Kosmos Energy Ltd., Dallas, has lowered its full year net production guidance due to planned shut-ins.
Full year net production from the US Gulf of Mexico is expected to be near the lower end of the of 24,000-28,000 boe/d range as Delta House platform operator LLOG has shut in the facility during the month of May and accelerate planned maintenance as a result of current market conditions.
Shut-in of Delta House will impact second quarter production by about 5,500 boe/d (net) from fields processed through the facility. Additionally, Kosmos will temporarily shut-in about 1,500 boe/d (net) at other facilities during the year’s second quarter, resulting in about 7,000 boe/d of net Kosmos production shut-in during for the quarter.
Shut-ins are expected to last through the end of May, but timing depends on future market conditions, the company said. Damage to reservoirs is not expected based on the seasonal shut-in of US Gulf of Mexico fields due to hurricanes.
The company is targeting base business capital expenditure of $200-225 million in 2020, while keeping 2020 production within the range of previous guidance and with minimal expected impact on 2021 production.
First quarter
Total net production in the first quarter of 2020 averaged 66,300 boe/d, at the upper end of guidance.
Production in the US Gulf of Mexico was unaffected by COVID-19 and averaged 28,300 boe/d net (80% oil) during the first quarter, at the top end of guidance, due primarily to better than expected performance at Odd Job and Kodiak. During the first quarter, the company spent $10 million on the unsuccessful Oldfield-1 well.
Production in Ghana was unaffected by COVID-19 and averaged 26,500 bo/d net in the first quarter, slightly ahead of expectations. Kosmos lifted one cargo from Ghana during the quarter. Full year guidance of 10 cargos remains intact. Full year net production guidance in Ghana of 27,000-29,000 bo/d is unchanged.
Production in Equatorial Guinea was unaffected by COVID-19 and averaged 11,600 bo/d net in the first quarter. Full year net production guidance of 11,000-13,000 bo/d and cargo guidance of 4.5 cargos is unchanged.
Phase 1 of the Greater Tortue Ahmeyim project offshore Mauritania and Senegal is 33% complete, but breakwater installation has been disrupted as a result of COVID-19 mitigation measures, resulting in a delay of 12 months (OGJ Online, Apr. 8, 2020). The delay resulted in a significant reduction in activity and budgeted spend this year, and the BP development carry is now expected to last through 2020 with remaining project capex spread over 2021, 2022, and 2023.
For the quarter, the company generated a net loss of $183 million. When adjusted for certain items that impact the comparability of results, the company generated an adjusted net loss of $66 million. The company booked asset impairments in the first quarter totaling $151 million largely related to Kodiak and Tornado fields in the Gulf of Mexico and due to the change in oil price since acquiring the assets in late 2018 with the acquisition of Deep Gulf Energy (OGJ Online, Aug. 6, 2018).