Could you clarify the value achieved from the 70% sell-down of Tiberias, specifically the gross valuation?

The farm-down implies a gross valuation for Tiberias of approximately $250 million as of January 1, 2026. The consideration includes upfront cash, carried future development capex, and future milestone payments, totaling under $45 million. “Yes, so if you just take the math simply in terms of what we got for what we've sold, it implies a gross valuation for Tiberius of around $250 million as of January. 1st 2026”

Given the casing issues at Winterfell, are you frustrated, and is there any recourse or a plan to tackle these challenges?

Management is frustrated by the drilling performance and additional costs at Winterfell, despite the significant reserves. They have paused activity to fully understand the issues and ensure they are resolved before further capital is spent. There hasn't been a material daily production impact. “Yes, it has been frustrating, but it's something the team's working hard on with the operator to make sure. sure gets comprehensively resolved.”

Can you elaborate on the plan to achieve the 20% net debt reduction target by year-end, specifically the remaining amount and source?

The company has reduced debt by almost $500 million in H1. To reach the 20% target, an additional $150 million reduction is needed, which is expected to be generated from free cash flow in H2 2026. They are also proactively managing the maturity schedule, addressing 2026, 2027, and RBL maturities, with plans to tackle 2028 notes later. “the balance of that difference which is about call it 150 million is expected to be generated from free cash flow, right?”

KOS

Kosmos Energy (KOS) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Energy· Aug 3, 2026

Source: earnings call transcript

Executive summary

Kosmos Energy Q2 FY26 — Strong Production, Debt Reduction, and Strategic Progress

Kosmos Energy delivered a strong second quarter, marked by robust production growth from its core assets and significant progress on debt reduction. The company is actively managing its portfolio through strategic farm-downs and exploration alliances, while also advancing key projects like the GTA domestic gas expansion. Operational challenges, such as those at Winterfell and with Jubilee's water injection, are being addressed, with management focused on maintaining momentum towards its full-year targets.

Highlights

Production from core assets (Jubilee, GTA) increased 18% in H1 2026 vs. H1 2025.
Absolute operating costs decreased 24% in H1 2026 vs. H1 2025, with OpEx per barrel expected to reduce by 35% for FY26.
Net debt reduced by approximately $420 million in H1 2026, making good progress towards a 20% reduction target by year-end.
Successful farm-down of Tiberias project, with proceeds covering all 2026 capex and H1 2027 capex.
Jubilee's J76 well performed at the top end of expectations, described as the best well in over a decade.

Concerns

Winterfell's number five well was temporarily abandoned due to casing issues encountered during drilling, causing frustration.
Jubilee water injection replacement rate was around 65% in Q2, down from 130% in Q1, due to scheduled maintenance and pump availability.

Guidance & targets

Category	Target	Timeline	Confidence
Jubilee Gross Production	70,000 to 80,000 barrels of oil per day high materiality	FY26	High
GTA Gross LNG Cargoes	32 to 36 cargoes medium materiality	FY26	High
OpEx per barrel reduction	around 35% high materiality	FY26	High
Net Debt Reduction	20% reduction high materiality	FY26	High
Leverage (Net Debt/EBITDA)	towards two times high materiality	year-end · FY26	High
Tiberias First Oil	H2 2028 medium materiality	H2 2028 · FY28	High
Trailblazer Drilling Start	Q1 2027 medium materiality	Q1 · FY27	High
RBL Facility Size	around $1.2 billion high materiality	Q4 · FY26	High
Jubilee 2027-28 Drilling Campaign Start	mid-2027 medium materiality	mid-2027 · FY27	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Ghana (Jubilee) Active drilling campaign delivering towards upper end of expectations. J76 well is the best in over a decade. Working to secure rig for 2027-28 drilling campaign (up to 10 wells) starting mid-2027. Water injection performance in Q2 was lower than Q1 due to operational issues, which is a focus for improvement. Gross Production: 90,000 bbl/d (expected with J50 online)Full-year Guidance: 70,000-80,000 bbl/dWater Injection Replacement Rate Q1: 130%Water Injection Replacement Rate Q2: 65%	—	—	—	Highest margin production
GTA (Mauritania/Senegal) Continued solid performance. Daily LNG production expected to be slightly lower in summer months due to warmer temperatures, picking up late in the year. Good progress on Phase 1 expansion for domestic gas to power, including pipeline fabrication and power plant agreements in Senegal and Mauritania. Gross LNG Production Q2: 2.65 mtpa equivalentGross LNG Cargoes Lifted Q2: 9Full-year LNG Cargoes Guidance: 32-36Condensate Cargoes Lifted Q2: 1 (300,000 barrels net to Kosmos)Condensate Cargoes Expected Q3: 1 (400,000 barrels net to Kosmos)OpEx per MMBTU Reduction Target FY26: 50%	—	—	—	—

Deals & partnerships

Navitas Farm-down of Tiberias project interest mix of upfront cash, carried future development capex, and future milestone payments (total consideration under $45M)

Navitas acquired a 33.33% interest in the Tiberias project. Kosmos remains operator with a 33.34% interest. Owner/operator of nearby Lucius facility (unnamed) will have 33.33% interest.

Shell Strategic exploration alliance in the Gulf of America

Exchanged interests across multiple blocks in the North of the Plague. Shell plans to drill the Trailblazer prospect in Q1 2027, targeting 200 million barrels gross. Kosmos is designated as development operator in case of success.

Saudi power company 25-year agreement for development, finance, construction, and operation of a new gas-fired power plant 25 years

Agreement for a new 230-megawatt gas-fired power plant in Ndiago, Mauritania. Important step for domestic electricity generation and energy security.

Capital programs

Tiberias Project Development underway $250 million gross

Period spend: all 2026 capex and H1 2027 capex

Funding: farm-in proceeds (upfront cash, carried capex, milestone payments)

Start: Q1 2026 (FID in March)

Benefit:40 million barrels recovered (first well target)

Successful farm-down with Navitas (33.33% partner) covers Kosmos's share of capex through H1 2027. Kosmos remains operator with 33.34% interest. Low-cost, high-margin development.

GTA Phase 1 Domestic Gas Expansion underway

Benefit:Gas supply to 250 MW Gandon power station (Senegal) and 230 MW Ndiago power plant (Mauritania)

Land cleared for onshore pipeline in Senegal, fabrication complete. Mauritania signed 25-year agreement for new gas-fired power plant. Aims to materially enhance project returns and support domestic electricity generation.

Jubilee 2027-28 Drilling Campaign planned

Start: mid-2027 (objective)

Benefit:Up to 10 wells, maximize future reserve recovery

Working closely with operators to secure a rig. Will integrate results of 2025 OBN seismic for future well planning.

Risks & headwinds

Winterfell drilling performance issues Q2

Number five well temporarily abandoned due to casing issues.

Mitigation:Paused activity to fully understand and resolve issues with the operator before further capital expenditure. No material daily production impact.

Jubilee water injection availability Q2, ongoing focus for Q3/Q4

Water injection replacement rate was 65% in Q2, down from 130% in Q1.

Mitigation:Working hard with the operator to improve availability of water injection pumps. Identified as an operational issue, not a reservoir issue.

Seasonality impact on GTA LNG production Summer months

Daily LNG production expected to remain slightly lower during summer months.

Mitigation:Due to warmer sea and air temperatures. Volumes expected to pick up again late in the year as cooler temperatures return.

What to watch in Q3 FY26

Jubilee Water Injection Availability

Q3/Q4

Current 65% replacement rate in Q2

Target Improved availability, closer to 130% replacement rate

Why it matters

Sustained high water injection is crucial for maintaining Jubilee's production levels and maximizing future reserve recovery, directly impacting cash flow.

It hasn't been as strong in 2Q. It's been around about half that level, actually around 65%. Some of it was scheduled maintenance. Some of it was availability of the water injection pumps. So we're working really hard with the operator now to focus on that issue.

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Q&A highlights

Can you provide more detail on the J76 well's setting and what it implies for remaining opportunities in Jubilee, especially regarding bypassed oil and deeper horizons?

J76 is in the core part of the field, identified using 4D seismic, targeting unswept oil. It also picked up deeper horizons. This demonstrates significant opportunities for bypassed oil and potential deeper resources not previously accessed, which will be key for future drilling.

“I think there's significant bypass oil opportunities, and I think there'll be continuing opportunities to find potentially deeper horizons that we haven't accessed in the past.”

asked by Charles Mead · answered by Unknown Speaker

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Detailed narrative

Jubilee Performance and Future Drilling

Jubilee production has shown strong progress, with two new producers (J76 and J77) coming online in Q2. The J50 well is expected to start up soon, bringing gross production to 90,000 barrels of oil per day. J76 was highlighted as the best well in over a decade, demonstrating significant upside potential.

The company is working to secure a rig for a 2027-28 drilling campaign of up to 10 wells, aiming to start in mid-2027, leveraging new 4D and OBN seismic data for optimal well placement.

GTA Operations and Domestic Gas Expansion

GTA continued to perform well, with gross LNG production of 2.65 million tons per annum equivalent and nine cargoes lifted in Q2. Full-year guidance for 32-36 cargoes remains unchanged. Significant progress has been made on the Phase 1 expansion for domestic gas to power, with land cleared in Senegal for the onshore pipeline and Mauritania signing a 25-year agreement for a new 230-megawatt gas-fired power plant.

These developments are crucial for regional energy security and project returns.

Gulf of America Portfolio Development

Production in the Gulf of America was in line with expectations, with solid performance from Odd Job and Kodiak fields. The Tiberias project is making good progress following its Final Investment Decision in March, and a successful farm-down brought Navitas into the project, covering Cosmos's capex for 2026 and H1 2027.

Additionally, a strategic exploration alliance with Shell will see drilling commence on the Trailblazer prospect in Q1 2027, targeting 200 million barrels of oil gross equivalent resource.

Financial Strength and Debt Reduction

The company achieved a strong financial quarter, with production up 12% year-on-year and absolute operating costs down 25%. Net debt was reduced by approximately $420 million in the first half of the year, contributing to a goal of a 20% reduction by year-end.

Available liquidity stands at over $500 million. Both S&P and Fitch upgraded the company's rating to B-, reflecting enhanced balance sheet strength. Discussions are underway to amend and extend the RBL, targeting a $1.2 billion facility by Q4.

Cost Management and Efficiency

Kosmos Energy is on track to achieve a 50% reduction target for OpEx per MMBTU this year for GTA, with further scope for reduction in 2027. The sale of the Equatorial Guinea assets, which were the highest cost barrels, is expected to further drive down absolute operating costs and unit costs in the second half of the year.

The focus on cost reduction, combined with capital management strategies like the Tiberias farm-down, underpins the company's debt reduction targets.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.