Q4 2022 Kosmos Energy Ltd Earnings Call

Good day, everyone welcome to Kosmos Energy's fourth quarter and full year 2022 conference call.

As a reminder, all participants are in a listen only mode.

A question and answer session will follow the formal presentation you require operator assistance during the program. 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 Investor Relations at Kosmos energy.

Thank you operator.

Thanks to everyone for joining us today.

Morning, we issued our fourth quarter and full year 2022 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 I'm, the Ngos Chairman and C.

And Neal Shah.

During today's presentation, we will make forward looking statements that refer to our estimates plans and expectations.

<unk> 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 detail.

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 fourth quarter and full year 2022 results cool.

So as I normally do with our full year results I'll start today's presentation by taking a step back and talk about our strategy and how the solid progress. We made in 2022 has supported the delivery of that strategy.

We'll then focus on 2023 and an important year of inflection for the company.

Turning to slide three which looks at cosmos its role in helping address the worlds energy challenges.

Well this is grappling with the need for affordable secure and cleaner energy with a balanced approach required to address the three dimensions of this energy trilemma.

Kosmos has the right strategy and portfolio at the right time to be part of the solution.

We have an oil weighted portfolio that can supply more of the energy the world needs today.

We're investing in growing old supply in each of our core production hubs with an emphasis on high graded projects that yield low cost lower carbon barrels that are highly cash generative.

At the same time, we're working with our partners to bring new sources of natural gas into production.

These projects address affordability and increase energy security by supplying more gas that global LNG markets as well as into domestic markets in Africa.

This assist our host countries in two ways.

First the revenues from the export of LNG can be invested in critical infrastructure to promote economic development.

And second providing baseload domestic gas supply will help expand that.

Access to electricity.

We go in each of the countries, where we work in Africa.

Over the next year, we're targeting an increase in production of around 50% as we optimize current production and bring new projects online.

Because most of the expected cash flow from our current and planned activities enabled selected reinvestment into the most compelling opportunities in our natural gas portfolio.

Which can help meet demand and support the energy transition for decades to come.

Longer term, we plan to continue shifting the balance of our portfolio from oil to natural gas and LNG to help meet the world energy needs as cleaner natural gas displacing coal heavy fuel oil and biomass as a primary source of energy in both developed and emerging economies.

Well as demand for energy continues to grow, particularly in Africa and field E&P companies are investing to meet this demand.

Given the quality of our asset base and the wealth of opportunities within our differentiated portfolio. We believe cosmos has an important role to play in helping address these energy challenges.

Turning to slide four which looks at the execution of our strategy over the past five years.

Throughout its history Cosmos as being contrarian in its thinking.

Received a differentiated and often counter cyclical strategy.

Cosmos its strategy has delivered value for our investors over the last five years with more to come as we continue to execute on our plans.

As part of our contrarian approach while much of the industry moved onshore we maintained our focus offshore where kosmos has deep expertise.

This decision provided an opportunity to take advantage of a market with few credible buyers for high quality deepwater assets, enabling three strategic and value accretive acquisitions.

We have many peers have publicly stated they are off assuming no or low growth Cosmos has pursued a series of organic growth projects, which are planned to come online at a time when the world needs more energy.

We believe that the industry is under investing for the needs of the future and the companies with quality opportunities can outperform.

We were an early mover among our peers in transitioning our portfolio to gas and we now have a unique hopper a world class gas and LNG opportunities that are well aligned with the needs of the energy transition.

And we've invested counter cyclically when commodity prices were low to drive value across the portfolio. We should continue to play out over the next several years.

Our fundamental measure of any E&P company valuation is these two P reserve base, which the Kosmos has almost tripled over this timeframe from around 200 million barrels of oil equivalents at the end of 2017 to around 550 million barrels of oil equivalent at the end of 2022.

With a lengthy runway of additional discovered resource potential beyond that which I'll talk more about on the next slide.

Turning to slide five.

For an oil and gas company to have a sustainable future it needs a robust reserve base of advantage hydrocarbons.

Mentioned on the previous slide over the last five years, our reserve base has enhanced materially in terms of size quality and diversity.

Breaking down these elements.

<unk> proven reserves are weighted more towards oil today, reflecting the near term exposure to low cost lower carbon barrels with high returns and short payback.

On a <unk> basis are proved and probable reserves our reserves to production ratio of over 20 years and is split almost 50 50 oil to gas demonstrating the future direction of the company.

Strategy is to invest our oil revenues into a world class gas and LNG opportunities, which are aligned with the energy transition.

The chart on the right shows the diversity in the reserve base with a two P reserve puts to see contingent resource life of over 30 years across five countries.

We have materially grown our reserves base over the last five years and expect further growth over the next five for modest covered resource base high lines and the runway of future value creation for years to come.

Turning to slide six.

The consistent perceived advanced strategy has created a unique investment proposition for investors, which is characterized by the elements on this slide.

Portfolio of high quality assets that have longevity.

These assets are differentiated and that they offer material rhythm visible near term growth.

The assets are highly cash generative with low breakeven and benefit from access to premium markets, giving us exposure to both brands and international gas prices.

We have a unique set of gas and LNG opportunities that have the potential to capture that premium price upside that will allow us to transition more to gas over time.

We have a management team focused on the execution of our clear strategy and meeting the expectations of our investors.

We also continue to focus on capital discipline with a rigorous capital allocation framework.

And finally, we have sector, leading ESG credentials, which I'll talk more about on the next slide.

Turning to slide seven.

Building, our ESG credentials there has been a core part of our strategy over the last five years.

Our key goal is to help our host nation's develop the hydrocarbons in a responsible way and expand access to affordable reliable energy.

Through creating economic benefits, we help drive sustainable development in our host countries.

I am pleased to say, we continue to deliver progress across ESG spectrum in 2022.

First on environments.

2019, we set a carbon neutrality target, a 2030 or sooner for our operated scope, one and scope two emissions, which we achieved in both 2021 and 2022.

We are building on this progress with a plan to disclose equity emissions and targets in this year's sustainability report.

We are increasing the gas weighting of our portfolio with first gas it towards you expected in the fourth quarter and a long pipeline that future gas projects, we should enhance our scope three emissions going forward.

Second on social.

We can deeply about the people who work for Cosmos, and those who work with Kosmos and our host countries, we employ 100% local nationals in our offices in Dallas and Houston are consistently named among the top places to work in both cities.

We aim to be a trusted partner and a good corporate citizen in our host countries working with a range of stakeholders and our communities <unk> sustainable development.

We have worked in this manner for nearly 20 years going back to when the company was founded.

Each year, we fund important social investment programs in Ghana extra gain a Senegal and Mauritania that are aimed at creating economic opportunity advancing social progress and improving standards of living.

The success of the Kosmos Innovation Center is a Prime example.

This initiative and gone in Mauritania, and Senegal invest in young entrepreneurs small businesses outside the oil and gas industry.

We train and empower young people turn their ideas the viable businesses and we work alongside promising start ups to help them reach their full potential in.

In Ghana, the Kosmos Innovation Center recently entered into a partnership with Mastercard Foundation in which Mark and Todd will fund a significant expansion of the program across Ghana.

And finally governance.

Governance has always been a pillar of our business and start to talk with our experienced and diverse board of directors down through to the executive leadership team and onto our employees.

We have always taken an industry leading position on transparency publishing all of our material petroleum contracts online along with old government payments.

In summary, our consistent commitment to ESG and sustainability is a core value for Kosmos one that has been recognized by stakeholders MSP.

MSCI and one of the leading ESG rating agencies recently, Ryan Cosmos AAA.

As possible rating, which puts us in the top 20% of companies in our sector.

Suddenly Newsweek and status that recently named Cosmos, one of America's most responsible companies for the third consecutive year.

Our consistent focus on operating responsibly and all that we do supports our ability to deliver long term value to our diverse range of stakeholders.

Switching gears I would now like to look back at our solid delivery in 2022, and how it laid the foundation for future success, turning now to slide nine.

2022, it was a year of strong operational delivery supporting our longer term strategic objectives.

I'm proud to report that we delivered an injury and incident free workplace.

Zero recordable and lost time safety incidents and no spills.

Our production of around 64000 barrels of oil equivalent per day was in line with guidance, representing 17% growth over 2021.

Our LNG development Torchy phase one is around 90% complete.

Our other development projects are moving forward with Jubilee southeast Winterfell, making good progress.

Last quarter, we reached full payback from our most recent acquisition in Ghana achieved in just 14 months, demonstrating our track record of value creation from the M&A.

And as flagged on the previous slide our ESG progress was recognized by MSCI This highest AAA rating.

Turning to slide 10.

2022 was a record year cosmos.

There is a lot of important data on this slide but I'd like to highlight standout points.

Over the last five years, we've seen revenue and EBITDAX doubled liquor.

Liquidity has almost doubled over the same period, while net leverage is almost half both a reflection of the drawing financial resilience of the company.

As I mentioned earlier, our <unk> reserve base has almost tripled from year end 2017 to year end 2022.

Long side, the diversification of our asset base.

The scale of this reserve base underpins the future of the company and has enabled us to drive shareholder value.

I'll now hand over to Neil to talk about the financial highlights of the.

Yes.

Thanks, Andy turning to slide 11.

As Andy said 2022 was a record year for Kosmos with the financial highlights noted on this slide.

Posted record revenue and EBITDAX for the year helped by oil prices, but also by the highly accretive acquisition of the octagon assets in late 2021.

Free cash flow was strong with around $350 million for the year, which enabled us to pay down over $400 million of debt during the year and we exited the year below our year end net debt target of one five times.

We expect further progress on debt Paydown in 2023 at current oil prices with our free cash flow backend loaded due to the timing of Capex and production increases.

Turning to slide 12, which looks at the fourth quarter in more detail.

<unk> numbers came in largely as expected.

Capex in the quarter was slightly higher than guidance due to the timing of accrued capex on <unk>, which we flagged as a possibility when we reported last quarter.

Depreciation was lower than guidance due to an increase of reserves at Jubilee booked at year end.

And as you've seen in today's press release, we have booked an impairment on 10 as now we forecast a more conservative activity set which is deferred and time based on last year's well results.

The reduction to <unk> reserves, which is fairly small at around three 5%. However, the bulk of the impairment related to the timing and mix of reserves between oil and gas.

We still believe 10 has significant potential but it does carry more risk and therefore any future activity must compete for capital with other opportunities across our portfolio, which we'll touch on a bit later when we talk about the year ahead.

With that I'll hand, it back to Amy.

Thanks Dale.

For the 2023, we expect this year to be a major inflection point for Kosmos is response to bring new developments online with multiple catalysts expected across the portfolio.

In Ghana on slide 14.

Late 2021, we materially enhance our stake in <unk> to almost 40% through the acquisition of <unk> interest because we believe in the upside in the field and.

In 2021, the field produced 75000 barrels of oil per day, we expect it to increase by around 25% from that level to 95000 barrels of oil per day. This year due to the startup of the Jubilee Southeast project, which is on track to come online at the end of next quarter.

She believes a big field, which continues to get bigger.

The first production back in 2010, the total oil in place is more than doubled to around 2 billion barrels is the partnership has drilled more wells, it's got more productive horizons improved up more resource.

We're now working closely with our partners to drive a higher recovery factor, which combined with more oil in place could increase gross recoverable reserves to over 1 billion barrels of oil equivalent with less than 40% of that produced to date.

The partnership has identified more than 30 additional drilling locations, which should enable a production plants at these higher levels for several years to come.

Recent drilling progress has been excellent with three Jubilee southeast wells drilled all of which have come in ahead of expectations.

The results have been encouraging from two dimensions.

Lastly, the wells have located reserves and more oiler horizons than expected and secondly, the primary horizons of indicated connectivity to the main Jubilee field we.

We look forward to providing further updates on this important project over the coming months.

Elsewhere, we are working with the partnership on a commercial gas sales agreement to replace the arrangement whereby the government received gas for free until the end of 2022 under the terms of the initial <unk> payout.

There is an interim agreement for the first half of this year, which mirrors. The key terms of the existing 10 gas sales agreements to take account of gas substitute from 10 to fulfill the Jubilee gas obligation.

We're also pleased with the progress made since the handover of operations and maintenance of the Jubilee F. BSO last year with cost savings and operational efficiencies materializing with most gap.

Opex in the second half of 2022 was 30% lower than the first half of the year.

In 2023 Jubilee Opex is expected to decline around 15% on a gross basis, which is rare in an inflationary environment.

This equates to around a 25% reduction per barrel given the expected increase in production year on year.

On 10, the partnership is working to high grade the future opportunity set with production guidance for the flat against current levels with no drilling activity currently planned for the year.

Production guidance for both fields was provided by the operator in January with <unk> at 95000 barrels of oil per day, gross and 10 to 20000 barrels of oil per day gross.

Turning to slide 15.

<unk> operations continue to go to plan.

The key deliverable last year was the extension of the Sabre an accumulation phase after 2014, which has enabled the next phase of investment, including the plan three well infill drilling campaign beginning in the fourth quarter of 2023.

We expect production this year in AG to be broadly flat year on year, Although we do expect to see production levels rise towards the end of the from the current level of approximately 30000 barrels of oil per day gross on the back of the infill drilling program.

In addition on exploration, we plan to progress maintaining deep ILS opportunity, we're drilling in the first half of 2024, along with the infill drilling program.

<unk> has the potential to create a step change in AG production if successful.

The well has a high graded prospects they delivers around 118 billion barrels of resource and a deeper Albion horizon between the existing cyber and accumulate fields on the source rock in a success case to pay will be tied back to the say Brent So where there is ample spare capacity.

There is also significant follow on potential with around 400 million barrels of resource identify the deeper Albion horizon across blocks as in <unk> 'twenty one.

The first quarter of 2023, Kosmos was awarded a 24% working interest in block <unk>, which contains an extension of this allergy and trend.

Turning to slide 16 in the Gulf of Mexico. This year's activity is largely focused on three areas first production optimization.

On Kodiak, we have worked with our partners to formulate a work over plan for the Kodiak three well in the second half of the year.

<unk> continues to experience productivity issues, but we anticipate work, which drove production to a more normalized rate in the fourth quarter.

We're also progressing the odd job subsea pump projects that were sanctioned last year. The project is approximately 30% complete and adding the pump is expected to increase all throughput from the odd job field starting in the middle of 2024.

Secondly, we continued to progress the winterfell development.

The field development plan has been signed by all partners awareness of finalizing the production handling agreements and the export agreement, which will lock in production and pipeline capacity for the project.

The rig has been contracted and we plan to start drilling the first phase one wells when it arrives on location in the third quarter.

This timing would allow for first oil around the end of the first quarter of 2020 before as previously communicated.

Turning to slide 17, the third area of focus for 2023 in the Gulf of Mexico is the Tiberius infrastructure led exploration well.

This is one of the few remaining full way structures in this prolific outboard Wilcox trend while historical success rate of always has been around 50%.

We expect to spud the well in the second half of the year.

We're targeting gross resource of around 135 million barrels of oil equivalent and Cosmos has operated ship and a one third interest alongside oxy in Ecuador.

The well is in close proximity to a production facility owned by one of the partners, which has sufficient spare capacity in the event of success.

This is one of the best prospect in our exploration portfolio and could materially drive our Gulf of Mexico business.

Turning to slide 18.

On Torchy Phase one continues to progress with the project now around 90% complete we want you to show how the infrastructure will come together in the coming months.

There are several key milestones as we deliver the major work streams for the project.

Announced in January the DSO left the yard in China, and as many short staff in Singapore to have a piece of equipment fitted and progress commissioning. The vessel will then continue its journey to West Africa is due to arrive in the second quarter as previously communicated.

Construction of the hub is now complete as can be seen in the image on the slide with commissioning underway and completion expected ahead of the arrival of the floating LNG vessel.

The floating LNG vessel is due to leave the construction yard in Singapore in the second quarter and is expected to arrive in West Africa in the third quarter.

On drilling four wells have been drilled and completed flowback of the wells is demonstrated rate significantly higher than required for phase one liquefaction.

On the subsea the Amazon vessel has now arrived in the field to commence the deepwater pipeline, which will be followed by the installation of the subsea structures with subsequent mechanical completion and commissioning.

Huckabee activities are GE to begin in the second half.

Targeting first gas in the fourth quarter.

As communicated by the operator BP with that fourth quarter results earlier this month.

A huge amount has been achieved today and we look forward to reporting on these key milestones through 2023, as we continue to get closer to first gas.

Turning to slide 19 looking.

Looking more broadly at our other gas opportunities in Mauritania and Senegal.

In recent days the partnership approved the LNG concept selection for the second Phase told you, which is an important step forward for the project.

The partner selected the gravity based structure or GBS, which is an LNG storage tank with the base of the structure is certainly on the CFO with a liquefaction units on top.

The concept select adds around two and a half to 3 million tonnes per annum of LNG capacity towards new and includes new wells subsea equipment that maximizes the use of the existing phase one infrastructure.

The partnership will work over the next year to optimize the size cost and schedule prior to entering into feed and sanctioning the project.

During this period of optimization will have loops are engaging with potential off takers.

On the assets or anger is BP recently stated the partnership is working to develop a domestic gas to power scheme as a first step for the development.

There is then the potential for future LNG export opportunity to complement the domestic gas project.

We recently signed a new PSC with the government of Mauritania and are working with the partnerships progressed that opportunity based on LNG export scheme.

In terms of total gas opportunity in Mauritania, and Senegal, that's potentially around 15 Tcf of recoverable gas at each of <unk> <unk> per hour and the assets Ranga.

Proximately 12, Tcf of recoverable gas next to Cosmos, which is around 2 billion barrels of oil equivalent.

The takeaway from this slide is that we have significant exposure to multiple potential future gas and LNG opportunities and we are continuing to progress all of them to create future optionality because months.

That's the overview of the planned activity set for 2023, and I'll now hand back to Neil to talk about our capital plan.

Thanks, Andy turning now to slide 20.

With a busy year of activity, we remain committed to disciplined capital allocation.

In 2023, we are targeting capital spend of between 700 $750 million, which is in line with 2022 levels as we continue to progress our three key developments.

Approximately 250 to 300 million is for maintenance activities across Ghana, EG and the Gulf of Mexico.

Which primarily includes our infill drilling programs and the subsea pump project in the Gulf of Mexico.

350 to 400 million is related to our three key development projects, you believe southeast towards phase one and when in fact.

Between 50, and 100 million as planned for our ILS activities in the gum and EG as well as the appraisal of our greater gas resources in Mauritania and Senegal.

We also remain committed to continued debt pay down.

At current oil prices, we expect to generate around 1% to $200 million of free cash flow this year before working capital.

Which is backend loaded as we reach the anticipated inflection point of lower Capex and higher production.

All excess cash flow this year will be prioritized to debt repayment.

We remain focused on debt pay down until we get leverage to below one five times and a normalized oil price environment, which could come from both increased EBIT tax from higher oil production and continued reduction of absolute debt.

When we reach that level and the potential for shareholder returns, which is an active conversation with our board, but in the near term, we see debt pay down as the best use of cash flow to ensure we continue to strengthen the financial resilience of the company.

Turning to slide 21.

Having outlined the capital plan for 2023. This slide shows the multiple catalysts, we expect from that investment throughout the year.

I don't plan to touch on every catalysts on the slide as you can see there is a consistent stream of important milestones across each part of our portfolio.

Already in the first two months of the year, we finished drilling the Jubilee southeast wells, which are expected online at the end of next quarter.

On <unk>, the Spss left the shipyard in China. The wells have all been drilled and completed and we've announced further progress on phase II.

We'll be reporting on the rest of these catalysts as we move throughout the year and as I mentioned on the prior slide we expect to see a major inflection point in the second half of this year as capex ramps down and production ramps up in Ghana.

It's going to be busy and exciting year across all of our geographies.

With that I'll hand, it back to Andy to wrap up today's presentation.

Thanks, Neal turning to slide 20 to conclude today's presentation.

Kosmos has a differentiated strategy that we pursued counter cyclically over the last five years.

This is build a high quality diverse portfolio.

Low cost lower carbon oil assets low cost lower carbon gas assets, which have longevity.

<unk> reserve life of over 20 years.

We plan to deliver around 50% growth in production between 2022, and 2024 and these assets have the potential to generate significant free cash flow with a major inflection points expected mid year as production grows and capex starts to fall.

A key differentiator of our portfolio is our deep hopper of future gas and LNG opportunities, which have exposure to premium international pricing.

And finally, we have a management team focused on creating value for our investors with a clear strategy and rigorous capital discipline.

Thank you and I'd now like turn the call the operator to open the session for questions.

Thank you we will now be conducting a question and answer session.

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One moment, please by the call for your questions.

Our first question is coming from the line of Charles Meade with Johnson Rice. Please proceed with your question.

Good morning, Neil and to the rest of the Cosmos team there.

Hmm.

Hey, good morning, Josh.

Andy I Wonder if you could talk us through I guess.

The process of selecting the gravity based structure for phase two.

To end up.

I'm not as familiar with those as a as a solution and so I'm curious.

Why are the departure from the from the design of Phase one <unk> and what are the what are the relative advantages of this gravity base.

Dining concept and what perhaps are some of the compromises that go along with those advantages.

Yes, Thanks Charles.

And I sort of start at the top.

As <unk> indicated the decision around the <unk>.

Phase III concept decision in.

I would say.

All the partners of the governments. The NSA is BP Cosmos are aligned around building a west African energy hub.

And ultimately it's about.

Alignment of strategy of developing Brazilian hydrocarbons for the energy transition and phase two is an important next step on that journey.

I'm sure we'll get questions across.

Many callers around.

The concept so why don't I sort of addressed the three big questions wanted to concept the timing on the cost I think when you.

Look at the concept, we did a lot of work with the government as I discussed.

Three months ago around ensuring that we have properly.

<unk> evaluated.

<unk>.

Primarily as we look to the changing market conditions, what was the right next step in the development of this significant gas resource so the.

Decision around.

Our gravity based structure for phase two.

Is it primarily sort of three primary considerations.

One is a fundamental cost efficiency.

The concept versus alternatives I think the second issue, which is a unique around the GBS is you have the opportunity to.

Scale in storage and that actually creates operational efficiencies as we integrate phase one and phase two and I think the third element the.

<unk> said the decision was flexibility around financing if we choose to go down that path and then ultimately.

Cost of that financing. So those are the three things that sort of drawing the selection of the GBS for the midstream.

Well I think reiterating that we have to face to a concept, which is going to leverage heavily the infrastructure from phase one.

What is phase III comprise all players clearly additional wells.

Manifolds flows, but we're going to debottleneck the Sps.

The actual capital contribution to that is very small use the existing pipeline obviously the brightwater.

Sport. So you are adding some additional storage and youre, adding.

The LNG processing on on Salt.

Again sort of anticipate the next question where are you on the timing.

We're really going to spend the next three.

Pre feed really ensuring that we've got the right approach to the market.

We've evaluated optionality around the GBS you can go concrete base you can go steal base.

To fully optimize the concept and fine tune the volume between two and a half and 3 million tonnes, which is really dependent on the debottlenecking of the NPS.

The amount of work at the front end to front end load that and particularly important given the inflationary environment. We're in but again. This is a very cost competitive brownfield expansion of an existing LNG.

Project, and therefore, we would anticipate sort of entering feed which BP would regard as the sanctioning of the project in about 12 months.

And then in terms of cost.

As I said really cost competitive because of the brownfield expansion the upstream.

Relatively minor given the use of the.

Of the existing infrastructure additional wells manifolds, and then you've got the LNG processing itself, which we believe is absolutely top quartile.

Other opportunities so I think hopefully.

Charles that gives you the full view.

Of the project.

And as you can sense I think we.

The partnership is very excited about moving forward now in the next stage of.

The expansion of this.

The development of this field.

Yes. It is thank you for your comments and it's an exciting prospect and when we're going to be able to follow for a while here my follow up do you believe southeast you made a couple of comments in your in your prepared remarks about I think you also had some of the press release that not only did you.

<unk> pressure connectivity with the with the main field pays in Jubilee proper, but that you've found.

It seems like maybe some new sand some some new reservoirs.

Yeah.

That is a.

That's a.

Near term upside for you guys. It seems like so I'm wondering if you could perhaps elaborate a bit on your prepared remarks there.

Yes look I think those three to three wells that we drill down to the southeast where important we're obviously testing and expansion of the field.

The slide that we included with our presentation you can see the stuff out.

The field to.

To the southeast and so.

Important that those wells actually delivered.

The subset as a result that we were hoping for and actually it was more than with helpful. We as you say there are a couple of things that were.

Important we believe we have the indication of connectivity to the main field, which clearly sort of size of that there was additional resource sort of inboard of the wells that we drill and then we found some deeper horizons.

I think if you step back from the DHL charged.

Youre, obviously right cheaply as we say it is a big fields get bigger.

We're continuing to see upside from the development of the field.

<unk>.

No.

From a near term perspective, having sort of the rest of the subsurface now for Jubilee southeast at least for the.

Actual size of the field, we think visitation will follow on potential there were 30 development locations that we found which gives you an indication I think is the longevity of the plot of the.

So that we can build.

Great. Thank you for your comment Danny.

Great. Thanks, Charles I appreciate it.

Thank you. Our next question is coming from the line of Alex Smith with Investec. Please proceed with your questions.

Hi, guys. Thanks for the call today.

Just a question on 10 to maybe pace given the impairment.

It looks like decision has been taken on the back of the two strategic wells.

Great and timely area back in 2020 to say would be good to hear.

Abuse of medium term prospects for that asset.

And any opportunities you feel that could be kind of get things back on track.

The area, especially maybe the opportunity for gas for 10 post oil in terms of growth given the gas agreements being signed with the government and any of you.

Kind of clear views on tend to be great. Thank you.

Yeah. Thanks, Alex Yeah. Good question.

Like when you step back from it from a results perspective, it was relatively small at three and a half the siding side. There was some reduction in oil offset by some additions of gas so sort of on a on a reserve basis, a relatively small impact of crossing that traded then the assessment against this.

Ceiling test I think when we look at that investment and can we actually see a.

Less capital going in and therefore, a more conservative development case. So there is future development of the field, but we are going to target lower risk areas. When we have good well control and fundamentally for cosmos.

About how would that development therefore compete with other opportunities that we have in our portfolio.

Clearly in the materials today, we talked about the deep hopper of opportunities that we have in Mauritania and Senegal opportunities that are opening up in the Gulf of Mexico, and Accessorial again, So I think ultimately this is about quality through choice.

And therefore, we're 10 would Ryan and our future opportunities. So we do see future potential it will be a combination of both oil and gas, but clearly it's smaller than we'd anticipated and therefore.

Decision as we look at the capital allocation to to take the impairment.

But very clear thank you.

Thanks, Alex.

Thank you. Our next question is coming from the line ask Neil Mehta with Goldman Sachs. Please proceed with your questions Hey, Good morning, Andy now and team. Thank you.

So congratulations to you guys on getting the Sps So moving towards West Africa, just would love your perspective on what are the gating.

Items that we should be thinking about about getting to first gas by the end of the year at <unk> phase one.

Yes, thanks Neil.

<unk>.

We've achieved a lot on the projects and as you say, it's not done yet, but we continue to make progress quarter on quarter.

As an important.

Deliveries in the first quarter.

And we anticipate it being an in location in the field in the second quarter that's clearly.

After and for you to track the LNG vessel is targeted to leave Singapore.

Second quarter getting there in the third quarter. So that's again an important milestone for you to track in terms of the.

The drilling of the well sort of all complete down.

The completions have flowed back and we're very positive about the well results as we said in our remarks, we've achieved right because that's when the heart of our client's phase one liquefaction. So we feel good about the.

The subsea we also feel very good about the hub terminal I think we included some pictures in the deck, which shows that the construction is complete and commissioning underway.

And the uptime on all will be ready to receive the LNG vessel when it arrives.

In the third quarter, so really now it's about the completion of the.

The subsea installation.

Amazon vessel is on location in the field now almost completely.

The lay of the deepwater pipeline and then we start to install structures. So I think as you sort of think about it.

You're really into.

Uh huh.

The completion of construction of the subsea through the third quarter.

On the fourth quarter mechanically complete, which then enables first gas in the fourth quarter. So the big things to look at obviously, the arrival of <unk> and its anchoring and position the arrival of the Apple J vessel and its.

Looking at connections.

Terminal and the completion of the installation of the deepwater pipeline and then the mechanical completion of the subsidy equipment.

Installation of the subsea equipment those are the big things.

As <unk> indicated in their results I think the closer we get to it the more confident we get around the delivery of gas by the end of the year.

Okay. Thanks, and this is a follow up question is a tricky one because maybe not all the moving pieces are there so feel free to pass on it but you gave the 2023 free cash flow number.

The $100 million to $200 million at current prices I think for a lot of investors, but they are really planned for 2024, because at that point, you've got phase one coming online and get that bigger auction is there any parameters that you can provide around what the free cash flow could look like ex <unk>.

<unk>, two where we havent gone that far yet.

Oh, I am going to give me a minute to think about.

To that question, there, but I think it's a great question because what we're talking about is the inflection point that is occurring in 2200 <unk> had cosmos.

Yes, mid 2023 middle of this year.

I want to see.

First product from Jubilee Southeast, which is a significant contribution to the growth in production, we obviously CNN the capital going into that project. We then go through the back end of the year and we say, it's a continuing decline in Capex as Torchy phase one is complete and then we go into the beginning of.

<unk> at 24 startup of production.

At the back end of 'twenty three on <unk> and then the startup of production.

And when to sell at the end of the first quarter. So I think.

The most important thing as you kind of see a progressive increase in that free cash flow quarter on quarter as we go through the second half of this year into the first half.

As of next year and then once.

We have winterfell on when you're starting to get to a sort of platform.

Yes.

Inflection is really close we're not far away now.

The forecasting of free cash flow in 'twenty, three is going to be dependent on the exact timing of those projects as you move to 20 <unk>, yes, so without getting.

New numbers.

I'd say all of them.

And as Andy said structurally are still sort of in play which is sort of operating cash flow increases and that sort of maintenance.

The capex required for the business.

Maintain that production certainly comes down quite a bit.

I think the key piece that will continue to progress.

On top of that we'll be we've got some choices to make around sort of where do we redirect that incremental free cash flow and I think we feel good and as we've said in the past around being able to direct cash flow towards future growth.

High graded out onto the projects that we want and continued debt pay down to get the balance sheet into a stronger more resilient place.

And then an additional piece on top of that for shareholder returns and so I think we should be unique in that ability.

To do all three given the quality of the portfolio and kind of where we are and that certainly.

We're taking it.

Thank you Pat.

Thank you. Our next question is coming from the line of <unk> Chandra with benchmark. Please proceed with your question.

Yeah, Hi, thank you.

Couple of questions follow ups I guess on the gravity base.

First is how do you compare cycle times posted for that versus floating and what do you think about sort of the novelty of gravity base lease score.

For this purpose.

Do you think it actually increases the risk or the operational risk or decreases.

Yes, good questions I think.

Thanks Sebastian.

In terms of the cycle time.

We would see the cycle time being very competitive with floating.

It's simply because you've got a broader access to construction yards.

Shipyards relatively full at the moment. So I think you have a broad.

Contracting base draw upon so we see no.

<unk> benefit from a contract cycle time in terms of the novelty of it it's a proven.

The volume of projects been used elsewhere that are approved and designs that have both a concrete base on a steel base. So we don't see any.

Any increased complexity associated with your approach in some respects, it's a very.

Straightforward piece of it.

Design and engineering.

It's been proven in.

It's a base structure. It obviously gives you a very simple architecture, then for putting the.

LNG trains on a.

A very simple for the top sides. So we think it has a lot of benefit in terms of both the.

The contracting strategy the access to different providers and ultimately the architecture that you you create so when you look at all of those combined we think that it's the right approach as I say, we've looked at it from a capital efficiency perspective, which I talked about which is about the <unk>.

Cost and time.

We.

We looked at it from the ability to sort of create incremental operational efficiencies from fine tuning the storage capacity and greater flexibility to do that and then if we chose from a financing perspective, we could create greater flexibility. There. So I think we don't see any increase tactical risk impact probably.

Nothing that we feel we're taking.

Is any of this benefit to it and I think in cycle times, it's absolutely competitive.

Got it makes sense a follow up.

Kodiak Workover.

Or do you think that could do for Gulf volumes, how do you think is.

If everything worked out exit Gulf volumes in 'twenty three.

Yes, I think we're.

Craig just to go back and now obviously the sidetrack, while we've had some skin issues. We've done a investigation partners involved.

We have.

And effective way to intervene on the well work out of the well and anticipate that it's going to.

Execute.

Sort of.

Back end of the fourth quarter around the fourth quarter. So it will have on our product production impact in the fourth quarter I think in terms of volumes, probably coming from the well, we could probably walk nailed on double.

2000 barrels a day a couple of thousand barrels a day net increase shoebrush I think that sort of it could be greater than that of that sort of what we're targeting.

Okay. Thank you very much.

Alright, thank you.

Thank you. Our next question is coming from the line of James Hosie with Barclays. Please proceed with your questions.

Yeah.

Hi, there thanks for the presentation, it's encouraging to see all the updates with <unk> I'm. Just wondering if you want or need LNG offtake contracts before you sanction phase two and then also if there's any update on the possibility of redirecting some of your phase one cargos to realize some of the upside to your contracted price.

Yes, good questions James.

Fundamentally.

Phase II is different from phase one.

The.

The capital.

It's involved in is significantly lower and therefore, we believe we absolutely will not require.

Full style.

The contracts before we sanctioned I think.

With the announcement now of phase two in terms of the concept and the scale and the timing of the project, we intend to engage in the market in this year. So you can look at options that we have around around flexibility on sales.

Without wanting to preempt that process I would say that will be an element of fixed to us.

It will have to review what index as we choose but an element of FX and I believe that we will have.

An element of Spartan is as well to be able to fully capture the upside.

We will not have to have sold all of the gas at that time.

So the <unk>.

Separating from whereas when we're at phase one it was very much.

Very much linked.

On phase one.

The cargo opportunities, we continue to make progress on that we have.

Engaged now with us at a high graded list of potential buyers.

We're working with those buyers on a contracts.

Structure, which we believe will give us the best opportunity to capture the upside and we anticipate.

We won't be in a position to sort of select the high graded buyer on the contract structure, probably in the first half of this year.

With regards to BP gas marketing, we've continued to debase discussed within the contract structure.

There's clearly a difference of opinion between us in terms of how it would actually operate so.

When you have a disagreement amongst friends.

<unk> gone to a third party. So we have agreed to go to arbitration.

And have the contracting centrex it for us and this is actually a good thing.

Positive outcome, because it allows us to get everything clear before we would start to reuse those.

Cargo optimization options, which comes at the end of the commissioning period, which is sort of around the middle of 2004, so getting everything lined out and sort it out in terms of how it actually works is an important step.

Step forward and we'd have all of that sorted out I think within a year.

I'll go through that process so that is.

The key assets began to the market now with phase two at the same time as we're discussing phase one allows us to get a really good understanding of what sort of a fixed nature of the future contracts and the spot nature, and then optimizing that between phase one and phase two.

Okay, Thanks, and I guess, a follow up for me.

If I guess, one driven by the future projects, you've got both in Senegal, and Mauritania I guess, we've seen some press reports that I guess naturally indicate the countries are very eager if you could get out and develop them as they are increasing pressure on yourselves and BP to commit capital I'll, let Dr. Ranker or is it just noise.

No look I think it's actually a positive James I wouldn't say it is.

As a negative.

Is that sort of step back I think.

Yeah real alignment amongst the governments the nics BP <unk> around.

The development of our resources and again from a BP perspective, they view it as a key part of that strategy.

The development of Brazilian hydrocarbons, So I think we're moving forward on pace of triangle.

<unk> will have a domestic element to it.

Play to the project is aimed at displacing heavy fuel oil expensive heavy fuel oil for power generation in Senegal and enables us to.

Stop the project in that way.

The competitive domestic gas project with the option then of LNG export in Mauritania.

There is a difference because you're looking primarily at an LNG scheme that and again, we're looking at a way in which we can get it and efficient.

Phased approach that uses some existing infrastructure.

In a port.

In Mauritania so.

For us it is about how do we continue to progress those projects.

And that's absolute alignment between beta Intel as most of you that do it in a way where we come up with really competitive schemes that compete and yes. Ultimately there may be a choice within cosmos around which ones, we invest in and which ones. We bring in partners, but I think thats ultimately a great problem for us to have going for.

Forward. So I don't feel any pressure I think it's great I think we have a resource the world needs.

We're addressing energy security in Europe , with creating affordable power and in Africa, and ultimate big contributing to a lower comp in future and if we can do all of that.

We were on it.

We will only create value cosmos as shareholders sorry, Ron.

Cited about in phase III moving forward. It's just the signal I think of the progress that we're making.

Okay. That's great. Thank you very much.

Great. Thanks, guys.

Thank you. Our next question is coming from the line of Mark Wilson with Jefferies. Please proceed with your questions.

Alright, thank you.

Two questions one on the GBS concept and one on exploration. Please.

On the on the GBS.

<unk> talked before about the floating concept for phase II being approximately.

$1 billion Capex now that was a few years ago, we went in.

Inflation and it appears to be a biggest scale. So I'm. Just wondering if you can give any sort of parameters to help us on what you think.

Capex of that concept select could be maybe as a percentage of total two phase. One is just one example.

Also on the geography.

So again, it's one thing that strikes me.

One thing that strikes me as you build all these concrete caisson till two phase one so this is vic.

Knowledge of using concrete to be able to launch things in Senegal, So is that.

This is not part of the concept as well local content and possibly.

Building at that thank you.

<unk>.

Yes, alright, Mark yes, let's do that one first.

Sure.

Just I think just sort of when we talked about cost in the past and we talked about $1 billion. It was clearly around the time the upstream.

On the basis of the sort of the least midstream yeah. So I think that things were.

The cost and I think that will do a lot better than that on the upstream now as we've done further work to delineate.

Whats actually going to be required to debottleneck the.

The infrastructure that we have in place today, so we've taken another gas flowing around.

<unk> 450 million standard cubic feet, a day that you need to provide for two and a half to 3 million tonnes of LNG liquefaction. So.

That's the first point, yes, so I think in terms of that billion dollar number the actual upstream cost I think there's going to be below that now that we've done in the world. When you come to the midstream and clearly we've got options to release.

Finance.

Obviously that wasn't the capital will not be on our books or do we need to recapitalize and that's a decision that we have yet to make but clearly when we look at the the GBS as a as an option we believe whether it's capital or whether it's leased it is more cost effective.

Going down the LNG growth.

So that makes sense.

It does yes, definitely and then on that local content point, given as I say.

Phase one case on what is going on.

In Senegal, no yes, absolutely.

And again, what we're looking to do with build out local accounts and as we look at phase III, what I don't want to do is sort of pre Ams will be with the market as there are various ways of doing it and you can clearly do it with a concrete base you can do it with the steel based on what we need to do is go out working with the market to come up with the most cost effective way.

Doing it along that is aligned with the local content. So.

That.

What youre undertaking is we have some real optionality now is how we create the most capital efficient most capitally efficient way of doing it and leveraging some of the knowledge that we built from the past so we will.

We see this as we say it is absolutely the most cost effective way to move forward.

And.

And it gives us the most flexibility on the storage size and financing.

Okay. Thank you just one quick follow up some a couple of really quite punchy exploration wells.

In the coming year.

<unk>.

King deep.

On that on the deep.

Could you remind us who your partners are in block Ash. Please.

So.

<unk> causes in what.

And.

And blockchain neuro and tried it yeah.

Okay very good thank you, Michael and whatnot, but yeah. Great question My follow up on that is again, we see it as being Ali.

Hobby perspective, this is an untested.

Deep.

Our objective clearly between the source rock.

Currently producing horizons in cyber and accumulate with age.

Solid four way structure.

And the great thing about it is then the alignment around the partnership that enables US then to bring it back to the existing.

The capacity that we have in cyber and accumulate so no. We're excited by it and I think it's great exploration prospect, but actually the capital again, it's a very low cost F&B because of the existing capacity and insight, but it came back.

We have.

Alignment amongst accomplished yet.

Got it appreciate the color. Thank you alright, thanks Mark.

Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question is coming from the line of Matt Smith with Bank of America. Please proceed with your questions.

Hi, there thanks very much I just wanted to come back to the free cash flow guidance for 2023. Please.

Just in light of that.

As a result in 2022.

I guess broadly flat to slightly up.

Broadly the same but clearly there's a macro element.

Due to the hedges.

To your.

Hedge realized price too.

What we see.

Today, So I just wanted to clarify.

Uh huh.

And anything in terms of music for free cash flow in 2023. Please.

And then I think a related follow up would be just.

Just to check on.

Shareholder returns.

And the comment correctly.

The story for 2024.

If we're looking at these opportunities across 2023 please.

Yes sure Matt.

Yes, so when you sort of reconcile 23 versus <unk> 22, clearly production is higher.

And we're sort of forecasting a lower sort of oil price, which is the biggest sort of impact to that.

That free cash flow number.

As you noted hedges aren't a headwind.

We've put in floors at around seven.

<unk> is an app ceilings up to 110 on average and so we got much better access to higher oil prices as as the year goes down.

Goes on Opex.

Clearly is trending.

Slightly higher but it is lower on a per barrel basis, given some of the increased amount of production we're running through.

Just from a free cash flow perspective, as you said the Capex is about the same there is a bit higher.

Interest cost just given we do have some variable rate debt.

And then cash taxes are bit higher.

Partially just reflecting timing so EG taxes are paid sort of a year careers.

And therefore.

And therefore, the benefit we got from last year will pay a little higher tax.

On that front.

This year.

But on the whole, we generated 400 million 350 million of free cash flow last year at $100 oil.

Sensitivity is still around $100 for every $5 on oil pricing, we're spending sort of oil price between 80 and 95%. So that's the biggest portion of the difference.

Okay. Thanks, a lot.

The shareholder distributions.

Uh huh.

Sorry can you repeat the question Matt.

Yeah sure Alright, I, just wanted to double check with horizon.

The comments correctly I think you referenced.

Free cash flow in 'twenty three.

<unk> balance sheet so.

Where are we thinking about shareholder returns.

But the full story.

Correct, Yes, I think thats the way to think about it I think as we get towards through the sort of mid year inflection point.

We'll be closer to the point, where we can provide sort of external guidance in terms of what that looks like in 'twenty four and beyond I think there are clearly a number of moving parts.

On the oil price and the projects that we.

We're working through and like I said it is an active discussion at the board in terms of what is the quantum.

And inform the dose.

Of that shareholder return policy, but it is a 24 plus.

Given sort of oil price it backed off a bit from where they were six months ago.

Okay, well, thanks, very much guys I appreciate the color.

Alright, Thanks, Matt.

Thank you at this time, we have reached the end of our question and answer session with that I would like to bring the call to a close thanks to everyone for joining today.

You may disconnect your lines at this time.

For your participation.

[music].

[music].

Good day, everyone welcome to Kosmos Energy's fourth quarter and full year 2022 conference call.

As a reminder, all participants are in a listen only mode.

A question and answer session will follow the formal presentation you require operator assistance during the program. 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 Investor Relations at Kosmos energy.

Thank you operator, and thanks to everyone for joining us today.

Morning, we issued our fourth quarter and full year 2022 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 and the Ngos Chairman and C.

And Neal Shah CFO .

During today's presentation, we will make forward looking statements that refer to our estimates plans and expectations.

<unk> 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. Please.

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 fourth quarter and full year 2022 results call.

As I normally do with our full year results I'll start today's presentation by taking a step back and talk about our strategy and how the solid progress. We made in 2022 has supported the delivery of that strategy.

We'll then focus on 2023 and an important year of inflection for the company.

Turning to slide three which looks at cosmos its role in helping address the wells energy challenges.

The world is grappling with the need for affordable secure and cleaner energy with a balanced approach required to address the three dimensions of this energy trilemma.

Kosmos has the right strategy and portfolio at the right time to be part of the solution.

We have an oil weighted portfolio that can supply more of the energy the world needs today.

We're investing in growing old supply in each of our core production hubs with an emphasis on high graded projects that yield low cost lower carbon barrels that are highly cash generative.

At the same time, we're working with our partners to bring new sources of natural gas into production.

These projects address affordability and increase energy security by supplying more gas that global LNG markets as well as into domestic markets in Africa.

This assist our host countries in two ways.

First the revenues from the export of LNG can be invested in critical infrastructure to promote economic development.

And second providing baseload domestic gas supply will help expand access to electricity a key goal in each of the countries, where we work in Africa.

Over the next year, we're targeting an increase in production of around 50% as we optimize current production and bring new projects online.

Because most of the expected cash flow from our current and planned activities enabled selected reinvestment into the most compelling opportunities in our natural gas portfolio.

Which can help meet demand and support the energy transition for decades to come.

Longer term, we plan to continue shifting the balance of our portfolio from oil to natural gas and LNG to help meet the world energy needs as cleaner natural gas displacing coal heavy fuel oil and biomass as a primary source of energy in both developed and emerging economies.

The world's demand for energy continues to grow, particularly in Africa and few E&P companies are investing to meet this demand.

Given the quality of our asset base and the wealth of opportunities within our differentiated portfolio. We believe cosmos has an important role to play in helping address these global energy challenges.

Turning to slide four which looks at the execution of our strategy over the past five years.

Throughout its history caused losses being contrarian in its thinking and has pursued is differentiated and often counter cyclical strategy.

Cosmos its strategy has delivered value for our investors over the last five years with more to come as we continue to execute on our plans.

As part of our contrarian approach while much of the industry moved onshore we maintained our focus offshore where kosmos has deep expertise.

This decision provided an opportunity to take advantage of a market with few credible buyers for high quality deepwater assets, enabling three strategic and value accretive acquisitions.

Where many peers have publicly stated they are off assuming no low growth Cosmos has pursued a series of organic growth projects, which are planned to come online at a time when the world needs more energy.

We believe that the industry is under investing for the needs of the future and the companies with quality opportunities can outperform.

We were an early mover among our peers in transitioning our portfolio to gas and we now have a unique offer world class gas and LNG opportunities.

Well aligned with the needs of the energy transition.

And we've invested counter cyclically when commodity prices were low to drive value across the portfolio. We should continue to play out over the next several years.

Our fundamental measure of any E&P company valuation. It is two P reserve base, which because March was almost tripled over this timeframe from around 200 million barrels of oil equivalents at the end of 2017 to around 550 million barrels of oil equivalents at the end of 2022.

With a lengthy runway of additional discovered resource potential beyond that which I'll talk more about on the next slide.

Turning to slide five.

For an oil and gas company to have a sustainable future it needs a robust reserve base of an advantage hydrocarbons.

As mentioned on the previous slide over the last five years, our reserve base has enhanced materially in terms of size quality and diversity.

Breaking down these elements.

<unk> proven reserves are weighted more towards oil today, reflecting the near term exposure to low cost lower carbon barrels with high returns and short payback.

On a <unk> basis are proved and probable reserves our reserves to production ratio of over 20 years and is split almost 50 50 oil to gas demonstrating the future direction of the company.

Our strategy is to invest our oil revenues into a world class gas and LNG opportunities, which are aligned with the energy transition.

Chart on the right shows the diversity in the reserve base with a two P reserve puts to see contingent resource life of over 30 years across five countries.

We have materially grown our reserves base over the last five years and expect further growth over the next five for modest covered resource base, highlighting the runway of future value creation for years to come.

Turning to slide six.

The consistent perceived advanced strategy has created a unique investment proposition for investors, which is characterized by the elements on this slide.

Our portfolio of high quality assets that have longevity. These.

These assets are differentiated and that they offer material rhythm visible near term growth.

The assets are highly cash generative with low breakeven and benefit from access to premium markets, giving us exposure to both brands and international gas prices.

We have a unique set of gas and LNG opportunities that have the potential to capture that premium price upside that will allow us to transition more to gas over time.

We have a management team focused on the execution of our clear strategy and meeting the expectations of our investors.

We also continue to focus on capital discipline with a rigorous capital allocation framework.

And finally, we have sector, leading ESG credentials.

I'll talk more about on the next slide.

Turning to slide seven.

Building, our ESG credentials has been a core part of our strategy over the last five years.

Our key goal is to help our host nation's develop the hydrocarbons in a responsible way and expand access to affordable reliable energy.

Through creating economic benefits, we help drive sustainable development in our host countries.

I am pleased to say, we continue to deliver progress across the <unk> spectrum in 2022.

First on environment.

2019, we set a carbon neutrality target, a 2030 or sooner for our operated scope, one and scope two emissions, which we achieved in both 2021 and 2022.

We are building on this progress with a plan to disclose equity emissions and targets in this year's sustainability report.

We are increasing the gas weighting of our portfolio with first gas at towards you expected in the fourth quarter and our loan pipeline and future gas projects, we should enhance our scope three emissions going forward.

Second on social.

Deeply about the people who work for Cosmos, and those who work with Kosmos and our host countries, we employ 100% local nationals in our offices in Dallas and Houston are consistently named among the top places to work in both cities.

We aim to be a trusted partner and a good corporate citizen in our host countries working with a range of stakeholders and our communities to facilitate sustainable development.

We have worked in this manner for nearly 20 years going back to when the company was founded.

Each year, we fund important social investment programs in Ghana, extra G&A, Senegal, and Mauritania that are aimed at creating economic opportunity advancing social progress and improving standards of living.

The success of the Kosmos Innovation Center is a Prime example.

This initiative and gone in Mauritania, and Senegal, and invest in young entrepreneurs small businesses outside the oil and gas industry.

We train and empower young people turn their ideas as a viable businesses and we work alongside promising start ups to help them reach their full potential.

In Ghana, the Kosmos Innovation Center recently entered into a partnership with Mastercard Foundation in which Mark and Todd will fund a significant expansion of the program across Ghana.

And finally governance Gulf.

<unk> has always been a pillar of our business and start to talk with our experienced and diverse board of directors down through to the executive leadership team and onto our employees.

We have always taken an industry leading position on transparency publishing all of our material petroleum contracts online along with old government payments.

In summary, our consistent commitment to ESG and sustainability is a core value of the cosmos, one that has been recognized by stakeholders.

MSCI one of the leading ESG rating agencies recently ranked Cosmos AAA.

It's possible rating, which puts us in the top 20% of companies in our sector.

Suddenly Newsweek and status that recently named Cosmos, one of America's most responsible companies for the third consecutive year.

Our consistent focus on operating responsibly and all that we do supports our ability to deliver long term value to our diverse range of stakeholders.

Switching gears I would now like to look back at our solid delivery in 2022, and how it laid the foundation for future success.

Turning now to slide nine.

2022, it was a year of strong operational delivery supporting our longer term strategic objectives.

I am proud to report that we delivered an injury incident free workplace with zero recordable and lost time safety incidents and no spills.

Our production of around 64000 barrels of oil equivalent per day was in line with guidance, representing 17% growth over 2021.

Our LNG development Torchy phase one was around 90% complete.

Our other development projects are moving forward with Jubilee southeast Winterfell, making good progress.

Last quarter, we reached full payback from our most recent acquisition in Ghana achieved in just 14 months, demonstrating our track record of value creation from the M&A.

And as flagged on the previous slide our ESG progress was recognized by MSCI This highest AAA rating.

Turning to slide 10.

2022 was a record year for Kosmos.

There's a lot of important data on this slide but I'd like to highlight the standout points.

Over the last five years, we've seen revenue and EBITDAX doubled.

Liquidity has almost doubled over the same period, while net leverage is almost half both a reflection of the growing financial resilience of the company.

As I mentioned earlier, our cheaper reserve banks has almost tripled from year end 2017 to year end 2022, alongside the diversification of our asset base.

The scale of its reserve base underpins the future of the company and has enabled us to grow shareholder value.

I'll now hand over to Neil to talk about the financial highlights of the.

Yes.

Thanks, Andy turning to slide 11.

As Andy said 2022 was a record year for Kosmos with the financial highlights noted on this slide.

We posted record revenue in EBITDAX for the year helped by oil prices, but also by the highly accretive acquisition of the octagon assets in late 2021.

Free cash flow was strong with around $350 million for the year, which enabled us to pay down over $400 million of debt during the year and we exited the year below our year end net debt target of one five times.

We expect further progress on debt Paydown in 2023 at current oil prices with our free cash flow backend loaded due to the timing of Capex and production increases.

Turning to slide 12, which looks at the fourth quarter in more detail.

<unk> numbers came in largely as expected.

Capex in the quarter was slightly higher than guidance due to the timing of accrued capex on <unk>, which we flagged as a possibility when we reported last quarter.

Depreciation was lower than guidance due to an increase of reserves at Jubilee booked at year end.

And as you've seen in today's press release, we have booked an impairment on 10 as now we forecast a more conservative activity set which is deferred and time based on last year's well results.

The reduction into <unk> reserves is fairly small at around three 5%. However, the bulk of the impairment related to the timing and mix of reserves between oil and gas.

We still believe 10 has significant potential but it does carry more risk and therefore any future activity must compete for capital with other opportunities across our portfolio, which we'll touch on a bit later when we talk about the year ahead.

With that I'll hand, it back to Andy.

Thanks Neil.

For the 2023, we expect this year to be a major inflection point for Cosmos as we strive to bring new developments online with multiple catalysts expected across the portfolio.

In Ghana on slide 14.

Late 2021, we materially enhance our stake in Jubilee to almost 40% due to the acquisition of <unk> interest because we believe in the upside in the field and.

In 2021, the field produced 75000 barrels of oil per day, we expect it to increase by around 25% from that level to 95000 barrels of oil per day this year.

The startup of the Jubilee Southeast project, which is on track to come online at the end of next quarter.

Do you believe it's a big field, which continues to get bigger.

The first production back in 2010, the total oil in place is more than doubled to around 2 billion barrels is the partnership has drilled more wells and scope and more productive horizons improved more resource.

But now working closely with our partners to drive a higher recovery factor, which combined with more oil in place could increase gross recoverable reserves to over 1 billion barrels of oil equivalent with less than 40% of that produced to date.

The partnership has identified more than 30 additional drilling locations, which should enable a production plateau of these higher levels for several years to come.

Recent drilling progress has been excellent with three Jubilee southeast wells drilled all of which have come in ahead of expectations.

The results have been encouraging from two dimensions.

Firstly, the wells are located reserves in more oil horizons than expected and secondly, the primary horizons of indicated connectivity to the main Jubilee field Wheeler.

We look forward to providing further updates on this important project over the coming months.

Elsewhere, we are working with the partnership on a commercial gas sales agreement to replace the arrangement whereby the government receipts gas for free until the end of 2022 under the terms of the initial <unk> payout.

There is an interim agreement for the first half of this year, which mirrors. The key terms of the existing 10 gas sales agreements to take account of gas substituted from 10 to fulfill the Jubilee gas obligation.

We're also pleased with the progress made since the handover of operations and maintenance of the <unk> F. BSO last year with cost savings and operational efficiencies materializing with most gap.

Opex in the second half of 2022 was 30% lower than the first half of the year.

In 2023 Jubilee Opex is expected to decline around 15% on a gross basis, which is red and in an inflationary environment.

This equates to around 25% production per barrel given the expected increase in production year on year.

On 10, the partnership is working to high grade the future opportunity set with production guidance for the flat against current levels with no drilling activity currently planned for the year.

Production guidance for both fields was provided by the operator in January with <unk> at 95000 barrels of oil per day, gross and 10 to 20000 barrels of oil per day gross.

Turning to slide 15.

<unk> operations continue to go to plan.

The key deliverable last year was the extension of the Sabre in the queue May license is after 2040, which has enabled the next phase of investment, including the planned three well infill drilling campaign beginning in the fourth quarter of 2023.

We expect production this year and <unk>, who are broadly flat year on year, Although we do expect to see production levels rise towards the end of the year from the current level of approximately 30000 barrels of oil per day growth on the back of the infill drilling program.

In addition on exploration we plan to progress maintained by a lack of opportunity we're drilling in the first half of 2024, along with the infill drilling program.

<unk> has the potential to create a step change in production if successful.

The well has a high graded prospects they deliveries around 118 billion barrels of resource and a deeper, albeit at horizon between the existing cyber and accumulate fails on the source rock in a success case that there will be tied back to the <unk>, So where there is ample spare capacity.

There is also significant follow on potential with around 400 million barrels of resource identify the deeper Albion horizon across blocks as in <unk> 'twenty one.

The first quarter of 2023 Cosmos was awarded a 24% working interest in block <unk>, which contains an extension of this allergy and trend.

Turning to slide 16 in the Gulf of Mexico. This year's activity is largely focused on three areas first production optimization.

On Kodiak, we have worked with our partners to formulate a workover plan for the Kodiak three well in the second half of the year.

<unk> continues to experience productivity issues, but we anticipate the work will be strong production to a more normalized rate in the fourth quarter.

We're also progressing the odd job subsea pump projects that were sanctioned last year. The project is approximately 30% complete and adding the pump is expected to increase oil throughput from the odd job field starting in the middle of 2024.

Secondly, we continue to progress the Winterfell development.

The field development plan has been signed by all partners when we near to finalizing the production handling agreements in the export agreement, which will lock in production and pipeline capacity for the project.

The rig is being contracted and we plan to start drilling the first phase one wells when it arrives on location in the third quarter.

This timing would allow for first oil around the end of the first quarter of 2020 before as previously communicated.

Turning to slide 17, the third area of focus for 2023 in the Gulf of Mexico is the Tiberius infrastructure led exploration well.

This is one of the few remaining full way structures in this prolific outboard Wilcox trend while historical success rate before wave has been around 50%.

We expect to spud the well in the second half of the year.

We're targeting growth resource of around 135 billion barrels of oil equivalent and Cosmos has operated ship and a one third interest alongside oxy in Ecuador.

The well is in close proximity to a production facility owned by one of the partners, which has sufficient spare capacity in the event of success.

This is one of the best prospect in our exploration portfolio and could materially grow our Gulf.

Gulf of Mexico business.

Turning to slide 18.

On Torchy Phase one continues to progress with the project now around 90% complete we want you to show how the infrastructure will come together in the coming months.

There are several key milestones through the as we deliver the major work streams for the project.

As announced in January the DSO left the yard in China, and as Matt has short staff in Singapore to have a piece of equipment fitted and progressed commissioning. The vessel will then continue its journey to West Africa as usual arrived in the second quarter as previously communicated.

Construction of the hub is now complete as can be seen in the image on the slide with commissioning underway and completion expected ahead of the arrival of the floating LNG vessel.

The floating LNG vessel is due to leave the construction yard in Singapore in the second quarter and is expected to arrive in West Africa in the third quarter.

On drilling four wells have been drilled and completed.

<unk> back of the wells is demonstrated rate significantly higher than required for phase one liquefaction.

On the subsea the Amazon vessel has now arrived in the field to commence the deepwater pipeline, which will be followed by the installation of the subsea structures with subsequent mechanical completion and commissioning.

Ill give activities at GE to begin in the second half of the year.

Targeting first gas in the fourth quarter.

As communicated by the operator BP with therefore quarter results earlier this month.

A huge amount has been achieved today and we look forward to reporting on these key milestones through 2023, as we continue to get closer to first gas.

Turning to slide 19.

Looking more broadly at other gas opportunities in Mauritania and Senegal.

In recent days the partnership approved the LNG concept selection for the second Phase. We told you which is an important step forward for the project.

<unk> has selected the gravity based structure or GBS, which is an LNG storage tank with the base of the structure setting on the sequel with a liquefaction units on top.

The concept select adds around two and a half to 3 million tonnes per annum of LNG capacity to torture and includes new wells subsea equipment that maximizes the use of the existing phase one infrastructure.

The partnership will work out over the next year to optimize the size cost and schedule prior to entering into feed and sanctioning the project.

During this period of optimization.

Engaging with potential off takers.

On the assets or anger is BP recently stated the partnership is working to develop a domestic gas to power scheme as a first step for the development.

There is then the potential for future LNG export opportunity to complement the domestic gas project.

We recently signed a new PSC with the government of Mauritania and are working with the partnerships progressed that opportunity based on the LNG export scheme.

In terms of total gas opportunity in Mauritania, and Senegal, SaaS potentially around 15 Tcf of recoverable gas at each of tool to gorilla and the assets Ranga.

Proximately 12, Tcf of recoverable gas next to Cosmos, which is around 2 billion barrels of oil equivalent.

The takeaway from this slide is that we have significant exposure to multiple potential future gas and LNG opportunities and we are continuing to progress all of them to create future optionality because months.

That's the overview of the planned activity set for 2023, and I'll now hand back to Neil to talk about our capital plan.

Thanks, Andy turning now to slide 20.

With a busy year of activity, we remain committed to disciplined capital allocation.

In 2023, we are targeting capital spend of between 700 $750 million, which is in line with 2022 levels as we continued to progress our three key developments.

Approximately 250 to 300 million is for maintenance activities across Ghana, EG and the Gulf of Mexico.

Primarily includes our infill drilling programs and the subsea pump project in the Gulf of Mexico.

$350 million to $400 million is related to our three key development projects, you believe southeast towards phase one and Winterflood.

Between 50 and $100 million as planned for our ILS activities in the gum and EG as well as the appraisal of our greater gas resources in Mauritania and Senegal.

We also remain committed to continued debt pay down.

At current oil prices, we expect to generate around 1% to $200 million of free cash flow this year before working capital.

Which is back end loaded as we reach the anticipated inflection point of lower Capex and higher production.

All excess cash flow this year will be prioritized to debt repayment.

We remain focused on debt pay down until we get leverage to below one five times and a normalized oil price environment, which had come from both increased EBIT tax from higher oil production and continued reduction of absolute debt.

When we reach that level and the potential for shareholder returns, which is an active conversation with our board, but in the near term, we see debt pay down as the best use of cash flow to ensure we continue to strengthen the financial resilience of the company.

Turning to slide 21.

Having outlined the capital plan for 2023. This slide shows the multiple catalysts, we expect from that investment throughout the year.

I don't plan to touch on every catalysts on the slide.

As you can see there is a consistent stream of important milestones across each part of our portfolio.

Already in the first two months of the year, we finished drilling the Jubilee southeast wells, which are expected online at the end of next quarter.

On tour to the CSO has left the shipyard in China. The wells have all been drilled and completed and we've announced further progress on phase II.

We'll be reporting on the rest of these catalysts as we move throughout the year and as I mentioned on the prior slide we expect to see a major inflection point in the second half of the year as Capex ramps down and production ramps up in Ghana.

It's going to be busy and exciting year across all of our geographies.

With that I'll hand, it back to Andy to wrap up today's presentation.

Thanks, Neal turning to slide 20 to conclude today's presentation.

Cosmos has a differentiated strategy that we pursued counter cyclically over the last five years.

This has built a high quality diverse portfolio of low cost lower carbon all assets low cost lower carbon gas assets, which have longevity.

<unk> reserve life of over 20 years.

We plan to deliver around 50% growth in production between 2022, and 2024 and these assets have the potential to generate significant free cash flow with a major inflection points expected mid year as production grows and capex starts to fall.

A key differentiator of our portfolio is our deep hopper of future gas and LNG opportunities, which have exposure to premium international pricing.

And finally, we have a management team focused on creating value for our investors with a clear strategy and rigorous capital discipline.

Thank you and I know last technical the operator to open the session for questions.

Thank you we will now be conducting a question and answer session.

Like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

You May press star two to remove your question from the queue.

For participants do you think speaker equipment, it may be necessary to pick up your handset before pressing the star one.

One moment, please while we poll for your questions.

Our first question is coming from the line of Charles Meade with Johnson Rice. Please proceed with your questions.

Good morning, Neil and to the rest of the Cosmos team there.

Yes.

Hey, good morning, Josh.

Andy I Wonder if you could talk us through I guess.

The process of selecting the gravity based structure for phase two.

Talk to it.

I am not as familiar with those as a as a solution and so I'm curious why the departure from the from the design of phase one being in <unk> and what are the what are the relative advantages of this gravity base design concept and what perhaps are some of the compromises that go along with those advantages.

Uh huh.

Yes, Thanks Charles.

Why don't I sort of start at the top 20 BP.

As <unk> communicated the decision around the.

Phase II concept decision.

We can save.

All of the partners that the governments. The NSA is BP Cosmos are aligned around building West Africa, an energy hub.

And ultimately it's about.

Alignment of strategy.

Developing Brazilian hydrocarbons for the energy transition and phase two is an important next step on that journey.

I'm sure we'll get questions across.

Many colors around.

The concept, so why don't I sort of.

So the three big questions why the concept the timing on the cost I think when you.

Look at the accounts that we did a lot of work with the government so as I discussed.

Three months ago around ensuring that we have properly.

<unk> evaluated.

<unk>.

Primarily as we look to the changing market conditions, what was the right next step in the development of this significant gas resource so the the decision around.

Gravity based structure for phase two.

Is it primarily sort of three primary considerations.

One is the fundamental cost efficiency.

The concept versus alternatives I think the second issue, which is unique around the GBS is you have the opportunity to.

Scale in storage and that actually creates operational efficiencies as we integrate the phase one and phase two and I think the third element.

Contributed said the decision was flexibility around financing if we choose to go down that path and then ultimately.

Cost of that financing.

Three things are sort of drawing the selection of the GBS for the midstream.

I think we reiterating that we have a phase two a concept which is going to leverage heavily the infrastructure from phase one.

What is phase III comprise offer is clearly additional wells manifolds for those but we're going to debottleneck the Sps.

The actual capital contribution to that it's very small use the existing pipeline obviously the brightwater.

Export so you are adding some additional storage and youre, adding.

The LNG processing on on Salt.

Again sort of anticipate the next question where are you on the timing.

Think we're really going to spend the next three pre feed really ensuring that we've got the right approach to the market.

<unk> evaluated optionality around the GBS you can go concrete base you can go steal base and to fully optimize the concept and fine tune the volume between two and a half and 3 million tonnes, which is really dependent on the debottlenecking of the NPS.

Huge amount of work on the front end to front end load that and particularly important given the inflationary environment. We're in but again. This is a very cost competitive brownfield expansion of an existing LNG.

<unk> and therefore, we would anticipate sort of entering feed which VP would regard as the sanctioning of the project in about 12 months time, and then in terms of cost.

As I said really cost competitive because of the brownfield expansion the upstream.

Relatively minor given the use.

<unk>.

Of the existing infrastructure additional wells manifolds, and then you've got the LNG processing itself, which we believe it's absolutely top quartile.

Other opportunities. So I think hopefully that gives you the full view.

Of the project.

And as you can sense I think we the partnership are very excited about moving forward now in the next stage of.

The expansion of this.

The development of this field.

Yes. It is.

Thank you for your comments and it's an exciting prospect and when we're going to be able to follow for a while here my follow up do you believe southeast you made a couple of comments in your in your prepared remarks about I think you also had some of the press release that not only did you.

Established pressure connectivity with the with the main field pays in Jubilee proper, but that you found.

It seems like the expense, maybe some new sand some some new reservoirs.

Yeah that that is a.

That's a.

Near term upside for you guys. It seems like so I'm wondering if you could perhaps elaborate a bit on your prepared remarks there.

Yes, no look I think those three to three wells that we drill down into the southeast were important we're obviously testing and the expansion of the field.

The slide that we included with our presentation you can see the step out of that.

Field.

To the southeast and so.

We pulled into those wells actually delivered.

The subset as a result that we were hoping for and actually it was more than with helpful. We as you say there are a couple of things that were.

Important we believe we have the indication and the connectivity to the main field, which clearly sort of says that there was additional resource sort of inboard of the wells that we drill and then we found some deeper horizons.

I think if you step back from the detail charged.

Youre, absolutely right and as cheaply as we said is a big fields get bigger.

We're continuing to see upside from the development of the field.

<unk>.

From a near term perspective, having sort of the rest of the subsurface now presumably southeast at least for the.

The size of the field, we think visitation will follow on potential there were 30 development locations that we'd found which gives you an indication I think is the longevity of the.

The platform that we can build.

Great. Thank you for your comment Danny.

Thanks, Charles I appreciate it.

Thank you. Our next question is coming from the line of Alex Smith with Investec. Please proceed with your questions.

Hi, guys. Thanks for the call today.

Just a question on 10 to me place today, just given the impairment.

It looks like decision has been taken on the back of the two strategic wells.

The grades in time area back in 2022.

Would be good to hear your views on the medium term prospects for that asset.

Any opportunities you feel that could be kind of get things back on track.

Area, especially maybe the opportunity to gas.

10 post oil in terms of growth given the gas agreements being signed with the government.

Clear views on tend to be great. Thank you.

Yes, Thanks, Alex good question.

When you stand back from it from a reserves perspective, it was relatively small at three 5% sorry.

Some reduction in oil kind of offset by some additions of gas so sort of on a on a reserve basis, a relatively small impact, but obviously not traded in the us.

Assessment against the ceiling test I think when we look at that would be the investment in can we actually see.

Less capital going in and therefore, a more conservative development case. So there is future development of the field, but we arent going to target lower risk areas. When we have good well control and fundamentally for Cosmos, it's about how would that development. Therefore compete with other <unk>.

Opportunities that we have in our portfolio.

Clearly in the materials today, we've talked about the deep hopper of opportunities that we have in Mauritania and Senegal opportunities that are opening up in the Gulf of Mexico and in Accessorial again, So I think ultimately this is about quality through choice.

Therefore were 10 would rank and our future opportunities. So we do see future potential it will be a combination intent about oil.

Gas, but clearly it's smaller than we'd anticipated and therefore the decision as we look at the capital allocation to to take the impairment.

But very clear.

Thank you.

Thanks, Alex.

Thank you. Our next question is coming from the line of Neil Mehta with Goldman Sachs. Please proceed with your questions Hey, Good morning, Andy now and team. Thank you.

So congratulations to you guys on getting the Fps, So moving towards West Africa, just would love your perspective on what are the gating.

Items that we should be thinking about about getting to first gas by the end of the year at tour to phase one.

Yes, thanks Neil.

<unk>.

We've achieved a lot on the projects and as you say, it's not done yet, but we continue to make progress quarter on quarter.

Is it important.

Deliveries in the third.

First quarter.

And we anticipate it being an in location in the field in the second quarter. So that's clearly a milestone for you to track the LNG vessel is targeted to leave Singapore.

In the second quarter getting there in the third quarter. So that's again an important milestone for you to track in terms of the.

The drilling of the well sort of all complete.

Hi.

Completions have flowed back and we're very positive about the well results as we said in our remarks, we achieved significantly higher client phase one liquefaction. So we feel good about the.

The subsea we also feel very good about the hub terminal I think we included some pictures in the deck, which shows that the construction is complete and commissioning underway.

The the uptime model will be ready to receive the LNG vessel when it arrives in the in the third quarter. So really now it's about the completion of the.

The subsea installation.

Amazon vessel is on location in the field now almost completely.

The lay of the deepwater pipeline and then we start to instill structures. So I think as you sort of think about it.

You're really into.

The completion of construction of the subsea through the third quarter.

The fourth quarter mechanically complete, which then enables first gas in the fourth quarter. So the big things to look at obviously the arrival of the <unk>.

And it's anchoring and position the arrival of the appetite Jay vessel and its.

Looking at connections.

Terminal and the completion of the installation in the deepwater pipeline and then the mechanical completion of the subsidy equipment.

Installation of the subsea equipment those are the big things.

As <unk> indicated in the results I think the closer we get to it the more confident we get around the delivery of gas by the end of the year.

Thanks, Andy This is a follow up question is a tricky one because maybe not all the moving pieces are there so feel free to pass on it but you gave the 2023 free cash flow number.

Of $100 million to $200 million at current prices I think for a lot of investors, but they are really planned for 2024, because at that point, you've got phase one coming online and get that bigger auction is there any parameters that you can provide around what the free cash flow could look like ex <unk>.

<unk>, two where we havent gone that far yet.

I'm going to give me a minute to think about that.

A question there, but I think it's a great question because what we're talking about is the inflection point.

That is occurring in 2200, <unk> had cosmos and.

Mid 'twenty two 'twenty three middle of this year, we kind of start to see.

First product from Jubilee Southeast, which is a significant contribution to the growth in production, we obviously CNN the capital going into that project. We then go through the back end of the year and we say, it's a continuing decline in Capex as <unk> phase one is complete and then we go into the beginning of <unk>.

At 24.

<unk> production.

At the back end of 'twenty three on torture and then the startup of production.

And when to sell at the end of the first quarter. So I think.

Most important thing as you kind of see a progressive increase in that free cash flow quarter on quarter as we go through the second half of this year into the first half.

Next year and then once.

We have winterfell on venue starting to get to what sort of platform.

Yes.

Inflection is really close we're not far away now.

The forecasting of free cash flow in 'twenty, three is going to be dependent on the exact timing of those projects because you've moved 20 phone ale, yes without giving.

New numbers.

I'd say.

All the things that you said structurally are still sort of in play which is sort of operating cash flow increases and that sort of maintenance.

The capex required for the business.

To maintain that production certainly comes down quite a bit.

The key piece that we will continue to progress.

On top of that.

We will be we've got some choices to make around sort of where do we redirect that incremental free cash flow and I think we feel good and as we've said in the past around being able to direct cash flow towards future growth.

Onto the projects that we want and continued debt pay down to get the balance sheet into a stronger more resilient place.

Then an additional piece on top of that for shareholder returns and so I think we should be unique in that ability.

To do all three given the quality of the portfolio and kind of where we are and that certainly.

We are taking.

Thank you Pat.

Thank you. Our next question is coming from the line of <unk> Chandra with benchmark. Please proceed with your question.

Yes, hi, thank you.

Couple of questions follow ups I guess on the gravity base.

First is how do you compare cycle times post FY <unk> for that versus floating and what do you think about sort of the novelty of gravity basically score.

For this purpose.

Do you think.

It actually increases the risk score the operational risk or decreases.

Yes, good questions I think.

Thanks Sebastian.

In terms of the cycle time.

We would see the cycle time being very competitive.

With floating.

Simply because you've got a broader access to construction yards.

Shipyards relatively full at the moment. So I think you have a broad.

Contracting base to draw upon so we see no.

<unk> benefit from a contract cycle time in terms of the novelty of it it's a proven development projects being used out.

They are operated and designs that have both.

Concrete base.

Steel base, so we don't see any.

Any increase complexity associated with the approach in some respects, it's a very.

Straightforward piece of <unk>.

Design and engineering that's been proven.

And.

At the base structure. It obviously gives you a very simple architecture, then for putting the LNG.

LNG trains.

Very simple for the top sides. So we think it has a lot of benefit.

Both the.

The contracting strategy the access to different providers and ultimately the architecture that you use.

So when you look at all of those combined we think that it's the right approach as I say, we've looked at it from a capital efficiency perspective, which I talked about which is both cost and time.

We we looked at it from the ability to sort of create incremental operational efficiencies from fine tuning the storage capacity and greater flexibility to do that and then if we chose from a financing perspective, we could create greater flexibility. There. So I think we don't see any increased tactical.

Risk impact probably.

Nothing that we feel we're taking.

And if there is any benefit to it and I think in cycle times, it's absolutely competitive.

Got it makes sense a follow up.

Kodiak Workover.

You think that could do for Gulf volumes, how do you think of.

If everything worked out exit Gulf volumes in 'twenty three.

Yes, I think we're.

Clay just to go back and now obviously the sidetrack, while we've had some skin issues. We've done a investigation partners involved we believe we have.

The effective way to intervene on the well work out of the well and anticipate that it's going to.

Execute.

So.

Backend as a fourth quarter around the fourth quarter. So it will have on our product production impact in the fourth quarter I think in terms of volumes probably coming from the well we can probably.

Well nailed on double.

2000 barrels that they hadn't happened 1000 barrels a day net increase shoebrush I think that sort of it could be greater than that but that's sort of what we're targeting.

Okay. Thank you very much.

Alright, thank you.

Thank you. Our next question is coming from the line of change Holden Barclays. Please proceed with your questions.

Hi, there thanks for the presentation, it's encouraging to see all the updates with <unk>.

Wondering if you want or need LNG offtake contracts before you sanction phase III and then also is there any update on the possibility of redirecting some of your phase one cargos to realize some of the upside to your contracted price.

Yes, good questions James.

Fundamentally.

Phase II is different from phase one.

And the.

The capital.

It's involved is significantly lower and therefore, we believe we absolutely will not require.

Full style.

The contracts before we sanctioned I think.

With the announcement now of phase two in terms of the concept and the scale and the timing of the project, we intend to engage in the market in this year. So you can look at options that we have around around flexibility on sales.

Without wanting to preempt that process I would say there will be an element of fixed to it.

It will have to review what indexes, we choose my element of FX and I believe that we will have.

An element of sponsored as well to be able to fully capture the upside.

We will not have to have sold all of the gas at that time.

So that is sort of separating from whereas when we're at phase one it was very much.

Brian much linked.

Yeah on phase one.

With the backlog of opportunities, we continue to make progress on that.

Engaged now with us at a high graded list of potential buyers.

We're working with those buyers on a contracts.

Structure, which we believe will give us the best opportunity to capture the upside and we anticipate.

We want to be in a position to sort of select the high graded buyer on the contract structure, probably in the first half of this year.

With regards to BP gas marketing.

Continue to debate.

Gus within the contract structure.

There's clearly a difference of opinion between us in terms of how it would actually operate so.

What do you have a disagreement amongst friends.

We've gone to a third party. So we have agreed to go to arbitration.

I don't have the contracting separately for us and this is actually a good thing.

Positive outcome, because it allows us to get everything clear before we would start to reuse those.

Cargo optimization options, which comes at the end of the commissioning period, which is sort of around the middle of 'twenty, four theyre getting everything lined out and sort it out in terms of how would actually work as an important.

Set forward and we'd have all of that sorted out I think within a year as we go through that process. So that is the key.

Key assets against the market now with phase two at the same time as we're discussing phase one allows us to get a really good understanding of the sort of fixed nature of the future contracts.

The spot nature, and then optimizing that between phase one and phase two.

Okay. Thanks, I guess a follow up from me just.

If I guess, one driven by the future projects, you've got both the Senegal and Mauritania I guess, we've seen press reports that naturally indicate the countries are very eager if you could get out and develop them as they're increasing pressure on yourselves and BP to commit capital I'll, let Dr <unk> or.

Is it just noise.

No look I think it's actually a positive James I wouldn't say it is.

As a negative.

Is that sort of a step back I think.

Yeah real alignment amongst the government the Nics BP cosmos around the development of our resources and again from a BP perspective, they view it as a key part of that strategy for the development of Brazilian hydrocarbons. So I think we're moving forward on pace of.

Yeah, I can try and go around.

<unk> will have a domestic element to it.

Play to the project.

Is aimed at displacing heavy fuel oil expense that had been fuel oil for power generation in Senegal and enables us to see.

Half the project in that way with it.

With a competitive domestic gas project with the option then.

Of LNG export in Mauritania.

There is a difference because you're looking primarily at an LNG scheme that.

And again, we're looking at a way in which we can get it and efficient.

Phased approach that uses some existing infrastructure.

<unk>.

In a port.

In Mauritania so for us.

It is about how do we continue to progress those projects.

And that's absolute alignment between beta Intel as most of you that do it in a way where we come up with really competitive schemes that compete and yes. Ultimately there may be a choice within cosmos around which ones, we invest in and which ones. We bring in partners, but I think thats ultimately a great problem for us to have going forward.

Forward, So I didn't feel any pressure I think it's great I think we have a resource the world needs.

We're addressing energy security in Europe , we're creating affordable power and in Africa, and ultimate big contributing to a lower comp in future and if we can do all of that.

I think.

We only can will allow us to create value for cosmos as shareholders. So I'm excited about in phase III moving forward. It's just the signal I think of the progress that we're making.

Okay. That's great. Thank you very much.

Alright, thanks, guys.

Thank you. Our next question is coming from the line of Mark Wilson with Jefferies. Please proceed with your questions.

Alright, thank you.

Two questions one on the GBS concept and one on exploration. Please.

On the GBS.

Talked before about the floating concept for phase III being approximately.

$1 billion Capex now that was a few years ago.

Inflation is.

To be a biggest scale, but just wondering if you can give any sort of parameters to help us on what you think.

Capex of that concept select could be maybe as a percentages of total III phase. One is just one example.

Also on the geography.

Yes.

So again, it's one thing that strikes me.

Yes, one thing that strikes me as you've built or at least concrete caisson.

Two phase one so this is vic.

Knowledge of using concrete to build launch things in Senegal, So is that.

This is not part of the concept as well local content and possibly.

Building at that thank you.

Sure.

Yes, alright, Mark yes, let's do that one first.

Just I think just sort of when we talked about.

Often in the past and we talked about the $1 billion. So it was clearly around the time the upstream.

And part of it on the basis of the sort of the midstream.

So I think that things were.

The cost and I think that will do a lot better than that on the upstream now as we've done further work to delineate.

That's actually going to be required to debottleneck the.

The infrastructure that we have in place today, so we've taken another gas flowing around.

<unk> 450 million standard cubic feet, a day that you need to provide for two and a half to 3 million tonnes of LNG liquefaction. So.

That's the first point, yes, so I think in terms of our billion dollar number the actual upstream cost I think there's going to be below that now that we've done in the world. When you come to the midstream and clearly we've got options to release.

Finance, which we know obviously that the capital will not be on our books or do we need to recapitalize and that's a decision that we have yet to make but clearly when we look at the the GBS as a as an option, we believe whether it's capital or whether at least it is more cost effective.

And then going down the LNG group.

So that makes sense.

It does Shen, yes, definitely and then on the local content point, given as I say.

One case on what's going on.

In Senegal.

Yes, absolutely.

And again, what we're looking to do with build out local accounts and as we look at phase two what I don't want to do is sort of preempt. The work that we're doing with the market as there are various ways of doing it and even currently with a concrete base you could do it with the steel based on what we need to do is go out working with the market to come up with the most cost effective way.

Doing it along that is aligned with the local content. So.

I think what Youre undertaking is we have some real optionality now is how we create the most capital efficient most capitally efficient way of doing it and leveraging some of the knowledge that we've built from the past so we will.

We see this as.

Absolutely the most cost effective way to move forward.

And.

And it gives us the most flexibility on the storage size and financing.

Okay. Thank you just one quick follow up some a couple of really quite punchy exploration wells in the coming year.

<unk>.

King deep yes.

Yes on that on the deep could you remind us who your partners are in block Ash. Please.

So.

As in.

And as long as partners in blockchain, neuro and try to and from.

Okay very good thank you yeah Mike.

Great question My follow up on that is again, we see it as being Ali.

Highly perspective this is an untested.

<unk>.

Our objective clearly between the source rock.

Currently producing horizons in cyber in the tumor with a very solid four way structure.

The great thing about it is then the alignment around the partnership that enables US then to bring it back to the existing.

Capacity that we have in cyber and accumulate so we're excited by it and I think it's great exploration prospects, but actually the capital again.

A very low cost F&B because of the existing capacity and insight, but it <unk>.

The fact that we have.

Alignment amongst common share.

Got it appreciate the color. Thank you alright, thanks Mark.

Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.

Our next question is coming from the line of Matt Smith with Bank of America. Please proceed with your questions.

Hi, guys. Thanks, very much I was just wondering if I could come back to the free cash flow guidance for 2023. Please.

Yes, just in light of the results in 2022 gives us.

Production I guess broadly flat just slightly up with Capex broadly the same Canadian.

Macro element.

But I think gone are due to the hedges.

To you.

Hedge realized price too far from what we have.

So just wanted to follow up on this.

And anything in terms of music for free cash flow in 2023. Please.

And then I think a related follow up would be just to check.

On shareholder returns am I interpreting that comment correctly.

That's probably a story for 2024.

If we're looking at further deleveraging.

2023 please.

Yes sure.

Yes, so when you sort of reconcile 23 versus <unk> 22, clearly production is higher.

Yes.

We're sort of forecasting a lower sort of oil price, which is the biggest sort of impact to that.

To that free cash flow number.

As you noted hedges aren't a headwind.

We've put in floors at around seven.

<unk> and <unk> ceilings up to 110 on average and so we've got much better access to higher oil prices as as the year goes down.

It goes on Opex.

Clearly it is trending.

Slightly higher but it is lower on a per barrel basis, given some of the increased amount of production we're running through.

Just from a free cash flow perspective, as you said the Capex is about the same there is a bit higher.

Interest cost just given we do have some variable rate debt.

And then cash taxes are bit higher.

Partially just reflecting timing so EG taxes are paid sort of a year in our careers.

And.

Therefore.

Benefit we got from last year will pay a little higher tax on that front.

This year.

But on the whole, we generated 400 million $350 million of free cash flow last year at $100 oil.

Sensitivity is still around $100 for every $5 on oil pricing, we're assuming sort of oil price between $280 85.

That's the biggest portion of the difference.

Okay. Thanks, very much just dump the shareholder distributions.

Sorry can you repeat the question Matt.

Yes, sure Alright, I, just wanted to double check with horizon.

The comments correctly I think you referenced that 100% of the free cash flow 23, you will tend to be geared balance sheet.

And then where are we thinking about shareholder return and a 2020.

Full story.

Correct, Yes, I think thats the way to think about it I think.

As we get towards through the sort of mid year inflection point.

We'll be closer to the point, where we can provide sort of external guidance in terms of what that looks like in 'twenty four and beyond I think there are clearly a number of moving parts.

On the oil price and the projects that we are working through and like I said. It is an active discussion at the board in terms of what is the quantum.

And inform the dose.

Of that shareholder return policy, but it is a 24 plus.

Any sort of oil price it backed off a bit from where they were six months ago.

Okay, well, thanks, very much guys I appreciate the color.

Thanks, Matt.

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