,647
|
|
|
|
|
|
|
|
|
|
||||||||
Depletion and depreciation
|
$
|
73,490
|
|
|
$
|
17,838
|
|
|
$
|
180,909
|
|
|
$
|
66,031
|
|
|
|
|
|
|
|
|
|
||||||||
Average cost per Boe:
|
|
|
|
|
|
|
|
||||||||
Oil and gas production, excluding workovers
|
$
|
12.97
|
|
|
$
|
14.28
|
|
|
$
|
10.10
|
|
|
$
|
19.94
|
|
Oil and gas production, workovers
|
0.36
|
|
|
0.05
|
|
|
0.20
|
|
|
0.02
|
|
||||
Total oil production costs
|
13.33
|
|
|
14.33
|
|
|
10.30
|
|
|
19.96
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Depletion and depreciation
|
25.01
|
|
|
18.84
|
|
|
23.10
|
|
|
17.42
|
|
||||
Oil and gas production cost and depletion costs
|
$
|
38.34
|
|
|
$
|
33.17
|
|
|
$
|
33.40
|
|
|
$
|
37.38
|
|
|
Actively Drilling or
|
|
Wells Suspended or
|
||||||||||||||||||||
|
Completing
|
|
Waiting on Completion
|
||||||||||||||||||||
|
Exploration
|
|
Development
|
|
Exploration
|
|
Development
|
||||||||||||||||
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||||
Ghana
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Jubilee Unit
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
0.48
|
|
West Cape Three Points
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9
|
|
|
2.78
|
|
|
—
|
|
|
—
|
|
TEN
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
0.85
|
|
Deepwater Tano
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.18
|
|
|
—
|
|
|
—
|
|
Mauritania
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
C8
|
1
|
|
|
0.28
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
0.84
|
|
|
—
|
|
|
—
|
|
Senegal (KBSL - equity method investment)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Saint Louis Offshore Profond
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
0.30
|
|
|
—
|
|
|
—
|
|
Cayar Profond
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
0.60
|
|
|
—
|
|
|
—
|
|
Total
|
1
|
|
|
0.28
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
4.70
|
|
|
7
|
|
|
1.33
|
|
|
Three Months Ended
|
|
|
||||||||
|
September 30,
|
|
Increase
|
||||||||
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
(In thousands)
|
||||||||||
Revenues and other income:
|
|
|
|
|
|
|
|
|
|||
Oil and gas revenue
|
$
|
151,240
|
|
|
$
|
46,628
|
|
|
$
|
104,612
|
|
Other income, net
|
2
|
|
|
20,001
|
|
|
(19,999
|
)
|
|||
Total revenues and other income
|
151,242
|
|
|
66,629
|
|
|
84,613
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Oil and gas production
|
39,187
|
|
|
13,574
|
|
|
25,613
|
|
|||
Facilities insurance modifications, net
|
(3,906
|
)
|
|
5,946
|
|
|
(9,852
|
)
|
|||
Exploration expenses
|
36,983
|
|
|
66,238
|
|
|
(29,255
|
)
|
|||
General and administrative
|
20,029
|
|
|
21,914
|
|
|
(1,885
|
)
|
|||
Depletion and depreciation
|
73,490
|
|
|
17,838
|
|
|
55,652
|
|
|||
Interest and other financing costs, net
|
18,478
|
|
|
11,066
|
|
|
7,412
|
|
|||
Derivatives, net
|
26,864
|
|
|
(16,891
|
)
|
|
43,755
|
|
|||
Other expenses, net
|
5,037
|
|
|
(795
|
)
|
|
5,832
|
|
|||
Total costs and expenses
|
216,162
|
|
|
118,890
|
|
|
97,272
|
|
|||
Loss before income taxes
|
(64,920
|
)
|
|
(52,261
|
)
|
|
(12,659
|
)
|
|||
Income tax expense (benefit)
|
(1,515
|
)
|
|
7,502
|
|
|
(9,017
|
)
|
|||
Net loss
|
$
|
(63,405
|
)
|
|
$
|
(59,763
|
)
|
|
$
|
(3,642
|
)
|
|
Nine Months Ended
|
|
|
||||||||
|
September 30,
|
|
Increase
|
||||||||
|
2017
|
|
2016
|
|
(Decrease)
|
||||||
|
(In thousands)
|
||||||||||
Revenues and other income:
|
|
|
|
|
|
|
|
|
|||
Oil and gas revenue
|
$
|
391,035
|
|
|
$
|
154,259
|
|
|
$
|
236,776
|
|
Other income, net
|
58,697
|
|
|
20,179
|
|
|
38,518
|
|
|||
Total revenues and other income
|
449,732
|
|
|
174,438
|
|
|
275,294
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|||
Oil and gas production
|
80,677
|
|
|
75,647
|
|
|
5,030
|
|
|||
Facilities insurance modifications, net
|
(1,334
|
)
|
|
5,946
|
|
|
(7,280
|
)
|
|||
Exploration expenses
|
162,679
|
|
|
126,498
|
|
|
36,181
|
|
|||
General and administrative
|
50,555
|
|
|
59,672
|
|
|
(9,117
|
)
|
|||
Depletion and depreciation
|
180,909
|
|
|
66,031
|
|
|
114,878
|
|
|||
Interest and other financing costs, net
|
54,729
|
|
|
30,268
|
|
|
24,461
|
|
|||
Derivatives, net
|
(36,404
|
)
|
|
33,752
|
|
|
(70,156
|
)
|
|||
Other expenses, net
|
14,233
|
|
|
13,768
|
|
|
465
|
|
|||
Total costs and expenses
|
506,044
|
|
|
411,582
|
|
|
94,462
|
|
|||
Loss before income taxes
|
(56,312
|
)
|
|
(237,144
|
)
|
|
180,832
|
|
|||
Income tax expense (benefit)
|
44,401
|
|
|
(10,064
|
)
|
|
54,465
|
|
|||
Net loss
|
$
|
(100,713
|
)
|
|
$
|
(227,080
|
)
|
|
$
|
126,367
|
|
|
Nine Months Ended
|
||||||
|
September 30,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Sources of cash, cash equivalents and restricted cash:
|
|
|
|
|
|
||
Net cash provided by (used in) operating activities
|
$
|
94,412
|
|
|
$
|
(65,623
|
)
|
Borrowings under long-term debt
|
—
|
|
|
450,000
|
|
||
Proceeds on sale of assets
|
222,068
|
|
|
210
|
|
||
|
316,480
|
|
|
384,587
|
|
||
Uses of cash, cash equivalents and restricted cash:
|
|
|
|
|
|
||
Oil and gas assets
|
100,712
|
|
|
506,256
|
|
||
Other property
|
1,639
|
|
|
1,003
|
|
||
Payments on long-term debt
|
250,000
|
|
|
—
|
|
||
Purchase of treasury stock
|
2,116
|
|
|
1,930
|
|
||
|
354,467
|
|
|
509,189
|
|
||
Decrease in cash, cash equivalents and restricted cash
|
$
|
(37,987
|
)
|
|
$
|
(124,602
|
)
|
|
September 30, 2017
|
||
|
(In thousands)
|
||
Cash and cash equivalents
|
$
|
164,162
|
|
Restricted cash
|
71,046
|
|
|
Senior Notes at par
|
525,000
|
|
|
Drawings under the Facility
|
600,000
|
|
|
Net debt
|
$
|
889,792
|
|
|
|
|
|
Availability under the Facility
|
$
|
700,811
|
|
Availability under the Corporate Revolver
|
$
|
400,000
|
|
Available borrowings plus cash and cash equivalents
|
$
|
1,264,973
|
|
•
|
fund asset integrity projects at Jubilee;
|
•
|
execute exploration and appraisal activities in our Senegal and Mauritania license areas; and
|
•
|
acquire and analyze seismic, perform new ventures and manage our rig activities.
|
|
Payments Due By Year(5)
|
||||||||||||||||||||||||||
|
Total
|
|
2017(6)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
||||||||||||||
|
(In thousands)
|
||||||||||||||||||||||||||
Principal debt repayments(1)
|
$
|
1,125,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
404,971
|
|
|
$
|
719,652
|
|
|
$
|
—
|
|
Interest payments on long-term debt(2)
|
281,477
|
|
|
11,406
|
|
|
82,056
|
|
|
75,351
|
|
|
67,448
|
|
|
45,216
|
|
|
—
|
|
|||||||
Operating leases(3)
|
9,910
|
|
|
1,158
|
|
|
4,736
|
|
|
3,951
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|||||||
ENSCO DS-12 drilling rig contract(4)
|
25,585
|
|
|
25,585
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
(1)
|
Includes the scheduled principal maturities for the $525.0 million aggregate principal amount of Senior Notes issued in August 2014 and April 2015 and the Facility. The scheduled maturities of debt related to the Facility are based on, as of
September 30, 2017
, our level of borrowings and our estimated future available borrowing base commitment levels in future periods. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of
September 30, 2017
, there were no borrowings under the Corporate Revolver.
|
(2)
|
Based on outstanding borrowings as noted in (1) above and the LIBOR yield curves plus applicable margin at the reporting date and commitment fees related to the Facility and Corporate Revolver and the interest on the Senior Notes.
|
(3)
|
Primarily relates to corporate office and foreign office leases.
|
(4)
|
In January 2017, Kosmos Energy Ventures (“KEV”) exercised its option to cancel the fourth year and revert to the original day rate of approximately $0.6 million per day and original agreement end date in November 2017. Commitments were calculated using the original day rate of $0.6 million, excluding applicable taxes.
|
(5)
|
Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments and seismic obligations, in our petroleum contracts.
|
(6)
|
Represents the period from
October 1, 2017
through
December 31, 2017
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
(Liability)
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
||||||||||||||
|
Years Ending December 31,
|
|
September 30,
|
||||||||||||||||||||||||
|
2017(5)
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Thereafter
|
|
2017
|
||||||||||||||
|
(In thousands, except percentages)
|
||||||||||||||||||||||||||
Fixed rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Senior Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
525,000
|
|
|
$
|
—
|
|
|
$
|
(545,874
|
)
|
Fixed interest rate
|
7.88
|
%
|
|
7.88
|
%
|
|
7.88
|
%
|
|
7.88
|
%
|
|
7.88
|
%
|
|
—
|
|
|
|
||||||||
Variable rate debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Facility(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
377
|
|
|
$
|
404,971
|
|
|
$
|
194,652
|
|
|
$
|
—
|
|
|
$
|
(600,000
|
)
|
Weighted average interest rate(2)
|
4.50
|
%
|
|
5.19
|
%
|
|
5.59
|
%
|
|
6.18
|
%
|
|
6.55
|
%
|
|
—
|
|
|
|
|
|||||||
Capped interest rate swaps:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Notional debt amount
|
$
|
200,000
|
|
|
$
|
200,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
694
|
|
Cap
|
3.00
|
%
|
|
3.00
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|||||||
Average fixed rate payable(3)
|
1.23
|
%
|
|
1.23
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|||||||
Variable rate receivable(4)
|
1.26
|
%
|
|
1.57
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(1)
|
The amounts included in the table represent principal maturities only. The scheduled maturities of debt are based on the level of borrowings and the available borrowing base as of
September 30, 2017
. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter. As of
September 30, 2017
, there were no borrowings under the Corporate Revolver.
|
(2)
|
Based on outstanding borrowings as noted in (1) above and the LIBOR yield curves plus applicable margin at the reporting date. Excludes commitment fees related to the Facility and Corporate Revolver.
|
(3)
|
We expect to pay the fixed rate if 1-month LIBOR is below the cap, and pay the market rate less the spread between the cap and the fixed rate if LIBOR is above the cap, net of the capped interest rate swaps.
|
(4)
|
Based on implied forward rates in the yield curve at the reporting date.
|
(5)
|
Represents the period
October 1, 2017
through
December 31, 2017
.
|
•
|
our ability to find, acquire or gain access to other discoveries and prospects and to successfully develop and produce from our current discoveries and prospects;
|
•
|
uncertainties inherent in making estimates of our oil and natural gas data;
|
•
|
the successful implementation of our and our block partners’ prospect discovery and development and drilling plans;
|
•
|
projected and targeted capital expenditures and other costs, commitments and revenues;
|
•
|
termination of or intervention in concessions, rights or authorizations granted by the governments of Ghana, Mauritania, Morocco, Sao Tome and Principe, Senegal or Suriname (or their respective national oil companies) or any other federal, state or local governments or authorities, to us;
|
•
|
our dependence on our key management personnel and our ability to attract and retain qualified technical personnel;
|
•
|
the ability to obtain financing and to comply with the terms under which such financing may be available;
|
•
|
the volatility of oil and natural gas prices;
|
•
|
the availability, cost, function and reliability of developing appropriate infrastructure around and transportation to our discoveries and prospects;
|
•
|
the availability and cost of drilling rigs, production equipment, supplies, personnel and oilfield services;
|
•
|
other competitive pressures;
|
•
|
potential liabilities inherent in oil and natural gas operations, including drilling and production risks and other operational and environmental risks and hazards;
|
•
|
current and future government regulation of the oil and gas industry or regulation of the investment in or ability to do business with certain countries or regimes;
|
•
|
cost of compliance with laws and regulations;
|
•
|
changes in environmental, health and safety or climate change or greenhouse gas (“GHG”) laws and regulations or the implementation, or interpretation, of those laws and regulations;
|
•
|
adverse effects of sovereign boundary disputes in the jurisdictions in which we operate;
|
•
|
environmental liabilities;
|
•
|
geological, geophysical and other technical and operations, including drilling and oil and gas production and processing;
|
•
|
military operations, civil unrest, outbreaks of disease, terrorist acts, wars or embargoes;
|
•
|
the cost and availability of adequate insurance coverage and whether such coverage is enough to sufficiently mitigate potential losses and whether our insurers comply with their obligations under our coverage agreements;
|
•
|
our vulnerability to severe weather events;
|
•
|
our ability to meet our obligations under the agreements governing our indebtedness;
|
•
|
the availability and cost of financing and refinancing our indebtedness;
|
•
|
the amount of collateral required to be posted from time to time in our hedging transactions, letters of credit and other secured debt;
|
•
|
the result of any legal proceedings, arbitrations, or investigations we may be subject to or involved in;
|
•
|
our success in risk management activities, including the use of derivative financial instruments to hedge commodity and interest rate risks; and
|
•
|
other risk factors discussed in the “Item 1A. Risk Factors” section of this quarterly report on Form 10-Q and our annual report on Form 10-K.
|
|
Derivative Contracts Assets (Liabilities)
|
||||||||||
|
Commodities
|
|
Interest Rates
|
|
Total
|
||||||
|
(In thousands)
|
||||||||||
Fair value of contracts outstanding as of December 31, 2016
|
$
|
1,638
|
|
|
$
|
53
|
|
|
$
|
1,691
|
|
Changes in contract fair value
|
25,623
|
|
|
301
|
|
|
25,924
|
|
|||
Contract maturities
|
(25,615
|
)
|
|
340
|
|
|
(25,275
|
)
|
|||
Fair value of contracts outstanding as of September 30, 2017
|
$
|
1,646
|
|
|
$
|
694
|
|
|
$
|
2,340
|
|
|
|
|
|
|
|
Weighted Average Dated Brent Price per Bbl
|
|
Asset (Liability)
|
|||||||||||||||||||||||||
|
|
|
|
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at
|
|||||||||||||||
|
|
|
|
|
|
Premium
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|||||||||||||||
Term
|
|
Type of Contract
|
|
MBbl
|
|
Payable, Net
|
|
Swap
|
|
Sold Put
|
|
Floor
|
|
Ceiling
|
|
Call
|
|
2017(2)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
||||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
October — December
|
|
Swap with puts/calls
|
|
503
|
|
|
$
|
2.13
|
|
|
$
|
72.50
|
|
|
$
|
55.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
90.00
|
|
|
$
|
6,348
|
|
October — December
|
|
Swap with puts
|
|
503
|
|
|
—
|
|
|
64.95
|
|
|
50.00
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,073
|
|
|||||||
October — December
|
|
Three-way collars
|
|
1,006
|
|
|
1.72
|
|
|
—
|
|
|
30.00
|
|
|
45.00
|
|
|
60.00
|
|
|
—
|
|
|
(2,171
|
)
|
|||||||
October — December
|
|
Sold calls(1)
|
|
500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85.00
|
|
|
—
|
|
|
—
|
|
|||||||
2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
January — December
|
|
Swap with puts
|
|
2,000
|
|
|
$
|
—
|
|
|
$
|
54.32
|
|
|
$
|
40.00
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(3,611
|
)
|
January — December
|
|
Three-way collars
|
|
2,913
|
|
|
0.74
|
|
|
—
|
|
|
41.57
|
|
|
56.57
|
|
|
65.90
|
|
|
—
|
|
|
6,202
|
|
|||||||
January — December
|
|
Four-way collars
|
|
3,000
|
|
|
1.06
|
|
|
—
|
|
|
40.00
|
|
|
50.00
|
|
|
61.33
|
|
|
70.00
|
|
|
(2,589
|
)
|
|||||||
January — December
|
|
Sold calls(1)
|
|
2,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
65.00
|
|
|
—
|
|
|
(2,624
|
)
|
|||||||
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
January — December
|
|
Three-way collars
|
|
4,500
|
|
|
$
|
0.26
|
|
|
$
|
—
|
|
|
$
|
40.00
|
|
|
$
|
50.00
|
|
|
$
|
62.78
|
|
|
$
|
—
|
|
|
$
|
(3,609
|
)
|
January — December
|
|
Sold calls(1)
|
|
913
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80.00
|
|
|
—
|
|
|
(373
|
)
|
(1)
|
Represents call option contracts sold to counterparties to enhance other derivative positions.
|
(2)
|
Fair values are based on the average forward Dated Brent oil prices on
September 30, 2017
which by year are:
2017
— $56.38,
2018
— $55.51 and
2019
— $54.77. These fair values are subject to changes in the underlying commodity price. The average forward Dated Brent oil prices based on November 1, 2017 market quotes by year are:
2017
— $60.57,
2018
— $58.72 and
2019
— $56.53.
|
|
Total Number
|
|
Average
|
|||
|
of Shares
|
|
Price Paid
|
|||
|
Purchased
|
|
per Share
|
|||
|
(In thousands)
|
|
|
|||
January 1, 2017—January 31, 2017
|
74
|
|
|
$
|
7.01
|
|
February 1, 2017—February 28, 2017
|
—
|
|
|
—
|
|
|
March 1, 2017—March 31, 2017
|
—
|
|
|
—
|
|
|
April 1, 2017—April 30, 2017
|
—
|
|
|
—
|
|
|
May 1, 2017—May 31, 2017
|
—
|
|
|
—
|
|
|
June 1, 2017—June 30, 2017
|
13
|
|
|
6.12
|
|
|
July 1, 2017—July 31, 2017
|
—
|
|
|
—
|
|
|
August 1, 2017—August 31, 2017
|
—
|
|
|
—
|
|
|
September 1, 2017—September 30, 2017
|
—
|
|
|
—
|
|
|
Total
|
87
|
|
|
6.87
|
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information.
|
|
|
Kosmos Energy Ltd.
|
|
|
|
(Registrant)
|
|
|
|
|
|
Date
|
November 6, 2017
|
|
/s/ THOMAS P. CHAMBERS
|
|
|
Thomas P. Chambers
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
Exhibit
Number
|
|
Description of Document
|
10.1**
|
|
|
|
|
|
10.2**
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
1 Year Kosmos Energy Chart |
1 Month Kosmos Energy Chart |
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