Good day, everyone. Welcome to Kosmos Energy's Second Quarter 2016 Conference Call. Just a reminder, today's call is being recorded. At this time, let me turn the call over to Neal Shah, Vice President of Finance and Treasurer at Kosmos Energy. Thank you. You may begin.

Thank you, operator, and thanks to all of you for joining us today. This morning, we issued our second quarter earnings release, which is available on the Investors page at kosmosenergy.com website. We also anticipate filing our 10-Q with the SEC later today. Joining me on the call today are Andy Inglis, Chairman and Chief Executive Officer and Tom Chambers, Chief Financial Officer. Before we get started, I'd like to mention that this conference call includes certain forward-looking statements based on our current expectations. The risks associated with forward-looking statements have been outlined in our earnings release and in our SEC filings. We may also refer to certain non-GAAP financial measures in our discussion. Management believes such measures are important in looking at the company's historical and future performance, and these are commonly referred to industry metrics. These measures are provided in addition to, and should be read in conjunction with, the information contained in our financial statements prepared in accordance with GAAP and included in our SEC filings. At this time, I'll turn the call over to Andy.

Thanks, Neal and good morning everyone. It's been a tough year and a half for the industry and for a lot of companies in our space. Lower oil prices and squeezed liquidity, forcing some companies out of business and others to dilute their investors to deleverage. Only in this business environment we have the assets, balance sheet, management at Kosmos differentiated themselves. Our strategy is designed to work in a low commodity price environment where we remain committed to its disciplined execution. We are now at inflection point in the company's history with production and cash flow set to increase the same time as our committed CapEx declines. This combined with our exploration success and the opportunities created for us, positions Kosmos to be one of the most successful companies as we emerge from this commodity cycle. As I go to my remarks today, there are two key points I want to discuss. First, our Ghana asset remains a strong foundation in delivering our near term production and cash flow growth. And second, the quality of our exploration portfolio has never been better and Kosmos is well positioned to live a value from both our discovery resource, as well as renew high quality opportunities our team has identified. Tom will then finish up with a review of our strong financial position and quarterly results. Turning first to Ghana. Last quarter we provided an update on the status of the turret bearing Jubilee. I am pleased to say that since then we made considerable progress on addressing the issue. In a short term, the revised operating procedures are working as anticipated. As a reminder these procedures consist of the use of tug boats to ensure to FPSO remain statically positioned, as shuttle tanker to overflow the FPSO and the storage tanker…

Thank you Neal and good morning everyone. Before turning to the results of the quarter I’d like to cover our financial position. We’ve reached an inflexion point for Kosmos with the company’s cash flow increasing from the upcoming start up of the TEN project and the corresponding decrease in Ghana CapEx. As we become free cash flow positive starting in the fourth quarter of this year and as this trend continues into 2017 Kosmos is positioned to be one of the few companies able to improve its balance sheet in a low commodity price environment. Kosmos remains a well capitalized company and we expect to remain that position while prudently investing through the cycle. At quarter end Kosmos had total corporate liquidity of $1.2 billion including $700 million of undrawn availability on our reserve base lending facility or RBL or $1 million of undrawn availability on our revolving credit facility and $113 million of available cash. Cost control continues to be a priority for Kosmos. We rigorously challenge ourselves to reduce expenses and work more efficiently and effectively. To that end that net cash G&A continue to decrease and we’re on target to meet our full year capital budget of approximately $650 million excluding any capital associated with the Jubilee FPSO remediation. With the Atwood Achiever now stacked our team is spending this time to minimize associated expenses and retender all our contracts ensuring that when we restart drilling in 2017 we’re operating at the lowest cost possible. Hedging also continues to play a key role in supporting our CapEx program by allowing us to protect the Ghana cash flow despite volatile oil prices. We continue to maintain our strong hedge position and at quarter end our commodity hedges had a mark to market value of approximately $85 million. As…

[Operator Instructions] Our first question comes from Manish Kapadia from Tudor Pickering. Please go ahead.

Hi, so the first question was on the Senegal & Mauritania development. I was just wondering if you could give somewhat of an update on the partnering process is there still some expectation that you get partnered by year end and from a final investment decision perspective I think there has been some talk about getting for that in 2017 is that still realistic in the current environment?

Yes, thanks Manish, it’s Andy. I think what I’d say is that the interest remains high and we’ve been approached by several parties both [IOCs] [ph] and contractor developers. I think the interesting sort of new news I think we’ve talked about this morning is really around the newly identified prospectivity in the outboard of Senegal where we have from the early 3D seismic identified some large structures, some very large structures basin for plan structures where we see strong evidence from the seismic and strong AVO conformance. So really it’s moved on from simply about a process of how do we get the right partner for the development of Greater Tortue into I think a bigger conversation about the right exploration partner to drill out the prospectively we see in Senegal and clearly we're starting the outboard seismic shoot outboard Mauritania in September next month. So we want to have all the data from that back. So I think the process is moving forward. What I would say is that we need to be aligned around both the exploration phase that we see now for the outboard and particularly the basin for fans, as well as the development phase and we’ll take the time necessary to come to the right conclusion. So it could well be by the end of the year but that will really depend on the speed at which we get the early products in from seismic.

And then just another question on exploration looking at 2017, I think you gave some guidance on timing of the wells. Just wanted to get an idea of in the current environment where are you seeing exploration well cost in the region for you would be expecting to be drilling. And also if you can just give an update on the plans you have for the rigs that is currently stacked for alignment and what is the potential cost and if you can pass that next year?

Okay. In terms of the forward program we haven’t yet defined drilling program for next year. I think at this stage we see potential from multi-well program. It would start in mid 2017. Just sort of back to the most important point about the timing here clearly the rig not being used is an irritant but back to the fundamentals which is Kosmos is a rifle shot exploration company, we’ve only drilled six basin opening wells in our 12-year history with a success rate of one in three. We’ve drilled five wells now in Mauritania and Senegal with 100% success. The most important thing now is that we spend the time to identify the liquids potential of the basin which we firmly believe is there and drill the next best prospects, and we see the potential both the out boarders in Mauritania, the outboard Senegal and in northern Mauritania. So there are potentially three independent tests. What we need to do now is high grade and ensure that we’ve got the best program. And so we’ll be disciplined around reducing the cost as Tom said, while the register is packed but the most important thing is that we drill the best prospects and we will start that program around the middle of the year.

Okay. One just quick follow on and other thing on the carried well that you had from BP in Morocco and what were the problems with that, are you still intending to drill that at some point.

Let's just say we’re in discussions with BP. I would say at momentum Manish we're trying to figure out what the best way forward is on that. So clearly we have to carry but is it the best thing to do to drill that well or not and we’re in discussions with BP.

Great. Thanks so much.

Our next question comes from Brendan Warn from BMO Capital Markets. Please go ahead.

Yes, thanks gentlemen. It's Brendan from BMO. Just following - the first question just following on from Manish, I guess in terms of either farm down or active sell [ph], can you just talk through what you’re actually trying to do, is it a single partner across all your blocks or are you looking at also parceling up perhaps just as you get discovery and I appreciate that stats about three blocks. And then just again what sort of process you have actually been running to roll that - this is going to be pushed into 2017. And then just second question just following on from your comments regarding outboard Senegal, can you just talk through the - obviously the upside and you made comments to better understanding of the source in the region, but can you just talk about these basin floor ends, just what type of trap that you see that is just relying on stratigraphic and just the risks in and around this type structure and particularly I just remember those similar type of structure offshore Tanzania a number of years ago that ended up actually not working out. Can you just talk about the risks of what you may actually see on Seismic please?

Yes. Okay. If you go back, so starting with the endpoint, I think we've progressively worked the basin in terms of our overall standing of it. We clearly focused initially on the slope channel system. We got very good calibration of the Seismic-2 and we now have something both in terms of amplitude and AVO, which is fully calibrated. We always believe there was the potential for launch of sand packages outboard in terms of the fan plays and we've now seen those come through on the 3D seismic. So I think it's very different from the Tanzania example that you've talked about. This is about an evolving understanding of the basin. We've now highly calibrated high quality seismic tools, which we've significantly de-risked there. So I think the trap type is the same stratigraphic structural trap that has worked in the channel system and I think the key point is that we've got very strong geophysical markers now, which support it. I think the time out is really about understanding charge so that we can get the best possibility of finding liquids with an extended well and that's really what we're focused on. So I think when you get to the reservoir story and you get the structural story, we have a high degree of confidence given the quality of the Seismic we have and the tools that we're using. I think the real challenge in a big basin like this is ultimately about understanding the four dimensional aspect of the charge model. So there are no different to the Gulf of Mexico and it's complexities, but for an oil and gas basin, the trick is to really understand the charge model and we're very early in that process given the scale of this basin, But nevertheless, I think…

That's ideal. Thank you.

Our next question comes from John Herrlin from Societe Generale. Please go ahead.

Yes. Going back to what you just said Andy, you wouldn't have any containership thing or you really want to do the whole [insulate] [ph] inboard versus outboard rather than having separate deals? Is that really what you're saying?

John, and again nothing is excluded at this point in time, but I think there are some very good examples that you know of well where trying to leverage maybe the last cent has ultimately led to a reduction in value because things become complicated and actually get deferred. East Africa is an example of that and I think our view at the moment is to ensure that we don't create complexity where it doesn’t need to be. So nothing is excluded, but I think our approach is that this is a high quality basin that we currently have a significant working interest in. We need to ensure we align with a partner in a way that they create the full potential to the explored and developed rather than something which is just a stop gap measure. So that's not what we're trying to do.

Great. Regarding the Albian discussion that you had in terms of sourcing, would that be then our retrograde type situation?

I think it's a little early to say. I think it's a little early to say, John actually. We're still working the data. It could be, but I think we need to let the work continue.

Okay. Thanks.

[Operator Instructions] And our next question comes from Pavel Molchanov from Raymond James. Please go ahead.

Thanks for taking the question guys. Just in the last three-four weeks, we saw stranded gas related M&A deal in Papua New Guinea and reportedly a pending one in Mozambique as well. As you look at these industry milestones that are not related to you guys specifically, what kind of read through do you think investors should draw? What kind of conclusions from looking at these other deals?

Hi Pavel, it's Andy. Look what I would say is that and you know as well as I do is the distinctive assets which have scale and quality in terms of the resource are valuable today and quote, even gas, and that's my read through and I think as you look at both P&G do and the Mozambique, reported Mozambique deal, then this is about world scale resource and it's about operator ship, it's about significant working interest, it's about the ability of larger scale companies to take control of assets. So I think those are the hallmarks of those deals and ultimately there are other scales where it makes a difference to a super major. So I think if I would have identified the cream on top of the bottle, there is lots of stuff floating around in the industry today, but the stuff that's actually moving is characterized by its quality, its scale of working interest and the degree to operate and I think those are the things that clearly we've been talking about in Kosmos around Mauritania and Senegal from the very beginning and the prior questions from Brendan and John have all been about the nature of what sort of relationship are you looking for and I think that those types of deals are the ones that are clearly in discussion at the moment.

Okay. Can I just drill a little bit more into the insurance issue that you guys talked about in the press release, when you begin to collect the reimbursements on a monthly basis, what's the revenue recognition going to be? In other words which line item will you actually will they feed into your product sales or other revenue and then on related point, will it be recognized as received or will there be some sort of black?

Tom, why don't you pick that up.

That's a good question Pavel. What will happen, let me talk about the LOPI proceeds first. So the loss of production proceeds will come through the line as other revenue on our income statement. So you will see those proceeds in that line. It will not come through as oil and gas revenue. It will come through as other revenue. In terms of we talked about the framework that we're in final agreement on or we're getting to a final agreement on and what we're going to do is we're going to recognize the loss a month after -- the month after it's incurred and then the cash will show up a month after that. Okay. And so there is two month lag in the cash, but we're going to accrue the proceeds, the month after the loss. And in terms of the operating expense and we're less furloughing on those discussions, but from an accounting treatment, the operating expense, the additional operating expense of the toughs, the shell tanker and the storage tanker are already included in our operating expense. You saw to the tune of little over $12 million in the second quarter and the guidance from the operator is $115 million for the year. So that will continue to show up in the operating expense line. When we get reimbursed from the insurers for operating expenses that will show up as an offset in operating expense in the operating expense line. So we'll net it out against the increased cost and in terms of the capital spending, we're not quite sure on the accounting treatment of the accounts. We're still looking at that and determining how we should actually show that on the income statement or if we should show it some other way.

Okay. Appreciate the detail guys. Thank you.

Our next question comes from Al Stanton from RBC Capital Markets. Please go ahead.

Yes. Good morning, guys. I want to stick with the LOPI insurance if I can please. Can you give some guidance as to what rate of tax you pay on that revenue and also the duration, is it just something that will run from I suppose the end of the excess period, i.e. May for 12 month or should we assume that the -- when the offloading boy is installed in 2018, that you're also going to be reimbursed LOPI at that time as well?

Tom.

Okay. Al, in terms of the LOPI, we will get 12 months from the end of May. We will collect it and the current schedule shows the current spread to be complete in the first half of 2017. We think that our coverage will extend through that. That spread mooring will be done prior to the expiration of that coverage. So we'll have full coverage of that through the first half of ’17. That's when that coverage expires. So any shut down in '18 for the com boy installation we will not be covered under our LOPI proceeds or policies.

Okay. And just sorry on the tax what rate.

Currently we're -- those proceeds are not considered taxable.

To get revenue that's not taxed.

That's correct.

Okay.

The revenue is not received in Ghana. So it will not be taxed there.

Okay. And I assume there are losses at the corporate level that prevents you getting paying tax in Texas or wherever.

Yes.

Okay. Cool. Thank you.

Thank you. I would now like to turn the floor back over to Mr. Shah for any closing comments.

Thank you, operator. We appreciate all of you joining us on the call today and your interest in Kosmos. If you have any further questions, please don't hesitate to contact me. Thank you very much.

This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.