Kosmos Energy [LON:KOS] NYSE:KOS, the Dallas-based upstream oil and gas production company published its 3Q24 results this morning (4th November).
As previously reported, Kosmos operates in Equatorial Guinea, Ghana, offshore Louisiana and Mississippi in the Gulf of Mexico, Mauritania, Senegal and São Tomé and Príncipe. All its operations are offshore and deepwater.
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The upstream O&G company generated net income of USD45m (GBP34.7m) for the third-quarter, which equated to USD0.09/share. After adjustment net income was USD38m or USD0.08/diluted share.
Production on-track with expectations
Production-wise Kosmos remained on track with expectations, with a solid third-quarter, up 5% from 2Q24, but behind 3Q23 by 4%. However, the producer’s profit and revenue was down significantly year-on-year, as a result of lower oil prices. It sold only 63.16 million barrels of oil per day (mbpd) over the quarter, down 13.6% y-o-y from 73.1mbpd.
Kosmos’ total revenues fell from USD526.3m to USD407.8m y-o-y. Average gas prices were up, but average oil sales prices were down from USD85.92 per barrel (/bl) this time last year, compared to USD76.64/bl this year. Total sales price per barrel down from USD78.24 to USD70.18 y-o-y. Adjusted net income fell to USD37.6m down from USD126m this time last year.
Andrew Inglis, Kosmos’ chairman and chief executive said in a statement to the market: “We continue to make good progress across the portfolio towards our production goal of [around] 90,000bpd around the end of the year. As production rises and projects are completed, we plan to significantly reduce capital expenditure.”
Inglis said Kosmos is prioritising cash generation in 2025. It expects to use cash generated to de-lever the balance sheet, with capex guidance already being cut to USD400m from USD550m. Kosmos tapped the debt capital markets in September, raising USD500m of new senior notes with a seven-year maturity to 2031 at 8.75%. Alongside the new issue Kosmos completed a series of tender offers to repurchase USD500m of its existing senior notes across various maturities.
Kosmos Energy works on consolidating debt
This led to Kosmos paying down most of its outstanding notes through to 2026 and reducing all near-term debt maturities, notably notes maturing 2027 and 2028, pushing out its overall maturity curve.
The same month Kosmos also addressed its syndicated bank debt, bringing two new participants into its reserve-based lending facility. New lenders brought another USD145m to the RBL facility increasing its total capacity to USD1.35bn. Subsequently, the company cancelled its undrawn revolving credit facility ahead of schedule.
All-in, at the end of 3Q24 Kosmos has USD2.8bn of long-term debt on its balance sheet. It has with net debt of USD2.7bn and available liquidity of USD715m.
Kosmos’ shares have been disappointing. They opened the week at 299p, down 49.1% over one-year, and down 45.6% over the year-to-date. Kosmos has a market capitalisation of GBP1.4bn. Kosmos Energy’s 3Q24 results reflect the ongoing challenges in the oil and gas industry. While the company remains committed to its growth plans and debt reduction efforts, its share price performance suggests investor concerns about the sustainability of these objectives in the face of volatile oil prices and a weakening global economy.
