Core Viewpoint - Kosmos Energy has provided an operational and financial update, highlighting successful drilling activities in Ghana, progress in the GTA LNG project, and financial maneuvers to manage debt obligations. Operational Update - In Ghana, the J-74 well in the Jubilee field development has been successfully drilled, expected to produce over 10,000 barrels of oil per day (bopd), contributing to a gross production rate of nearly 70,000 bopd at the start of 2026 [2] - The average gross production from the Jubilee field in Q4 2025 was approximately 59,000 bopd, with a projected base decline of about 5% quarter over quarter [2] - The partnership has approved five additional wells for 2026, including four producers and one injector, with drilling for the next producer already commenced [2] - The Ghanaian government has approved license extensions for the West Cape Three Points and Deep Water Tano Petroleum Agreements, extending them to 2040, with an increase in Ghana National Petroleum Corporation's (GNPC) share starting July 2036 [3] - The Jubilee plan of development has been amended to include up to 20 additional wells, leading to an expected increase in 2P reserves [3] - The TEN partnership has agreed on terms to acquire the TEN FPSO at the end of its lease in 2027, which is anticipated to reduce operating costs and improve leverage in 2026 [4] LNG Project Update - In Mauritania and Senegal, the GTA LNG project has ramped up to nameplate capacity of 2.7 million tonnes per annum (mtpa) in December 2025, with peak production reaching approximately 3.0 mtpa [5] - A total of 18.5 gross LNG cargos and one condensate cargo were lifted in 2025, with expectations for cargo liftings to nearly double in 2026 due to improved performance [5] Financial Update - A borrowing notice for a $100 million draw on the second tranche of the Gulf of America Term Facility was submitted on January 2, 2026, alongside a notice of redemption for remaining 2026 unsecured notes, expected to be redeemed on January 13, 2026 [6] - The company is looking to refinance its 2027 debt maturities, with RBL banks agreeing to a waiver for new secured financing, benefiting from existing subordinated guarantees [6]

Core Viewpoint - Kosmos Energy Ltd. (NYSE:KOS) has experienced a significant decline in share price and has faced multiple downgrades from analysts, reflecting concerns over the energy sector's current challenges and specific project risks [1][3][4]. Group 1: Share Price Movement - The share price of Kosmos Energy Ltd. fell by 10.68% between December 10 and December 17, 2025, marking it as one of the energy stocks that lost the most during that week [1]. Group 2: Analyst Ratings and Price Targets - Mizuho analyst William Janela lowered the price target for Kosmos Energy from $2 to $1.50 while maintaining a 'Neutral' rating, citing an updated outlook for the exploration and production sector [3]. - BofA analyst Matthew Smith downgraded Kosmos Energy from 'Buy' to 'Underperform' and reduced its price target from $3.4 to $1, following a revision of Brent oil price forecasts for 2026 and 2027 to $60 and $62 per barrel, respectively [4]. Group 3: Project Risks - There was initial concern regarding the potential nationalization of the Yakaar-Teranga project by the Senegalese government, which is one of the largest gas discoveries in recent years and is operated by Kosmos Energy. However, the company confirmed that there are no intentions for nationalization and stated it would return its license by July 2026 if a new partner is not found [5].

Core Viewpoint - Kosmos Energy announced that Senegal's energy ministry has confirmed there are no plans to nationalize the Yakaar-Teranga gas field, where Kosmos holds a 90% stake [1] Group 1 - The confirmation from Senegal's energy ministry alleviates concerns regarding potential nationalization of the Yakaar-Teranga gas field [1] - Kosmos Energy maintains a significant ownership position with a 90% stake in the gas field, indicating strong investment in the region [1]

Core Viewpoint - Kosmos Energy Ltd. is facing significant challenges, including a downgrade in rating and a weak outlook for Brent crude prices, which is expected to average $60 per barrel by 2026 [2]. Group 1: Analyst Ratings and Price Targets - Bank of America Securities analyst Matthew Smith downgraded Kosmos Energy to Sell with a price target of $1 [1]. - Benchmark's Subash Chandra maintained a Hold rating on Kosmos Energy, while Goldman Sachs's Neil Mehta also reiterated a Hold rating with a price target of $1.75 [3]. Group 2: Financial Performance - Kosmos reported Q3 2025 revenues of $311.23 million, missing analyst estimates of at least $345.25 million due to a net underlift position [4]. - The company experienced higher production volumes but could not meet projections, indicating operational challenges [4]. Group 3: Company Overview and Debt Situation - Kosmos Energy is a deepwater exploration and production company based in Dallas, Texas, focusing on crude oil and natural gas in regions such as Ghana, Equatorial Guinea, Mauritania, Senegal, and the Gulf of Mexico [5]. - The company has a heavy debt load of $2.9 billion against approximately $500 million in equity, raising concerns about its ability to manage debt and maintain cash flow [2].

Upgrades - Rubrik (RBRK) upgraded to Outperform from Market Perform due to "stellar beat-and-raise results" and ongoing share gains in the cyber-resilience market [2] - Corpay (CPAY) upgraded to Outperform from Perform with a price target of $380, as shares offer "growth at a discount" [2] - Humana (HUM) upgraded to Buy from Hold with a price target increased to $313 from $253, following an analysis of the company's Stars diversification effort [2] - Unity (U) upgraded to Overweight from Equal Weight with a price target raised to $51 from $42, based on a positive outlook for the mobile game advertising industry in 2026 [3] - Dollar General (DG) upgraded to Buy from Accumulate with a price target of $140, noting strong traffic growth compared to Dollar Tree (DLTR) [3] Downgrades - Argan (AGX) downgraded to Hold from Buy with a price target raised to $325 from $260, citing a top-tier valuation despite strong execution and a $3B backlog [4] - AIG (AIG) downgraded to Equal Weight from Overweight with a price target reduced to $88 from $95, due to limited attractive growth opportunities in the current pricing environment [4] - Synchrony (SYF) downgraded to Neutral from Outperform with an unchanged price target of $82, as lower end consumer exposure makes shares less appealing after a recent rally [4] - Parsons (PSN) double downgraded to Market Perform from Strong Buy without a price target, following the FAA's decision to award a significant contract to Peraton [4] - Kosmos (KOS) double downgraded to Underperform from Buy with a price target lowered to $1 from $3.40, after cutting brent oil price forecasts for 2026 and 2027 to $60 and $62 per barrel respectively [4]

Core Insights - Kosmos Energy Ltd. reported mixed results for the third quarter, indicating progress in operations but continued pressure on financial metrics [1] - The latest Adjusted EPS was -$0.15, while GAAP EPS was -$0.26, both of which did not meet expectations [1] Financial Performance - The company experienced a decline in earnings per share, with Adjusted EPS at -$0.15 and GAAP EPS at -$0.26, reflecting ongoing financial challenges [1] Operational Progress - Despite financial pressures, operations at Kosmos Energy are moving forward, suggesting potential for future improvement [1]

Production and Revenue - In Q3 2025, production from Ghana averaged approximately 93,600 Boepd gross (31,300 Boepd net) and production from the Gulf of America averaged approximately 16,600 Boepd net (~84% oil) [135][138] - The Greater Tortue Ahmeyim project achieved first LNG production in February 2025, with 13.5 gross cargoes lifted through October 2025, and a daily contracted sales volume of approximately 2.45 million tonnes per annum [145] - Total oil and gas revenue for Q3 2025 was $310.96 million, a decrease from $407.79 million in Q3 2024, with oil sales contributing $255.66 million [149] - Oil and gas revenue decreased by $96.8 million to $310.96 million for the three months ended September 30, 2025, compared to $407.79 million in the same period of 2024, primarily due to lower average realized prices and production volumes [155] - For the nine months ended September 30, 2025, oil and gas revenue decreased by $284.1 million to $993.73 million, compared to $1.28 billion in 2024 [165] Costs and Expenses - Total production costs for Q3 2025 were $147.70 million, compared to $133.47 million in Q3 2024, with average cost per Boe rising to $26.78 from $22.97 [149] - Total costs and expenses increased by $116.4 million to $417.7 million for the three months ended September 30, 2025, compared to $301.3 million in 2024 [154] - Oil and gas production costs increased by $180.3 million to $558.12 million for the nine months ended September 30, 2025, compared to $377.82 million in 2024 [166] - Exploration expenses rose by $28.7 million to $68.69 million for the nine months ended September 30, 2025, primarily due to costs associated with the Winterfell-4 well [167] Financial Performance - Net loss for the three months ended September 30, 2025, was $124.3 million, a decrease of $169.3 million compared to a net income of $44.97 million in the same period of 2024 [154] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $98.7 million, a decrease of 80.4% compared to $502.5 million for the same period in 2024 [178] - The company had a net debt of $2.947 billion as of September 30, 2025, compared to $2.715 billion at the end of 2024 [180] Debt and Financing - A senior secured term loan credit agreement was entered into on September 24, 2025, with a first tranche of $150 million funded on October 1, 2025 [148] - Total long-term debt increased to $3.025 billion as of September 30, 2025, up from $2.800 billion at the end of 2024 [180] - The company repurchased $150 million of its 7.125% Senior Notes due 2026, reducing the outstanding balance to $100 million [191] - As of September 30, 2025, borrowings under the Facility totaled approximately $1.1 billion, with undrawn availability of $225 million [177] - The facility's undrawn availability was $225 million as of September 30, 2025, with total borrowings under the facility at approximately $1.1 billion [185] Operational Developments - The partnership in Ghana has prepared amendments to extend the WCTP and DT licenses to 2040, covering the Jubilee and TEN fields [137] - The company received approval for a twelve-month extension for the exploration phase of Block EG-24 in Equatorial Guinea, extending to December 2026 [143] - The company plans to drill additional infill wells and advance development efforts in Ghana, Equatorial Guinea, and the Gulf of America [183] - The company has a commitment to drill one development well in Equatorial Guinea as of September 30, 2025 [205] Market and Price Sensitivity - Average oil sales price per barrel in Q3 2025 was $67.30, down from $76.64 in Q3 2024, while average gas sales price per Mcf increased to $5.54 from $3.54 [149] - Oil prices in the first nine months of 2025 ranged between $61.09 and $83.06 per Bbl for Dated Brent, indicating significant price volatility [216] - A hypothetical 10% increase in oil prices would decrease future pre-tax earnings by approximately $53.6 million, while a 10% decrease would increase future pre-tax earnings by approximately $47.3 million [222] - If oil prices average $50.00 or $60.00 per barrel for the remainder of 2025 and 2026, the average realized pricing after derivatives would be approximately $56.00 and $62.00 per barrel, respectively [222] Derivative Instruments and Risk Management - The company has entered into various oil derivative contracts to mitigate exposure to commodity price risk, including swaps and options [217] - The company’s commodity derivative financial instruments are sensitive to changes in oil prices, with specific contracts outlined for 2025 and 2026 [221] - The fair market value of the company's interest rate swaps was a net asset of approximately $0.2 million as of September 30, 2025 [225] - Changes in market interest rates could impact interest costs associated with future debt issuances or borrowings [224] Commitments and Covenants - The company is subject to a financial covenant under the Facility, which was amended to be less restrictive for the next two assessment dates [188] - The company is subject to a GoA net leverage ratio covenant of not more than 3.50x and a field life coverage ratio of not less than 1.50x [204] - The total commitment for decommissioning trust funds is estimated to be approximately $126.1 million as of September 30, 2025 [209]

Financial Data and Key Metrics Changes - The company reported total net production of approximately 31,300 barrels of oil equivalent per day, with Jubilee gross oil production increasing by 13% quarter on quarter to around 62,500 barrels of oil per day [8][19] - Operating costs decreased by nearly 40% quarter on quarter, reflecting improvements across all business units [19] - Capital expenditures (CapEx) for the year are expected to be below the $350 million forecast, with third-quarter CapEx reported at $67 million [6][19] Business Line Data and Key Metrics Changes - At Jubilee, the first producer well of the 2025-2026 drilling campaign came online in July, contributing to increased production [4][11] - At GTA, net production rose to approximately 11,400 barrels of oil equivalent per day, a 60% increase from the previous quarter, with 6.8 gross LNG cargoes lifted during the quarter [8][14] - In the Gulf of Mexico, net production was around 16,600 barrels of oil equivalent per day, driven by strong performance from Oddjob and Kodiak [9][17] Market Data and Key Metrics Changes - The company lifted 13.5 gross LNG cargoes through October, with expectations of 7-8.5 cargoes in the fourth quarter [15] - The first gross condensate cargo was lifted early in the fourth quarter, marking a new revenue source for the project [9][15] Company Strategy and Development Direction - The company aims to grow production and reduce costs to prioritize free cash flow while strengthening the balance sheet [3][24] - A focus on enhancing the resilience of the balance sheet has been emphasized, with proactive measures taken to address upcoming debt maturities [7][21] - The company is targeting a significant increase in production at Jubilee through a committed drilling program of five more wells in 2026 [12][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's unique, world-class portfolio of assets and the ability to weather commodity price volatility [7][24] - The company anticipates further production growth and cost reductions, with a focus on maintaining a sustainable business in a lower-price environment [25][41] Other Important Information - The company has secured a $250 million term loan from Shell to address upcoming debt maturities [7][21] - Hedging strategies have been implemented to protect against near-term commodity price volatility, with significant portions of oil production hedged for 2026 [22][40] Q&A Session Summary Question: Can you provide details on the 10 FPSO sale and repurchase agreement? - The company is finalizing a purchase option for the FPSO, which will reduce operating costs significantly, with no additional payments until a closeout payment in 2027 [26][29] Question: What are the expectations for cash flows and deleveraging in 2026? - The company expects to break even in the mid-$50 per barrel range, with excess free cash flow dependent on oil prices beyond that [30][31] Question: Can you discuss GTA operating expenses and future expectations? - Current operating expenses are around $60 million, with expectations to reduce them to approximately $30 per barrel [32] Question: What lessons have been learned from the Winterfell challenges? - The company emphasized the need for rigorous planning and execution in future operations, focusing on simpler completion strategies [34] Question: What are the drivers for cargoes from Ghana in Q4? - The timing of year-end cargoes will depend on performance, with a relatively flat production profile expected [35] Question: Can you elaborate on liquidity and balance sheet confidence? - The company has made significant progress in addressing immediate debt issues and is proactively managing future maturities [39][40] Question: What is the expected CapEx for the year and potential savings from FPSO lease refinancing? - CapEx is projected to be below $350 million, with real savings expected from drilling efficiencies and lower contract rates [46][50]

Production and Operations - Third quarter net production was approximately 65,500 boepd[10] - Ghana's third quarter net production reached approximately 31,300 boepd[10] - Mauritania & Senegal's third quarter net production was approximately 11,400 boepd[10] - Gulf of America's third quarter net production was approximately 16,600 boepd[10] - Equatorial Guinea's third quarter net production was approximately 6,200 bopd[10] Financial Performance and Cost Management - The company is on track to achieve fiscal year 2025 capex of less than $350 million, a year-on-year reduction of approximately $500 million[9] - Operating costs decreased by approximately 39% quarter-over-quarter[9] - The company is on track to deliver a targeted $25 million overhead reduction by year-end 2025[9] - Third quarter 2025 opex was approximately $19.5/boe, compared to approximately $28.2/boe in the second quarter of 2025[25] Balance Sheet and Liquidity - The company completed a $250 million Gulf of America term loan[9] - The company repaid $150 million of 2026 notes[9] - The company has hedged 8.5 million barrels for 2026[9]

Financial Performance - The company reported a net loss of $124 million, or $0.26 per diluted share, for Q3 2025, with an adjusted net loss of $72 million, or $0.15 per diluted share[1]. - Oil and gas revenue for Q3 2025 was $310,959,000, a decrease of 23.7% compared to $407,794,000 in Q3 2024[38]. - Total revenues and other income for the nine months ended September 30, 2025, were $995,178,000, down from $1,277,906,000 in the same period of 2024, representing a decline of 22.1%[38]. - Net loss for Q3 2025 was $124,299,000, compared to a net income of $44,974,000 in Q3 2024, indicating a significant shift in performance[38]. - Total costs and expenses for Q3 2025 increased to $417,701,000, up from $301,279,000 in Q3 2024, marking a rise of 38.7%[38]. - Cash and cash equivalents as of September 30, 2025, were $64,032,000, down from $84,972,000 at the end of 2024, reflecting a decrease of 24.7%[40]. - Net cash used in operating activities for Q3 2025 was $(27,568,000), compared to $6,282,000 in Q3 2024, indicating a negative cash flow shift[42]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $(330,924,000), down from $(774,813,000) in the same period of 2024[42]. - The company reported a net increase in cash, cash equivalents, and restricted cash of $26,065,000 for Q3 2025, contrasting with a decrease of $(122,232,000) in Q3 2024[42]. - Net income for the three months ended September 30, 2025, was $(124,299) thousand, compared to $44,974 thousand for the same period in 2024, representing a significant decline[46]. - Free cash flow for the three months ended September 30, 2025, was $(98,935) thousand, compared to $(212,963) thousand for the same period in 2024[48]. Production and Sales - Net production averaged approximately 65,500 barrels of oil equivalent per day (boepd), a 3% increase compared to Q2 2025, with sales of approximately 59,900 boepd[2]. - Production in Ghana averaged approximately 31,300 boepd net, with Jubilee oil production averaging approximately 62,500 bopd gross[18]. - The company lifted 6.8 gross LNG cargos from the Greater Tortue Ahmeyim (GTA) project during the quarter, with an additional 2.7 cargos lifted post quarter-end[2][14]. - Total net volume sold for oil in the three months ended September 30, 2025, was 3.799 million barrels, down from 5.135 million barrels in the same period of 2024[50]. - Oil sales revenue for the three months ended September 30, 2025, was $255,661 thousand, down from $393,555 thousand in the same period of 2024[50]. - Average oil sales price per barrel for the three months ended September 30, 2025, was $67.30, compared to $76.64 in the same period of 2024[50]. - The average total sales price per Boe for the three months ended September 30, 2025, was $56.39, down from $70.18 in the same period of 2024[50]. Capital Expenditures and Costs - Capital expenditures for Q3 2025 were $67 million, with full-year capital expenditures expected to be below $350 million, representing a reduction of over 60% year-on-year[5][10]. - Operating costs decreased by 39% compared to Q2 2025, with a targeted overhead reduction of $25 million by year-end[5][10]. - Operating expenses (Opex) for 4Q 2025 are projected to be between $15.00 and $18.00 per boe, while FY 2025 is expected to be around $22.00 per boe[57]. - Depreciation, Depletion, and Amortization (DD&A) for 4Q 2025 is estimated at $21.00 to $23.00 per boe, with FY 2025 guidance of $22.00 to $24.00 per boe[57]. - General and Administrative expenses (G&A) for 4Q 2025 are expected to be approximately $15 million, with FY 2025 guidance at around $75 million[57]. - Exploration expenses for FY 2025 are projected to be between $25 million and $45 million[57]. - Net interest expense for FY 2025 is expected to be around $220 million[57]. - Capital expenditures for 4Q 2025 are forecasted to be between $80 million and $100 million, with FY 2025 expected to be less than $350 million[57]. Debt and Liquidity - The company exited Q3 2025 with approximately $2.9 billion in net debt and liquidity of approximately $540 million[11][28]. - Long-term debt, net, as of September 30, 2025, was $2,728,500,000, slightly down from $2,744,712,000 at the end of 2024[40]. - Total long-term debt as of September 30, 2025, increased to $3,025,274 thousand from $2,800,274 thousand as of December 31, 2024[44]. Future Outlook - 4Q 2025 production forecast is between 66,000 and 72,000 boe per day, with FY 2025 guidance at approximately 65,000 boe per day[57]. - Ghana's FY 2025 revenue is forecasted based on 9-10 cargoes, with an average cargo size of 950,000 barrels of oil[59]. - Gulf of America production for FY 2025 is projected to be between 17,000 and 19,000 boe per day, with an oil/gas/NGL split of approximately 83%/11%/6%[61]. - Operating costs associated with GTA for FY 2025 are expected to total approximately $225 million to $245 million net[61].