Kosmos to use $250 million of 2017 free cash flow to repay borrowings

By Devika Patel

Knoxville, Tenn., Feb. 27 – Kosmos Energy Ltd. plans to generate about $250 million of free cash flow in 2017, which will be used to pay down a portion of the borrowings under its reserve-based lending facility.

The company has a strong balance sheet, which it plans to maintain, and is in a strong financial position, according to company executives.

“We expect to generate approximately $250 million of free cash flow at $50 oil this year,” senior vice president and chief financial officer Thomas P. Chambers said on the company’s first quarter earnings conference call on Monday.

“We expect to use that free cash flow to pay down a portion of the borrowings on our RBL.

“We plan to repay $150 million under our RBL during the first quarter,” Chambers said.

Chambers said that the company’s finances are strong.

“We entered 2017 with a strong balance sheet and liquidity position,” he commented.

“We are committed to maintaining the strength of our balance sheet and creating value for our shareholders through the cycle.

“Kosmos remains in a strong financial position,” he said.

At the end of the fourth quarter, Kosmos had total corporate liquidity of over $1.2 billion. This includes $617 million of undrawn availability on the company’s reserve-based lending facility, $400 million of undrawn availability on its revolving credit facility and $190 million of available cash.

The Dallas-based oil exploration and production company exited the fourth quarter of 2016 with $1.2 billion of liquidity and $1.1 billion of net debt.

“Amid a challenging macro environment, 2016 was a successful year for Kosmos,” chief executive officer and chairman of the board of directors Andrew G. Inglis added on the call.

“We accomplished all of our key objectives because we entered the downturn in a strong financial position and stayed disciplined in the execution of our strategies.

“We became free cash flow positive in the fourth quarter through the combination of increasing production and decreasing capex, a trend we expect to continue in 2017,” Inglis said.

© 2015 Prospect News.
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