Kosmos Energy Ltd.

Good day, everyone. Welcome to Cosmos Energy's second quarter 2022 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.

Thank you, Operator, and thanks to everyone for joining us today. This morning, we issued our second quarter earnings release. This release and the slide presentation to accompany today's calls are available on the Investors page of our website. Joining me on the call today and to go through the materials are Andy Ingalls, Chairman and CEO, and Neil Sharpe, 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. At this time, I will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our second quarter results call. I'd like to start today's presentation looking at the operational delivery in the quarter. I'll then hand over to Neil to talk through the financials before I wrap up today's presentation. We'll then open up the call for Q&A. Turning to slide three, 2Q was another quarter of strong execution for Cosmos as highlighted by the boxes on this slide. Our production assets are performing well with production for the quarter at the upper end of guidance. Our three development projects, Tortue Phase 1, Jubilee Southeast, and Winterfell, are continuing to make good progress and are expected to deliver production growth of around 50% by 2024. We continue to optimize our world-class gas portfolio in Mauritania and Senegal, working closely with partners and the governments to accelerate and deliver value from our significant discovered resources. Today, Cosmos announced its plan to utilize existing contractual rights in the sales agreement for GTA Phase 1 volumes to divert cargos to prospective buyers in order to benefit from the current market environment. More on that in a moment. And finally, the balance sheet continues to improve as the portfolio generates cash and drives down leverage, all while supporting our differentiated growth. We'll dig into each of these things later in today's presentation. Turning to slide four, which looks at our producing assets, which are performing well with 2Q production coming in at the upper end of guidance. In Ghana, the Jubilee field continues to deliver. Gross production for the quarter, excluding the impact of the shutdown, was around 92,000 barrels of oil per day. Including this impact, gross production was around 74,000 barrels of oil per day. In May, the partnership completed the planned two-week shutdown, achieving our key objectives, which included important maintenance and the tie-ins for the risers for the Jubilee Southeast development. Following the shutdown, gross production has averaged over 90,000 barrels of oil per day, benefiting from the producer well and the injector well completed and tied in during the quarter. As the operator recently communicated, the Ghana drilling performance has been excellent, with wells coming in ahead of schedule and under budget. The partnership will now focus on managing the performance and reliability of the field until the Jubilee Southeast wells come online, which are scheduled for mid-next year. These wells should drive the next step up in production towards the 100,000 barrels a day field target. A 10 gross production of around 24,000 barrels of oil per day was in line with expectations. One producer well is currently being drilled at Enyenra, with production for that well expected in the fourth quarter. As the operator highlighted in its recent trading update, the partnership has been performing a review of the 10 resource development opportunities. We believe there remains a significant amount of undeveloped oil and gas and are evaluating the optimal path to bring these resources online over the coming years. As part of that optimization plan, We had two riser-based wells planned at 10 this year to support the delineation of the ENTOME resource. In July, the partnership drilled the first of the two riser-based wells. The NT10 well was drilled to test two separate reservoir objectives with the reservoir quality and thickness better than expectations, but the well encountered water. The well was drilled in a structural load to test the boundary conditions for the ENTOME resource modelling. The second riser-based well, NT11, is planned for late 2022, targeting a different fairway in a structurally higher setting. The results of the two wells should allow us to high-grade and optimize the future drilling plans for the TEN enhancement project. Next, Royal Guinea, gross production of around 31,300 barrels of oil per day was in line with expectations. but sequentially lower quarter on quarter due to higher facility downtime and certain wells being offline for work over activity. We have two ESB installations planned this year with the first completed during the quarter. As we flagged in May, the partnership extended licenses of both Sabre and Akume to 2040, extending our 2P reserves base by around 6 million barrels, which creates an incremental NPV10 of around $100 million at a $75 margin. per barrel oil price. With the extension, the partnership has committed to drill a package of four infill and ILX wells. A rig has been selected and we expect to begin that work in the second half of 2023. In the Gulf of Mexico, net production of 20,600 barrels of oil equivalent per day was above expectations and around 10% higher than the previous quarter due to less downtime of third party facilities in the second quarter. The HP-1 vessel, which processed production from the tornado field, had been scheduled for a routine dry dock in late 2Q. This has now been deferred to the third quarter, so we expect there will be downtime of around 45 days related to tornado in 3Q. Four-year production guidance remains unchanged. The Kodiak sidetrack has now been drilled with completion activities ongoing. Drilling results of the well are in line with our expectations, and initial production is expected later this quarter. Also on Kodiak, we completed the preemption transaction in June to acquire an additional 6% interest, taking our total interest to around 35%. The new sidetrack well, combined with our larger working interest, should increase our net production in the Gulf of Mexico by approximately 3,000 barrels of oil equivalent per day after the Kodiak sidetrack comes online. Finally, at the end of the second quarter, we sanctioned a new subsidy pump project at the odd job field, which should both accelerate production and also increase recoverable reserves by extending the economic life of the field. A great investment, which we expect to have a very short payback, particularly in a higher price or environment. Turning now to slide five. We've talked in previous presentations of growing production by around 50% by 2024. This slide has a status update of the three key developments that we expect will drive that growth. First, Tortue Phase 1, our LNG project in Mauritania and Senegal. All work streams continue to make good progress with the project over 80% complete at the end of the second quarter. On the hub terminal, all 21 concrete caissons have now been installed, an important milestone for the project. Piling installation is on schedule and nearing completion, with the construction of the living quarters platform complete and in transit to the site. On the floating LNG vessel, which has been constructed in Singapore, construction and mechanical completion activities continue and commissioning works have commenced. On the SCSO, which is being constructed at the Costco yard in Kedong, In China, mechanical completion loop checking activities continue and were approximately 50% complete at the end of the second quarter. BP is working hard to mitigate the impact of the April lockdown of the Costco yard and the ongoing COVID disruptions in China whilst ensuring the FPSO leaves the yard with a targeted high level of completion. However, the operator has not been able to fully mitigate these impacts and we now expect the FPSO sail away to slip from end September into the fourth quarter. Despite this later sail-away date, the partnership is working to maintain the overall project timeline to first gas by optimizing the sequencing of the hookup activities. On the subsea, the installation of the subsea pipeline began in the second quarter, with a second pipeline vessel expected to arrive later this year to begin the deepwater portion of the pipeline. There have been quality issues with the fabrication of some of the subsidy equipment, which will require repair. We don't currently anticipate this to impact the overall project timeline. And finally, on drilling, we've successfully drilled two of the four wells required for first gas. The third well is in progress. So even with the supply chain challenges, we continue to make good progress quarterly and are still targeting first gas in the third quarter of 2023 with the first LNG cargo targeted for year-end 2023. On Jubilee Southeast, the project's approximately 40% complete, with long lead items ordered and the drilling on track to commence in the fourth quarter. As I mentioned earlier in the presentation, work was done during the Jubilee FPSO shutdown to allow the tie-in of these wells. Initial production is targeted for the middle of 2023, with the new wells expected to increase total Jubilee field production to over 100,000 barrels per day. At Winterfell, the field development plan has been submitted to the partnership, and formal FID is expected by the end of the third quarter. Based on the additional technical work we completed on the initial wells, we now believe the total resource is significantly larger than previous estimates, with up to 200 million barrels of gross recoverable resource. I'll talk more about the development plan on slide six. As we've described in the past, we plan to develop Winterfell as a phase subsidy tieback project. The first phase, which can be seen on the right side of the slide, is expected to include five wells, three drilled before first oil, targeting around 100 million barrels of gross recoverable resource. Based on the pressure work from the discovery wells, we now believe the total resource could be around double the original 100 million barrel estimate. which we expect to prove up as we drill and produce the Phase 1 wells. Winterfell is already well advanced with long lead items ordered and a rig selected to drill and complete the first wells next year. The partners have received a field development plan from the operator and we expect FRD approval by the end of the third quarter. This low-cost, lower-carbon oil development is expected to have strong economics. Development costs are expected to be around $10 per barrel, with operating costs around $12.50 per barrel, delivering a break-even of less than $25 per barrel. First oil is expected around 18 months from FID approval. Turning to slide seven. Over the last two slides, I've discussed the development projects in the portfolio that we expect to drive production growth around 50% over the next two years. This slide looks at the deep hopper of opportunities in Mauritania and Senegal that we expect can deliver significant additional value and contribute to a growing gas weighting across the portfolio. First, Tortue Phase 1. To optimize the commercial value of sales for the gas production from Tortue, Cosmos plans to utilize existing contractual rights under our Phase 1 LNG agreement to divert cargoes to prospective buyers in order to benefit from the current market environment. In the gas sales agreement for phase one, we have a deliver or pay contractual right, which allows us to take advantage of elevated global LNG prices for a portion of our phase one volumes. By exercising this right and diverting cargoes, COSMOS could retain significantly more upside to global gas prices, especially if current gas prices severely dissipated from oil prices. Second, Tortue Phase 2. As we said last quarter, given the structural changes to the global gas markets we have seen in recent months, we are working with the operator and the government to ensure we have the right development concept for Phase 2 with regard to scope and scale. We are therefore working closely with our partners to optimise the development scheme to best utilise the existing Phase 1 infrastructure to maximise cash flow and return to the partnership. We also want to manage cost exposure in light of the supply chain constraints and inflationary pressures we are seeing across the industry. A development decision is now planned for the end of the third quarter. Third, on Borrella, with the expiration of the C8 license in 2Q, the partnership has agreed the substantial terms and conditions of a new PSC and the license is awaiting government approval. The new PSC, which retains the area surrounding our successful Borrella and Orca discoveries, would grant the partnership two years to submit a development plan. As we discussed in the past, the area has future development potential of around 10 million tonnes of LNG per annum and we would also plan to develop these resources in phases. As we would have a new PSC carved out from the existing C8 license, we were required to write off our historical E&A costs from an accounting perspective, although they are still tax deductible and cost recoverable against our torture development. Lastly, at Yakuturanga, the partnership continues to progress the initial phase of the gas development with the government, which centers on a domestic gas solution to provide low-cost gas to support the country's energy needs to drive its rapidly growing economy. I recently visited Senegal and Mauritania to meet with their respective energy ministers and President Sal of Senegal to discuss the future gas opportunities in the region. With both countries, there is an aligned view around what the future could hold for their gas resource development. There is a significant lower carbon advantage gas resource available offshore that could help provide more energy security for the world and Europe in particular. Equally important, given the characteristics of the gas and its lower carbon intensity, this resource could play a significant part in bridging the energy transition and in providing the affordable energy that Mauritania and Senegal rightly demand for their own development. The very embodiment of a just transition. Both governments recognize that we are living in a volatile world, as the pandemic and the events in the Ukraine have shown. And I believe both countries have the vision to see through this volatility and become important players on the world energy stage in the coming years. As we refine the next phases of our LNG projects, I believe the futures for Mauritania and Senegal are bright. With that, I'll turn the call over to Neil to take you through the financials for the quarter.