Q3 2023 Kosmos Energy Ltd Earnings Call
Good day, everyone and welcome to Kosmos Energy's third quarter 2023 conference call.
Mind, you today's call's being recorded at this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos energy.
You may begin.
Thank you operator.
Thanks to everyone for joining us today.
Morning, we issued our third quarter earnings release.
This release and the slide presentation to accompany today's call.
On the investors page of our website.
Joining me on the call today to go through the materials I'm being goes chairman and C. I.
Neil Shah Yeah.
During today's presentation, we will make forward looking statements such estimates plans and expectations.
Actual results and outcomes could differ materially due to factors. We note in this presentation and how are you.
U K and SEC filings.
Please refer to our annual report exchange announcement and SEC filings for more details.
These documents are available on the website.
At this time I will turn the call over to one day.
Thanks, Jamie and good morning, and afternoon to everyone. Thank you for joining us today for our third quarter results cool.
Since our last call we continue to make good progress in our strategic objectives with several important recent developments.
I will talk about these in more detail in today's material as well as giving an update on the quarter.
Then hand over the call to Neil's take you through the financials before wrapping up the presentation and opening the call for Q&A.
Turning to slide three.
At <unk>, we're pursuing a clear and consistent strategy.
To provide the world with the energy needs today, while working hard to bring down the carbon intensity of our portfolio and providing the world with a cleaner energy it needs for the future.
To achieve this we are executing a differentiated set of projects that are focused on advantaged low cost lower carbon oil and advantaged low cost low carbon gas.
This slide shows the progress we are making.
First on production growth, we set a target to grow our production in the second half of 2022 by around 50% through the second half of 2024 from three core development projects <unk> Southeast Torchy phase one unwinds itself.
In the third quarter, we brought the first of the development projects Jubilee Southeast online, which increased you believe gross production to around 100000 barrels of oil a day up almost 50% from the production levels seen in the first half of the year.
I'll talk more about Jubilee in the following slides, but we're pleased with the progress being made with more expected in the coming months.
Second our two remaining developments continue to progress our Windsor. The partnership recently completed the first production well and important milestone for the project.
So to the hub terminal was completed and handed over to operations and we have re contracted the subsea work scope, which was previously on the critical path.
Third in recent weeks, we have deepened our portfolio of high quality advantaged oil and gas investment opportunities.
In October we announced the discovery with its high various well in the Gulf of Mexico, and today, we announced that we had assumed operators ship and increased our working interest in the world scale, Yes, it's around gift sales in Senegal subject to customary government approvals. We're excited by both of these projects as we expect Linda.
Create the next leg of value growth because most beyond 2024.
More on both of these later in the presentation.
The channel is on the rise of this line is one we've shown before which has been updated for these recent developments.
It shows the progress, we're making against our longer term strategic objectives.
The first meaningful step up in production was <unk> with production rising 17% from the second quarter with further upside potential from Jubilee and then the planned startup of Torchy phase one and when to sell in 2024.
We expect this growth to drive a material step up in free cash flow as these projects deliver enabling the company to further delever and ultimately to fund shareholder returns when leverage falls below our target level.
Looking beyond that we have a deep hopper of high quality operated and non operated growth options across both short cycle oil and long dated gas that will continue to differentiate cosmos from our peers over the coming years.
We plan to balance the pay some working interest in these future projects to ensure we can manage our growth and generate.
<unk> generated material free cash flow.
Turning to slide four which looks at the quarters operational highlights in more detail.
Net production around 68000 barrels of oil equivalent per day was in line with guidance and an increase of approximately 17% versus the previous quarter due to the Jubilee southeast startup.
Do you believe produce an average of around 96000 barrels of oil per day gross during the quarter, an increase of over 30% versus the previous quarter with three <unk> wells coming online across Jubilee southeast and the main field.
While we are being successful in delivering the production wells there was some delays and provide the necessary water injection, which has had a knock on impact to near term production, which I'll talk about in more detail on the following slide.
On <unk> production in the quarter around 15000 barrels of oil per day was in line with expectations and lower than the previous quarter due to a planned <unk> shutdown.
While working on the maintenance of the SPX. So we modified the gas train and the rerouting gas is now being re injected in tow many field to support reservoir pressure and maintain production levels.
This has resulted in around a 75% reduction in flattering a major step towards our goal to eliminate routine.
Hiring by 2026.
The amended 10 plan of development and combined 10 and Jubilee gas sales agreement is being submitted to the ministry of energy for approval.
In the interim we've extended the Jubilee gas sales agreements through the end of November at a price of $2 90 per btu.
Nextera DNA gross production averaged around 25400 barrels per day during the quarter in line with expectations.
Infill drilling campaign is expected to start this quarter with the rig now in country ahead.
Ahead of the three planned infill wells the rig is planning to carry out two workovers on the save the sale, which should boost the year end production rate before the new wells coming online around the end of the first quarter.
The operator expects the work out of an infill campaign to add around 10000 barrels of oil a day to gross production.
Most of our infill campaign you can the infrastructure led exploration well is on track to spud early in the second quarter of 2024.
In the Gulf of Mexico, net production was approximately 15700 barrels of oil equivalent per day ahead of guidance due to lower than anticipated storm activity.
And I'll jump the subsea pump project continues to make good progress and is expected online in mid 2024 as planned.
<unk> production continues to perform in line with expectations and will be supported by the work of a scheduled for mid 2024.
I'll wait to file the partnership continues to make good progress the rig arrived in the third quarter and we have successfully completed the first of the three wells and important milestone for the project.
First of all is on track for the end of the first quarter 2024.
Post quarter end, we announced the discovery of its high various well and Keathley Canyon, which I'll talk about in more detail later in the presentation.
Turning to slide five.
The start up of the Jubilee Southeast developments has driven a material uplift in production at Jubilee.
Producers are brought online during the quarter, taking gross field production up to around 100000 barrels of oil per day, a level not seen for several years.
As I mentioned earlier water injection rates in <unk> were lower than planned.
This is partly due to lower uptime on the water injection pumps and partly due to the delay in bringing <unk> injection wells online, which we originally planned staff in <unk> <unk>.
First quarter and we did bring these two water injection wells online and are now ramping up water injection support the elevated levels of production.
The partnership with previously assumed we would pharma a drilling rig in Ghana in the fourth quarter. This was to allow time to assess our initial three wells in Jubilee and high grade. The next set of wells. However, given the success in our well selection drilling execution. We are now planning to accelerate an additional <unk>.
<unk> and water injection into the fourth quarter from 2024.
This should allow for continued Jubilee production growth into 2024 with both wells expected online early in the new year.
The acceleration of this activity results in an increase in 2023 capex of around $30 million net to Kosmos however.
However, the expected returns are very high with quick paybacks.
As a result of the lower water injection rates. The operator is now forecasting a jubilee will produce around 85000 barrels of oil per day gross for 2023 down from its previous estimate of 90000.
This decrease is driving a lower production guidance and.
It is the expenses, resulting in one less 2023 cargoes from Jubilee than previously forecast.
It is just a timing issue and our view of 2020 full production is unchanged with a shortfall in 2023 I expect it to be made up in 2024.
Whilst there are always challenges in bringing new projects online and optimizing overall field performance. We're excited about the future potential of <unk> and are continuing to work well with the operators to maximize cash flow from the field.
Turning to slide six.
This is a slide we've used over the years to provide a status update on the key work streams on the <unk> LNG project on.
On the hub terminal construction is finished and handed over to operations has been completed.
Within the quarter. We also made important progress on the subsea work scope, which was previously on the critical path to first gas.
Following the performance issues with the previous pipe lay vessel the subsea work is being re contracted.
All cities and Saipem is now being brought in to finish the deepwater pipe lay in the infield flow lines with work expected to start in early December and finish in the first quarter of 2024.
On the LNG cellular way of the vessel is expected later this quarter with the arrival of expected early next year.
The partnership is currently working with Golar to identify ways to advance commissioning of the vessel.
The critical path to first gas on phase one of the <unk> project is now through the arrival of hookup and commissioning of the Fps.
The delivery of first gas in the first quarter of 2024 as signaled by BP. The operator in its third quarter results last week. It depends on the execution of this work stream, which has the potential to slip into the second quarter of 2024.
Turning to slide seven.
On these key projects, we have been focused on defining the next set of growth projects for the company targeting high quality advantaged oil and gas investment opportunities with operators in control.
Today Cosmos announced that has increased its interest in assumes operator ship Avianca Ranga fails in Senegal subject to customary government approvals.
Yes, I can try and there is a world scale gas resource with approximately 25 trillion cubic feet of gas in place and was the largest discovery in the world in 2017.
It is advantaged gas with magazine group C. O. Two located approximately 75 kilometers from the back half and then Sheila enabling a low cost development.
Cosmos, it's working interest in Yadkin, Ranga will increase to 90% with 10% holding the remaining 10%.
Volume is up 10% to participate as an equal partner and the full value chain with a greater working interest.
Cosmos is working with Pakistan and the government of Senegal.
<unk> development solution prioritizing cost competitive gas San Nicols rapidly growing domestic market combined with a floating LNG facility geography exports into international markets.
<unk> Director General statement in today's press release, the Yanke gets around there is a strategic project and supports the plan and Senegal, <unk> zone, which aims to provide affordable abundant and clean energy for the country.
Cosmos <unk> plans to evaluate partnership strategies with the objective of creating an aligned partnership presenting the necessary upstream and midstream expertise coupled with access to cost effective financing and access to international LNG markets.
Turning to slide eight last month's Cosmos announced a successful discovery the Tiberius infrastructure led exploration well in the Gulf of Mexico like Cosmos is operator and has a 30, 334% interest alongside oxy and acronym.
<unk> is a four while structural trap in the outboard Wilcox trend, which was drilled using the partnerships ocean bottom nodal seismic.
This modern seismic technology generates and enhance the image of the prospect, which help refine the location of the exploration well and de risk the future development program.
The image on the slide shows the time, various exploration well, which was drilled on the crest of the structure and the central fault block with additional upside potential in the neighboring fault blocks.
Knowledge improvements like IBM signs maker, a game changer for the industry and allow us to have a much better understanding of the subsurface pre drill.
Well discovered oil column around 250 feet and we were able to conduct an extensive logging program recovering multiple fluid samples and sidewall cores initial.
Initial analysis suggests that fluid quality similar to other nearby discoveries in the world comps trend.
For example, controllers are being sent to the lab for analysis that will enable us to better understand permeability and viscosity, which are key to confirming well flow rates and our future development.
We are now working with our partners on the planning of a phased development scheme, which targets first production in around two years.
Preferred host platform would be the oxy operated Lucius facility located six miles to the northwest of the discovery with key commercial terms of the production handling agreement agreed pre drill.
Successor, Tiberius validates our proven basin infrastructure led exploration strategy targeting low cost lower carbon short cycle oil opportunities to complement our deep hopper of long dated lower carbon gas opportunities in West Africa.
I'll now hand over to Neal to take you through the financials.
Thanks, Andy turning to slide nine.
<unk> for the quarter was in line with guidance Gulf.
Gulf of Mexico was slightly ahead of expectations offsetting the lower than anticipated production from Jubilee that Andy talked about earlier.
Opex was in line with guidance and higher quarter on quarter as a result of the 110 cargo that we have in the year falling in the third quarter.
As a reminder, 10, opex, which is higher than the rest of the assets in the portfolio is recognized when we have the listing.
The guidance slide in the appendix shows opex falling down to normalized levels in the fourth quarter.
Capex was at the higher end of our range, but did include the extensive success case evaluation program associated with Tiberius that Andy mentioned on the previous slide.
Turning to slide 10.
During the third quarter, we saw a continued improvement in our financial position with leverage lower as a result of both increased EBITDAX and reduce net debt.
We repaid the Gulf of Mexico loan within the quarter and important step towards simplifying the capital structure.
Following the Paydown of the term loan and the <unk> Amendment in October Cosmos has no scheduled debt maturities until 2025.
We've talked about reaching a cash flow inflection point as production rises and Capex capital falls as our growth projects are delivered.
Our near term priority with any cash generated is debt pay down to bring leverage towards our long term target of less than one five times at mid cycle oil price.
With our floating debt more now more expensive than our fixed debt. We are prioritizing the RVO, which allows us to maintain and grow available liquidity over time.
We anticipate that we still have a couple of quarters of higher Capex ahead of us completing towards <unk> and winterfell after which we expect debt reduction to accelerate its free cash flow ramps up meaningfully in the second half of next year.
We continue to make good progress on our hedging targets for next year.
In line with previous practice, we are looking to hedge around 50% of the falling gas production, which allows us to fund the capital plan for the for the year.
Using collar structures. We currently have around one third of next year's production hedged at an average floor of $69 per barrel with an average ceiling of around $94 per barrel.
Looking forward at our <unk> guidance, which is included in the appendix there are few points I wanted to flag.
Full year 'twenty three production guidance is now expected to be approximately 63000 barrels of oil equivalent per day due to the delayed startup of Jubilee southeast and reduced water injection levels.
We raised full year production guidance due to the lack of storms. However, <unk> production is lower than the third quarter due to both planned and unplanned downtime, which is expected to be largely complete this months.
We also now expect total capex for the year to be around $800 million.
Selecting the accelerated drilling in <unk> in the fourth quarter and the increased activity at Tiberius following the successful well results.
We still expect a step down in capex into 'twenty four, particularly in the second half as we finish our capital spend of our three key projects.
With that I'll now hand, it back to Andy to close today's presentation. Thanks.
Thanks, Neal turning to slide 11 to conclude today's presentation.
I started todays presentation talking about the importance of having a clear and consistent strategy.
So far in 2023 Cosmos has achieved multiple important milestones in the delivery of that strategy, which sets us up well for further delivery in 2024.
Whilst I don't intend to dwell on all of the bullets on the slide I want to focus on some key themes.
Cosmos has a differentiated growth story, which we've started to deliver with the startup of the Jubilee Southeast project in Ghana with more growth expected to come in 2024.
We continue to progress our other development projects at Tokyo, Winterfell, which are expected to drive another material production uplift in 2024 with torchy, providing further portfolio diversification, both geographically and by adding a new multi decade LNG.
Revenue stream once online.
We are also expanding our medium to long term growth hopper with high quality operators investment opportunities across both advantage oil and gas.
Darius and jackets around yet.
And finally.
As we deliver increased free cash flow, we will prioritize debt paydown until we reach our target leverage level, which is when we plan to look at shareholder returns.
The Kosmos management team is excited by the future opportunity set in front of us and energize the growth and value for our shareholders.
Thank you I'd now like to turn the call over to the operator to open the session for questions.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Matthew Smith with Bank of America. Please proceed with your question.
Hi, guys. Thanks, very much a few questions from me if I could the first one would be on that.
What's your Capex I think at the last earnings call.
There is an element of uncertainty over the phasing and also I guess the amount of additional capex to be incurred from the new subsea contract.
But I think if I heard correctly, you didn't sort of that.
Not to say.
That's the reason for the increased tiny tiny three guidance, so should I take it that that might be some deferred capex.
From this change on torture to 'twenty to 'twenty four.
That'd be the first question the second one on Tiberius I. Appreciate that's further analysis to be done here.
But are you able to just remind us of the pre drill resource estimate that you had there and why you feel like you may have come out of our society, if you're willing to comment.
And then lastly, squeeze a third on my slides okay.
Whether you can add anything on toward your phase two at this point.
And I suppose the question that some investors would ask is is there anything that we should read across from BP.
And their exit from Senegal.
Their enthusiasm on the expansion towards your place thanks very much.
Yes, Thanks, Matt.
What are we splitting up the three questions I'll, let neel talk about the torture Capex I'll pick a top area and then talk about face towards close to yes.
Yes, so Matt just on towards the Capex, Yes, we mentioned last quarter there'd be a re phasing due to the subsea our overall view for 'twenty three hasnt changed suddenly capex basically related to the subsea that was supposed to be in sort of the second quarter and third quarter as we faced in the fourth quarter.
And then ultimately some of that slipped into <unk> to 'twenty four 'twenty.
'twenty three it's roughly the same there is an additional amount of capital versus what we originally planned.
Order of around $100 million net.
For <unk> in the 'twenty four.
Time period.
Okay.
Yeah on Tiberius map.
We're really encouraged by the.
Initial exploration well as we talked about in the <unk>.
In the material, we targeted the central fault block.
And we believe that we probably not central fault block the risks around about a third of the.
Potential that we had pre drill.
In terms of its development.
<unk>.
We did a pretty extensive.
Logging program, which was part of the additional Capex that we spent in 2003. So I think we've got really good set of sidewall cores fluid samples, which give us gives us encouragement around being able to move.
Ah had quickly with the development.
We've obviously got to get all of that analysis back from from the labs, but in the interim we've already kicked off actually the planning of a tie back to lose yes.
I think within a week actually after the discovery was announced contained already put out.
But the big documents continuing to build the.
Subsea lay out so I'm actually quite pleased around the pace at which we're moving and the fact that we have with that initial fault block.
Significant increment to production for Cosmos I would anticipate.
Is that coming on within a couple of years. So again, you know sort of good progress.
And I think.
<unk>.
Subsea architecture will be laid out there'll be a single floor initially, but with the addition of maybe two maybe three additional wells from the additional fault blocks.
Out of the material.
On torture phase two.
Thank you.
Step back and I actually sort of think about how it links thing to Jack It's Ryan I'm sure there'll be more questions around the ACA to running it but.
We have a very.
This things at growth portfolio, and Cosmos of advantaged low cost gas adjacent to Europe, and our objective now is to phase the development of that in Hawaii.
We can not only grow but.
Capital to our shareholders. The first step of that is the completion of told you face long obviously, we've given you that the forward time line for that with controlling now yes. It's Ryan I think we can then position that.
As the next building block and in sequence and I would imagine that tortured phase II could sit behind that so we have a phase of developments now where you're building out around two and a half million tons of LNG, but doing it in a way where.
His visit that does control now with an operated project and doing it in a way.
Youre limiting the capital outlay, so that you have.
Accretable and manageable capital profile. So we're pleased.
We know what the future looks like now.
And we believe this is an important source of value drive.
For shareholders.
Alright, well, thank you very much pass it all right. Thanks, Matt.
Our next question comes from Charles Meade with Johnson Rice. Please proceed with your question.
Good morning, Andy and Neil and the rest of the Cosmos team there.
Andy I Wonder if I could just can pick up maybe just about where you left off.
You said youre sure there'll be more questions about about <unk> and that's what I'd like to ask about.
I guess, there's two parts of this one can you just give us a.
The bigger context of Oh, where your Doctor Trang.
How you chose to develop toward two of Rioja, turning her first.
And and where younger turning it kind of sits in the.
I guess in the in your mind as far as the is.
Is it is it number two after yard after towards two and then also as part of that.
And I recognize that different companies have different priorities and have different viewpoints, but but how would you make the case.
For the value of your car to Ranga to Cosmos for people looking at BP, and saying well if BP just walked away from this why is it valuable.
Yes, Thanks, Charles if you fail all good questions and maybe I'll start at the end and sort of work back.
Yes sure Ryan.
It is a distinctive.
Uh huh.
I, just think that gas resource it as low CF to content. It is close to show a 70 ton kilometers off the.
The back up and then Sheila.
And from a bus.
Mr. Cameron LNG perspective, it has strong market pool, there's a need to replace heavy fuel oil.
Source of power in it.
In Senegal and <unk>.
Clearly.
Senegal is.
It is one of the closest sources new sources of LNG to to Europe. So you then sort of say well, okay. How does that fit with various companies strategies and I think.
To me.
We're at a point now in the lifecycle of the energy transition why different companies are placing different paths and I suppose nothing.
Clear on that and then the two big announcements.
Last couple of weeks here in the in the U S and I think that strategic contacts actually influences the way that people will look at various investment opportunities.
As I said I think Cosmos believes this gas is distinctive and is well described.
Well described what do I mean by that I mean that and told you we drilled four exploration and appraisal wells and the DST rather not.
We're able to calibrate the seismic that lag too for successful development wells. So a huge amount of subsurface data that's directly correlates to jackets, along where we have three exploration and appraisal wells. So we believe we have a well described.
Surface and and are confident in its ability to deliver a very commercial project. We also believe is a low cost solution to development given the geographic situation close to.
The task out Peninsula now.
Yes, I would say the BP doesn't have the same view and I think it's not ultimately.
Heavily influence it is ultimately heavily influenced by.
This is a change in context of where they are allocating our capital and their ability to envisage a commercial.
Development so.
I think this is a great opportunity for the company we've inherited that yeah. We started 90% our objective is for Pakistan to build that share. So they are an equal partner.
With ourselves and whoever comes in we would anticipate that 425 to maybe 33% jazz.
We've got work to do now on fully describing the contract.
Laid out in the.
And the material and.
We've got work to do to bring in a partner around the underpinning.
Financing, but with all of that done this is an incredibly.
So opportunity, but it has to be done.
And a low cost way.
Fully leverages all of the subsurface knowledge so.
That's the essence of might be if the difference but I.
I'd say, it's a huge opportunity for the company and look as you know it is not without precedent.
So.
You're very familiar with the Gulf of Mexico, you go back to something like Shenandoah.
I think two large companies gave it up a smaller company now has it and they're just now we are not executing it very well.
Competitive scale project now so those things.
Many precedent in the industry of that and I think the energy transition is simply money. There is differences more more acute and that's where the opportunity is greater.
That is that's helpful elaboration, Andy Thank you and if I could go back to your prepared comments you talked you talked about the two the two additional wells youre going to drill at Jubilee in Jubilee South East I, just want to make sure I understood. So you.
You guys were going to farm out the rig, but then you decided you you've got these you've got these are these two wells once and do you believe if I understand right ones did you believe once Jubilee South east.
What does this does this lead to a higher plateau or is this just or were these mostly just kind of more reduce the volatility around that that plateau. In case, you have some more of these water ingestion.
Kind of frame it up for us what the yes Jonathan.
Yeah, Yeah, it's simply everybody around accelerate activity out of 24 into 'twenty, three which allows us to actually build towards the facility limit faster. So.
That additional water injection well is important because it allows us to address some of the water injection issues that we've been experiencing and then the second well.
As a producer of which would come on in 'twenty four and then we have an ongoing.
Drilling program launch I believe that would build with additional producers. So ultimately now it's about building the facility's.
Facility's limit in terms of wild capacity, probably building slightly beyond the facility's limit. So we have a degree of wall capacity and reserve and then holding the feel.
Field at that level. So it would accelerate some capital out of 24 into 'twenty three to allow us to build towards that facility limit faster.
Got it thanks for the clarification.
Thanks Charles.
Our next question is from Bob Brackett with Bernstein.
Bernstein Research. Please proceed with your question.
Hey, good morning, acknowledging that you don't yet have the ground truth sidewall core data for Tiberian, sorry, the wireline properties in line with what you expected pre drill.
The follow up.
<unk> is how do I think about the capital cost of developing Tiberius given that the host is a sunk cost and given the potentially the <unk>.
Albert just on cost.
Yeah, Hi, Bob it's always good questions.
The parole.
Was absolutely in line with expectations.
As you are well aware of the next step then is to do the LIBOR too.
<unk> actually confirmed permeability rather than it would be a read across when porosity and then <unk>.
Realize the fluid either with viscosity.
That we can then optimize the completion design. So yes everything is in line with what we expected. It's in line with analogs that are adjacent fail. So.
So so far so good.
As I said two to map.
We're moving ahead well.
With.
I really cost effective.
<unk> plan with the tie back to to lease yes, yes.
Just picked up on the capital of that.
Bob I think you're right in terms of the.
Minimal infrastructure to be late and therefore.
It should be very cost effective.
To tie back program, and we didn't and we develop it similar to how we've done winterfell and other projects in terms of its staged phased development to where we have a single well EPS.
Tori telephone lines in our facility.
And then grow the development over time with more information from them.
Well in the reservoir and overtime. So I think we've talked about the past that sort of F&B and towards 10 to $15 range generically I.
I think thats.
Quarterly fall in that range.
Very clear thanks.
Alright, Thanks, Paul.
Our next question is from Neil Mehta with Goldman Sachs. Please proceed with your question. Good morning team. Thanks for the update today.
Question I had was just around capital spending can you break just from your previous Capex guide to the current one.
Much of that was project related versus inflation and as you think about 2024, recognizing you don't have the full numbers, but how should we think about the airwave network.
To the extent you are able to provide that.
Yes, great.
And they will pick that up.
And yeah I'm on.
'twenty three I think.
The two biggest pieces were really around.
Yeah, the tortured acceleration that Andy talked about that being $30 million and about $20 million of it was sort of the additional drilling everything on our site.
The additional two wells or one and a half wells in Ghana Jubilee.
It's $30 million on that and then the $20 million was really additional drilling at Tiberius post the success and the extensive logging campaign, so that sort of tickets from a sort of yeah. We were trending towards the high end of range that basically maintenance from 750 day hundreds. So that's kind of the acceleration of that yeah.
I would call value, adding activity into 'twenty three.
If I look sort of going forward I think we've talked about sort of a normalized capex rate post our three big projects.
Call it.
Three to $3 50 of maintenance in two to $2 50, a growth sort of get to around $5 50 of steady state cap.
Capex for the company 24.
It's a bit of a transition here because we thought the completion of tortilla and winterfell.
And the residual capex related to that as well as sort of the sort of steady state capex. So again, we haven't given out in 24 guidance yet we'll do that in February.
But I suspect that 24 will fall in between the two.
Where we are this year, and then sort of a steady state level as we finish those two key projects.
Thank you Neal Thanks, Andy and then the follow up is just around <unk>.
Phase one and maybe you can get us.
A little bit more clarity around the work stream that you highlighted which has the potential to slip into the second quarter, but as of now.
Still on track for first gas in the first quarter of 2024 can you get us into the field and give us more granularity. So we understand what specifically you're talking about.
Yes, not shown there yeah if you.
Can you sort of go through the <unk>.
The key work streams, we talked about the hub terminals sort of being finished handed over to operations that was a big milestone in the quarter. You then look at the LNG vessels, which will obviously be more than enough terminal that leaves.
Singapore.
Around the <unk>.
Around this in this quarter and it will get to site at the beginning of next year, so sort of not sitting on the on the critical path.
The big breakthrough in the quarter was around getting all of the sub sea.
Architecture finished.
Re contracting the velocities in Saipem.
That work starts.
Early next month and we have.
Actually the program completes in the in the first quarter, So I feel good about that.
Piece that we have the issue where the wrestling with at the moment is just around the Fps. So it's actually an issue that set of external to the vessel the vessel has families on it.
Italy saw used in the permanent anchoring of the vessel on location.
So you kind of thing and then the voids across to the <unk>.
The East Coast of Africa.
C pass things were damaged.
The boats currently sitting offshore but at the moment, we're looking to get access to the potent urban so that work to address the issue with the families can be conducted so thats a thing what is a little bit of sort of uncertainty in the timing so not a big issue, but it's sort of it is a very.
Our singular issue that we're working on.
All that said as you know.
That work ongoing on the efficacy so itself and all the top side. So we can get on with work to do with the pre commissioning. So when it does arrive on site that were extremely short and they're big projects. It is about the integration of the pieces were clearly getting closer and I actually.
We felt good about the progress we made in <unk> and we've got a significant milestones now to hit in the.
Remainder of this quarter and into the first quarter of next year and the one that we're obviously trying to stay focused on.
Alright.
It is to make sure that we get the peso on location. So that we can deliver first gas. So that's the color behind the.
Right.
Great. Thanks, Scott.
Alright. Thanks.
Our next question is from Mark Wilson with Jefferies. Please proceed with your question.
Okay. Thanks, Gents and thanks for the color on the Sps show that.
Can I ask you about that journey. So that's clear so let's go to.
Ranga, you've actually outlined a very specific development concept and the press release today 550 million cubic feet a day.
With piped gas domestic and export via LNG and I think Andy you mentioned.
And F LNG vessel of similar size to two that's what I wanted to check is what would be the split of that gas how much does.
Senegal require domestically and therefore, how much would be left to take.
Export and you mentioned, bringing in a partner so I guess that is.
Definitive requirement to move forward.
Sort of final percentage stake would you envisage taking in such a development. Thank you.
Okay, Yeah, right hope good questions Mark Yeah. So I think I think sort of covered it earlier, but just sort of I think that.
It is a well described.
<unk>.
I hope you get a sense from that but we've been obviously been working closely with Patterson and the development of that and a scheme that clearly.
Is it as competitive commercially attractive that meets the countries are in development goals, which were around the domestic gas supply and the ability then to create additional revenue through LNG export. If you look at the split it's Brian the 150 million standard cubic feet a day.
Into the domestic gas and.
And I think all of that.
Initially probably.
That won't be the full power capacity to take that but that will grow.
Through time.
Again, a steady state we would be looking at in LNG scheme, which is about two to 3 million tons, which sort of takes you to a gas supply of 400 to 500 million standard cubic feet. Yeah. So that gives you an idea of the SKU.
And therefore, the number of wells that will be required the well the well potential is very similar to.
GTA and I think in sort of.
Therefore sort of linking back to the question.
Y O y.
Why is <unk> not involved.
This is a scheme.
We developed in collaboration with with Pakistan, and then ultimately the decision by BP not participate has allowed us to move forward with that so as I step back.
We're focused on getting phase one of GTA finished and that creates us the opportunity to to work. This so I think.
The scheme is sort of clear in terms of working percentages, we typically have 25% to 33%.
Our current projects have been virtually the same.
Objective is perpetual sand to step up.
Two an equivalent shares to other parties that would come in if it's too it's maybe 25% 25%. If it's just one party coming maybe were at a third a third a third so it's that sort of.
Shape.
Forget that we've got work to do now to bring in the partnership.
That is a gating item for both ourselves and Petro <unk> and secure the necessary financing to enable.
Petra Centre move forward, so again lots to do on it but it is a project, which I believe.
Has the full support of the government has a very clear development concept and a very cost competitive proposal now there's work to do to bring all of that.
See fruition.
Okay. Thank you for that.
On that development concept can we just push it a little bit harder on that so talk to for instance.
A very large breakwater been built in a lot of the phase one was sized with a view to a follow on phase two.
LNG being added.
Could you explain whats different in terms of your account to rank maybe in terms of its location offshore.
That might make it.
And easier or quicker.
City National Phase.
Yeah, No again.
Okay. Good good piece of color Marc Yeah, Yeah.
The way to describe it is we don't envisage bill.
Building a break water we believe there is a design.
To enable AR.
Uh huh.
And as LNG vessel.
To be located.
On location that different met ocean conditions. So that you don't have a significant cost of building up a great quarter. So I think that it is about being innovative around the development solution that we've talked about.
And.
We believe that we've done significant work, we have been significant work to enable us to be able to progress that concept.
Okay, that's great.
Sorry, I've got one more I just wanted to confirm so and do you believe now.
Additional producer injector, Pat before year end, but it is still the plan for that rig to continue in 2024 with a three to four well annual program I think that's been talked about before by the operator.
No no you're right.
Mark and concept that's that's the last proposal so goodbye.
About half a rig year I would say Jubilee in 'twenty four.
And again I think it was Charles as question around.
The objective is to build a well capacity so that we would go.
We took a reserve capacity beyond the facility's limit.
And together with.
Reliable water injection, you then have the ability to sort of hold the plateau.
At that level and then you know clearly your fault you then follow up with additional wells as well capacity it becomes tested but we're on a good track now to sort of continue to move forward with good <unk> as we have those wells and.
Mentally underpin the new wells with with reliable water injection.
Yeah.
The increase in Jubilee as well well described.
In terms of the forward activity set.
Right. Okay I appreciate it thanks.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.
Our next question comes from stellar courage with Barclays. Please proceed with your question.
Hi, Dara and afternoon, all many thanks for all the updates and I wanted to ask on two things. Please.
Please and the first just taking a question on Yucca Glenda do you actually have to pay any consideration to BP, but.
But the additional stake and that would be the first one and the.
Second on the 10 guests development at the TSA Guy in the press about potential cost.
I just wanted to if you could give us a comment directly about what capex you see there.
But from the Kosmos sure.
And then finally do you have any updates on the gamma tax situation that would be great. Thanks.
Alright, I'll sort of go Brian Rose in reverse.
As regards Cosmos, we have no ongoing dialogue with the.
With the <unk>, which is a gamma and tax authority.
Regarding any tax issues.
On 10 the.
I think the newspaper article talked about a $1 3 billion dollar development, which would cover the full development of <unk>.
The next phase of the 10 per day.
We would ask that would be 20% of that.
And clearly that spend would be forward spend through potentially <unk> four five.
Et cetera. So.
But we're still waiting for.
Progress with the government of Ghana in terms of spend so that we don't yet have any firm timing for that.
And then on the assets Ranga there was no consideration paid to BP.
That's great Thanks and Im.
I'm sure you don't have.
Any ongoing dialogue with the government do you mean, there is no tax claim anymore or the tax claim is still there, but there's just been no discussion about it.
We have no tax claim.
Right. Okay. Thanks for the clarification on that was there any particular reason that was dropped.
I'm sorry.
No.
With regard to ourselves versus.
Other policies there was never a tax claim against never just never dispute.
Okay.
Every every partnership is.
Different we've never had any formal dispute with the DRA.
You, obviously have ongoing discussions with them, but we don't have any claims working through.
Okay, all right many thanks for that Greg.
Thank you.
Yeah.
Since there are no further questions at this time I'd like to bring the call to a close thanks to everyone. Joining today you may disconnect. Your lines at this time and thank you for your participation.
Yeah.