Financial Data and Key Metrics Changes - Kosmos Energy Ltd. reported a significant reduction in capital expenditures (CapEx) expected to fall from over $800 million in 2023 and 2024 to $400 million in 2025, representing a decrease of over 50% [10][28] - The company achieved a year-end 2024 2P reserves of 513 million barrels of oil equivalent, with a reserve replacement ratio of 137%, indicating strong reserve growth [13][15] - The company maintained a strong financial position by raising $900 million in new bonds and refinancing its reserve-based lending facility, extending average debt maturity to around four years [20][25] Business Line Data and Key Metrics Changes - Production for Q4 2024 was lower than guidance due to issues at the Jubilee field, but actions have been taken to resolve these issues, and production is expected to stabilize [21][22] - The company achieved first oil at Winterfell in summer 2024 and expects production to rise as new wells come online [18][19] - The Gulf of America business unit is projected to see a 20% year-over-year increase in production, with full-year guidance of 17,000 barrels of oil equivalent per day net [49] Market Data and Key Metrics Changes - The company is focusing on the Gulf of America for exploration efforts, leveraging advanced seismic imaging and reservoir management tools [12][44] - The GTA project is expected to ramp up production in Q1 2025, with first LNG production achieved in early February 2025 [34][36] - The company is actively managing oil price volatility through a rolling hedging program, with around 60% of first-half oil production hedged [26][27] Company Strategy and Development Direction - Kosmos Energy Ltd. aims to prioritize cash generation through maximizing revenue and rigorous cost management, with a focus on reducing overhead costs by $25 million by the end of 2025 [11][28] - The company plans to use generated cash flow primarily for debt paydown until reaching a leverage goal of below 1.5 times at mid-cycle oil prices [12][13] - The strategic focus includes enhancing the reserve base and transitioning 2C resources into 2P reserves through improved technology and drilling [15][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver sustainable cash generation due to a strong reserve base and disciplined cost management [15][53] - The company is optimistic about the future potential of the GTA project and its ability to meet local market gas needs while driving low-cost expansions [38][39] - Management acknowledged challenges in production reliability at Jubilee but emphasized ongoing efforts to improve power generation reliability and water injection [111][112] Other Important Information - Kosmos Energy Ltd. achieved zero lost time injuries or total recordable injuries in 2024, maintaining a strong safety performance [17] - The company is not planning to revisit discussions with Tullow, focusing instead on free cash flow accretion and maintaining a strong portfolio [120][121] Q&A Session Summary Question: Discussion on startup costs and their nature - Management indicated that startup and commissioning costs are expected to be one-time in nature, with costs trending lower as production ramps up [56][58] Question: CapEx guidance and potential for lower spending - Management confirmed a CapEx ceiling of $400 million for 2025, emphasizing a focus on capital efficiency and free cash flow generation [63][64] Question: Clarification on GTA phase one plus - Management explained that phase one plus involves fully utilizing existing infrastructure with minimal additional CapEx, aiming for increased production capacity [75][76] Question: Jubilee production assumptions - Management highlighted the importance of achieving 100% voidage replacement and reliable power generation to meet production guidance for Jubilee [82][86] Question: Confidence in Jubilee's performance - Management expressed confidence in addressing past issues and achieving production targets through effective reservoir management and additional drilling [110][112] Question: Future M&A considerations - Management stated that there are no current plans to revisit discussions with Tullow, focusing instead on free cash flow and value accretion [120][121] Question: Timeline for achieving leverage goals - Management anticipates reaching a leverage level of around 1.5 times by the latter half of 2026, with a focus on debt paydown and production growth [127][128] Question: Tortue project CapEx implications - Management indicated that future CapEx for Tortue will be minimal, focusing on sustaining current production levels and maximizing revenue [102][103]

Financial Data and Key Metrics Changes - The company reported a year-end 2024 2P reserves of 513 million barrels of oil equivalent, representing a reserves to production ratio of twenty-two years, with a reserve replacement ratio of 137% [13][15][18] - Total CapEx is expected to fall significantly from over $800 million in 2023 and 2024 to $400 million in 2025, a reduction of over fifty percent [10][28] - The company achieved first LNG production from the GTA project in early February 2025, with first cargo lifting expected shortly [34][36] Business Line Data and Key Metrics Changes - Production for the fourth quarter was lower than guidance, primarily due to lower Jubilee production and delays in ramp-up from infill wells [21][22] - Net production in Ghana for 2024 was just over 41,000 barrels of oil equivalent, below the operator's target, driven by issues with water injection reliability [42][44] - The Gulf of America saw a gradual quarterly ramp-up in production from Q2 onwards, with full year guidance of 17,000 barrels of oil equivalent per day, a 20% increase year over year [49] Market Data and Key Metrics Changes - The company has hedged around 60% of its first half oil production with downside protection of approximately $70 per barrel, providing solid protection for cash flow [26][27] - The GTA project is positioned to deliver growth in revenue with increasing margins as gas and LNG continue to grow in the global energy mix [7][8] Company Strategy and Development Direction - The company aims to focus on cash generation through maximizing revenue and rigorous cost management, with a clear goal of reducing annual overhead by around $25 million by the end of 2025 [11][12][28] - The strategy includes prioritizing cash for debt pay down until leverage goals of below 1.5 times at mid-cycle oil prices are achieved [13][29] - The company is focused on sustainable cash generation, with a diverse reserve base supporting production for many years to come [15][53] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in addressing production issues and emphasized the importance of power generation reliability for future performance [111][112] - The company is optimistic about the future potential of the GTA project and its ability to meet local market gas needs while driving low-cost expansions [36][38] - Management highlighted the importance of rigorous capital allocation and cost management to sustain free cash flow yield [64][70] Other Important Information - The company achieved zero lost time injuries or total recordable injuries in 2024, maintaining high safety performance [17] - The company raised a total of $900 million in new bonds at competitive rates, enhancing its financial position and extending weighted average maturities [20][25] Q&A Session Summary Question: Discussion on startup costs and their nature - Management indicated that startup and commissioning costs are expected to be one-time in nature, with costs trending lower over time as production ramps up [56][58] Question: CapEx guidance and potential for lower spending - Management confirmed a ceiling of $400 million for CapEx in 2025, emphasizing a focus on free cash flow and disciplined capital allocation [63][65] Question: Clarification on GTA phase one plus - Management explained that phase one plus involves fully utilizing existing infrastructure to increase capacity with minimal additional CapEx [75][78] Question: Assumptions behind Jubilee production guidance - Management highlighted the importance of achieving 100% voidage replacement and reliable power generation as key assumptions for Jubilee's production guidance [82][86] Question: Confidence in Jubilee's performance and future plans - Management expressed confidence in addressing past issues and emphasized a clear set of objectives for field management to ensure future performance [112][114] Question: Thoughts on terminated discussions with Tullow - Management stated that there are no plans to revisit discussions with Tullow, focusing instead on free cash flow generation and maintaining a strong portfolio [120][121] Question: Timeline for achieving leverage goals - Management anticipates reaching a leverage level of around 1.5 times by the back half of 2026, with a focus on debt pay down and growth in EBITDAX [127][128] Question: CapEx implications for Tortue project - Management indicated that future CapEx for the Tortue project will be minor, focusing on sustaining current well counts and maximizing revenue [102][135]

Fourth Quarter & Full Year 2024 Results February 24, 2025 NYSE/LSE: KOS 1 Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Kosmos Energy Ltd. ("Kosmos" or the "Company") expects, believes or anticipates will ...

Financial Performance - Oil and gas revenue for the year ended December 31, 2024, was $1,675.36 million, a decrease of 1.5% from $1,701.61 million in 2023[471]. - Net income for 2024 was $189.85 million, down from $213.52 million in 2023, representing a decline of about 11.1%[471]. - The company's total assets increased to $5,308.99 million as of December 31, 2024, compared to $4,938.13 million in 2023, reflecting a growth of approximately 7.5%[469]. - The company's asset retirement obligations totaled $406.89 million as of December 31, 2024, an increase from $343.98 million in 2023, indicating a rise of approximately 18.3%[469]. - Total current liabilities increased to $594.95 million in 2024 from $554.83 million in 2023, marking an increase of about 7.2%[469]. - The company reported a basic net income per share of $0.40 for 2024, down from $0.46 in 2023, reflecting a decrease of approximately 13.0%[471]. - Long-term debt increased to $2,744.71 million in 2024 from $2,390.91 million in 2023, representing an increase of about 14.8%[469]. - Operating cash flow for 2024 was $678.249 million, down from $765.170 million in 2023, reflecting a decline of 11.4%[478]. - Total cash, cash equivalents, and restricted cash at the end of 2024 was $85.277 million, compared to $98.761 million in 2023, a decrease of 13.4%[487]. - The total costs and expenses for 2024 were $1,325.75 million, slightly down from $1,329.80 million in 2023, showing a marginal decrease of about 0.3%[471]. Debt and Financing - Outstanding borrowings under the Facility totaled $900.0 million as of December 31, 2024, with a weighted average interest rate of approximately 8.4%[437]. - The Facility size and borrowing base capacity increased to $1.35 billion from $1.25 billion, with borrowings totaling $900.0 million and undrawn availability of $450 million as of December 31, 2024[550][552]. - The net leverage ratio as of December 31, 2024, was 2.54x, indicating a need to restrict approximately $66.0 million in cash unless waived by lenders[487]. - The Company recognized a loss on debt modifications of approximately $22.0 million during the second quarter of 2024 due to the amendment and restatement of the Facility[550]. - The 7.125% Senior Notes outstanding principal decreased to $250.0 million from $650.0 million, reflecting a significant reduction in debt obligations[548]. - The Company issued $450.0 million of 7.500% Senior Notes in March 2021, receiving net proceeds of approximately $444.4 million after fees, which were used to repay outstanding indebtedness and for general corporate purposes[570]. - The Company completed the repurchase of approximately $49.7 million of the 7.500% Senior Notes on September 24, 2024, pursuant to the Tender Offers[571]. - In September 2024, the Company issued $500.0 million of 8.750% Senior Notes, receiving net proceeds of approximately $494.9 million after fees, which were used to fund Tender Offers and related expenses[577]. - The Company issued $400.0 million of 3.125% Convertible Senior Notes in March 2024, receiving net proceeds of $390.4 million after fees[584]. - The carrying value of total debt as of December 31, 2024, is $2,781,497,000, an increase from $2,414,921,000 in 2023, representing a growth of approximately 15.1%[619]. Commodity and Derivative Instruments - Oil prices during 2024 ranged between $70.56 and $93.35 per barrel for Dated Brent, indicating significant volatility in commodity prices[431]. - The company is exposed to risks from changes in commodity prices and interest rates, which could impact revenues and cash flows[425]. - The company has various oil derivative contracts, including collars, put options, call options, and swaps, to mitigate exposure to commodity price risk[432]. - The company entered into Dated Brent three-way collar contracts for 2.0 million barrels from January 2025 through December 2025, with a sold put price of $55.00 per barrel[435]. - The estimated fair value of derivative assets was $11,670,000, compared to $6,765,000 in 2023[605]. - Total derivatives not designated as hedging instruments resulted in a loss of $14,747,000 for the year ended December 31, 2024[607]. - The company has a notional fixed rate of 3.645% on interest rate swaps with a notional amount of $500,000, effective January to December 2025[603]. - The total fair value of the company's liabilities related to commodity derivatives is $(3,103,000) as of December 31, 2023[611]. - The company’s provisional oil sales derivative is valued at $2,242,000, based on sales volumes and pricing differences over the contract term[613]. Exploration and Development - The company’s ability to find and develop new oil and gas prospects is critical for future growth and operational success[21]. - Exploration expenses rose significantly to $119.91 million in 2024, compared to $42.28 million in 2023, indicating an increase of approximately 183.5%[471]. - The company completed the acquisition of an additional 5.5% interest in the Winterfell area for $9.6 million in March 2022[520]. - The acquisition of an additional 3.2% interest in the Winterfell area was completed for $6.6 million in September 2022, raising the total interest to 25.0%[521]. - Kosmos increased its participating interest in the Tiberius area from 33.3% to 50.0% following the acquisition of an additional 16.7% interest in March 2024[517]. - The company holds a 24% non-operated participating interest in Block EG-01 offshore Equatorial Guinea, covering approximately 59,400 acres[518]. - Kosmos assumed BP's participating interest in the Cayar Offshore Profond Block, increasing its interest to 90% effective January 18, 2024[519]. - The Yakaar and Teranga discoveries in Senegal continue to progress, with a final investment decision for development expected to be made following additional evaluations[541]. Asset Management - The company follows the successful efforts method of accounting for its oil and gas properties, with proved properties being depleted using the unit-of-production method based on estimated proved oil and gas reserves[449]. - Proved oil and gas reserves are estimated by independent petroleum engineering consultants, affecting depletion calculations and impairment assessments[504]. - The company recorded depletion expense of $419.3 million in 2024, compared to $411.6 million in 2023, and no proved property impairments were recorded in 2024[533]. - The company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived asset by the same amount as the liability[497]. - The company recognized tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained upon examination[512]. - The company contributed $11.5 million to the decommissioning trust fund in 2024, with investments primarily in US Treasury debt securities valued at $10,653,000[616]. - The estimated fair value of the decommissioning trust fund investments is $10,653,000, with unrealized losses of $55,000 recorded for the year[617]. - The company’s long-lived assets are subject to fair value adjustments based on impairment reviews when circumstances indicate potential recoverability issues[620].

Group 1: Merger and Acquisition Insights - Kosmos Energy (KOS) has decided not to proceed with the acquisition of Tullow Oil (TUWOY), which was initially discussed as an all-share deal [8][10] - The potential merger was projected to create a combined entity with a production capacity exceeding 130,000 barrels of oil equivalent per day (boe/d) [9] - Analysts noted that the merger could have provided operational synergies and improved financials for Tullow Oil, given both companies' shared assets in Ghana [3][4] Group 2: Financial and Operational Context - Both Kosmos Energy and Tullow Oil are currently facing significant debt burdens, which has raised concerns about their financial stability [4] - Tullow Oil's management expressed confidence in the company's ability to operate independently, while Kosmos Energy is seen as well-positioned to enhance its capital structure [5] - The deadline for Kosmos Energy to make an acquisition offer was set for January 9, 2025, but the company retains the option to reconsider its decision under certain circumstances [10] Group 3: Industry Performance Indicators - TechnipFMC plc reported a total backlog of $14.7 million in Q3 2024, reflecting an 11.1% increase year-over-year, indicating strong revenue growth potential [7] - Zacks Rank indicates that TechnipFMC plc holds a strong buy rating, while Nine Energy Service is rated as a buy, suggesting positive market sentiment towards these companies [11]

Company Overview - Kosmos Energy (NYSE: KOS) is identified as an undervalued oil company poised for a significant transformation in the coming months [1] - The company is expected to increase production and reduce capital expenditures (CapEx) through its Winterfell and GTA new projects [1] Projects and Production - The Winterfell and GTA projects are key drivers for Kosmos Energy's future growth, with the potential to enhance production levels [1] - These projects are anticipated to generate operational efficiencies and cost savings, contributing to the company's financial performance [1] Analyst Background - Oriol Madaula, the author, is an experienced actuary with a Master's degree in Actuarial and Financial Sciences from the University of Barcelona [1] - He has a background in the insurance and financial sectors, with experience in consultancy and banking roles in Spain and the United Kingdom [1] - His investment approach is centered on value investing, with a focus on the shipping sector and a macroeconomic perspective [1]

Group 1 - Kosmos Energy Ltd. is in early discussions for an all-share acquisition of Tullow Oil plc, but Tullow has indicated that the deal is not guaranteed and terms are uncertain [1][4] - Kosmos Energy has until January 9, 2025, to decide on pursuing the acquisition, with a firm announcement required by the deadline [2] - The potential acquisition would create a leading exploration and production firm focused on the Atlantic Margin, with Kosmos Energy's third-quarter production at approximately 65,400 barrels of oil equivalent per day [3] Group 2 - Tullow Oil's production for the first half of the year was 63,700 barrels of oil equivalent per day, and the company has a market capitalization of approximately $480.5 million [4] - The North American oil and gas sector has seen significant consolidation, and the potential deal between Kosmos Energy and Tullow Oil may indicate a similar trend in other regions [4]

Core Viewpoint - The article emphasizes the importance of value investing and highlights Kosmos Energy (KOS) as a potentially undervalued stock based on various financial metrics [2][8]. Company Analysis - Kosmos Energy (KOS) holds a Zacks Rank of 2 (Buy) and has a Value grade of A, indicating strong potential for value investors [4]. - The stock is currently trading at a P/E ratio of 7.44, which is lower than the industry average of 8.42 [4]. - KOS has a PEG ratio of 0.43, compared to the industry's average PEG of 0.48, suggesting favorable growth expectations relative to its price [5]. - The P/S ratio for KOS is 1.01, slightly below the industry average of 1.05, indicating a competitive valuation based on sales [6]. - KOS's P/CF ratio stands at 2.66, significantly lower than the industry's average P/CF of 4.61, reflecting a strong cash flow outlook [7]. - Overall, these metrics suggest that Kosmos Energy is likely undervalued, making it an attractive option for value investors [8].

Group 1 - The Daily Drilling Report is an investment group focused on providing analysis for the oil and gas industry, featuring a model portfolio that encompasses all segments of upstream oilfield activity with weekly updates [1] - The group offers investment ideas for both U.S. and international energy companies, covering a range from shale to deepwater drillers [1] - Technical analysis is utilized to identify catalysts within the oil and gas sector [1] Group 2 - Fluidsdoc is an international oil industry veteran with 40 years of experience, having worked across six continents and in over twenty countries, specializing in the upstream oilpatch [2]

Financial Data and Key Metrics Changes - Gross Jubilee production in Q3 was approximately 87,600 barrels of oil per day, with year-to-date production just under 90,000 barrels of oil per day, reflecting a 5% increase compared to the prior quarter [12][26] - CapEx for the year is expected to be around $800 million, with approximately $100 million anticipated in Q4, indicating a significant reduction from previous quarters in 2024 [28][33] - The company achieved a high FPSO uptime of 99% during the quarter, although voidage replacement was approximately 90% below the 100% target due to lower than planned uptime of generators [12][13] Business Line Data and Key Metrics Changes - In Equatorial Guinea, gross production averaged around 23,000 barrels of oil per day, with an infill drilling campaign underway that is expected to increase production to around 30,000 barrels of oil per day [16][17] - In the U.S. Gulf of Mexico, production was ahead of expectations at 17,000 barrels of oil equivalent net to the company, with current production increasing to approximately 20,000 barrels of oil equivalent per day [18][21] - The TEN field performed slightly ahead of expectations with gross oil production of 18,500 barrels of oil per day in the quarter [16] Market Data and Key Metrics Changes - The company is actively managing future price volatility through a rolling hedging program, currently hedging around 45% of first half 2025 oil production with downside protection of approximately $70 per barrel [32] - The partnership contracted a new 4D seismic survey over the Jubilee field, which is expected to enhance understanding of the reservoir and fluid movements [14][15] Company Strategy and Development Direction - The company plans to prioritize free cash flow in 2025, focusing on disciplined capital allocation and significantly reducing growth CapEx year-on-year [11][36] - The company aims to grow production by 50% from around 60,000 barrels of oil equivalent per day to approximately 90,000 barrels of oil equivalent per day by year-end [7][36] - The company is deferring sanctions for the Tiberius project to the second half of 2025 to prioritize cash generation [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving year-end goals, with production expected to ramp up towards the target of approximately 90,000 barrels of oil equivalent per day [36] - The management noted that the Akeng Deep well is crucial for opening up new plays and will impact capital allocation decisions in 2026 rather than 2025 [50] - The management acknowledged that the transition of power in Senegal has slightly slowed discussions regarding the Yakaar-Teranga project, but emphasized that it has not significantly impacted ongoing operations [88][90] Other Important Information - The company completed a series of tender offers to repurchase $500 million of outstanding senior notes, resulting in no maturities in 2025 and only a small stub in 2026 [31] - The company is working on refinancing the FPSO leaseback arrangement with BP, which is expected to reduce operational expenses significantly [86] Q&A Session Summary Question: 2025 CapEx outlook and changes - Management clarified that the $550 million CapEx indication was a guideline, with a focus on free cash flow delivery and a primary delta related to the Tiberius project sliding to the second half of 2025 [39][42] Question: Jubilee drilling priorities for 2025 - Management indicated that the 4D seismic data will inform the next phase of drilling, balancing the need to start drilling while incorporating new information [44][46] Question: Implications of Akeng Deep success on 2025 capital - Success in the Akeng Deep well will open new opportunities but will primarily impact capital allocation decisions in 2026 rather than 2025 [50] Question: Commissioning process for the FLNG vessel - Management explained that the commissioning process is being accelerated, with production recognition expected to occur shortly after gas introduction [57][60] Question: Current production levels in the U.S. Gulf of Mexico - Current production levels are around 20,000 barrels of oil per day, excluding the two Winterfell wells that are being restarted [65] Question: Target leverage point for shareholder returns - Management aims to reduce leverage to less than 1.5 times before considering shareholder returns or buybacks [68][69] Question: Update on discussions with Senegalese authorities - Management noted that the transition of power has slowed discussions but emphasized that ongoing projects like GTA are progressing well [88][90]