Kosmos Energy ( KOS) Q3 2011 Earnings Conference Call November 10, 2011 11:00 AM ET Executives Brad Whitmarsh – Vice President, Investor Relations Brian Maxted – President and CEO Greg Dunlevy – Executive Vice President and CFO Marvin Garrett – Senior Vice President, Production and Operations Paul Dailly – Senior Vice President of exploration. Analysts Edward Westlake – Credit Suisse Doug Leggate – Bank of America Al Stanton – RBC Capital Markets Anish Kapadia – Tudor Pickering Holt & Co. Nathan Churchill - Societe Generale Joseph Bachmann – Howard Weil Inc. Edward Westlake – Credit Suisse Presentation Operator
We may also refer to certain non-GAAP financial measures such as EBITDAX, or Earnings Before Interest, Taxes, DD&A and Exploration. The management believes such measures are important in looking at the company's historical and future performance, and these are commonly referred to metrics in the industry.Historical non-GAAP performances reconciled to the appropriate GAAP measure in our earnings release. At this time, I'd like to turn the call over to Brian. Brian Maxted Thanks, Brad and good morning everyone. I'd like to start off today with some open comments focused on our strategic goals and accomplishments in the third quarter. Greg will then discuss that strong financial results for the period, and Marvin will follow with some context on the progress of Jubilee, to be followed by Paul who will updates on our exploration and appraisal programs. In the context of the bigger picture, everything we do at Kosmos as an organization is focused on two corporate goals. One, the foundation of this company is exploration. So our priority, is to find and unlock new petroleum systems. We firmly believe and our history has proven that the best way to create value in this business is organic exploration success, the results of executing on a world class portfolio. Strategically, we focus on frontier on emerging basins, these are the areas that we believe are offer the greatest upside in finding substantial quantities of high value barrels. During the quarter, we made significant progress in continuing to build out our portfolio of new venture opportunities with discipline and diligence, focusing on areas where we can create a competitive advantage and maximize value. I'm extremely excited about the expansion of our position offshore Morocco, where we entered into a new petroleum agreement for Essaouira block in the Agadir Basin which followed the signing of Foum Assaka last quarter.
We've now captured approximately 12 million gross acres offshore Morocco, about 30 times the size of Ghana position. So this is a very substantial area with multiple prospect tights and huge running rate. We are planning to start a sizeable 3D seismic acquisition survey over these new blocks shortly.Our new ventures team continue to identify opportunities to grow and diversify our exploration portfolio including a number of place in our existing geography at West Africa, as well as in other adjacent geographic areas and similar geological themes. We are very pleased with the team's progress to date. Our goal is to increase our exposure to new hydrocarbon systems, and we're pulling together a very attractive lineup of basin in play wells for 2013 and 2014. Our second goal is to grow and mature the value of Hydrocarbon systems we've already opened. Obviously, for us, that is in Ghana, where we continue to have follow-on exploration success. We're also progressing the appraisal development and production of our existing discoveries. At third quarter we've a number of big accomplishments on that front including a new discovery Akasa on our operated West Cape Three Points Block which had multiple good quality reservoirs. We also had success at the Enyenra-3 appraisal well, highlighting the significance of that major oil field. An additional appraisal like Enyenra and Teak is currently underway. Exposing our company to meaningful resource upside and helping us to best define the extents of these discoveries. Paul will talk through these programs in just a bit. Our Jubilee, guidance from the unit operators suggest that we are delayed in ramping up production to full facility capacity. As previously mentioned, we're in the process of sidetracking the J-7 well, and we expect that well to be online early next year. The FPSO in the reservoir pits would be performing at very high levels, however downhole completion issues have recently impacted production sample of the wells. We believe that this is a well completion design matter with no impact on the ultimate recovery resources at Jubilee.
It's a timing issue on the ramp up of Jubilee and the operators are taking the necessary steps to identify and implement appropriate remediation measures. With two – liftings and strong Brent pricing we generated over $190 million of EDITDAX in the quarter. Combined with great progress in our exploration programs, it was a great quarter for Kosmos.Read the rest of this transcript for free on seekingalpha.com