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Kosmos Energy called to pay US$130mln as debt test sees borrowing limit reduced

Lower crude pricing has triggered a cut in the borrowing base for the company’s reserves-based lending facility.

Kosmos Energy Ltd - Kosmos Energy called to pay US$130mln as debt test sees borrowing limit reduced

Kosmos Energy Ltd’s (LON:LTD) lenders have called a US$130mln repayment following a quarterly debt test.

A scheduled redetermination of the oil company’s reserves-based lending credit facility saw the borrowing allocation reduced to US$1.32bn, whilst US$1.45bn was already drawn.

Kosmos told investors it will make the repayment in the fourth quarter, from its available liquidity.

In London, Kosmos shares fell 4.42% to trade at 1.08p.

The RBL downgrade comes as a result of reduced oil price assumptions since the prior debt test back in March. The facility is secured against production assets in Ghana and Equatorial Guinea, the company’s gas assets in Mauritania and Senegal are unencumbered by the RBL.

As of October 1, Kosmos had around US$500mln if available liquidity.

Neal Shah, Kosmos chief financial officer, noted that the balance sheet is expected to be strengthened during this quarter by proceeds from the company’s transaction with Shell (in September it agreed to divest a partial stake in frontier exploration assets for US$100mln in upfront cash, plus US$100mln in contingent future payments).

"We are pleased to have successfully completed the September RBL re-determination, and we thank our bank group for its continued support,” Shah said in a statement.

“With the recently announced Gulf of Mexico facility and this successful re-determination, the company has secured access to multiple sources of low cost, flexible financing.”

In early August, Kosmos released second quarter results showing a US$199mln net loss as production of 60,100 bopd generated US$127mln of revenue. At that time it had US$614mln of liquidity and a total of US$2bn of debt.

Financial results for the third quarter are due November 9.

Quick facts: Kosmos Energy Ltd

Price: 202 GBX

Market: LSE
Market Cap: £819.02 m

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