Kosmos Energy Ltd ((KOS)) has held its Q1 earnings call. Read on for the main highlights of the call.
Kosmos Energy’s latest earnings call painted a picture of cautious optimism, with the company celebrating significant milestones such as the first LNG cargo export from the Greater Tortue Ahmeyim (GTA) project and notable cost reductions. Despite facing challenges like production issues in the Gulf of America and increased operating costs, the overall sentiment was positive, highlighting Kosmos Energy’s financial resilience and operational advancements in a volatile market environment.
First LNG Cargo Export from GTA Project
Kosmos Energy marked a significant achievement with the successful export of the first LNG cargo from the GTA project. This milestone positions Mauritania and Senegal as new entrants in the LNG export market. All four trains on the FLNG vessel are now operational, with production ramping up towards the contracted sales volume of 2.45 million tonnes of LNG per annum.
Significant Cost Reductions
The company reported substantial cost reductions, with capital expenditures expected to decrease by over 50% year-on-year. In the first quarter, CapEx was $86 million, which is $200 million lower than the same period last year. Additionally, Kosmos Energy is on track to reduce its annual overhead by $25 million by the end of the year.
Operational Progress in Ghana
Kosmos Energy made strides in its Ghana operations, completing a 4D seismic survey and a scheduled Jubilee FPSO shutdown safely and within budget. The company plans to increase drilling activities, with two Jubilee wells slated for 2025 and four more in 2026.
Improved Financial Resilience
The company’s financial resilience was enhanced by refinancing its reserve-based lending facility in 2024, ensuring minimal near-term maturities and maintaining ample liquidity. Kosmos continues to hedge production, with 40% of 2025 oil production hedged at a floor of $65 per barrel.
Production Challenges in Gulf of America
Kosmos Energy faced setbacks in the Gulf of America, where the work over the Winterfell-3 well was unsuccessful. The company is considering a future sidetrack to access these reserves.
Lower Entitlement Production
Entitlement production for the first quarter was slightly below guidance, mainly due to the timing of the GTA ramp-up.
Higher Operating Costs
Operating expenses per barrel of oil equivalent increased year-on-year, driven by lower production and higher maintenance costs in the first quarter of 2025.
Forward-Looking Guidance
Looking ahead, Kosmos Energy remains focused on cash generation and cost control amid market volatility. The company plans to continue its significant reduction in capital expenditures and overhead costs while maintaining a rolling hedging program. Key operational milestones include ramping up production from the GTA project and expanding drilling activities in Ghana. Financial resilience is expected to be bolstered by recent refinancing activities, ensuring strong liquidity and minimal near-term debt maturities.
In conclusion, Kosmos Energy’s earnings call highlighted a generally positive outlook, with the company achieving key operational and financial milestones despite ongoing challenges. The successful export of LNG from the GTA project and significant cost reductions underscore Kosmos Energy’s strategic focus on growth and resilience in a fluctuating market environment.