Reports related to this article:
Project(s): View 4 related projects in PECWeb
Plant(s): View 1 related plant in PECWeb
en
Researched by Industrial Info Resources (Sugar Land, Texas)--Cobalt International Energy Incorporated (NYSE:CIE) (Houston, Texas), an independent exploration and production company working in the deepwater U.S. Gulf of Mexico and offshore Angola and Gabon, approached its drilling projects with more caution toward the end of 2014 at prices plummeted and impairment charges popped up. The company, which was incorporated in 2009 and has not yet begun producing or generating revenues from its properties, reported net losses of $510.76 million for 2014, compared with $589.02 million in 2013.
Industrial Info is tracking nearly $1.5 billion in active projects involving Cobalt, including four drilling programs offshore Angola, each valued at $100 million: Cameia, Mavinga, Bicuar and Lontra. The first three are located in Block 21 of the Kwanza Basin, with Cobalt working as operator and holding an 80% interest; Sonangol (Luanda, Angola) holds 20%. Cameia is set for 2015-16, and Mavinga and Bicuar are set for 2016-17. Lontra, in which Cobalt holds 40%, is in Block 20 offshore Luanda and is slated for 2016-17.
Cobalt executives said in a quarterly earnings conference call that they responded to last year's dramatic decline in oil prices by performing a "rigorous stress test" of developments to determine which are the most economically attractive. As a result, the company plans to direct the bulk of its resources at the Heidelberg, Shenandoah, Anchor, Camela, Orca and North Platte developments in the Gulf of Mexico. Capital and operating expenditures for 2014, excluding changes in working capital, were reported to be about $829 million.
Contributing significantly to the quarter's losses were $126 million in impairment charges related to two exploration wells offshore Angola, and $50 million related to leasehold properties in the Gulf of Mexico.
Cobalt expects to see its first production from Heidelberg, where it now has a 9.375% working interest, in 2016. In the North Platte, the company recently began drilling its No. 2 appraisal well, following initial discovery in 2012. Cobalt holds a 20% interest in the North Platte, where it is operator. Cobalt also saw promise after it completed drilling at its No. 3 appraisal well in the Shenandoah prospect, where it holds a 20% working interest.
Earlier this year, the company saw its fourth major discovery in the deepwater Gulf of Mexico with the Anchor subsalt exploration well; appraisal drilling is slated to begin sometime this year. Cobalt, a non-operator, has a 20% working interest in Anchor.
"The recent oil price collapse actually comes at the time in Cobalt's operational life when we believe we are well-positioned to drive benefits from cost savings and services, and supplies that always result from times of lower oil prices," said Joe Bryant, the chairman and chief executive officer of Cobalt, in a conference call. "This is one of the reasons that we put the brakes on sanctioning Cameia at year end 2014. We did not want to get into the market ahead of what we believe would be considerable downward pressure on costs in 2015 and which are now starting to materialize in the marketplace. In addition, we wanted to use this opportunity to optimize the Cameia project design, and the results we have seen today are staggering."
Cobalt's capital and operating expenditures for 2015 are expected to be essentially flat with last year's numbers, at between $800 million and $900 million. Nonetheless, the company is more than doubling its investment in appraisal and development projects, directing 80% of the total toward those areas. Cobalt executives say this is a major step toward generating product and revenue from its exploration assets.
"As we look at Cobalt today, we have significant assets that are in various," Bryant said in the conference call. "These include Heidelberg, which will go on-stream in the first half of 2016; followed by Cameia, likely in 2018; and then followed by Shenandoah, Orca, North Platte and our newest world-class discovery, Anchor."
He added: "Based on all of the information that we have available to us today, we believe that each of this projects is highly attractive and will yield internal rates of return at sanction of between the high-teens up to 30%."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Industrial Info is tracking nearly $1.5 billion in active projects involving Cobalt, including four drilling programs offshore Angola, each valued at $100 million: Cameia, Mavinga, Bicuar and Lontra. The first three are located in Block 21 of the Kwanza Basin, with Cobalt working as operator and holding an 80% interest; Sonangol (Luanda, Angola) holds 20%. Cameia is set for 2015-16, and Mavinga and Bicuar are set for 2016-17. Lontra, in which Cobalt holds 40%, is in Block 20 offshore Luanda and is slated for 2016-17.
Cobalt executives said in a quarterly earnings conference call that they responded to last year's dramatic decline in oil prices by performing a "rigorous stress test" of developments to determine which are the most economically attractive. As a result, the company plans to direct the bulk of its resources at the Heidelberg, Shenandoah, Anchor, Camela, Orca and North Platte developments in the Gulf of Mexico. Capital and operating expenditures for 2014, excluding changes in working capital, were reported to be about $829 million.
Contributing significantly to the quarter's losses were $126 million in impairment charges related to two exploration wells offshore Angola, and $50 million related to leasehold properties in the Gulf of Mexico.
Cobalt expects to see its first production from Heidelberg, where it now has a 9.375% working interest, in 2016. In the North Platte, the company recently began drilling its No. 2 appraisal well, following initial discovery in 2012. Cobalt holds a 20% interest in the North Platte, where it is operator. Cobalt also saw promise after it completed drilling at its No. 3 appraisal well in the Shenandoah prospect, where it holds a 20% working interest.
Earlier this year, the company saw its fourth major discovery in the deepwater Gulf of Mexico with the Anchor subsalt exploration well; appraisal drilling is slated to begin sometime this year. Cobalt, a non-operator, has a 20% working interest in Anchor.
"The recent oil price collapse actually comes at the time in Cobalt's operational life when we believe we are well-positioned to drive benefits from cost savings and services, and supplies that always result from times of lower oil prices," said Joe Bryant, the chairman and chief executive officer of Cobalt, in a conference call. "This is one of the reasons that we put the brakes on sanctioning Cameia at year end 2014. We did not want to get into the market ahead of what we believe would be considerable downward pressure on costs in 2015 and which are now starting to materialize in the marketplace. In addition, we wanted to use this opportunity to optimize the Cameia project design, and the results we have seen today are staggering."
Cobalt's capital and operating expenditures for 2015 are expected to be essentially flat with last year's numbers, at between $800 million and $900 million. Nonetheless, the company is more than doubling its investment in appraisal and development projects, directing 80% of the total toward those areas. Cobalt executives say this is a major step toward generating product and revenue from its exploration assets.
"As we look at Cobalt today, we have significant assets that are in various," Bryant said in the conference call. "These include Heidelberg, which will go on-stream in the first half of 2016; followed by Cameia, likely in 2018; and then followed by Shenandoah, Orca, North Platte and our newest world-class discovery, Anchor."
He added: "Based on all of the information that we have available to us today, we believe that each of this projects is highly attractive and will yield internal rates of return at sanction of between the high-teens up to 30%."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
