Kosmos Energy (KOS) Stock Flies On Strengthened Liquidity Position

Kosmos Energy KOS Stock News

Kosmos Energy Ltd (NYSE: KOS) is running for the top in the market this morning, and for good reason. The company announced that it has closed a transaction that ultimately strengthens its liquidity position. Here’s what’s going on:

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KOS Stock Climbs On Strengthened Liquidity

In the press release, Kosmos Energy said that it has closed a Gulf of Mexico facility with Beal Bank USA and Trafigura Trading. Ultimately, the transaction improves the company’s liquidity position.

Under the transaction, KOS has restructured its previously announced Gulf of Mexico prepayment facility into a five-year $200 million term-loan facility. The facility is secured against the company’s U.S. Gulf of Mexico assets.

Moreover, the company rolled the $50 advance under the prepayment agreement with Trafigura into a new facility, structured by CSG Investments. The new facility now holds the remaining $150 million provided by Beal Bank.

In the release, the company said that the facility has an interest rate of about 6% and increases the company’s borrowing capacity by $50 million from the initial prepayment agreement. Moreover, the facility extends the term to five years and includes an accordian feature that allows for the expansion of the facility up to $300 million.

In a statement, Neal Shah, CEO at KOS, had the following to offer:

The closing and syndication of the Gulf of Mexico facility enhances the company’s strong liquidity position with access to low-cost, flexible financing. Along with free cash generated by our low-cost production assets and proceeds of the recent Shell transaction expected this quarter, the company’s balance sheet is expected to strengthen into 2021.

This Is Big News

The news released by Kosmos Energy is overwhelmingly positive. After all, it costs money to make money. Ultimately, the company now has access to about $650 million of available liquidity. While the company may not use all of these funds, it’s important to have them available.

Ultimately, with access to this amount of funding, there’s no reason for the company to consider dilutive transactions, reducing risk for the company ahead. All in all, this is great news, making KOS stock one to watch closely.

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