Sign in
KE

Kosmos Energy Ltd. (KOS)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 came in soft versus expectations: revenue of $290.43M and diluted EPS of $(0.23) missed S&P Global consensus of $319.16M and $(0.08), driven by planned shutdowns (Jubilee FPSO, Kodiak), underlift (~1.2 mmboe), and no Q1 cash contribution from GTA sales; free cash flow was $(91.1)M .
  • Guidance intact: FY25 production 70–80 mboe/d and CapEx “<$400M” maintained; 2Q25 step-up to 66–72 mboe/d as GTA ramps and maintenance subsides; OpEx $25–27/boe in 2Q and $18–20/boe FY (ex-GTA costs) .
  • Strategic positives: first LNG cargo at GTA in April; all four FLNG trains operational and being tested ~10% above nameplate; FPSO refinancing targeted in 2H25 to lower phase-1 OpEx; Phase 1+ low-cost brownfield expansion work underway .
  • Balance sheet and risk management: RBL redetermination maintained $1.35B facility; ~40% of remaining 2025 oil production hedged with $65 floor/$80 ceiling; net debt $2.85B, liquidity ~$400M .
  • Near-term stock catalysts: sustained GTA cargo cadence and cost normalization, Ghana infill drilling (rig arrival May; two Jubilee wells 2025), Winterfell-4 online in 3Q25, and clarity on FPSO refinancing lowering GTA OpEx .

What Went Well and What Went Wrong

  • What Went Well

    • GTA reached first LNG cargo in April; second cargo lifting underway; all FLNG trains operational and tested ~10% above nameplate; reservoir performance ahead of expectations (potentially fewer future wells) .
    • Cost discipline progressing: Q1 CapEx $86M (below plan on Ghana 4D seismic and Winterfell-4 delay); pushing FY CapEx below prior $400M guide; overhead reduction program advancing .
    • Balance sheet resilience: RBL spring redetermination supported $1.35B facility; rolling hedges increased (~40% of remaining 2025 oil) with $65 floor/$80 ceiling .

  • What Went Wrong

    • Earnings miss and negative FCF: revenue $290.43M and EPS $(0.23) below consensus; FCF $(91.1)M as liftings timing, heavy planned maintenance, and no Q1 GTA cash inflow weighed on results .
    • Higher unit costs: OpEx/boe rose to $37.64 (vs $16.42 YoY) on lower volumes and maintenance; ex-GTA OpEx/boe $24.99 .
    • GoA operational hiccup: Winterfell-3 remediation unsuccessful; sidetrack under evaluation; production underperformed in 1Q due to Kodiak host shutdown (now completed) .

Financial Results

Main P&L vs prior year, prior quarter, and estimates (oldest → newest):

MetricQ1 2024Q4 2024Q1 2025
Total Revenues & Other Income ($M)419.14 397.66 290.43
Diluted EPS ($)0.19 (0.01) (0.23)
Net Income (Loss) ($M)91.69 (6.58) (110.61)
Net Income Margin (%)21.9% (1.7)% (38.1)%
EBITDA ($M)——78.48*
EBITDA Margin (%)——27.0%*

Notes: EBITDA and margin are S&P Global standardized; company also reports EBITDAX of $103.48M in Q1 2025 .
Values with asterisks (*) retrieved from S&P Global.

Revenue mix and volumes (YoY comparison, oldest → newest):

MetricQ1 2024Q1 2025
Oil sales ($M)402.12 270.41
Gas sales ($M)15.14 17.63
NGL sales ($M)1.85 2.10
Total oil & gas revenue ($M)419.10 290.14
Total volumes (MMBoe)5.701 4.445
Avg total sales price ($/Boe)73.52 65.27

Key KPIs and balance sheet (QoQ where available, oldest → newest):

KPIQ4 2024Q1 2025
Net production (boe/d)~66,800 ~60,500
Sales volumes (MMBoe)6.042 4.445
Realized revenue ($/Boe)65.38 64.87
OpEx ($/Boe)25.27 37.64 (ex-GTA: $24.99)
CapEx ($M)117 86
Free Cash Flow ($M)14.33 (91.13)
Underlift (MMboe)~0.2 ~1.2
Net Debt ($M)2,715.0 (12/31/24) 2,850.2 (3/31/25)

Estimate comparison (Q1 2025):

MetricActualS&P Global ConsensusSurprise
Revenue ($M)290.43 319.16*(8.99%)*
Diluted EPS ($)(0.23) (0.08)*(0.15)*
EBITDA ($M)78.48*152.04*(48.4%)*

Values retrieved from S&P Global.

Guidance Changes

FY 2025 guidance vs previous (as of Q4 2024 vs Q1 2025):

MetricPeriodPrevious Guidance (Feb 24)Current Guidance (May 6)Change
Production (boe/d)FY 202570,000–80,000 70,000–80,000 Maintained
OpEx ($/boe, ex-GTA)FY 202518–20 18–20 Maintained
DD&A ($/boe)FY 202522–24 22–24 Maintained
G&A ($M)FY 202580–100 80–100 Maintained
Exploration Expense ($M)FY 202525–45 25–45 Maintained
Net Interest Expense ($M)FY 2025180–200 180–200 Maintained
Tax ($/boe)FY 20256–8 6–8 Maintained
Capital Expenditure ($M)FY 2025<400 <400 (working to lower) Maintained (bias lower)
GTA Gross Cargos (FY)FY 202520–25 20–25 Maintained

Select 2Q 2025 guidance (point-in-time detail):

MetricPeriodGuidance
Production (boe/d)2Q 202566,000–72,000
OpEx ($/boe, ex-GTA)2Q 202525–27
DD&A ($/boe)2Q 202520–22
G&A ($M)2Q 202520–25
Net Interest Expense ($M)2Q 2025~50
Tax ($/boe)2Q 20254–6
CapEx ($M)2Q 2025120–140
Ghana net cargos2Q 20253–4 cargos
EG net cargos2Q 20251 cargo
GTA gross cargos2Q 20254.5–5.5 cargos

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
GTA ramp-up and capacityFirst gas/LNG imminent; wells completed; first LNG expected around end-Q4’24 First LNG cargo loaded; second underway; trains tested ~10% above nameplate; exploring upgrades to >3 mtpa and Phase 1+ brownfield expansion Improving; upside to contracted volumes
Cost discipline and CapEx2025 CapEx cut to ~$400M from ~$550M Q1 CapEx $86M; pushing FY < $400M; overhead -$25M targeted Strengthening
Ghana operations & drilling4D seismic planned; optimize 2025 drilling; FPSO reliability focus 4D seismic completed; rig arriving May; two Jubilee wells in 2025; AI-supported production optimization highlighted Execution ramping
U.S. Gulf of America (Winterfell/Tiberius)Winterfell start-up; remediation at 3rd well; Tiberius sanction deferred to 2H25 Winterfell-3 remediation unsuccessful; Winterfell-4 drilling underway for 3Q25 online; lower-cost Tiberius plan with OBN seismic Mixed: near-term remediation, medium-term optimization
Balance sheet/hedgingSenior notes issued; RBL upsized to $1.35B; liquidity $715M RBL size maintained; ~40% of 2025 oil hedged ($65 floor/$80 ceiling) Stable to improving resilience
NOC financing (GTA)GTA progressing to revenue recognition on first cargo NOC financing outflows end near-term; repayments expected to begin as GTA ramps and costs fall Improving cash cycle

Management Commentary

  • “Production is ramping up to the contracted sales volume, with potential to push higher towards, or beyond, the nameplate capacity of the FLNG vessel of 2.7 mtpa.” — CEO Andrew Inglis .
  • “We are working to reduce full year 2025 capex below the $400 million guidance... and have made significant progress on the $25 million overhead reduction target.” — CFO Neal Shah (press release) .
  • “We now have approximately 40% of remaining 2025 oil production hedged with a floor of approximately $65/boe and a ceiling of approximately $80/boe.” — CFO Neal Shah .
  • “We believe the enhanced 4D image will greatly improve our reservoir models and when combined with AI-supported production optimization will enable... higher field recovery.” — CEO Andrew Inglis .
  • “FLNG trains are being tested at around 10% above... nameplate capacity... we’ll test the common systems at the maximum rate to get a better picture of where we can safely operate above the contracted sales volume.” — CEO Andrew Inglis .

Q&A Highlights

  • GTA throughput and timeline: management expects testing through 2Q to determine sustainable rates above nameplate; upside volumes beyond 2.45 mtpa ACQ could be realized once stable .
  • Breakeven and capital allocation: company targets ~$50/bbl Brent corporate breakeven in 2026 with minimal committed CapEx (primarily four Jubilee infill wells), which have project breakevens near ~$30/bbl .
  • Leverage/liquidity: plan to pay down 2026 notes largely from FCF; liquidity levers include secured financing on unencumbered GTA/GoA assets if needed; hedging mitigates downside .
  • NOC financing: development loan outflows conclude near-term; repayments to begin as production increases and GTA OpEx declines .
  • GTA offtake terms: ACQ 2.45 mtpa; pricing ~9.5% slope to Brent, FOB .

Estimates Context

  • Results vs S&P Global consensus: Q1 2025 revenue $290.43M vs $319.16M*, EPS $(0.23) vs $(0.08), EBITDA $78.48M vs $152.04M* — a broad-based miss tied to underlift, scheduled maintenance (Jubilee/Kodiak), and lack of Q1 GTA cash inflow .
  • Forward estimates imply step-up in 2H as GTA contributes and Ghana infill drives volumes; monitor estimate revisions post-miss and after 2Q guidance reaffirmation/updates (consensus datapoints available above).
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Near-term setup: 2Q production +15% q/q midpoint per management; cargo cadence at GTA and Ghana/EG liftings should normalize cash conversion into 2H .
  • Cost down/cash up story: targeted CapEx reductions and overhead cuts, plus GTA FPSO refinancing in 2H25, are central to improving OpEx/boe and FCF trajectory .
  • GTA optionality: testing above nameplate and Phase 1+ expansion could lift volumes and lower unit costs, creating upside to medium-term EBITDA beyond contracted levels .
  • Execution watch-items: Ghana drilling delivery (two Jubilee wells in 2025), Winterfell-4 online in 3Q25, and resolution of Winterfell-3 reserves via sidetrack .
  • Balance sheet: RBL capacity maintained; ~40% 2025 oil hedged ($65–$80); plan to delever with FCF; consider secured financing on unencumbered assets if macro weakens .
  • Valuation narrative: stock likely sensitive to GTA throughput evidence, OpEx normalization, and cash paydown pace—clear catalysts over next 1–2 quarters.

Citations:

  • Q1 2025 8-K and Exhibit 99.1 press release, including financials, KPIs, guidance, and non-GAAP reconciliations .
  • Q1 2025 earnings call transcript for management commentary and Q&A .
  • Additional press releases on GTA first LNG cargo and Q4/FY results context .

S&P Global disclaimer: Asterisked values are retrieved from S&P Global.