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Kosmos Energy Ltd. (KOS)·Q2 2025 Earnings Summary
Executive Summary
- Q2 2025 delivered rising sales volumes and revenue but a GAAP net loss, with adjusted EPS and EBITDA missing Street estimates; revenue was $393.5M and GAAP diluted EPS was -$0.18, while adjusted diluted EPS was -$0.19 . Wall Street consensus for Q2 was EPS -$0.09, revenue ~$398.3M, and EBITDA ~$204.8M; actuals were -$0.19 EPS, ~$392.9M revenue, and ~$141.7M EBITDA, driving a meaningful miss across EPS and EBITDA (S&P Global)*.
- Operationally, GTA achieved COD in June with 3.5 gross LNG cargos lifted in Q2 and production ramping toward the 2.7 mtpa nameplate in Q4; Jubilee brought the first new producer online (~10 kbopd gross) post-quarter, while Gulf of America production was at the upper end of guidance .
- Guidance changes: FY production guidance lowered to 65–70 kboepd (from 70–80), FY opex raised to $22–24/boe (from $18–20), and FY capex cut to ~$350M (from <$400M), reflecting slower GTA ramp and lower Jubilee output but tighter capital discipline .
- Balance sheet resilience actions include indicative terms for a secured Gulf of America term loan up to $250M to address 2026 notes, an RBL covenant waiver adjustment through March 2026, and increased 2026 oil hedges (7 MMBbl) targeting ~50% hedged by year-end .
- Near-term catalysts: execution on GTA FPSO refinancing, continued GTA ramp to nameplate, second Jubilee producer later in 2025, Winterfell-4 first oil, and potential Phase 1+ clarity on brownfield expansion and domestic gas agreements .
What Went Well and What Went Wrong
What Went Well
- GTA reached COD; production at contracted volumes (~2.45 mtpa equivalent), with 3.5 gross LNG cargos lifted in Q2 and cadence increasing; partners target nameplate (2.7 mtpa) in Q4 and first condensate cargo in late Q3 .
- Jubilee drilling restarted: J-72 producer encountered more pay than expected and is producing ~10 kbopd gross; program optimized to add a second producer by year-end; improved imaging from fast-track NAZ seismic with OBN planned, enabling better target selection .
- Discipline on costs and liquidity: FY capex cut to
$350M; overhead reduction on track ($25M); indicative $250M secured term loan to manage 2026 maturity; increased 2026 hedging (floor ~$66, ceiling ~$75) .
Quote: “We set out this year with three clear priorities: Increase production, reduce costs and enhance the resilience of the balance sheet… We are approaching Kosmos’ record high production levels…” .
What Went Wrong
- Earnings miss: adjusted EPS (-$0.19) and EBITDA (~$141.7M) missed Street estimates (-$0.09 EPS;
$204.8M EBITDA); revenue modestly below consensus ($392.9M vs ~$398.3M) (S&P Global)*. - Jubilee gross oil production averaged ~55.3 kbopd in Q2, below expectations due to a nine-day FPSO shutdown, riser instability (since addressed), and underperformance on the eastern side (Jubilee Southeast), pressuring Q2 volumes and FY opex .
- FY opex guidance raised to $22–24/boe (ex-GTA), reflecting lower production and cost timing; tax guidance lowered but net interest unchanged; FY production guidance cut to 65–70 kboepd on slower GTA ramp and lower Jubilee output .
Financial Results
Core P&L vs Prior Year and Prior Quarters
Margin Trends
Values retrieved from S&P Global*.
Q2 2025 vs Wall Street Consensus (S&P Global)
Values retrieved from S&P Global*. Note: Company reports EBITDAX of $149.486M .
KPIs and Cash Metrics
Operational Breakdown (Q2 2025)
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- Strategy: “Our near term focus is on growing production, reducing costs and enhancing the resilience of the balance sheet… significant scope to add long term value…” .
- GTA costs: “Start up and commissioning costs should start to fall away in the second half… refinancing of the FPSO lease… exploring alternative lower cost operating models” .
- Jubilee trajectory: “Three to four wells per year will be needed to maximize the field's full potential… supported by new imaging and reservoir management technology” .
- Capex envelope: “Around $350 million probably right… company is going to continue to grow” .
Q&A Highlights
- Jubilee declines and recovery plan: Management clarified Q2 was impacted by downtime and higher-than-expected decline on the eastern side; regular drilling and better data (NAS, OBN) expected to reestablish potential, aiming ~70 kbopd by year-end and building back toward ~90 kbopd with 2026 wells .
- GTA cost structure: CFO broke down cost components (FLNG toll slightly elevated in Q2 due to bonuses, normalizes to a little over ~$2/mcf, FPSO ~$15M/quarter pre-refi, field OpEx declines in Q4 as commissioning costs roll off) .
- Capex sustainability: Company comfortable operating around ~$350M going forward, prioritizing Jubilee program; Phase 1+ spend likely slower with FID targeted later, supporting free cash flow focus .
- Ghana license MoU specifics: Commitment to increase domestic gas to ~130 mmscf/d with a small price discount; up to 20 wells; fiscal terms unchanged; expected uplift in 2P reserves .
- Domestic gas logistics: Preference for pipeline gas solutions versus LNG regas; domestic gas agreements needed ahead of Phase 1+ FID .
Estimates Context
- Q2 2025 vs consensus: EPS -$0.09 vs actual -$0.19 (miss), revenue ~$398.3M vs $393.5M (miss), EBITDA ~$204.8M vs ~$141.7M (miss). Values retrieved from S&P Global*.
- Implications: Street likely to trim near-term EBITDA and EPS on raised FY opex and lowered production, while medium-term revisions may reflect improving volumes from Jubilee and GTA cost normalization (FPSO refi and operating model changes) .
Key Takeaways for Investors
- Near-term: Earnings miss driven by opex and lower Jubilee volumes; watch Q3 for GTA cost roll-off, FPSO refi progress, and Winterfell-4 contribution to stabilize margins .
- Production trajectory: Post-quarter Jubilee producer adds ~10 kbopd gross; second producer by year-end; GTA ramp to nameplate in Q4—key catalysts for sequential volume growth .
- Cost reduction path: Opex should improve as commissioning costs fade and FPSO refi closes; alternative operating models could further lower GTA unit costs .
- Balance sheet: Indicative $250M secured term loan offsets 2026 notes; increased 2026 hedges reduce downside; RBL covenant adjustment provides runway through March 2026 .
- Guidance reset: FY production lowered and opex raised; capex cut to ~$350M underscores capital discipline—monitor execution against revised plan and potential reversion if volumes ramp .
- Strategic upside: Phase 1+ brownfield expansion (doubling gas throughput) and Ghana license extensions (to 2040) provide multi-year reserve and production optionality with modest incremental capex .
- Trading lens: Near-term stock reaction likely sensitive to visible GTA cost progress and Jubilee well performance; sustained delivery on sequential production growth and de-risked costs could support multiple normalization.
Footnote: Values marked with an asterisk (*) were retrieved from S&P Global.