Kosmos Energy Announces Pricing of $500 Million of Senior Notes Due 2031

Rhea-AI Summary

Kosmos Energy (NYSE/LSE: KOS) has priced $500 million of 8.750% senior notes due 2031. The offering is expected to close on September 24, 2024, subject to customary conditions. Kosmos plans to use the net proceeds, along with cash on hand, to fund tender offers for a portion of its existing senior notes due in 2026, 2027, and 2028, and to cover related expenses.

The new senior notes are being offered only to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S of the Securities Act. They have not been registered under the Securities Act or state securities laws, and cannot be offered or sold in the United States without registration or an applicable exemption.

Positive

• Successful pricing of $500 million in senior notes
• Potential reduction of existing debt through tender offers
• Possible improvement in debt structure and maturity profile

Negative

• Increase in total debt load
• Higher interest rate of 8.750% on new notes compared to existing notes
• Potential increase in interest expenses

Insights

Financial Analyst

Kosmos Energy's $500 million senior notes offering at 8.750% interest rate signals a strategic debt refinancing move. This action aims to restructure their existing debt portfolio by replacing higher-interest notes due in 2026, 2027 and 2028 with a longer-term 2031 maturity. The high yield of 8.750% reflects current market conditions and Kosmos's risk profile in the energy sector. While this refinancing provides improved debt maturity profile, it comes at a higher cost, potentially impacting future profitability. Investors should closely monitor how this affects Kosmos's interest expense and cash flow in coming quarters. The private placement nature of the offering to qualified institutional buyers suggests a targeted approach to debt management.

Market Research Analyst

This debt refinancing by Kosmos Energy reflects broader trends in the energy sector, where companies are seeking to optimize their capital structures amid volatile market conditions. The 8.750% yield is notably high, indicating investor perception of risk in the oil and gas industry. This move could be seen as a proactive step to manage near-term maturities, potentially improving Kosmos's financial flexibility. However, the higher interest rate may put pressure on profitability metrics. Investors should consider how this refinancing fits into Kosmos's overall strategy, particularly in light of energy transition challenges facing the sector. The successful pricing of the notes suggests continued investor appetite for high-yield energy debt, despite ongoing industry uncertainties.

DALLAS--(BUSINESS WIRE)-- Kosmos Energy Ltd. (“Kosmos”) (NYSE/LSE: KOS) announced today the pricing of $500 million aggregate principal amount of its 8.750% senior notes due 2031. The offering is expected to close on September 24, 2024, subject to customary closing conditions. Kosmos intends to use the net proceeds from the offering, together with cash on hand, to fund the tender offers for a portion of its 7.125% Senior Notes due 2026, 7.750% Senior Notes due 2027 and 7.500% Senior Notes due 2028 and to pay any related premiums, fees and expenses.

The senior notes offered have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any state securities laws, and the securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws. The senior notes were offered only to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration set forth in Rule 144A under the Securities Act, and outside the United States, to non-U.S. persons in reliance on the exemption from registration set forth in Regulation S under the Securities Act.

This press release is being issued pursuant to, and in accordance with, Rule 135c under the Securities Act, and is neither an offer to sell nor a solicitation of an offer to buy the senior notes or any other securities, and it does not constitute an offer to purchase or a solicitation to sell any notes subject to the tender offers or any other securities or a conditional notice of partial redemption with respect to any securities. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the senior notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful.

About Kosmos Energy

Kosmos is a full-cycle, deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as world-class gas projects offshore Mauritania and Senegal. We also pursue a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos is listed on the NYSE and LSE and is traded under the ticker symbol KOS. Kosmos is engaged in a single line of business, which is the exploration, development, and production of oil and natural gas. Substantially all of our long-lived assets and all of our product sales are related to operations in four geographic areas: Ghana, Equatorial Guinea, Mauritania/Senegal and the U.S. Gulf of Mexico.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Kosmos expects, believes or anticipates will or may occur in the future are forward-looking statements. Kosmos’ estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Kosmos believes that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to Kosmos. When used in this press release, the words “anticipate,” “believe,” “intend,” “expect,” “plan,” “will,” “may,” “potential” or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Kosmos, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Kosmos’ Securities and Exchange Commission filings. Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

European Economic Area and United Kingdom Notices

Financial Conduct Authority (FCA) stabilization rules apply.

MiFIR professionals / ECPs only / No PRIIPs / UK PRIIPs KID - Manufacturer target market (MiFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs regulation key information document (KID) has been prepared as the notes are not available to retail investors in the EEA or the United Kingdom.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240910952898/en/

Investor Relations

Jamie Buckland

+44 (0) 203 954 2831

jbuckland@kosmosenergy.com

or

Media Relations

Thomas Golembeski

+1-214-445-9674

tgolembeski@kosmosenergy.com

Source: Kosmos Energy Ltd.

FAQ

What is the interest rate and maturity of Kosmos Energy's newly priced senior notes?

Kosmos Energy (KOS) has priced $500 million of 8.750% senior notes due 2031.

When is the expected closing date for Kosmos Energy's (KOS) new senior notes offering?

The offering is expected to close on September 24, 2024, subject to customary closing conditions.

How does Kosmos Energy (KOS) plan to use the proceeds from the new senior notes?

Kosmos intends to use the net proceeds, along with cash on hand, to fund tender offers for a portion of its existing senior notes due in 2026, 2027, and 2028, and to pay related premiums, fees, and expenses.

Are Kosmos Energy's (KOS) new senior notes registered under the Securities Act?

No, the new senior notes have not been registered under the Securities Act of 1933 or any state securities laws.