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Kosmos Energy Ltd. (KOS)
NYSE:KOS
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Kosmos Energy
(NYSE:KOS)
69Neutral
Positive Factors
Cash Flow Potential
Kosmos is on the cusp of a meaningful free cash flow inflection, with early production data from the first Tortue cargo indicated as positive.
Cost Management
Kosmos has confirmed capital expenditure of less than $400 million, representing a significant drop year over year, indicating improved financial management.
Project Expansion
The potential expansion of the GTA project could significantly increase capacity and offer future growth opportunities for Kosmos Energy.
Negative Factors
Financial Guidance
Kosmos Energy's 2025 production guidance is below expectations, leading to reduced estimates for future cash flows.
Reserves Decline
Reserves for 2024 have declined by 10%, which was unexpected as flat reserves were anticipated.
Stock Recommendation
The recommendation has been downgraded to HOLD from BUY due to surprising cost increases and information lag from non-operator status.
Kosmos Energy (KOS) vs. S&P 500 (SPY)
Market Cap
$1.08B
Dividend YieldN/A
Average Volume (3M)10.81M
Price to Earnings (P/E)5.7
Beta (1Y)0.76
Revenue Growth-2.25%
EPS Growth-13.08%
CountryUS
Employees243
SectorEnergy
Sector Strength86
IndustryOil & Gas Exploration & Production
Share Statistics
EPS (TTM)0.39
Shares Outstanding477,904,660
10 Day Avg. Volume10,920,282
30 Day Avg. Volume10,806,783
Financial Highlights & Ratios
PEG Ratio0.04
Price to Book (P/B)N/A
Price to Sales (P/S)0.64
Price to Cash Flow (P/CF)1.50
P/FCF Ratio0.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$4.98Price Target Upside120.35% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
Kosmos Energy Business Overview & Revenue Model
Company DescriptionKosmos Energy Ltd., a deep-water independent oil and gas exploration and production company, focuses along the Atlantic Margins. The company's primary assets include production offshore Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, as well as a gas development offshore Mauritania and Senegal. It also maintains a proven basin exploration program. The company was founded in 2003 and is headquartered in Dallas, Texas.
How the Company Makes MoneyKosmos Energy generates revenue primarily through the exploration, development, and production of oil and natural gas. The company's key revenue streams include the sale of crude oil, natural gas, and natural gas liquids extracted from its producing fields. Kosmos Energy's financial performance is significantly influenced by global oil prices and production volumes. The company often enters into joint ventures and partnerships with other energy companies and national oil corporations to share exploration and development risks and costs, which can also contribute to its earnings. Additionally, Kosmos Energy may engage in strategic acquisitions or divestitures to optimize its asset portfolio and enhance its revenue potential.
Kosmos Energy Financial Statement Overview
Summary
Kosmos Energy's financial performance is solid with strong profitability and improved financial stability. The reduction in debt and strong cash flow generation are key strengths. However, inconsistent revenue growth presents a challenge.Income Statement
Kosmos Energy has demonstrated strong profitability with a significant gross profit margin and EBIT margin. The company showed a net profit margin of 11.33% in 2024, indicating healthy profitability. However, revenue growth has been inconsistent, with a decline noted in recent years.75
Positive
Balance Sheet
The company has improved its financial stability by reducing total debt to zero in 2024, enhancing its debt-to-equity ratio. Return on equity is strong at 15.82%, reflecting efficient use of equity. The equity ratio is moderate, indicating a balanced asset financing mix.70
Positive
Cash Flow
Kosmos Energy has shown strong cash flow generation, with substantial free cash flow growth from negative to positive territory in recent years. The operating cash flow to net income ratio is robust, suggesting good operational efficiency. Free cash flow to net income is also positive, supporting reinvestment and debt reduction.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.68B | 1.70B | 2.25B | 1.33B | 804.03M | Gross Profit |
| 1.68B | 866.58M | 1.34B | 518.79M | -20.31M | EBIT |
| 1.58B | 734.62M | 1.12B | 352.03M | -228.03M | EBITDA |
| 806.59M | 930.52M | 938.11M | 531.63M | 175.66M | Net Income Common Stockholders |
| 189.85M | 213.52M | 226.55M | -77.84M | -411.59M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 84.97M | 95.34M | 183.41M | 131.62M | 149.03M | Total Assets |
| 5.31B | 4.94B | 4.58B | 4.94B | 3.87B | Total Debt |
| 0.00 | 2.39B | 2.23B | 2.62B | 2.11B | Net Debt |
| -84.97M | 2.30B | 2.04B | 2.49B | 1.96B | Total Liabilities |
| 3.51B | 3.91B | 3.79B | 4.41B | 3.43B | Stockholders Equity |
| 1.20B | 1.03B | 787.85M | 529.24M | 440.15M |
| Cash Flow | Free Cash Flow | |||
| 678.25M | -167.43M | 321.10M | -563.65M | -183.45M | Operating Cash Flow |
| 678.25M | 765.17M | 1.13B | 374.34M | 196.15M | Investing Cash Flow |
| -966.06M | -994.85M | -703.86M | -973.38M | -345.59M | Financing Cash Flow |
| 274.32M | 141.62M | -414.70M | 624.16M | 69.86M |
Kosmos Energy Technical Analysis
Negative
2.26
Price Trends
2.93
Negative
3.28
Negative
4.07
Negative
Market Momentum
-0.20
Negative
36.33
Neutral
73.60
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KOS, the sentiment is Negative. The current price of 2.26 is below the 20-day moving average (MA) of 2.35, below the 50-day MA of 2.93, and below the 200-day MA of 4.07, indicating a bearish trend. The MACD of -0.20 indicates Negative momentum. The RSI at 36.33 is Neutral, neither overbought nor oversold. The STOCH value of 73.60 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KOS.
Kosmos Energy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $69.33B | 11.12 | 22.29% | 2.96% | 0.88% | -13.66% | |
75 Outperform | $48.27B | 17.43 | 27.41% | 1.20% | 20.51% | 99.86% | |
74 Outperform | $3.98B | 9.90 | 7.77% | 4.59% | -12.48% | -36.47% | |
72 Outperform | $45.05B | 19.61 | 8.88% | 1.83% | -4.35% | -37.69% | |
69 Neutral | $1.08B | 5.73 | 17.01% | ― | -2.25% | -13.08% | |
68 Neutral | $7.50B | 9.05 | 20.26% | 4.85% | 17.61% | -75.78% | |
58 Neutral | $8.70B | 5.51 | -5.93% | 7.52% | -0.18% | -74.84% |
* Energy Sector Average
Performance Comparison
KOS
Kosmos Energy
2.26
-3.40
-60.07%
APA
APA
20.84
-10.87
-34.28%
EOG
EOG Resources
128.27
5.96
4.87%
HES
Hess
157.35
9.81
6.65%
MUR
Murphy Oil
27.26
-15.91
-36.85%
OXY
Occidental Petroleum
47.92
-14.30
-22.98%
Kosmos Energy Earnings Call Summary
Earnings Call Date: Feb 24, 2025 | % Change Since: -28.93% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call highlighted Kosmos Energy's strong cash generation potential, significant achievements in LNG production, and robust reserve replacement. However, challenges were noted in production reliability and the impact of planned maintenance on near-term outputs. Despite these issues, the company's strategic focus on reducing costs and increasing financial resilience provides a positive outlook.Highlights
Strong Cash Generation Potential
Focus on maximizing revenue and rigorous cost management expected to drive attractive free cash flow yield with projected CapEx reduction of over 50% from $800 million to $400 million in 2025.
GTA Project Milestones
First LNG production achieved in early February 2025 with first cargo lifting expected shortly. This positions Kosmos Energy Ltd. to leverage the new Atlantic basin LNG hub for steady revenue growth.
Reserve Replacement and Longevity
2P reserve replacement ratio of 137% for 2024, with year-end 2P reserves at 513 million barrels of oil equivalent, representing a reserves to production ratio of 22 years.
Safety Performance
Zero lost time injuries or total recordable injuries in 2024, maintaining high safety performance with incident rates well below industry averages.
Financial Resilience
Issued $900 million in new bonds and increased the capacity of the reserve-based lending facility, extending the average debt maturity to four years and managing future price volatility with a rolling hedging program.
Lowlights
Production Challenges at Jubilee
Fourth quarter production was lower than guidance due to water injection and reliability issues at Jubilee, resulting in lower production ramp-up from the EG infill wells and Winterfell.
Planned Maintenance Impacts
Several planned maintenance programs in the first quarter of 2025 expected to keep production flat quarter on quarter, including shutdowns at Jubilee FPSO and other scheduled maintenance in Equatorial Guinea.
Company Guidance
During the Kosmos Energy Ltd. fourth quarter and full year 2024 conference call, the company provided guidance on several key metrics for 2025. They anticipate a significant reduction in capital expenditures, from over $800 million in 2023 and 2024 to $400 million, a decrease of over 50%. They also aim for a reduction in annual overhead by $25 million by the end of 2025. Kosmos Energy Ltd. plans to prioritize free cash flow generation, targeting a free cash flow yield of around 25% at the current equity price, achieved through increased production and rigorous cost management. The company has set a leverage goal of below 1.5 times at mid-cycle oil prices by the second half of 2026. Additionally, they reported a 2P reserve replacement ratio of 137% at the end of 2024, with 2P reserves standing at 513 million barrels of oil equivalent, equating to a reserves-to-production ratio of 22 years. With the ongoing ramp-up of GTA, Kosmos Energy Ltd. expects to see substantial long-term cash generation potential.Kosmos Energy Corporate Events
Business Operations and Strategy
Kosmos Energy’s 2024 Drilling Campaign Highlights Success
Positive
Nov 29, 2024
Kosmos Energy Ltd., along with its partners, has concluded its 2024 drilling campaign in Equatorial Guinea after the Akeng Deep exploration well showed sub-commercial hydrocarbon quantities and will be abandoned. Despite this, the campaign was marked by success in the Ceiba and Okume fields, where newly drilled infill wells have exceeded performance expectations, demonstrating promising production outcomes.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.