Kosmos Energy acquires Deep Gulf Energy for $1.22 billion

DALLAS -- Kosmos Energy entered into an agreement to acquire Deep Gulf Energy, a deepwater company operating in the Gulf of Mexico, for a total consideration of $1.225 billion. By acquiring DGE, Kosmos adds to its deepwater Atlantic margin portfolio, an established business with attractive assets and a strong record of growing production and reserves through infrastructure-led exploration. The acquisition enhances the scale of the company and is expected to generate significant cash flow, enabling Kosmos to return cash to shareholders through a dividend, beginning in the first quarter of 2019.

Kosmos President and CEO Andrew G. Inglis 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 other operators leaving the GOM to chase onshore shale plays, an 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 GOM. The transaction is immediately accretive – delivering sustainable production and free cash flow growth and enabling dividend payments to begin in the first quarter of 2019.”

Under the terms of the transaction, Kosmos will acquire DGE for total consideration of $1.225 billion, comprised of $925 million in cash and $300 million in Kosmos common shares issued to First Reserve, management, and other DGE shareholders. Kosmos intends to fund the cash portion of the purchase price with borrowings under its existing credit facilities. In connection with the transaction, Kosmos has received $200 million of additional firm commitments to increase its reserves-based loan facility capacity.

The acquisition is expected to close around the end of the third quarter 2018, subject to receipt of regulatory approval and the satisfaction of customary closing conditions.