What Kosmos Energy (KOS) Said on Its Q3 Earnings Call

Key Points

• Kosmos reported stronger operating performance in the first nine months of 2026, with production up 14%, operating costs down 26%, and EBITDAX nearly doubling to almost $800 million. The company expects approximately $300 million in 2026 free cash flow, excluding a roughly $200 million hedging impact.
• Ghana and GTA operations continued to advance: Jubilee production rose to 84,500 barrels per day in the third quarter, while GTA remained on track to achieve the upper end of its annual LNG cargo guidance. Kosmos also progressed the GTA Phase 1+ pipeline expansion and upcoming Gulf of America drilling projects.
• Debt reduction and refinancing remain priorities. Kosmos reduced net debt by about 17% through the first nine months, repaid $90 million of debt during the quarter, and is targeting less than $2.4 billion of debt by year-end 2026 and approximately $2 billion by the end of 2027.

Kosmos Energy NYSE: KOS said it made progress toward its 2026 production, cost-reduction and debt-reduction goals during the third quarter, citing higher output from its core assets, lower operating costs and continued work to extend its debt maturities.

Chairman and CEO Andy Inglis said production in the first nine months of 2026 increased 14% from the same period a year earlier, without adjusting for the sale of EG. The company also reduced absolute operating costs by 26% and operating costs per barrel of oil equivalent by about 37% over the same period, he said.

Chief Financial Officer Neal Shah said EBITDAX nearly doubled to almost $800 million for the nine months ended Sept. 30, supported by lower costs and higher commodity prices. Kosmos expects approximately $300 million of free cash flow for 2026, excluding an expected roughly $200 million impact from hedging.

Ghana output rises as drilling program concludes

In Ghana, Jubilee gross oil production averaged 84,500 barrels per day in the third quarter, up about 17% from the preceding quarter as new wells came online. The J50 producer began production in August, while the J73 water-injection well was completed in September.

Year-to-date Jubilee production through the end of the third quarter was approximately 75,000 barrels of oil per day, within the company’s annual guidance range of 70,000 to 80,000 barrels per day. With the latest drilling campaign completed, Inglis said the partnership’s focus has shifted toward reservoir management and mitigating production declines ahead of the next program, scheduled to begin in mid-2027.

The company identified several operational priorities: sustaining water injection, or voidage replacement, above 120%; optimizing the production system; adding gas lift on the west side of Jubilee; and maintaining FPSO uptime of approximately 98% or more. Inglis said the gas-lift project was underway and expected to come online toward the end of the month.

Kosmos has contracted Noble’s Faye Kozack rig for a 2027-2028 drilling program of up to 10 wells, with the rig expected to arrive in mid-2027. The early wells are expected to benefit from recent 4D seismic data, while an ocean-bottom-node survey is expected to help plan and rank wells for the latter half of the program.

GTA LNG operations and expansion work advance

At Greater Tortue Ahmeyim, or GTA, gross LNG production was approximately 2.44 million tons per annum equivalent during the third quarter. The partnership lifted 8.5 gross LNG cargoes during the quarter, bringing the year-to-date total to 27 cargoes.

Kosmos said it remains on track to reach the upper end of its full-year guidance of 32 to 36 gross LNG cargoes. A condensate cargo delayed by weather at the end of the third quarter was lifted in early fourth quarter, providing Kosmos with just under 400,000 net barrels of condensate. All three gross condensate cargoes expected for the year have now been lifted.

On the GTA Phase 1+ expansion, construction of an onshore pipeline in Senegal is underway. RGS, the pipeline operator, reported that the first phase of the line connecting the GTA hub to the 230-megawatt Gandon power plant was more than 25% complete. Construction on additional southern segments is due to begin in 2027, with commissioning targeted for 2029.

Gulf of America projects move forward

Gulf of America production averaged about 14,100 barrels of oil equivalent per day in the third quarter, in line with company expectations. Kosmos said fourth-quarter Gulf production will be affected by planned maintenance at Delta House, a workover at Kodiak and downtime related to Hurricane Isaias.

During the quarter, Kosmos completed its farm-down of the Tiberius project, bringing Navitas in as a 33.33% partner. Kosmos will retain operatorship and a 33.34% interest, while Oxy holds the remaining stake. The transaction includes upfront cash, a carry for future development capital expenditures and future milestone payments.

According to Inglis, the carry is expected to cover Kosmos’ Tiberius capital expenditures through 2026 and fund its share of development spending through the first half of 2027. First oil is expected in the second half of 2028.

The company and Shell are also preparing to drill the Trailblazer exploration well in the first half of 2027 using Transocean’s Deepwater Pontus rig. Kosmos expects to hold roughly one-third of the prospect under what Inglis characterized as a straightforward interest split. In a success case, Trailblazer could be tied back to Shell’s nearby Appomattox facility, where available capacity exists.

Debt reduction and refinancing remain priorities

Kosmos recently extended its reserve-based lending facility to April 2033. Shah said the company exited the third quarter with about $570 million of available liquidity and expects liquidity to improve in the fourth quarter.

During the quarter, the company used free cash flow to repay $50 million of its 2027 bonds, $15 million of its Gulf of America term loan and $25 million of its reserve-based lending facility. Kosmos plans to prioritize free cash flow toward its bonds in the fourth quarter as it works to address 2028 maturities.

Net debt was reduced by about 17% from year-end 2025 through the first nine months, according to Inglis, and the company remains on track for its 20% reduction target for the year. Shah said Kosmos expects to exit 2026 with less than $2.4 billion of debt and is targeting net debt of around $2 billion by the end of 2027 at strip prices.

“We remain focused on enhancing the company’s financial resilience,” Inglis said, citing additional debt repayment, management of near-term maturities and selective investment in growth projects as priorities for 2027.

About Kosmos Energy (NYSE:KOS)

Kosmos Energy Ltd. NYSE: KOS is an independent energy company engaged in the exploration, development and production of oil and natural gas. The company focuses primarily on offshore assets and seeks to develop resources in partnership with national oil companies, international energy companies and other industry participants.

Kosmos has historically operated across several regions, including offshore Ghana, Equatorial Guinea, Mauritania and Senegal, as well as the U.S. Gulf of Mexico.

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