S&P raises Kosmos Energy

S&P said it raised Kosmos Energy Ltd.’s issuer rating to B+ from B and affirmed B+ rating on its senior unsecured notes.

However, it revised the recovery rating on the notes to 3 from 2, citing the exercise of preemptive rights on the ringfenced assets recently acquired from Occidental Petroleum, which back the senior unsecured notes and revolver. The 3 recovery rating indicates an estimated 50% to 70% recovery (rounded estimate: 65%) in default.

“We recently raised our price assumptions for Brent oil to $90 per barrel (bbl) for the remainder of 2022 and $75/bbl in 2023, and $55/bbl in 2024 and thereafter. We now expect Kosmos' cash flow will improve over the next 12-24 months and be more than sufficient to fund its portion of phase 1 of the BP-operated Tortue gas project offshore Mauritania and Senegal. We expect the company's funds from operations (FFO) to debt to average in the 45% to 55% area in 2022 and 2023,” the agency said in a press release.

The outlook is stable.

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