Cobalt Reports Third Quarter Net Loss
Cobalt International Energy reported a net loss of $35.2 million, or $0.10 per basic and diluted share, for the three months ended September 30, 2010, compared with a net loss of $15.0 million, or $0.05 per pro forma basic and diluted share, for the same period in 2009.
The net loss for the third quarter included seismic and exploration costs of approximately $20 million for seismic acquisition and interpretation for Cobalt’s Gulf of Mexico prospects and for force majeure costs related to equipment and services associated with Cobalt’s North Platte #1 exploratory well operations that were suspended as a result of the Gulf of Mexico Drilling Moratorium. Force majeure costs for the first nine months of the year totaled approximately $13 million, in-line with a previous estimate of approximately $15 million for 2010.
Cash expenditures for the quarter were approximately $29 million. Cobalt currently estimates it will spend between $35 to $45 million in the fourth quarter 2010, bringing estimated full-year 2010 expenditures between $140 to $150 million compared to Cobalt’s previous estimate of between $150 to $170 million. The cash, cash equivalents and investments at the end of third quarter were approximately $917 million. This excludes approximately $330 million designated for future operations held in escrow and letters of credit. In addition, the balance of the TOTAL drilling fund for Gulf of Mexico activities at the end of the third quarter was approximately $200 million. Cobalt has no short or long-term debt.
Cobalt today also announced its execution of a Drilling Rig Contract with Diamond Offshore Drilling Inc. for use of the Ocean Confidence drilling rig. Cobalt plans to use this rig to drill the first two wells on Block 21 in the deepwater offshore Angola. Cobalt has an option to drill up to two additional wells. The Ocean Confidence rig has a base operating rate of $360,000 per day. Cobalt anticipates the rig to be mobilized to Angola in the first quarter, 2011, depending upon when the current operator of the rig concludes its drilling operations.
Cobalt also announced an important modification of its contract with Ensco for the 8503 drilling rig. The amendment provides for a substantially reduced day rate in the event that the rig is unable to work due to continued permitting delays in the Gulf of Mexico.
Cobalt's Chairman and Chief Executive Officer, Joseph H. Bryant, said "The execution of the Ocean Confidence Rig Contract is an important step in advancing our exploration program in the deepwater offshore Angola. We worked closely with Sonangol and the Block 21/09 contractor group to design a drilling program according to acceptable safety standards. With respect to our modification of the 8503 contract, we felt it best to hedge our exposure to any further delays in recommencing our Gulf of Mexico drilling program."
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