Kosmos Energy(KOS) - 2025 Q2 - Quarterly Results

Executive Summary Q2 2025 Financial Performance Kosmos Energy recorded a net loss of $88 million and an adjusted net loss of $93 million in Q2 2025, with revenue of $393 million and an average sales price of $58.93 per boe Financial Metrics | Indicator | Amount (million USD) | Per Share (USD) | | :------------------- | :-------------- | :---------- | | Net Loss | 88 | 0.18 | | Adjusted Net Loss | 93 | 0.19 | Revenue and Production Costs | Indicator | Amount (million USD) | Per Boe (USD) | | :------ | :-------------- | :---------------- | | Revenue | 393 | 58.93 | | Production Expenses | 243 | 28.22 (excluding GTA) | Q2 2025 Operational Highlights The company achieved approximately 63,500 boepd net production and 73,200 boepd sales volume, with the GTA LNG project reaching COD and Jubilee's first well producing 10,000 bopd Operational Metrics | Indicator | Value | | :------------------- | :---------------- | | Net Production | ~63,500 boepd | | Sales Volume | ~73,200 boepd | | Capital Expenditure | $86 million | | Operating Cash Flow | $127 million | | Free Cash Flow | $45 million | - The GTA project's Gimi FLNG vessel successfully achieved Commercial Operations Date (COD)[2] - 3.5 LNG cargoes were offloaded from the GTA project in the second quarter[2] - The first production well at the Jubilee field was drilled and brought online, with initial production of approximately 10,000 bopd[2] CEO Commentary & Strategic Priorities CEO Andrew G. Inglis highlighted progress in increasing production, reducing costs, and enhancing balance sheet resilience, with GTA ramp-up, capital budget reduction, and overhead cuts - The company's three priorities are: increasing production, reducing costs, and enhancing balance sheet resilience[3] - GTA project production is ramping up smoothly, with the FLNG achieving Commercial Operations Date, and 6.5 LNG cargoes offloaded year-to-date[3] - Full-year capital budget reduced from $400 million to approximately $350 million[4] - Targeting $25 million in overhead cost reductions by year-end[4] Financial Update Q2 2025 Financial Overview Net capital expenditure for Q2 2025 was $86 million, below expectations due to reduced spending in Mauritania, Senegal, and the Gulf of Mexico, while operating costs were slightly higher Financial Summary | Indicator | Amount (million USD) | | :------------------- | :-------------- | | Net Capital Expenditure | 86 | | Net Cash Provided by Operating Activities | 127 | | Free Cash Flow | 45 | | Net Debt (period-end) | 2,850 | | Available Liquidity (period-end) | 400 | - Operating costs were higher than expected, primarily due to lower-than-anticipated production and a one-off lifting at the Ghana TEN project[6] Capital Expenditure & Cost Reduction The company reduced its full-year capital expenditure guidance to approximately $350 million and aims to achieve $25 million in overhead cost reductions by year-end - Full-year capital expenditure guidance reduced to approximately $350 million (previously $400 million)[5] - On track to achieve $25 million in overhead cost reductions by year-end[5] Cash Flow & Liquidity The company generated $127 million in net cash from operating activities and $45 million in free cash flow, with net debt of $2.85 billion and available liquidity of $400 million at quarter-end Cash Flow and Liquidity Metrics | Indicator | Amount (million USD) | | :------------------- | :-------------- | | Net Cash Provided by Operating Activities | 127 | | Free Cash Flow | 45 | | Net Debt (period-end) | 2,850 | | Available Liquidity (period-end) | 400 | Hedging Strategy Kosmos increased hedging during periods of rising oil prices, with 5 million barrels hedged for 2025 at a floor of $62/barrel and 7 million barrels for 2026 at a floor of $66/barrel Hedging Positions | Year | Hedged Volume (million barrels) | Floor Price (USD/barrel) | Cap Price (USD/barrel) | | :--- | :-------------- | :--------------- | :--------------- | | 2025 | 5 | ~62 | ~77 | | 2026 | 7 | ~66 | ~75 | - The target is to hedge approximately 50% of 2026 oil production by year-end[7] Debt Management The company revised its RBL facility's debt coverage calculation to address GTA project timing and secured preliminary terms for a $250 million senior secured term loan to repay 2026 unsecured notes - Successfully revised the debt coverage calculation for the Reserve Based Lending (RBL) facility to accommodate the impact of the GTA project's start-up timing[8] - Preliminary terms agreed for a senior secured term loan facility of up to $250 million for general corporate purposes, including repayment of unsecured notes due in 2026[9] - The term loan facility is expected to close by the end of Q3 2025[9] Operational Update Overall Production & Guidance Total net production in Q2 2025 was approximately 63,500 boepd, below guidance due to GTA project timing and Jubilee field decline, with full-year guidance adjusted to 65,000 – 70,000 boepd Production and Guidance Summary | Indicator | Value | | :------------------- | :---------------- | | Q2 2025 Total Net Production | ~63,500 boepd | | Full-Year 2025 Production Guidance | 65,000 – 70,000 boepd | | Net Underlift (as of Q2 end) | ~0.3 million boe | - Production was below guidance, primarily due to slower GTA project start-up timing and declining production at the Jubilee field[10] Mauritania and Senegal (GTA Project) The GTA FLNG vessel achieved COD in June, with production reaching contracted volumes, and Kosmos ceased funding national oil companies' GTA capital expenditure share, while partners work on cost reduction and ramp-up - The GTA FLNG vessel successfully achieved Commercial Operations Date (COD) in June[11] - Kosmos has ceased carrying the national oil companies' share of GTA capital expenditure[11] GTA Project Metrics | Indicator | Value | | :------------------- | :---------------- | | Q2 2025 Net Production | ~7,100 boepd | | Q2 2025 LNG Cargoes Offloaded | 3.5 (total) | | Target Production (Q4) | 2.7 mtpa (FLNG nameplate capacity) | - Partners are implementing various measures to reduce GTA Phase 1 operating costs and plan for a future low-cost Phase 1+ expansion[12][14] Ghana (Jubilee & TEN) Ghana's Q2 net production was approximately 29,100 boepd, with Jubilee impacted by FPSO downtime and well performance, while a new well (J-72) is producing 10,000 bopd and a license extension to 2040 was signed Ghana Production Summary | Indicator | Value | | :------------------- | :---------------- | | Q2 2025 Ghana Net Production | ~29,100 boepd | | Q2 2025 Jubilee Gross Production | ~55,300 bopd | | J-72 Initial Gross Production | ~10,000 bopd | | Q2 2025 TEN Gross Production | ~15,900 bopd | - Jubilee field production was affected by FPSO downtime, riser instability, and underperforming wells[16] - A Memorandum of Understanding was signed with the Government of Ghana to extend the production license to 2040, expected to significantly increase 2P reserves[19] - Planned Ocean Bottom Node (OBN) seismic data acquisition later this year to further improve imaging and support future drilling activities[18] Gulf of Mexico Gulf of Mexico net production in Q2 was approximately 19,600 boepd, with the Winterfell-4 well expected online in Q3 2025, and Tiberius and Gettysburg projects evaluating development options Gulf of Mexico Production | Indicator | Value | | :------------------- | :---------------- | | Q2 2025 Gulf of Mexico Net Production | ~19,600 boepd | | Oil Percentage | ~84% | - The Winterfell-4 well is expected to come online by the end of Q3 2025[21] - The Tiberius project aims for a Final Investment Decision (FID) in 2026[22] - The Gettysburg project plans a low-cost single-well tie-back development with Shell[23] Equatorial Guinea Equatorial Guinea's Q2 gross production was approximately 22,000 bopd, impacted by subsea pump mechanical issues, with a replacement pump expected in Q4 to restore production Equatorial Guinea Production | Indicator | Value | | :------------------- | :---------------- | | Q2 2025 Equatorial Guinea Gross Production | ~22,000 bopd | | Q2 2025 Equatorial Guinea Net Production | ~7,700 bopd | - Production was affected by mechanical failure of a subsea pump[24] - The first replacement pump is expected to be installed in Q4, with production anticipated to recover thereafter[24] Financial Statements Consolidated Statements of Operations In Q2 2025, total revenues and other income were $393.5 million, a 12.7% decrease year-over-year, while total costs and expenses increased by 44.8% to $457.3 million, resulting in a net loss of $87.7 million Consolidated Statements of Operations | Indicator (thousand USD) | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :------- | :------- | :------- | | Oil and Gas Revenue | 392,635 | 450,900 | -12.9% | | Total Revenues and Other Income | 393,518 | 450,936 | -12.7% | | Oil and Gas Production Costs | 243,118 | 150,733 | +61.3% | | Exploration Expenses | 4,069 | 13,235 | -69.2% | | Depletion, Depreciation and Amortization | 151,268 | 90,094 | +67.9% | | Interest and Other Financing Costs | 54,834 | 37,279 | +47.1% | | Derivatives, Net | (21,566) | (2,852) | -656.2% | | Total Costs and Expenses | 457,278 | 315,812 | +44.8% | | Net Income (Loss) | (87,740) | 59,770 | -246.8% | | Diluted Net Income (Loss) Per Share | (0.18) | 0.12 | -250.0% | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $5.213 billion, a slight decrease from $5.309 billion at December 31, 2024, with total liabilities at $4.195 billion and total shareholders' equity at $1.018 billion Condensed Consolidated Balance Sheets | Indicator (thousand USD) | June 30, 2025 | December 31, 2024 | Change Rate | | :----------------------- | :------------- | :------------- | :----- | | Cash and Cash Equivalents | 51,694 | 84,972 | -39.16% | | Total Current Assets | 363,380 | 446,132 | -18.56% | | Property and Equipment, Net | 4,357,812 | 4,444,221 | -1.94% | | Total Assets | 5,213,006 | 5,308,988 | -1.81% | | Total Current Liabilities | 809,283 | 594,948 | +36.02% | | Long-Term Debt, Net | 2,600,553 | 2,744,712 | -5.39% | | Total Liabilities | 4,195,222 | 4,108,564 | +2.11% | | Total Shareholders' Equity | 1,017,784 | 1,200,424 | -15.21% | Condensed Consolidated Statements of Cash Flow In Q2 2025, net cash provided by operating activities was $127.2 million, net cash used in investing activities was $125.3 million, and net cash used in financing activities was $1 thousand, resulting in a net increase of $1.903 million in cash and restricted cash Condensed Consolidated Statements of Cash Flow | Indicator (thousand USD) | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :------- | :------- | :------- | | Net Cash Provided by Operating Activities | 127,168 | 223,657 | -43.1% | | Net Cash Used in Investing Activities | (125,264) | (238,218) | +47.4% | | Net Cash Provided by (Used in) Financing Activities | (1) | (69,234) | +99.99% | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | 1,903 | (83,795) | +102.3% | | Cash, Cash Equivalents and Restricted Cash at End of Period | 51,999 | 174,118 | -70.1% | Non-GAAP Financial Measures & Reconciliations EBITDAX EBITDAX for Q2 2025 was $149.5 million, representing a 46.8% decrease compared to $281 million in the prior year period EBITDAX Reconciliation | Indicator (thousand USD) | Q2 2025 | Q2 2024 | YoY Change | | :-------------- | :------- | :------- | :------- | | Net Income (Loss) | (87,740) | 59,770 | -246.8% | | Exploration Expenses | 4,069 | 13,235 | -69.2% | | Depletion, Depreciation and Amortization | 151,268 | 90,094 | +67.9% | | Derivatives, Net | (21,566) | (2,852) | -656.2% | | Interest and Other Financing Costs, Net | 54,834 | 37,279 | +47.1% | | Income Tax Expense | 23,980 | 75,354 | -68.2% | | EBITDAX | 149,486 | 281,040 | -46.8% | Adjusted Net Income (Loss) Adjusted net loss for Q2 2025 was $92.7 million, compared to an adjusted net income of $80.48 million in the prior year, resulting in a diluted adjusted net loss per share of $0.19 Adjusted Net Income (Loss) Reconciliation | Indicator (thousand USD) | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :------- | :------- | :------- | | Net Income (Loss) | (87,740) | 59,770 | -246.8% | | Derivatives, Net | (21,566) | (2,852) | -656.2% | | Debt Modification and Extinguishment | — | 22,531 | -100.0% | | Adjusted Net Income (Loss) | (92,697) | 80,482 | -215.1% | | Diluted Adjusted Net Income (Loss) Per Share | (0.19) | 0.17 | -211.8% | Free Cash Flow Free cash flow for Q2 2025 significantly improved to $44.65 million from a negative $14.51 million in the prior year, with underlying business free cash flow at $58.28 million Free Cash Flow Reconciliation | Indicator (thousand USD) | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :------- | :------- | :------- | | Net Cash Provided by Operating Activities | 127,168 | 223,657 | -43.1% | | Net Cash Used for Oil and Gas Properties - Underlying Business | (68,886) | (120,525) | +42.8% | | Underlying Business Free Cash Flow | 58,282 | 103,132 | -43.5% | | Net Cash Used for Oil and Gas Properties - Mauritania/Senegal | (13,635) | (117,646) | +88.4% | | Free Cash Flow | 44,647 | (14,514) | +407.6% | Net Debt As of June 30, 2025, the company's net debt increased to $2.848 billion from $2.715 billion at December 31, 2024 Net Debt Reconciliation | Indicator (thousand USD) | June 30, 2025 | December 31, 2024 | Change Rate | | :----------------------- | :------------- | :------------- | :----- | | Total Long-Term Debt | 2,900,274 | 2,800,274 | +3.57% | | Cash and Cash Equivalents | 51,694 | 84,972 | -39.16% | | Total Restricted Cash | 305 | 305 | 0.00% | | Net Debt | 2,848,275 | 2,714,997 | +4.91% | Operational Summary & Guidance Q2 2025 Operational Summary In Q2 2025, net sales volume was 6.663 million boe, with average daily sales of 73,216 boepd, total oil and gas revenue of $392.6 million, and an average sales price of $58.93/boe Q2 2025 Operational Summary | Indicator | Q2 2025 | Q2 2024 | YoY Change | | :----------------------- | :------- | :------- | :------- | | Net Sales Volume (MMBoe) | 6.663 | 5.954 | +11.9% | | Average Daily Sales Volume (Mboepd) | 73.216 | 65.423 | +11.9% | | Total Oil and Gas Revenue (thousand USD) | 392,635 | 450,900 | -12.9% | | Realized Revenue (thousand USD) | 404,049 | 446,411 | -9.5% | | Average Realized Sales Price (USD/Boe) | 58.93 | 75.73 | -22.2% | | Oil and Gas Production Costs (USD/Boe) | 36.49 | 25.31 | +44.2% | - As of June 30, 2025, Kosmos was net underlifted by approximately 0.3 million boe[48] Hedging Summary As of June 30, 2025, the company hedged 4 million barrels of crude for 2025 and 7 million barrels for 2026, utilizing various options and swap contracts to manage price exposure Hedging Positions as of June 30, 2025 | Year | Type | Index | MBbl | Floor Price (USD) | Put Strike Price (USD) | Cap Price (USD) | | :--- | :--- | :--- | :--- | :--------- | :----------------- | :--------- | | 2025 | Two-Way Collar | Dated Brent | 4,000 | 60.00 | — | 74.94 | | 2025 | Three-Way Collar | Dated Brent | 1,000 | 70.00 | 55.00 | 85.00 | | 2026 | Two-Way Collar | 1H26 Dated Brent | 1,000 | 60.00 | — | 74.75 | | 2026 | Three-Way Collar | FY26 Dated Brent | 2,000 | 60.00 | 50.00 | 75.51 | | 2026 | Swap | 1H26 Dated Brent | 1,000 | 72.90 | — | — | | 2026 | Swap | FY26 Dated Brent | 3,000 | 70.62 | — | — | 2025 Guidance The company updated its full-year 2025 guidance, projecting production between 65,000 - 70,000 boepd, operating expenses (excluding GTA) of $22.00 - $24.00/boe, and capital expenditure of approximately $350 million 2025 Guidance Summary | Indicator | Q3 2025 Guidance | Full-Year 2025 Guidance | | :------------------- | :------------- | :------------- | | Production (boepd) | 65,000 - 71,000 | 65,000 - 70,000 | | Operating Expenses (USD/boe) | $18.50 - $20.50 | $22.00 - $24.00 | | Depletion, Depreciation and Amortization (USD/boe) | $22.00 - $24.00 | $22.00 - $24.00 | | General and Administrative Expenses (million USD) | ~$20 | $80 - $100 | | Exploration Expenses (million USD) | ~$10 | $25 - $45 | | Net Interest Expense (million USD) | ~$55 | ~$200 | | Taxes (USD/boe) | $3.00 - $5.00 | $4.00 - $6.00 | | Capital Expenditure (million USD) | $75 - $100 | ~$350 | - Full-year 2025 operating expenses exclude GTA project operating costs, estimated at $225 million - $245 million net[57] Company Information & Disclosures Conference Call and Webcast Information Kosmos Energy will host a conference call and webcast on August 4, 2025, to discuss its Q2 2025 financial and operational results, accessible via the company website or phone - The conference call and webcast will be held on August 4, 2025[26] - The webcast can be accessed through the company's investor page[26] About Kosmos Energy Kosmos Energy is a leading deepwater exploration and production company focused on global energy demand, with diverse assets in Ghana, Equatorial Guinea, Mauritania, Senegal, and the Gulf of Mexico - Kosmos Energy is a leading deepwater exploration and production company[27] - Possesses diverse oil and gas production assets in Ghana, Equatorial Guinea, Mauritania, Senegal, and the Gulf of Mexico[27] - Listed on the New York Stock Exchange and London Stock Exchange under the ticker symbol KOS[27] - Committed to business principles including transparency, ethics, human rights, safety, and environmental stewardship[27] Non-GAAP Financial Measures Explanation This report uses non-GAAP financial measures like EBITDAX, adjusted net income, free cash flow, and net debt, which management and external users employ to assess performance and provide comparability within the oil and gas industry - Non-GAAP financial measures include EBITDAX, adjusted net income (loss), adjusted net income (loss) per share, free cash flow, and net debt[28] - These metrics are used by management and external users to evaluate company performance in the oil and gas industry and provide a useful tool for period-to-period and company-to-company comparability[29] - Forward-looking non-GAAP financial measures cannot be reliably reconciled to the most directly comparable GAAP financial measures[30][31] Forward-Looking Statements This press release contains forward-looking statements regarding future expectations, beliefs, or activities, which are subject to risks and uncertainties that may cause actual results to differ materially from projections - This press release contains forward-looking statements concerning the company's future expectations, beliefs, or activities[32] - Forward-looking statements are based on current expectations and estimates of future events and trends but are subject to various risks and uncertainties that could cause actual results to differ materially[32] - The company undertakes no obligation to update or revise these statements unless required by applicable law[32]