0001509991false12/312023Q200015099912023-01-012023-06-3000015099912023-08-03xbrli:shares00015099912023-06-30iso4217:USD00015099912022-12-31iso4217:USDxbrli:shares00015099912023-04-012023-06-3000015099912022-04-012022-06-3000015099912022-01-012022-06-300001509991us-gaap:CommonStockMember2022-12-310001509991us-gaap:AdditionalPaidInCapitalMember2022-12-310001509991us-gaap:RetainedEarningsMember2022-12-310001509991us-gaap:TreasuryStockCommonMember2022-12-310001509991us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100015099912023-01-012023-03-310001509991us-gaap:CommonStockMember2023-01-012023-03-310001509991us-gaap:RetainedEarningsMember2023-01-012023-03-310001509991us-gaap:CommonStockMember2023-03-310001509991us-gaap:AdditionalPaidInCapitalMember2023-03-310001509991us-gaap:RetainedEarningsMember2023-03-310001509991us-gaap:TreasuryStockCommonMember2023-03-3100015099912023-03-310001509991us-gaap:AdditionalPaidInCapitalMember2023-04-012023-06-300001509991us-gaap:CommonStockMember2023-04-012023-06-300001509991us-gaap:RetainedEarningsMember2023-04-012023-06-300001509991us-gaap:CommonStockMember2023-06-300001509991us-gaap:AdditionalPaidInCapitalMember2023-06-300001509991us-gaap:RetainedEarningsMember2023-06-300001509991us-gaap:TreasuryStockCommonMember2023-06-300001509991us-gaap:CommonStockMember2021-12-310001509991us-gaap:AdditionalPaidInCapitalMember2021-12-310001509991us-gaap:RetainedEarningsMember2021-12-310001509991us-gaap:TreasuryStockCommonMember2021-12-3100015099912021-12-310001509991us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-3100015099912022-01-012022-03-310001509991us-gaap:CommonStockMember2022-01-012022-03-310001509991us-gaap:RetainedEarningsMember2022-01-012022-03-310001509991us-gaap:CommonStockMember2022-03-310001509991us-gaap:AdditionalPaidInCapitalMember2022-03-310001509991us-gaap:RetainedEarningsMember2022-03-310001509991us-gaap:TreasuryStockCommonMember2022-03-3100015099912022-03-310001509991us-gaap:AdditionalPaidInCapitalMember2022-04-012022-06-300001509991us-gaap:CommonStockMember2022-04-012022-06-300001509991us-gaap:RetainedEarningsMember2022-04-012022-06-300001509991us-gaap:CommonStockMember2022-06-300001509991us-gaap:AdditionalPaidInCapitalMember2022-06-300001509991us-gaap:RetainedEarningsMember2022-06-300001509991us-gaap:TreasuryStockCommonMember2022-06-3000015099912022-06-30kos:segment0001509991country:GQ2023-04-012023-06-300001509991country:GQ2022-04-012022-06-300001509991country:GQ2023-01-012023-06-300001509991country:GQ2022-01-012022-06-300001509991country:GH2023-04-012023-06-300001509991country:GH2022-04-012022-06-300001509991country:GH2023-01-012023-06-300001509991country:GH2022-01-012022-06-300001509991kos:U.S.GulfOfMexicoMember2023-04-012023-06-300001509991kos:U.S.GulfOfMexicoMember2022-04-012022-06-300001509991kos:U.S.GulfOfMexicoMember2023-01-012023-06-300001509991kos:U.S.GulfOfMexicoMember2022-01-012022-06-300001509991us-gaap:OilAndGasMember2023-04-012023-06-300001509991us-gaap:OilAndGasMember2022-04-012022-06-300001509991us-gaap:OilAndGasMember2023-01-012023-06-300001509991us-gaap:OilAndGasMember2022-01-012022-06-300001509991kos:PetroleumContractMemberkos:BlockEG01OffshoreEquatorialGuineaMember2023-02-28xbrli:pure0001509991kos:PetroleumContractMemberkos:PanoroEnergyASAMemberkos:BlockEG01OffshoreEquatorialGuineaMember2023-02-280001509991kos:PetroleumContractMemberkos:GuineaEquatorialDePetroleosMemberkos:BlockEG01OffshoreEquatorialGuineaMember2023-02-28utr:acreutr:sqkm0001509991kos:PetroleumContractMemberkos:BlockEG01OffshoreEquatorialGuineaMember2023-02-012023-02-280001509991kos:PanoroEnergyASAMemberkos:BlockSOffshoreEquatorialGuineaMemberkos:FarmOutAgreementMember2023-03-310001509991kos:BlockSOffshoreEquatorialGuineaMemberkos:FarmOutAgreementMember2023-03-310001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2019-02-012019-02-28kos:agreement0001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2023-06-300001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2022-12-310001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2023-04-012023-06-300001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2022-04-012022-06-300001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2023-01-012023-06-300001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2022-01-012022-06-30kos:project0001509991kos:YakaarAndTerangaDiscoveriesMember2019-09-012019-09-30utr:km0001509991kos:YakaarAndTerangaDiscoveriesMember2021-07-012021-07-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2022-12-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2019-04-300001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2023-06-300001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2022-12-310001509991kos:A7750SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2021-10-310001509991kos:A7750SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2023-06-300001509991kos:A7750SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2022-12-310001509991kos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2021-03-310001509991kos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2023-06-300001509991kos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2022-12-310001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMember2023-06-300001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMember2022-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2023-04-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2023-04-012023-04-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMembersrt:MinimumMember2023-04-192023-04-190001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMembersrt:MaximumMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-04-192023-04-190001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2023-01-012023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2023-01-012023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2023-01-012023-06-300001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2019-04-012019-04-300001509991kos:A7750SeniorNotesDue2027Memberus-gaap:SeniorNotesMember2021-10-012021-10-310001509991kos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2021-03-012021-03-310001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMember2020-09-012020-09-300001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMember2020-09-300001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMember2023-01-012023-06-300001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMemberus-gaap:FederalFundsEffectiveSwapRateMember2023-01-012023-06-300001509991kos:DatedBrentMemberkos:ThreeWayCollarsMemberkos:TermJuly2023ToDecember2023Member2023-01-012023-06-30utr:MBblsiso4217:USDutr:bbl0001509991kos:DatedBrentMemberkos:ThreeWayCollarsMemberkos:TermJuly2023ToDecember2023Member2023-06-300001509991kos:DatedBrentMemberkos:TwoWayCollarsMemberkos:TermJuly2023ToDecember2023Member2023-01-012023-06-300001509991kos:DatedBrentMemberkos:TwoWayCollarsMemberkos:TermJuly2023ToDecember2023Member2023-06-300001509991kos:DatedBrentMemberkos:TermJanuary2024ToDecember2024Memberkos:ThreeWayCollarsMember2023-01-012023-06-300001509991kos:DatedBrentMemberkos:TermJanuary2024ToDecember2024Memberkos:ThreeWayCollarsMember2023-06-300001509991kos:DatedBrentMemberkos:TwoWayCollarsMemberkos:TermJanuary2024ToJune2024Member2023-01-012023-06-300001509991kos:DatedBrentMemberkos:TwoWayCollarsMemberkos:TermJanuary2024ToJune2024Member2023-06-300001509991kos:DatedBrentMemberkos:TermJanuary2024ToDecember2024Memberkos:ThreeWayCollarsMemberus-gaap:SubsequentEventMember2023-07-012023-07-310001509991kos:DatedBrentMemberkos:TermJanuary2024ToDecember2024Memberkos:ThreeWayCollarsMemberus-gaap:SubsequentEventMember2023-07-310001509991us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2023-06-300001509991us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2022-12-310001509991us-gaap:NondesignatedMemberkos:ProvisionalOilSalesMember2023-06-300001509991us-gaap:NondesignatedMemberkos:ProvisionalOilSalesMember2022-12-310001509991us-gaap:NondesignatedMember2023-06-300001509991us-gaap:NondesignatedMember2022-12-310001509991kos:ProvisionalOilSalesMemberus-gaap:SalesMember2023-04-012023-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:SalesMember2022-04-012022-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:SalesMember2023-01-012023-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:SalesMember2022-01-012022-06-300001509991us-gaap:CommodityContractMemberus-gaap:DerivativeMember2023-04-012023-06-300001509991us-gaap:CommodityContractMemberus-gaap:DerivativeMember2022-04-012022-06-300001509991us-gaap:CommodityContractMemberus-gaap:DerivativeMember2023-01-012023-06-300001509991us-gaap:CommodityContractMemberus-gaap:DerivativeMember2022-01-012022-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel1Member2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2023-06-300001509991us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2023-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300001509991us-gaap:FairValueInputsLevel3Memberkos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMember2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2023-06-300001509991us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMember2023-06-300001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel1Member2022-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2022-12-310001509991us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2022-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2022-12-310001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001509991us-gaap:FairValueInputsLevel3Memberkos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001509991kos:ProvisionalOilSalesMemberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001509991us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001509991us-gaap:FairValueMeasurementsRecurringMember2022-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2023-06-300001509991us-gaap:EstimateOfFairValueFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2023-06-300001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2022-12-310001509991us-gaap:EstimateOfFairValueFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2022-12-310001509991kos:A7750SeniorNotesDue2027Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-06-300001509991kos:A7750SeniorNotesDue2027Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2023-06-300001509991kos:A7750SeniorNotesDue2027Memberus-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMember2022-12-310001509991kos:A7750SeniorNotesDue2027Memberus-gaap:EstimateOfFairValueFairValueDisclosureMemberus-gaap:SeniorNotesMember2022-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2023-06-300001509991us-gaap:EstimateOfFairValueFairValueDisclosureMemberkos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2023-06-300001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2022-12-310001509991us-gaap:EstimateOfFairValueFairValueDisclosureMemberkos:A7500SeniorNotesDue2028Memberus-gaap:SeniorNotesMember2022-12-310001509991us-gaap:SecuredDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:GoMTermLoanMember2023-06-300001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-06-300001509991us-gaap:SecuredDebtMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:GoMTermLoanMember2022-12-310001509991us-gaap:SecuredDebtMemberkos:GoMTermLoanMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310001509991us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:TheFacilityMember2023-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2023-06-300001509991us-gaap:RevolvingCreditFacilityMemberus-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:TheFacilityMember2022-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-06-300001509991us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-06-300001509991us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310001509991us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310001509991kos:LongTermIncentivePlanMember2023-04-012023-06-300001509991kos:LongTermIncentivePlanMember2022-04-012022-06-300001509991kos:LongTermIncentivePlanMember2023-01-012023-06-300001509991kos:LongTermIncentivePlanMember2022-01-012022-06-300001509991kos:LongTermIncentivePlanMember2023-06-300001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2022-12-310001509991kos:LongTermIncentivePlanMemberkos:MarketAndServiceVestingRestrictedStockUnitsMember2022-12-310001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2023-01-012023-06-300001509991kos:LongTermIncentivePlanMemberkos:MarketAndServiceVestingRestrictedStockUnitsMember2023-01-012023-06-300001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2023-06-300001509991kos:LongTermIncentivePlanMemberkos:MarketAndServiceVestingRestrictedStockUnitsMember2023-06-300001509991kos:LongTermIncentivePlanMembersrt:MinimumMemberkos:MarketAndServiceVestingRestrictedStockUnitsMember2023-01-012023-06-300001509991kos:LongTermIncentivePlanMembersrt:MaximumMemberkos:MarketAndServiceVestingRestrictedStockUnitsMember2023-01-012023-06-300001509991us-gaap:RestrictedStockUnitsRSUMemberkos:LongTermIncentivePlanMember2023-06-300001509991us-gaap:RestrictedStockUnitsRSUMemberkos:LongTermIncentivePlanMember2023-01-012023-06-300001509991country:US2023-04-012023-06-300001509991country:US2022-04-012022-06-300001509991country:US2023-01-012023-06-300001509991country:US2022-01-012022-06-300001509991kos:OtherForeignCountriesMember2023-04-012023-06-300001509991kos:OtherForeignCountriesMember2022-04-012022-06-300001509991kos:OtherForeignCountriesMember2023-01-012023-06-300001509991kos:OtherForeignCountriesMember2022-01-012022-06-300001509991kos:GhanaAndEquatorialGuineaMember2022-01-012022-06-300001509991kos:GhanaAndEquatorialGuineaMember2023-01-012023-06-30kos:well0001509991kos:GreaterTortueFPSOMemberkos:BPOperatorMember2023-06-300001509991kos:BureauOfOceanEnergyManagementMemberus-gaap:SuretyBondMemberkos:U.S.GulfOfMexicoMember2022-12-310001509991kos:BureauOfOceanEnergyManagementMemberus-gaap:SuretyBondMemberkos:U.S.GulfOfMexicoMember2023-06-300001509991us-gaap:SuretyBondMemberkos:ThirdPartyMemberkos:U.S.GulfOfMexicoMember2022-12-310001509991us-gaap:SuretyBondMemberkos:ThirdPartyMemberkos:U.S.GulfOfMexicoMember2023-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2023-04-012023-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2023-04-012023-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2023-04-012023-06-300001509991us-gaap:CorporateNonSegmentMember2023-04-012023-06-300001509991us-gaap:IntersegmentEliminationMember2023-04-012023-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2023-01-012023-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2023-01-012023-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2023-01-012023-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2023-01-012023-06-300001509991us-gaap:CorporateNonSegmentMember2023-01-012023-06-300001509991us-gaap:IntersegmentEliminationMember2023-01-012023-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2023-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2023-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2023-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2023-06-300001509991us-gaap:CorporateNonSegmentMember2023-06-300001509991us-gaap:IntersegmentEliminationMember2023-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2022-04-012022-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2022-04-012022-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2022-04-012022-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2022-04-012022-06-300001509991us-gaap:CorporateNonSegmentMember2022-04-012022-06-300001509991us-gaap:IntersegmentEliminationMember2022-04-012022-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2022-01-012022-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2022-01-012022-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2022-01-012022-06-300001509991us-gaap:CorporateNonSegmentMember2022-01-012022-06-300001509991us-gaap:IntersegmentEliminationMember2022-01-012022-06-300001509991kos:GhanaSegmentMemberus-gaap:OperatingSegmentsMember2022-06-300001509991kos:EquatorialGuineaSegmentMemberus-gaap:OperatingSegmentsMember2022-06-300001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalMember2022-06-300001509991kos:U.S.GulfOfMexicoMemberus-gaap:OperatingSegmentsMember2022-06-300001509991us-gaap:CorporateNonSegmentMember2022-06-300001509991us-gaap:IntersegmentEliminationMember2022-06-300001509991kos:TullowMemberkos:JubileeUnitAreaAndTenFieldsMember2022-01-012022-06-300001509991kos:KodiakFieldMemberkos:MarubeniMember2022-01-012022-06-300001509991kos:KodiakFieldMemberkos:MarubeniMember2022-04-012022-06-30

 

 

 

 

 

(Exact name of registrant as specified in its charter)

 

 

Registrant’s telephone number, including area code: +1 214 445 9600

 

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒  No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Unless otherwise stated in this report, references to “Kosmos,” “we,” “us” or “the company” refer to Kosmos Energy Ltd. and its wholly owned subsidiaries. We have provided definitions for some of the industry terms used in this report in the “Glossary and Selected Abbreviations” beginning on page 3.

 

 

The following are abbreviations and definitions of certain terms that may be used in this report. Unless listed below, all defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings.

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

(Unaudited)

 

 

Kosmos Energy Ltd. is incorporated in the State of Delaware as a holding company for Kosmos Energy Delaware Holdings, LLC, a Delaware limited liability company. As a holding company, Kosmos Energy Ltd.’s management operations are conducted through a wholly-owned subsidiary, Kosmos Energy, LLC. The terms “Kosmos,” the “Company,” “we,” “us,” “our,” “ours,” and similar terms refer to Kosmos Energy Ltd. and its wholly-owned subsidiaries, unless the context indicates otherwise.

Kosmos is a full-cycle, deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as world-class gas projects offshore Mauritania and Senegal. We also pursue a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos is listed on the NYSE and LSE and is traded under the ticker symbol KOS.

 

Kosmos is engaged in a single line of business, which is the exploration, development, and production of oil and natural gas. Substantially all of our long-lived assets and all of our product sales are related to operations in four geographic areas: Ghana, Equatorial Guinea, Mauritania/Senegal and the U.S. Gulf of Mexico.

 

 

 

The interim consolidated financial statements included in this report are unaudited and, in the opinion of management, include all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim periods. The results of the interim periods shown in this report are not necessarily indicative of the final results to be expected for the full year. The interim consolidated financial statements were prepared in accordance with the requirements of the SEC for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by GAAP have been condensed or omitted from these interim consolidated financial statements. These interim consolidated financial statements and the accompanying notes should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2022, included in our annual report on Form 10-K.

 

Certain prior period amounts have been reclassified to conform with the current presentation. Such reclassifications had no significant impact on our reported net income, current assets, total assets, current liabilities, total liabilities, stockholders’ equity or cash flows.

 

Cash and cash equivalents include demand deposits and funds invested in highly liquid instruments with original maturities of three months or less at the date of purchase.

The Company’s joint interest billings consist of receivables from partners with interests in common oil and gas properties operated by the Company for shared costs. Joint interest billings are classified on the face of the consolidated balance sheets as current and long-term receivables based on when collection is expected to occur.

 

 

Inventories consisted of $143.4 million and $125.3 million of materials and supplies and $48.0 million and $8.2 million of hydrocarbons as of June 30, 2023 and December 31, 2022, respectively. The Company’s materials and supplies inventory primarily consists of casing and wellheads and is stated at the lower of cost, using the weighted average cost method, or net realizable value.

Hydrocarbon inventory is carried at the lower of cost, using the weighted average cost method, or net realizable value. Hydrocarbon inventory costs include expenditures and other charges incurred in bringing the inventory to its existing condition. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory costs.

Our oil and gas revenues are recognized when hydrocarbons have been sold to a purchaser at a fixed or determinable price, title has transferred and collection is probable. Certain revenues are based on provisional price contracts which contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from oil sales at the spot price on the date of sale. The embedded derivative, which is not designated as a hedge, is marked to market through oil and gas revenue each period until the final settlement occurs, which generally is limited to the month of or month after the sale.

    

    Oil and gas revenue is composed of the following:

Our revenue can be materially affected by current economic conditions and the price of oil and natural gas. However, based on the current demand for crude oil and natural gas and the fact that alternative purchasers are readily available, we believe that the loss of our purchasers and/or marketing agents would not have a long‑term material adverse effect on our financial position or results of operations.

In February 2023, Kosmos and Panoro Energy ASA (“Panoro”) entered into a petroleum contract covering Block EG-01 offshore Equatorial Guinea with the Republic of Equatorial Guinea. Kosmos holds a 24% participating interest in the block and the operator, Panoro, holds a 56% participating interest. The Equatorial Guinean national oil company, Guinea Equatorial De Petroles (“GEPetrol”), currently has a 20% carried participating interest during the exploration period. Should a commercial discovery be made, GEPetrol’s 20% carried interest will convert to a 20% participating interest. Block EG-01 currently comprises approximately 59,400 acres (240 square kilometers), with a first exploration period of three years from the effective date (March 1, 2023).

In March 2023, we closed a farm-out agreement with Panoro, whereby Panoro acquired a 6.0% participating interest in Block S offshore Equatorial Guinea. As a result of the farm-out agreement, Kosmos’ participating interest in Block S was reduced to 34.0%.

 

In February 2019, Kosmos and BP signed Carry Advance Agreements with the national oil companies of Mauritania and Senegal obligating us to finance a portion of the respective national oil company’s share of certain development costs incurred through first gas production for Greater Tortue Ahmeyim Phase 1, currently targeted in the first quarter of 2024. Kosmos’ share for the two agreements combined is originally estimated at approximately $240.0 million, which is to be repaid with interest through the national oil companies’ share of future revenues. As of June 30, 2023 and December 31, 2022, the balance due from the national oil companies (including interest) was $259.0 million and $218.4 million, respectively, which is classified as Long-term receivables on our consolidated balance sheets. Interest income on the long-term notes receivable was $3.8 million and $2.3 million for the three months ended June 30, 2023 and 2022, respectively, and $7.3 million and $4.3 million for the six months ended June 30, 2023 and 2022, respectively.

 

Property and equipment is stated at cost and consisted of the following:

 

 

We recorded depletion expense of $82.0 million and $114.7 million for the three months ended June 30, 2023 and 2022, respectively, and $183.6 million and $266.4 million for the six months ended June 30, 2023 and 2022, respectively.

 

The following table reflects the Company’s capitalized exploratory well costs on drilled wells as of and during the six months ended June 30, 2023.

 

The following table provides an aging of capitalized exploratory well costs based on the date drilling was completed and the number of projects for which exploratory well costs have been capitalized for more than one year since the completion of drilling:

 

 

As of June 30, 2023, the projects with exploratory well costs capitalized for more than one year since the completion of drilling are related to the Yakaar and Teranga discoveries in the Cayar Offshore Profond block offshore Senegal and the Asam discovery in Block S offshore Equatorial Guinea.

 

Yakaar and Teranga Discoveries — In May 2016, we drilled the Teranga-1 exploration well in the Cayar Offshore Profond block offshore Senegal, which encountered hydrocarbon pay. In June 2017, we drilled the Yakaar-1 exploration well in the Cayar Offshore Profond block offshore Senegal, which encountered hydrocarbon pay. In November 2017, an integrated Yakaar-Teranga appraisal plan was submitted to the government of Senegal. In September 2019, we drilled the Yakaar-2 appraisal well which encountered hydrocarbon pay. The Yakaar-2 well was drilled approximately nine kilometers from the Yakaar-1 exploration well. In July 2021, the current phase of the Cayar Block exploration license was extended up to an additional three years to 2024. The Yakaar and Teranga discoveries are being analyzed as a joint development. During the first and second quarter of 2023 we have continued progressing appraisal studies and maturing concept design. Following additional evaluation, a decision regarding commerciality is expected to be made.

Asam Discovery — In October 2019, we drilled the S-5 exploration well offshore Equatorial Guinea, which encountered hydrocarbon pay. The discovery was subsequently named Asam. In July 2020, an appraisal work program was approved by the government of Equatorial Guinea. The well is located within tieback range of the Ceiba FPSO and the appraisal work program is currently ongoing to integrate all available data into models to establish the scale of the discovered resource and evaluate the optimum development solution. During the fourth quarter of 2022, we received approval from the Government of Equatorial Guinea to enter the second sub-period phase of the Block S exploration license with a scheduled expiration in December 2024. Additionally, in December 2022 the Asam Field appraisal report was submitted to the Government of Equatorial Guinea. During the first and second quarter of 2023, studies and concept design continued to progress. Following additional evaluation, a decision regarding commerciality is expected to be made.

 

The Facility supports our oil and gas exploration, appraisal and development programs and corporate activities. As of June 30, 2023, borrowings under the Facility totaled $775.0 million and the undrawn availability under the Facility was $370.1 million. Final maturity of the Facility is in March 2027. In April 2023, during the Spring 2023 redetermination, the Company’s lending syndicate approved a borrowing base capacity of approximately $1.15 billion resulting in a reduction of approximately $100 million of availability under the Facility. The borrowing base amount is based on the sum of the net present values of net cash flows and relevant capital expenditures reduced by certain percentages as well as value attributable to certain assets’ reserves and/or resources in the Company’s production assets in Ghana (excluding the additional interests in Jubilee and TEN acquired in the acquisition of Anadarko WCTP in October 2021) and Equatorial Guinea.

On November 23, 2022, the Company amended the Facility to update the interest rate benchmark from LIBOR to term SOFR, effective as of April 19, 2023. As amended, interest on the Facility is the aggregate of the applicable margin (3.75% to 5.00%, depending on the length of time that has passed from the date the Facility was entered into), plus the term SOFR reference rate administered by CME Group Benchmark Administration Limited for the relevant period published and a credit adjustment spread. Interest is payable on the last day of each interest period (and, if the interest period is longer than six months, on the dates falling at six-month intervals after the first day of the interest period). We pay commitment fees on the undrawn and unavailable portion of the total commitments, if any. Commitment fees are equal to 30% per annum of the then-applicable respective margin when a commitment is available for utilization and, equal to 20% per annum of the then-applicable respective margin when a commitment is not available for utilization. We recognize interest expense in accordance with ASC 835 — Interest, which requires interest expense to be recognized using the effective interest method. We determined the effective interest rate based on the estimated level of borrowings under the Facility.

We were in compliance with the financial covenants contained in the Facility as of March 31, 2023 (the most recent assessment date). The Facility, as amended, contains customary cross default provisions.

The Corporate Revolver is available for general corporate purposes and for oil and gas exploration, appraisal and development programs. As of June 30, 2023, there were no outstanding borrowings under the Corporate Revolver and the undrawn availability was $250.0 million with an expiration date of December 31, 2024.

The Company capitalized $6.1 million of deferred financing costs associated with entering into the new revolving credit facility in March 2022, which is being amortized over the term of the new revolving credit facility. On November 23, 2022, the Company amended the Corporate Revolver to update the interest rate benchmark from compounded SOFR to term SOFR, effective as of April 19, 2023. As amended, interest on the Corporate Revolver is the aggregate of a 7.0% margin, the term SOFR reference rate administered by CME Group Benchmark Administration Limited for the relevant period published and a credit adjustment spread. Interest is payable on the last day of each interest period (and, if the interest period is longer than six months, on the dates falling at six-month intervals after the first day of the interest period). We pay commitment fees on the undrawn portion of the total commitments.

Commitment fees for the lenders are equal to 30% per annum of the respective margin when a commitment is available for utilization.

In April 2019, the Company issued $650.0 million of 7.125% Senior Notes and received net proceeds of approximately $640.0 million after deducting commissions and other expenses.

The 7.125% Senior Notes mature on April 4, 2026. Interest is payable in arrears each April 4 and October 4, commencing on October 4, 2019. The 7.125% Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in right of payment with all of its existing and future senior indebtedness (including all borrowings under the Corporate Revolver, 7.750% Senior Notes and the 7.500% Senior Notes) and rank effectively junior in right of payment to all of its existing and future secured indebtedness (including all borrowings under the Facility) and all borrowings under the GoM Term Loan. The 7.125% Senior Notes are guaranteed on a senior, unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico assets and the interests acquired in the Anadarko WCTP acquisition, and on a subordinated, unsecured basis by certain subsidiaries that borrow under, or guarantee, the Facility and that guarantee the Corporate Revolver, the 7.750% Senior Notes and the 7.500% Senior Notes. The 7.125% Senior Notes contain customary cross default provisions.

In October 2021, the Company issued $400.0 million of 7.750% Senior Notes and received net proceeds of approximately $395.0 million after deducting fees.

The 7.750% Senior Notes mature on May 1, 2027. Interest is payable in arrears each May 1 and November 1, commencing on May 1, 2022. The 7.750% Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in right of payment with all of its existing and future senior indebtedness (including all borrowings under the Corporate Revolver, the 7.125% Senior Notes and the 7.500% Senior Notes) and rank effectively junior in right of payment to all of its existing and future secured indebtedness (including all borrowings under the Facility) and all borrowings under the GoM Term Loan. The 7.750% Senior Notes are guaranteed on a senior, unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico assets and the interests acquired in the Anadarko WCTP acquisition, and on a subordinated, unsecured basis by certain subsidiaries that borrow under, or guarantee, the Facility and that guarantee the Corporate Revolver, the 7.125% Senior Notes and the 7.500% Senior Notes. The 7.750% Senior Notes contain customary cross default provisions.

In March 2021, the Company issued $450.0 million of 7.500% Senior Notes and received net proceeds of approximately $444.4 million after deducting fees.

The 7.500% Senior Notes mature on March 1, 2028. Interest is payable in arrears each March 1 and September 1, commencing on September 1, 2021. The 7.500% Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in right of payment with all of its existing and future senior indebtedness (including all borrowings under the Corporate Revolver, the 7.125% Senior Notes and the 7.750% Senior Notes) and rank effectively junior in right of payment to all of its existing and future secured indebtedness (including all borrowings under the Facility) and all borrowings under the GoM Term Loan. The 7.500% Senior Notes are guaranteed on a senior, unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico assets and the interests in the Anadarko WCTP acquisition, and on a subordinated, unsecured basis by certain subsidiaries that borrow under, or guarantee, the Facility and that guarantee the Corporate Revolver, and the 7.125% Senior Notes and the 7.750% Senior Notes. The 7.500% Senior Notes contain customary cross default provisions.

In September 2020, the Company entered into a five-year $200.0 million senior secured term-loan credit agreement secured against the Company's U.S. Gulf of Mexico assets with net proceeds received of $197.7 million after deducting fees and other expenses. The GoM Term Loan also includes an accordion feature providing for incremental commitments of up to $100.0 million subject to certain conditions. The GoM Term Loan bears interest at the weighted average margin of 5.9% per annum plus a benchmark rate of 0.35% and Federal Funds Rate and matures in 2025, with quarterly principal repayments having started since the fourth quarter of 2021. In June 2023, the Company amended the GoM Term Loan deferring the scheduled quarterly principal repayments through March 31, 2024 and extending the deferred repayments to the maturity date.

As of June 30, 2023, $15.0 million of the total $137.5 million outstanding under the GoM Term Loan has been classified within Current maturities of long-term debt on our consolidated balance sheet.

We were in compliance with the covenants, representations and warranties contained in the GoM Term Loan as of March 31, 2023 (the most recent assessment date). The GoM Term Loan contains customary cross default provisions.

At June 30, 2023, the estimated repayments of debt during the five fiscal year periods and thereafter are as follows: 

__________________________________

(1)Includes the scheduled maturities for outstanding principal debt balances. The scheduled maturities of debt related to the Facility as of June 30, 2023 are based on our level of borrowings and our estimated future available borrowing base commitment levels in future periods. Any increases or decreases in the level of borrowings or increases or decreases in the available borrowing base would impact the scheduled maturities of debt during the next five years and thereafter.

(2)Represents payments for the period July 1, 2023 through December 31, 2023.

 

Interest and other financing costs, net incurred during the periods is comprised of the following:

 

Capitalized interest for the six months ended June 30, 2023 and 2022 primarily relates to spend on the Greater Tortue Ahmeyim Phase 1 project. After first gas production on the Greater Tortue Ahmeyim Phase 1 project, which is targeted in the first quarter of 2024, we will no longer capitalize interest on the project.

 

We use financial derivative contracts to manage exposures to commodity price and interest rate fluctuations. We do not hold or issue derivative financial instruments for trading purposes.

 

We manage market and counterparty credit risk in accordance with our policies and guidelines. In accordance with these policies and guidelines, our management determines the appropriate timing and extent of derivative transactions. We have included an estimate of non-performance risk in the fair value measurement of our derivative contracts as required by ASC 820 — Fair Value Measurement.

 

 

The following table sets forth the volumes in barrels underlying the Company’s outstanding oil derivative contracts and the weighted average prices per Bbl for those contracts as of June 30, 2023. Volumes and weighted average prices are net of any offsetting derivative contracts entered into.

__________________________________

The following tables disclose the Company’s derivative instruments as of June 30, 2023 and December 31, 2022, and gain/(loss) from derivatives during the three and six months ended June 30, 2023 and 2022, respectively:

 

 

Our derivative instruments which are subject to master netting arrangements with our counterparties only have the right of offset when there is an event of default. As of June 30, 2023 and December 31, 2022, there was not an event of default and, therefore, the associated gross asset or gross liability amounts related to these arrangements are presented on the consolidated balance sheets.

 

In accordance with ASC 820 — Fair Value Measurement, fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. We prioritize the inputs used in measuring fair value into the following fair value hierarchy:

 

•Level 1 — quoted prices for identical assets or liabilities in active markets.

•Level 2 — quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means.

•Level 3 — unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, for each fair value hierarchy level: 

 

The book values of cash and cash equivalents and restricted cash approximate fair value based on Level 1 inputs. Joint interest billings, oil sales and other receivables, and accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. Our long-term receivables, after any allowances for credit losses, and other long-term assets approximate fair value. The estimates of fair value of these items are based on Level 2 inputs.

 

 

Our commodity derivatives represent crude oil collars, put options and call options for notional barrels of oil at fixed Dated Brent or NYMEX WTI oil prices. The values attributable to our oil derivatives are based on (i) the contracted notional volumes, (ii) independent active futures price quotes for the respective index, (iii) a credit-adjusted yield curve applicable to each counterparty by reference to the credit default swap (“CDS”) market and (iv) an independently sourced estimate of volatility for the respective index. The volatility estimate was provided by certain independent brokers who are active in buying and selling oil options and was corroborated by market-quoted volatility factors. The deferred premium is included in the fair market value of the commodity derivatives. See Note 8 — Derivative Financial Instruments for additional information regarding the Company’s derivative instruments.

 

 

The value attributable to provisional oil sales derivatives is based on (i) the sales volumes and (ii) the difference in the independent active futures price quotes for the respective index over the term of the pricing period designated in the sales contract and the spot price on the lifting date.

 

 

The following table presents the carrying values and fair values at June 30, 2023 and December 31, 2022:

 

 

The carrying values of our 7.125% Senior Notes, 7.750% Senior Notes and 7.500% Senior Notes represent the principal amounts outstanding less unamortized discounts. The fair values of our 7.125% Senior Notes, 7.750% Senior Notes and 7.500% Senior Notes are based on quoted market prices, which results in a Level 1 fair value measurement. The carrying values of the GoM Term Loan and Facility approximate fair value since they are subject to short-term floating interest rates that approximate the rates available to us for those periods.

Certain long-lived assets are reported at fair value on a non-recurring basis on the Company's consolidated balance sheet. These long-lived assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Our long-lived assets are reviewed for impairment when changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company calculates the estimated fair values of its long-lived assets using the income approach described in the ASC 820 — Fair Value Measurements. Significant inputs associated with the calculation of estimated discounted future net cash flows include anticipated future production, pricing estimates, capital and operating costs, market-based weighted average cost of capital, and risk adjustment factors applied to reserves. These are classified as Level 3 fair value assumptions. The Company utilizes an average of third-party industry forecasts of Dated Brent, adjusted for location and quality differentials, to determine our pricing assumptions. In order to evaluate the sensitivity of the assumptions, we analyze sensitivities to prices, production, and risk adjustment factors.

During the three and six months ended June 30, 2023 and 2022, the Company did not recognize impairment of proved oil and gas properties as no impairment indicators were identified. If we experience material declines in oil pricing expectations in the future, significant increases in our estimated future expenditures or a significant decrease in our estimated production profile, our long-lived assets could be at risk of impairment.

 

 

 

We record equity-based compensation expense equal to the fair value of share-based payments over the vesting periods of the LTIP awards. We recorded compensation expense from awards granted under our LTIP of $11.1 million and $8.7 million during the three months ended June 30, 2023 and 2022, respectively, and $21.2 million and $17.1 million during the six months ended June 30, 2023 and 2022, respectively. The total tax benefit for the three months ended June 30, 2023 and 2022 was $1.9 million and $1.5 million, respectively, and $3.7 million and $2.9 million during the six months ended June 30, 2023 and 2022, respectively. Additionally, we recorded a net tax shortfall (windfall) related to equity-based compensation of $(0.5) million and $(0.5) million for the three months ended June 30, 2023 and 2022, respectively, and $(3.1) million and $0.7 million during the six months ended June 30, 2023 and 2022, respectively. The fair value of awards vested during the three months ended June 30, 2023 and 2022 was $3.8 million and $4.0 million, respectively, and $44.8 million and $21.3 million during the six months ended June 30, 2023 and 2022, respectively. The Company granted restricted stock units with service vesting criteria and a combination of market and service vesting criteria under the LTIP. Substantially all of these grants vest over three years. Upon vesting, restricted stock units become issued and outstanding stock.

In June 2023, the Company’s stockholders approved the Amended and Restated Kosmos Energy Ltd. Long Term Incentive Plan, which authorized an additional 17.0 million shares of common stock available for issuance under the LTIP.

The following table reflects the outstanding restricted stock units as of June 30, 2023:

 

__________________________________

(1)The restricted stock units with a combination of market and service vesting criteria may vest between 0% and 200% of the originally granted units depending upon market performance conditions. Awards vesting over or under target shares of 100% results in additional shares granted or forfeited, respectively, in the period the market vesting criteria is determined.

 

As of June 30, 2023, total equity-based compensation to be recognized on unvested restricted stock units is $49.7 million over a weighted average period of 1.92 years. At June 30, 2023, the Company had approximately 18.5 million shares that remain available for issuance under the LTIP.

 

For restricted stock units with a combination of market and service vesting criteria, the number of common shares to be issued is determined by comparing the Company’s total shareholder return with the total shareholder return of a predetermined group of peer companies over the performance period and can vest in up to 200% of the awards granted. The grant date fair value ranged from $1.06 to $12.33 per award. The Monte Carlo simulation model utilized multiple input variables that determined the probability of satisfying the market condition stipulated in the award grant and calculated the fair value of the award. The expected volatility utilized in the model was estimated using our historical volatility and the historical volatilities of our peer companies and ranged from 50.0% to 105.0%. The risk-free interest rate was based on the U.S. treasury rate for a term commensurate with the expected life of the grant and ranged from 0.2% to 3.7%.

We evaluate our estimated annual effective income tax rate each quarter, based on current and forecasted business results and enacted tax laws, and apply this tax rate to our ordinary income or loss to calculate our estimated tax expense or benefit. The Company excludes zero statutory tax rate and tax-exempt jurisdictions from our evaluation of the estimated annual effective income tax rate. The tax effect of discrete items are recognized in the period in which they occur at the applicable statutory tax rate.

Income before income taxes is composed of the following:

 

 

For the three months ended, June 30, 2023 and 2022, our effective tax rate was 56% and 40%, respectively. For the six months ended June 30, 2023 and 2022, our effective tax rate was 45% and 43%, respectively. For the three and six months ended June 30, 2023 and 2022, our overall effective tax rates were impacted by:

•The difference in our 21% U.S. income tax reporting rate and the 35% statutory tax rates applicable to our Ghanaian and Equatorial Guinean operations,

•Jurisdictions that have a 0% statutory tax rate or that are tax exempt,

•Jurisdictions where we have incurred losses and have recorded valuation allowances against the corresponding deferred tax assets, and

•Other non-deductible expenses, primarily in the U.S.

 

The following table is a reconciliation between net income and the amounts used to compute basic and diluted net income per share and the weighted average shares outstanding used to compute basic and diluted net income per share:

__________________________________

(1)We excluded restricted stock units of 1.8 million and 0.1 million for the three months ended June 30, 2023 and 2022, respectively, and 1.4 million and 0.1 million for the six months ended June 30, 2023 and 2022, respectively from the computations of diluted net income per share because the effect would have been anti-dilutive.

 

From time to time, we are involved in litigation, regulatory examinations and administrative proceedings primarily arising in the ordinary course of our business in jurisdictions in which we do business. Although the outcome of these matters cannot be predicted with certainty, management believes none of these matters, either individually or in the aggregate, would have a material effect upon the Company’s financial position; however, an unfavorable outcome could have a material adverse effect on our results from operations for a specific interim period or year.

 

We have a commitment to drill three development wells and one exploration well in Equatorial Guinea. We have a $200.2 million FPSO Contract Liability in Other long-term liabilities related to the deferred sale of the Greater Tortue FPSO.

As of June 30, 2023 and December 31, 2022, the Company had performance bonds totaling $195.5 million for our supplemental bonding requirements stipulated by the BOEM and $9.7 million to third parties related to costs anticipated for the plugging and abandonment of certain wells and the removal of certain facilities in our U.S. Gulf of Mexico fields.

 

 

Accrued liabilities consisted of the following: 

 

The following table summarizes the changes in the Company's asset retirement obligations as of and during the six months ended June 30, 2023:

 

Other expenses, net incurred during the period is comprised of the following: 

 

Kosmos is engaged in a single line of business, which is the exploration, development and production of oil and gas. At June 30, 2023, the Company had operations in four geographic reporting segments: Ghana, Equatorial Guinea, Mauritania/Senegal and the U.S. Gulf of Mexico. To assess performance of the reporting segments, the Chief Operating Decision Maker reviews capital expenditures. Capital expenditures, as defined by the Company, may not be comparable to similarly titled measures used by other companies and should be considered in conjunction with our consolidated financial statements and notes thereto. Financial information for each area is presented below: