Kosmos Energy’s Earnings Call: Production Up, Costs Down

Kosmos Energy Ltd ((KOS)) has held its Q3 earnings call. Read on for the main highlights of the call.

Kosmos Energy Ltd’s recent earnings call painted a generally positive picture, highlighting substantial progress in production and cost management, despite some operational setbacks. The company’s strategic focus on increasing production and reducing costs has overshadowed challenges faced in specific projects, leading to an optimistic outlook for the future.

Increased Production in Jubilee and GTA

Kosmos Energy reported significant production increases in its Jubilee and GTA projects. The Jubilee oil field’s first well of the 2025/26 campaign delivered approximately 10,000 barrels per day of gross oil production. Additionally, the GTA project ramped up production, achieving 13.5 gross LNG cargos by the end of October, along with the first condensate cargo lifted. These developments underscore Kosmos’ commitment to enhancing its production capabilities.

Cost Reductions

The company has made impressive strides in reducing costs, with CapEx expected to fall below $350 million, marking a reduction of around $500 million year-on-year. Operating costs have decreased by nearly 40% quarter-on-quarter, with targeted savings of $25 million in overhead anticipated by year-end. These cost-cutting measures are pivotal in improving Kosmos Energy’s financial health.

Balance Sheet Enhancements

Kosmos Energy has strengthened its balance sheet by securing a $250 million term loan from Shell to address upcoming debt maturities. Additionally, the successful semi-annual re-determination of the RBL maintained a borrowing base above $1.35 billion. These financial maneuvers reflect the company’s proactive approach to managing its financial obligations.

Operational Challenges at Winterfell

The Winterfell-4 well faced significant operational challenges, leading to its abandonment due to production casing collapse. Completion challenges have prompted the operator to focus on simpler operations for future wells. While these setbacks are notable, Kosmos Energy remains committed to overcoming these hurdles.

Subsea Pump Issues in Equatorial Guinea

In Equatorial Guinea, subsea pump issues resulted in a quarter-on-quarter decline in net production. Although repair progress is underway, normalized production is not expected until the first half of 2026. This situation highlights the operational challenges that can impact production timelines.

Forward-Looking Guidance

Kosmos Energy’s forward-looking guidance remains optimistic, with significant progress and future expectations outlined during the earnings call. The Jubilee oil field’s new well is expected to continue its strong production, and the GTA project in Senegal and Mauritania has shown a 60% production increase. The company has revised its CapEx expectations downward to below $350 million and continues to focus on cost reductions. Additionally, Kosmos has improved its leverage position by hedging 8.5 million barrels of oil for 2026.

In conclusion, Kosmos Energy’s earnings call reflects a positive sentiment, driven by substantial production increases and cost management efforts. While operational challenges in specific projects present hurdles, the company’s strategic initiatives and financial maneuvers position it well for future growth and stability.