0001509991-25-000063
SEC filingKosmos Energy reported a Q2 2025 net loss of $87.7 million, swinging from a $59.8 million profit a year ago, driven by lower oil prices and increased LNG production costs at the GTA Phase 1 project.
Kosmos Energy reported a net loss of $87.7 million in Q2 2025, compared to net income of $59.8 million in Q2 2024. Revenue decreased 13% to $392.6 million, driven by a 21% drop in average realized oil prices ($66.10/bbl vs $83.51/bbl), partially offset by a 12% increase in total sales volumes to 6,663 MBoe (73,216 boepd). The revenue decline was most pronounced in Ghana (-39%), where production was impacted by a two-week scheduled Jubilee FPSO shutdown. Equatorial Guinea revenue rose 68% on improved pricing, while the Gulf of America increased 35% due to Winterfell start-up. The Mauritania/Senegal segment generated $20.2 million in first-time LNG revenue from the GTA Phase 1 project.
Gross profit (oil and gas revenue less production costs) fell 50% to $149.5 million, with gross margin compressing from 66.6% to 38.1%. The sharp decline was primarily due to $69.1 million in LNG production costs at GTA Phase 1, which added $36.49/boe to unit costs (total production cost per boe rose from $25.31 to $36.49). Exploration expenses fell $9.2 million to $4.1 million as the company reduced geological and geophysical studies. Depletion, depreciation and amortization increased 68% to $151.3 million, reflecting higher depletion rates and a larger cost base from development activities. Interest and other financing costs rose $17.6 million to $54.8 million, mainly due to lower capitalized interest (-$37.2 million) after GTA Phase 1 reached first gas in December 2024, partially offset by the absence of a $22.0 million loss on debt modifications recorded in Q2 2024. Derivatives contributed a net gain of $21.6 million (vs $2.9 million gain in the prior year), driven by changes in the forward oil price curve.
Basic loss per share was $0.18, versus earnings of $0.13 per share in Q2 2024.
Total assets at June 30, 2025 were $5.21 billion, down $96 million from year-end 2024. Cash and cash equivalents fell to $51.7 million from $85.0 million, while total debt (including current maturities) increased to $2.85 billion from $2.74 billion. The increase in debt reflects $200 million in borrowings under the Facility (revolving credit), partially offset by $100 million in repayments. Undrawn availability under the Facility stood at $350 million, down from $450 million at year-end. The company had no letters of credit outstanding.
Net debt (total debt less cash and restricted cash) rose to $2.85 billion from $2.71 billion. The debt cover ratio was 2.54x at year-end 2024, which triggered a restricted cash requirement. However, Facility lenders waived that requirement through 2025. In July 2025, the company amended the debt cover ratio covenant to allow up to 4.0x in September 2025 and 4.25x in March 2026, returning to 3.50x thereafter, reflecting lower oil prices and pre-production costs.
Accounts payable decreased $37 million to $312.9 million, while accrued liabilities were relatively flat at $240.6 million. Long-term receivables increased $59 million to $444.7 million, primarily due to $355.5 million in carry advance receivables from national oil companies of Mauritania and Senegal (up from $280.1 million at year-end), reflecting financing of their share of GTA Phase 1 costs.
Stockholders' equity decreased $183 million to $1.02 billion, driven by the net loss of $198.3 million in the first half of 2025, partially offset by equity-based compensation of $15.7 million and $0.3 million from restricted stock unit issuances.
Cash flow from operations was $126.3 million in the first half of 2025, down from $496.2 million in the prior-year period. The decline was driven by lower operating income and higher working capital outflows. Net income of ($198.3 million) was adjusted for non-cash items including depreciation/depletion/amortization ($275.7 million), deferred income taxes ($1.6 million), equity-based compensation ($15.7 million), and derivative fair value changes ($7.9 million non-cash gain). Cash settlements on derivatives were a net inflow of $6.3 million. Changes in operating assets and liabilities provided $42.1 million, primarily from a decrease in receivables ($70.7 million), partially offset by a decrease in accounts payable and accrued liabilities ($36.1 million).
Capital expenditures (oil and gas assets) totaled $172.8 million, resulting in negative free cash flow of $46.5 million for the first half. The 2025 capital budget is approximately $350 million, with $275 million for maintenance, $50 million for GTA completion, and $25 million for appraisal/development programs.
Financing activities provided $100 million net, consisting of $200 million in borrowings and $100 million in debt repayments. No dividends or share buybacks were executed.
Management attributed the quarterly loss to lower commodity prices and the high-cost ramp-up of GTA Phase 1 LNG production. The GTA Phase 1 achieved Commercial Operations Date in June 2025, with six cargoes exported through July. In Ghana, the Jubilee and TEN partnerships signed an MoU to extend licenses to 2040, with a Plan of Development amendment expected by Q3 2025. In the Gulf of America, Winterfell-4 was drilled and completion operations are underway, with the well expected online later in Q3 2025; Winterfell-3 was temporarily abandoned due to sand production. In Equatorial Guinea, subsea pump failures are being addressed with replacement pumps expected in Q4 2025.
The 2025 capital budget remains at ~$350 million, primarily focused on infill drilling in Ghana and Gulf of America, plus final GTA work. The company continues to evaluate appraisal opportunities at Tiberius and Yakaar/Teranga.
In July 2025, the U.S. enacted the "One Big Beautiful Bill Act" (OBBBA) tax reform. The company is evaluating its impact; no adjustments were made in Q2 2025. The debt cover ratio amendment provides temporary covenant relief through March 2026.