Kosmos Energy makes another, deeper discovery off the West African coast

May 19, 2015 12:00 AM

Kosmos Energy continues to find more hydrocarbons at deeper depths as it drills off the West African coast.

Dallas-based Kosmos announced the discovery of 32 additional feet of hydrocarbon pay areas in the lower Albian section.

The Albian is a geologic formation that also represents a pre-historic period. Like the previous discovery with the Tortue-1 well, the new find is expected to be natural gas.

“While the Albian was not the primary objective of the Tortue-1 well, the presence of additional hydrocarbons in the Albian further de-risks other prospects in the Greater Tortue Complex, which include primary reservoir targets in both the Albian and underlying Aptian,” Brian Maxted, chief exploration officer for Kosmos, said in a statement.

The drill site is 285 kilometers off the Mauritania coast. The well costs $125 million to drill 5,100 meters down. Rather than use a drilling platform, Kosmos uses the Atwood Achiever drillship, which stays on target using satellites and thrusters. No anchors are used.

The well will be capped now that it has reached total depth. A second exploratory well will be drilled later this year in the same block, or leased area. Actual natural gas production is still many years away, said Thomas Golembeski, vice president of corporate communications for Kosmos.

Kosmos has a 90 percent interest in the discovery area and has renamed it Ahmeyim. That interest will likely shift if and when the project moves into the development and production phase, Golembeski said. That frees Kosmos to go explore the next block.

"Once we get through the exploration and appraisal phase, the operatorship will typically shift to the super major partner where they will take over day-to-day operations," Golembeski said. "That way, we're working on what we do best."

A subsidiary of Chevron Corp. already acquired a 30 percent non-operated interest in the area and could take a 30 percent interest in Ahmeyim.

Shares of KOS responded well the last time Kosmos announced a major discovery on April 27, jumping 10 percent in one day.

The off-shore driller did take a hit with lower crude oil prices, bringing in $109 million in oil revenues in the first quarter. That’s about half what Kosmos raked in during the same period in 2014.

Overall, Kosmos reported a $78.9 million loss in the first quarter, or 21 cents per share. Compare that to a year ago when Kosmos posted $74.9 million in net income, or $0.21 per share.

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