Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Cobalt International Energy (NYSE:CIE)

Q1 2012 Earnings Call

May 01, 2012 11:00 am ET

Executives

Joseph H. Bryant - Chairman and Chief Executive Officer

John P. Wilkirson - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

James W. Farnsworth - President and Chief Exploration officer

Analysts

Evan Calio - Morgan Stanley, Research Division

Ryan Todd - Deutsche Bank AG, Research Division

Brian Singer - Goldman Sachs Group Inc., Research Division

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division

Joseph Bachmann - Howard Weil Incorporated, Research Division

Al Stanton - RBC Capital Markets, LLC, Research Division

Operator

Good day, everyone, and welcome to Cobalt International Energy's First Quarter 2012 Conference Call. Just a reminder, today's call is being recorded.

Before we get started, one housekeeping matter. This conference call includes forward-looking statements. The risks associated with forward-looking statements have been outlined in the earnings release and in Cobalt's SEC filings, and we incorporate these by reference for this call.

At this time, for opening remarks and introduction, I would like to turn the call over to the Chairman and CEO of Cobalt, Mr. Joe Bryant. Please go ahead, sir.

Joseph H. Bryant

Good morning, and thank you for joining us on Cobalt's First Quarter 2012 Earnings and Operational Update call. I'm joined on today's call by John Wilkirson, our Chief Financial Officer; and Jim Farnsworth, our Chief Exploration Officer.

I'd like to make a few brief comments before I turn the call over to John for a review of our financial results.

During the first quarter, we concentrated on 5 critical areas that we believe would deliver shareholder value. These include performing a Drill Stem Test on our Cameia #1 exploratory well; participating in the drilling of wells in both of our key deepwater geographic basins; continue our technical evaluation and maturation of additional pre-salt prospectivity in Blocks 9, 20 and 21 in Angola, Diaba and Gabon; and four, continuing our efforts to finally [ph] obtain regulatory approvals of our exploration plans and permits required to drill our Gulf of Mexico prospect inventory; and five, initiating and completing a successful follow-on stock offering, which would provide Cobalt with an even stronger balance sheet.

I'm happy to report that we've accomplished a great deal in these 5 critical areas. And we'll start off discussing our successes in West Africa.

In early February, Cobalt obtained the Drill Stem Test results from our Cameia #1 exploratory well in the deepwater offshore Angola and announced that the results were extraordinary and had exceeded Cobalt's expectations. The DST confirmed the presence of a very thick, continuous high-quality reservoir saturated with light oil.

Following the exceptional success of the Cameia #1 exploratory well, Cobalt immediately commenced drilling of the Cameia #2 appraisal well in order to further assess the size and extent of the Cameia oil discovery. In addition, the Cameia #2 well will test objectives deeper than those drilled in the Cameia #1 well. We expect to announce the results of this appraisal well later in the second quarter of this year.

Our 3D seismic acquisition and processing efforts offshore West Africa continue to go very well. Last year, Cobalt and our Block 20 partners executed an agreement with our seismic contractor to acquire and process approximately 4,200 square kilometers of 3D seismic data on Block 20. It is now a little over 6 months since our seismic contractors started shooting this survey, and the data acquisition is anticipated to be completed this week. The processing of this data has already commenced. These efforts should allow us to remain on schedule to drill the much-anticipated Lontra prospect in Block 20 in 2013.

In Block 9, we completed our 3D seismic processing efforts in March. Most significantly, the data quality is exceeding our pre-acquisition expectations. We have begun prospect maturation efforts and preliminary well planning, and we are currently targeting the drilling of the first Block 9 pre-salt exploration well of the Loengo prospect, also in 2013.

In Block 21, where Cameia is located, we are finalizing our block-wide 3D seismic reprocessing efforts and expect this work to be fully complete and in our geologists' hands by the end of May. These reprocessed data will be utilized to further mature additional prospects we see on Block 21.

We have firmed up our near-term drilling plans for offshore Angola. Today, we're able to announce that we have contracted the Ocean Confidence drilling rig for one additional slot at an attractive day rate. After the Cameia #2 appraisal drilling and testing operations are complete, we will release the Ocean Confidence to another operator, who will drill one lease-maintaining well outside of Angola. As soon as that well is complete, which we expect will be late in the third quarter or in the fourth quarter of 2012, the rig will be returned to us and we will use our one remaining slot, plus the one additional slot to drill 2 consecutive pre-salt wells offshore Angola, most likely chosen from Bicuar and North Cameia in Block 21 and Loengo in Block 9.

While securing the Ocean Confidence addresses our near-term plans, we're also currently tendering for a long-term rig solution to support our Angolan exploration and development drilling program. In addition, we're in the process of tendering for long-lead items for this drilling program.

With regard to the Diaba blocks in Gabon, the final reprocessing of the 6,000 square kilometer 3D seismic acquisition was completed at the end of last year. TOTAL, as operator, is performing detailed seismic reprocessing over the most promising prospects on the block and expects to have this work completed in June. They have contracted a drilling rig with a target to spud the first Diaba exploratory pre-salt well on either Mango or Mango South in early 2013.

In the deepwater Gulf of Mexico, Cobalt participated in the Anadarko-operated Heidelberg #3 appraisal well, and announced that the well had encountered approximately 250 net feet of oil pay in the high-quality Miocene sands. Following the success of the Heidelberg #3 well, Cobalt participated in the Heidelberg #3 sidetrack, which successfully proved up an extension of up to 1,500 acres in the 3,500-acre Heidelberg field. Anadarko, as operator, announced that the results of this sidetrack solidified the field's estimated resource range and provided support for the option of a standalone development. The Heidelberg partnership has initiated pre-FEED, which is front-end engineering and design, to evaluate development solutions with the objective of advancing commercialization of Heidelberg.

Also in the deepwater Gulf of Mexico, we commenced our first post-Macondo Cobalt-operated well soon after the Ensco 8503 drilling rig returned to the Gulf of Mexico from French Guiana.

On January 1, 2012, we spud the Ligurian #2 exploratory well on Green Canyon Block 814. The Ligurian #2 well was designed to test the northwest flank of the field discovered by Heidelberg #1 and to evaluate deeper Miocene formations. As of April 30, 2012, we had drilled through the interval discovered by the Heidelberg #1 well, but did not encounter commercial hydrocarbons. Our drilling operations continue on Ligurian #2, as we have yet to penetrate our deeper Miocene objectives. We anticipate announcing the results of the deeper Miocene test in Ligurian in May.

Cobalt's team has worked tirelessly to prepare and submit applications for the exploration plans and permits necessary to drill our wells in the Gulf of Mexico. While this process has been challenging and extremely time-consuming, we're happy to report that during the first quarter of 2012, we received approvals for both of our North Platte #1 drilling permit and our Aegean exploration plan. We are now seeking approval of the Aegean #1 well drilling permit, as well as the Ardennes exploration plan in order to ensure that we have all approvals necessary to move the Ensco 8503 rig from one well operation to the next with no costly rig standby time. After the completion of drilling activities on the Ligurian #2, we will immediately move the Ensco 8503 to our North Platte #1 exploratory well.

In addition to the Cobalt-operated drilling activity that I've discussed, we also look forward to participating in the Anadarko-operated Shenandoah #2 Lower Tertiary appraisal well, which we expect will commence early in the third quarter.

As you know, we launched our follow-on offering on February 21 and closed the transaction on February 29. We have raised an additional $490 million net of expenses in the offering. I want to thank all of the shareholders who participated in this offering, including those of you who are new shareholders of our company. This successful offering ensures that we are fully capitalized to execute our planned exploration and appraisal drilling program through the end of 2013.

We are well positioned in both West Africa and the Gulf of Mexico, where we will continue to drill our high-potential exploratory prospects and where appraisal operations are proceeding, with the expectation that appraisal results will advance our efforts to move these discovered fields to production.

Finally, I'd like to briefly discuss certain media articles on Cobalt's commitment to transparency. As I'm sure many of you are aware, Cobalt was named in a series of Financial Times articles about potential Foreign Corrupt Practices Act issues in Angola. In particular, it was alleged that certain government officials held concealed interest in Nazaki, who is our partner in Blocks 9 and 21 in Angola.

Transparency is a primary focus of Cobalt, and frankly, we cannot operate without it. We have spent significant human and financial resources to ensure that the appropriate compliance was undertaken as it relates to the contracts and agreements we have placed -- have in place with our Angolan partners.

Our compliance efforts began in 2007, long before we began operations in Angola, and long before these articles and allegations surfaced. From the beginning, our compliance efforts have been led by 2 highly respected international law firms. Our Board of Directors routinely discusses compliance matters and hears directly from our law firms. We are confident of this process, and that we have done everything we can do. In addition, we have worked closely with the U.S. Securities and Exchange Commission and the Department of Justice in responding to their inquiries to be sure that we did adhere to the appropriate regulations. Our compliance efforts never end, and we intend to continue our efforts in the same vein.

With regard to Nazaki, they were assigned to the Block 9 and 21 contractor groups by the concessionaire, Sonangol, in the same fashion, for example, as BP was assigned to the Block 20 contractor group. The Nazaki was selected by Sonangol well after Cobalt was selected to operate these blocks. I wish to clearly state that we did not select Nazaki, and Nazaki is a full paying member of the contractor group.

Our commitment to Angola is a long-term one. We are proud of what we have achieved there and look forward to continuing operations but [ph] always comply with both U.S. and Angolan law in a transparent fashion and to provide the basis for many future years of success in Angola for our company and for the people of Angola.

I will now turn the call over to John for a few words on our financial results. John?

John P. Wilkirson

Thanks, Joe. As reported in this morning's release, for the first quarter of 2012, Cobalt's net loss was $37 million, or $0.09 per basic and diluted share. Our cash expenditures excluding working capital changes for the quarter were $236 million, which includes $123 million for the year one Block 20 social bonus payment. Our balance sheet remains strong, now with over $1.8 billion, including the net proceeds from our February equity offering.

At the end of March, we had about $1.3 billion of unrestricted cash investments, plus about $550 million of funds designated for future operations that are held in escrow and collateralized letters of credit. In addition, and not reported on our balance sheet, is the joint promote funds for our Gulf of Mexico program with TOTAL of $172 million. We continue to have no debt.

For the full year, our cash expenditures forecast, excluding working capital changes, remains unchanged at $550 million to $650 million. Our estimate for the second quarter cash expenditures is $100 million to $120 million, with the primary expenditures being drilling activities, both offshore Angola and in the Gulf of Mexico.

We expect a full year 2012 earnings to align with our cash expenditures, excluding the Block 20 first year social bonus contribution that was capitalized. Of the remaining cash expenditures, the primary earnings uncertainty would be either the expenditure [indiscernible] to the capitalization or the expensing of cost following the results of individual exploration wells. In addition, we anticipate having approximately $25 million to $30 million of noncash earnings-related items spread evenly throughout the year.

I'll now turn the call back to Joe.

Joseph H. Bryant

Thanks, John, for those comments. John and I and Jim Farnsworth now look forward to any questions that you may have. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is from the line of Evan Calio of Morgan Stanley.

Evan Calio - Morgan Stanley, Research Division

On the Ocean Confidence, I understand you get a second slot on the rig and you want to give it up to another operator after Cameia appraisal for 120 days. And I -- also you comment on potentially bringing in a second rig into West Africa. And I wonder if you can just comment on the duration that you're looking to secure there. I know you clearly have a lot of potential activity, and if you could update us on when you expect to -- when you're looking to, based on your negotiations, take delivery of that second rig in West Africa.

Joseph H. Bryant

Evan, this is Joe. First of all, on the Ocean Confidence, the situation there was, as you all know, we had the rig for 4 slots. It became apparent, however, that the rig was essentially double-booked. And the operator that also had the Ocean Confidence was facing a lease expiration up the coast in West Africa. Therefore, the dilemma arose: do we give the rig up or do they lose their lease? And what we did was we negotiated what we think is a favorable rate on an incremental slot for the Ocean Confidence in exchange for turning the rig loose for a few months. We, of course, did not want to turn the rig loose. We've got a lot of prospects to drill. But we think, overall, it was a win-win solution and one that is best for Cobalt, to get that extra slot with the Ocean Confidence. Regarding a long-term rig solution for Angola, again, you're all aware of the numerous slots that we need over the next several years, both for exploration and development. We're currently out right now. Those bids are going to come back here in, probably sometime in May. We'll discuss them with our partners and the concessionaire. We're looking for a multiyear contract from those rigs. The rig market is getting pretty tight, and I think getting a rig in the first half of 2013 is less and less likely, based on how tight the market is getting. Therefore, again, that's why it made sense to do the deal with the Ocean Confidence to get it tied up until we have a much higher degree of confidence that when it sails away, we can bring in the new long-term rig for Angola. So hopefully, on the next -- on the second quarter call, I'll tell you what we did on that. But that's as much info as I have today and that I can share with you. Did that answer your questions?

Evan Calio - Morgan Stanley, Research Division

That was -- and so with the 2 slots post-Cameia, after the rig comes back and potentially the second rig, I mean, could you run me through the location sequencing? I know you mentioned Bicuar Block 9, but is that path dependent upon Cameia #2 and potentially Cameia North? Or is that how you see it now? And then in addition, I guess, what you're saying, Lontra is 2013 -- you're thinking Lontra's spud date in 2H 2013. Is that fair?

Joseph H. Bryant

I would say -- I would certainly definitely say Lontra is probably not 1Q 2013. But after 1Q, I don't know if we can get it spud in 2Q or 3Q. But rest assured, it is absolutely at the top of our list to drill as soon as we can get it ready, and our partners ready to drill as well. Of course, everybody wants to drill the well. Now with respect to what we're going to drill next, we have the luxury of having a lot of options. And as I sit here today, I think there's several options for what we do with the Ocean Confidence when it gets back to us in the late third quarter, early fourth quarter, one of which is Bicuar; another is Loengo in Block 9; another is an additional appraisal well in Cameia; and another is the North Cameia well. So all 4 of those prospects, as we sit here today, are in the bull's eye. But as we mentioned in my opening comments, we're doing a lot of seismic and geophysical processing right now, which will inform the decision of which wells we drill next and which ones come after that. So again, this is why we have a pretty deep and robust portfolio, so we're faced with making choices on which well has the most to offer our overall exploration program in the sense that they can give us the most information about Angola pre-salt.

Evan Calio - Morgan Stanley, Research Division

That's helpful. And maybe one last question, if I could, and I'll leave it to [ph] somebody else. I mean, maybe if I missed any update on Gabon exploration, either comments of third-party activity or clarity from -- on the spud date. I know TOTAL's the operator there. I'd appreciate it.

Joseph H. Bryant

Okay, I don't think there's really much to offer from an industry standpoint. I think our intelligence would be that we will -- we, being we and TOTAL, will drill the first pre-salt well in deepwater at Gabon as soon as that well is slotted into the TOTAL rig schedule. So that's our best data. I don't think there's anything I can add to that.

Operator

Our next question is from the line of Ryan Todd of Deutsche Bank.

Ryan Todd - Deutsche Bank AG, Research Division

I just wanted to follow up on Ligurian #2. Can you talk about -- I mean, based on what you've seen, I realize it's early and you're still drilling the deeper target. But when you look forward at Ligurian and the Heidelberg structure there, what do you think that well means for the go-forward plan as a whole? And in terms of the deeper target that you're looking at, how that might be related to other kind of successful deeper targets that you've seen, that you and other operators have seen in the basin?

James W. Farnsworth

This is Jim Farnsworth. I'll try to take that question. Obviously, it's still very early days, as you've mentioned. We still have the deeper targets to test. Pre-drill, certainly, we saw the upper target as being kind of the lower risk of the 2, simply because at Heidelberg, offsetting a few miles to the southeast, we had, in fact, discovered the upper Miocene sand. In terms of kind of how we define the limits of Heidelberg versus the limits of Ligurian, that's going to take some time and certainly require kind of integrating the well data, especially the deeper well data into our existing data set and frankly, likely trying to either reprocess or getting a different data set to help us clearly define the trap size and scale. In terms of what it means for our other prospects, which I think was the second part of your question, I think this is pretty much an isolated standalone prospect. It has no impact, good or bad, on other opportunities. We have seen the deeper sand in other nearby fields adjacent to Ligurian, which is why, of course, we are targeting the lower sand.

Ryan Todd - Deutsche Bank AG, Research Division

And is it Tahiti that's one of those successful deeper targets in the nearby region?

James W. Farnsworth

Yes, it is.

Ryan Todd - Deutsche Bank AG, Research Division

Okay, great. And so that we should expect to hear, I would assume, sometime later this month and then the rig will move to North Platte. Is that correct?

James W. Farnsworth

That's correct.

Operator

[Operator Instructions] Our next question is from the line of Brian Singer with Goldman Sachs.

Brian Singer - Goldman Sachs Group Inc., Research Division

In West Africa, can you just give us an update on any additional learnings based on any of the data that you've processed, either on the discovery at Cameia or any other that seismics since your earning -- I'm sorry, any other data that you've processed since your last update.

James W. Farnsworth

This is Jim again. I'll try to take that. To be honest with you, we're -- the Cameia #2 well is really going to tell us a lot, and we aren't yet in the position where we have all the data from that well. But in addition to that, we've also, of course, been going back and looking at the entire portfolio, across Block 21 especially, and further maturing prospects and trying to integrate the results of Cameia #1 into those prospects. And that's exactly the process Joe was mentioning earlier, about looking at 4, 5 or 6 different opportunities, and again reprioritizing and making sure that the next 2 wells we drill tell us as much as possible about both the pre-salt play, but also test sizeable volumes in both those wells. So I think in another few months, after Cameia #2's down, we feel that we'll have a better conversation about what it is we've learned and what it means for the portfolio.

Brian Singer - Goldman Sachs Group Inc., Research Division

Great. And is there anything that you've seen from other industry data that is giving you more confidence in the area around Loengo prospect or any -- or any new prospects on that block?

James W. Farnsworth

Well, there really isn't any other industry activity very close to us, with the exception of in Block 26, where Petrobras is drilling a well, pre-salt well. But again, we have no knowledge of what they've found or not found yet. So we can't -- we don't have anything really to work with yet. Most of the data that's going to be gathered over the next couple of years is going to be gathered by Cobalt.

Operator

Our next question is from the line of Brad Pattarozzi with Tudor, Pickering, Holt.

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Can you tell me what the current depth of Cameia #2 is?

Joseph H. Bryant

Brad, I'm sorry, I missed...

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

The current depth of Cameia #2?

Joseph H. Bryant

Current depth? No, we're not sharing that data. We're currently drilling as planned. And what we've always said is we'll share the results as soon as we get them. And I think our track record is proof of that. So soon as we have something to share, we'll share it. But as I've always said, we'll share it in the second quarter, and things are going according to plan and I hope we'll be able to do that.

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Okay. Can you talk a little bit more about what you're trying to determine, testing at Diaba pre-salt potential compared to what you saw with Cameia #1? What are you looking for? What are you hoping to gain in relation, or in different -- that would be different from Cameia #1?

Joseph H. Bryant

This is Joe. I'll take a stab at that. So when we drilled Cameia #1, we actually had 2 separate reservoirs targeted in that well. One was what we call the mound, and 2 is the deeper target. And because of the quantity of pay that we found in what we call the mound, we never got to that deeper target. So Cameia #2's trying to do 2 things. One, it will test the lateral extent of the mound discovery that we made, and will be the first penetration into the deeper zones in that basin, really.

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Okay. Then if -- post-Cameia #2, you've talked about potentially Cameia #3 going on from there. What will be the goals going forward? Just further aerial extent? Or what will be the thought process?

Joseph H. Bryant

Again, if you look at the size of Cameia aerially, it's a very, very large prospect. And so for a prospect of that size, if we continue to have success in Cameia #2, it would be natural that we would drill additional appraisal wells to again delineate the structure in multiple directions to understand the overall size of the accumulation. So when we do that, we're trying to really do 2 things: one, understand the aerial extent of the oil accumulation; and two, we're trying to understand the quality of the pay or the pay distribution throughout the field.

Brad Pattarozzi - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division

Okay. And in terms of timing, you've got a number of prospects. In terms of drilling Cameia 3, potentially where would that fall from the standpoint of timing versus other prospects? Or is that just something you need to determine after Cameia #2 is done?

Joseph H. Bryant

That's what I was referring to earlier, is that depending upon results of Cameia #2 and the other prospects we have, which would include Bicuar, Loengo, North Cameia, we'll integrate all of that data and then decide what well we drill with each of those 2 slots that are left on the Ocean Confidence. And then hopefully, by that time, we'll have line of sight to the additional long-term rig for Angola and have a more robust conversation about how all these prospects will be drilled over the coming years.

Operator

Our next question is coming from the line of Mike Scialla with Stifel, Nicolaus.

Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division

I want to follow up on the Ligurian #2. Did that well see both of the sands, those upper sands in the Miocene that were found at Heidelberg, or just one?

Joseph H. Bryant

It drilled through the section of both of those sands. But not the deeper sand, which was the secondary target.

Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division

Right. And can you say where those 2 upper sands came in structurally, compared to what you were predicting?

Joseph H. Bryant

That's really confidential data at this point. So no, I can't.

Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division

Understood, okay. Any bearing on what you've seen with those up ones on -- does it change your outlook for the deeper prospect at this point?

Joseph H. Bryant

No, not really. They're really independent, in terms of kind of the risk profile and so far, haven't seen anything that would really substantially change them.

Michael Scialla - Stifel, Nicolaus & Co., Inc., Research Division

Okay. And then just a last one. Any thoughts on selling down in Angola?

Joseph H. Bryant

Well, we talk about that a lot. We get that question an awful lot. The real issue there, as we've said before, is that it's difficult because of the size of these blocks, which are several hundred Gulf of Mexico blocks. If you sell down, you're selling down in the entire block, not in a prospect. And so of course, based on our success rate thus far in Block 21, we can't see selling down in the block for what would essentially be probably a simple well promote on a future well. So we talk about that a lot. We think about it, but we just can't get there economically at this point.

Operator

Our next question is from the line of Jeb Bachmann of Howard Weil.

Joseph Bachmann - Howard Weil Incorporated, Research Division

Just had a couple quick ones. First, with the data you've picked up on Cameia, any idea when we could see a new DNN report that goes over all the hydrocarbon recovery yields, all those kind of data points for the areas?

John P. Wilkirson

This is John Wilkirson. At this point, we don't have anything planned, but we'll be looking through that once we get the wells drilled. There's nothing planned at this point.

Joseph Bachmann - Howard Weil Incorporated, Research Division

Okay. And then last one for me, do you guys anticipate being active in upcoming lease sale in June this year?

Joseph H. Bryant

We're always looking at lease sales, trying to understand how the available acreage would fit into our portfolio and our data. So that's just something that, if you're in exploration, you're always looking at.

Operator

Our next question is from Al Stanton of RBC Capital Markets.

Al Stanton - RBC Capital Markets, LLC, Research Division

I think I'm going to test your patience on the rig discussion for West Africa, but it's really about can you work in partnership with anyone else in Angola to secure rigs for the periods you need, because I'm interested to know whether you have the confidence to just put your head down and drill well after well after well or, as we've seen with some other people, particularly in East Africa, you drill 2 or 3 wells and then pause for breath, and then drill a couple more. And I suppose the final bit to that is, if actually we're going to plot the drilling schedule for exploration, should we do what you've done to-date, and that is one exploration well, one or 2 appraisal wells; one exploration well, one or 2 appraisal wells. And in fact, the drilling schedule for exploration gets drawn out over quite a few years, perhaps twice as long as we're currently assuming.

Joseph H. Bryant

If I understand your question, do we -- is our intention to take a rig contract under long-term plan to drill up our portfolio. That is currently our intention. Of course, the issue is, when you have success, you have really 2 challenges: one, you're trying to appraise the discovery you've made; and at the same time, you're trying to integrate that data into the rest of your portfolio. So very seldom is it as simple as just saying, I'm going to put my head down and drill exploration wells. It's always, what do I do with the rig I have to create the most shareholder value? So our intention today is to take a rig under a long-term contract and endeavor to have a continuous drilling program. That doesn't mean that will be continuous exploration drilling, but it doesn't mean that it won't. It means that once you get the infrastructure established in a place like Angola, you just need to keep drilling. You need to get the same rig on the payroll. Everybody gets used to the rig and working with each other, and that's how you can get things done most efficiently and most safely. So that's our intention. But let me answer what --I think you had another line of questioning: would we consider partnering with other people for a long-term rig in Angola or West Africa? And we are in conversations almost routinely with other operators to pick up rigs that we can rig-share with, if that's our best option. As a matter of fact, that's the Ocean Confidence, was we took that rig on a sub-let from another operator. So we do all of the above, and we make the decision on the day that's best for the shareholders and best for our operational people.

Okay. There are no more questions in the queue. I might just wrap it up there. As I've said earlier, we've accomplished a great number of things in the first quarter. We're extremely pleased with the Cameia well results. We look forward to announcing Cameia #2 here in the second quarter. Again, we're pleased with the results from Heidelberg. We're obviously disappointed with the result that we've seen thus far in Ligurian. We're not giving up there. We look forward to seeing what those deeper sands have to offer, and we'll let you know what they do offer as soon as we have those results. We do continue to have confidence in the prospectivity of the Gulf of Mexico in general and our portfolio there. And we certainly have a lot of confidence in our West African asset base.

So let me again thank all of you for your interest and your confidence in Cobalt. If you have any follow-up questions, please don't hesitate to get in touch with John or Rich Smith, they're -- or myself. We're available at any time. So thanks, everybody. Have a good day.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Cobalt International Energy's CEO Discusses Q1 2012 Results - Earnings Call Transcript
This Transcript
All Transcripts