Greetings. Welcome to Kosmos Energy second quarter 2019 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If there is anyone to require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Jamie Buckland. Thank you. You may begin.
Thank you, operator, and thanks to you all for joining us today. This morning, we issued our second quarter earnings release and a slide presentation to accompany today's call. Both materials are available on the investors page of the kosmosenergy.com website. We anticipate filing our 10-Q for the quarter with the SEC later today. Joining me on the call today to go through the materials are Andy Inglis, Chairman and Chief Executive Officer, and Thomas Chambers, Chief Financial Officer. Before we get started, I'd like to mention that this conference call includes certain forward-looking statements based on our current expectations. The risks associated with forward-looking statements have been outlined in the earnings release and in our SEC filings. We may also refer to certain non-GAAP financial measures in our discussion.
A management believes such measures are important in looking at the company's historical and future performance, and these are commonly referred to industry metrics. These measures are provided in addition to and should be read in conjunction with the information contained in our financial statements prepared in accordance with GAAP and included in our SEC filings. At this time, I'll turn the call over to Andy.
Thanks, Jamie, and good morning, everyone. I'd like to start the call by reinforcing the key characteristics that define Kosmos' unique investment proposition. They are consistent with the themes we outlined at our capital markets day in February. First, Kosmos's business model is highly cash generative. In the second quarter, we delivered approximately $136 million of free cash flow. We're on track to deliver over $200 million in 2019 at current prices. Our third year in a row of positive free cash flow. For context, in 2019, this represents a free cash flow yield of around 10%, which is very competitive compared to other E&P companies, and indeed, other sectors. Second, our infrastructure-led exploration, or ILX program, is working.
The Gladden Deep well brought the first success in the second quarter. Through the rest of the year, we expect to drill four ILX wells in the GoM and EG, targeting a total net resource of around 125 million barrels oil equivalent. Third, we continue to add value to our Mauritania and Senegal asset base. Our recent appraisal drilling further expanded the resource at Tortue. We continue to make good progress with the sell down of our positions around 10%. The scale and quality of the assets have led to significant industry interest. The process remains on track. Fourth, creating transformational value through basin opening exploration remains a key part of our business. We have a deep, diverse portfolio of oil and gas opportunities, which we will continue to mature high-grade and test.
Later this year, we'll drill the Orca well in Mauritania and expect to drill two basin opening tests per year from 2020 onwards. Finally, our conservative approach to managing the balance sheet has not changed. In April, we opportunistically refinanced our bonds that were due in 2021, pushing out the maturity until 2026. Balance sheet strength continues to be a strategic asset of Kosmos. Turning to slide three, I'd now like to discuss the second quarter. Kosmos had record production during the quarter with our entitlement share averaging approximately 71,000 barrels of oil equivalent per day. In Ghana, second quarter gross production averaged 97,000 barrel of oil per day at Jubilee and 59,000 at TEN, resulting in the planned two cargos from Jubilee and one from TEN. At Jubilee, the partnership is planning to accelerate the gas enhancement projects into the fourth quarter of this year.
Implementation of these enhancements should increase gas handling capacity to above 180 million standard cubic feet per day, thereby allowing oil production to increase in the fourth quarter and into 2020. At TEN, as the operator previously reported, completion problems were experienced at the EN-14 well due to mechanical issues, resulting in the well not being completed. In addition, there is the potential for two other TEN wells to be deferred. These mechanical issues and the potential deferral of TEN drilling has reduced our full-year expectations for the field, and we now expect to lift four cargos from TEN, down from the previous expectation of five. As a result, we now expect production for 2019 at the corporate level to be the low end of our guidance range.
In the Gulf of Mexico, our assets continue to exceed expectations, beating the high end of our guidance range for the second quarter in a row. The 26,400 barrels of oil equivalent per day net average daily production in the second quarter was a record for the GoM business unit, demonstrating the growth in the business since acquiring DGE last year. The quarter-on-quarter increase was primarily driven by increased production at Oddjob, where we are able to take advantage of spare capacity aboard Delta House and the Tornado field coming back online after its planned dry dock in 1Q. Performance in Equatorial Guinea during the quarter was in line with expectations. Our electrical submersible pump or ESP program is ongoing with two further ESP installations this quarter.
In addition, a stimulation program in Okume has recently begun, and a facilities upgrade program is currently underway to enhance the Okume facilities in support of the 2020 and 2021 ESP program. These are low-cost, rapid payback projects, and the 2019 ESP program has delivered cash payback in excess of 120% of invested capital in just seven months. This strong production performance translated into approximately $136 million of free cash flow during the quarter. We remain on track to exceed our $200 million free cash flow forecast at current prices for the full year. Finally, we paid a $0.045 dividend during the quarter and announced our third quarter dividend today, payable in late September. At $0.18 for the year, this equates to a yield of around 3% at today's share price.
Turning to Slide four, as I mentioned in my opening remarks, our ILX program is off to a great start, and we expect first oil from Gladden Deep around six months from discovery. Our inventory of high-quality prospects in the GoM was broadened through our participation in the March lease sale. During the second quarter, Kosmos was awarded all nine leases where we were apparent high bidder. With these new awards, we now have approximately 80 blocks in total with over 30 prospects, equivalent to more than five years of future drilling activity. In the second half, we have an active ILX drilling program in the GoM and plan to drill three of these prospects, which I'll talk about in a minute. In Equatorial Guinea, we're planning to drill our first well targeting the G13 prospect.
We have now contracted the rig to drill this well, which is expected to spud late in the third quarter. In Mauritania and Senegal, phase one of the Greater Tortue Ahmeyim project remains on track following FID in December. Pre-feed work on phases 2 and 3 is ongoing, and recent drilling results have further expanded our significant resource base at Greater Tortue Ahmeyim. The sell-down process we announced in February is progressing well. This world-class resource base has garnered significant industry interest, and we expect to announce a transaction by year-end. Turning to Slide 5. This slide shows our infrastructure-led exploration program in action. Gladden Deep may be the smallest of our 2019 prospects, but it's still meaningful and demonstrates the speed to first production and cash flow contribution of our growing ILX portfolio.
We expect to deliver incremental net production to Kosmos of approximately 1,100 barrels oil equivalent per day around six months from discovery. The economics of the well are very attractive. At $60 Brent and with a $10.50 per barrel F&D cost and $7.30 per barrel lifting cost, the well has a full cycle IRR of around 70%, with payback expected in around 14 months from first oil. Opportunities like Gladden Deep are precisely why we entered the Gulf of Mexico, and we look forward to more success as we ramp up activity in the second half. Slide six shows this activity in more detail. We plan to spud Moneypenny and Resolution in October, followed by Oldfield in November. In total, these three wells will tax approximately 100 million barrels of net oil resource greater than our current 80 million barrel oil equivalent 2P reserve base in the GoM.
Success at any of these wells would be meaningful. Interestingly, on Oldfield specifically, we're in the process of finalizing a cross assignment of our interests with Hess on the adjacent block, with Kosmos taking a 40% interest in the two blocks and Hess 60%. As a result of new seismic data that Hess has processed in the area, we now believe that there could be significant upside to the 30 million barrel oil equivalent we initially talked about. Oldfield is another example of Kosmos's strong license to operate within the Gulf of Mexico, often with much larger players like Hess and BP. With Oldfield, we plan to operate the prospect on behalf of Hess during exploration and the initial development phase. One important point to note, each of these three prospects is located near existing infrastructure, which has available capacity.
If successful, the discoveries can be brought online quickly. The wells have an average F&D cost of around $12 per barrel and an average lifting cost of around $6 per barrel. With oil prices of only $60 per barrel Brent, generate average full cycle IRRs around 50%. There's a lot of oil yet to be found in the Deepwater GoM and an abundance of underutilized infrastructure. As I've said in previous presentations, I don't believe there's ever been a better time to be active in the GoM. We plan to take advantage of this attractive backdrop and a growing opportunity set by drilling four to five ILX wells a year, targeting 65 million barrels oil equivalent-100 million barrels oil equivalent of unrisked net resource each year. Turning to slide seven, I'd like to discuss another ILX opportunity, this time in the G13 area in Equatorial Guinea.
This is a unique opportunity around a legacy discovery. The G13 field includes four previously drilled wells, three of which were successful. The wells drilled to date have proved up around 25 million barrels of oil equivalent with a 500-meter oil column. Today, we have a calibrated well database, and in 2018, we acquired a new seismic survey. The previous wells were drilled off a 1999 vintage seismic survey. The new survey has given us a much clearer image of the depositional system that delivered reservoir sand into the prospect area. This better resolution has enhanced our understanding of the trap model. The new information has been key in identifying that the previous wells were drilled on what we now believe to be the edge of the main reservoir channel, providing considerable upside to the discovery.
This, together with the stratigraphic element, increases the resource potential to around 200 million barrels gross for the field. The first well will test around 50 million barrels gross and expected to spud in the third quarter. Slide eight shows the significant progress we continue to make in Mauritania and Senegal. With our partners, we're building a major LNG business across the basin. With 50 to 100 TCF of gas initially in place, we believe we have enough gas to underpin three separate 10-million-ton per annum LNG hubs. The innovative development scheme we're using at Greater Tortue Ahmeyim can be replicated for the other two hubs, BirAllah and Yakaar-Teranga, using a design-once-build-many approach. Our exploration and appraisal activities this year are therefore focused on, first, expanding our resource base at Greater Tortue Ahmeyim, which we've done with a successful GTA-1 appraisal well.
Second, defining the development area and securing a second LNG hub at Yakaar in Senegal, where an appraisal well is planned to spud next month after the rig completes some BOP and riser maintenance. Third, underpinning the next LNG hub in Mauritania at Barela, which we hope to do with the Orca well, which we expect to spud in October. As I said in my opening remarks, the sell-down process we announced in February is progressing well, and we expect to announce a transaction by year-end. Turning to slide nine, I'd like to highlight the substantial change in our shareholder base over the last two years, a shift that mirrors the rapid evolution of our business over the same period. In June, Blackstone sold their remaining position in Kosmos. Blackstone was one of two founding shareholders.
Post their exit, and that of Warburg Pincus earlier this year, we now have almost 100% free float, and any private equity shareholding overhang is all but gone. Today, we have a more diverse, broader set of public equity investors. With that enhanced float, U.S. assets, and a U.S. domicile, we believe Kosmos should soon be eligible for more meaningful index inclusion with the benefits that will bring to our shareholder base. We've included the guidance for the third quarter and full year in an appendix to the presentation, and we encourage you to look at that when modeling the business for the rest of the year. Turning to the final slide. In summary, 2Q was a record quarter for Kosmos, with production and EBITDAX both over 50% higher compared to the same quarter last year.
This significant growth over the last 12 months has been done with only a modest increase in leverage, perhaps most importantly for our shareholders, with minimal dilution. With the company's strong cash generation, we expect leverage to move towards our target range of one times to one and a half times. We look forward to a very busy second half that is full of exciting catalysts, many of which could be transformational for the company. Thank you. I'd now like to turn the call over to the operator to open the session for questions.
Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from David Round with BMO Capital Markets. Please proceed with your question.
Morning, Andy. Just a couple from me. The first one on Ghana. Are you able to add any further detail on drilling plans there? I'm thinking particularly at 10 following the 14 well. How do you currently see the schedule for the rest of the year and into 2020? The second question, in the Gulf of Mexico, obviously quite a strong quarter, and you've now added Gladden Deep, which looks like it's going to contribute this year. How do we think about production in the second half, and what's your confidence around the full-year guidance there?
Okay, yeah. Thanks, David. I think on Ghana, it'd be good to give you a sort of a full view of what we think the second half could look like. We're obviously disappointed that we couldn't complete the EN-14 well, and we support the operator's decision to take a timeout. There previously have been problems on the prior well, EN-10, where that completion was delayed by a month. I think taking a timeout on 10 is actually the right thing to do. We need to come back with a plan for EN-14, what's the right remediation. I think we also need to come back with an appropriate design for drilling and completing that we're confident can be delivered on time, on budget. I think it's important to emphasize on 10 this is an operational issue, nothing to do with the reservoir. The reserves are there.
We just need to make sure we can get at them in a cost-effective way. What it actually means, I think, from our perspective, is the rig will work on Jubilee for the rest of the year. We're about, I think, to start up a producer on Jubilee, J-23. I think there's some maintenance then, planned maintenance on the rig. Then I think there's a series of re-completions that would take you through to the end of the year. The combination of that additional well capacity at Jubilee together with the increase in the gas throughput on Jubilee to above 180 million standard cubic feet should give us a sort of strong production on Jubilee and a good exit rate for Jubilee for the year-end and into 2020. Clearly from a Kosmos perspective, that's important.
We have a larger share in Jubilee than we do in 10. It's important that we maintain a strong production base in Jubilee. I think that's sort of the Ghana story. In Ghana, yeah, we're very pleased. The business has outperformed our expectations. Outperformed our expectations, obviously, when we made the acquisition. It was a record quarter in production. Through the year-end, we've got two more wells starting up, Gladden Deep, Nearly Headless Nick, which means that we should exit the Gulf with a strong exit rate in 4Q. I think that the Gulf has been a strong performance, and has obviously contributed to mitigating some of the impact of 10. I genuinely feel pleased about the business we're building there from all dimensions. It's a great team.
We've managed to seize on, I think, the opportunity to get into some great prospects through the licensing round and through deals that we've done with some of the larger companies, brought the Kosmos brand to build. As I said in my remarks, we've got a five-year drilling inventory built up, which is pretty neat given the acquisition is less than a year through. It's been a strong start from all dimensions in the Gulf.
Great. That's really helpful. Thanks, Andy.
Great, thanks.
Our next question is from James Carmichael with Macquarie Group. Please proceed with your question.
Hi, good morning, Andy. Just one quickly on the Gulf of Mexico. Just interested in what scale of resource you think you need to discover at Resolution to ensure that is a new production hub rather than sort of simply tying it back to the Gunnison spar. Also just in the event that that Resolution well doesn't work, would you still consider the Gatlinburg and Sioux Falls, et cetera, as drillable targets further in the future? Thanks.
Good questions, James. I think it's important to look at the standalone versus a new build. Sorry, a standalone new build versus Gunnison, I think is something that could be pursued almost irrespective of the scale. The Gunnison spar would be an opportunity for us to use existing infrastructure. I believe it would have the capacity, even with sort of full success at Resolution and the surrounding prospects came in. I don't think it's a scale thing. I think it's ultimately around what is the most economic decision, full life economic decision in terms of utilizing Gunnison, potentially debottlenecking it, or is it about bringing in a new build? The good news is we've got optionality there. We could go either route, and I think both are valid today. Resolution, we have at around 150 million barrels.
The surrounding prospectivity, we could have up to sort of half a billion barrels gross. This is a significant opportunity for us. If Resolution were not a success, I think it's about individual prospects. It will not be about the area itself. Obviously in the Gulf of Mexico, it will probably be around trap, and therefore faults, et cetera, the ongoing prospectivity is still valid. We like the area. We like the scale. We like the ability, with success, to be able to move forward with development quickly. That, to me, is the thing that distinguishes the economics in the Gulf of Mexico. It's the time to production ultimately, which is driving the high IRRs, and we would want to retain that optionality with success on resolution.
Very helpful. Thanks a lot.
Great. Thanks, James.
Our next question is from Richard Tullis with Capital One. Please proceed.
Hey, thanks. Good morning, Andy. Congrats on a nice quarter. Looking at the LNG Tortue sell down process, are bids still expected late summer at this point?
Yeah, Richard, actually it's been a busy couple of months, I'd say, on Mauritania and Senegal and the sell down process. We announced it obviously in May, set up the data room, and the level of interest in the industry has been significant, which is a plus and a minus. It means there's lots of people going through the data room, lots of management presentations to work, and that's a process that we've been working on. We've had interest from IOCs, NOCs, trading houses. It's been interesting to me to see the diversity of the strategic interest in the assets, and I think that, to me, is the real driver. The importance of gas. Actually, gas as a transition fuel. People's portfolios not being balanced. How do they get access to it? Those have been the conversations that we've been in.
We're working our way through that process. We're on track to get it all done, therefore we sort of remain on track to have, we hope, a transaction that we can announce by the end of the year. A lot of work being done and a lot of work to be done. The level of interest that we've had in the process has really been strong, therefore, we're hopeful that by year-end, we will have a transaction that we can announce.
That's helpful. When you look at a potential transaction, what sort of structure could it take? Would you be looking for mostly cash in a deal? What would the parameters look like?
Yeah. Look, and I think it's early days to talk about that, and I think, hopefully, you'll respect my position, which is to say, look, this is a competitive process. Different people will have different views, and then therefore, will put different value on different aspects of it. I think it's too early to say exactly how we're going to structure the deal. I think that you're right to push the fact that we believe with a discovered resource that is in place, a project that is moving forward, phase 1, phase 2 and 3 in Tortue. A strong cash element is an important part of the bid. I think that's clear that that's an important part of the transaction for us. Equally while, there are some pieces that are not fully described today.
I think there is significant upside to the resource base in Mauritania, for instance. How do we capture that? There are mechanisms in which we can do that. I think you're right to look at it as being a combination, but I think that things moved when we FID-ed in December. We have a real project moving forward with real value, real cash flows underpinned by resource with an appraisal well on Greater Tortue Ahmeyim that underpin that resource. I think the cash element of that is an important part of the transaction.
That's also helpful, I do appreciate the sensitivity there. Just lastly, how much shut downtime do you have factored into the Gulf of Mexico third quarter guidance range?
We have sufficient. Just to give you an indication, let's say Barry. The impact of Barry on a full year basis was 400 barrels of oil per day. Yeah. We have built in that, plus another event of a similar size. I think we're well covered in terms of the impact from hurricanes.
All right, Andy. Well, that's all from me. Thanks so much.
Great, thanks.
Our next question is from Neil Mehta with Goldman Sachs. Please proceed.
Hey, thank you very much. I guess the first question is, you're getting to a period, even at a lower oil price environment, where we see a substantial amount of free cash flow generation in the model. Maybe spend some time talking about allocation of that free cash flow and how much you want to return to shareholders versus reinvest in the business.
Yeah. Thanks, Neil. I think we've been clear on this, I think at the Capital Markets Day, and I think we're clear on following through on that plan. I think first off, it's good for you to recognize the strong free cash flow from the company, which I think is distinctive, and it's something that we're absolutely focused on. That's what Tom and I are primarily focused on, is ensuring that we deliver on that. It's good to see 2Q come through strongly. We're paying a dividend. We've announced the $0.18 per year. We've sort of announced that it would grow in line with the growth in the business. I think we've been clear about the return of cash to shareholders through the dividend. I think the next track then for the cash delivery will be to bring the leverage down into our target range.
We're sitting, as we showed on the view graph, around on a sort of backward-looking basis, around 2. Our objective at year-end is to get to the 1 to 1.5. Sorry, by year-end, to get to 1.7 to 1.8 on a journey to get to 1 to 1.5. The balance sheet strength has been a distinctive part of Kosmos's strategy. It's allowed us to be opportunistic when opportunities have made themselves available. I think, looking forward, Neil, I think there will be opportunities from the organic success that we have. We've talked about the drill out in the Gulf of Mexico. Success across all three of those prospects is significant in terms of the opportunities it'll present the business. Clearly, we have been opportunistic around inorganic opportunities.
I think, to us, the first thing is confidently underpin the dividend and confidently bring the debt down into the target range of one to one and a half. On current prices, excluding any proceeds in Mauritania Senegal, where we're going to be at 1.7-1.8 by year-end.
I appreciate that. The follow-up question is this BBC Panorama story on Senegal. I think you guys have been very public, as well as BP in your response to it. Can you frame out that risk for investors who are on the call? Because it is something that does come up, and by virtue of you showing conviction around the Tortue asset sale, I would imagine that you feel like that's still on course and won't be disrupted from these headlines. I want to give you a forum to respond.
Yeah. Look, Neil, I appreciate you asking the question. I think, we were very clear in our response to the program. We feel it is an inaccurate and misleading portrayal of our business in Senegal. BP has been equally clear and so has the government of Senegal. As far as the government of Senegal is concerned, they're very focused on the governance of the sector, which Kosmos fully supports. They've recently been very clear, through COS-PETROGAZ, the entity which governs the sector, that there's absolutely no intention to question the licenses that have been issued to Kosmos or BP. In fact, the government is very much focused on ensuring that the project moves forward. That is the most important thing that we talk to with potential buyers as they come into the data room, is that the project is absolutely proceeding as planned.
The progress made on phase 1 in terms of contracts being let, steel being cut, and that propagation occurring. The pre-feed work that's occurring on phases 2 and 3. Nothing has changed.
Appreciate it, guys.
Our next question is from Bob Brackett with AllianceBernstein. Please proceed.
Question around Equatorial Guinea and specifically slide seven. I guess I'll start fairly specifically. That fault block that you're targeting for S5, is the 50-million barrel target all within that fairway in that fault block?
Yes.
Going broader, I'll see what I'll get away with. I see a number of both penetrated and unpenetrated fault blocks, and I see two fairways. One question would be, what color on that chart represents lowest known oil, and how prospective do you think those two fairways are? If S5 is successful, what's the sort of scale of the follow-on opportunity?
I think, good questions, Bob. I think if S5 is successful, where we would go next is up dip. We haven't got a cross-section for you. If you went up dip, which is going to the east on that map. The resource upside would come in from that up dip stratigraphic trap. That's where the new seismic data has actually allowed us to see additional resource.
That unpenetrated fault block east of the G13-2, is that prospective?
Yes, it is.
Okay, great. Thanks for the call.
Yeah. Look, good call, good questions, right? I think we're targeting the first well on what we believe is the lowest risk compartment, which is where the S5 well has been targeted. I think the success there allows us to have a tieback, which is economic. From there, with that in place, we can then test the up dip resource, which would add significant additional volume. I think the other thing is to sort of recognize, as I said in my remarks, that the original wells were drilled off a seismic that was 20 years old. Actually 20 years old, yeah. The step change in quality is huge. We have the ability to image it a lot better.
Clearly, one of the reasons why this wasn't pursued in those days by Hess, and actually, our team in the Triton days were involved in that handover with Hess, was because the facilities were full at Sabre and Acumen. There wasn't the space. I think this is going to be interesting, and I think there are other opportunities of a similar ilk that we're starting to define now on the back of the enhanced data set.
Sorry to pester with one final one. What do you think the economic cutoff is for a viable tieback in terms of reserves?
It's around that 50 million barrel mark.
Okay.
It's around the $50 million barrel mark. It's a good question, Bob. We haven't been out to bid, et cetera, but in terms of where we are, of all the pre-feed work that we've done, we would say it's around that $50 million barrel mark.
Great. Thanks again.
Great. Thanks.
Our next question is from Al Stanton with RBC Capital Markets. Please proceed with your question.
Yes. Good afternoon, guys. It's a very quick question on Gulf of Mexico. You mentioned a number of times, I think, that you've got an inventory of drilling targets for the next five or six years. Does that mean your plate is full with respect to exploration and any new additions we should anticipate in the Gulf of Mexico, very much focused on adding reserves production and cash flow inorganically?
Great question, Al. I think we're in an enviable position. I think we've built a really strong portfolio of opportunities with access at really low cost. I couldn't be more pleased at the way in which we took advantage, I think, of a real lull in the Gulf of Mexico, to do that. It's interesting to see almost post the acquisition, sort of more interest now in the deep water. I think we timed it really well. I actually think there will be inorganic opportunities that will come up. I think the majors are constantly reevaluating their portfolios. I think the simple answer is to say anything that we add has to compete with the inorganic returns. I think we've demonstrated that those inorganic returns are pretty good. We have choices, and it's great to have choices.
I believe we're not driven to do anything from an inorganic perspective. We will obviously look at things, and if we believe that any new addition can match the high quality that we have internally, then obviously we would look at it. I think it's great to have built that foundation now. I think it's going to be interesting times in the Gulf of Mexico, but I think discipline is hugely important. I think we've demonstrated that discipline through our initial ownership and growth in the Gulf.
Okay. Thank you.
Good. All right. Thanks.
Our next question is from Pavel Molchanov with Raymond James. Please proceed.
Thanks for taking the question. It so happens that this year, your drilling schedule, just for the company as a whole, is very back-end weighted with, I think, four prospects between September and November, or something like that. Are you going to be sustaining that pace of exploration activity into 2020, or is it just a coincidence that Q4 of 2019 has such a large number of exploration prospects?
Yeah. No, good question, Pavel. Yeah. It's a little bit of it. It's just that obviously, if you think of it, three of the five are Gulf of Mexico, yeah. Actually, they are three operated wells in the Gulf of Mexico. It's really post the acquisition of DG, building the portfolio, high-grading it, making sure we're drilling the right things, getting access to the resolution hub with BP, access actually, and sort of progressing the equity conversations with Hess on Oldfield. Moneypenny was sort of always in the program where it was. Actually, the two operated wells required us to sort of get those deals done, then get the rigs. The other point to mention is we use rigs of opportunity so that we can get very good rig rates. We're not locked into a program, actually, of having to drive a rig.
I think this is a feature of the spool up, post the acquisition of DG. Now, once we've clearly, as I described, got four or five very strong prospects outlined for 2020 in the Gulf of Mexico. What you will see is a more ratable program. Then what follow on in EG will depend on success in EG 13 RS-5. Then, we will time the basin opening wells, As the data matures. The answer is, you're going to see a more ratable drilling program through 2020 and 2021, built off the back of a more ratable program in the Gulf of Mexico.
Okay, that's helpful. Back to the cash flow allocation question. If we just look at your Q2 numbers and annualize with Brent in the 60s, your stock's trading at around three times cash flow from operations. Obviously, pretty low multiple by anybody's standards. I'm curious what your thoughts are on share buyback as an opportunity to perhaps balance that out with de-leveraging.
Yeah. We have used share buybacks in the past. We obviously used stock to proportion of the acquisition of DGE, and we bought that back at, Tom, what? A 40% discount. Actually, to address the dilution in that deal. As we talked about, we've grown the company by over 50% EBITDA production quarter 2019 versus 2018, 2Q with minimal dilution. We've used it opportunistically in that way. Yes, it remains an option, and I'm not going to rule it out, Pavel. It remains an option. I think we've been clear. Dividend, get the debt in the right place, and then it remains an option, I think, after that. We don't rule it out. We've clearly used it in the past. I think, depending on the share price performance, it remains an option. Tom, would you like to add anything?
No, I think that kind of summarizes, Andy, from where we stand.
Yeah. We're clear the balance sheet strength for us is something that has been good for Kosmos since we went public. It's helped us, I think, distinguish ourselves in the sector, and that's our dividend balance sheet strength. Then share buybacks would be an option.
All right. Appreciate it.
Thanks.
Our next question is from James Hosie with Barclays. Please proceed.
Hi there. Good morning, good afternoon, depending where you are. I guess firstly, on the Senegal Mauritania divestment, I was just wondering the extent of which you feel the drilling activity you're planning there for H2 could meaningfully impact the sales process?
Yeah, good question, James. I think we've been careful in our remarks that we anticipate having the Orca result before we would announce a transaction. That's sort of what we believe would be the outcome. Clearly, if things were to accelerate, there are commercial mechanisms in which you can cope with that. It doesn't become a rate determining step. It's simply one that we can accommodate.
Okay. Is it possible that you could see the timing of the announcement slip into next year just on the timing of activity?
No. We'll know the Orca result this year.
Okay. A second question I had on Jubilee and the gas throughput enhancement plans. Can you give us some color on the scale of the uplift oil production capacity at Jubilee you expect to achieve from that?
Yeah. I don't want to get too much into the engineering. Today, the gas handling on Jubilee is constrained to around 160-165. It's in that zone. We would hope to, through the bottleneck, get to 180-185. Then actually, the uplift you get on the oil side will depend on the marginal GOR of a well. It's sort of 10,000 barrels a day of oil production if you saw that increase.
Okay. Thanks very much for that.
From existing wells. It's not new wells being brought on from existing wells. It's material. The most important part is it sort of helps you going forward. It's a constant brick that you get rather than it be one that's sort of on decline.
Great. Very clear. Thank you.
All right. Thanks.
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