Kosmos is a leading independent oil and gas exploration and production company
focused on frontier and emerging areas along the Atlantic Margins. Our assets
include existing production and development projects offshore Ghana, large discoveries
and significant further exploration potential offshore Mauritania and Senegal,
as well as exploration licenses with significant hydrocarbon potential offshore
Sao Tome and Principe, Suriname, Morocco and Western Sahara. Kosmos is listed
on the New York Stock Exchange (“NYSE”) and is traded under the
ticker symbol KOS.
Kosmos was founded in 2003 to find oil in under-explored or overlooked parts
of West Africa. Members of the management team—who had previously worked
together making significant discoveries and developing them in Africa, the Gulf
of Mexico, and other areas—established the company on a single geologic
concept that previously had been disregarded by others in the industry, the
Late Cretaceous play system.
Following our formation, we acquired multiple exploration licenses and proved
the geologic concept with the discovery of the Jubilee Field within the Tano
Basin in the deep waters offshore Ghana in 2007. This was the first of our discoveries
offshore Ghana; it was one of the largest oil discoveries worldwide in 2007
and is considered one of the largest finds offshore West Africa during the last
decade. As technical operator of the initial phase of the Jubilee Field, we
planned and executed the development. Oil production from the Jubilee Field
began in November 2010, just 42 months after initial discovery, a record for
a deepwater development in this water depth in West Africa.
Following our Initial Public Offering in 2011, we acquired several new exploration
licenses and again proved a new geologic concept with the Ahmeyim discovery
(formerly known as Tortue) in the deepwater offshore Mauritania in 2015. The
Ahmeyim discovery was one of the largest natural gas discoveries worldwide in
2015 and is believed to be the largest ever gas discovery offshore West Africa.
We have since demonstrated the extension of this gas discovery into Senegal
with the successful Guembeul-1 exploration well, which we collectively call
the Greater Tortue discovery. We have now drilled five exploration and appraisal
wells offshore Mauritania and Senegal with a 100% success rate, and in aggregate
have discovered a gross potential natural gas resource of approximately 25 trillion
cubic feet and derisked over 50 trillion cubic feet.
Grow proved reserves and production through exploration, appraisal and development
In the near-term we plan to grow proved reserves and production by further
developing the Jubilee Field, including incorporating our Mahogany and Teak
discoveries into the Greater Jubilee Full Field Development Plan (“GJFFDP”)
and by increasing production at TEN through further development after delivering
first oil in August 2016 through a second, dedicated FPSO. In the medium-term,
growth could also be realized through the development of all or a portion of
our new discoveries in Mauritania and Senegal.
Focus on optimally developing our discoveries to initial production
Our development focus is designed to accelerate production, deliver early learnings
and maximize returns. In certain circumstances, we believe a phased approach
can be employed to optimize full-field development through a better understanding
of dynamic reservoir behavior and enable activities to be performed in a parallel
rather than a sequential manner. A phased approach also facilitates refinement
of the development plans based on experience gained in initial phases of production
and by leveraging existing infrastructure as subsequent phases of development
are implemented. Production and reservoir performance from the initial phase
are monitored closely to determine the most efficient and effective techniques
to maximize the recovery of reserves and returns. Other benefits include minimizing
upfront capital costs, reducing execution risks through smaller initial infrastructure
requirements, and enabling cash flow from the initial phase of production to
fund a portion of capital costs for subsequent phases. In contrast, a traditional
development approach consists of full appraisal, conceptual engineering, preliminary
engineering, detailed engineering, procurement and fabrication of facilities,
development drilling and installation of facilities for the full-field development,
all performed sequentially, before first production is achieved. This approach
can considerably lengthen the time from discovery to first production.
For example, post-discovery in 2007, first oil production from the Jubilee
Field commenced in November 2010. This development timeline from discovery to
first oil was significantly less than the seven to ten year industry average
and set a record for a deepwater development of this size and scale at this
water depth in West Africa. This condensed timeline reflects the lessons learned
by our experienced team while leading other large scale deepwater developments.
We believe the prospects and leads offshore Mauritania, Senegal, Sao Tome and
Principe, Suriname, Morocco and Western Sahara provide favorable opportunities
to create substantial value through exploration drilling. Starting in the second
quarter of 2017, we plan to resume our exploration drilling to test this potential
in Mauritania and Senegal and in other areas starting in 2018. Given the potential
size of these prospects and leads, we believe that exploratory success in our
operating areas could significantly add to our growth profile.
Our management and exploration teams have demonstrated an ability to identify
regions and hydrocarbon plays that have the potential to yield multiple large
commercial discoveries. We focus on frontier and emerging areas that have been
underexplored yet offer attractive commercial terms as a result of reduced competition
and first-mover advantage. We expect to continue to use our systematic and proven
geologically-focused approach in frontier and emerging petroleum systems where
geological data suggests hydrocarbon accumulations are likely to exist, but
where commercial discoveries have yet to be made. We believe this focus on poorly
understood, under-explored or otherwise overlooked hydrocarbon basins enables
us to unlock significant hydrocarbon potential and create substantial value
for shareholders.
This approach and focus, coupled with a first-mover advantage and our management
and technical teams’ discipline in execution, provide a competitive advantage
in identifying and accessing new strategic growth opportunities. We expect to
continue seeking new opportunities where hydrocarbons have not been discovered
or produced in meaningful quantities by leveraging the reputation and relationships
of our experienced technical and management teams. This includes our existing
areas of interest as well as selectively expanding our reach into other locations.
In addition to ideas developed organically, farm-in opportunities may offer
a way to participate in new venture opportunities to undertake exploration in
emerging basins, new plays and fairways to enhance and optimize our portfolio.
Consistent with this strategy, we may also evaluate potential corporate and
asset acquisition opportunities as a source of new ventures to support and expand
our asset portfolio.
Kosmos Exploration Approach
Kosmos’ exploration philosophy is deeply rooted in a fundamental, geologically-based
approach geared toward the identification of poorly understood, under-explored
or overlooked petroleum systems. This process begins with detailed geologic
studies that methodically assess a particular region’s subsurface, with
careful consideration given to those attributes that suggest working petroleum
systems. The process includes basin modeling to predict oil or gas charge and
fluid migration, as well as stratigraphic and structural analysis to identify
reservoir/seal pair development and trap definition. This analysis integrates
data from previously drilled wells, where available, and seismic data. Importantly,
this approach also takes into account a detailed analysis of geologic timing
to ensure that we have an appropriate understanding of whether the sequencing
of geological events could promote and preserve hydrocarbon accumulations. Once
an area is high-graded based on this play/fairway analysis, geophysical analysis
based on new 3D seismic is conducted to identify prospective traps of interest.
Alongside the subsurface analysis, Kosmos performs an analysis of country-specific
risks to gain an understanding of the “above-ground” dynamics, which
may influence a particular country’s relative desirability from an overall
oil and natural gas operating and risk-adjusted return perspective. This process
is employed in both areas that have existing oil and natural gas production,
as well as those regions that have yet to achieve commercial hydrocarbon production.
Once an area of interest has been identified, Kosmos targets licenses over
the particular basin or fairway to achieve an early-mover or in many cases a
first-mover advantage. In terms of license selection, Kosmos targets specific
regions that have sufficient size to manage exploration risks and provide scale
should the exploration concept prove successful. Kosmos also looks for long-term
contract duration to enable the “right” exploration program to be
executed, play type diversity to provide multiple exploration concept options,
prospect dependency to enhance the chance of replicating success and sufficiently
attractive fiscal terms to maximize the commercial viability of discovered hydrocarbons.
