Adjusted net income
Kosmos Energy (KOS) announced its 1Q17 earnings before the market opened on May 8, 2017. KOS reported a worse-than-expected loss of ~$43 million in 1Q17. Wall Street analysts had been expecting a loss of ~$34 million.
On a year-over-year (or YoY) basis, Kosmos Energy’s losses increased by more than 193%. In 1Q16, KOS reported lower losses of $15 million. On a sequential basis and excluding one-time items, KOS reported ~662% higher losses in 1Q17, compared to its losses of ~$6 million in 4Q16.
Reported net income
Kosmos Energy’s 1Q17 adjusted net income includes certain benefits and charges totaling ~-$14 million, most of which are related to tax expenses and net losses on crude oil (USO) derivatives. Excluding these items, KOS’s reported net income was -$29 million on a GAAP (generally accepted accounting principles) basis, or -$0.07 per share, in 1Q17. In comparison, its reported net income was -$58 million, or -$0.15 per share, in 1Q16.
Factors that affected KOS’s net income
Despite higher YoY revenue in 1Q17, KOS’s adjusted net losses rose due to its higher exploration expenses. Kosmos Energy incurred higher exploration expenses of ~$106 million in 1Q17, compared to ~$24 million in 1Q16.
KOS’s peer Southwestern Energy (SWN) reported adjusted net income of $87 million in 1Q17. In the next article, we’ll study Kosmos Energy’s revenue.