Good day, everyone. Welcome to Kosmos Energy's Second Quarter 2023 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.

Thank you, operator, and thanks to everyone for joining us today. This morning we issued our first quarter earnings release. This release and the slide presentation to accompany today's call are available on the Investors page of our website. Joining me on the call today to go through the material, are Andy Inglis, Chairman and CEO, and Neal Shah, CFO. During today's presentation, we will make forward-looking statements that refer to our estimates, plans, and expectations. Actual results and outcomes could differ materially due to factors we note in this presentation and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement, and SEC filings for more details. These documents are available on our website. At this time, I will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our second quarter results call. I'm going to run through the progress we've made during the quarter before handing over to Neil to take you through the financials. We'll then open the call for questions. Starting on Slide three. Last year, we set out our strategy to develop our world-class asset base with a goal to grow production by around 50% from our 2022 baseline. I'm pleased to say in the last few weeks, we've taken the first step to achieve that growth target with the startup of the Jubilee South East project in Ghana. This material stamp-up in Ghana production is contributing around half of our stated growth target. With additional growth expected to come from the Tortue LNG project in Mauritania and Senegal and the Winterfell project in the Gulf of Mexico. I'll talk about all these developments in more detail shortly. As we continue to deliver these growth projects, we expect development CapEx to fall, resulting in a lower capital program over the coming year. With production rising towards our growth target and CapEx are expected to fall. We're nearing the free cash flow inflection point where we expect to generate significant free cash flow, particularly at current commodity prices. As cash flow grows, we'll remain disciplined in our allocation of capital towards three priority areas. Further financial resilience through debt pay down funding compelling growth opportunities, and potential shareholder return. So in summary, we're making good progress on delivery of our strategy with a lot more to come in the next six to nine months. Turning to Slide four, which looks at operations across our three production hubs during the quarter, and highlights the upcoming activities there. Net production of…

Thanks Andy. Turning to Slide eight. 2Q financials were in line with our prior guidance. As expected, we were materially under lifted in the quarter by around 1 million barrels of oil, which we expect will normalize in the second half of the year. The only notable outlier in the quarter was CapEx of $170 million that came in below the guidance range of 200 million to 225 million, largely related to lower accruals on the subsea work scope on the Tortue project. Looking forward at our 3Q guidance, which is included as an appendix to this presentation, there are a few points I wanted to flag. First, we expect 3Q production to be around 20% higher than the second quarter on the back of the step change in production we've seen in Ghana in recent weeks. Second, the increase in OpEx per barrel quarter-on-quarter is due to the scheduled TEN cargo in 3Q as expected. OpEx per barrel should then fall again in the fourth quarter with no TEN cargo scheduled and higher production levels from Jubilee. Third, 3Q CapEx is expected to be similar with the second quarter as a result of the ramp-up in activity in the GoM, offsetting the completion of Jubilee South East. We also expect the reduced Tortue Subsea CapEx from 2Q to be deferred into the fourth quarter and early 2024. As Andy mentioned in his opening remarks, with growing production and CapEx expected to fall as the growth projects complete, we are nearing the important free cash flow inflection point for the business. With that, I'll hand it back to Andy to close today's presentation.

Thanks, Neal. Turning to Slide 9 to conclude today's presentation. At the beginning of the year, we presented a portfolio with multiple meaningful catalysts across our four business units. The recent start-up of Jubilee South East was the first of three key development projects to come online with a material step-up in production, delivering around half of our 2024 production growth target of 50%. Additional wells on Jubilee later in the year should support a further production increase. In Equatorial Guinea, the infill drilling campaign is on track to commence around the end of the year with the first well expected online around the end of the first quarter next year. In the Gulf of Mexico, drilling has commenced at the Tiberius ILX prospect with the first development well at Winterfell also expected to start drilling later this quarter. And finally, on Tortue, we expect a very active six to nine months as we continue to progress the subsea installation while optimizing the remaining work scopes. Delivery of the various catalysts shown on the slide should drive increased production alongside the completion of a multiyear development spend, which supports our material free cash flow generation going forward. As cash flow grows, we'll remain disciplined in our allocation of capital towards three priority areas; further financial resilience through debt paydown, funding compelling growth opportunities and potential shareholder returns. Thank you, and I'd now like to turn the call over to the operator to open the session for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first questions come from the line of Charles Meade with Johnson Rice. Please proceed with your question.

Good morning, Andy and Neal and to the rest of the Kosmos team there. Andy, my first question is about Winterfell and if you could kind of calibrate our expectations for what our production rate can be there. And I recognize no two reservoirs or no two developments that are like, but there's a recent subsea tieback in the Gulf of Mexico that's doing I think, about 80,000 barrels of oil a day from seven wells. What direction or how would you calibrate off of that data point?

Yes. Charles, I think if you sort of think about, I'll do it in that actually, I will do the simplest way to think about it. But out of the first three wells, it would be net 5,000 barrels to us. We're 25% share, so that's a gross level of around 20,000 barrels a day.

It's ultimately pipeline installing. It's flowline constrained.

It's flowline constrained. Yes. And so we see more opportunity beyond that. The sort of the second phase will be additional two wells. And I think with success, we would look at actually adding another flowline. So I think there's sort of continuing upside to Winterfell. As we said in our remarks, it's ultimately a 200-million-barrel gross resource. So I think the first three wells, as Neal said, flowline constrained at 20,000 barrels a day with the opportunity then to continue to debottleneck the project.

Right. Right. That makes sense. Second question about Tortue. And I like that you closed with Slide 9. This is one of my favorites. But I want to ask, perhaps I'm over-interpreting this, but you have the -- on the bottom right, you have the first cash, it kind of looks like it's going to be at the end of 1Q, '24. Is that the right read?

Yes. Look, I appreciate the question, Chuck. So there is [indiscernible] over-interpreting material. I think as VP noted in that 2Q results last week, first gas is now expected in 1Q '24, which is where we put it on that chart, Charles. So I think that's what you should rely on.

Our next questions come from the line of James Hosie with Barclays. Please proceed with your question.

I guess, firstly, on Tortue and the delayed Phase I. I was wondering if you could say there's any additional CapEx you expect due to the delays and also the change in the subsea inflation schedule? And then just on Jubilee, I mean are you actually looking for oil production facility capacity, we think it's 120,000 barrels a day by year-end. And then on the gas price increase you've got in Ghana, should we think about lower price of what you're expecting to receive under longer-term sales agreement that you're currently finalizing?

Okay. Right. That was a machine gun. Thanks, James. On Tortue Phase I, if we just sort of look at the CapEx impact, most of the remaining CapEx on the project is related to the subsea work just to remind the FPSO and the FLNG are lease vessels. The hub terminal is complete, the wells have been drilled. So ultimately, it's about the remaining CapEx to complete the subsea work. 2Q CapEx, as Neal said in his remarks, was lower due to the accruals on the subsea due to the delay in this activity. But through 3Q, we're sort of in line with guidance. So you should see some rephasing of CapEx from 2Q to 4Q to reflect the subsea delay and therefore, that's why our sort of full year '23 guidance is unchanged. And then really sort of depending on the timing of the process of completing the subsea work going back to Charles' question, I think there will be some residual CapEx for the subsea that will go into of IQ '24 James, and we'll provide you an update for that when we give you the '24 guidance. On Jubilee, if I just sort of step back and sort of trying to give a bigger picture, I think we're very pleased with the performance of Jubilee. We've gone up from 70,000 barrels gross. We entered the year, we're now up at 100,000 barrels per day, that is from three wells. We had one in the main field that started up, and then we've had in July, two more wells in Jubilee South East. The next wells come on will be another well in the main field. And with that, we expect another bump in production, and then it will be followed by two water injectors, one in the…

Yes, it did. Thank you.

Our next questions come from the line of Neil Mehta with Goldman Sachs. Please proceed with your question.

Yes. Thanks so much, Andy, very helpful update. I guess the first question is just around the under-lift. It seemed like if there was any softness in the cash flow, it's just a lot of it was just about timing of cargoes. And can you just remind us how those trajectories will pick up through 3Q and 4Q. It's fair to assume you'll make up for that lost cargo.

Yes, I'll ask Neal to pick that up.

Yes. So Neil, you're right. The first half, a large part included in the second quarter is really just around the timing of the progress as we only listed two Jubilee Cargos, which will increase to three and then ultimately, five in 3Q, 4Q as we go forward. And then we didn't look to TEN cargo in the second quarter, which will lift in the third quarter. We haven't lifted half a cargo in EG, which will lift sort of one net cargo in 3Q, 4Q going forward. So yes, there's very much an overlift component, which is better considering the price or higher in the back end of the year than they have been in the first half of the year. So yes, that will square away, at least on our forecast in 3Q partially and in 4Q.

Okay. That's very helpful. And then as the non-engineer, maybe I can ask this question, which is about the subsea. And certainly, that's been an area where there have been some productivity issues Andy, can you just explain in layman's terms, what's going on there and how the investment community should get confidence that there's a clear fix in mind and it's easily addressable?

Yes. Thanks, Neil. 1Q results, we find that subsea work scope was delayed due to the late arrival of the deepwater pipeline vessel. So that's the first sort of straightforward issue. As a result, the work stream moved to the critical path and therefore, is driving the overall project timeline. I'll come back to the work streams in a minute. As VP noted in the 2Q results last week, the first gas date is now expected in 1Q. And then it's simply as a result of further delays in the deepwater pipeline. And the operators fairly focused on that issue and looking to both address that delay with contingencies and optimize the other work streams to fit with the overall 1Q first gas timetable. So that's the basic sort of issue we're dealing with at the moment, Neil, it's focused on a very singular issue. It's being clearly getting the attention of requires from the operator and I think they put together a very good plan, which both addresses the issue in terms of a base plan with contingencies to allow for first gas in 1Q '24. And as with any large project, we're bringing together several work streams now. And I think we shouldn't -- clearly, a major focus on the pipeline part of it. But across the other work streams, a lot of progress has been made with several major items derisked. The FPSOs left the yard where obviously with a delay in the subsea installation, it creates an opportunity for us to complete work in areas where we've got greater support in imports in shipyards rather than take that work offshore Mauritania and Senegal, which clearly gives us the ability to arrive at an even higher level of completion. The wells have been drilled and flowed back, that hub terminal construction is complete and currently has been handed over to operations and the FLNG is close to sailaway. So whilst we're disappointed with the subsea delay, it's getting the attention that it needs and the other work streams are proceeding accordingly.

Our next questions come from the line of Subash Chandra with Benchmark. Please proceed with your question.

Just some clarity on the CapEx issue. Should we think of that overflow into first quarter of next year sort of be at that $30 million that you came in under in the second quarter. And then I think you mentioned there's probably some additional CapEx but also shows up independent of 2Q July.

Yes, Subash, I'd say there are probably the $40-ish million that we underspent in 2Q that gets refaced partially into 4Q and then some additional CapEx that will show up in the first quarter as well. So again, we'll get out 24 guidance when we get to that time frame. But I think, again, I think within the year or 2Q and 3Q are going to be lower than the first quarter and fourth quarter, and then there will be a residual period in the first quarter that will provide some clarity on as we get through the budget cycle.

Okay, great. Second is on Phase 2 sort of any update on all the aspects that go into it? And secondly, Senegal politics, right, just keep making the paper here over the past week and any color there?

Yes. Yes, Subash, I would say on Phase 2 is sort of again, sort of going back to the fundamentals. Phase 2 is a brownfield expansion of Phase 1. We're putting in place the infrastructure where the additional gas processing capacity on the FPSO pipeline capacity to export more gas and the hub terminal that can accommodate additional gas processing. So the most important thing at the moment is we properly optimize the concept to take account of all of the brownfield capital that we've laid in. So that's the work that's going on at the moment. And nothing's changed from the lines we gave previously, which is with the concept fully optimized, then the objective would be to [indiscernible] next year, which ourselves and VP would regard as a formal project sanction given the nature of the spend increasing at that point. So again, I feel good about Phase 2 because it's fundamentally one of the lowest cost, lower carbon gas expansion projects globally. In terms of the politics in Senegal, obviously, we're leading up to an election next year. the history as the country has a long history of a democratic process, changes of government and stability aligned around that. So I see this as just being part of the normal ebb and flow of politics in the country. And the most important thing is that it has a very stable democracy and it's demonstrated that through several election cycles and this one will be no different.

[Operator Instructions] Our next questions come from the line of Mark Wilson with Jefferies. Please proceed with your question.

My first question for Neal. So given all the variables you spoke to, is it fair to assume that this Q2 net debt would be the high watermark Kosmos, and we'll see that delever from quarter-on-quarter from here?

Yes. I mean I think we're pretty close to that mark. I think we're right at that inflection point where production is rising and clearly, it sort of says oil prices and we're now starting to get some of that CapEx fall. So again, I think that will continue to expand as the production continues to grow up or rise in the capital continue to fall. Yes, I think we're right around that high level.

Okay. Cool. Thanks. And there's been questions regarding the schedule at Tortue. In terms of introducing gas into this health system with the facilities in place, it sounds like that's something that's going to happen in the middle of 1Q or in 1Q. What was the expected time for commissioning of all of these various FLNG vessels and did you think that has shortened given the time, the extended time in shipyards? Or is it the same as original plan in terms of once you get gas into the pipeline?

Yes. Mark, I'll take that. No, it's short, Mark, because we're doing work as the FPSO on the journey from China to Senegal, we manage to liquidate some time. So actually, it goes sort of in front of the first gas day, the actual hookup will be shortened as a result. And then obviously, as you say, you would then introduce gas into the FPSO. And then there's the sort of cooldown of the FLNG vessel where, again, we hope to sort of shorten that timeframe. But I think sort of plus or minus, it's around sort of probably three months from first gas into the FPSO. You've still got around about a 3-month sort of cool down period that would then lead to the first cargo. So I think, yes, it's been shortened. I think the thing for me is it's been derisked because a lot of the work you're doing to inspect, walk down and prepare has removed risk on startup. And I think that's ultimately one of the most important points to take away, I think.

Thank you. I'm showing no further questions at this time. And with that, I would like to bring the call to a close. Thanks to everyone joining today. You may disconnect your lines at this time and thank you for your participation.