Kosmos to cut production capital by 30%, another $60 million elsewhere

Kosmos Energy, Dallas, plans to reduce its 2020 base production capital budget by 30% to under $250 million from the previous $325-375 million budget while keeping production flat for the year. The spending reduction is in response to the current market price volatility.

In Mauritania & Senegal, the company is working with Tortue Phase 1 operator BP to defer 2020 Phase 1 capital spending with the goal of extending the carry of its capital obligations through the end of the year (OGJ Online, Dec. 21, 2018). The company plans also to sell down interests to support a self-funded gas business. Tortue Phases 2 and 3 are expected to take final investment decision in mid-2022 and mid-2023, respectively, with minimal capital required ahead of FID with the objective to project finance both thereafter.

The company also plans to implement cost reductions of over $60 million from operational expenditures and general and administrative costs this year, targeting a reduction of $1/boe without impacting asset integrity or near-term production and through a reduction in company headcount, no planned cash bonuses for employees, and other cost reductions.

Flexibility in the company’s 2021 capital program exists, should market conditions persist, the company said. Currently, impacts to 2021 production are expected to be minimal.