Kosmos Energy Ltd.

Good day, everyone. Welcome to Cosmos Energy's fourth quarter 2020 conference call. Just a reminder, today's call is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Cosmos Energy.

And thanks to everyone for joining us today. This morning, we issued our fourth quarter earnings release. And this release and the slide presentations will accompany today's call are available on the Investors page of our website. Joining me on the call today to go through the materials are Andy Ingalls, Chairman and CEO, and Neil Shah, CFO. During today's presentation, we will make forward-looking statements that refer to our estimates, plans, and expectations. Actual results and outcomes could differ materially due to factors we note in this presentation and in our UK and SEC filings. please refer to our annual report, stock exchange announcement, and SEP filings for more details. These documents are available on our website. At this time, I will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. I'll start today's presentation with a reminder of our strategy and the characteristics that differentiate Cosmos. I'll then look back at 2020 and the strategic strategies steps we made during the year, despite the COVID-related challenges, before Neil walks through the quarterly numbers and the financial progress we made in 2020. I'll then wrap up the presentation with a look forward into 2021 and the increased momentum we expect through an active year ahead. Turning to slide two, which looks at our portfolio and the unique characteristics that define the company. Cosmos has a high-quality portfolio, world-class, conventional, oil and gas assets with strong ESG credentials. Our focus on offshore exploration development production along the Atlantic margin has not changed. We have three oil production hubs in Ghana, the Gulf of Mexico, and Extraordinary Guinea, as well as a world-scale LNG development in Mauritania and Senegal. These advantage assets have low decline rates, Brents or HLS price benchmarks, and an overall carbon intensity that is significantly lower than the industry average. As our recent climate risk and resilience report showed, we are making portfolio decisions and capital choices to deliver shareholder value consistent with a lower carbon world. Safety and sustainability are two core values that are critical to the delivery of our strategy, and I'll talk about both subjects in more detail later in the presentation. Alongside the producing assets and our LNG development, we continue to high-grade our exploration portfolio with a focus on returns. This means prioritizing proven bases where we have a deep technical understanding, a large resource portfolio, and can leverage existing infrastructure. Our acquisitions at Equatorial Guinea and the Gulf of Mexico targeted opportunities that created value through optimizing the existing production base and through infrastructure-led exploration, or ILX, and we've built a diverse hopper of ILX opportunities across the three basins. Given their low cost and low decline rates, these assets produce significant free cash flow, even at low oil prices. Through the 2020 cost reduction, as Neil will talk about later, we are materially low in our corporate free cash flow break-evens. and we expect our base business to generate a healthy level of free cash flow at current oil prices this quarter. On the gas side, the phase development of Tortue is expected to generate a long-term free cash flow stream to complement the cash-generative oil assets in the portfolio today. First gas at Tortue phase one is expected in the first half of 2023. And finally, the business is underpinned by a solid balance sheet that enables us to execute our plans. We came through 2020 with ample liquidity, a staggered debt maturity schedule with nothing maturing this year, and the business that is expected to generate cash and reduce leverage. Certainly supply-free, where I'd like to focus on our strategic progress last year. The environment for most of 2020 was extremely challenging for the sector. and for society as a whole. However, against that backdrop, Cosmos delivered on its key strategic priorities. Our production assets delivered robust performance in 2020, producing around 61,000 barrels of oil equivalent per day. This is only an 8% decline year-on-year, despite a reduction in capex of around 40% over the same period. Tour 2 Phase 1 was around 50% complete at year-end, with the project back on track despite COVID-related impacts. We published our first ever TCFD-aligned climate risk and resilience report during the year, followed this with our sustainability report, and set a goal to be carbon neutral for scope one and scope two emissions by 2030 or sooner. This climate risk analysis supported our decision to monetize a portfolio of exploration assets bringing in around $100 million of proceeds in the fourth quarter, with further upside potential on future success with no more capital exposed. Following that transaction, we now have an expiration portfolio focused on high return, fast payback opportunities in the proven basins we know well, where we restarted drilling in 4Q with a successful Winterfell ILX well. On cash, we reached a cash flow inflection point in the second half of the year, with positive free cash flow in 4Q driven by higher prices, as well as significant and sustainable cost reductions, which have lowered our corporate break-even. We established a financing path for Tortue Phase 1, which should enable us to fund our current interest through to first gas. Working closely with BP, the operator, we have also optimised Phase 2, significantly lowering capex, which we expect to enhance future returns and cash flow. And finally, on the balance sheet, we diversified our available source of capital with the Gulf of Mexico term loan, and we maintained healthy liquidity through the year with around $570 million available at year end. Turning to slide four, which looks at our reserves. A sustainable EMP business requires low cost, lower carbon assets, and a strong reserve base. Cosmos has both, with total 2p reserves around 480 million barrels of oil equivalent, a 2p reserves to production ratio of over 20 years. As you can see on the top chart on this slide, our 2p reserves are split evenly between the oil producing assets in Ghana, Equatorial Guinea, and the Gulf of Mexico, and the Tortue gas assets, which we expect to come online in 2023. Year-on-year changes to 2P reserves largely reflect 2020 production and the optimized second phase of the torture development, which should increase project capacity to 5 million tons per annum. Our 1P SEC reserve base of 140 million barrels largely reflects the impact from 2020 production and a lower SEC price deck that is around $20 per barrel lower than 2019 prices. which impacted the economic limit for some assets later in life. At current prices, we'd expect those price-related reserve changes to reverse in 2021. Looking forward, we have significant additional discovered resources that should increase our reserves when booked. On 1P, future ads are expected to come primarily from Tortue Phase 1, which would add an additional 100 million barrels of oil equivalent at current prices, while Assam and Winterfell are expected to further increase our 2p reserve bets. Turning to slide five, as I said in my opening remarks, safety is a core value at Cosmos, and nothing is more important than the safety of our employees and contractors. The slide shows our safety metrics over the last five years, benchmarked against the industry. Our One Team One Goal initiative to deliver HSE excellence has recently become even more important in the wake of a tragic incident in the Gulf of Mexico this January, in which a subcontractor working on a Cosmos-contracted drill ship was fatally injured. The incident is a stark and tragic reminder that the journey to zero incidents and accidents is more than a set of HSE metrics. As a company, we're determined to learn and prevent anything like this happening again. The incident is still being investigated, and we've already begun to share the initial learnings with our peer companies, engaging with more than 20 operators in the Gulf of Mexico. Looking at the right-hand side of the slide, our commitment to health and safety extends beyond our direct operations and informs how we engage with our communities. In each of our countries, our teams were quick to support the COVID-19 response effort with critical medical equipment, testing kits, and other supplies. We also set up a hunger relief program to address food insecurity that's been made worse by the pandemic. I'm proud of the way our people rose to the challenge, supporting each other and our communities through the year. Turning to slide six, the operational performance for the quarter. In Ghana, cargoes and sales were in line with our guidance, while entitlement production was sequentially lower due to the lack of drilling activity in the same half of the year. Uptime and reliability numbers were strong in the quarter, as they have been through 2020, and we continue to work closely with the operator to ensure this performance is sustained. The extra-organic performance was in line with expectations, and we look forward to our first drilling campaign starting later this year. In the Gulf of Mexico, production was in line with guidance. The production number on the slide does include the benefit of contractual royalty relief, which we received due to lower realized oil prices in 2020. In December, we spotted the successful Winterfell ILX well, which I'll talk about later. In Mauritania and Senegal, phase one of the Torchy project ended the year around 50% complete, with the force majeure dispute the goal I resolved in October finalizing the 11th month delay. Overall, most of 2020 saw a slowdown in operational activity across the company due to the pandemic and ability to safely execute. However, in the fourth quarter, activity started to return. We expect momentum to continue building as we move through 2021. More on that in a few minutes. Now I'd like to hand over to Neil to take you through the financials.