Kosmos Energy Ltd. · NYSE:KOS
Kosmos Energy — Investor Day (February 2019)
83 slides from Kosmos Energy's investor day presentation, Feb 25, 2019
Slide 1: Capital Markets Event
Capital Markets Event 25 February 2019 NYSE/LSE: KOS Capital Markets Presentation February 25, 2019 0 Strictly Private and Confidential
Slide 2: Disclaimer
DISCLAIMER Forward-Looking Statements This presentation 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 presentation
Slide 3: The Kosmos Team
THE KOSMOS TEAM Kosmos Management Team In Attendance Andy Inglis Tom Chambers Tracey Henderson Richard Clark Chief Executive Officer Chief Financial Officer Chief Exploration Officer SVP, Gulf of Mexico Chris Ball Mike Anderson Todd Niebruegge Neal Shah Chief Commercial Officer SVP, External Affairs
Slide 4: Schedule
SCHEDULE Presentations commence: 14:00 Introduction • Andy Inglis Production Optimization and Exploitation • Andy Inglis • Richard Clark Infrastructure-Led Exploration • Tracey Henderson Q&A Break 15:15 – 15:45 Development of World-Scale Discoveries • Andy Inglis Basin-Opening Exploration • Tracey H
Slide 5: Introduction
INTRODUCTION Andy Inglis Strictly Private and Confidential
Slide 6: Capital Markets Event: Key Takeaways
CAPITAL MARKETS EVENT: KEY TAKEAWAYS Kosmos can fund 2019 Capex 8-10% production Resilient Business: its sustaining capex Reduction: CAGR 2018-2021 Low Cost and and dividends at maintained with From $500-$600mm Cash Generative $35/barrel Brent to $425-$475mm ~20% capex reduction Strategic Major Infr
Slide 7: What Makes Kosmos Unique?
WHAT MAKES KOSMOS UNIQUE? Ability To Generate High Returns And Create Shareholder Value Through The Cycle Disciplined World Class Exploration Rapid Cycle Portfolio Capital Assets Excellence Development Optimization Management QUALITY VALUE RIFLESHOT PAYBACK VALUE CREATION vs. vs. vs. vs. vs. QUANTIT
Slide 8: What Does the Kosmos Business Model Deliver?
WHAT DOES THE KOSMOS BUSINESS MODEL DELIVER? Kosmos Has The Portfolio And Capability To Deliver On Its Objectives Strong Free Cash Flow Generation Returns Driven Growth Deep, Diverse Portfolio Rich in Opportunity Focus on Total Shareholder Return Balance Sheet Strength and Financial Flexibil
Slide 9: Safe Operations Underpin License to Operate
SAFE OPERATIONS UNDERPIN LICENSE TO OPERATE Safety First 2018 Highlights Total Recordable Incident Rate (TRIR)1 1.5 • Largest operated activity set ever 1.0 – 6 wells drilled – >25,000 km² 3D seismic acquired (>15% of global proprietary IOGP - Global Offshore² Kosmos (2016-18)³ seismic in 2018) Lost
Slide 10: Growth Through Organic and Inorganic Activity
GROWTH THROUGH ORGANIC AND INORGANIC ACTIVITY Tripled Production And 2P Reserves In Two Years – No Shareholder Dilution 2016-18 Production And 2P Reserves1 Growth Net Production 2P Reserves 2016-18 CAGR: 2016-18 CAGR: ~85% ~90% 600 70 60 500 50 Production (mboepd) 400 Reserves (mmboe) 40 300 30 200
Slide 11: 2019: An Active Year for Exploration
2019: AN ACTIVE YEAR FOR EXPLORATION Drilling In Mauritania, Equatorial Guinea And Gulf Of Mexico Net Exploration Acreage In W. Africa & NE South America2 120,000 In 2019, Kosmos expects to drill 100,000 6 wells 80,000 1 Basin-opening well (Mauritania) 5 ILX wells (1 EG & 4 GoM) Km2 60,000 Targeting
Slide 12: Sustainable Growth From a Deep and Balanced Portfolio
SUSTAINABLE GROWTH FROM A DEEP AND BALANCED PORTFOLIO Goal To Double Production 2018-2025 From Existing Portfolio Forecast Production Growth (mboepd)1,2 ~130 100 80 60 mboepd GoM 40 EG 20 Ghana 0 2016 2017 2018 2019E 2020E 2021E 2025E 1. 2019 production of 71,000 barrels of oil per day uses midpoint
Slide 13: Disciplined Capital Allocation: 2019 Capex Reduced
DISCIPLINED CAPITAL ALLOCATION 2019 Capital Expenditure Reduced By ~20% 2019 Capital Expenditure: $425 – 475 million 600 Previous 2019 capex guidance 500 New 2019 guidance 400 GoM capex ~$500mm post acquisition 300 / year average 2019-21 2018 capex in 200 line with FY guidance 100 0 2018 2019E 2019-
Slide 14: Disciplined Capital Allocation: 2019-2021 Capital Program
DISCIPLINED CAPITAL ALLOCATION The 2019-2021 Capital Program Has Diversity And Built-In Flexibility Theme Geography Type Basin-Opening Other Basin-Opening Exploration Exploration Development of World- Mauritania / Senegal Growth Scale Discoveries (~55%) Infrastructure Led Exploration / Development G
Slide 15: Delivery of Free Cash Flow
DELIVERY OF FREE CASH FLOW ~$1 Billion Of Free Cash Flow Pre Dividends 2019-2021 At $60 Brent Strong Free Cash Flow1 500 Free Cash Flow 2019-21: ~$1 billion At $60/bbl Brent 400 300 ($m) 200 100 - 2017 2018 2019E 2020E 2021E 1. Free Cash Flow is pre-dividend and excl. the cash consideration for all
Slide 16: Balance Sheet Strength and Financial Flexibility
BALANCE SHEET STRENGTH AND FINANCIAL FLEXIBILITY Commitment To Shareholder Returns And Balance Sheet Strength Reduce Debt And Enhance Liquidity 4.0x Net Debt / EBITDAX covenant < 3.5x 3.5x 3.0x 2.5x 2.0x 1.5x Target Leverage Ratio: 1.0x – 1.5x 1.0x Debt reduction from: • Excess cash flow 0.5x • Proc
Slide 17: Focus on Shareholder Returns
FOCUS ON SHAREHOLDER RETURNS Commitment To Shareholder Returns And Balance Sheet Strength Shareholder Returns Balance Sheet Strength Dividend of $0.18 / share Target 1.0 – 1.5x for 2019 ~3.0% yield1 Net Debt / EBITDAX 2019-21 Use of Cash Flow From Operations ($ million) +Mauritania / Senegal Sell Do
Slide 18: Right Portfolio and Capability to Execute the Strategy
WE HAVE THE RIGHT PORTFOLIO AND CAPABILITY TO EXECUTE THE STRATEGY Sustainable Growth Across Our Short, Medium And Longer Cycle Business Units Growth From A Balanced Portfolio • Gulf of Mexico Production Optimization & Exploitation • Equatorial Guinea • Ghana • Gulf of Mexico Infrastructure-Led Expl
Slide 19: Production Optimization & Exploitation
PRODUCTION OPTIMIZATION & EXPLOITATION Andy Inglis Strictly Private and Confidential
Slide 20: Production Optimization & Exploitation: Key Takeaways
PRODUCTION OPTIMIZATION & EXPLOITATION: KEY TAKEAWAYS Strong Production Base Underpins The Value Of Kosmos Today Growing Base Production 2018-2021E (mboepd)2 Growth From Existing Reserve Base 80 2018: 1P Organic RRR1 >130% 60 Including Acquisitions >450% 40 High Margin 20 High Rate of Return 0 2018
Slide 21: Gulf of Mexico Overview
GULF OF MEXICO OVERVIEW DGE: Highly Experienced Deepwater Gulf of Mexico Operator >20 Years Experience Operating In The Deepwater GoM: ~900 mmboe discovered since 1994 Mariner DGE / Kosmos 1,000 900 800 95 Wells 35 Subsea Drilled 700 44 Operated Reserves (mmboe) Developments 600 18 Operated 500 400
Slide 22: Strong Track Record of Delivering Success
STRONG TRACK RECORD OF DELIVERING SUCCESS High Success Rate and Short Cycle Times Have Led to Repeatable Production and Reserves Growth Production Growth (mboepd) 2P Reserves Growth (mmboe) 25 100 2P F&D2 Cost Previous owner $~15/boe looking to exit High Success Rate1 80 20 (10 of 16 ILX wells drill
Slide 23: Gulf of Mexico: Why Now? Attractive Economics
GULF OF MEXICO: WHY NOW? Attractive Economics Deepwater Gulf Of Mexico Competes Favorably With The Best Onshore US Plays $100 Deepwater GoM Half Cycle Breakeven $ / bb (WTI to Henry Hub @ 20:1) Breakeven $80 <$30/bbl WTI $60 $40 $20 $0 Barnett Utica Marcellus SCOOP | Bakken-US Haynesville Eagle Ford
Slide 24: Gulf of Mexico: Why Now? Low Competition
GULF OF MEXICO: WHY NOW? Low Competition Easy Access, Plentiful Opportunities, Available Infrastructure 100 1,200 Kosmos Well Number of companies bidding in lease sales Positioned To 80 Become The Leading 900 Independent Number of bids in lease sales 60 600 40 300 20 0 0 2008 2009 2010 2012 2013 201
Slide 25: Gulf of Mexico
GULF OF MEXICO Gulf Of Mexico Business Poised To Deliver Strong Production And Reserve Growth Gulf of Mexico Gulf of Mexico Acreage Low Lifting Cost1 (~$9/boe) High Margin Low F&D2 (~$15/boe) Gulf Of Mexico Net Reserves (mmboe) High Return Possible 26 RRR3 >110% 109 mmboe 51 Proved 32 Future Growth
Slide 26: Gulf of Mexico: High-Quality Asset Base
GULF OF MEXICO High-Quality Asset Base With Substantial Low-Risk Upside Operational Highlights Net Production Outlook (mboepd) • Business sustained through high 34 30 rate of return infill and 26 development drilling 22 18 • Development of 5 wells planned 14 Planned Tornado Drydock 10 2019-20 Q4 Q1
Slide 27: Equatorial Guinea
EQUATORIAL GUINEA Substantial Value Creation Opportunity From Maximizing Value Of Existing Asset Base Equatorial Guinea Equatorial Guinea Acreage Low Lifting Cost1 (~$15/barrel) High Margin Low Acquisition Cost (~$5/barrel) Equatorial Guinea Gross Reserves (mmboe) High Return Possible 29 RRR2 >200%
Slide 28: Equatorial Guinea: Low Cost Activities to Sustain Production
EQUATORIAL GUINEA Low Cost Activities To Sustain Production. Upside Through Infrastructure-Led Exploration Activity Operational Highlights Gross Production Profile (mbopd) 50 • Business sustained through high rate of return 45 G-13 production optimization 40 projects 35 • Electrical submersible pump
Slide 29: Equatorial Guinea: Near-Term Production Optimization
EQUATORIAL GUINEA Near-Term Production Optimization ESP Installation Generic ESP Example • Proven technology 2,500 2,000 ESP • Phase 1: Two conversions complete / 1,500 Conversion three more in 2019 1,000 • Targeting 4,000 bopd gross rate gain 500 0 • Nine additional planned 2020+ Oct '18 Jan '19 A
Slide 30: Ghana: Big Fields Get Bigger
GHANA Big Fields Get Bigger Ghana Ghana Acreage Low Lifting Cost1 (~$11/boe) High Margin Low F&D (~$12/boe) Ghana Gross EUR3 (mmboe) High Return Jubilee TEN Ghana 48 250 242 298 RRR2 >100% Six Years In A 912 52 477 212 1,389 454 Row 128 mmboe mmboe 179 mmboe 165 293 458 Future Growth Produced Proved
Slide 31: Ghana: Substantial Reserve Base Underpins Free Cash Flow
GHANA Substantial Reserve Base Underpins Significant Free Cash Flow Operational Highlights Gross Production Profile (mboepd) 200 • 2 rigs currently operational 150 – Taking advantage of low rates 100 • Targeting 7 wells drilling in 2019 50 - • Objective to fill the facilities 2018 6 2019E 2020E 2021
Slide 32: Base Business NPV10 Underpins the Value of Kosmos
BASE BUSINESS NPV10 UNDERPINS THE VALUE OF KOSMOS Current Producing Assets Alone More Than Underpin Company Value 2018 NPV10 @ $60 Brent ($/Share) $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 2P Reserves NPV10 3P Reserves NPV10 $- Ghana 2P EG 2P GoM 2P Net Debt Ghana Possible EG Possible GoM Possible Ghana
Slide 33: Infrastructure-Led Exploration
INFRASTRUCTURE-LED EXPLORATION Richard Clark / Tracey Henderson Strictly Private and Confidential
Slide 34: Infrastructure-Led Exploration: Key Takeaways
INFRASTRUCTURE-LED EXPLORATION: KEY TAKEAWAYS Strategic Acquisitions Have Created The Next Chapter Of Growth 20 Forecast ILX Production Growth 2018-2023E (mboepd) Attractive Returns: 18 Gulf of Mexico Leveraging Existing Infrastructure 16 Equatorial Guinea 14 Short-Cycle: 12 Rapid Development From 1
Slide 35: Gulf of Mexico: Seismic Improvements Unlock Inventory
GULF OF MEXICO Gulf Of Mexico Business Poised To Deliver Strong Production And Reserve Growth Gulf of Mexico A Salt Canopy Covers Most Of The C. and W. Deepwater GoM Large Unexplored Areas Significant Running Room Significant Improvement In Seismic Historical Seismic Limitations 2000 Seismic Imaging
Slide 36: Lack of Competition Enables Access to Significant Resource
LACK OF COMPETITION ENABLES ACCESS TO SIGNIFICANT RESOURCE Only 15% Of All GoM Deepwater Blocks Are Currently Leased – A Third Expire Within Five Years 1,558 Deepwater Blocks Leased (vs. 4,500 Ten Years Ago) LOUISIANA Viosca Knoll De Soto Canyon Mississippi Canyon Ewing Bank Atwater Valley Lloyd Rid
Slide 37: Gulf of Mexico – Existing Core Area
GULF OF MEXICO – EXISTING CORE AREA Highly Attractive Economics And Significant Follow-On Exploration Opportunities Production Hub With Material Anchor Field For Kosmos (Odd Job) Delta House: “Hub & Spoke” Kosmos Working Discovery Gross 2P Ultimate Total Capacity: 95,000 bopd Field Interest Year mmb
Slide 38: Core Anchor Field: Odd Job
CORE ANCHOR FIELD: ODD JOB A 76 mmboe Field Continues To Get Bigger Through Short-Cycle Exploration And Exploitation Odd Job • Kosmos operator (55-61%) • Discovered: 2015 • F&D cost ~$11/boe • Lifting cost1 ~$10/boe • Generated 4 prospects in the Odd Job area (~80 mmboe gross) Oct. 2016 Nov. 2014 Oc
Slide 39: Creating the Next Core Area – Partnering with BP
CREATING THE NEXT CORE AREA – PARTNERING WITH BP Production Hub With Material Anchor Prospect (Resolution) The Opportunity Resolution Kosmos-Operated 50/50 Multi Block Farm-In With BP Potential For New Production Hub Anchored By The Resolution Prospect 100 – 200 mmboe Gross Drilling H2 2019 Supporte
Slide 40: Why Does the Opportunity Exist?
WHY DOES THE OPPORTUNITY EXIST? Major Breakthrough In Advanced Seismic Identifies Additional Oil Resources New Seismic Capabilities Create New Opportunities BP Atlantis Image Of Salt Formation – 2004 • Significantly enhanced sub-salt imaging lowers exploration risk • How did BP achieve this? − Multi
Slide 41: Resolution Prospect
RESOLUTION PROSPECT Stacked Reservoir Objectives Resolution • Amplitude-supported sub-salt prospect • Amplitudes conform to structure • Seismically tied to existing discoveries in proven mini-basin • Multiple stacked targets • 100-200 mmboe resource potential Capital Markets Presentation February 25
Slide 42: Multi-Year Subsea Tieback Inventory
MULTI-YEAR SUBSEA TIEBACK INVENTORY High Return, Infrastructure-Led Exploration Inventory Risked Exploration Program 50 • Prospect inventory: 20+ prospects Risked Exploration 40 Base • Added 15 prospects in last 6 months 30 Assumption: Conservative 50% success rate • ~30 mmboe gross per prospect 20
Slide 43: Gulf of Mexico: An Acquisition with Significant Upside
GULF OF MEXICO An Acquisition With Significant Upside Future Upside From ILX Opportunities ($mm) $2,500 Future value creation $2,000 $1,500 Value creation to date DGE Acquisition $1,000 Delivered ~1.5x, Targeting >2.0x $500 $0 Acquisition Cost 2P NPV10 @ $60 Brent Future Upside Source: 2P NPV10 post
Slide 44: History of Kosmos in Equatorial Guinea
HISTORY OF KOSMOS IN EQUATORIAL GUINEA Unfinished Business Equatorial Guinea Timeline 1997 - 2003 2003 - 2017 2017+ • Triton Energy team make Ceiba and • Limited new • Kosmos acquires Hess EG assets Today 1997 Okume discoveries offshore exploration • Joint venture with Trident Equatorial Guinea • No
Slide 45: Equatorial Guinea – Infrastructure-Led Exploration
EQUATORIAL GUINEA – INFRASTRUCTURE-LED EXPLORATION Lower Risk Tie-Backs Provide Significant Short-Cycle Production Growth Opportunity The Opportunity Fairway Map From Latest Seismic Santonian Salt Fairway Discovered Oil (500m Oil Column) G-13-1 Undeveloped Due To Appraisal Failure G-13-2 To Find Mai
Slide 46: G-13 Opportunity
G-13 OPPORTUNITY Infrastructure-Led Opportunity In Equatorial Guinea Overview Location • Existing discovery accessed as part of Ceiba/Okume acquisition BLOCK W EG-21 Okume − Proximity to Ceiba FPSO EG-24 BLOCK S Ceiba G-13 − Tie-back to infrastructure Ti e back range with available capacity Subs ea
Slide 47: Equatorial Guinea – An Acquisition with Significant Upside
EQUATORIAL GUINEA – AN ACQUISITION WITH SIGNIFICANT UPSIDE Cash Generative, High Return Acquisition Less Than One Year Payback – Significantly More To Come… ($mm) $1,000 $800 Future value creation $600 EG Acqisition Value creation Delivered ~3.0x, to date Targeting >3.5x $400 $200 $0 Acquisition cos
Slide 48: Q&A / Break
Q&A / Break Strictly Private and Confidential
Slide 49: World-Scale Discoveries
WORLD-SCALE DISCOVERIES Andy Inglis Strictly Private and Confidential
Slide 50: World Scale Discoveries: Key Takeaways
WORLD SCALE DISCOVERIES: KEY TAKEAWAYS Mauritania and Senegal: Long-Term Growing Source of Cash Flow 50-100 Tcf GIIP World-Scale Resource (15-30 Tcf / 10 MTPA Net To Kosmos) Highly Competitive Source Of LNG Driving Rapid Project Execution Coveted By Industry; Sell-Down To ~10% WI Post FID Value Infl
Slide 51: World Scale Gas Resource: Mauritania & Senegal
WORLD SCALE GAS RESOURCE: MAURITANIA & SENEGAL 50-100 TCF GIIP1 Underpinning 30 MTPA Of LNG Liquefaction 10 MTPA Tortue Project Is The First Phase Of Development (BP Operated) 50-100 TCF Resource – 3 Export Hubs2 • Tortue: ~25 Tcf (GIIP) • BirAllah: 12-60 Tcf (GIIP) – 2019 Appraisal • Yakaar Teranga
Slide 52: Positioned to Become World's Fourth Largest International LNG Player
WORLD SCALE GAS RESOURCE: MAURITANIA & SENEGAL Mauritania And Senegal Positioned To Become World’s Fourth Largest International LNG Player Current Operating International LNG Projects 1 Source: WoodMac; McKinsey Energy Insights 1. Includes the 23 mtpa from the expansion phase expected to be operatio
Slide 53: The Most Competitive Projects Get Sanctioned
THE MOST COMPETITIVE PROJECTS GET SANCTIONED Tortue – Competitive With U.S. Gulf Coast LNG Pre-FID Greenfield Projects, Landed Cost Into North West Europe1 New capacity New capacity 16 needed by 2025 needed by 2030 14 12 Cost, $/mmbtu 10 8 6 4 2 0 ~50Mtpa ~190Mtpa Volume, mtpa Other USGC2 Tortue Qua
Slide 54: Tortue Expected to Be Fastest Greenfield LNG Project
WORLD SCALE GAS RESOURCE: MAURITANIA & SENEGAL Tortue Expected To Be The Fastest Greenfield LNG Project From Discovery To Production Fastest Greenfield Discovery To First Gas (years)1 40 35 30 25 20 15 10 5 0 Plant Location Offshore Onshore Source: Wood Mackenzie, Offshore Technology, SubseaIQ 1. Af
Slide 55: Supermajors Re-Gasifying Portfolios
SUPERMAJORS “RE-GASIFYING” PORTFOLIOS Scarcity Of High Quality LNG Assets of Scale – Mauritania and Senegal A Valuable, Well-Timed To Market Asset 2016: Shell acquires of BG 2018: Total acquires Engie 2018: Total takes 10% direct 2016: Total acquires 23% working interest in Arctic LNG 2 Group for ~$
Slide 56: Mauritania & Senegal: Portfolio Optimization
MAURITANIA & SENEGAL: PORTFOLIO OPTIMIZATION Value Creation For Shareholders - Phased Monetization At Value Inflection Points 2015 Tortue-1 Well Successful 10-15 Tcf : Underpins Commerciality 2015 BirAllah-1 Well Successful Second Potential Hub 2016 BP Farmout Supermajor Development Partner 2017 Yak
Slide 57: Video
VIDEO Capital Markets Presentation February 25, 2019 56
Slide 58: Tortue – A Sanctioned ~10 MTPA LNG Project
TORTUE – A SANCTIONED ~10 MILLION TON PER ANNUM LNG PROJECT Tortue: A Cost Competitive, Innovative, Near Shore LNG Scheme First Gas Expected H1 2022 Low Cost Innovative Repeatable Capital Markets Presentation February 25, 2019 57
Slide 59: Tortue: Key Figures (10% Working Interest)
TORTUE: KEY FIGURES (10% WORKING INTEREST) Fully Funded Through First Gas • Resource Project Design – Gross Recoverable resources: ~15 Tcf – Gas required for a 10mtpa LNG scheme: ~12 Tcf • Tortue Costs / Economics (net to Kosmos) – CapEx to first gas1,2 $0 – Long-term cash flow plateau1 ~$150 millio
Slide 60: Mauritania & Senegal: Growing Source of Long-Term Cash Flow
MAURITANIA & SENEGAL: GROWING SOURCE OF LONG-TERM CASH FLOW Objective: Self Funded, Long-Term Source Of Cash Flow From 10% Working Interest • Tortue (10mtpa): Zero capex to first BirAllah Development Concept gas • BirAllah (10mtpa) <$100m net spend to FID value inflection point • Yakaar Teranga (10m
Slide 61: Basin-Opening Exploration
BASIN-OPENING EXPLORATION Tracey Henderson Strictly Private and Confidential
Slide 62: Basin Opening Exploration: Key Takeaways
BASIN OPENING EXPLORATION: KEY TAKEAWAYS High Quality Exploration Portfolio Sustainable Prospect Inventory – Quality Through Choice Strategic Exploration Partnerships With BP/Shell Asymmetric Value Upside Capital Markets Presentation February 25, 2019 61
Slide 63: Kosmos' Frontier Exploration Strategy Has Not Changed
KOSMOS’ FRONTIER EXPLORATION STRATEGY HAS NOT CHANGED Rifle Shot Exploration • Focused geography – Expert knowledge base ATLANTIC • Focused geology – Deep understanding of existing plays MARGIN • Leverage knowledge and understanding to generate new ideas • Early entry – Attractive commercial terms F
Slide 64: 2019 Basin-Opening Exploration Activity
2019 BASIN-OPENING EXPLORATION ACTIVITY Continuing To Grow The High Quality Prospect Inventory Drilling • Mauritania: Orca-1 well • Carried by BP Seismic Acquisition And Processing • Sao Tome & Principe / Equatorial Guinea • Cote D’Ivoire • Namibia New Venture Activity • Active program to sustain pr
Slide 65: 2019: Mauritania
2019: MAURITANIA Follow-On Exploration Of Proven Play To Create Next LNG Hub In Mauritania Mauritania – Orca Prospect • Located on same structural ridge as BirAllah 15 km 9 miles (Marsouin-1) and Tortue discoveries Marsouin-1 − Proven inboard gas play • AVO calibrated from BirAllah and Tortue Orca-1
Slide 66: 2020: Suriname
2020: SURINAME Walker – Targeting A Proven Play In Guyana Suriname – Walker Prospect • Walker: Carbonate prospect − 4-way structural closure − Proven play in Stabroek block with Ranger discovery • Optimal charge migration pathway − Source rock onlaps reservoir Subsurface Cross Section • Dual objecti
Slide 67: 2020: Sao Tome & Principe / Equatorial Guinea
2020: SAO TOME & PRINCIPE / EQUATORIAL GUINEA Captured Significant Position In A Basin With Proven Reservoir And Charge Sao Tome & Principe / Equatorial Guinea • Rio Muni Basin: Extensive position established 47,000 km2 • Proven source − Inboard: Ceiba & Okume − Outboard: ST&P oil seeps • Proven res
Slide 68: 2021: Cote D'Ivoire
2021: COTE D’IVOIRE Low Cost Entry With BP Into Large New Play Concept Cote D’Ivoire: Reservoir Extension Into Deepwater • Basin entry in 2018 as part of BP Technical success Alliance (50/50) Oil shows COTE D’IVOIRE • Deepwater underexplored; new basin floor fan play concept • Evidence of working so
Slide 69: 2021: Namibia
2021: NAMIBIA Low Cost Entry With Shell Into Large New Play Concept Namibia • New basin entry for Kosmos as part of Shell Alliance • Evidence of oil prone marine NAMIBIA source rock beyond outer high Kudu SOUTH AFRICA • Multiple play types; carbonate and INBOARD GAS clastics KITCHEN • Acquisition of
Slide 70: The Value of Partnerships
THE VALUE OF PARTNERSHIPS Working Alongside The Supermajors Exploration Alliances With Shell And BP Kosmos’ Exploration Alliances Super Major Reduced Technical Cycle Resources Times MAURITANIA AFRICA SENEGAL Exploration COTE D’IVOIRE Alliances SAO TOME Atlantic Complementary Competitive Ocean NAMIBI
Slide 71: 2019-2021 Basin-Opening Exploration Activity Schedule
2019 – 2021 BASIN-OPENING EXPLORATION ACTIVITY SCHEDULE Sustainable Two Wells / Year Program: Drilling Out >15 Billion Boe Prospect Inventory 2019 2020 2021 Exploration well Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 MAURITANIA Orca-1 SURINAME Walker-1 STP / EG STP-1 Seismic Acquisition NAMIBIA & Processin
Slide 72: Finance: Powering the Platform
FINANCE: POWERING THE PLATFORM Tom Chambers Strictly Private and Confidential
Slide 73: Finance: Key Takeaways
FINANCE: KEY TAKEAWAYS Disciplined Balance Sheet Management Growing Liquidity No Near-Term Debt Maturities Active Hedging Policy Protects Downside Focus On Shareholder Returns Capital Markets Presentation February 25, 2019 72
Slide 74: Disciplined Balance Sheet Management
DISCIPLINED BALANCE SHEET MANAGEMENT Track Record Of Disciplined Balance Sheet Management Through The Commodity Cycle Target Leverage Ratio Of 1.0x – 1.5x 4.0 3.5 Net Debt / EBITDAX covenant < 3.5x 3.0 2.5 2.0 @ $60 Brent 1.5 Excludes proceeds from expected M/S sell down 1.0 0.5 0.0 2016 2017 2018 2
Slide 75: Growing Liquidity
GROWING LIQUIDITY Targeting >$1.0 Billion Provides Flexibility Through Cycles Robust Liquidity Position1 2.0 80 70 1.5 60 50 Oil price ($/barrel) @ $60 Brent Liquidity ($bn) 1.0 Excludes proceeds 40 from expected M/S sell down 30 0.5 20 10 0.0 0 2016 2017 2018 2019 Liquidity Brent Price $/bbl Capita
Slide 76: No Near Term Debt Maturities
NO NEAR TERM DEBT MATURITIES Actively Manage Debt Maturities To Ensure Capital Flexibility Debt Maturity Profile ($mm) $800 $600 $400 $200 $0 2018 2019 2020 2021 2022 2023 2024 2025 2026 RBL RCF Existing Notes Potential New Notes Capital Markets Presentation February 25, 2019 75
Slide 77: Active Hedging Policy Protects Downside
ACTIVE HEDGING POLICY PROTECTS DOWNSIDE Reducing Oil Price Exposure Through Our Consistent And Robust Commodity Hedging Program • Hedge significant forward Hedged Production 2019-2020 (mmbbl) 10.5 mmbbl, production to protect cash flow 12 weighted avg. floor/ceiling of • Rolling three year program 1
Slide 78: Focus on Shareholder Returns
FOCUS ON SHAREHOLDER RETURNS Excess Cash Flow Funds Debt Reduction and Shareholder Returns 2018 2019-21E Sources And Uses @$60/bbl Brent Excludes any proceeds Share Buyback 2,500 from M/S sell-down ~$190 Million 2,000 35 Million Shares 1,500 ~25% to be returned 2019 to shareholders via $m dividend A
Slide 79: 2019 Guidance Slide
2019 GUIDANCE SLIDE Q1 2019 FY 2019 Production1,2 58,000 – 60,000 boe/day 69,000 – 73,000 boe/day Opex $14.00-$16.00/boe $12.00-$15.00/boe DD&A $22.00-$25.00/boe $22.00-$25.00/boe G&A3 $32-$35 million $115-$125 million Exploration Expense ~$30 million average/quarter Net Interest $35-37 million/quar
Slide 80: Conclusion
CONCLUSION Andy Inglis Strictly Private and Confidential
Slide 81: Conclusion
CONCLUSION Kosmos can fund 2019 Capex 8-10% production Resilient Business: its sustaining capex Reduction: CAGR 2018-2021 Low Cost and and dividends at maintained with From $500-$600mm Cash Generative $35/barrel Brent to $425-$475mm ~20% capex reduction Strategic Major Infrastructure- Significant Re
Slide 82: Appendix
Appendix Strictly Private and Confidential
Slide 83: Capital Markets Presentation February 25, 2019
Capital Markets Presentation February 25, 2019 82