Kosmos to test investors’ energy appetite with London listing

Kosmos Energy is aiming to become the biggest oil and gas company to join the London Stock Exchange since the oil price slide three years ago, in a test of investor sentiment towards the sector.

The Dallas-based explorer is to pursue a secondary listing on London’s main market in addition to its existing membership of the New York Stock Exchange.

Kosmos, which had a market capitalisation of $2.5bn in New York on Tuesday, has earned a reputation as one of the most successful international exploration companies after a string of big discoveries off the coast of west Africa.

Andrew Inglis, Kosmos chief executive, said the company wanted to widen its shareholder base beyond the US, where offshore exploration has been eclipsed by onshore shale oil and gas production in investors’ affections.

“The US shareholder base has become very focused on shale and we believe there is a better understanding in the UK market of the opportunities that exist in conventional offshore exploration,” he told the Financial Times.

Kosmos already has strong ties to the UK as a partner of London-listed Tullow Oil in Ghana and with BP in Senegal and Mauritania.

The listing, planned to take place before the end of September, comes as the oil industry gradually stabilises after three years of pain since crude prices crashed from above $100 per barrel in 2014.

UK investors still carry scars from heavy losses on debt-laden companies such as Premier Oil, EnQuest and Tullow during the downturn. Kuwait Energy, a Middle East-focused oil and gas company, has so far failed to get its planned London initial public offering off the ground since announcing an intention to float in May.

However, Mr Inglis said he was confident of an enthusiastic reception for Kosmos because it has a healthier balance sheet than most peers with $1.2bn of available liquidity, strong cash flow from production in Ghana, and one of the biggest potential resource bases among independent explorers.

“This is not about raising money,” said Mr Inglis. “It’s about diversifying the shareholder base to reach investors who cannot currently access our shares.”

Mr Inglis said New York would remain the company’s primary listing and Dallas its headquarters.

Founded in 2003, Kosmos has had success in “frontier” oil territories along the west coast of Africa, exploring areas considered too risky by rivals or taking a second look in places where others had drawn blanks.

This approach led to the 2007 discovery of the Jubilee field in Ghana — one of the largest in African waters for years — followed by others nearby which, together, produced an average 132,000 barrels of oil per day in the first half of this year. Of this, Kosmos’s share amounted to 26,900, with the rest going to partners including the operator, Tullow.

Further discoveries have come in Senegal and Mauritania, which led to a $1bn deal with BP last December. A “major” gas find off Senegal in May increased confidence behind predictions that the area could hold up to 50tn cubic feet of gas — comparable with some of the world’s biggest offshore gas developments of recent years.

As well as additional exploration in Senegal and Mauritania, Kosmos also has licences off the coast of Suriname in South America close to where ExxonMobil recently gave the go-ahead for its giant Liza oil field in neighbouring Guyana.

Mr Inglis said Kosmos would stick to its strategy of investing in exploration and bringing in partners when oil and gas is found. “We’re good at frontier exploration but the development and production phases require the skills of Big Oil,” he added.

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