0001509991-26-000027
SEC filingKosmos Energy's Q1 2026 net loss widened to $225.6M driven by a $252.0M non-cash derivative loss, overshadowing 28% revenue growth from higher GTA and Jubilee production.
Kosmos Energy reported a net loss of $225.6 million for Q1 2026, widening from a $110.6 million loss in Q1 2025. Revenue increased 28% year-over-year to $370.7 million, driven by higher production at the Jubilee field in Ghana (two new producer wells brought online) and the Greater Tortue Ahmeyim (GTA) field in Mauritania/Senegal, which operated at 5% above FLNG nameplate capacity. The revenue gain was partially offset by lower average realized oil and gas prices ($55.81 per boe vs $65.27 per boe).
Costs and expenses totaled $612.0 million, up from $384.5 million, primarily due to a $246.0 million increase in derivative losses (mostly non-cash mark-to-market). Oil and gas production costs fell $36.7 million to $130.6 million, benefiting from lower routine operating costs and reduced workover expense, particularly in the Gulf of America. Exploration expenses rose $10.1 million to $19.7 million due to leasehold write-offs in Sao Tome and Principe. Depreciation, depletion, and amortization remained flat at $119.9 million.
Loss per share was $0.45 (diluted) versus $0.23 in the prior year.
Total assets increased to $4.78 billion from $4.70 billion at year-end 2025, while total liabilities rose to $4.27 billion from $4.17 billion. Stockholders' equity decreased to $515.1 million from $528.6 million, largely due to the net loss and a public stock offering that raised $206.4 million (112.1 million shares).
Cash and cash equivalents stood at $130.0 million at quarter-end, up from $91.5 million. Restricted cash (long-term) increased to $30.6 million. The company had $350.0 million undrawn on its $1.25 billion revolving credit facility (as of April 2026 redetermination). Total debt (net) was $2.87 billion, down from $2.92 billion, reflecting repayments of $277.7 million and $347.0 million in repurchases/redemptions of senior notes, partially offset by $350.0 million in new GTA Nordic bonds and $124.2 million in borrowings under the Facility.
Net debt improved to $2.78 billion from $2.98 billion. The company was in compliance with all financial covenants after amendments, though the debt cover ratio exceeded 2.50x, triggering a restricted cash requirement of approximately $47.0 million, for which a waiver was being sought.
Operating cash flow turned positive at $106.6 million, compared to a use of $0.9 million in Q1 2025, driven by higher cash receipts from increased production and lower operating costs. Investing activities used $98.6 million, primarily for oil and gas assets ($87.0 million) and contributions to the decommissioning trust fund ($11.6 million). Financing activities provided $42.9 million, including $350.0 million from the Nordic bond issuance and $206.4 million from the stock offering, offset by $624.7 million in debt repayments and repurchases.
Free cash flow (operating cash flow minus capex) was positive at $19.5 million, though not explicitly labeled.
Management attributed the improved operating cash flow to higher production and lower costs, while emphasizing the impact of volatile oil prices on derivative valuations. The company's 2026 capital budget is approximately $350 million, allocated to maintenance activities ($275M), development programs ($60M), and facilities integrity ($15M). Key projects include infill drilling in Ghana and the Gulf of America, the Tiberius development (FID in March 2026, first oil H2 2028), and GTA Phase 1 ramp-up.
The company plans to close the sale of its Equatorial Guinea assets (Ceiba and Okume) around mid-2026 for $180M upfront, with up to $39.5M in contingent consideration. Proceeds will be used to reduce debt. Additionally, a potential farm-down of the Tiberius working interest to ~33% is expected around mid-2026.
Key risks include compliance with financial covenants (debt cover ratio) and oil price exposure, partially mitigated by an active hedging program. The company amended its credit facility covenants in February 2026 to provide flexibility through September 2026.
Segment performance varied widely. Ghana generated $201.3M in revenue (33% YoY growth) but a loss of $51.2M due to higher DD&A and interest charges. Equatorial Guinea revenue fell 35% to $22.4M, reflecting asset divestiture plans and well workovers. Mauritania/Senegal saw revenue jump to $52.3M from $2.7M, driven by first LNG sales from GTA, though the segment posted a $43.2M loss due to ramp-up costs. Gulf of America revenue declined 7% to $94.8M, with lower production partially offset by lower costs.
Derivative liabilities of $171.2M were recognized at quarter-end, reflecting the adverse oil price environment. The company entered into multiple hedging positions for 2026 and 2027, including collars and swaps with weighted average floors between $50-$70/bbl and ceilings up to $85/bbl.
Equity-based compensation was $6.0M in Q1 2026, down from $8.4M in Q1 2025. The company maintains a 3.125% convertible senior notes position of $400M (conversion price ~$7.02 per share) and capped call transactions to reduce dilution.