Kosmos, BP Make "Major" 6th Discovery (update)

Update: Yakaar-1 is "understood to be the largest hydrocarbon find in the world so far in 2017," said Kosmos exploration chief Brian Maxted later May 8.

US Kosmos Energy announced May 8 a "major" gas discovery in Senegal -- its sixth consecutive discovery in the Mauritania/Senegal offshore basin -- indicating its belief that, together with new partner BP, it has enough gas there to have two floating liquefaction modules producing in the early 2020s.

Yakaar-1 is the first well in a series of four tests of fan fairways, further offshore of the trend it opened with its Tortue-1 gas find announced in 2015.

Kosmos estimates Yakaar-1 discovered a gross P-mean gas resource of 15 trillion ft³ (42.5bn m³), in line with pre-drill expectations, and with a ratio of some 15 to 30 barrels of condensate per mn ft³, consistent with previous discoveries.

Update: Yakaar-1 is "understood to be the largest hydrocarbon find in the world so far in 2017," said Kosmos exploration chief Brian Maxted in a briefing to analysts later May 8.

"Together with the Teranga-1 discovery last year, we believe this resource will support a second cost-competitive LNG hub,” said CEO Andrew G Inglis in the company's statement.

Kosmos Energy CEO Andrew G Inglis (Photo credit: the company)

An appraisal program is being planned to delineate the Yakaar discovery, which found a gross hydrocarbon column of 120 meters, of which 45 meters net pay. It was drilled on the Cayar Offshore Profond block 95km northwest of Dakar in almost 2,550 meters of water to a total depth of some 4.7km. After completing Yakaar-1, the Atwood Achiever drillship will move to Tortue-1 to conduct a drill stem test there, enabling the start of that project's Front End Engineering Design (feed) in 2H2017, a final investment decision on a floating LNG project in 2018, and first gas in 2021, said Kosmos.

Kosmos and BP presently each hold an effective 30% interest in the Cayar Offshore Profond license, while BP is in the process of buying a further 30% from Timis Corp. State Petrosen holds 10%.

BP upstream chief Bernard Looney added: “Yakaar-1 follows the earlier exploration success that led to the Tortue discovery and further confirms our belief that offshore Senegal and Mauritania is a world-class hydrocarbon basin. This discovery marks an important further step in building BP’s new business in Mauritania and Senegal. We look forward to results from the additional exploration wells planned for 2017."

1Q losses halved, Sao Tome 3D starts

Kosmos also May 8 announced a net 1Q loss of $28.8mn, down from its 1Q2016 loss of $59mn.

Total capital expenditure in 1Q2017 was $120mn (mostly on exploration). This was offset by initial proceeds from deals with BP of $222mn, resulting in a credit to Kosmos’s capital budget of $102mn in 1Q2017.

Production in Ghana continued to be lower than forecast, due to ongoing repairs by operator Tullow.

Offshore Sao Tome and Principe, West Africa, Kosmos has begun a 16,000 km² 3D seismic survey across its blocks, while offshore Suriname in South America, it completed 3D surveys in January across blocks 42 and 45 totaling over 6,500 km² and expects to mature prospects for drilling in 2018.

Kosmos has reduced its net capex budget for full year 2017 to $150mn, from its previously announced $175mn, after refining its E&P cost estimates.

Mark Smedley