Q3 2024 Kosmos Energy Ltd Earnings Call
Good day, everyone and welcome to Kosmos Energy's third quarter 2024 conference call. As a reminder, today's call is being recorded at this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos energy.
Jamie Buckland: Thank you operator, and thanks to everyone for joining us today.
Jamie Buckland: This morning, we issued our third quarter 2024 earnings release.
Jamie Buckland: This release and the slide presentation to accompany today's call.
Jamie Buckland: Now on the investors page of our website.
Jamie Buckland: Joining me on the call today, and see you guys been materials I'm being co chairman and CEO.
Jamie Buckland: <unk> Shah CFO.
During today's presentation, we will make forward looking statements estimates plans and.
Jamie Buckland: And expectations.
Jamie Buckland: Actual results and outcomes could differ materially due to factors. We note in this presentation and in our UK and SEC filings. Please.
Jamie Buckland: Please refer to <unk> and you recall stock exchange announcement and SEC filings for more details. These documents are available on our website.
At this time I'll turn the call I just want it.
Jamie and good morning, and afternoon to everyone.
Jamie Buckland: Thank you for joining us today for our third quarter results call.
Jamie Buckland: I'll start today's call by looking at the operational momentum and enhanced financial resilience, we have built across the business during the quarter.
Jamie Buckland: Hand over to nail to look at the numbers in more detail, especially on some of the key financial objectives. We completed in the last few months. They will then look forward to 2025, where I will discuss our capex plans for the year.
Before I wrap up well then open the call for Q&A.
nail: Starting on slide three.
Jamie Buckland: Two years ago, we set a target to grow production by 50% from around 60000 barrels oil equivalent today, it's around 90000 barrels of oil equivalent per day.
Jamie Buckland: This slide highlights, we're making good progress towards that goal.
Jamie Buckland: The message out in third quarter, we achieved first production at <unk> and completed two production enhancement projects at Kodiak, No gel both of which are performing well.
Jamie Buckland: Sure.
Jamie Buckland: The campaign is underway with the first two wells online in October and the second one I expect it online later this month.
Jamie Buckland: We expect to spud the <unk> well in Midland.
Jamie Buckland: When the result by yearend in Mauritania and Senegal. The partnership has made good progress over the last three months with the project now nearing stop I'll talk more about that shortly.
Jamie Buckland: We finished.
Jamie Buckland: Drilling count midyear and now optimizing the activities scheduled for 2025.
Jamie Buckland: On the finance side, we've done a lot this year, so enhance the financial resilience of the company by extending maturities and enhancing liquidity and simplifying the capital structure.
Jamie Buckland: Neil will go into more detail on these points later in the presentation.
Jamie Buckland: So in summary, we're making good progress towards achieving our year end goals.
Jamie Buckland: And rises we will remain focused on disciplined capital allocation with a plan to significantly reduce growth capex year on year.
Looking ahead to 2025, we plan to prioritize free cash flow to enhance the value of the company for our shareholders.
Jamie Buckland: Turning now to slide four we slipped at Cortez in more detail.
Speaker Change: Gross Jubilee production in the quarter. It was around 87600 barrels of oil today yesterday production of just under 90000 barrels of oil per day.
Jamie Buckland: Yeah. So uptime remained high at 99%, whilst voltage replacements or the water injections to replace produced fluids and maintain reservoir pressure was approximately 19%.
Jamie Buckland: 100% target.
Jamie Buckland: This was the result of modeled and planned uptime of the generator supplying power to the water injection pumps.
As I've discussed in previous quarters to get maximum performance from the field is critical sustained water Jackson Atlanta, instead of cheese body replacement in excess of 100%.
Jamie Buckland: Jackson has now been restored to record levels of around 300000 Boes per day, which should enhance floaters replacement going forward.
Jamie Buckland: Third quarter gross gas production averaged 12700 barrels of oil equivalent per day, which was lower quarter on quarter. The flashing the planned downtime the onshore gas processing plants, we flagged last quarter.
Jamie Buckland: During the quarter the partnership contracts at a new 40 seismic said I was Jubilee field starting 2025.
Jamie Buckland: The survey will be the first fully the partnership is conducting almost eight years.
Jamie Buckland: Mr cycle during Covid.
Jamie Buckland: It will utilize the latest protest and techniques and should generate significantly improved damage to the reservoir and fluid movement further enhancing our understanding of this world class.
Jamie Buckland: The results of the third I should help the high grade well locations, but the next phases of drilling.
Jamie Buckland: The field is performing slightly ahead of expectations with garage door production of 18500 barrels involved today in the quarter and 18800 for the yesterday.
Jamie Buckland: DSO uptime remains high at around 99%.
Jamie Buckland: Our next show again, a gross production averaged around 23000 barrels of oil today.
Jamie Buckland: These ongoing campaigns underway with the first well online increase in gross productions around 30000 barrels of oil per day.
Jamie Buckland: And then for a while as I expect it online later this month.
Jamie Buckland: These two wells combined should add around 3000 barrels of oil per day net to Kosmos by year end.
Jamie Buckland: Following these two vertical wells, we expect to spud the it kingdom I'll ask well imminently, whether result by year end.
Jamie Buckland: In the U S Gulf of Mexico production in the quarter was ahead of expectations at 17000 barrels of oil equivalent net to Kosmos despite an active hurricane season.
Jamie Buckland: You know at <unk>, we saw the startup of the Wheatstone project with two wells online in July followed by the third.
Speaker Change: Uh huh.
Speaker Change: We successfully confirmed the extension of the mine, we saw rather than what's in the south.
It also can say on this one.
Speaker Change: <unk> thousand barrel of oil equivalent per day gross production capacity on the first phase of drilling.
Speaker Change: Shortly after startup the third well production of the field was curtailed due to sand productions on the third well see that production facility.
Speaker Change: Currently working with you on Friday to restart production in the first two wells, which collectively produce around 30000 barrels of oil equivalent per day gross and there are evaluating options to remediate third well.
Speaker Change: In the quarter. We also completed two important production enhancement projects with a successful what kind of a caveat.
Speaker Change: The subsea pump projects, though Joe both of which are offered by Cosmos are performing ahead of expectations.
Speaker Change: Current production in the U S. Gulf of Mexico was increased to approximately 20000 barrels of oil equivalent per.
Speaker Change: Today in line with expectations and around 50% higher than the first half of the year.
Speaker Change: On the <unk>.
Speaker Change: Project like Cosmos is on Friday, we have agreed with our 50 50 partner offices each of the first time since the second half of 2025 C prioritize cash generation in 2025.
Speaker Change: We continue to progress the farmed down the field and that's good levels of interest.
Jamie Buckland: Yeah.
Jamie Buckland: Turning now to slide five we should find an upside on gcs.
Jamie Buckland: As you on Friday noted on their earnings call last week. Good progress is being made across all the major work streams during the quarter.
Jamie Buckland: LNG cargo has been brought with it the carriers currently the alongside the Hot summer.
Jamie Buckland: LNG from the carriage they introduce into the tanks are at floating LNG vessel, so accelerating that process and commenced commissioning of the LNG trains.
Jamie Buckland: Image on this slide on the phone and kind of other presentation show the carryout at the hub.
Jamie Buckland: After successful mooring operations last quarter U S. P. S. O is expected to be ready for start up shortly with a hand over from the contractor technip energies to VP operations.
Jamie Buckland: The subsea infrastructure is mechanically complete which will enable first gas supply from the field following ipso salad.
Jamie Buckland: G is expected around the end of the quarter, which is when we start to recognize production.
Jamie Buckland: So in summary significant progress over the last three months there was project startup.
Jamie Buckland: An important event for the GTA partnership and the people of Senegal and Mauritania.
Speaker Change: I'll now hand, it over to nail to take you through the financial.
Jamie Buckland: Yes.
Speaker Change: Thanks, Andy now turning to slide six which looks at the third quarter in more detail.
Speaker Change: Production for the quarter of 65004 hundred barrels of oil equivalent was up 5% versus the prior quarter or towards the bottom end of our guidance range, reflecting the FERC infill well in Equatorial Guinea coming online around two months later than initially planned and slightly lower Jubilee production.
Speaker Change: This was partially offset by the higher production in the Gulf of Mexico that Andy mentioned earlier.
Jamie Buckland: Sales volumes were as expected with three cargoes in Ghana, and one in Equatorial Guinea.
Jamie Buckland: Costs were largely in line with guidance with Opex slightly better helped by lower than anticipated costs in Ghana for the quarter.
Jamie Buckland: Capex came in slightly above the guidance range, which was a result of higher than forecasted spend on the EG drilling campaign in three kids.
Jamie Buckland: We now expect capex to be around 800 million for the year.
Jamie Buckland: This equates to around $100 million and for Q, a significant reduction from previous quarters in 2024, and a good guide on where we expect quarterly capex to be in 2025.
Jamie Buckland: Finally, as we mentioned last quarter, the working capital benefit from the first half of the year reversed in the third quarter, reflecting completion payments associated with projects delivered across the portfolio.
Jamie Buckland: This working capital movement was largely responsible for the cash outflow in <unk>.
Jamie Buckland: Turning to slide seven.
Jamie Buckland: During the quarter, we made significant progress to enhance the financial resilience of the company as we head into 2025.
Jamie Buckland: In September we successfully issued $500 million of new senior notes due 2031, eight and three quarters percent.
Jamie Buckland: Along side the new issue, we completed a series of tender offers to repurchase $500 million of our outstanding senior notes across multiple maturities paying down the majority of our 'twenty 'twenty six notes, while also reducing the outstanding amount of our notes due 2027 and 2028.
Jamie Buckland: The result of these transactions is that we have no maturities in 2025, and only a small stub in 2026, which we would anticipate paying with free cash flow from the business.
Jamie Buckland: Yeah.
Jamie Buckland: Also during the quarter, we added two new banks to our R. B L syndicated increasing our total commitments to the facility size of 1.35 billion.
Jamie Buckland: Post quarter end, we also canceled our undrawn revolving credit facility ahead of its year end maturity simplifying the capital structure.
Jamie Buckland: In addition, we continued to actively manage future price volatility through our rolling hedging program.
Jamie Buckland: We currently have around 45% of our first half of 2025.
Jamie Buckland: Oil production hedged with downside protection of approximately $70 per barrel.
Jamie Buckland: To continue this through end of the year layering in more hedges for 2025, as our 2020 for hedges roll off providing solid protection to our cash flow from potentially volatile oil prices in 2025.
Jamie Buckland: Moving to slide eight.
Jamie Buckland: As mentioned previously as projects are delivered we expect to see a material step down in capex with around 100 million.
Jamie Buckland: <unk> and <unk>.
Jamie Buckland: This level of quarterly Capex is a good representation of where we expect to be in 2025.
Speaker Change: As Andy talked about earlier, they plan to prioritize free cash flow next year and have therefore high graded our maintenance capital to focus on drilling at Jubilee, and where winterfell to mitigate decline in Ghana, and the Gulf of Mexico.
Speaker Change: Equatorial Guinea will benefit from this year's infill drilling program and we anticipate very low maintenance capital on GTA. Once the project is online.
Jamie Buckland: We will be disciplined in allocating capital to growth opportunities in 2025, ensuring we only spend what is needed to preserve our deep pipeline of growth options, which remains a key differentiator for our company.
Jamie Buckland: The growth options listed in the appendix consistent both high quality oil and gas projects spread across our different business units.
Jamie Buckland: Importantly, many of these are kosmos operators, such as Tiberius yucca terrain, and the King deep, which gives us much greater control over both pace and spend that we've had on the projects in the past.
Speaker Change: With that I'll hand, it back to Andy to conclude today's presentation.
Andy: Thanks, Neal turning now to slide nine we've achieved a lot so far in 2024 with the startup of new projects are more to come as we close out the year.
Andy: Production is now ramping up towards our target of approximately 90000 barrels of oil equivalent per day around the end of the year.
Speaker Change: As Neil said in the previous signed we expect Capex to fall sharply in the fourth quarter. They continue at this lower level through 2025.
Jamie Buckland: With this disciplined capital allocation, we plan to prioritize free cash flow delivery in 2025, we should allow us to pay down debt and reduce leverage.
Jamie Buckland: And finally, our differentiated operating gross project portfolio provides significant optionality for the future with high quality oil and gas investment opportunities with a much greater degree of control.
Jamie Buckland: Thank you and I'd now like to turn the call over to the operator to open the session for questions.
Speaker Change: Thank you we will now be conducting a question and answer session.
Speaker Change: Like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Information tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue and for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Our first question is from Charles Meade with Johnson Rice. Please proceed.
Charles Meade: Good morning, Andy and Neil and into the whole Cosmos team there.
Charles Meade: Andy I wanted to ask a question about the the 2025 capex outlook it in and the changes there.
Speaker Change: I recognize that that 550 indication you would given was I I I took this as more of a kind of a guideline there wasn't necessarily a specific roster.
Speaker Change: Perhaps it wasn't a specific roster of projects, but can you talk about the moving pieces, what what made me moved out of 25 and how much of that Delta of 150.
Speaker Change: It was related to Tiberius slogging through the back half of the year.
Speaker Change: Yeah, Hey, Charles Yeah, I Love you.
Speaker Change: Right.
Speaker Change: It was more of a guideline.
Jamie Buckland: And we characterized it as saying it's around 250 going forward and growth.
Jamie Buckland: On average and around might be 300 to 350 and are in the base going forward.
Jamie Buckland: Towards the 25 as we said in the remarks, our focus is on free cash flow delivery next year and therefore, the Capex are you know 400 is ensuring that we put sufficient capex into the base, we have drilling projects in the Gulf of Mexico, but it sounds like with two additional wells.
Jamie Buckland: And we have the reach to all of the Ghana or infill program in Jubilee and E. G. There's there's not a lot of maintenance capital Yeah. We have a drilling program in 'twenty four and as you know little maintenance Capex and a N. G. T. I cause you know we've got more than sufficient capacity. So that's one of the.
Jamie Buckland: The base spend is going to maintain the device and then we all spending down the growth Capex subprime remove that is the one that you've identified which is time periods. So essentially that's like by about a year.
Jamie Buckland: It's it's the <unk>.
Jamie Buckland: It's obviously still where it's at now and.
Jamie Buckland: Under our operator ship were aligned with oxy around the timing. So that's the primary Delta and then you've got a little bit of a well.
Jamie Buckland: Additional growth Capex, just keeping everything ticking over so you know the other message that goes from this is that in and deferring that growth Capex will not actually damaging any of the growth options is simply about a ship probably in about a year in terms of the time various Tommy.
Speaker Change: Got it that's that's helpful detail. Thank you and then.
Speaker Change: On the the 25 do you believe drilling I Wonder if you could could talk a little bit more about what the priorities are are there I mean, obviously, you're trying to get the F. P. F. F. Yeah, so up to capacity, but I imagine that that whatever you learn from this from your four D seismic shoot it it's gonna be not going to have enough time to for that to inform.
Jamie Buckland: 25 drilling, but maybe confirm that and just talk about what the goals of the 25 drilling program are.
Speaker Change: Yeah, well, so that you know what.
Speaker Change: We started the next phase of drilling on jewelry, Charles and as we've sort of remarks, I think that I believe of 40, he's going to have a big impact on that you know and it's.
Speaker Change: The lineup the acquisition techniques. It gets it towed streamer, it's not you know have Max we've moved massively but clearly the processing has put us in terms of the quality of what you get and actually the timeliness of it you've got the product a lot of Eylea. Yeah. So we we we we we we have a sort of a challenge to manage you know when we stopped.
Speaker Change: We still did better but how do we ensure that we're fully incorporating the Atlantic now whether they're a counsellor. While I was why are we know that this is the 40 is not going to have a big impact. So we have so there are a couple of wells that are all secure from from my perspective, and then you start to find the rain. The additional information that you get from the from the 40 seismic so.
Speaker Change: No I mean in a way, it's just getting the right balance of how do you ensure you you're taking full advantage of the seismic but not waiting too long by where you're diminishing the impact of the of the infill program. So I think we've got the balance about right now.
Speaker Change: Thank you.
Jamie Buckland: Great. Thanks Charles.
Jamie Buckland: Our next question is from Bob Brackett with.
Speaker Change: Bernstein Research. Please proceed.
Bob Brackett: Good morning, I had a question around the king deepened and one around Tiberius that are somewhat related.
Bob Brackett: We'll know something around they can be by year end I think you guided to what are the implications for success case on capital for 2025, and I'll follow up the Tiberius.
Speaker Change: Yeah, no problem I think.
Speaker Change: He came in and pull them well because you know what ends up a whole new play that enables us to you know use the existing infrastructure. It's I'll ask tie back they are the wild.
Speaker Change: I think when you look at 'twenty time with success in that King deed, we won't rush at it I think what we wanted to do is make sure that we're well high grading the right opportunities that exist across and considerable gain. So you know we've had an infill program and in cyber and are indicating that there's more of those wells.
Jamie Buckland: With success of the King D. You'll have a deeper or a target that you can bring in semi and we'd see it actually impacting 'twenty six forward when we're actually high grading the capital that we plan to pull up for 'twenty, six and an extra again, a ANAC seizes it'll be bad debating I didn't for a while and so I think my Oh.
Jamie Buckland: But versus a king D. Now the good news is if you remember that we extended the leases in the blocks to ow beyond 'twenty 40, alright. So we're not in a big rush. So this is about ensuring that we get the right.
Jamie Buckland: High grading of the opportunity set I I'm not sure I'm excited because I think you know where we know we've drilled but finished the first small on the cyber who just finished the second well on the two might the rig is literally everything as we speak the guns real King D. But I think that between you know the the success of the infill program, we're going to create.
Jamie Buckland: Not a lot of Optionality now and you know with success you use we will be we'll have some choices to make I think around the future infill program. So that's really going to impact 26 ball brother in 'twenty five.
Speaker Change: Very clear and that's almost ties well into my question on Tiberius give them the two wage twenty-five F I D.
Speaker Change: Gives you essentially more time to look at the farm down.
Jamie Buckland: And if there's less interest than you are.
Speaker Change: Our desire to retain a greater working interest, which I know we've talked about in the past does the farmed out have to go forward or F. I D comes like did you keep a greater working interest.
Speaker Change: Well you know even though it's debated this we like it a lot and nothing's changed. This is about you know how it's presented.
Speaker Change: Prioritizing I think the pace at which we have moved forward on some of our growth options. So I think this is not about not liking. It I think we believe you know the working interest.
Speaker Change: Around the 40% level you know it'll.
Speaker Change: I'll be right for us I think all clean and about the same place of bringing in a partner is the is the right thing to do and what kind of going through that process. Now. So we'll let the process run and Bob I don't think it changes our.
Speaker Change: Our intent.
Speaker Change: And ultimately you know we we see you know it's a good prospect you know we want to ensure there's alignment you know on the development plan, which we can now creating that alignment going forward and so with ourselves as tie back to an oxy operated platform.
Speaker Change: Very clear or a project. So I think no change of plans simply you know deferral and the the farm out process is working as we speak.
Speaker Change: Very clear thanks.
Speaker Change: Alright, Thanks, Paul.
Speaker Change: Our next question is from Matt Smith with Bank of America. Please proceed.
Matt Smith: Hi that come on in the call the nail them, but a couple of questions from me just to start with the first perhaps and that would be on torture if I could.
Matt Smith: Really just could you remind us survive the commissioning process, yeah, LNG sort of is that sort of set in stone I believe you referred to a six month period of commissioning before or is that an expectation and then really just well can you remind us what the implications sort of during that stage, what do you expect from <unk>.
Speaker Change: Sure that car goes but also your exposures to the commercial arrangement that you have with BP. So I'll start out with the first.
Speaker Change: Oh.
Speaker Change: Okay right. So it is in terms of the the commissioning process.
Speaker Change: Yeah, so LNG vessel wherever accelerating that process by bringing in the.
Speaker Change: The carrier and starting the process with with gas coming from that LNG, Canada that allows us to cool down the tanks. It allows us to enable was the run the first.
Speaker Change: Is that the compressors at the front end of the process and then actually spin the AR.
Speaker Change: The key compressors in the a F. LNG trains themselves so not surprised since we're going through at the moment and then that allows us when we introduce gas from the Afghan So essentially very quickly just not making LNG. So that's the process and that's when we actually recognized production I think they are.
Speaker Change: The the six month program that you're talking about is actually dealing with a contractual arrangements associated with the finalization of the agreements that we have with with Golar in terms of them. Yeah meeting all of the criteria that they have to meet as part of that contract. So yeah. So I think you'll have.
Speaker Change: To sort of separate those out.
Speaker Change: From the the actual physical a representation of the production and the revenue which comes as soon as we start putting gas through the S. LNG and stop producing gas and then exporting it yeah. So I think what.
Speaker Change: What I am sort of explaining that for us the process from the introduction of gas to the production of LNG and the revenue recognition is going to be a lot shorter than you. So you've described.
Speaker Change: And in terms of the marketing arrangements would be paid so there's nothing changes that would lift the gas and some of the gas.
Speaker Change: Yeah.
Speaker Change: Thank you for the clarification I was just just a follow up.
Speaker Change: Whereas whether the commercial agreement that you have with BP am I right in thinking that's tied to the the six months.
Speaker Change: Commissioning process that you have with with Golar I, you'll be free to sell your cargoes on the spot market you're at about.
Speaker Change: That time frame is that correct.
Speaker Change: Okay.
Speaker Change: No no I think it will lift the calicoes, so we wouldn't be selling anything on the spot market in that time period.
Speaker Change: And there's essentially Matt and go under the long term pricing freight and there's a slightly different option and you know what it does in MVP referenced potentially but.
Speaker Change: As a base case sort of itself Brent on the same terms as the long term contract during commissioning.
Speaker Change: Okay.
Speaker Change: Thank you wanted to have a really really.
Speaker Change: Really precise about it in that six month period.
Speaker Change: Only about six months periods as a price a marker versus a and b paper, there's a price market versus Brent okay. So there's that.
Speaker Change: That's the that's that's the only sort of difference between that six month period, and then the long term periods.
Speaker Change: Okay understood I think that's consistent with my understanding that that makes sense. Okay. Thanks for clarifying that.
Speaker Change: And hopefully the second.
Speaker Change: Understood.
Speaker Change: Okay.
Speaker Change: Our next question is from Mark Wilson with Jefferies. Please proceed.
Mark Wilson: Thank you first question just a clarification point on the U S. Gulf of Mexico, you say that current production levels that 20000.
Speaker Change: Bounds of where the day I just wonder is that current level.
Speaker Change: Include those two winter shell wells, you're looking to restart those question.
Speaker Change: It's around 20000 without those mark yeah. So wherever yeah, we benefited really from the production on the odd job subsea pumping better than we thought and the Kodiak workout, but doing better than we thought so it was slightly ahead of where.
Speaker Change: We would've been but you know in essence, it's sort of it's around that 20000 barrel a day mark.
Speaker Change: Okay, very good and and then so those provided that there's something good is sorted those four wells four and five next year you'd expect to be able to maintain or even slightly higher than these current levels through at least finally, hi, Mike Yeah, exactly yeah, but building production that rather than it.
Speaker Change: Going going down and you know clearly again you know we benefited from a couple of the production enhancement projects during Saudi body language forecast, which is good. So the base citizens is stronger and then you're adding the wells from from Wentzville.
Speaker Change: Okay. Thank you for that so then into 25 with the lower Capex as you've spoken to already and the focus on getting leverage down could I ask is there a leverage point or target you don't have to get to a shareholder returns or a buyback could be something you'd look at.
Speaker Change: Yeah, why don't I I'll turn it over to Neil.
Speaker Change: Yeah.
Speaker Change: Mark Yes, I don't think our views changed we're very much focused on getting leverage down to less than one and a half times once we get beyond sort of that one and a half times then we'll look at shareholder returns which is.
Speaker Change: Clearly an option that we're keeping on the table and so yeah, but like I said I think from our perspective 25 will be around prioritizing free cash flow and using that cash flow to pay down debt and accelerate to that point. So I don't think it'll it'll jump, but it is very much still on our minds and our board.
Speaker Change: The pathway to get there.
Speaker Change: Okay very good and then the final question. So you've you've asked it about the carrier and F. LNG vessels seem to accelerate the commissioning time off the F. LNG vessels till to could you just speak to the final steps for the F. P. S. So that has crept into full cute, but first gas getting through that what are the final.
Speaker Change: Steps that need to be taken to get that first gas.
Speaker Change: Please.
Speaker Change: Yeah, No good point, Mark I think you know crazy.
Speaker Change: Yeah, Yeah salaries is an important part of the chain and we're close.
Speaker Change: I think just dive a little bit of color.
Speaker Change: Technip energies.
Speaker Change: As a contract where they actually perform the commissioning of the vessel. So all the work is ongoing at the moment is under attack needs wants and that commissioning. The vessel. The next step is then is handed over to BP operation. So it goes from the from Chinese vendors diseases. The project to be be ops, who then him to take the.
Speaker Change: We will take on besides the operations.
Speaker Change: At that point, it sort of moves into the sort of the the pick ups worldwide rights under that control of what does that control. The blood you can then enjoying some subsidy system, which then allows you to introduce gas I think as we go down that journey.
Speaker Change: Maybe you know an important milestone was actually when the the floods how that was supporting the work the tiny tonnage who's been doing all sure. It's now deposit and I think that's an indication to you I think that we're very close in terms of the few remaining punch list items that need to be performed does allow that process I'm ready.
Speaker Change: The startup to a to a cat I can tell you that the that's the defining sort of criteria is take me.
Speaker Change: To finish all that work, which is I just want to punch list items and then he can time that I have a fun time has already gone <unk>.
Speaker Change: Which signals the the amount of work to be done is not very much.
Speaker Change: Excellent. Thank you for that very clear I'm I shall hand over now.
Speaker Change: Great. Thanks, Mark I appreciate it.
Speaker Change: Our next question is from Neil Mehta with Goldman Sachs. Please proceed.
Neil Mehta: Thank you Andy team that so I guess the first question is just that on the 90000 barrels a day equivalent and when do you. When do you think you get there in in.
Speaker Change: And as you think about the next couple of years are at target targeting and then in your Q4.
Speaker Change: <unk> volume guide is there any assumption for a volume contribution are.
Speaker Change: From GTA from talked to in there.
Speaker Change: Yeah. So you know instead of a two pronged question the only sort of.
Speaker Change: You know going forward I think you sort of thinking about the company.
Speaker Change: The invested heavily to sort of grow the production now it's about focus and 25.
Speaker Change: On the sort of maintaining that level as I discussed on a prior question. The maintenance Capex is sort of blowing G. Probe allows you know there's very little.
Speaker Change: Next the Guy and so you've got a sort of a flat production curve from that the production that goes into the Gulf of Mexico.
Speaker Change: As Mark alluded to in his quest question, you sort of a G. T. A we'd wait to cell phone finds its probably be small amount of growth that you know I think we'll sort of see our actual G&A relatively flat and therefore, you know and then back to drilling in in Jubilee.
Speaker Change: Which again is about sort of maintaining it flat and then starting to increase so I think if you look through 'twenty four 'twenty five.
Speaker Change: 'twenty four capex aimed at the base, it's about maintaining and then beyond venue stopped back into the cycling 26, I'm seeing are in you know the growth projects, but you wont see the impact of the time various until 'twenty seven now so I think in a relatively flat and then you know you know.
Speaker Change: Seeing some growth in 'twenty sevens. So I think that's the way I'd think about it and clearly we're prioritizing you know the.
Speaker Change: The investment level in the base to ensure that we keep it robust yeah.
Speaker Change: Yeah, and then in 'twenty the production guidance and 20 are in the fourth quarter of 24, there's a very small amount of Oh Gee I in that you know we sat around the end of the year production is recognized when he goes when when actually we got gas flowing from the F. P. S into the U S LNG.
Speaker Change: Yeah. So we said you know maths around the end of the year. So you can see there's a small amount of gas that small contribution.
Speaker Change: Perfect. Okay. That's very helpful. And then at what is the assumption.
Speaker Change: Thank you recommend for 2020 five for your L. O E M.
Speaker Change: Per barrel as you think about the pro forma company.
Speaker Change: For for G T a in 2020.
Speaker Change: 2025, just how do you think this project could change the consolidated cost structure.
Speaker Change: Yeah, Neil if you want to pick that up.
Speaker Change: Yes.
Speaker Change: And then getting to see here I'm thinking about it on a per Boe.
Speaker Change: Basis, but again I don't see a meaningful change on the oil side of the business, we've been increasing the run rate on the L. O E for the gas side of the business. We said sort of we expect this quarter to be sort of six between 60 and $80 million for the quarter and there's a number of things going on there, but when you think.
Speaker Change: Got it in a normalized sense, there's yeah, I'd say when you on a per mcf basis for the gas business the normalized recurring.
Speaker Change: Opex is around $4.
Speaker Change: Per M C. S M and now on the gas side and that includes the U S. LNG.
Speaker Change: Toll and then sort of the upstream costs, so plus or minus it's around in that range, and then and again I think well yeah and we'll get into this in terms of guidance for 25 and in February but Theres law says yeah. If you recall in 2021 we sold our the F. P. S. So Ted to.
Speaker Change: And we're working on a refinancing of that so that's currently in.
Speaker Change: And opex as well and so there's a little money associated with that that will come down as.
Speaker Change: As we get that piece refinance next year.
Bob Brackett: Okay. Thanks, Neal I appreciate it.
Speaker Change: Sure.
Speaker Change: As a reminder, it is star one on your telephone keypad, if he would like to ask the question. Our next question is from Astellas grades with Barclays. Please proceed.
Speaker Change: Hi, Dara afternoon, yes.
Speaker Change: And if I could just follow up on the previous question.
Speaker Change: In terms of this close Opex for talk here could you just talk about how much of that thank you for some of these one off items just in absolute dollar terms and what the quarterly Opex would be adult attempts that 2025.
Speaker Change: Yeah.
Speaker Change: And Neil Olympics.
Speaker Change: Yeah.
Speaker Change: Let us get back to you sort of offhand I don't remember exactly because there are some moving parts in that Q4 number so alright, well, we'll get back to you on that in terms of the exact breakdown on that key Florida.
Speaker Change: Okay that would be what he said salaries at the Q4 number includes the the pre commissioning cargo. So it includes the expenses associated with bringing the carrier in Soma. So you've got a one off item associated with that and then you do have some pretty commissioning costs associated with the BPA team.
Speaker Change: Go through the process now of the handover from Technip energies all of that because obviously you know ahead of the production going forward. So the two big items all those two items that you know all this.
Speaker Change: Once production is running.
Speaker Change: And then it normalizes into the the basically the $2 per Mcf a number that Neil talked about so we you know that.
Speaker Change: That's probably the simplest way to look at it we can get we can come out and give you the exact breakdown, but the the spend ahead of production is around those two items and then as soon as you get into production then you're around $3, an mcf for for all banks and about $2 for the East coast.
Speaker Change: Okay. That's helpful.
Speaker Change: Thanks.
Speaker Change: Could you just talk a little bit more about this refinancing of the leaseback.
Speaker Change: Leaseback they talked about before just what do you mean by that exactly.
Speaker Change: Yeah Neil.
Neil Mehta: Yeah. So just to when we so we sold the F. P. S O to BP in 2021.
Speaker Change: Then so its lease back to the partnership and it was always sort of envision post first gas at the project then we'd look for you know putting a permanent financing a permanent solution around the S. P. S. L and so that's what we're working collaboratively with B P. M on at the moment and so it's not yeah, it's starting to yeah. We.
Speaker Change: We're seeing U S. P S O in the Opex leased today.
Speaker Change: Depending on it either if we end up doing the refinancing, which we're working on that.
Speaker Change: That amount in terms of what we see in the Opex line will come down pretty substantially.
Speaker Change: Okay. That's helpful. Thanks, and if you don't mind, if I just ask one final thing and in Senegal is it anyhow.
Speaker Change: These are discussions that you've had with the start to ease their <unk> you know like for you to right got you.
Speaker Change: And some of the you know benches of thinking how can I guess first election taxes I mean I'm aware. This is the second election coming up so things might be in the air but any comments on that would be great.
Speaker Change: Yeah, I don't know if it's it's now six months oxy since the New administration is has come in and sell out you know, they're a new party in power there there's been a process of them.
Speaker Change: Putting people in the B.
Speaker Change: Key positions within the administration.
Speaker Change: That process has sort of been lengthened as a result of the decision to go to the.
Speaker Change: The election of the Parliament, which is later this month, so I'd say the first sort of six months of the journey.
Speaker Change: It Hasnt really had we haven't seen really any impact on our sort of daily on pricing the business.
Speaker Change: We've continued to progress GTA and continue to work very closely with the Ministry of energy and the U N S C and in terms of interest and I would say it has slowed down the I could trying to have a.
Speaker Change: Political you know and that's partly you know as you get into conversations that for around the growth Capex you can sort of see that so there's probably moving slightly.
Speaker Change: The lights are on that sort of natural.
Speaker Change: And you give them coming in.
Speaker Change: They're picking it up.
Speaker Change: People within Pakistan, they've got new people within the Ministry that are handling those conversations you know my sense of all of that is going to clear and I'm just sort of the end of the beginning of the following you know following yeah and I know somebody it. It's a it's an important project for their national plan.
Speaker Change: It's it's about creating a low cost gas. The replaces you always got them currently than are being consumed for power at all salaries the soles of export.
Speaker Change: Therefore in combination you know, creating an important new revenue stream in terms of development of my resource, but you're also creating an import and domestic gas supply, which creates energy security and it enables a lower cost of balance of the country. So you know it's an important project so that compensation is wrong.
Speaker Change: As we speak but I, just think things kind of take a slightly longer just because of that transition of power and then you know further complicated by the decision that you want to go where the national election, but I think the message to take out of it nothing has really impacted the important work on GTA, which is obviously a primary focus of the mine.
Kevin: Yeah, Kevin Thanks.
Kevin: Great. Thank you.
Speaker Change: Since there are no further questions at this time I would like to bring the call to close thanks to everyone for joining today you may disconnect. Your lines at this time and thank you for your participation.
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