0001509991-25-000072
SEC filingKosmos Energy posted a net loss in Q3 2025 driven by lower oil prices, delayed Jubilee sales, and a $51.1M well write-off, while liquidity concerns persist despite a recent debt covenant amendment.
For the third quarter of 2025, Kosmos Energy reported a net loss of $124.3 million compared to net income of $45.0 million in the same period last year. Revenue decreased 23.7% to $311.0 million, driven by lower average realized oil prices (down 12.2% to $67.30/bbl) and lower sales volumes, particularly in Ghana and Equatorial Guinea. The decline was partially offset by first LNG cargo sales from Mauritania/Senegal which contributed $39.3 million in revenue.
Total costs and expenses increased by 38.7% to $417.7 million, primarily due to a $51.1 million exploration expense related to the Winterfell-4 well write-off and higher oil and gas production costs associated with the GTA Phase 1 ramp-up. Interest and other financing costs rose sharply to $57.9 million from $22.1 million as capitalized interest decreased following first gas at GTA in December 2024.
For the nine months ended September 30, 2025, net loss was $322.6 million versus net income of $196.4 million in the prior year period. Revenue fell 22.2% to $993.7 million.
As of September 30, 2025, Kosmos had $64.0 million in cash and cash equivalents and $14.0 million in restricted cash. Total debt was $3.03 billion (face value), an increase from $2.80 billion at year-end 2024. Net debt stood at $2.95 billion. The company had $225.0 million undrawn under its $1.35 billion borrowing base Facility.
During the first nine months, the company borrowed $375 million and repaid $150 million, resulting in a net debt increase. In September 2025, Kosmos entered into a $250 million GoA Term Loan Facility, drawing $150 million in October 2025 to redeem part of its 7.125% Senior Notes.
The company's current ratio deteriorated to 0.52x due to $250 million current maturities of long-term debt. Stockholders' equity declined to $898.8 million from $1.20 billion at year-end due to cumulative net losses.
Net cash provided by operating activities for the nine months was $98.7 million, down 80.4% from $502.5 million in the prior year. The decline reflects lower revenues and higher production costs. Capital expenditures were $244.1 million, leading to negative free cash flow of $145.4 million. The company also invested $86.8 million in notes receivable and other investing activities, primarily related to GTA carry advances.
Financing activities provided $225.0 million, driven by $375 million in borrowings offset by $150 million in debt repayments. No buybacks or dividends were executed.
Management highlighted that lower realized oil prices, delayed Jubilee cargo sales, and a slower GTA LNG production ramp-up have reduced forecasted EBITDAX and increased drawn debt levels. The company amended its debt cover ratio covenant in July 2025 to less restrictive levels (4.0x for September 2025 and 4.25x for March 2026) to provide breathing room. However, there are circumstances under which the company may not comply with the covenant in March and September 2026.
A mitigation plan has been developed that includes reducing operating expenditures at TEN fields in Ghana, reducing G&A expenses, and potentially monetizing existing hedges. The company may also consider strategic transactions. Failure to execute this plan could lead to an event of default.
The 2025 capital budget is expected to be less than $350 million, with $250 million for maintenance, $75 million for GTA completion, and $25 million for appraisal activities.
Results by segment (Q3 2025):
The company suspended well costs of $211.5 million at September 30, 2025, primarily related to Yakaar-Teranga and Tiberius discoveries. Asset retirement obligations were $400.6 million.
Derivative instruments had a net asset position of $19.5 million. The company has hedges covering 2,500 MBbl for Q4 2025 and 8,500 MBbl for 2026 at various strike prices. A 10% decrease in oil prices would increase pre-tax earnings by approximately $47.3 million.
After the balance sheet date, Kosmos drew $150 million on the GoA Term Loan Facility and used proceeds to redeem $150 million of 7.125% Senior Notes due 2026, leaving $100 million remaining outstanding.