On schedule and on budget with a mere 1% of the project incomplete, the Tweneboa-Enyenra-Ntomme project offshore Ghana—commonly known as TEN—could deliver first oil shortly, Kosmos Energy (NYSE: KOS) said.

Kosmos and its partners are also pondering whether to speed up gas exports from the field, considering fabrication was completed early and the gas export facilities can be installed by year-end, enabling connection to existing gas infrastructure in early 2017, Kosmos said.

The update was delivered Aug. 8 as the Dallas-based company, which targets underexplored regions along the Atlantic Margin, shared news about its second-quarter 2016 earnings. The company’s revenues plummeted to about $45.7 million from $121.8 million a year ago.

TEN is one of the main developments offshore Ghana the company is depending on to help it sustain and grow cash flow as it moves forward on the exploration front, uncovering hydrocarbon potential in offshore places such as Mauritania and Senegal.

“It’s been a tough year and a half for the industry and for a lot of companies in our space. Low oil prices have squeezed liquidity, forcing some companies out of business and others to dilute their investors to deleverage,” Kosmos Energy CEO Andy Inglis said on a conference call Aug. 8. “Only in this business environment have the assets, balance sheet and management of Kosmos differentiated themselves.”

But the company is at an inflection point, he added, as production and cash flow are set to rise while capex falls.

The TEN project is expected to add an average of about 55,000 barrels of oil per day (Mbbl/d) gross during 2016. So far, eight of 11 wells have been completed and hook-up and commissioning of the FPSO is approaching the finish line.

“A gradual ramp-up in oil production towards the FPSO capacity of 80,000 bbl/d is anticipated around the end of 2016 as the facilities complete performance testing and well production levels are increased to optimal rates,” Inglis said.

Until export begins, plans are to reinject associated gas produced at TEN into the Ntomme reservoir gas cap, the company said.

Kosmos has a 17% interest in the Tullow-operated TEN development area. Tullow holds a 47.18% equity interest; other partners include Anadarko Petroleum Corp. (NYSE: APC), 17%; Ghana National Petroleum Co., 15% and Petro SA, 3.82%.

The TEN project along with exploration and appraisal drilling accounted for the bulk of Kosmos’ second-quarter capex of $184 million. But the company warned that a second-half ramp down is expected.

“We paused our drilling program in late May and expect to see a reduction of TEN spending after achieving first production during the third quarter,” Kosmos said. “The forecast for full-year 2016 capital expenditures remains approximately $650 million.”

Jubilee Field

Meanwhile, at Jubilee—another offshore Ghana asset that fuels the company’s financials—production rebounded after a solution was found to a turret bearing issue on the Jubilee FPSO, which was forced into a longer-than-expected shutdown earlier this year. After tug boats for heading control and a dynamically positioned shuttle tanker and storage vessel for offloading were put to use, the company said, production increased to average of about 90,000 bbl/d gross in June.

In the long term, Kosmos and partners plan to convert the FPSO to a permanently spread moored facility. A deepwater catenary anchor leg mooring (CALM) buoy, set to be installed in first-half 2018, will be used for offtake. The work will be undertaken in phases, starting with the stern anchoring system.

Once this work is completed, expected by year-end 2016, plans are to remove the load of the turret and risers to prep for spread moor heading work—a $150 million job that will require the FPSO be shut down for eight to 12 weeks in first-half 2017, the company said in a statement.

Kosmos suffered a blow to its production expenses and profit potential due to the turret bearing issues; however, the company expects to recoup some expenses thanks to loss of production income insurance. Kosmos’ production expenses for the quarter equated to about $34.47/bbl, more than 3xt the second-quarter 2015 spending—mainly due to more operating procedures related to the turret bearing and impacts associated with lower production, the company said.

“We are in final discussions on the benchmark production level from which we will calculate lost production volumes, for which we will receive compensation of $62 per barrel,” Inglis said.

Kosmos plans to file its first claim this month, he added. Payment could arrive late next month, if the framework details are finalized.

With 35.48% interest in the Jubilee area, Tullow is the operator. Kosmos and Anadarko Petroleum Corp. (NYSE: APC) each hold 24.08% interest; GNPC, 13.64% and Petro SA, 2.73%.

Velda Addison can be reached at vaddison@hartenergy.com.

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