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Cape Town — Africa's upstream industry has learned from the recent oil price slump and is now better positioned to take advantage of the improved sentiment, Tracey Henderson, senior vice president of exploration at Kosmos Energy, said Thursday.

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"I would say within the last eight to 10 months the buzz is definitely back and there is a sense of optimism that hadn't been there since the downturn," Henderson told S&P Global Platts in an interview on the sidelines of Africa Oil Week in Cape Town.

Henderson noted that there had been a clear pickup in deepwater activity and a flurry of oil majors had entered into the lucrative Senegal and Mauritania oil and natural gas basin. The two countries are a big focus for Dallas-based Kosmos. But she conceded that oil explorers are treading carefully with smart plays.

"People aren't jumping off the deep end just because something has got a bit of a buzz," Henderson said.

The shift has moved from focusing not just on the growth and exploration portfolio but also on the value of returns.

"There is still enough capital discipline from oil companies right now," Henderson said. "There is a belief that we have stabilized, but nobody is completely confident you won't see oil at $60/b or $55/b again in the next two years so then the physical terms become incredibly important."

Along with partner BP, Kosmos is on track to take the final investment decision for the West African Tortue LNG project by the end of 2018.

"I would say Mauritania and Senegal is a great example in terms of how you get a project to move forward and agreeing physical terms and getting two different governments on the same side of the fence".

The project -- based on an estimated 15 Tcf (425 Bcm) of gas in an area straddling the Mauritania/Senegal maritime border -- is expected to produce its first gas in 2022.

Tortue LNG would add to the existing LNG export facilities in West Africa that include the six-train Nigeria LNG, Angola LNG and Equatorial Guinea LNG.

BETTER TERMS

African oil ministries are wising up, offering better fiscal and royalty terms to investors, which has coincided with the revival in oil prices.

"While everyone in Africa was pulling out during the downturn ... we were trying to pick up acreage in Ivory Coast, expanded our position in Equatorial Guinea, picked up a position in Sao Tome and Principe " Henderson added, explaining the company's shift from an exploration-only company to a full-cycle exploration and production model.

African governments have not been the fastest to react to the needs of oil companies, which is one of the reasons exploration and drilling fell sharply in the continent over the past five years. But some countries like Gabon and Angola have recently made sweeping changes to their petroleum policies in a bid to lure investors.

Gabonese oil minister Pascal Ambouroue said this week that his government has scrapped corporate tax for oil companies operating in the Central African country to inject some much needed money and enthusiasm there.

Henderson said some of these terms had to be changed as a bulk of these agreements were set when oil was $100/b.

Kosmos expects its full-year production to be more than double last year, at around 67,000 boe/d, rising to 70,000-76,000 boe/d next year, according to its third-quarter 2018 results, which were published earlier in the week. The company saw its revenue rise 61% on the year to $243 million. But hedging losses and exploration costs meant it reported a sharply greater net loss of $126 million, or $92 million on an adjusted basis. Its net debt more than doubled to $1.9 billion, mainly due to its August acquisition of US Gulf of Mexico operator Deep Gulf Energy.

-- Eklavya Gupte, eklavya.gupte@spglobal.com

-- Paul Hickin, paul.hickin@spglobal.com

-- Edited by Richard Rubin, newsdesk@spglobal.com