US LNG exports surge but will buyers in China turn up?
Introduction & Market Context
Kosmos Energy Ltd (NYSE:KOS) presented its second quarter 2025 results on August 4, 2025, highlighting a strategic focus on cash generation amid ongoing financial challenges. The company’s stock was down 4.62% to $1.86 in morning trading, extending a downward trend that has seen the share price approach its 52-week low of $1.385.
The presentation comes after a disappointing first quarter where Kosmos missed earnings estimates with an EPS of -$0.22 against forecasts of -$0.08. The company’s Q2 strategy reflects efforts to address investor concerns through production increases, cost reductions, and balance sheet strengthening measures.
Quarterly Performance Highlights
Kosmos reported net production of approximately 63,500 barrels of oil equivalent per day (boepd) in Q2 2025, up from 60,500 boepd in the previous quarter. This production increase occurred despite challenges, particularly in Ghana where the Jubilee field experienced higher-than-anticipated production declines in certain wells.
The company’s realized price decreased to $60.6/boe in Q2 from $64.9/boe in Q1, while operating expenses increased to $28.2/boe from $25.0/boe. General and administrative expenses showed improvement, decreasing from $26 million to $19 million, reflecting progress on the company’s targeted $25 million overhead reduction by year-end.
As shown in the following financial performance summary:
Strategic Initiatives
Kosmos is prioritizing cash generation through three key strategic pillars: increasing production, lowering costs, and enhancing balance sheet resilience. This approach aims to strengthen the company’s financial position amid challenging market conditions.
The strategy includes significant progress on the Greater Tortue Ahmeyim (GTA) LNG project, which achieved Commercial Operations Date in June. The project has successfully lifted 6.5 gross LNG cargos year-to-date and is targeting 2.7 mtpa nameplate capacity by Q4 2025.
The following slide illustrates the company’s three-pronged approach to cash generation:
In Ghana, Kosmos brought online the first producer of its 2025/26 drilling program in late July, with initial production in line with expectations. The company has signed a memorandum of understanding for license extension to 2040 and is implementing new seismic technology to enhance recovery.
As shown in this slide detailing the GTA Phase 1 progress and production ramp-up:
Detailed Financial Analysis
A key component of Kosmos’s strategy is strengthening its balance sheet through debt management and capital discipline. The company has reduced its full-year 2025 capital expenditure guidance to approximately $350 million, down from the previous $400 million and representing a more than 50% reduction compared to 2024.
Kosmos has secured indicative terms for a Gulf of America term loan of up to $250 million to repay 2026 maturities and obtained a debt cover ratio covenant waiver from lenders through March 2026. The company has also increased its hedging position, adding 7 million barrels for 2026 with a floor of approximately $66/barrel and a ceiling of approximately $75/barrel.
The following slide details the company’s approach to balance sheet management:
Capital expenditure has stabilized at $86 million per quarter in the first half of 2025, a significant reduction from 2024 levels that exceeded $200 million per quarter. This disciplined approach to capital allocation reflects the company’s focus on financial sustainability.
Regional Operations
Kosmos’s operational progress spans four key regions: Mauritania & Senegal, Ghana, Gulf of America, and Equatorial Guinea. Each region contributed to the company’s overall production of 63,500 boepd in Q2.
In the Gulf of America, the Winterfell-4 well was successfully drilled, encountering approximately 100 feet of net pay. Completion is ongoing with the well expected online by the end of Q3 2025. The company is also advancing the Tiberius development with FID targeted for 2026.
The following operational overview highlights progress across all regions:
In Ghana, Kosmos is implementing new data acquisition and technology to drive higher recovery rates. The company shot new 4D narrow azimuth seismic in Q1 2025 and plans ocean bottom node seismic acquisition for late 2025 to better identify unswept oil and improve reservoir understanding.
The following slide shows how new seismic technology is enhancing reservoir definition:
Forward-Looking Statements
Kosmos provided detailed guidance for Q3 and full-year 2025. The company expects production of 65,000-71,000 boepd in Q3 and 65,000-70,000 boepd for the full year. Operating expenses are projected at $18.50-$20.50/boe for Q3 and $22.00-$24.00/boe for the full year.
Capital expenditure is expected to be $75-100 million in Q3, contributing to the revised full-year guidance of approximately $350 million. This reduction in capital spending reflects the company’s emphasis on financial discipline and cash preservation.
Looking beyond 2025, Kosmos highlighted its long-term value creation strategy, emphasizing its deep resource base with over 20 years of 2P reserves-to-production life. The company plans to leverage existing infrastructure for low-cost expansions, particularly in the GTA project where Phase 1+ is expected to double gas production through brownfield development.
Despite these forward-looking initiatives, investors appear cautious, as reflected in the stock’s premarket decline of 3.59% before further dropping in regular trading. The company faces the challenge of delivering on its cash generation strategy while managing a significant debt burden in a volatile commodity price environment.
Full presentation:
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