Kosmos Energy Ltd. Reports Quarterly Results for the Period Ended March 31, 2025

Mauritania and Senegal: Ramping Up Production

Kosmos Energy, a leading deepwater exploration and production company, has been making significant progress in its operations in Mauritania and Senegal. The company’s production in these two countries averaged approximately 5,100 barrels of oil equivalent per day (Boepd) gross (1,300 Boepd net) in the first quarter of 2025, as the Greater Tortue Ahmeyim (GTA) liquified natural gas (LNG) project ramped up.

The GTA project achieved first gas production from the subsea system to the floating production, storage and offloading (FPSO) vessel on December 31, 2024. This was a major milestone, as first LNG was then achieved in February 2025. The partnership expects to reach the daily contracted sales volume, equivalent to approximately 2.45 million tonnes per annum, in the second quarter of 2025. The first LNG cargo was successfully completed in April 2025, with the second cargo currently being lifted.

However, during the first quarter of 2025, low-rate subsea gas bubbles were discovered at the GTA A02 well offshore Mauritania during a planned commissioning test. The well has been capped, which stopped the minor release. The A02 well is one of four wells for GTA Phase 1, and the ramp-up and commissioning activities at GTA are not expected to be impacted while the A02 well is unavailable. Insurance proceeds are expected to cover a substantial portion of the costs for any repair of the well.

Financial Performance

Kosmos Energy’s overall financial results, which include operations from Ghana, Equatorial Guinea, Mauritania, Senegal and the Gulf of America, showed a mixed performance in the first quarter of 2025 compared to the same period in 2024.

Oil and gas revenue decreased by $129.0 million during the first quarter of 2025, primarily due to lower production at the Jubilee field in Ghana, the timing of oil liftings in Equatorial Guinea, and lower average realized oil and gas prices. The company sold 4,445 thousand barrels of oil equivalent (MBoe) at an average realized price of $65.27 per Boe in the first quarter of 2025, compared to 5,701 MBoe at an average realized price of $73.52 per Boe in the first quarter of 2024.

Oil and gas production costs increased by $73.7 million during the first quarter of 2025, mainly due to the inclusion of operating costs associated with LNG production at the GTA Phase 1 project in Mauritania and Senegal, costs related to scheduled shutdown and maintenance activities in Ghana, and workovers in the Gulf of America.

Exploration expenses decreased by $2.4 million, as a result of decreased seismic data acquisition costs in the Gulf of America business unit.

Depletion, depreciation and amortization increased by $19.7 million, primarily due to higher depletion rates per Boe across the portfolio as a result of increased cost basis related to development activities in 2024 and increased production in the Gulf of America, partially offset by the lower sales volumes in Ghana and Equatorial Guinea.

Interest and other financing costs, net, increased by $35.4 million, mainly due to decreased capitalized interest related to the GTA Phase 1 project commencing first gas production in December 2024.

The company recorded a loss of $6.7 million on its outstanding hedge positions during the first quarter of 2025, compared to a loss of $23.8 million in the same period of 2024, as a result of changes in the forward oil price curve.

Income tax expense decreased by $33.7 million, driven by the changes in the company’s effective tax rates based on the tax jurisdictions in which its income before income taxes was generated.

Strengths and Weaknesses

One of Kosmos Energy’s key strengths is its diversified asset portfolio, with operations in Ghana, Equatorial Guinea, Mauritania, Senegal and the Gulf of America. This geographic diversification helps to mitigate risks and provides the company with multiple sources of production and revenue.

The successful start of the GTA LNG project in Mauritania and Senegal is another significant strength, as it represents a major new source of production and cash flow for the company. The ramp-up of the project is progressing as planned, and the company expects to reach the daily contracted sales volume in the second quarter of 2025.

However, the company’s financial performance in the first quarter of 2025 was negatively impacted by lower production and realized prices in Ghana and Equatorial Guinea, as well as higher operating costs. The discovery of the gas bubbles at the GTA A02 well, although not expected to significantly impact the overall project, represents a potential operational risk that the company will need to manage.

Additionally, the company’s high debt levels, with total long-term debt of $2.9 billion as of March 31, 2025, could be a concern if oil and gas prices were to decline significantly or if the company’s production and cash flow were to be disrupted. The company will need to carefully manage its debt and liquidity to ensure financial stability.

Outlook and Future Prospects

Kosmos Energy’s outlook for the future is cautiously optimistic. The successful ramp-up of the GTA LNG project in Mauritania and Senegal is expected to provide a significant boost to the company’s production and cash flow in the coming years. Additionally, the company’s ongoing exploration and development activities in the Gulf of America, Mauritania and Senegal hold the potential for further discoveries and production growth.

However, the company faces several risks and uncertainties that could impact its future performance. These include the continued volatility in oil and gas prices, the potential for further operational issues or delays in its projects, and the challenge of managing its high debt levels.

To mitigate these risks, Kosmos Energy has implemented a number of strategies. The company maintains an active hedging program to help stabilize its cash flows and has reviewed its capital spending program to ensure it is aligned with its financial resources and market conditions.

The company’s 2025 capital budget of $400 million or less, excluding any acquisitions or divestitures, is focused on maintenance activities across its producing assets, the completion of the first phase of the GTA development, and the continued appraisal and development of its assets in the Gulf of America, Mauritania and Senegal.

Overall, Kosmos Energy’s performance in the first quarter of 2025 was mixed, with the successful start of the GTA LNG project offset by lower production and higher costs in other areas of its business. The company faces a number of challenges, but its diversified asset base, ongoing development activities, and risk management strategies provide a solid foundation for future growth and success.