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Kosmos to acquire DGE in USD 1.23bn deal
Posted on Monday, 06 August 2018 14:19
Kosmos Energy agreed to purchase Deep Gulf Energy (DGE), a deepwater company operating in the Gulf of Mexico, for USD 1.23 billion, subject to certain adjustments.
The transaction is expected to enhance the scale of the Dallas-headquartered firm, generate significant free cash flow and allow the company to return cash to shareholders through a dividend beginning in the first quarter of 2019.
Kosmos is adding to its deepwater Atlantic Margin portfolio by purchasing DGE, which comes with a strong record of growing production, attractive assets and reserves through infrastructure-led exploration.
Closing is expected in the third quarter of 2018, subject to regulatory approvals.
Following this, the buyer will add 25,000 barrels of oil equivalent per day (boed) production, with an estimated reserve to production ratio of 8.8, which expands 2018 pro forma production by 50.0 per cent from 45,000 to 70,000 boed.
Under the terms of the deal, Kosmos will pay USD 925.00 million in cash and USD 300.00 million in common shares to be issued to First Reserve, management and other stockholders in DGE.
The initial part of the transaction will be financed with borrowings under the acquiror’s current credit facility.
In addition, Kosmos received USD 200.00 million in commitments to increase its reserves-based loan facility capacity.
Andrew Inglis, chief executive of the buyer, said: “With this acquisition, Kosmos continues to grow into a larger, more balanced exploration and production company, with increasingly diversified production, a pipeline of world-class development projects, and a portfolio of short- and longer-cycle exploration opportunities.
“Over the last four years, Kosmos has doubled production, and this acquisition creates the platform to double production again in the next four years. With many competitors leaving the Gulf of Mexico to chase onshore shale plays, a huge opportunity has opened in the basin.”
The company also announced its second quarter and first half financial results earlier today; it generated total revenue of USD 342.65 million in the opening six months of 2018, up 14.8 per cent from USD 298.49 million in the first half of 2017.
Across the two quarters ending 30th June 2018, Kosmos also recorded earnings before interest, taxes, depreciation, amortisation and exploration expenses of USD 176.86 million (H1 2017: USD 133.35 million).
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