Neal D. Shah

Thanks Andrew now turning to slide 6 which looks at the third quarter in more detail production for the quarter of 65,400 barrels of oil equivalent was up 5% versus the prior quarter. But towards the bottom end of our guidance range reflecting the first infill. Well in Equatorial Guinea coming online around two months later than initially planned and slightly lower jubilee production.
This is partially offset by the higher production in the Gulf of Mexico. That Andy mentioned earlier sales volumes were as expected with three cargoes in Ghana and one in Equatorial Guinea costs were largely in line with guidance with OpEx slightly better helped by lower than anticipated costs. In Ghana for the quarter.
CapEx came in slightly above the guidance range which was a result of higher than forecasted spend on the drilling campaign in three Q.
We now expect CapEx to be around 800 million for the year.
This equates to around 100 million in four Q significant reduction from previous quarters in 2024 and a good guide on where we expect quarterly CapEx to be in 2025.
Finally, as we mentioned last quarter, the working capital benefit from the first half of the year reversed in the third quarter. Reflecting completion payments associated with projects delivered across the portfolio.
This working capital movement was largely responsible for the cash outflow in three Q turning the slide 7 during the quarter we made significant progress to enhance the financial resilience of the company. As we head into 2025 in September, we successfully issued $500 million of new senior notes due 2031 at 8.75%.
Alongside the new issue. We completed a series of tender offers to repurchase 500 million of our outstanding Senior notes across multiple maturities paying down the majority of our 2026 notes while also reducing the outstanding amounts of our notes due 2027 and 2028.
The result of these transactions is that we have no maturities in 2025 and only a small stub in 2026 which we would anticipate paying with free cash flow from the business.
Also during the quarter, we added two new banks to our RBL syndicate, increasing our total commitments to the facility size of 1.35 billion post quarter end. We also canceled our undrawn revolving credit facility ahead of its year end maturity, simplifying the capital structure.
In addition, we continue to actively manage future price volatility through our rolling hedging program.
We currently have around 45% of our first half of 2025 oil production hedged with downside protection of approximately $70 per barrel.
We expect to continue this through end of the year layering in more hedges for 2025 as our 2024 hedges roll off providing solid protection to our cash flow from potentially volatile oil prices in 2025.
Moving to slide 8 as mentioned previously, as products are delivered, we expect to see a material step down in CapEx with around 100 million expected in four Q.
This level of quarterly CapEx is a good representation of where we expect to be in 2025.
As Andrew talked about earlier, we plan to prioritize free cash flow next year and have therefore high graded our maintenance capital to focus on drilling at jubilee and winterfell to mitigate decline in Ghana and the Gulf of Mexico Equatorial again will benefit from this year's infill drilling program. And we anticipate very low maintenance capital on GTA. Once the project is online, we will be disciplined in allocating capital to growth opportunities in 2025. Ensuring we only spend what is needed to preserve our deep pipeline of growth options, which remains a key differentiator for our company.
The growth options listed in the appendix consist of both high quality oil and gas projects spread across our different business units.
Importantly, many of these are Kosmos operated such as Tiberius, Yakaar, Taranga and the King Deep, which gives us much greater control over both pace and spend than we've had on projects in the past.
With that, I'll hand it back to Andrew to conclude today's presentation.

Andrew G. Inglis

Thanks Neal Turning now to slide 9. We've achieved a lot so far. In 2024 we started with new projects and more to come. As we close out, the year production is now ramping up towards our target of approximately 90,000 barrels of oil equivalent per day around the end of the year.
As Neil said on the previous side, we expect CapEx to fall sharply in the fourth quarter, then continue at this lower level through 2025.
With this disciplined capital allocation, we plan to prioritize free cash flow delivery. In 2025 we should allow us to pay down debt and reduce leverage.
And finally, our differentiated operated growth project portfolio provides significant optionality for the future with high quality oil and gas investment opportunities with a much greater degree of control.
Thank you. And I'd now like to turn the call over to the operator to open the session for questions.

Question and Answer Session

Operator

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two. If you would like to remove your question from the queue and for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Our first question is from Charles Meade with Johnson Rice & Company. Please proceed.

Charles Meade

Good morning, Andrew Neal and into the whole Kosmos team there. Andrew, I want to ask a question about the 2025 CapEx outlook and, and the changes there. You know, I recognize that that 550 indication you had given was I took it as more of a kind of a guideline that wasn't necessarily a specific roster or perhaps it wasn't a specific roster of projects. But can you talk about the moving pieces? What made me moved out of 25? And how much of that delta of 150 is related to Tiberius sliding to the back half of the year?

Andrew G. Inglis

Yeah. Hey, Charles. Yeah look you're right you know the 550 was more of a guideline and we characterized it as saying it's around 200 to 250 going forward in growth on average and around maybe 350 in the base going forward. So as we look towards 25 as we said in the remarks, our focus is on free cash flow delivery next year. And therefore the CapEx, you know 400 is ensuring that we put sufficient CapEx into the base.
You know, we have drilling projects in the Gulf of Mexico in wins with two additional wells. And we have the restart of the Ghana infill program in Jubilee in eg there's not a lot of maintenance capital, you know we've had the drilling program in 24 and there's you know little maintenance CapEx in GTA because, you know we've got more than sufficient well capacity. So that's where the base spend is going to maintain the base. And then we are thinning down the growth CapEx. The prime mover is the one that you've identified, which is Tiberia, essentially that slides by about a year. it's the project's obviously still there. It's you know under our operatorship, we're aligned with OXY around the timing. So, you know that's the primary delta and then you've got a little bit of additional growth CapEx just keeping everything ticking over. So, you know, the other message of course, from this is that in deferring that growth complex, we're not actually damaging any of the growth options. It's simply about a shift probably in about a year in terms of the time timing.

Charles Meade

Got it. That's helpful detail. Thank you. And then on the 25 jubilee drilling I wonder if you could talk a little bit more about what the priorities are there. I mean, obviously you're trying to get the up to capacity, but I imagine that whatever you learn from this from your four D seismic shoot, it's going to be not going to have enough time to, for that to inform your 25 drilling, but it would maybe confirm that and just talk about what the goals of the 25 drilling program are.

Andrew G. Inglis

Yeah. Well, sort of you know, we started the next phase of drilling on, on Jubilee Charles and as we've sort of remarked, I think that I believe the 40 is going to have a big impact on that. You know, and it's the actual you know, the acquisition techniques, it's a toad streamer it's not you know, haven't actually moved massively, but clearly the processing has both in terms of the quality of what you get and actually the timeliness of it you get the product a lot earlier. Yeah. So we have a sort of a challenge to manage, you know when we start the earlier, we start the better. But how do we ensure that we're fully incorporating that learning? Now, there are a couple of wells where we know that the 40 is not going to have a big impact. So we have a couple of wells that are secure from that perspective and then you start a fair in the additional information that you get from the from the four D seismic. So in a way, it's just getting the right balance of how do you ensure you're taking full advantage of the seismic but not waiting too long by where you're diminishing the impact of the, of the input program. So I think we've got the balance of that right now.

Charles Meade

Great. Thank you.

Andrew G. Inglis

Great. Thanks Charles.

Operator

Our next question is from Bob Brackett with BERNSTEIN. Please proceed.

Bob Brackett

Good morning. I had a question around the AK deep and then one around Tiberias that are somewhat related, will know something around a king deep by year end. I think you guided to what are the implications for success case on capital for 2025 and, and I'll follow up with Tiberius.

Andrew G. Inglis

Yeah, I know you're right, Bob Look I think the king D well, is an important. Well because it opens up a whole new play that enables us to you know, use existing infrastructure. It's IOX tie back the Well, I think when you look at 25 with success in the King Deep, we won't rush at it. And I think what we want to do is make sure that we're high grading the right opportunities that exist across equatorial Guinea. So, you know, we've had an in all program in, in Sabre and, and AK a more of those wells, you know with success of the King Deep, you have a deeper target that you can bring in. So I would see it actually impacting 26 forward when we're actually high grading the capital that we've planned for for 26 in extra or Guinea. And actually it will be about debating it in for well and say Kme versus a King D. Now, the good news is if you remember that we extended the leases in the blocks to out beyond 2040. So we're not in a big rush. So this is about ensuring that we get the right high grading of the opportunity set. I'm actually, you know, I'm excited because I think, you know, we were, you know, we've built, you know, we finished the first well on Saber, we just finished the second. Well on the KME, the rig is literally moving as we speak to go and the king deep. But I think that between, you know the success of the Intel program, we're going to create quite a lot of optionality now. And you know, with success, we will have some choices to make. I think around the future Intel program that's really going to impact Bob26 rather than 25.

Bob Brackett

Very clear. And that almost ties well into my question on Tiberius, given the two H25 FID, it gives you potentially more time to look at the farm down. And if there's less interest than your desire to retain a greater working interest, which I know we've talked about in the past, does the farm down have to go forward or if the FID comes late, would you keep a greater working interest?

Andrew G. Inglis

Well, look you know you and I have debated this, we like it a lot and nothing's changed. This is about you know us you know prioritizing, I think the pace at which we move forward on some of our growth options. So I think this is not about not liking it. I think we believe you know working interest, you know around the 40% level you know it's probably right for us I think in about the same place of bringing in a partner is the right thing to do and we're clearly going through that process now. So we'll let the process run Bob. I don't think it changes our intent. And, and ultimately you know we see you know, it's a good prospect you know we want to ensure there's alignment you know on the development plan which we can now create that alignment going forward. And so with ourselves, it's tie back to an oxy operated platform. It's a very clear project. So I think no change of plan simply, you know the referral and the Pharma process is working as we speak.

Bob Brackett

Very clear. Thanks.

Andrew G. Inglis

Alright, thanks, Bob.

Operator

Our next question is from Matthew Smith with Bank of America. Please proceed.

Matthew Smith

Hi there. Good morning Andrew and Neil. A couple of questions from me. I'll just to start with the first perhaps and that would be on torture if I could. And really just could you remind us around the commissioning process? The FLNG sort of you know, is that sort of set in stone? I believe you referred to a six month period of commissioning before or is that an expectation? And then really just what can you remind us of the implications sort of during that stage? What do you expect from production and cargo? But also your exposures to the commercial arrangement that you have with BP. So I'll start there with the.

Neal D. Shah

First.
Okay. Right. So in terms of the commissioning process of the FL and G vessel, we're accelerating that process by bringing in the carrier and starting the process with gas coming from the LNG cargo that allows us to cool down the tanks, It allows us to enable us to run the first the compressors at the front end of the process and then actually spin the key compressors in the L&G trains themselves. So that's the process we're going through at the moment. And then that allows us when we introduce gas from the FDS. So essentially very quickly to start making LNG. So that's the process and that's when we actually recognize production, I think the six month program and that you're talking about is actually doing with the contractual arrangements associated with the finalization of the agreements that we have with Golar in terms of them, you know, meeting all of the criteria that they have to meet as part of their contract. So I think you have to sort of separate those out from the actual physical representation of the production and the revenue which comes as soon as we start putting gas, you know, through the FLNG and start producing gas and then exporting it. Yeah, so I think, you know the what I'm sort of explaining therefore, is the process from the introduction of gas to the production of our, of LNG and the revenue recognition is going to be a lot shorter than you've described.
And in terms of the marketing arrangements with BP, sort of nothing changes they would have left the gas and sell the gas.

Matthew Smith

But no, thank you for the clarification there And I suppose just to follow up, was whether the commercial agreement that you have with BP, am I right in thinking that's tied to the six month commercial commissioning process that you have with, with Gola IE you'll be free to sell your cargoes on the spot market during that time frame. Is that correct?

Neal D. Shah

No, BP will lift the cargoes. So we wouldn't be selling anything on the spot market in that time period.

Andrew G. Inglis

And there essentially mat go under the long term pricing frame, there's a slightly different option and you know where there's an MVP reference potentially, but as a base case sort of itself, Brent on the same terms as the long term contractor and commissioning.

Neal D. Shah

You really precise about it in that six month period. Only in that six month period, there's a price marker versus NVP and there's a price marker versus brand. Okay. So that's the, that's the only sort of difference between that six month period and then the long term period.

Matthew Smith

Okay. Understood. I think that's consistent with my understanding. Then that makes sense. Okay. Well thanks for clarifying all of that. And then hopefully the second one.
Understood.

Operator

Our next question is from Mark Wilson with Jeffrey. Please proceed.

Thank you. First question just a clarification point on the US Gulf of Mexico. You say that current production levels at 20,000 barrels of oil a day. I just wondered if that current level include those two wind shell wells you're looking to restart. That's the first question.

Andrew G. Inglis

It's around 20,000 without those mark. Yeah. So, you know we're benefited really from the production on the odd job, subsea pump being better than we thought and the Kodiak worker doing better than we thought. So we're slightly ahead of where you know we would have been. But, you know, in essence, it's around that 20,000 barrel a day mark.

Okay. Very good. And and then so those provided that this thing is sorted, those four wells, four and five next year, you'd be expect to be able to maintain or even be higher than these current levels through.

Andrew G. Inglis

Exactly, we're building production there rather than it going and going down. And you know clearly again you know, we've benefited from a couple of the production enhancement projects doing slightly better than we forecast, which is good. So the base in a sense is stronger and then you're adding the wells from wins.

Okay. Thank you for that. So then into 25 with the lower CapEx as you've spoken to already, and the focus on getting leverage down, could I ask is there a leverage point or a target? You aim to get to where shareholder returns or a buyback could be something you'd look at.

Andrew G. Inglis

Yeah, why don't I'll turn that over to Neal.

Neal D. Shah

Yeah. Thanks Mark. Yes, I don't think, you know our views change. We're very much focused on you know getting leverage down to less than 1.5 times and once we get beyond sort of that 1.5 times, then we'll look at shareholder returns which is clearly an option that we, we're, we're keeping on the table. And so, but like I said, I think you know from our perspective, 25 will be around prioritizing free cash flow using that cash flow to pay down debt and accelerate that point. So I don't think it'll jump, but it's very much still on our minds and we're accelerating the pathway to get there.

Okay. Very good. And then the final question. So you, you've asked it about the carrier and FLNG vessel seems to accelerate the commissioning time of the FLNG vessel at 22. Could you just speak to the final steps for the FPSO that has crept into four Q for first gas getting through that. What are the final steps that need to be taken to get that first gas, please?

Andrew G. Inglis

Yeah, no good point mark. I think you know, crazy the FPSO is an important part of the the chain and we're close. You know the I think to add a little bit of color.
Technique energies has a contract where they actually perform the commissioning of the vessel. So all the work that's ongoing at the moment is under techniques watch and they're commissioning the vessel. The next step is then it's handed over to BP operations. So it goes from the Technique Energies as the project to BP OPS who then undertake the will undertake the operations.
At that point, it sort of moves into the sort of the big ops world where it's under their control of work under their control of work. You can then energize the subsidy system which then allows you to introduce gas. I think, you know, as we go down that journey, maybe, you know, an important milestone was actually when the Flotel that was supporting the work the technique energies were doing offshore, it's now departed. And I think that's an indication to you. I think that we're very close in terms of the few remaining punch list items that need to be performed, that allow that process ready for startup to occur. And clearly that's the, that's the defining sort of criteria is you have to finish all their work, which is those final punch list items and then it gets handed over. Flotel is already gone which signals the amount of work to be done is not very much.

Excellent. Thank you for that very clear and I shall hand it over now.

Andrew G. Inglis

Great. Thanks Mark. Appreciate it.

Operator

Our next question is from Neel Mehta with Goldman Sachs. Please proceed.

Neel Mehta

Thank you and the team. So I guess the first question is just on the 90,000 barrels a day equivalent. When do you when do you think you get there in as you think about the next couple of years tar targeting and then in your Q4 guide is there any assumption for a contribution from GTA from to two in there?

Neal D. Shah

Yeah. So, you know, sort of two part question there. It's sort of you know going forward. I think if you start to think about the company it's obviously invested heavily to sort of grow the production. Now, it's about a focus in 25 on sort of maintaining that level. As I discussed in a prior question, the maintenance CapEx is sort of low in GDA. You've built the wells, you know there's very little CapEx to go. So you get a sort of flat production curve from that the production that goes into the Gulf of Mexico, you know, as Mark alluded to in his question, you sort of with GTA with Winterfell four and five is probably a small amount of growth there.
You know, I think we'll sort of see X or guinea relatively flat. And therefore, you know and then back to drawing in jubilee, which again is about sort of maintaining it flat and then starting to increase. So I think you know if you look through 2,425 you know, with 24 CapEx aimed at the base about maintaining and then beyond then you start back into the cycle in 26 of seeing in you know, the growth projects, but you won't see the impact of Tiberius until 27 now. So I think, you know relatively flat and then you know post you know seeing some growth in 27. So I think that's the way I'd think about it and clearly we're prioritizing you know the investment level in the base to ensure that we keep it robust.

Andrew G. Inglis

Yeah, and then look in 20 the production guidance in 20 in the fourth quarter of 24 there's a very small amount of GGA in that you know, we said around the end of the year, production is recognized when it goes when actually we get gas flowing from the FPSO into the LNG vessel. So we've said, you know, that's around the end of the year. So you can assume there's a small amount of gas there, a small contribution.

Neel Mehta

Perfect. Okay. That's very helpful. And then what is the assumption we that you recommend for 2025 for LOE you know per barrel as you think about the Pro Forma company for GTA in 2025. Just how do you think this project is going to change the consolidated cost structure?

Andrew G. Inglis

Yeah, Neal, do you want to pick that up?

Neal D. Shah

Yes. So, and then again, it's easier to think about it on a per BOE basis. But again I don't see a meaningful change on the oil side of the business. We've been increasing the run rate on the LOE for the gas side of the business. We said sort of we expect this quarter to be sort of six between $60million to $80 million. For the quarter there's a number of things going on there. But when you think about it in a normalized sense, there's you know I'd say when you on a per MCF basis for the gas business, you the normalized recurring OpEx is around $4 per MC in on the gas side and that includes the FLNG toll and then sort of the upstream cost. So plus or minus it's around in that range. And then and again I think what you know and we'll get into this in terms of guidance for 25 in February. But there's also, you know, if you recall in 2021 we sold the FPSO to, to BP and we're working on a refinancing of that. So that's currently in OpEx as well. And so there's a little money associated with that that will come down as we get that piece refinanced next year.

Neel Mehta

Okay, thanks Neal. Appreciate it.

Neal D. Shah

Sure.

Operator

As a reminder to star one on your telephone keypad. If you would like to ask a question, our next question is from Stella Cridge with Barclays. Please proceed.

Hi there. Good afternoon. Yes. If you don't mind if I could just follow up on the previous question in terms of this gross OpEx for tortue. Could you just talk about you know how much of this in Q4 is some of these one off items just in absolute dollar terms and what the quarterly OpEx would be in dollar terms for 2025

Neal D. Shah

Yeah, let us get back to you sort of off hand. I don't remember exactly because there are some moving parts in that Q4 number. So, it's all right. We'll get back to you on that in terms of the exact breakdown on that Q4 number.

That would be great.

Andrew G. Inglis

It says is the Q4 number includes the precommissioning cargo. So it includes the expense associated with bringing the carrier in and so on. So you've got a one off item associated with that and then you do have some precommission costs associated with the BP team as they go through the process. Now of the handover from technique energies, all of that occurs obviously ahead of the production going forward. So the two big items are those two items, you know, obviously, once production is running and then it normalizes into the, basically the $2 per MCF number that, that Neil talked about. So, you know, that's probably the simplest way to look at it. We can give we can come back and give you the exact breakdown. But the spend ahead of production is around those two items. Then as soon as you get into production, then you're around $2 an MTF for operating about $2 for the cost.

That's fantastic. Thanks and could you just talk a little bit more about this refinancing of the leaseback that you talked about before? Just what do you mean by that Exactly?

Andrew G. Inglis

Yeah. Neal.

Neal D. Shah

Yes. So just so when we so we sold the FPSO to BP in 2021. Then, so it's leased back to the partnership. It was always sort of envisioned post First Gas of the project. Then we look for, you know, put in a permanent financing or permanent solution around the F PSO. And so that's what we're working collaboratively with BP on at the moment. And so it's not you know, it's starting to you, we are seeing the FPSO in the OpEx lease today. Depending on either if we end up doing the refinancing, which we're working on that amount, in terms of what we see in the OpEx line will come down pretty substantially.

Okay. That's lovely, thanks. And if you don't mind, if I just ask one final thing in Senegal, is there any update on discussions that you've had with the authorities there and regarding, you know, outlook for Yakaar anda your business in the country. And some of the you know, mentions obviously we heard during the first elections about taxes. I mean I'm aware there's a second election coming up so things might be in the air. But, you know any comments on that side would be great.

Neal D. Shah

Yeah. Well, look, it's now over six months actually since the new administration has come in So, you know they're a new party in power there, there's been a process of them, you know, putting people in the key positions within the administration and that process has sort of been lengthened as a result of the decision to go to the election of the parliament, which is, is later this month. So I'd say in the first sort of six months of the journey, it hasn't really had we haven't seen really any impact on our sort of daily operating business. You know, we've continued to progress GTA and we continue to work very closely with the Ministry of Energy and the NFC in terms of purchasing, I would say it has slowed down a triangle a little, you know and that's partly you know, as you get into conversations there around the growth CapEx, you can to see that sort of probably moving slightly later and that's sort of natural you know new government coming in you know, they're picking it up, they've got new people within p and they've got new people within the ministry that are handling those conversations. You know, my sense of all of that is going to clear in the sort of end of the year beginning of the following, you know following year. And ultimately it's an important project for their national plan. It's about creating a, you know low cost gas that replaces fuel, oil that's currently being consumed for power. It also is a source of export and therefore in combination, you're creating an important new revenue stream in terms of development of that resource, but you're also creating an important domestic gas supply which creates energy security and it enables, you know, a lower cost of power to the country. So, you know, it's an important project. So the conversations are ongoing as we speak. But I just think things are going to take slightly longer just because of that transition of power. And then, you know, further complicated by the decision if you like to go with a national election but I think the message to take out of it, nothing's really impacted the important work on GTA which is obviously our primary focus at the moment.

Thanks.

Andrew G. Inglis

Great. Thank you.

Operator

Since there are no further questions at this time, I would like to bring the call to a close. Thanks to everyone for joining today. You may disconnect your lines at this time and thank you for your participation.