Kosmos Energy Q1 2025 Earnings Report

Kosmos Energy EPS Results

• Actual EPS: -$0.22
• Consensus EPS: -$0.15
• Beat/Miss: Missed by -$0.07
• One Year Ago EPS: N/A

Kosmos Energy Revenue Results

• Actual Revenue: $290.43 million
• Expected Revenue: $338.23 million
• Beat/Miss: Missed by -$47.80 million
• YoY Revenue Growth: N/A

Kosmos Energy Announcement Details

• Quarter: Q1 2025
• Date: 5/6/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 11:00AM ET

Kosmos Energy (NYSE:KOS), together with its subsidiaries, engages in the exploration, development, and production of oil and gas along the Atlantic Margins in the United States. The company's primary assets include production projects located in offshore Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, as well as gas projects located in offshore Mauritania and Senegal. It undertakes a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico. Kosmos Energy Ltd. was founded in 2003 and is headquartered in Dallas, Texas.

Kosmos Energy Q1 2025 Earnings Call Transcript

Key Takeaways

• Kosmos shipped its first LNG cargo from the GTA project and now has all four FLNG trains online, ramping toward a contracted 2.45 Mtpa and exploring upgrades to exceed 3 Mtpa.
• Q1 capital spend was over 50% lower year-on-year at $86 million, and the company is on track to cut annual overhead by $25 million by year-end.
• In Ghana, the Jubilee drilling rig arrives late Q2 with two wells planned in 2025 and four more in 2026, driving high-margin, low-cost production growth.
• Kosmos has refinanced and upsized its reserve-based lending facility, hedged ~40% of 2025 oil at a $65–$80 range, and maintains minimal near-term maturities.
• After Q1 maintenance-related underlift, Q2 production is forecast to be ~15% higher quarter-on-quarter, with full-year guidance unchanged.

Presentation

[Operator]

Day, everyone. Welcome to Kosmos Energy's First Quarter twenty twenty five Conference Call. As a reminder, today's call is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos Energy.

[Jamie Buckland, Vice President, Investor Relations at Kosmos Energy]

Thank you, operator, and thanks to everyone for joining us today. This morning, we issued our first quarter twenty twenty five earnings release. This release and the slide presentation to accompany today's call are available on the Investors page of our website. Joining me on the call today to go through the materials are Andy Ingels, Chairman and CEO and Neil Shah, CFO. During today's presentation, we will make forward looking statements that refer to our estimates, plans and expectations.

[Jamie Buckland, Vice President, Investor Relations at Kosmos Energy]

Actual results and outcomes could differ materially due to factors we note in this presentation and in our UK and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details. These documents are available on our website. And at this time, I will turn the call over to Andy.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our first quarter results call. I'll start off the call by reinforcing the messages I gave in February with our full year results, which apply even more so in today's volatile market. Kosmos continues to focus on prioritizing cash generation, rigorous cost control and enhancing the financial resilience of the company. I'll then provide an update on the operational progress we've made so far this year and the outlook for the remainder of 2025.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Neil will then walk you through the quarter's results and the balance sheet before I wrap up with closing remarks. We'll then open up the call for Q and A. Starting on Slide three. While we're seeing heightened volatility in our sector and across global markets more broadly, our priorities remain unchanged. I talked in detail in February about prioritizing cash generation and that continues to be our primary focus.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And we deliver that through a combination of increasing production and lowering costs. Starting with production, we were pleased to announce the export of the first cargo from the GTA project last month. All four trains on the FLNG vessel are now operational with daily production ramping up towards the contracted sales volume equivalent to 2,450,000 tons of LNG per annum with potential to go higher. I'll talk more about that on the following slide. In Ghana, we expect the drilling rig to arrive late this month with two Jubilee wells planned in 2025, which should help deliver production growth in the second half of the year.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

The partnership also plans to drill an additional four Jubilee wells in 2026, which should further enhance production with low cost, high margin barrels even in a lower oil price environment. In the Gulf Of America, we're currently drilling the fourth Wintershall well, which is expected online in the third quarter. On costs, I talked in February about a material reduction in costs across both capital expenditures and overhead with the ability to exercise greater control over our CapEx going forward. We expect CapEx to fall by over 50% year on year with evidence of this in 1Q with CapEx of $86,000,000 2 hundred million dollars lower than the same quarter last year. We also committed to reduce our annual overhead by $25,000,000 by year end and have already made significant progress against that target through April.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And finally, as we navigate a volatile market backdrop, the important actions taken last year to enhance the financial resilience of the company have put us in good shape for the year ahead. In 2024, we raised new capital and refinanced and upsized our reserve based lending facility, which pushed out our average maturity level. We continue to protect our balance sheet with a rolling hedging program and have minimal near term maturities and ample liquidity. Our portfolio is also made up of assets, particularly on the oil side with low operating costs and therefore low breakevens. Neil will go into more detail on the actions we're taking later in the presentation, but the activities we have completed lead us the flexibility to maintain the resilience of our balance sheet through the current volatility.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So in summary, we're focused on keeping the business in good shape through a period of market uncertainty with growing production, material cost reduction and an unchanged priority on cash delivery to pay down debt. Turning to Slide four. We achieved several key milestones in Mauritania and Senegal in recent months with first gas and LNG production in the GTA project, followed by the first LNG cargo. With the export of its first cargo, Mauritania and Senegal have become the latest LNG exporting nations and Kosmos is proud to become an LNG producer. On the FLNG vessel, all four liquefaction trains are now operational with production ramping up towards a contract daily rate equivalent of 2,450,000 tons per annum.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

The second cargo lifting is underway and our full year gross cargo guidance of 20 to 25 cargo remains unchanged. We also expect the first condensate cargo to be exported in the second half of the year. On costs, we're targeting material reductions in both operating costs and our FPSO lease costs. We expect routine operating costs to reduce near term as the commissioning work naturally comes to an end. In addition, we're working with BP on the FPSO refinancing, which should further reduce OpEx, targeting completion in the second half of the year.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Over the medium to longer term, the operator is investigating alternative operating models that could materially reduce costs and enhance the overall returns of the project. We look forward to working with them on this initiative. We see future upside potential at GTA with increased production through the existing facilities and then a potentially material step up in production through some low cost modifications to those facilities. The FOD vessel has a nameplate capacity of 2,700,000 tons per annum and the liquefaction trains are being tested at around 10% above this equivalent nameplate capacity. Next, we'll test the common systems at the maximum rate to get a better picture of where we can safely operate the facility above the contracted sales volume.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

We're also working with the operator and Golar to explore potential upgrades to the FLNG vessel, which could help increase LNG production capacity to beyond 3,000,000 tons per annum. Initial work suggests this can be achieved with relatively modest upgrades. This would likely be done as part of Phase one plus where work has begun with the project partners to fully leverage the existing infrastructure. Phase one plus is a low cost brownfield expansion to potentially double future gas sales with minor modifications to the FPSO in addition to the upgrades to the FLNG vessel and the provision of additional domestic gas. The performance of the GTA reservoir based on data from the initial production has been positive, which creates the potential to reduce future well counts and CapEx.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

We'll continue to update the market as we make further progress. Turning to Slide five, which looks at operations in Ghana. It's been a busy start to the year in Ghana, where we've completed two major pieces of work. Firstly, the partnership shot a new four d seismic survey, the first over the field in around eight years, and that data is now being processed using state of the art algorithms. We believe the enhanced four d image will greatly improve our reservoir models and when combined with AI supported production optimization will enable a partnership to high grade the future infill drilling campaigns and optimize reservoir management strategies to drive higher field recovery over the life of the asset.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

The second major piece of work was the scheduled Jubilee FPSO shutdown, which was completed safely and on budget in early April. The work scope should help to sustain high levels of reliability and higher production as we drill new wells in the future. This year, the operator has been delivering good facilities uptime and consistent water injection into the fields necessary to mitigate the natural decline rate. On drilling, the rig is expected to arrive this month with two Jubilee wells planned in 2025. The Partnership then plans to drill four Jubilee wells in 2026 with an option of additional wells if the external environment is supported.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Jubilee infill wells provide the highest returns across our portfolio with full payback typically in months due to the low operating and development costs and high cash margins of the barrels even in a lower oil price environment. And finally, last month, I had a very productive meeting with President Bahama in Accra to discuss his vision for the future of Ghana's energy sector. We share a very aligned agenda around the importance of investment in the oil and gas sector to support the long term economic and social development of the country. We look forward to continuing to work with the President and his government to invest in and advance Ghana's energy sector under his leadership. Turning to Slide six.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

In the Gulf Of America, production for the first quarter was in line with expectations and included a planned thirty day shutdown facility that hosts the Kodiak field, which has been completed. Our Gulf Of America production has ramped back up to around 20,000 barrels of oil equivalent today net. On Winterfell, the work over the Number 3 well was unsuccessful. We are currently working with partners to evaluate a future sidetrack to access those reserves. The rig is currently drilling the Winterfowl 4 well and that is expected online in the third quarter.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

On Tiberias, where Kosmos is operating, we're making good progress on an improved lower cost development plan, which will be supported by new Ocean Bottom Node Seismic, or OBN, being acquired this year. We're working closely with Oxy, who are fifteen fifty partners on the project and also own the nearby Lucius facility, which we expect would host production from the field. Post acquisition of the OBN, the farm out process will continue with the aim of bringing a partner ahead of project sanction. In Extraordinary, production for the quarter was steady at around 9,000 barrels of oil per day net. Post the recent infill drilling campaign, activity is relatively light this year as the partnership focuses on well work to support current production levels.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

In addition, we're working with the operators to reprocess the seismic we have with modern technology to high grade the future infill drilling potential. There's a lot of opportunity in EG, so the key is making sure we have the best understanding of the subsurface before our next drilling program. Neil will now take you through the financials.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Thanks, Andy. Turning now to Slide seven, which looks at the quarter in detail. Production for the first quarter was impacted by a number of one offs. We had heavy scheduled maintenance as communicated in February, primarily driven by the Jubilee and Kodiak shutdowns, which led to a large underlift in 1Q. Entitlement production did come in slightly lower than guidance, primarily due to the timing of the GTA ramp up.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

As Andy talked about earlier, the GTA ramp up has progressed in April, and our full year GTA cargo guidance is unchanged. 2Q production guidance reflects this GTA ramp up, with production in the second quarter expected to be around 15% higher than the first quarter at the midpoint of our guidance. OpEx per barrel of oil equivalent was in line with guidance, but higher year on year, reflecting the lower production and higher maintenance in 1Q twenty twenty five, including a construction support vessel at Jubilee prior to and during the scheduled shutdown and the Winterfell III workover. The biggest change was CapEx, which is materially lower year on year, in line with our commitment to deliver capital for the year of $400,000,000 or lower. G and A, expiration and interest expense were also all down year on year.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Taxes lower year on year, primarily reflecting lower commodity prices. As you'll see in the appendix, we have put in our updated guidance. Full year guidance has not changed. However, I want to point out a couple of items related to 2Q. The increase in 2Q OpEx is a function of our 110 cargo being lifted this quarter.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Higher CapEx in 2Q is a function of some activity moving to 2Q from 1Q and commencing the drilling activity in Ghana and the Gulf Of America. Turning to Slide eight. As Andy touched on earlier, 2024 was an important year of financing activity to position us well for the future. Last year, we refinanced and upsized the reserve based lending facility, and we have recently concluded the spring redetermination with our banks. That process went well with a borrowing base well in excess of the current facility size, with the banks using a long term price deck below the current strip.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Importantly, this borrowing base excludes any value for our GTA and Gulf Of America assets, which could be used to access financing in the future. We continue to actively manage all the levers we have to maximize cash generation to repay debt, including our 2026 maturity. As part of that effort, post quarter end, we continued our rolling hedging program, adding a further 2,000,000 barrels. We now have around 40% of remaining 2025 oil production hedged with a floor of approximately $65 per barrel and a ceiling of approximately $80 per barrel. In addition, as I mentioned on the previous slide, first quarter CapEx this year was materially lower year on year, as can be seen on the chart on the bottom right.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

And we are working to reduce full year CapEx further from the $400,000,000 we communicated at our full year results. Going into next year, we have minimal capital committed, which provides us a lot of flexibility to further manage our activity set. While the environment is volatile, we continue to be active in managing our options to maintain our financial resilience. With that, I'll hand it back to Andy.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Thanks, Neil. Turning now to Slide nine to conclude today's presentation. Our focus on cash generation and cost discipline remains unchanged, It's even more important given the current market volatility. Production is rising as we ramp up GTA and the near term drilling in Ghana and The Gulf Of America are expected to lead to further production gains in the second half of the year. We're prioritizing cash generation through the rigorous cost and capital discipline we've outlined in today's materials.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

We have assets with low breakeven to generate cash in a low commodity price environment. And the long term value proposition of the company is underpinned by a 2P reserves production line of over twenty years. Thank you. I'd now like to turn the call over to the operator to open the session for questions.

[Operator]

Thank you. We will now be conducting a question and answer Our first questions come from the line of David Round with Stifel. Please proceed with your questions.

[David Round, Managing Director at Stifel Financial Corp]

Great. Thanks. Thanks, guys. A couple from me, please. Firstly, just on the nameplate capacity test at GTA, can you talk about the time frame there for actually understanding the potential rates?

[David Round, Managing Director at Stifel Financial Corp]

And what do you actually need to see to have confidence that higher rates might be sustainable there? The second one, just in your presentation, you talk about breakevens a few times. So interested if you can talk about where you see your breakevens today and potentially how those might evolve in future years?

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes. Hi, David. Yes, no, thanks for those two questions. In terms of the nameplate capacity, as I said in the remarks, nameplate capacity of the FLNG vessel is 2,700,000 tons per annum. The process of getting to that level and beyond is testing each of the trains individually and we're going through that process now.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And we've tested several and they're sort of coming in at around 10% higher, which is typical. What's ongoing then to test the overall system and then that will give us the rate that we can deliver reliably safely above that 2.7. So that's the first step and I think that works so they're going to go on through the second quarter. And then beyond that, once we know we're at that level, the objective with them will be to deliver reliably at that and therefore you have the option with additional volumes above the ACQ of 2.45. So that's the process and there's nothing unusual here.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

I think if you look at LNG facilities around the world, they typically operate at above around 10% higher than nameplate and that's what we're seeing on the FLNG vessel Moving to your second question on the breakevens. I think, look, at oil prices around current levels, for the remainder of the year as a whole, we expect to be free cash flow positive and we'd obviously use that free cash flow to pay down debt. Then as you look sort of forward beyond where we are today, we've got a ramp up in volume in the second half of the year and into 2026. As we expect production to rise obviously with the ramp up GTA that I've just talked about and then with Jubilee drilling, which should commence shortly.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And again, as we've talked about today, we've been pretty clear about our focus on cost control, is bringing down CapEx, reducing the overhead. And I think as we showed in the with the first quarter CapEx, we're making good progress on that. So we haven't given CapEx guidance for '26, but in a low price environment, Neil talked about the minimal committed CapEx we have for '26, which is really just the four well Jubilee program. So if you have that plus maintenance CapEx across the rest of the portfolio, we get to a target breakeven of around $50 per barrel Brent. In that scenario, you still see production growth year on year 25 to '26, but we would be deferring future growth projects in that lower price environment.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And the thing that added in that scenario, I think probably around 85% of lion's share of capital is going into the Jubilee infill wells, which again as we said in the remarks are our highest return projects and they've got a very low breakeven probably on a project basis around $30 a barrel. So even in the low price world, those are things that are going to be adding value for the company. So I think that's just want to make sure I've sort of communicated two things, sense of where that breakeven would be going forward, where the capital would be allocated and our ability to manage in that lower price world.

[David Round, Managing Director at Stifel Financial Corp]

Okay, that's very clear. Thanks, Andy.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Great. Thanks, David.

[Operator]

Thank you. Our next question is coming from the line of Lydia Gould with Goldman Sachs. Please proceed with your questions.

[Lydia Gould, Research Analyst at Goldman Sachs]

Good morning. Thanks for taking my question. My question is around credit and the balance sheet. How are you thinking about financial leverage in a lower commodity price environment and liquidity in those circumstances? Would love your perspective on how you're thinking about the 1.5 times leverage target as well?

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes. Thanks, Lydia. I'll pass the question across to Neil.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Yes. Hi, Lydia. So, I'd say, again, I think our focus on sort of reducing financial leverage and maintaining sufficient liquidity for the business haven't changed. So, again, the direction of travel for for us is, you know, continue to generate free cash, which as Andy just commented, you know, we can generate an oil price around this price at the current price level and use that to pay down debt. And as a result of that, leverage will come down over time.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

And so the pace, you know, really changes based on the oil price, but, you know, again, that's something outside of our control. But, you know, we've taken the steps to both, you know, we're taking the steps to both increase production, lower the capital expenses and operating expenses that allow that are sort of conducive to that environment. I'd say in addition to that, you know, we talked a bit about hedging on the call, that's another tool that we're actively using to protect, insulate the cash flow from the business. If I hit your second part of the question around sort of liquidity, yeah, again, I'd still say, yeah, we've got questions around sort of the the debt maturities in in '26 and '27. We did a lot of work last year to sort of manage those maturities down.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

We'd still anticipate paying the bulk of the outstanding 26 notes with cash flow generated from the business. And then, you know, if oil prices, you know, move lower or stay lower for a sort of extended period of time, you know, we have clearly other options in terms of leaning into existing liquidity, as well as, you know, accessing financing on some of our, unencumbered assets. So, you know, the Gulf Of America assets and, you know, there are assets in Mauritania, Senegal, clearly don't have any debt. And, you know, that's a they provide us some flexibility if we wanna go raise cost effective secured financing against those assets. And so we have a lot of levers that we can manage if the environment gets worse.

[Lydia Gould, Research Analyst at Goldman Sachs]

Thanks, team.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Great. Thanks, Adia.

[Operator]

Thank you. Our next question comes from the line of Bob Brackett with Bernstein Research. Please proceed with your question.

[Bob Brackett, Senior Research Analyst at Bernstein]

Good morning. This might be a stretch, but if I talk about Tiberias and I see you're looking at a lower cost development plan with new OB and seismic data. And if I compare that to some of the Department of Interior studies around commingled production or higher drawdown production, how do you think about the evolving policy in the Gulf Of Mexico and is that driving anything that you're doing there?

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes, no, interesting question, Bob. I'd say there's nothing specific today that is changing our plans. Yes, it remains I think a basin where we see the ability to conduct business. It's a basin where we can leverage technology. I think over half of the seismic in the Gulf Of Mexico now is OPN and that provides us with we think a much enhanced image and therefore the ability to de risk and optimize the development.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So a piece of the optimization is the leverage of that OBN and then a piece of it is actually work that we're doing with Oxy, who are the co partner there fifty-fifty, but it's tied back to Lucius, that's the our objective and the ability then to figure out how you fully optimize the existing infrastructure on Lucius. So I don't think for Tiberius in The Pacific, that's been something that the interior department interior has done, which is making a big change for us. This is work that we have going for some time now. And for me, it's more about the ability to leverage the technology, the pace at which that's evolving. And then I would say just good honest engineering to take out cost.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

I think those are the things.

[Bob Brackett, Senior Research Analyst at Bernstein]

Very clear. Thanks.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Thanks, Bob.

[Operator]

Thank you. Our next questions come from the line of Matt Smith with Bank of America. Please proceed with your questions.

[Matthew Smith, Vice President, Data and Analytics Manager at Bank of America]

Hi there, Andy. Hi, Neil. I guess my questions were really around in the current price environment, the current oil prices, would you be comfortable deploying that growth CapEx on the Tortue expansions that you referenced earlier? Specifically, think the Phase one plus. So would you be willing to deploy that growth CapEx at the current oil price?

[Matthew Smith, Vice President, Data and Analytics Manager at Bank of America]

It was really the first question. And the second question related was, are you considering in any greater way sort of monetizing part of your stakes in Senegal, Mauritania at the moment? Will that be taught to itself or the peripheral discoveries as well?

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes, good questions, Matt. Look, it's tough one to answer because it also depends what the price is, right? I think we've been very clear on the call today about our ability to manage the oil price environment. It is about the committed CapEx and that's the scenario I talked about when David asked the original question. I think going forward, we would say that the growth CapEx on Phase one plus is not committed today and therefore we have the option around the pace.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And I think that's the important thing around the resource there is that it's not an option we're going to lose, it's about the pace of the development and it's therefore about ensuring that we're doing it in a way which doesn't interfere with the overall financial resilience of the company. So I feel good about the fact that we have a greater clarity now, I think on what that option is. I think we have greater alignment with ourselves, BP and the national oil companies, I think really strong alignment now. And the work that we're doing now is at the front end. So it's very low CapEx allowing us over the next twelve to eighteen months to understand the engineering and make sure that we've got the right basis on which to proceed.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So it's a really low cost spend initially and clearly you'll monitor that progress and therefore decide when you would move into a higher CapEx spend. Look, and then in terms of monetization, there's value being added to GTA as we speak. We're ramping up. We're demonstrating the field is working. We've got optionality, I think, of moving beyond the ACQ.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

I think there's work to be done, Matt, to make sure that we fully describe the full potential of GTA before we start to think about any dilution. So nothing sacred, everything ultimately in the portfolio has a value. What we need to do is make sure that we're in the point of the cycle where we've properly described the value. I feel good about the subsurface. We talked about that in the remarks.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

I think that the initial production data we're getting now is very positive. So that's a good sign. I think we need to demonstrate the facility has greater potential than what is currently described in terms of the offtake and therefore building that into future models. So I think we're little ways away from that, but it's something that we're working towards getting ourselves to the place where we fully describe the potential of GCA.

[Matthew Smith, Vice President, Data and Analytics Manager at Bank of America]

Okay, great. Thank you, Andy. Happy to pass it.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Thank you.

[Operator]

You. Our next question has come from the line of Stella Cridge with Barclays. Please proceed with your questions.

[Stella Cridge, MD, Head of EEMEA Corporate Credit Research at Barclays Capital]

Hi, there. Afternoon, everyone. Many thanks for all the updates. There was a couple of areas I wanted to ask on. The first, you talked about recent meeting in Ghana and engaging positively there.

[Stella Cridge, MD, Head of EEMEA Corporate Credit Research at Barclays Capital]

I noticed recently, Tullow on their call talked about potential multiple future rounds of investment in Ghana. I just wondered what was your takeaways from those discussions? Are there any kind of key action points in the near term with regarding the partnership there over the longer term? That was the first one. And just the second one was that I noted that there was a cash outflow from notes receivable in Q1.

[Stella Cridge, MD, Head of EEMEA Corporate Credit Research at Barclays Capital]

I just wondered, will there be any more outflows from receivables or could potentially there be any inflows from Senegal and Mauritania in the future? That would be great.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes. Thanks, Alexia. I'll ask Neil to pick up the question around the cash outflow. Ghana, we've been there a long time. We've seen obviously multiple governments.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And for me, it was great to meet President Mahama again. He was clearly there in power eight years ago and it was an opportunity to connect with him and sort of his view and vision of the industry in Ghana. My big takeaway is that he has a very clear mandate, I think to reenergize sector. There is I think a lot of potential remaining in the basin, but it's a potential that is actually around sort of near term activity where you're getting the most out of your existing fields that are on production. And I think the big point to take away from it is that, I think I've talked on previous calls about the potential that we see in Jubilee, the remaining reserves to be produced.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

And an important element of that is you have an aligned agenda with the government and obviously with the national company. And that's what I took away from it that we have the same aligned agenda. It's a place where Cosmos is welcome. And we're embarking on a program now with obviously two wells in 2025, but then four wells in 2026 to ramp up a Jubilee production. And then the potential to work and continue to work on enhanced recovery from the field.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So I think the big message is around the fact that we have a country where we're welcome, we have a long history there and we have very much an aligned agenda as we look to get the maximize both the efficiency and the effectiveness of the recovery, which will benefit both the country and Kosmos' shareholders. So

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

I think that's a

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

big message from that. And as I say, we're starting on that journey now with infill program that will drilling rig to arrive this quarter. Maybe if I just pass the call across to Neil, just to cover your question about the cash flow.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

Yes, hi, Celis. I think the question you asked is just around the NOC financing that was in 1Q. And so, that's part of the development loan that we put in place with GTA. That comes to a close basically this quarter and so in terms of our obligation to finance their sort of development expense and then you know as you noted then there will be a repayment schedule in terms of then starting to get that cash flow back. So again, in the second half of the year, you know, it'd be stopping an outflow and then, you know, as we deliver the increase in production and reductions in operating expenses, then there's capacity for the that cash flow to start being repaid back to both us and VP as part of that repayment of the NFC loans.

[Neal Shah, Senior VP & CFO at Kosmos Energy]

And so, we're sort of near the peak of that in terms of capital expended.

[Stella Cridge, MD, Head of EEMEA Corporate Credit Research at Barclays Capital]

That's it from me. Thanks for the answers.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Great. Thanks, Scott.

[Operator]

Thank you. Our next question has come from the line of Nikhil Bhatt with JPMorgan. Please proceed with your question.

[Nikhil Bhat, Executive Director at JP Morgan]

Good morning. I just have one quick one. More of a clarification on your LNG offtake agreement with BP. Could you please remind me if there's any annual quota of volumes of cargoes that your contracted sell to BP? And also if there's could you remind me what's the contracted price again, please?

[Nikhil Bhat, Executive Director at JP Morgan]

Thanks.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes. The annual contract quantity is 2,450,000 tons per annum and the price is 0.959.5% slope against Brent FOB.

[Nikhil Bhat, Executive Director at JP Morgan]

Thank you.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Does that make sense, Nikhil? I know that's sort of short machine gun stuff, but is that is precisely the answer.

[Operator]

Okay. Our next question comes from the line of Mark Wilson with Jefferies. Please proceed with your questions.

[Mark Wilson, Managing Director at Jefferies]

Thank you and good afternoon, gents. First off, on TOR two, just give a bit more color on what is it you've seen with the subsurface performance that you mentioned is ahead of expectations, which sounds good. And then second point, I wonder what are the steps to obligation offtake physically with regards to pipeline? And also, financially, does that connect to what Neil was just talking about NOC payback? Do you need that domestic obligation in place?

[Mark Wilson, Managing Director at Jefferies]

Thanks. Those are my two points.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

Yes, Mark. So look on the subsets, you should go back in time, obviously, you understand this, but seismic, you then do we had three exploration wells, one appraisal well and we've got four development wells. The four development wells we did flow back for a short period of time. It's tough on those shorter flowbacks to sort of see where you are getting any connected volumes. And I think the big as it were new piece of data we've got is from the flow back from the first two wells actually, where we're seeing a greater connection in volume than we'd originally mapped.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So I think that's a very positive obviously because as you start to think about the future therefore there, if you have the opportunity to reduce the number of wells you need for a given amount of recovered volume, which again would enhance the returns from

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

the project.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

In terms of on the same question, Mark, just remind me, domestic gas and the build out of the infrastructure, yes. Okay. Yes, so we don't in essence, yes, the obligation just so we're clear on the obligation. The obligation is with the off taker, which is the National Oil Company to build any infrastructure. So are responsible for building the pipeline from the hub terminal to which is the offtake point to their whatever their chosen landing point is.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So we don't have any capital liability for that. I think that was really the essence of your question, wasn't it?

[Mark Wilson, Managing Director at Jefferies]

Yes, is. And obviously, they do that, you, I guess, can sell at nameplate capacity.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

You have more gas to sell, exactly. And you've got more gas to sell, yes. So I don't think there's a if you think about the limits of the system or the FPSO, all right, and then its associated infrastructure can do well more than 3,000,000 tons per annum. It's the in terms of delivering LNG, the constraint is the capacity of the facility itself. And then if it's at its full capacity and that number is beyond the 2,700,000 tons per annum, that's still gas available for domestic.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

So we're not it's not about sort of one being exchanged for the other. There's plenty of capacity in the system.

[Mark Wilson, Managing Director at Jefferies]

Absolutely. It makes sense. Thank you. I'll hand that over.

[Andrew Inglis, Chairman & CEO at Kosmos Energy]

All right. Good. Thanks, Mark.

[Operator]

Thank you. Since there are no further questions at this time, I would like to bring the call to a close. Thanks to everyone for joining today. You may now disconnect your lines and thank you for your participation.

Participants

Executives

• Jamie Buckland, Vice President, Investor Relations
• Andrew Inglis, Chairman & CEO
• Neal Shah, Senior VP & CFO

Analysts

• David Round, Managing Director at Stifel Financial Corp
• Lydia Gould, Research Analyst at Goldman Sachs
• Bob Brackett, Senior Research Analyst at Bernstein
• Matthew Smith, Vice President, Data and Analytics Manager at Bank of America
• Stella Cridge, MD, Head of EEMEA Corporate Credit Research at Barclays Capital
• Nikhil Bhat, Executive Director at JP Morgan
• Mark Wilson, Managing Director at Jefferies