Good day, everyone. And welcome to Kosmos Energy Third Quarter 2021 Conference Call. Just as 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 third quarter earnings release. And 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 materials 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 that we note in this presentation and in our U.K. 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 third quarter results call. I'll run through the highlights for the quarter before handing over to Neal to take you through the financials. I'll then provide a few closing thoughts in summary before taking questions at the end. Starting on slide 1, a lot has been achieved at Kosmos Energy since our last quarterly call in August, we delivered several transactions that have advanced the company's strategy and significantly improved our financial position. We'll talk more about the Oxy Ghana acquisition shortly. But in summary, the acquisition is expected to materially increase our free cash flow from high margin oil assets, which we plan to invest in our portfolio transition to LNG at a time of rising global natural gas demand while reducing debt. The transaction is strategically consistent and financially compelling for Kosmos and is highly accreted across all financial metrics. In Mauritania and Senegal, we closed the FPSO transaction in mid-August, which materially reduces our capital expenditure to first gas. With increased production, including from the Oxy Ghana transaction and higher oil prices, we now expect to find our remaining CapEx to first gas through organic cash flow. We expect the newly acquired assets and our base business to generate significant free cash flow from 4Q, 2021 and are currently hedging our growing production at attractive levels. With EBITDAX growing and excess cash used to reduce absolute debt going forward, we expect to lever the balance sheet rapidly and we are targeting a leverage ratio of less than 2x a yearend 2022 at $65 Brent. Using current oil prices that target will be around 1.5x. And finally on this slide, the recent transactions continue to strengthen our ESG agenda with growing…

Thanks Andy, Turning the slide 7. Production of approximately 49,000 barrels of oil equivalent in the quarter was in line with expectations, taking into account the unplanned downtime in the Gulf of Mexico from hurricane Ida that Andy talked about, which had an impact of around 4,000 barrels of oil equivalent per day in 3Q. As guided last quarter, sales volumes for 3Q were expected to be low due to the number of cargo lifted which resulted in a significant under lift of around 1.5 million barrels at the end of the quarter. Most sales volumes coupled with a working capital draw, partly related to the under lift and partly related to cash payments in Mauritania and Senegal, prior to the FPSO transaction closing led to a cash outflow within the quarter. The lower realized price in 3Q reflects regular monthly settlements as hedges despite lower sales volumes in the quarter, with 5.5 cargoes expected in Ghana and EG in the fourth quarter and GUM production restored to pre hurricane Ida levels, we expect a significant cash inflow in the fourth quarter as we close out the year with more production selling at significantly higher realized prices. The rest of the line items were largely in line with prior guidance. Turning the slide 8. You've heard both Andy and myself talking about our commitment to reducing leverage with a target of between 1x and 1x. The Oxy Ghana transaction helps to accelerate delivery of that goal. The equity debt mix we put in place to execute the Ghana transaction meant the acquired assets had a leveraged multiple of less than 2x using a trailing 12 months EBITDAX. This meant the transaction was deleveraging immediately. The chart on the short slide shows the pace of expected deleveraging through year end '21 and into '22 as we benefit from going production in higher oil prices, which we are able to lock in with new hedges. We have started to hedge the acquired barrels with two way colors that have a floor $70 per barrel and a ceiling of around $90 per barrel. This gives us EBITDAX and cash flow visibility, both of which should positively enhance leverage over the coming months. By the end of next year, we are talking leverage of around 1.5x at current oil prices, which would be below the level at which we exited 2019 and before any benefit from new production in 4Q in 2023. With that, let Andy wrap up today's presentation.

Thanks Neal. Turning to slide 9. As I said in my opening remarks, it's a transformational time for Kosmos, and I'm proud of what the team has achieved within the last quarter. As I look back 2020 was a year of survival for the sector where Kosmos took the opportunity to reposition its portfolio to be fit for the future. 2021 has been a year of resuming operational activity and strengthening the balance sheet, which has been significantly enhanced by the two major transactions I've talked about in today's presentation. Looking ahead, 2022 is the year in which Kosmos can really start to thrive. We have the right portfolio for the future and a clear pathway to unlocking shareholder value. Looking at some of the important milestones we see through 4Q and into next year. First, we expect our base business assets and the newly acquired assets from the Oxy Ghana transaction to generate significant free cash flow, which we plan to use to fund the Tortue project and to pay down debt. As we move through 2022 first gas at Tortue comes into view with the bulk of the capital funded. We also expect to take FID on Phase 2 during the year. Now 2021 hedges are now rolling off and we are able to hedge our growing production base significantly higher levels, giving us increased visibility to enhance future cash flows. And finally building on Neal's comments from the previous slide, we're committed to deleveraging the company with 2022 year end leverage of around 1.5x at current oil prices. Thank you and I'd now like to turn the call over to the operator to open the session for questions.

[Operator Instructions] Our first question is from Charles Meade with Johnson Rice.

Good morning Andy and Neal. My first question is on the Phase 2 FID for Tortue. Are there any significant questions or unknowns you guys are still grappling with or alternatively is this just you have to follow the process. But this is a fait accompli?

Okay, Charles, yes, I'll take that question, I think we're clear on the approach, which is we pre invested in the infrastructure to enable both Phase 1 and Phase 2 developments. The objective therefore is to ensure that we fully optimize the Phase 2. And to do that, we need to ensure that we got the right approach for the subsea pipeline ashore and the LNG solution. I think the work on the offshore side of it well described; we know exactly how we're going to get the most out of what we've pre invested in, in terms of the FPSO and pipeline. So with a minimal incremental spend there. And we're now working through the commercial negotiations to optimize the LNG solution. So that's really the key activity to tip grass. And with that in place, that then enables us to move forward. So I would say that we're now -- we're certainly in a position where we can complete that work in a timely manner. And clearly the external environment today is helping all parties, the partners, ourselves, BP and the NOCS

Got it, thank you for that, Andy. And then a follow up question on your activity levels. So your CapEx levels, is I -- from the outside looking in, it looks to me, like your activity levels, across your portfolio in '22, are going to be about the level that we're seeing for Q4. And I guess the question is, is that a fair reading? Is 4Q kind of activity and spending a reasonable baseline to use for '22 levels?

Yes, so let me take that Andy or Charles. Yes, I'd say the piece of 4Q doesn't reflect in terms of the implications for 2018. We're really rounding sort of Mauritania and Senegal, and so I think from a Ghana business, the activity level will be the same, EG spend is sort of moves around by quarter, but broadly will be similar to sort of the levels we spent this year as well as within the Gulf of Mexico. And so we will be spending a bit more and more in Mauritania and Senegal to get sort of the Phase 1 to first guess when we've talked about that around having $300 million left to go post the FPSO transaction in the '22, '23 timeframe.

Our next question is from Neil Mehta with Goldman.

Hi, team. Can you hear me, okay? Thanks, Andy. So first question is just around Tortue and how you're thinking about Phase 2, and specifically, the economics of Phase 2 relative to Phase 1, I think that the Brent slope on Phase 1 is lower than maybe some would have desired, although the economics will get be better if we sustain an $80 Brent type of environment. But Phase 2, it feels like there could be some outsized economics, talk about where we are in terms of the gating process to getting to Phase 2, and just how you think about the contracting environment, especially with global LNG prices, having firmed up so much.

Yes, thanks, Neil. I think as I said to Charles, I think we were clear on the basis for the expansion of Phase 2, the minimum amount of CapEx to put in to the expansion and using the capital that we've invested in Phase 1. So that enables some very low breakeven costs, which is what we showed in the in the presentation. So as you look around the world for brownfield expansions, we believe it is one of the most cost competitive projects around, so hence the desire of the partnership to move forward. So it's advantage from that perspective. And then I think from a Kosmos perspective it's advantage because we have flexibility now on how we prize the back gas. Yes, we have flexibility because we have the cash flows clearly from Phase 1, the funding for Phase 2 is considerably lower from the than Phase 1, we've talked as a partnership of a number of gross being less than a $1 billion. So from a funding perspective, there is no sort of financing requirements that causes to not optimize the pricing. So I think you'll see us going forward now look at how we capture the current market conditions in the best way. And, as I said, in my remarks, I think, we have opportunities now to look at different indexation, we have the ability to look at some gas being contracted longer term, some proportion of the gas been spot. So we see it as a significant opportunity now, to capture what I believe will be a strong LNG market, going through the rest of this decade, and firmly believe in engineering sense, it's the right project at the right time, because it has a very low cost of supply. And it's the right project at the right time, because it's entering the market, when there are very few competing projects, and therefore it can benefit from a very good price environment. So, I think, all of that is to come, Neil. And as you sort of senses, we see it as a major upside.

There are a lot of moving pieces with the business, certainly toward 2As is in slide that the Oxy Ghana transaction is in motion as well. And obviously the oil price, but is there any way you guys can help us understand what the mid cycle free cash flow power of this business looks like in a more constructive commodity price environment? Or at a minimum at the curve once you have Phase 1 on? And a layered in the Ghana assets as well?

Yes, so Neil, I guess the way I'd answer that was, we've sort of given guidance around sort of Phase 1 and Phase 2 free cash flow around sort of $150 million to $200 million of free cash flow per year. And the way to think about is we've got to spend to get it online, and then Phase 1 truly sort of funds Phase 2. And then once Phase 1 and Phase 2 are online, and you get sort of that sort of $150 million to $200 million number out of that for sort of 20-ish years out of that business, I think the oil prices, or the oil business should be pretty easy to model at this point. We are -- all of businesses between Ghana, EG and the Gulf of Mexico are broadly similar in terms of operating costs and sort of the $10 to $15 range, additional sort of maintenance CapEx for to keep sort of production at sort of that now sort of 75,000 barrel a day level, and then some cash taxes, particularly on the front end in Ghana and EG. And then we will start paying cash taxes at some point within sort of three to four years, or after three or four years in the Gulf of Mexico. So there's a number of moving parts on that piece, but all of themselves solidly produced free cash flow down to sort of a $40 -$50 oil price environment and then you bolt-on sort of the free cash from the gas business in 2026 plus.

And Neal, just remind us again, the oil price sensitivity.

Yes. So it's around $100 million unhedged every year for $5 change by the change in the old price.

Our next question is from Bob Brackett with Bernstein Research.

Good morning. I've got a short-term question and a longer term question. On the short term, can you talk about the path to the refinancing of the NOC loans by year end? Anything we should watch for or worry about?

Yes, so Bob, with it's sort of a live discussion that we're in with number of banks and financial institutions to get that across so there won't be really any milestones between now and then, it's really been a function of being able to have the conversations, we got -- we needed to get the FPSO transaction done before we could have the conversations on the NOCs and then clearly the last few weeks or months we've been working on the financing related to the Oxy Ghana transaction. So but yes, so I wouldn't -- there's no other sort of milestones expected outside of once we have a deal done.

Great. And then the bit of a longer term question, if I think about Winterfell going to appraisal, is you maintaining the ability to convert that appraisal well into a development well, or is that something you shy away from?

Now we're maintaining that optionality, Bob, yes, so as you rightly say, we had the first discovery well, we are now drilling the second full block, and we're currently, operations are underway. And once we have the results of that, we could then have the opportunity of an early production scheme that brought those wells back online.

Our next question is from Nick Stefanou with Renaissance Capital.

Hi, guys, it's Nick from Renaissance Capital. Thank you for taking my questions. And I've got three to ask if I may, and Andy first one is for you. If I go back a year ago, when the BP announced to reduce the scope of Tortue and make it smaller project like the Bir Allah at a low cost. That time it made a lot of sense. But, I mean, gas markets moved up quite a bit since then, just wondering do you think about that decision still made sense. And then a kind of like the follow up to that question, how should I be thinking about future phases of Tortue. I mean from [Indiscernible] to like a brownfield development, after Phase 2 not adopted, I don't think be that anymore. So what would then other phases look like? And then my third question is for Neal. I think we've got maybe less than a week left for your partners on Ghana to exercise that preemption rights. And can we kind of like take it as a given that they are not going exercise at this point. Thanks.

Yes, Nick, good questions, I think fundamentally, every dollar we put into Kosmos has to earn the highest possible return. And our objective on the next Phase of Tortue was to absolutely deliver the most capital efficient scheme. And the scheme were described of expansion to 5 million tonnes, essentially, sort of utilizing fully the infrastructure we have in place, is, I believe, absolutely the right decision. And we're driven by ensuring that we create the highest possible returns and generate the most value, and this scheme is the one that actually does that. So I think it's absolutely the right objective, irrespective of the price environment clearly, at a higher price will make a much stronger margin. And that's great for any day of the week. I think when you then look beyond that, I think we would then look, I think for the next phase, as it were Phase 3, to sort of fully optimize the resource base, which can support around 10 million tonnes per annum. And I think that's where you then make the next step up, you fully sort of utilize the existing offshore infrastructure in terms of the FPSO and the pipeline, how do you then increment to 10 million tonnes, it will require additional facilities offshore, it will require additional pipeline, how do you then add out then integrate that into the existing hub terminal? So I think that to me is a very logical process. Yes, you enabled the project through the first phase. Phase 2 is the logical brownfield development to fully utilize invested capital and delivers the highest return. The third phase should then be about the long-term expansion to fully utilize all of the resource. So that was the objective. I think we've stuck to that plan in a really rigorous way. And I believe through that we've optimized the through that the rigor of that approach, we've optimized the capital efficiency, and therefore the value creation. Neal?

Yes, so just on the preemption, Nick, yes, you're right, I mean have there's about a week left within that option. And again, we're not going to apply in terms of what the partners do, I think if you sort of step back, the transaction for us was around sort of gaining access to a materially larger stake in Ghana, particularly in the Jubilee Field, where we've gone up from 24% to 42%. And while preemption is possible, the good thing from our perspective is we retain a much larger stake in Jubilee, which is where we see the largest sort of near term upside and the impact of largely beyond a reduction in the TEN asset. And so it's still outstanding, and we'll know when the times gone through.

Okay. And then the carbon sensitivity you gave just a few minutes ago, I think that was the three Oxy -- one, right? And shouldn't that be a bit higher now with Oxy -- with the increased stake in Ghana?

Yes, no. Yes. I mean, there's a, yes, I mean, the number hasn't materially changed in terms of maybe there's another $15 million, $20 million per $5. But again, it's just sort of not a huge overall change.

Our next question is from James Hosie with Barclays.

Yes, hi, thank you. Just a couple of questions for me, just first off, how should we think about shareholder returns now? Is that something that can come and leverage falls below 1.5x EBITDA or other considerations or metrics, we can think of a trigger for that catalyst? And then just on Tortue, I was wondering what is carbon intensity of that production and what you expect it to be? And if there's scope for you to look at marketing, carbon neutral cargoes from that project?

Yes, obviously there are talks of shareholder returns and the Neal will chime in, we talked about getting to a leverage range of 1x to 1.5x, clearly when we're in that range, I think it is a valid conversation to have. And I think the only comments I'll add on top of that is it needs to be sort of sustainable. So how do we get to a world where we can see a sustainable average of 1x to 1.5x? And when we're in that world, we'll then have that debate? Clearly, our objective is to get there as fast as we can. And I think we're pretty clear today on how we know we're doing that, while supporting this transition of the business from purely a low carbon low cost oil business to a balanced portfolio.

Yes, the only thing I'd add on that Andy is to Neil's question earlier, the business generates a lot of free cash flow in oil prices, where we are right now. So as we do get leverage to that point, within that range, by the end of next year, we've gotten the capital from Tortue largely behind us to that point, and then additional production on the Ghana. I think that's the appropriate time to have that conversation. And again, I think we're sort of well positioned to do it at that timeframe stuff, and there's some more work to be done on our end, again, we got a pretty clear line of sight to the delivery of that in a reasonably short timeframe.

Yes, when you look at it how to benchmarks from a carbon intensity perspective, it's pretty good. When you look across the range of both existing projects, and new projects that are being brought on, it's got a significantly better than average carbon intensity. So we feel good about it from that perspective. And then looking forward to the marketing of carbon neutral cargoes. Yes, it is something that we're looking into, clearly we're a little ways from that point in terms of having those cargoes on the water, but it would be another opportunity, I think, for us to get a differential price for the cargoes and that's ultimately what it is initially, the cargo is obviously being sold to BP. So in that sense that's their will. I think the opportunity comes when we start to think about Phase 2 and cargos that we may market through different mechanisms. I think that's where you start to see some a way to differentiate the cargoes and see a potentially a more attractive price. So I think that's where we would focus that effort on, James, is the sort of the longer term view of Tortue and particular the unmarked Phase 2 cargoes.

Our next question is from Mark Wilson with Jefferies.

Thank you, gentlemen. And I'd like to ask about Ghana about this there was some discussion around the time of the deal potential implicate the operatorship of Jubilee. Is there any reason to think that could change about this deal, and could you remind us on the timing of set break into Ghana and whether that might be done a right thing. And then lastly, and you mentioned about TEN gas injector, supporting current levels is 30,000 level should be looked at through '22, let's say drilling up on the Ghana side. And then lastly, if there's any commentary regarding the Greater Tortue like right now Bir Allah, yes, whether are hat challenge too, what do you think about monetization of those assets, [Indiscernible] Thank you.

Great. Thanks Mark. Yes, going through Ghana, in terms of the sort of three areas you mentioned, I think I'll be very clear on operatorship. We have a very good working relationship with Talos. And we've seen as a result, I think of a strong partnership, significant progress being made in terms of the operational delivery, both in terms of reliability in terms of water injection, gas offtake, and actually drilling performance. So that's what we're focused on now is to ensure that that partnership continues, it's great for GNPC to have a large stake, as well, as part of the transaction, we have the same partnership, as it we are going forward now. And our objective is to ensure that we continue to leverage our partnership to create more value through higher production, good cost management and delivery of the targets. In terms of the second rig, we're clearly in the debate at the moment with our partners on the drilling program. I think the timing is probably around your end, why? It allows us then to fully utilize a rig string on Jubilee itself, where we will be starting the drilling a jubilee SE. And then there are other opportunities that we want to pursue in particular, I think across the existing areas that are under development in Jubilee and on TEN. So I think you will see us make that decision towards the end of the year, and then being able to sort of open up those work fronts. I think what we need to stay focused on at the moment is to ensure that we know we deliver, continue to deliver really good drilling performance, and that comes by having a very clear program that's well described, and the targets are delivering what they said they…

Our final question is from Matthew Smith with Bank of America.

Yes, hi, there. Andy and Neal, thanks for taking the question, just one to finish off, and that was just whether you were looking into revenue sharing and toll on your cargoes in Ghana, in particular, because it does seem as though the market sometimes struggles to assess the underlying sort of free cash flow, or earnings potential of the company just due to the quarter-on-quarter volatility. And I sometimes feel that the share price reaction is almost a bit inevitable based upon the nature of the quarter. And I think we've had a few questions on this call around the underlying sort of free cash flow potential of the business. So I was just wondering if a revenue sharing agreement is something you're considering at the stage?

Yes. Thanks Matthew. No, that's a good question. It's something obviously we're cognizant of, and actually have been almost exacerbated as production levels in Ghana decreased in the early part of this year. And so increasing the production actually will help even out that issue. So where it should be less of a concern and then to your point, we are planning to sort of coalesced our own barrel so in terms of the acquired barrels plus our existing barrels, if we put them together, we will also get rid of some of the regular sort of the timing issue. So we'll have much more regular volume going forward. So it is something that we're, yes, attempt to do because I agree, I think it does create a bit of a distraction around some of the quarterly numbers and it will as we look to '22, it does naturally become less of an issue as we're both growing production and actually coalesced our barrels. The ones that we acquired plus our existing barrels, helps move that out to where we don't have as much variation, yes, in 4Q and beyond.

Since there are no further questions at this time, I will bring the call to a close. Thanks to everyone for joining us today. You may disconnect your line at this time. And thank you for your participation.