LONDON (Alliance News) - Kosmos Energy Ltd on Monday announced an acquisition worth over USD1 billion as interim revenue rose, though it has swung to a loss on higher expenses.
Oil company Kosmos is buying Deep Gulf Energy from First Reserve Corp for USD1.23 billion, and Kosmos said the acquired business will generate "significant" cash flow, enabling it to pay a dividend from the first quarter of 2019.
Kosmos is to pay with USD925 million in cash and the rest in Kosmos shares, to be issued to First Reserve. The cash part will be funded using existing credit facilities.
Deep Gulf adds around 25,000 barrels of oil equivalent of production a day to Kosmos' output, and also brings an estimated 80 million barrels of oil equivalent of proved and probable reserves.
Kosmos Chairman & Chief Executive Andrew Inglis said: "With this acquisition, Kosmos continues to grow into a larger, more balanced exploration and production company, with increasingly diversified production, a pipeline of world-class development projects, and a portfolio of short- and longer-cycle exploration opportunities."
"Over the last four years, Kosmos has doubled production, and this acquisition creates the platform to double production again in the next four years. With many competitors leaving the Gulf of Mexico to chase onshore shale plays, a huge opportunity has opened in the basin."
He added: "The best deep water assets can compete with the best of shale, and now is a good time to enter the Gulf of Mexico."
Turning to financials, for the six months to June Kosmos posted a pretax loss of USD223.2 million, after a USD8.6 million profit a year earlier.
The swing was due to loss of USD178.8 million after a USD63.3 million bonus in its prior year related to oil derivatives contracts, as well as higher depreciation and amortisation.
Revenue came in at USD342.7 million for the period, up from USD298.5 million. The vast majority of this is oil and gas revenue.
Production in Equatorial Guinea exceeded expectations once again, while output was stable in Ghana despite a shutdown in the first quarter. In Suriname, Kosmos expects to begin drilling its Pontoenoe-1 well id mid-August, the first up up to three possible prospects on offshore Block 42.
Kosmos shares were trading at 594 pence each on Monday morning, 1.4% higher.
Kosmos Energy (KOS)