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Kosmos Energy Ltd. (KOS)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered a small GAAP net loss of $6.6 million (–$0.01 diluted EPS) on $397.7 million of revenue, with an adjusted net loss of $16 million (–$0.03) as higher exploration charges and transition costs weighed on results .
  • Operations reached critical milestones at Greater Tortue Ahmeyim (GTA): first gas on Dec 31, 2024, first LNG in February 2025, and first cargo loading in April 2025—setting up revenue recognition commencement in Q1 2025 and a ramp to steady-state from Q2 2025 .
  • 2025 capital discipline is a central theme: capex guided to “<$400M” versus the prior ~$550M indication, with ~50% year-on-year reduction and targeted ~$25M overhead cuts by year-end 2025; management prioritizes deleveraging to <1.5x leverage by H2 2026 .
  • Production trends: Q4 net production ~66.8k boe/d (below guidance due to Jubilee reliability/water injection and Winterfell downtime), but remediation actions are in place; 2025 production guided to 70–80k boe/d .
  • Estimate comparison: S&P Global Wall Street consensus could not be retrieved (system limit). As such, “vs. estimates” is not included; investors should focus on Q1 ramp and Q2 free cash flow run-rate as the likely near-term stock catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • GTA commissioning milestones achieved: “first gas” (Dec 31, 2024), “first LNG” (Feb 2025) and first cargo loading (Apr 17, 2025), setting up revenue recognition and cash flow commencement in Q1 2025 and ramping thereafter .
    • Strategic pivot to free cash flow: capex cut to “<$400M” in 2025 (vs. ~$550M prior), and overhead reduction targeted at ~$25M by year-end 2025, enabling deleveraging and improved financial resilience .
    • Portfolio depth and longevity: 2P reserve life ~22 years and 2P reserves ~530 mmboe; management underscored potential for brownfield expansion at GTA Phase 1+ to increase capacity at low capex .

  • What Went Wrong

    • Q4 production below guidance due to Jubilee water injection/power reliability issues and Winterfell-3 downtime; management detailed remediation and planned 1Q maintenance impacting near-term volumes .
    • Cost headwinds from GTA start-up/commissioning elevated Q4 costs and capex slightly above guidance; exploration expense rose on Akeng Deep dry hole ($28M) and Asam write-off ($37.2M) .
    • Year-over-year pricing/cost mix headwinds: average total sales price per boe fell to $65.80 (from $75.64), while oil & gas production costs per boe rose to $25.27 (from $15.46), compressing margins .

Financial Results

Quarterly progression (oldest → newest):

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$450.9 $407.8 $397.7
Net Income ($USD Millions)$59.8 $45.0 $(6.6)
Diluted EPS ($)$0.12 $0.09 $(0.01)
Net Income Margin (%)13.3% (59.8/450.9) 11.0% (45.0/407.8) –1.7% (–6.6/397.7)
Net Production (boe/d)~62,100 ~65,400 ~66,800

Year-over-year (Q4 2024 vs Q4 2023):

MetricQ4 2023Q4 2024
Revenue ($USD Millions)$507.8 $397.7
Net Income ($USD Millions)$21.7 $(6.6)
Diluted EPS ($)$0.04 $(0.01)
Avg Total Sales Price per Boe ($/boe)$75.64 $65.80
Oil & Gas Production Costs ($/boe)$15.46 $25.27

Segment/Region snapshot (Q4 2024):

RegionNet ProductionNotes
Ghana~38,600 boe/d 3 cargos lifted in Q4
Gulf of America~18,200 boe/d Winterfell-3 remediation; Winterfell-4 due online 3Q 2025
Equatorial Guinea~10,000 bopd net 1 cargo lifted in Q4
Mauritania & Senegal (GTA)n/a in Q4First LNG Feb 2025; first cargo Apr 2025

Key KPIs (Q4 vs Q3):

KPIQ3 2024Q4 2024
Avg Oil Sales Price ($/bbl)$76.64 $72.62
Avg Total Sales Price ($/boe)$70.18 $65.80
Realized Revenue ($/boe)$69.74 $65.38
Oil & Gas Production Costs ($/boe)$22.97 $25.27
Cash from Operations ($USD Millions)$6.3 $175.7
Free Cash Flow ($USD Millions)$(213.0) $14.3
Capex ($USD Millions)$210 $117
Net Debt ($USD Millions)$2,698.4 (9/30) $2,715.0 (12/31)
Available Liquidity ($USD Millions)~$715 (9/30) ~$535 (12/31)

Non‑GAAP and notable items (Q4):

  • Adjusted net loss $(15.6) million or $(0.03) per diluted share; key adjustments include impairment of suspended well costs $37.2M, derivatives, other items, and tax effects .
  • Exploration expense elevated by Akeng Deep ($28M) and Asam write-off ($37.2M) in Equatorial Guinea .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital ExpenditureFY 2025~$550M (indication) <$400M Lowered
ProductionQ1 2025—62,000–66,000 boe/d Introduced
ProductionFY 2025—70,000–80,000 boe/d Introduced
Opex ($/boe)Q1 2025—$23–$25 Introduced
Opex ($/boe)FY 2025—$18–$20 Introduced
DD&A ($/boe)Q1 2025—$25–$27 Introduced
DD&A ($/boe)FY 2025—$22–$24 Introduced
G&A (~65% cash)Q1 2025—~$25M Introduced
G&A (~65% cash)FY 2025—$80–$100M Introduced
Exploration ExpenseQ1 2025—~$10M Introduced
Exploration ExpenseFY 2025—$25–$45M Introduced
Net Interest ExpenseQ1 2025—~$45M Introduced
Net Interest ExpenseFY 2025—$180–$200M Introduced
Tax ($/boe)Q1 2025—$3–$5 Introduced
Tax ($/boe)FY 2025—$6–$8 Introduced
GTA Opex (net)FY 2025—~$225–$245M (excluded from FY opex) Introduced
Cargo Guidance (Ghana/EG)Q1 2025—Ghana 2; EG 0.5 cargos Introduced
Cargo Guidance (Ghana/EG)FY 2025—Ghana 11–12; EG 3.5 cargos Introduced
Cargo Guidance (Mauri & Senegal)Q1 2025—2 gross cargos Introduced
Cargo Guidance (Mauri & Senegal)FY 2025—20–25 gross cargos Introduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
GTA ramp-up/costsFPSO moored; pre-commissioning cargo to accelerate FLNG cooldown; first LNG expected 4Q 2024 GTA near start-up; commissioning underway; first LNG around end of 4Q 2024 First gas (Dec 31), first LNG (Feb), first cargo (Apr); 2025 is transition year with costs normalizing as volumes ramp and FPSO lease refinanced Improving
Ghana (Jubilee) reservoir managementJ-69 underperforming; voidage ~80%; aim for 100% Voidage ~90%; actions to restore injection; 4D seismic planned Early 2025 voidage >100%; two wells planned in 2025; guidance 70–76 kbopd gross Improving
GoA (Winterfell)First oil in July; 3 wells phase one; 20k boe/d gross capacity Winterfell-3 sand issue; remediation; production enhancement projects outperforming Winterfell-3 remediation in progress; WF-4 online 3Q25; net 2025 GoA 17–20k boe/d Stable to improving
Capex/FCF/debtConcept of 2025 capex ~$550M Cut 2025 capex to ~$400M; liquidity/hedging strengthened 2025 capex “<$400M”; overhead down ~$25M; de-lever to <1.5x by H2’26 Improving discipline
M&A posture——Tullow talks terminated; no revisit planned at current equity levels Neutral

Management Commentary

  • CEO on FCF pivot: “With the end of this highly capital-intensive period… we will now prioritize the generation of free cash flow… 2025 capex budget of $400 million is a reduction of over 50% from recent years.”
  • CEO on GTA: “First LNG production [earlier this month]… first cargo is currently being prepared for loading… a world-scale asset… with significant room to grow production and cash flow.”
  • CFO on leverage path: “Getting to around 1.5x [leverage] is probably towards the back half of ’26… through a combination of debt paydown and EBITDAX growth.”
  • CEO on Jubilee remediation: “Our objective is to get to 100% voidage replacement through the year… we’ve started the year strongly.”
  • CFO on GTA normalized costs: “Normalized recurring OpEx is around $4–$5 per Mcf … plus a little more than another $1 per Mcf for FPSO financing, subject to refinancing.”

Q&A Highlights

  • GTA start-up/commissioning costs: 2025 is a “transition year” with costs higher initially, falling as one-offs roll off, volumes ramp to 2.45 mtpa ACQ, and FPSO lease is refinanced; normalized OpEx ~$4–$5/Mcf plus ~>$1/Mcf FPSO financing .
  • Capex discipline: Ceiling of $400M in 2025 could be “at or lower”; focus on sustaining base (Jubilee, Winterfell) while pacing growth (e.g., Tiberius deferral) to sustain FCF yield; not a “harvest mode” .
  • Jubilee assumptions: Guidance assumes 100%+ voidage replacement, improved power reliability, planned 1Q shutdown, and two wells online in 3Q 2025; 4D seismic to inform 2026 program .
  • GTA Phase 1+: Brownfield debottlenecking (FPSO up to ~800 mmscfd) and incremental domestic gas take at low capex; strong operator/NOC alignment, with studies underway .
  • Leverage & returns: Deleveraging prioritized until <1.5x in H2’26; then revisit balance between debt reduction and shareholder returns .

Estimates Context

  • Wall Street consensus (S&P Global) could not be retrieved due to a system request limit; therefore, this recap does not include “vs consensus” comparisons. Investors should anchor on management’s Q1/Q2 ramp and FY 2025 guidance for near-term modeling .

Key Takeaways for Investors

  • GTA has turned the corner: revenue recognition begins in Q1 2025 with first cargo in April; watch for a steady ramp to the 2.45 mtpa ACQ and potential upside from Phase 1+ debottlenecking—key catalysts into Q2/Q3 .
  • 2025 is a reset year for costs and capex: <$400M capex and ~$25M overhead cuts underpin a FCF inflection; near-term cash goes to deleveraging, with <1.5x targeted by H2 2026 .
  • Ghana execution is critical: delivering sustained 100%+ voidage replacement and 3Q wells is needed to stabilize/improve gross Jubilee production (70–76 kbopd target) and protect the oil cash engine .
  • GoA can add medium-term growth: Winterfell-3 remediation and WF-4 online in 3Q25 support the 17–20k boe/d 2025 GoA plan; continued optimization at Odd Job/Kodiak helps base performance .
  • Mind the cost/margin bridge: lower realized prices/boe and higher opex/boe pressured Q4 margins; normalization at GTA and portfolio mix should improve the unit cost profile over 2025 .
  • Balance sheet risk moderated: staggered maturities (only $250M in 2026), enhanced liquidity, and hedging (~60% 1H25 oil protected around $70/bbl) reduce downside while the LNG ramp matures .
  • M&A optionality on hold: terminated Tullow talks and emphasis on FCF/leverage reduction suggest organic execution is the near-term narrative driver .