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(Alliance News) - Kosmos Energy Ltd on Tuesday said it will be suspending the dividend and cutting expenditure amid the volatile oil market.
Brent oil was quoted at USD30.07 per barrel on Tuesday, with the price battered due to fears over Covid-19's impact on the global economy, and thus demand. Oil-producing nations have also failed to come up with cuts to prop up the price.
Kosmos, which has producing assets in west Africa and the US Gulf of Mexico, paid dividends of USD0.1808 per share during 2019. It also declared in February a dividend of USD0.0452 payable in March this year.
"Our priority is to ensure the strength of the balance sheet in the current market price volatility. The board has therefore decided to suspend the dividend after the announced fourth-quarter 2019 payment until market conditions improve. This will provide savings of approximately USD75 million annually," said Kosmos on Tuesday.
Kosmos also in February guided for a capital budget of USD325 million to USD375 million for 2020. It has now decided to reduce the budget for the base business by around 35% whilst keeping production flat.
It has further flexibility should current oil market conditions persist, it said.
Kosmos will also be cutting operational expenditure and general costs by around USD60 million in 2020. This will include reducing headcount and suspending cash bonuses.
"As a result of the actions above, and taking into account the company's hedging position, Kosmos believes it can be free cash flow neutral beginning in the second quarter and fund all of its obligations at a USD35 barrel Brent price," said Kosmos.
Shares were 1.0% higher on Tuesday in London at a price of 76.30 pence each.
By George Collard; georgecollard@alliancenews.com
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