Kosmos Energy Ltd.

Good day, everyone. Welcome to Cosmos Energy's first quarter 2021 conference call. At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. 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.

Thank you, Daryl, and thanks to everyone for joining us today. This morning, we issued our first quarter earnings release. This release and the slide presentation to 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 SEC filings for more details. These documents are available on our website. And at this time, I will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. Today, almost to the day, marks the 10-year anniversary of Cosmos' IPO on the New York Stock Exchange. The official birthday is tomorrow. So I want to start the call with a look back at how far the company has come over those 10 years and also look forward to where we expect the company to head over the next decade. I'll then talk about the operational highlights for the quarter. review our upcoming appraisal and infrastructure-led exploration activity before handing over to Neil to discuss the 1Q financials and the balance sheet. Starting on slide two, in 2011, at the time of the NYSE listing, Cosmos was a successful frontier explorer. The company's operations were centered around Ghana with production from a single FPSO at Jubilee. Oil prices averaged $111 per barrel that year, and consensus was there wasn't enough supply to meet growing future oil demand. Full-year production in 2011 was just 16,000 barrels of oil per day, and Cosmos had net 2 pre-reserves of around 70 million barrels, almost all of which was oil. Over the last 10 years, Cosmos has successfully transformed from a frontier oil explorer to a full-cycle E&P. We've brought online the 10 fields in Ghana, discovered multiple giant gas fields in Mauritania and Senegal, and have since taken FID on Phase 1 of the Tortue LNG project. We have diversified our production and added ILX opportunities with value accretive acquisitions in Equatorial Guinea and the U.S. Gulf of Mexico. And last year, we monetized our longer-dated frontier exploration assets. Over that time, production also nearly quadrupled and our reserve base increased around sevenfold to where we are today. While we've grown the business and adapted the strategy to meet the rapidly evolving world around us, one characteristic that hasn't changed is our commitment to corporate responsibility and our dedication to supporting the economic and social development of our host countries. Around the time of our listing, Cosmos set out to improve transparency across the oil and gas industry by publishing all of our petroleum contracts online. To this day, we believe we are still the only U.S. oil and gas company to do this. To enhance the society's In which we work, we set up the award-winning Cosmos Innovation Centre in Ghana, which later expanded into several other countries in West Africa. The Cosmos Innovation Centre invests in promising young entrepreneurs and small businesses to bring lasting benefits to the host countries and contributes to the creation of healthier and more diverse economies. In recent years, we have increased our commitment to the environment integrating the impact of climate change into our strategic business decisions, shaping our portfolio to be fit and relevant for the future, and setting a goal of carbon neutrality in our Scope 1 and Scope 2 emissions by 2030 or sooner. As we look at the company today, Cosmos is an oil-focused full-cycle exploration and production company with production from three separate hubs, a world-scale LNG development, a deep hop for proven base and ILX opportunities. We've created a strong platform which we believe will allow us to successfully navigate the next 10 years with defined high-quality projects in our current portfolio to further grow and diversify production. Over the next several years, we believe we have line of sight to grow organic production to around 100,000 barrels of oil equivalent, with potential options to supplement that further with compelling value-enhancing inorganic opportunities. In 2023, we expect first gas from Torchy Phase 1, with the second phase planned to come online the middle of this decade. This significant ramp-up in company production is expected to make Mauritania and Senegal a major production hub for Cosmos, with the gas weighting of our portfolio increasing considerably. All credible scenarios by leading analysts, from economists to financial advisors to scientists, have modeled a pathway to 2050 with a significant proportion of natural gas in the energy supply mix. It's our view that the world cannot achieve the Paris goals and let millions of people out of poverty in a developing world through a just transition without natural gas playing a major role. With our growth in natural gas and a firm commitment to emissions reduction, COSMOS is playing its part towards the Paris goals. We are already making good progress towards those goals with our measure-reduce-mitigate approach to emissions and our investment in high-quality nature-based carbon capture projects in Ghana and the U.S. This consistent agenda to tackle climate as part of our broader commitment to advancing our ESG responsibilities has been a major part of Cosmos' business over the last 10 years. With a portfolio of advantage assets, we expect to remain well positioned to further drive that agenda over the next 10 years. Turning to slide 3. I spoke at our 4Q results in February about the operational momentum that we expect to see return in 2021. We've made a strong start to the year and this slide shows the progress we've made across the portfolio in the first quarter. On production, we planned to drill nine infill wells in 2021, three times as many as we drilled in 2020. This activity has started in line with our 2021 work plan, with infill wells already drilled in Ghana and the Gulf of Mexico, and our second well in Ghana currently drilling. In Equestrian Guinea, our production enhancement activities for this year have started successfully. We expect to shortly begin our initial infill drilling campaign of three development wells, with the rigs scheduled to arrive at the end of this quarter. On development, Phase 1 of the Tortue LNG project is continuing to advance, with 58% complete at the end of the first quarter. On the FDSO sale and leaseback, the documentation has been finalised and the government approval process is well underway, with the transaction expected to close this quarter as previously guided. On expiration, we started the year with success at Winterfell in the Gulf of Mexico and partners have fast-tracked an appraisal program with an appraisal while expected in the third quarter. We're also planning to drill the Zora ILX while in 3Q. More on this shortly. On financing, late February, we successfully completed a high-yield bond offering, and this morning we announced the completion of our RBL extension in conjunction with our spring redetermination. These transactions have collectively strengthened the balance sheet, increased liquidity, and pushed out all near-term debt maturities. Having started the year strongly, we remain on track for the full year to deliver between $100 and $200 million of free cash flow from the base business at $55 per barrel Brent. Slide 4 looks at the ramp-up in activity across our three production hubs in more detail. In Ghana, we continue to work closely with the operator to enhance facility performance and drive higher reliability, and we're making good progress. FDSO uptime in Wonkyu was 98% at Jubilee and 99% at TEN, carrying on the momentum from the second half of 2020. Water injection at Jubilee, which is helping provide reservoir support, is now at levels not seen since 2012. Gas offtake of approximately 110 million standard cubic feet per day from Jubilee in 10 is around double the 2019 level, and there is scope for this to increase further. Greater gas offtake means less gas being injected into the reservoir. Combined with improved water injection, this is expected to have a positive impact on the GOR at Jubilee, which should mitigate decline from existing wells. The Karam Abuia Jubilee was commissioned in the first quarter, removing the need for shuttle tankers, which reduces OPEX and streamlines our operations. As I mentioned in my opening remarks, we're back to drilling in Ghana and have just finished drilling a producer well at Jubilee. This is the first well drilled on Jubilee since 2019. It came in as planned and is the first of four wells planned in Ghana this year. The rig has now moved to drill a water injection well at Jubilee, after which it's expected to complete both wells, increasing Jubilee production by an estimated 15,000 to 20,000 barrels of oil per day gross, which should continue to drive our production higher. In 3Q, after initial two wells, the partnership plans to drill and complete a 10 gas injector well before drilling and completing a third Jubilee well in 4Q, which is expected online around year-end. In Exxon Guinea, we've been active 1Q with a QME upgrade project nearing completion, adding additional power, water injection and gas lift capacity necessary for further facilities, de-bottling and additional ESPs. In April, we completed the first of three ESPs for 2020, won and upgraded the G19 flowline, which has significantly enhanced production from that well. We've contacted a rig for our upcoming drilling campaign and is expected to arrive in-country later this quarter. The three planned wells this year will be the first infill wells drilled in Equatorial Guinea since 2015. In the U.S., Gulf of Mexico, Kodiak 2 was brought back online late in 1Q after a successful remediation of the subsea infrastructure issue identified in the fourth quarter of 2020. The Kodiak 3 well came online last month, and we plan to drill the Tornado 5 in full well this quarter, with production expected in 3Q. Cosmos delivered approximately 53,000 barrels of oil equivalent per day for the first quarter, in line with guidance, and our production activities remain on track to hit a year-end exit rate of 60,000 barrels of oil equivalent per day. Turning to slide 5, the momentum we've seen in one queue across our production activities is matched in our development projects. Torture Phase 1 ended the first quarter around 58% complete, with strong progress across all of the major work streams, which can be seen on the images on the slide. The top image is the FPSO, where the hole was launched last month. The bottom image shows the progress being made on the breakwater. Five cases are complete, with work ongoing on the next two. And in April, the first case on offloading took place. The full caisson construction process through to offloading has all gone to plan and the offloaded caisson is now in wet storage ahead of transit to the final breakwater location later this year. This is an exciting time for the project as the infrastructure starts to move offshore. Overall, we're making good progress and Phase 1 is expected to be around 80% complete at year end. On the FDSO sale and leaseback, documentation is being finalized and the government approval process is well underway. Late last month, the energy ministers from both countries held a joint meeting on the project where they endorsed the FDSO financing, continuing the strong and consistent support by both countries for the project. As a result, we feel good about where we are and as previously communicated, we're made on track for a 2Q completion. Turning to slide 6. We talked in February about the ILX success we had with Winterfell in the Gulf of Mexico at the beginning of the year. Winterfell is a Miocene subsoil discovery found in a trap type common in the Gulf of Mexico. The exploration well tested two reservoir sections in a single fault block and the seismic response has now been calibrated with the well data. The Winterfell discovery derives more than 100 million barrels of gross resource potential across Cosmos' acreage position across multiple fault blocks and reservoir section. Over the last quarter, the partnership has been working on a fast-track appraisal plan, expected to begin in 3Q with an appraisal well. This well is designed to test the fault blocks to the north-west of the discovery, which is the same seismic signature as Winterfell. The well is also expected to test a deeper horizon with an exploration tail, which can be seen on the seismic cross section on the bottom image of this slide. We believe that with a successful appraisal well, we have discovered more than sufficient resource potential in the core development area to underpin a development decision. We anticipate the development will likely be phased with up to three potential drill centres. This discovery, located in an infrastructure-rich part of the Gulf of Mexico, provides the potential to develop a highly economic, low-carbon project. Turning to slide 7, which looks at Zora, our next potential ILX hub. Zora is planned to be the first exploration well in another mini-basin. The initial prospect, Zora, is a super-solid miocene target. in the same play as nearby analogous producing fields such as Oddjob, Horn Mountain and Marmalade. Cosmos will operate the well with a planned working interest of 37.5%. We have received all of our permits and the rig has been contracted with drilling planned in 3Q. As you can see from the map on the slide, the Zora crossfade is near host facilities which can facilitate a low cost and lower carbon development in the event of success. The image also shows that Zora sits near several other prospects where Cosmos has built a material interest. We believe that a successful Zora well will lower the risk of these nearby opportunities, thus providing the potential to create a new production hub with around 200 million barrels of gross resource potential in total. With that, I'll hand over to Neil to take you through the financials on slide 8.