Business Context and Reporting Period
This Form 8-K filing by Kosmos Energy Ltd. (Bermuda) reports material events occurring on February 17, 2012, and February 23, 2012. The Company is an independent oil and gas exploration and production company focused on the Jubilee Field development in Ghana.
Key Financial Metrics and Agreements
- Debt Financing: Entered into a Deed of Transfer and Amendment and a new IFC Facility Agreement effective February 17, 2012.
- Loan Amount: International Finance Corporation (IFC) acquired $67,000,000 of loans and commitments via novation from existing lenders.
- Future Capacity: The facility amount is scheduled to increase to a maximum of $100,000,000 by June 30, 2012.
- Interest Rate: LIBOR plus 325 to 475 basis points, dependent on utilization and time elapsed.
- Drawdown Period: Expires May 15, 2014.
- Use of Proceeds: Jubilee Field development, appraisal of additional discoveries, and ongoing exploration in Ghana.
- Executive Compensation: Monthly consulting fee for John R. Kemp increased to $51,750, effective January 1, 2012.
Material Changes
The primary material change is the restructuring of the Company's senior term loan facility to include the IFC as a new lender. This involves the transfer of $67,000,000 in obligations from existing lenders to the IFC and the amendment of the Facility Agreement to reflect new commitment percentages and definitions. Additionally, the Company amended a consulting agreement to increase executive compensation retroactively to the start of the year.
Outlook, Risks, and Contingencies
- Management Commentary: The financing is intended to support capital-intensive development and exploration activities in Ghana.
- Risks: The IFC Facility Agreement includes standard representations regarding environmental and anti-corruption compliance. An event of default allows the IFC to accelerate maturity after a standstill period.
- Contingencies: The increase of the facility to $100,000,000 is contingent upon obtaining additional commitments from the IFC or transfers from existing lenders by June 30, 2012.
Investor Verification Checklist
- Verify the final commitment amount of the IFC Facility Agreement by June 30, 2012 (target: $100,000,000).
- Confirm the utilization rate of the facility to determine the applicable interest rate spread (325-475 bps).
- Review the Company's progress on Jubilee Field development to ensure proceeds are utilized as stated.
- Monitor compliance with environmental and anti-corruption representations made to the IFC.