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Africa Economic Institute

Kosmos Energy May Invest $ 750 Million in Ghana

Kosmos Energy signed a final contract to finance a project in Ghana. The facility is to be secured by the shares of the company’s subsidiary Kosmos Energy Ghana and its interest in the world-class Jubilee oil field offshore Ghana. This financing will fully fund Kosmos’ share of Jubilee’s phase-one development.

The US$750 million of debt is divided among a senior facility of US$550 million, a junior facility of US$100 million and facilities of US$100 million from the International Finance Corporation (IFC), a member of the World Bank Group. The main facility has a final maturity date of December 2015. The facilities include an early-draw tranche of up to US$300 million that Kosmos can access immediately on receipt of the Ghanaian government’s consent to the security package, which is consistent with ordinary practice for this type of debt facility.

The project, located in deep water some 60 kilometers off the coast of Ghana, will produce domestic crude oil, generating foreign exchange income for the country and substituting expenditures for oil imports. It is also expected to boost government revenues, providing much needed income against the background of the global economic downturn.

W. Greg Dunlevy Kosmos Executive Vice President and Chief Financial Officer said in an Interview: “This debt financing provides one of the essential components in ensuring a timely achievement of first oil production for Ghana. Together with the equity invested by Warburg Pincus and The Blackstone Group, it provides Kosmos with the financial resources necessary to fully develop the first phase of the Jubilee oil field. We believe the fact that we put in place a debt facility of this magnitude for our world-class project in the current credit environment is a significant achievement. This is evidence of the confidence of the International financial community in Kosmos’ team of seasoned executives and employees, as well as its strong support of investment in the emerging Ghanaian oil sector.”

Next to oil, the Jubilee field is expected to produce gas to support about 400 megawatts of new power generation, equivalent to about 30 percent of Ghana’s annual power consumption. The project also will stimulate the Ghanaian economy by purchasing goods and services locally. IFC is advising the companies on enhancing the project’s benefits for local communities and stakeholder engagement.

“The Jubilee oil field is a landmark project for Ghana,” said Somit Varma, IFC’s Global Head for Oil, Gas, Mining, and Chemicals. “The project will provide a new and vital revenue source in a country that has one of the best governance track records in Sub-Saharan Africa.”

Kosmos and its partners are executing a phased development plan for the Jubilee Field, which is located on the West Cape Three Points Block and adjacent Deepwater Tano Block. The company believes that phase-one development will produce in excess of the planned 300 million barrels of recoverable oil. The designed production capacity of phase one is 120,000 barrels of crude per day.

Kosmos is part-owned by private equity giant Blackstone. In May, Blackstone’s Chief Operating Officer Tony James said the fund may be looking to exit an energy company it was invested in which, like Kosmos, had made major hydrocarbon discoveries