Kosmos Energy (NYSE:KOS) used its fourth-quarter and full-year 2025 earnings call to reiterate its near-term priorities—growing production, reducing costs, and paying down debt—while outlining early 2026 operational momentum across its core assets in Ghana and the Greater Tortue Ahmeyim (GTA) LNG project offshore Mauritania and Senegal.
2025 described as a “challenging transitional year”
Chairman and CEO Andy Inglis characterized 2025 as a transitional year aimed at building “a sustainable lower cost business.” He said the company delivered safe operations with no lost time or recordable injuries and achieved 1P reserves replacement of around 90%, or about 120% excluding the assets being sold in Equatorial Guinea (EG). Inglis also highlighted the extension of the Ghana licenses to 2040 and quarterly production growth through 2025 as Jubilee drilling resumed and GTA production ramped.
Management also acknowledged shortfalls versus prior goals. Inglis said production growth came more slowly than expected and net debt ended 2025 higher than planned, but added that the company had “laid the groundwork to deliver in 2026.”
Operational update: Jubilee drilling and GTA volumes
In Ghana, Inglis said the Jubilee drilling program is “continuing to deliver.” The second producer well in the current campaign (J74) came online in January and is contributing around 13,000 barrels of oil per day gross, including cannibalization effects from neighboring wells. He said this has taken Jubilee production to more than 70,000 barrels of oil per day gross, with five additional Jubilee wells expected online during 2026.
Discussing cannibalization during Q&A, Inglis said impacts vary well-to-well based on infrastructure and gas-oil ratio. As a “rule of thumb,” he suggested that a 10,000 barrel-per-day well might see roughly 2,500 barrels per day backed out on average, while J74’s net back-out was “close to zero” because it was brought in through a new riser that relieved pressure elsewhere.
Kosmos maintained a Jubilee gross production forecast range of 70,000–80,000 barrels per day, with current performance supporting the upper end. Inglis said the company assumes an approximate 20% decline rate in its forecast, while year-to-date performance has been better due in part to a 130% volume replacement ratio. He also pointed to the potential benefits of new seismic work, including recently completed ocean bottom node (OBN) seismic that is being processed and is expected to improve imaging for future well placement and recovery.
At GTA, Inglis said fourth-quarter performance continued into early 2026. Production has averaged about 2.9 million tons per annum equivalent year-to-date, partially helped by cooler seasonal weather, and 6.5 gross LNG cargoes had been shipped year-to-date. The company is targeting 32–36 gross LNG cargoes in 2026 and three gross condensate cargoes.
In Q&A, Inglis said the apparent mismatch between early quarterly pace and the annual cargo range is primarily seasonal, with Q1 and Q4 expected to be strongest and lower volumes anticipated during warmer summer quarters. He said there is no planned turnaround embedded in the annual guidance. Inglis also confirmed that volumes above the 2.45 million tons per annum contract level with BP are sold under the same contract pricing.
Cost reductions, capital allocation, and Ghana FPSO plans
CFO Neal Shah said Kosmos is shifting from a growth investment phase toward margin improvement, emphasizing cost reductions across capital spending, operating costs, and overhead. Shah said 2025 capital expenditure was $290 million—down nearly 70% year over year and the lowest since 2017. For 2026, the company is targeting capex of about $350 million, including around $40 million associated with the TEN FPSO purchase.
Management set out 2026 cost objectives that include:
- CapEx: around $350 million, with roughly 70% allocated to Ghana and about 15% to the Gulf of Mexico (including Winterfell and long-lead items for Tiberias)
- OpEx: an absolute reduction of more than $100 million year over year, rising to around $250 million after the EG producing assets are sold
- Overhead: full-year benefit in 2026 from cost savings implemented in 2025, after exceeding a $25 million reduction target
Inglis said the partnership has signed a sale and purchase agreement to acquire the TEN FPSO at the end of its lease term in early 2027. He said this is expected to reduce OpEx from 2026 onward, as lease payments will be classified as capex until early next year and then eliminated. In Q&A, Inglis said the FPSO purchase and new seismic could support the economics of future TEN drilling, potentially in 2027–2028, but he reiterated the strength of Jubilee well economics, noting the last 12 Ghana wells averaged around a nine-month payback, with the latest two closer to six months.
Balance sheet actions, hedging, and EG asset sale
Shah said Kosmos has been “actively working to enhance the balance sheet,” pointing to the $350 million Nordic bond completed in January. He said $250 million of proceeds will repay 2027 notes and $100 million will pay down the company’s reserve-based lending (RBL) facility.
On the RBL, Shah said the bank group granted a leverage covenant waiver covering year-end 2025 and the mid-year 2026 tests. In Q&A, Shah said the mid-year 2026 leverage covenant was raised from 3.5 to 4.25, which he said accommodates second-half 2025 underperformance and lower oil prices, providing cushion down to “60-ish Brent.” He added that, based on guidance and forecasts, the company expects leverage to return to normal levels by year-end as GTA ramp-up rolls through the last-twelve-month calculation.
Management said it is targeting at least a 10% net debt reduction in 2026, helped by the announced sale of producing assets in Equatorial Guinea and by free cash flow and other potential non-core asset sales. On hedging, Shah said the company has 8.5 million barrels hedged for 2026 and two million barrels hedged for 2027. He added that after the EG sale, Kosmos will retain its hedges, increasing 2026 hedge exposure to over 50%.
Addressing the borrowing base in Q&A, Shah said the RBL is underpinned by Ghana reserves and EG, and he expects both to be included in the March process. After the transaction closes (discussed as occurring in Q2), he said EG will come out of the borrowing base and estimated the impact at roughly plus-or-minus $100 million, adding that the company was “well overcollateralized” from a Ghana perspective.
Gulf of Mexico: impairment, Tiberias FID target, and Shell alliance
Inglis said Gulf of Mexico performance in the quarter and year was in line with expectations, with strong results from Odd Job and Kodiak and minimal storm downtime, offset by lower Winterfell performance. Due to drilling and completions challenges at Winterfell, Kosmos recorded an impairment following a fair value assessment with auditors. Inglis said the company is working with operators to refine the drilling program to reduce risk.
Looking ahead, management outlined two growth initiatives in the Gulf. First, Kosmos has advanced a low-cost development plan for Tiberias in the Upper Wilcox with 50/50 partner Occidental (Oxy), where Kosmos is operator and Oxy owns and operates the Lucius host facility. Inglis said Kosmos expects to take final investment decision in the first half of 2026, with most capex in 2027 and 2028, and plans to farm down post-FID to around a one-third interest. In Q&A, Shah said the farm-down concept is to bring in a third partner to reach one-third, one-third, one-third ownership, with the new partner paying its share of capital costs and potentially paying back-cost and other consideration.
Second, Inglis said Kosmos entered a strategic alliance with Shell to jointly explore the Norphlet play, exchanging interests in multiple blocks with prospects he said target more than 400 million barrels of oil equivalent gross within tieback distance of Shell’s Appomattox facility. The first prospect, Trailblazer, targets more than 200 million barrels of oil equivalent gross, with drilling planned for 2027. Inglis said Kosmos has flexibility to adjust working interest to manage capital exposure.
In closing remarks, Inglis said Kosmos aims in 2026 to deliver 15% year-on-year production growth, a 20% reduction in total operating costs, and net debt reduction of at least 10%, with the combined effect expected to lower OpEx per barrel by around 35%.
About Kosmos Energy (NYSE:KOS)
Kosmos Energy Ltd. is an independent oil and gas exploration and production company headquartered in Dallas, Texas. Since its founding in 2003, the company has focused on identifying and developing hydrocarbon reserves in frontier and emerging basins around the world. Kosmos combines geological and geophysical expertise with a disciplined approach to acreage acquisition and partner selection to pursue high‐impact offshore exploration opportunities.
The company’s portfolio is anchored by assets in West Africa and the Gulf of Mexico.
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