With this purchase, Kosmos has expanded its deepwater Atlantic Margin portfolio.
This acquisition is immediately accretive and is expected to generate free cash flow, thereby allowing Kosmos to return cash to shareholders through a dividend in the first quarter of next year.
The purchase of Deep Gulf Energy includes Deep Gulf Energy LP, Deep Gulf Energy II, Deep Gulf Energy III, and associated entities.
The pure-play Kosmos has assets at offshore Ghana, Equatorial Guinea, and in the US Gulf of Mexico. It has Tortue gas project in Mauritania and Senegal, and an exploration programme in proven basins of Equatorial Guinea and US Gulf of Mexico besides emerging basins of Mauritania, Senegal and Suriname, and frontier basins of Cote d’Ivoire and Sao Tome and Principe.
In August, Kosmos signed an agreement to purchase Deep Gulf Energy from First Reserve and other shareholders.
The $1.225bn amount consists of $925m in cash and $300m in Kosmos common shares issued to First Reserve, management, and other DGE shareholders.
Kosmos funded the cash portion of the acquisition through its existing credit facilities.
During the time of the acquisition announcement, Kosmos chairman and CEO Andrew G. Inglis had 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 best deepwater assets can compete with the best of shale, and now is a good time to enter the Gulf of Mexico. This highly complementary transaction is immediately accretive – delivering sustainable production and free cash flow growth, and enabling dividend payments to begin in the first quarter of 2019.”