Kosmos Energy(US:KOS)2025-11-03 17:00Financial 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]