Q3 2019 Earnings Call
Energy third quarter 2019 earnings conference call at this time, all participants are they listen only mode. A question answer session will follow the formal presentation I know when should require operator systems. During the conference. Please press star zero under telephone Keypad. Please note. This conference is being recorded I will now turn the conference over to your host Jamie Buckland Vice President.
That's relations Mr. Buckland you may begin.
Thank you operator.
Thank you all for joining us today.
Morning, we issued a third quarter earnings release on the slide presentation to accompany todays call.
Hi materials are available on the best as page Kosmos energy Dot Com website, we anticipate falling out of 10 key sort of course or with the FCC later today.
Joining me on the cold today to go through that material on the Ingles, Chairman and Chief Executive Officer.
China does chief Financial Officer.
Before we got started I'd like to much in this conference call include certain forward looking statements based on our current expectations.
Risks associated with forward looking statements have been outlined in the earnings release under now FCC filings.
We may also I refer to certain non-GAAP financial measures in our discussion.
Management believes such measures are important and looking at the company's historical and future performance and these are commonly referred to industry metrics.
These measures are provided in addition to and should be in Red <unk> in conjunction with information contained in our financial statement.
In accordance with GAAP and included in our SEC filings.
That's all I'm, saying before leave it to one day.
Thanks, Jamie and good morning, everyone.
I'd like to stop the cool by reinforcing the key characteristics.
Cosmesis distinctive investment proposition.
Kosmos generates cash.
We have a portfolio rich in value accretive capital that.
We have a strong balance sheet that underpins our strategy.
The seems a consistent with those we set out at our capital markets day in February and I'd like to go through them in more detail.
First Kosmos has a portfolio that delivers cash in the third quarter, we generated approximately $70 million the free cash while we remain on track to deliver over $200 million in 29 to even at current prices.
Yeah in Iraq, Paul sort of free cash flow.
The context in 2019 this represents a free cash flow yield around 10%, which continues to be very competitive coincide with other E. M P companies and indeed other sectors.
Second infrastructural at expiration or Ilex program is working today, we're pleased to announce off the success in extra skinny.
Long side, it too I like Cisco reason the gone since Cosmos <unk> DG last year. Both on production. This year. We have now my three discoveries from four I likes wells in total.
Without results. This morning, we announced to the test of the money Penny prospect was on the successful.
Well, which was targeting that resources of around 9 million barrels oil equivalent was designs is inexpensive exploration style or the all jumped development, well and cost around $3 million net to cosmos.
We have two more near term ilex wells in the Gong. We're currently drilling resolution and we'll spud Oldfield in December . These are the long just on my last prospects and the 2019 drilling campaign, both could be transformational for all gone business any advance of success.
Good we've demonstrated with the recently announced OCA discovery. The Kosmos has a focused high impact exploration program. We believe the old Cofield has an estimated 13 tcf of gas in place.
The wireless how to de risk around 50, Tcf and Nebraska area.
Okay is the largest deep water hydrocarbon discovery and the well so far this year.
With the recent success the bulk up plus the significant appraisal success with how the Yak on Tortue this year.
Resource estimate for the Mauritania, Senegal Bison has increased the top end of the 50 to 100 Tcf gas in place range.
As a result of these major resource additions, we've extended the sell down process into 2020 to allow the buyer pool more time to evaluate the new data.
And finally I consider approach to managing the balance sheet has not changed we continue to use free cash flow to fund the company's dividends and pay down that we expect to end the with leverage around 1.8 times [noise].
Turning to slide three I'm not a lot to discuss the courts in more detail as mentioned on the previous slide Kosmos generated $70 million a free cash in Threeq you capex for the quarter was inline with expectations and full year Capex remains within a targeted range.
The free cash generated we paid off our revolving credit facility and we will pay dividends a foreigner how sense for the quarter.
Production for Threeq, he was flat versus CIC to taking out the impact of American battery, which resulted in around 1500 barrels oil equivalent could I have lost production for the quarter.
It was also slightly negatively impacted by unplanned downtime at save a which is partially offset by the successful yes. The program at Acumera win by V. S piece now completed.
We expect full Q to be flat versus three two for the company juice, the deferral body, operator, or the gas enhancement work on Jubilee to the first quarter 2020 .
As a result for the full year 29 team, we expect production to be around 67000 barrels.
Oil equivalent per day with lower than expected volumes and gone up partially offset by outperformance in the Gulf of Mexico.
All my life assets continue to make strong progress and that because all Guinea, we had success with the as five while more not at the moment and then the Gulf of Mexico, We had first oil from gladden be.
In Mauritania and Senegal, we continue to make excellent progress last week, we announced the Okon discovery and we also announced the ACA two appraisal well results during the quarter, which proved up a southern extension of the field and supports the yeah cuts are on the LNG hub and the first phase domestic gas project.
Finally, a tortue we had a successful with result, with the GT, a warner appraisal, well, which expands the tortue resource potential. The project continues to make good progress with the phase one development around 15% complete at quarter end, we should rise to around 25% by year end.
Turning to slide four as I mentioned in my opening remarks Ilex program is working on this slide I'd like to focus on the progress was made in the Gulf of Mexico. Since we acquired DG 12 months ago.
We'll drill three exploration wells and had two discoveries with nearly had less Nick and gladden they.
The Navy headless naked gladden deep discoveries, while small demonstrate the rapid development timelines for these ilex tie backs gladden. They came on line within four months of discovery and nearly had this next expected online December 15 month development. It's the show development times that result in high returns.
Quick paybacks for these projects.
Looking at the right side of the slide we're currently drilling resolution and we expect to spud the old prospect in December .
Prospects to potentially much larger and could be transformational for our Gulf of Mexico business to use a baseball analogy and apologies to my fellow Astro friends on the line.
Hi last portfolio when they go home office low risk singles and doubles, which will replace the reserves that we produced during the Oh, we complement that with larger prospects that can deliver the haven't been catalyst if successful.
Turning to slide five which looks at our ilex, probably got an extra again.
This morning, we announced success with our initial IMAX well in EG.
This was the first wells to be drilled on more than three D seismic and proved out concepts around the potential of the underexplored reimburse any basin.
The seismic for the last five areas fast tracked and the wells how good the house at the San Antonio and channel, whereas previous wells were drilled on what we believe was the edge of the channel.
Well encountered approximately 39 meters and that old pay with better reservoir development than any of the previous wells drilled in the area diminishing logging data it looks like the all is high quality than we have at sabre and acumen and the well could flow to initial right of over 10000 barrels.
As a Boe per day, which would be immaterial increment to the current saybrook, who made production.
The field is within 20 kilometers of the Sabre ASP, so which puts it well within Thai baht range. We're now doing the work to a Scott established to scale up at discovered resource and evaluate the optimum development solutions to tie it back into the existing infrastructure.
Work is also now underway to identify additional low risk tie back prospects around the existing infrastructure final volumes from the 2018 seismic are expected to be Lebanon early 2020 a line for the maturation of prospects for the next drilling campaign.
Slide six shows a considerable progress we made since taking the final investment decision antonucci less than a year ago.
Through this successful GCA, one appraisal well we expended.
Resource base, greater Tortue, asking them and we expect to use as well as a future producer.
Beyond appraisal drilling as you can see from the table at the bottom and images on the right. We've made considerable progress in phase one of the projects and satisfy the key work streams are progressing well, where the f. LNG vessel in particular almost 25%.
We expect the overall project to be approximately 25% finished by the end of the.
Our estimate the first gas the Tortue remains the first half of 20 to 22.
Turning to slide seven our appraisal well at yacoub to confirm the southern extension of the field and as you can see on the right. This test demonstrated how lastly extensive field is combined with Teranga. We now have the resource required to underpin an LNG hub inside the goal which will be developed.
Using a phased approach where the domestic gas leading to an LNG export project.
Slide eight shows the technical highlights for the whole cone discovery, we announced last week, we like we believe the oil could feel has 13 tcf of gas initially in place and think excellent quality albian reservoirs as can be seen from the log on the last of the slide.
Discovery continues 100% track record on the inboard trend and demonstrates the ability of the high quality calibrated ablio too to identify gas in quality reservoir.
Well, which was real seven kilometers off structure confirmed our pre drill expectations about structural and stratigraphic traps all present and working.
Turning to slide nine Oelkers Kosmos is nine discovery in the Mauritania, Senegal basin, and the largest deepwater hydrocarbon discovery in the world So far in 29 team.
The well was drilled into were previously untested Albion play and encountered 36 meters of net pay an excellent quality reservoir.
Together with Massu and we believe we now have the rest up to 50 Tcf of gas in place in Mauritania alone more than enough gas to underpin a standalone LNG hub in Mauritania.
There's also additional upside potential and then untested apps in play and we remain very excited about this area.
So turning to the final slide one that we presented to the capital markets day in February this year at the time, we estimated Mauritania Senegal at around 50, Tcf of gas implies with upside potential to double that in the event of successful exploration and appraisal campaign this year.
We have done that with success at GCA Wong Yacoub to an OCA long we've increased the resource base. The top end of the range around 100, tcf across the basin, providing sufficient resources to underpin three LNG hubs totaling 30.
Million tons, Brian I'm up capacity.
With these significant resource additions through 29 team, we've extended to sell down process into 2020 to allow the buyer pool more time to evaluate the new data.
So to summarize todays presentation.
Kosmos continues to be highly cash generative.
We have an IMAX program that delivers high return short cycle growth, that's working EG and the Gome.
We've doubled the size of all resource base in Mauritania, and Senegal through successful exploration and appraisal in 29 teen.
And we have a strong balance sheet that underpins the strategy.
Thank you and I now like turn the call I wish the operator to open the session for questions.
At this time, we'll be conducting a question answer session. If you like Cascade question. Please press star one and your telephone keypad a confirmation toggle indicate your line is into question Q you May press star too if you like to remember question from the Q4 participants using speaker equipment. It maybe that's sort of pick up your handset before pressing the star Keith one moment please lobby.
Poll for questions.
Our first question is from Al Stanton RBC. Please proceed with your question.
Hi, Yes, good evening, guys, just Oh I appreciate you didn't always give guidance on what's going on in the data range and the on the various discussions you're having with potential buyers, but I think historically, we always assumed that would be one by I'm focused on told to me with no additional discoveries thing so nice to have put I'm wondering.
Now whether there's any [noise].
Possibility you might be looking to buy in terms of one from Mauritania and one for senechal.
Yes, Hi, Oh, yeah. Thanks.
It's a great question sort of get I was sort of go back to when we kicked off the process in February Yeah, We had a total resource across Senegal, and Mauritania of around 50, Tcf with a lot of concentration of its time on on Tortue.
Clearly through the we've had success with the wells as I said in my remarks, CJ won the rocket two and okay.
And we now have a resource which we believe is that that's helping the EUR 50 to 100 CCF range. So no we want to ensure that the potential buyers do have time to analyze the new dogs to better understand the assets I think as you point out we now have three various things out.
<unk> assets in Mauritania, and Senegal, and they will have distinct.
That's reviews.
You know greater Tortue is is a project by the first phase is being I find the we have gas versus gas.
Two two and a hockey is a away the inc. The resources increased with the GCA ones success. So you have something this this well described.
Yes. It surrender incentive go we have added resource to it where the outcome to success and I think underpinned.
Actually a plan for the commercialization with a near term domestic project consistent with the country's plant image on Senegal, but followed by an LNG export hub, so a different level of definition from tortue, but nevertheless clarity around the.
Next steps to commercialize.
And I would say in in barometer Mauritania its own you.
We had a successful well from many perspective it was about the competency the idea we drilled it in an area, where we could distinguish us a week or.
Cenomanian.
Attribute to I must stronger Albion ounce reviewed we drilled it off structure. So that we could demonstrate the structural stratigraphic closures were working I think as a result, we have a significant resource now in Mauritania. So again.
Different attributes so I think.
One of the things we're doing is to show the that Optionality is built into the the sell down process and there's a lot of new daughter to look at and I think there are different.
Attributes that different buyers will look out as a result.
Can I just a follow on it would we expect another well before the deals closed stores. This it.
No.
Clearly, we've got a you know that ongoing conversation with the operator, but I think that if you look at GE I believe were went down.
The E. These told you a was an additional piece of resource more than enough resource I think we were well described in yacoub.
And in Edinburgh, our I. I think the the evidence from the the OCO, while it is quite compelling so it doesn't need another it doesn't need another well today to add to capture what I would say the the core value in each of these assets now what's happened in the enough.
I think I'm, we're pleased with the precision with which we've done it and I don't think we'd anything else.
Okay. Thank you.
Great. Thanks Al.
Our next question from Bob Brackett Bernstein Research. Please proceed with your question.
Hi, Good morning, I had a question about resolution given that it's the largest of your Gulf of Mexico, Ilex wells, what caused the cadence of it being the third to drill this year is that it because it's higher risk score it needed a partner permits got can you give some color on that and what the risk of that well could be.
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Yeah. Thanks, Bob No. This is simply about that was a a upset bomb in process would be paid we have together I've done then we have to go out and get the rig you know as you as you know we know we don't have a rigzone long term charters. So it's a rig of opportunity.
Requires a certain spec so that was the a the timeline behind a behind a site you know.
It is important every Nick I need to keep emphasizing that you know because we're going out and actually I literally using rigs of opportunity. They know the the way the various prospects lineup will not be driven purely by scale or quality, there will be operational aspects that are coming supply and that's why resolution.
As a was the Tommy resolution has been driven by the equally out equally oldfield, it's been done on a separate Reagan so that that's what drives its Tommy.
That's very clear of follow up would be thinking ahead to 2020, you talked about during the capital markets day, a first well until may print cheap and then the Walker prospect in store and how do we think about IODEX program for 2020 .
Yes.
We've built a really good portfolio now and you know one of the things that I'm really pleased about is the the pace at which we've done it in the Gulf of Mexico, but actually is the quality of what we've built.
Yeah. So he or she says we can just every year since we closed. So I think you know what you can see is probably targeting around three to four ilex wells per year, where we were clearly opened up you know I think a real opportunity set an extra again, a now and so we're gonna see competing prospects are going to.
The competition between AJ on on the Gulf of Mexico, We've got to deepen but inventory in the Gulf more than five years, or so 25 prospects that'll be competing to get quality to the top on the same with AJ, but I think if you would sort of see AWS drilling.
For high quality material prospects, and 2020 and actually D. J B on a you know that's the cadence of the program. Okay. I appreciate it.
Thanks, Paul.
Our next question is from Charles Mead Johnson Rice. Please.
Please proceed with your question.
It was good morning, or good afternoon to maybe Andy do you want your whole team there I wouldn't pick up on your your E. G comments and I'm wondering if you could give us a little more a little more detail around the process forward here for this as far as this discovery you maybe that's five both with respect to bringing this.
Right and also the follow up drilling I know you have the seismic that's coming in early yeah, 20, but do you need that seismic before you can do and appraisal well do you need an appraisal well when should we be thinking about first volumes from us.
Great job.
Oh, it's sort of go back here you know the one of the fundamental.
Pieces behind entering Ecuador, again, I was to get access to cyber and it came I yeah, we've done a great job and stemming the decline a and creating value from from a purely from a production operations.
We capture the three a licensed walks around first that Wisco shooting seismic and then we high graded that seismic program to around the together product first from around us five.
The.
The target of the well was a San Antonio and channel, where we believe that the prior wells have been drilled it out on the ages other channels not in the heart of the channel and so the up the well objective was to establish a high quality reservoir.
In the core of the of the channel and we've done that we've delivered 39 meters. A good quality reservoir. We think we've got a lot of fluid than we'd got elsewhere inside for an acute right and I see this would be the first production from the the San Antonio in the area. So the while fully met.
The expectations. The primary target was fault block to which you can see on that on the chart in the in the pipe is that we we gave you ahead of the cool Mead going in the expectation was around 100.
<unk> million barrels of oil in place.
So now it's ultimately about the establishing the connected volumes that we've got we're literally just getting the wells out right now so the other while is still a you know still underway, but we've got the initial well daughter and tying that to the seismic understanding the best depletion methodology or water flood.
Versus natural deflation that will walk you optimize infrastructure that drives that and then you know what pre investment what do you put on the infrastructure. There are other fault blocks in the area, but I think we know we genuinely excited about it because the thesis with proved out there is good centsone in reservoir in the area we've.
We've got a well was fully met the expectations now we've got to get through an optimized development scheme, which allows us to fully exploit it. So that's the values of the next steps and and we're looking forward to do the what I don't think one that will need another well too to a price. It I think we've got the downturn.
Hey, they are they the ultimate visit the task now is to optimizing the the configuration to ensure that we've got all the the best best value for today and tomorrow.
Got it. Thank you for that and then and then if I could reference slide eight and you guys put all that up all the.
Interesting seismic on that on your your discovery there at Orca keep can you give us a little feel what was what was the obviously, it's a it's a big thing to find the the Albion reservoir, but how much of what was that the bigger surprise. There was the biggest prize finding that that cenomanian.
Don't structure like that.
Sure.
I wouldn't say surprise, but I think it was I. It was an important well because we wanted to tested to the full effects that we could have drilled as you can see we could have drilled that sort of on structure at a more conservative when I say location or the problem with doing that and they would have resulted in another well to be drilled right. So.
Okay.
We drilled a well, which we felt was approximately twice to demonstrate the the quality of the Albion.
And to demonstrate both construction and stratigraphic trap. So we I believe it was a it was an appropriate exploration well not without risk if you like but but actually with a with a with a good result, it's actually de risk both of those elements now.
And of course, there read across a across obviously from our soon to walk up to other two of the.
Prospects in the area, though found unveiling and then those for all the the barela hub, which ultimately has the potential now with well described a calibrated idea that supports the upper end of the resource we talked about.
Thank you.
Right size.
Our next our next question is from Neil Mehta Goldman Sachs. Please proceed with your question.
Hi, Thank you for the very thorough update this morning. The first question I have it just around gone up production I think year to date I think you guys. It knowledge. It's been more sluggish then what was initially anticipated takes then you could talk about at the you know how do you think we are in terms of course correction and how should we think about the outlook for a forgot.
On a production going into 2020.
Yeah. Thanks, Yeah, you know.
Sort of stand back from at all.
Yeah, we would anticipate.
29 team production to be around 90000 barrels a day gross for Ah Jubilee.
Which is clearly lower than forecast and the primary issue is the rising to do all.
Gas handling is therefore, the constrained and IP Jim.
Clearly if you can handle more gassy can produce more or it's as simple as that.
We had hoped that the gas enhancement project will be done in Fourq you. That's now been deferred by the operated two first quarters 2020 .
So once that carried out.
Clearly.
The ability to process more gas should lead to higher oil production in 2020.
And he though and the right certainly we would see you know it rising in the sort of 95 to 100000.
Once a day gross.
Without enhanced.
Yes handling.
They do book a 10, you know I think our views gross production will be around 62000 barrels oil per day.
And then put 2020, you know 10 relatively flat against that so I think that the outlook in and I think ultimately it is about.
Jubilee.
It's not our reservoir issue is not wells got plenty wells reservoirs performing we've just got to make sure that we can manage.
The the GE law, which will ultimately provides plenty of opportunity to improve the the old right.
Oh, that's great and the follow up question and this might be a question forgive me, but and what's now your trailing four quarters earnings positive and ER and with the liquidity stock having improved are you guys eligible for index inclusion can you talk a little bit about sounds the parameters.
Recognizing.
That you can't necessarily influence the outcome, but just so we can frame that out.
Yeah, Neel I'll take that yeah, you rightly say.
The primary parameters are a U.S. domiciled, which we Oh now I think the a another parameter is the liquidity of the stock, which as you rightly point now has reached the thresholds will the sell down of the.
The private equity owners earlier this year or another key a parameter is the in aggregate you know you last 12 months.
James needs to be positive in the last quarter positive. So I think those are all that those are they a the parameters.
And I think we believe we've we met those but as you rightly say thereafter as its really a a black box in terms of the decisions and of how and when the index inclusion or would occur. So obviously I I can't comment on that.
And neither can can Jamie but the.
Those are they a the three key parameters and obviously the results today, we're an important step forward in that.
That's great. Thanks, guys right. Thanks.
Our next question is from Richard Tullis Capital One Securities. Please proceed with your question.
Thanks, Good morning, Andy Congratulations on a nice quarter.
I'm going back to the sell down process Mauritania Senegal.
Could you provided you know little more detail on what the go forward plans are you know with the new data in hand, we reopened a data room, what could be the potential timing and maybe as a few comments. If you could on how the process was going I'm, leading into you know the drilling of the where.
Oh, you know.
How many participants and you know if bids were submitted et cetera.
Yeah. Thanks, Richard Yeah, you know it's been an interesting you know year for US I think there's.
This you know.
Helping a lot of interest.
Think you know the interest as against as sort of mix.
Background I would say the positives are around a year, where the the energy transition and the pressure on on companies to be relevant in a process and gas.
I believe will play an important role as a fuel has become more and more important to certain companies. So of course, you know that's credit genuine interest of how people can fit Oh resource and all projects in let's say in Senegal into a into that.
Portfolios.
And then you know if you if you you know people that pushed on as it.
As a negative vein the you know LNG prices in the which was certainly under pressure.
I think it's never going to do it and not environment, but actually I do you know this is production that comes on in 2022 that for you know people looking beyond that and they see a resource which is ultimately low cost it's got a at very competitive price into your.
You know competes absolutely with a with U.S. Gulf Coast gas.
And it's importantly don't know Seo too in that and as you think of competing projects around the world.
They meet the criteria for the energy transition that is a free key criteria and then we've also had all the news as it were on the.
On the well results and we opened the data rooms pretty early after a after February after they capital markets day, So a lot as a kid sense. So I think the the process really is about allowing people to.
To come back in you know look at the new data and actually I think you know Alan's question at the beginning was important I think we've got three very interesting assets now which have different attractions to different buyers, which creates additional ups optionality in the process.
So you know I think we've been a very different place. If we haven't had the success with that drove that we always felt we would but actually getting people acquainted with the assets and now the ability to come back and look at them will be an important product.
Of the process going forward.
That's helpful. Andy Thank you and just lastly.
It doesn't sound like there is gonna be additional drilling at Mauritania, Senegal related to to the LNG projects and 2020, but could you talk maybe what the potential additional capex could be now that you will retain 30% of the of the project into 2020 compared to maybe how you're thinking of it previously.
Well I don't think we've said the necessary [laughter] resigned but is that guy a very good I think we need to sort of.
Let the process play through 2020.
What I think you know what we should do you know we will there is we will come back to you in beginning of the you know in India with our guidance for Capex and a in 2022 or two to cover that we clearly have the carry from from BP, which which covers a portion of that true through through 2020.
So if it is in effect.
On the scenario, where you have played out it would be a backend effect. Okay. That's all for me. Thanks Sandy.
Our next question is from David round at BMO Capital. Please proceed with your question.
Hi, and its I personally you monopoly in a position to comment on your credit decisions.
The gas enhancement project that you believe but is there any thinking that this future proofing dot work right.
The more gas handling capacity now and then can I just that's gone on EG you talk about development concepts I posted the discovery that am I right in assuming those developing concepts are all tie backs or is there anything Kim has to stand alone given the additional resource.
I might be around the area.
Yeah, good questions David Yeah.
You know again, the most important thing to emphasize on Jubilee is it's a world class reservoir, so big fail.
Actually getting bigger a you know reserve replacement as being very strong year on year. The fundamental issue is sort of gas management and there was.
Two ways, which you can sort of deal with the problem I see three ways in which you deal with the problem you know the first as you say is so the increase the gas handling and what we need to do is is absolutely sort of all go with the operator has been to maximize the increment that.
We can make.
Now to provide as with the as you say a sort of the optimal solution that the risk. This issue going forward. So the gas is no longer they.
Yeah the constraint.
The other ways in which you can help mitigate the issue is clearly water injection, increasing the downhole crashes reliable water injection will also to mitigate the energy oil and then the third thing that is absolutely in the works is that to export more gas from.
From Jubilee.
To be used in the in domestic power production.
And there is a a power plant that is that has been actually remote being being relocated.
Hi, Jason said, the Afterall BOE, a gas plant, which will actually take gas from from Jubilee. So that will then have the a the gas offtake. So the combination those the three parameters the upping juggles to ensure that we'd go all the the optimal oil production so I'm.
I'm not negative about the future, but we do need to sort of see a gas handling capacity increases we need to see water injection lobby the improved and we need to see more gas offtake boes together provide significant upside.
Okay. Okay, and then so you know I think the answer is yes.
There is there is plenty of opportunities to to improve the situation, we just need to sort of quite get it done I bet on on AG. The reason we went in was to get out to EG was to look at things, which we felt could be tie backs.
Yeah, I would say today on the basis of what we know today that would be the optimal scheme, because we have additional capacity I I say, but and therefore I think that's the way you should think about it you know the inventory we're building of future Prospectivity.
They could they could be different they are they could be different but I think the objective for us five was to demonstrate a resource that has tie back potential that has very.
Positive economics, both in terms of its quality of its roots ends and the cash accretive nature of the a the investment where you know we haven't got a long time to first oil and get a short time to first oil and therefore very positive cash characteristics.
Okay got it.
Thanks, David.
Our next question is from par value mall cannot.
Raymond James.
Please proceed with your question.
During the question I'm going back to the outcome may and Suriname plans for 2020 I can you just remind.
Do you have a carry on.
That acreage as well.
No.
And I agree on that was a question on that much I Didnt answer.
Let me get back to the timing there was let me just can you go onto your question more broadly pop as well because I mean, it's important that I come back at that point the.
So we are 2020, we oh, we have found a while and NCR and targeting [laughter] a walk a.
Carbonite opportunity.
Collectively as agreed upon as at the side is is if a the wells 2021 and the rationale for that is there's a lot going all in the basin at the moment, you'll now the key wells that are being drilled in new daughter, It's got to come from that and I think it's important that we we take.
The time to you know fully digest that information and drill.
Baswell after right time, I don't think we're in that position. We've got no time clock on the exploration program. So of course, but not in a rush. So I think this is one way it is important to be absolutely disciplined about the capital because.
Today, we don't want to have any regrets about the well that we drill went off without rig driven or what else time processing on the licenses. This is a real opportunities to maximize.
Our or knowledge and therefore, the deployment of all of our capital on E. G. We got the seismic acquisition as obviously completed they into the dollars coming in and any.
We can see.
Good opportunity that so basically you know that remains a very valid target for a full 20 to 2020.
Okay. That's.
Helpful on and Tortue, so you've been in construction now for roughly a year.
I'm curious given the kind of the Duluth no.
Oh across the oilfield service value chain.
Are you, perhaps seen cost savings versus what you've originally you NBP had originally budgeted.
Yeah, I actually think that those savings were incorporated when we obviously went out to bid and then put the major contracts in place. There as you know there are elements of it which affects fixed costs, you've actually taken that.
Opportunity in the and the supply chain when we when we did that and I think the.
The overall contracting strategy that the opinions deployed is as being really really well down so I think yeah.
Those elements of sort of in capture the issue now as sort of no changes.
And ultimately where Ah projects other buttons.
Any trouble at this point in the cycle, where the variable cost cutting could increase equally well with no changes the variable costs could could come down, but I think the what I'd say the to me the most important part about the.
The process is that in terms of execution given the a as you say the looseness in the sector is you get da teams from the contractors. So there's never been ER.
That at times, so actually construct and then we clearly have not contracted yet four phases, two and three and so you have the savings I think what with one from phase one we can take across to phases, two and three and look to loosen up to.
Continue to drive down those capital costs. So you know the pace of the project is been done in a very thoughtful way, where you know we're capturing the looseness in today's market and ensuring that we're contract well and I see the final point is tied to letting some phase one and then apply them into a interface.
Two and three lots playful yep, Okay. Appreciate it right time how.
This concludes the question answer session I will now turn the floor back over to Jamie Buckland for closing remarks.
Thanks, operator, we appreciate everybody joining us on the call today.
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