HOUSTON--(BUSINESS WIRE)--Cobalt International Energy, Inc. (“Cobalt”) (NYSE:CIE) today announced a net loss of $186 million, or $6.28 per basic and diluted share for the second quarter of 2017, compared to a net loss of $206 million, or $7.52 per basic and diluted share, for the second quarter of 2016. This decrease in net loss compared to the same period in 2016 was largely driven by a $113 million reduction in dry hole costs and impairments offset by a $26 million increase in interest expense and a $72 million non-cash loss on debt related embedded derivatives associated with the recently completed debt exchanges and an increase in the market value of secured debt during the quarter.
As of June 30, 2017, cash, cash equivalents, short term investments and restricted cash were approximately $597 million. This includes $250 million of Angolan sale proceeds received pursuant to the purchase and sale agreement with Sonangol, but excludes $159 million in receivables owed to us by Sonangol.
We expect capital expenditures to be approximately $250 million in 2017, which excludes general and administrative expenses and interest expense. Of this amount, approximately $206 million has been spent as of June 30, 2017; however, given that drilling activities have been completed at Shenandoah, Anchor and North Platte, cash outlays for capital expenditures are expected to significantly decrease for the remainder of 2017. Total 2017 cash outlays are currently expected to be approximately $550 million, of which approximately $359 million has been spent as of June 30, 2017.
In the deepwater Gulf of Mexico, Cobalt completed its North Platte #4 Sidetrack 2 operations in May 2017. This well was drilled approximately one–half mile updip of the North Platte #4 Sidetrack 1 location and encountered approximately 400 feet of high quality Lower Wilcox pay. In June 2017, Cobalt completed a bypass for core operation adjacent to the North Platte #4 Sidetrack 2 location and recovered approximately 200 feet of Lower Wilcox conventional core. Following the abandonment of the wellbore, the Rowan Reliance rig was released from operations in late June.
In July 2017, Cobalt entered into an agreement with Chevron and the other co–owners in the Anchor development to unitize Cobalt’s two leases immediately south of the existing Anchor unit (Green Canyon blocks 850 and 851) into such Anchor unit. Cobalt believes the inclusion of these leases in the Anchor unit will optimize the development plan and maximize oil recovery from the Anchor development. The transfer of these interests and the revised Anchor unit remain subject to customary regulatory approval, following which Cobalt would retain its 20% working interest in the revised Anchor unit.
At Shenandoah, Cobalt and its co–owners are continuing to explore development options for the field. Well planning is underway for a drilling operation expected in the first six months of 2018.
Marketing efforts with respect to Cobalt’s Gulf of Mexico assets continue and it is expected that these efforts will conclude in late third quarter of 2017.
With regard to Angola, the previously announced arbitration process between Cobalt and Sonangol is progressing as planned and currently the arbitral tribunals are being constituted. In addition, Cobalt recently met with representatives from Sonangol and the Angolan government and it appears that all parties share a common goal to resolve this matter amicably. However, until this matter is resolved in a satisfactory manner, Cobalt will continue to vigorously prosecute these claims in arbitration and seek all available remedies.
A conference call for investors will be held today at 9:00 a.m. Central Time (10:00 a.m. Eastern Time) to discuss Cobalt’s second quarter 2017 results. Hosting the call will be Timothy J. Cutt, Chief Executive Officer, and David D. Powell, Chief Financial Officer.
The call can be accessed live over the telephone by dialing (877) 407-9039, or for international callers (201) 689-8470. A replay will be available shortly after the call and can be accessed by dialing (844) 512-2921 or for international callers (412) 317-6671. The passcode for the replay is 13667710. The replay will be available until August 22, 2017.
Interested parties may also listen to a simultaneous webcast of the conference call by accessing the Newsroom-Events & Speeches section of Cobalt’s website at www.cobaltintl.com. A replay of the webcast will also be available for approximately 30 days following the call.
Cobalt International Energy, Inc. (NYSE: CIE) is an independent exploration and production company active in the deepwater U.S. Gulf of Mexico and offshore West Africa. Cobalt was formed in 2005 and is headquartered in Houston, Texas.
This press release includes “forward-looking statements” within the meaning of the federal securities laws, including the safe harbor provisions of the Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 — that is, statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact. In this context, forward-looking statements often address Cobalt’s expected future business and financial performance, and often contain words such as “anticipate,” “believe,” “may,” “will,” “aim,” “estimate,” “continue,” “intend,” “could,” “expect,” “plan,” and other similar words. These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. For further discussion of risks and uncertainties, individuals should refer to Cobalt’s SEC filings. Cobalt disclaims any obligation or undertaking, and does not intend, to update these forward-looking statements to reflect events or circumstances occurring after this press release, other than as required by 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.
Consolidated Statement of Operations Information:
|Three Months Ended||Six Months Ended|
|June 30,||June 30,|
|(in thousands, except per share amounts)|
|Oil, natural gas and natural gas liquids revenues||
|Operating costs and expenses:|
|Seismic and exploration||14,064||9,428||21,083||15,491|
|Lease operating expenses||3,035||1,702||5,733||2,658|
|Dry hole costs and impairments||42,486||155,814||279,591||155,389|
|General and administrative expenses||27,698||22,864||46,624||51,320|
|Depreciation, depletion and amortization||10,093||4,289||18,972||7,459|
|Total operating costs and expenses||97,673||194,199||372,590||232,521|
|Other (expense) income, net:|
|Loss on embedded derivatives||(72,436||)||–||(70,530||)||–|
|Total other expense, net||(101,644||)||(14,521||)||(142,849||)||(24,450||)|
|Basic and diluted loss per share||$||(6.28||)||$||(7.52||)||$||(16.68||)||$||(9.23||)|
Weighted average common shares
outstanding (basis and diluted)
Consolidated Balance Sheet Information:
|June 30,||December 31,|
|($ in thousands)|
|Cash and cash equivalents||$||191,608||$||613,534|
|Total current assets||798,414||1,147,191|
|Oil and natural gas properties||961,849||1,078,885|
|Total current liabilities||456,178||533,954|
|Total long-term liabilities||2,644,702||2,537,858|
|Total stockholders’ equity (29,528,008 and 29,422,864 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively)||(1,326,532||)||(841,334||)|
|Total liabilities and stockholders’ equity||$||1,774,348||$||2,230,478|
Consolidated Statement of Cash Flows Information:
|Six Months Ended June 30,|
|($ in thousands)|
|Net cash (used in) provided by:|