Kosmos Energy Ltd. (KOS) Stock Trends Lower Despite Expansion of Interests in Ghana Fields

Kosmos Energy Ltd. (KOS) stock prices remained unchanged at a price per share of USD$3.26 on October 13th, 2021. Subsequent after-hours fluctuations have seen the stock dip by 3.07%, bringing it down to USD$3.16.

KOS Stock’s Public Offering

October 13th, 2021 saw KOS stock announce the launch of a registered underwritten public offering. The offering will consist of the sale of 37.5 million shares of the company’s stock. The company has also included a 30-day option for underwriters to purchase up to an additional 5.625 million shares of its common stock in the event of overallotments. Proceeds generated from the offering are expected to be put towards the repayment of outstanding borrowings. These borrowings are under the company’s commercial debt facility and include borrowings incurred to finance a part of the previously announced acquisition of Anadarko WCTP Company.

Expansion of Investments

KOS concurrently announced the acquisition of an additional 18% interest in the Jubilee field and an additional 11% interest in the TEN fields in Ghana from Occidental Petroleum. The transaction was valued at a purchase price of USD$550 million. Consideration due to OXY upon the completion of the transaction will be roughly USD$460 million, after the deduction of costs associated with the closing of the transaction. The compelling transaction will serve to facilitate the acceleration of the company’s strategic delivery. It is expected to provide long-term sustainable cash flow from fields where the company has high hopes for the potential of.

Scope of Expansion

The additional stakes in Ghana is anticipated to generate nearly USD$1 billion of incremental free cash flow by the end of 2026. The additional cash flow from these assets is planned to be put towards the reduction of existing debt, as well as funding the company’s growth in LNG. The transaction is hoped to be highly accretive across all key metrics, including free cash flow. It will also accelerate the company’s commitment to deleverage its balance sheet while creating a simplified and aligned partnership in both the Jubilee and TEN fields.

Future Outlook for KOS Stock

The company reported a promising quarter, further consolidated by the expansion of its interests in Ghana. KOS is poised to capitalize on the expanded scope of opportunities afforded to it. Current and potential investors are hopeful that management will be able to effectively leverage the resources at their disposal. This is hoped to facilitate significant and sustained increases in shareholder value over the long term.