Market Overview

Kosmos Energy Enters Gulf of Mexico with $1.225 Billion Acquisition of Deep Gulf Energy

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Kosmos
Energy
(NYSE/LSE: KOS) announced today that the company has entered
into an agreement to acquire Deep Gulf Energy ("DGE")1, a
leading deepwater company operating in the Gulf of Mexico, from First
Reserve and other shareholders for a total consideration of $1.225
billion, subject to certain adjustments. By acquiring DGE, Kosmos adds
to its deepwater Atlantic Margin portfolio an established business with
attractive assets and a strong record of growing production and reserves
through infrastructure-led exploration. This immediately accretive
acquisition enhances the scale of the company and is expected to
generate significant free cash flow, enabling Kosmos to return cash to
shareholders through a dividend, beginning in the first quarter of 2019.

Transaction Highlights

  • Immediately accretive:
    • Acquisition EV / 2018 estimated EBITDAX: 3.4x vs. Kosmos at 6.4x2
    • Acquisition EV / 2018 estimated 2P reserves: approximately $15 per
      barrel of oil equivalent (boe) vs. Kosmos at approximately $21 per
      boe
  • Adds approximately 25,000 barrels of oil equivalent per day (boed)
    production (~85% oil), with an estimated reserves to production ratio
    of 8.8, growing 2018 pro forma production by 50% from approximately
    45,000 to 70,000 boed
  • Adds estimated 2P reserves of approximately 80 million barrels of oil
    equivalent3 (MMboe), increasing total 2P reserves by 40%
    from over 200 MMboe to approximately 280 MMboe
  • Adds experienced deepwater Gulf of Mexico management team with track
    record of delivering short-cycle, high-margin production
  • Attractive acquisition with NPV-10 breakeven of approximately $48.00
    per barrel WTI
  • Low asset retirement obligation of approximately $100 million
    undiscounted
  • Enables commencement of dividend payment in the first quarter of 2019,
    underpinned by expected production growth and sustainable free cash
    flow

Andrew G. Inglis, chairman and chief executive officer, 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. The best deepwater
assets can compete with the best of shale, and now is a good time to
enter the Gulf of Mexico. This highly complementary transaction is
immediately accretive – delivering sustainable production and free cash
flow growth, and enabling dividend payments to begin in the first
quarter of 2019."

Transaction Details

Under the terms of the transaction, Kosmos will acquire DGE for total
consideration of $1.225 billion, comprised of $925 million in cash and
$300 million in Kosmos common shares issued to First Reserve,
management, and other DGE shareholders. Kosmos intends to fund the cash
portion of the purchase price with borrowings under its existing credit
facilities. In connection with the transaction, Kosmos has received $200
million of additional firm commitments to increase its reserves-based
loan facility capacity.

The acquisition is expected to close around the end of the third quarter
2018, subject to receipt of regulatory approval and the satisfaction of
customary closing conditions.

Evercore Inc. and Goldman Sachs & Co. LLC acted as financial advisors to
Kosmos.

Conference Call & Webcast Information

Kosmos will discuss the acquisition on the Company's second quarter 2018
earnings conference call on Monday, August 6, 2018 at 10:00 a.m. CDT.

Dial-in telephone numbers:
U.S. / Canada: +1.877.407.3982
International:
+1.201.493.6780
Webcast: investors.kosmosenergy.com

A slide presentation will be made available on the Investors page of
Kosmos' website at www.kosmosenergy.com
immediately after this news release is issued. A replay of the webcast
will be available on the website for approximately 90 days following the
event.

Note:

  1. Includes Deep Gulf Energy LP, Deep Gulf Energy II, LLC and Deep Gulf
    Energy III, LLC (collectively "DGE")
  2. Acquisition EBITDAX based on Kosmos's internal estimates which assume
    pricing based on the July 26, 2018 NYMEX WTI strip of $67.32 per
    barrel in 2018. Kosmos enterprise value calculated using Kosmos's July
    30, 2018 closing price and second quarter 2018 net debt. Kosmos EV /
    EBITDAX multiple calculated using Bloomberg consensus EBITDAX.
  3. Estimated 2P reserves as of June 30, 2018

About Kosmos Energy

Kosmos is a well-capitalized, pure play deepwater oil and gas company
with growing production, a pipeline of development opportunities and a
balanced exploration portfolio along the Atlantic Margins. Our assets
include growing production offshore Ghana and Equatorial Guinea, a
competitively positioned Tortue gas project in Mauritania and Senegal,
and a sustainable exploration program balanced between proven basins
(Equatorial Guinea), emerging basins (Mauritania, Senegal and Suriname)
and frontier basins (Cote d'Ivoire and Sao Tome and Principe). As an
ethical and transparent company, Kosmos is committed to doing things the
right way. The company's Business Principles articulate our commitment
to transparency, ethics, human rights, safety and the environment. Read
more about this commitment in the Kosmos 2017 Corporate
Responsibility Report
. For additional information, visit www.kosmosenergy.com.

Forward-Looking Statements

This press release 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 press release that
address activities, events or developments that Kosmos expects, believes
or anticipates will or may occur in the future are forward-looking
statements. Kosmos' estimates and forward-looking statements are mainly
based on its current expectations and estimates of future events and
trends, which affect or may affect its businesses and operations.
Although Kosmos believes that these estimates and forward-looking
statements are based upon reasonable assumptions, they are subject to
several risks and uncertainties and are made in light of information
currently available to Kosmos. When used in this press release, the
words "anticipate," "believe," "intend," "expect," "plan," "will" or
other similar words are intended to identify forward-looking statements.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of Kosmos, which may
cause actual results to differ materially from those implied or
expressed by the forward-looking statements. Further information on such
assumptions, risks and uncertainties is available in Kosmos' Securities
and Exchange Commission ("SEC") filings.
Kosmos undertakes no
obligation and does not intend to update or correct these
forward-looking statements to reflect events or circumstances occurring
after the date of this press release, except as required by applicable
law. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in their
entirety by this cautionary statement.

Inside Information

This announcement contains inside information. The person responsible
for arranging the release of this announcement is Jamie Buckland, Vice
President, Investor Relations and Rhys Williams, Senior Manager,
Investor Relations.

Non-GAAP Financial Measures

EBITDAX, Adjusted net income (loss) and Adjusted net income (loss)
per share are supplemental non-GAAP financial measures used by
management and external users of the Company's consolidated financial
statements, such as industry analysts, investors, lenders and rating
agencies. The Company defines EBITDAX as net income (loss) plus
(i) exploration expense, (ii) depletion, depreciation and amortization
expense, (iii) equity
-based compensation expense,
(iv) unrealized (gain) loss on commodity derivatives (realized losses
are deducted and realized gains are added back), (v) (gain) loss on sale
of oil and gas properties, (vi) interest (income) expense, (vii) income
taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts
expense and (x) similar other material items which management believes
affect the comparability of operating results. The Facility EBITDAX
definition includes 50% of the EBITDAX adjustments of Kosmos-Trident
International Petroleum Inc.
The Company defines adjusted net
income (loss) as net income (loss) after adjusting for the impact of
certain non-cash and non-recurring items, including non-cash changes in
the fair value of derivative instruments, cash settlements on commodity
derivatives, gain on sale of assets, and other similar non-cash and
non-recurring charges, and then the non-cash and related tax impacts in
the same period.

We believe that EBITDAX, Adjusted net income (loss), and Adjusted net
income (loss) per share and other similar measures are useful to
investors because they are frequently used by securities analysts,
investors and other interested parties in the evaluation of companies in
the oil and gas sector and will provide investors with a useful tool for
assessing the comparability between periods, among securities analysts,
as well as company by company. Because EBITDAX, Adjusted net income
(loss), and Adjusted net income (loss) per share excludes some, but not
all, items that affect net income, these measures as presented by us may
not be comparable to similarly titled measures of other companies.

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