Kosmos Energy to Slash Headcount, Costs

OE Staff
Tuesday, March 17, 2020

Oil and gas company Kosmos Energy is set to slash both capex and opex, and will suspend dividend payment citing the need to maintain balance sheet and preserve flexibility during the oil price volatility.

"At the 4Q19 results, we guided to a 2020 capital budget for our base production business of $325-$375 million. We have identified over $100 million of discretionary expenditure largely related to exploration activities in the Gulf of Mexico and our basin-opening exploration portfolio," Kosmos said.

The company said Tuesday it would cut Capex for the base business by around 30% to under $250 million whilst keeping 2020 production flat, in line with previous guidance and with the minimal expected impact on 2021 production.

"The company also has significant flexibility in its 2021 capital program should current market conditions persist," it said.

Further, Kosmos Energy, which is working with BP on the development of the Tortue Phase 1 offshore Mauritania and Senegal, has said it is working to defer 2020 capital spending on the project with the goal of extending the carry of its capital obligations through the end of this year.

Kosmos also reiterated that its priority was to sell down its interests “to support a self-funded growing gas business.”

Headcount reduction

"We plan to implement cost reductions with over $60 million of savings expected in Opex and G&A in 2020.  Whilst a significant portion of our Opex is fixed, we are targeting a reduction of $1/boe without impacting asset integrity or near-term production."

"Through a reduction in company headcount, no planned cash bonuses for employees in 2020 and other cost reductions we plan to significantly reduce cash G&A in 2020," Kosmos said, without providing details on where and how many people it plans to lay off.

Also, the company said it would stop dividend payouts until the situation improves.

"Our priority is to ensure the strength of the balance sheet in the current market price volatility. The Board has therefore decided to suspend the dividend after the announced 4Q'19 payment until market conditions improve.  This will provide savings of approximately $75 million annually."

"...Kosmos believes it can be free cash flow neutral beginning in 2Q and fund all of its obligations at a $35/bbl Brent price," it said.

According to Reuters, the Brent price was trading at $30.94 a barrel by 0746 GMT. Tuesday.

Categories: Finance Drilling Activity Production North America Africa Development

Related Stories

NOV Acquires MAATS Tech's Carousel and Cable-Lay Systems IP

TotalEnergies Gets Share of Bayou Bend CCS Project in United States

JUB Pacific Bolsters Liftboat Fleet

Current News

First Gas Export to Denmark from Tyra II Expected Today

Vattenfall to Take Part in IJmuiden Ver Offshore Wind Tender in Netherlands

Beach Energy to Let Go 30% of Workforce Amid Strategic Review

Ocean Infinity Inks Deal with Shell for Subsea Data Capture Services

Subscribe for OE Digital E‑News