Kosmos hires former BP explorer Inglis in billion barrel hunt
BY BRADLEY OLSON
HAMILTON, Bermuda (Bloomberg) -- Kosmos Energy Ltd., the oil wildcatter behind one of the biggest West African discoveries in a decade, is hiring BP Plc’s former head of exploration to lead the company as it ramps up its search for the next billion-barrel oil field.
Andrew Inglis, who left BP in 2010 after the Gulf of Mexico oil spill, will join Kosmos March 1 as chairman and CEO, Kosmos said today in a statement. Inglis, 54, is leaving his current position as CEO of the integrated services division of London-based Petrofac Ltd., an oil-services company.
He’ll take charge of a 10-year-old company with a market value of $4.4 billion built on a 2007 mega-discovery off the coast of Ghana. Kosmos, which slowed exploration spending after the 2008 financial crisis, plans to drill two to four wells per year in offshore Morocco and other areas targeted by much larger operators such as Chevron Corp., Inglis said.
“Kosmos is phenomenally well placed to build on the success in Ghana and open up new basins through exploration,” he said in a Jan. 10 interview in Dallas. “This company is poised for a second inning, building on that success, and with the potential in Morocco, to do something very similar again.”
Kosmos CEO Brian Maxted will continue with the Hamilton, Bermuda-based company as chief exploration officer and remain on the board, according to the statement. Current chairman John Kemp III will retire with Inglis’s appointment. Inglis will be based in Dallas at the company’s U.S. headquarters.
The former BP executive returns to the business of global oil exploration as investors have begun to favor steady returns from U.S. shale formations over the high-cost, high-risk hunt for giant new offshore oil fields in some of the world’s deepest waters.
Inglis left BP in a management shuffle led by CEO Bob Dudley in the wake of the 2010 Macondo well explosion, which killed 11 workers and led to the worst offshore oil spill in U.S. history. A mechanical engineer with a master’s degree from Cambridge University, Inglis spent 30 years at BP, including as an executive director on the company’s board, overseeing oil and natural gas projects from Azerbaijan to the Gulf of Mexico.
Backed by private-equity funds Blackstone Group LP and Warburg Pincus LLC, Kosmos has distinguished itself by using capital from the development of its Jubilee field in Ghana to fund exploration in other regions that have been left behind or misunderstood by other companies, Inglis said.
Kosmos and its partners including Tullow Oil Plc produce the equivalent of about 110,000 barrels of oil a day from Jubilee and are developing several other nearby discoveries, according to Tullow. Kosmos has accumulated nearly 25 million acres for exploration off the coasts of West Africa, Suriname in South America, and Ireland, according to a company presentation in November.
That’s double what it had at the time of its initial public offering in May 2011. Kosmos shares hit an all-time high of $19.24 that month and have since fallen more than 40 percent as the company failed to replicate its Jubilee success.
“The potential of each of the areas we’re looking at is huge,” Inglis said.
For most of the world’s offshore wildcatters, 2013 was the the year of the dud. Exploration-focused companies including Kosmos drilled more than 80 unsuccessful wells and discovered the equivalent of about 20 billion barrels of oil excluding onshore expansions in North America, less than half the amount produced that year, Anish Kapadia, a managing director at Tudor, Pickering, Holt & Co., said in a Jan. 7 note to clients.
International explorers such as London-based Tullow Oil, which drilled more than 20 dry holes in 2013, lost about $20 billion in value last year as investors migrated to U.S. producers that have boosted domestic production to the highest point since 1988, Kapadia said. Onshore explorers such as Pioneer Natural Resources Co., which gained 73 percent in 2013, don’t have to contend with the costly challenges of ultra-deep waters or unstable governments abroad.
Regardless of U.S. producers’ success onshore, finding new sources of oil, including “elephant” sized offshore fields that will pay off for decades, will remain an important part of the industry’s focus, Inglis said.
“Absolutely, shale has had a big impact, it will continue to have a big impact, but so will new basins that have been found and will be found.”
One such basin may be in Morocco, said Maxted, Kosmos’ current CEO.
With many companies sticking to already explored areas, “the skills to unlock frontier emerging basins, which is what we do, is essentially becoming a dying art,” Maxted said. “For us, that’s an opportunity.”
Statoil ASA’s 600 million barrel Bay du Nord find in Canada’s Flemish Pass may serve as a template for offshore Morocco because the regions were once joined millions of years ago before the continents shifted, and so they may have similar geology, Tim Dodson, vice president of exploration at Statoil, said in an interview Nov. 27.
Chevron and Cairn Energy Plc are among other oil companies exploring in offshore Morocco, and a total of about 10 wells are planned off the country’s coast through 2014, according to Citigroup Inc. BP is partnering with Kosmos to help fund the drilling of an exploration well in Morocco this year.
“We’re back in the game,” Inglis said. “This is a very strong position to play from.”