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    KOS
    Earnings call· Jun 2026(Q2 FY26)

    Kosmos Energy Q2 FY26 earnings call KOS

    Aug 3, 2026 Source

    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

    5

    • 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

    2

    • 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

    9
    CategoryTargetConfidence
    Jubilee Gross Production
    70,000 to 80,000 barrels of oil per day
    high materiality
    High
    GTA Gross LNG Cargoes
    32 to 36 cargoes
    medium materiality
    High
    OpEx per barrel reduction
    around 35%
    high materiality
    High
    Net Debt Reduction
    20% reduction
    high materiality
    High
    Leverage (Net Debt/EBITDA)
    towards two times
    high materiality
    High
    Tiberias First Oil
    H2 2028
    medium materiality
    High
    Trailblazer Drilling Start
    Q1 2027
    medium materiality
    High
    RBL Facility Size
    around $1.2 billion
    high materiality
    High
    Jubilee 2027-28 Drilling Campaign Start
    mid-2027
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    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%
    		————

    Operational metrics

    14
    Absolute Operating Costs
    down 25%year-on-year
    Q2

    Consistent with ongoing efforts to drive down costs. Expected to continue falling in H2 post EG disposal.

    Interest Expense
    reduction
    Q2

    Expected to continue as debt reduction targets are met.

    Net Debt Reduction
    $420 million
    H1

    Achieved through free cash flow, equity raised, and EG sale proceeds. Progress towards 20% reduction target.

    Available Liquidity
    $500 million
    Q2 end

    Company ended the quarter with over $500 million of available liquidity.

    Credit Rating Upgrade
    B-
    Q2

    Reflecting work to enhance the balance sheet in H1.

    Tiberias Gross Valuation
    $250 million
    as of Jan 1, 2026

    Implied by the farm-down terms, including upfront cash, capex carry, and milestone payments.

    Tiberias Farm-in Consideration
    under $45 million
    Q2

    Received from Navitas for 33.33% stake.

    Production
    up 18%vs. H1 2025
    H1 2026

    Driven by new wells at Jubilee and GTA ramp-up.

    Jubilee J76 Well Performance
    top end of expectations
    Q2

    Demonstrates upside potential of the asset.

    GTA OpEx per MMBTU Reduction
    50%
    FY26

    On track to hit target, with scope for further reduction in 2027.

    Trailblazer Target Resource
    200 million barrels
    future

    Target of exploration alliance with Shell. Kosmos' net share is around 60 million barrels gross.

    Tiberias First Well Recoverable Reserves
    40 million barrels
    future

    Targeted by the first well tie-back.

    Tiberias First Well Production Capacity
    10,000 barrels per day
    future

    Expected production from a good modeling assumption for the first well.

    Lucius Facility Capacity
    30,000 barrels per day
    current

    Capacity available to accommodate multiple wells from Tiberias.

    Industry KPIs

    4
    MetricValueDetails
    Sanctioned expansion backlog$250 millionUSD
    Basin level production volume90,000bbl/d
    FCF shareholder distributions$420 millionUSD
    Take or pay contract structure25-year agreement

    Deals & partnerships

    3
    NavitasFarm-down of Tiberias project interestmix 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.

    ShellStrategic 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 company25-year agreement for development, finance, construction, and operation of a new gas-fired power plant25 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

    3
    Tiberias Project Developmentunderway$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 Expansionunderway

    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 Campaignplanned
    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

    3
    Winterfell drilling performance issuesQ2

    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 availabilityQ2, 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 productionSummer 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

    5

    Jubilee Water Injection Availability

    Q3/Q4
    Current65% replacement rate in Q2
    TargetImproved 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.

    Q&A highlights

    6

    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

    2 min read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.