Kosmos Accomplishes Re-Determination of RBL Credit Facility

Zacks Equity Research
·3-min read

Kosmos Energy KOS announced the conclusion of re-determining its reserve-based lending credit facility (“RBL”).

In the course of the re-determination in September, a borrowing base capacity of $1.32 billion got sanctioned by the company’s lending syndicate, suggesting a reduction from the earlier base of $1.45 billion. The borrowing base curtailment is predominantly due to assuming lower oil price as compared with the upstream energy firm’s oil price prediction during March re-determination, thanks to the coronavirus pandemic. The repayment of the reduced borrowing base will be made in the last quarter from the available resources.

Notably, the RBL is secured by the Ghana and Equatorial Guinea assets of the deepwater independent oil and gas producer. The company added that the scheduled time for the first amortization payment is Mar 2022. Kosmos added that its Mauritania and Senegal gas properties now remain unencumbered. Investors should also note that as of Oct 1, the oil and gas explorer had $0.5 billion of available liquidity.

Kosmos added that its liquidity position is quite good since it has access to several low cost and flexible financing sources, thanks to the successful RBL re-determination and the recent restructuring of the Gulf of Mexico prepayment facility into a $200-million five-year term loan. The company expects to further strengthen the balance sheet with the proceeds from divesting some exploration assets to Royal Dutch Shell plc RDS.A and free cash flow generations from low-cost upstream assets.

Company Profile & Price Performance

Headquartered in Dallas, TX, Kosmos is a leading independent deepwater oil and gas exploration and production company, with a strong footprint in prolific offshore resources in Ghana, Equatorial Guinea and the U.S. Gulf of Mexico.

Notably, its shares have outperformed the industry in the past six months. The company’s stock has lost 5.8% compared industry’s 18.2% decline in the said timeframe.

Zacks Rank & Stocks to Consider

Kosmos currently carries a Zack Rank #3 (Hold). Some better-ranked players in the energy space are Sunoco LP SUN and Equinor ASA EQNR, both currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Over the past 60 days, the Zacks Consensus Estimate for 2020 earnings for Equinor has been raised 38.6%.

Sunoco is expected to see earnings growth of 52.3% in 2021.

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