Kosmos Energy Q3 Production Rises as Costs Fall

Kosmos Energy Ltd. reported higher third-quarter 2026 production, stronger realized pricing and lower unit operating costs, generating about $90 million of free cash flow as the oil and gas producer continued to reduce debt. The company said its 2026 operating goals remain on track, including an approximately 35% full-year reduction in operating costs per barrel of oil equivalent.

Net production averaged about 69,200 barrels of oil equivalent per day in the quarter, up from 65,500 boepd a year earlier. New Jubilee wells offset the impact of Kosmos’ sale of its Equatorial Guinea assets. The realized price, excluding derivative cash settlements, increased to approximately $71.40 per boe from $56.40.

Operating expenses declined to about $17.70 per boe from $26.80, reflecting lower routine costs across the company’s business units. Depletion, depreciation and amortization fell to $19.50 per boe from $25.70. Capital expenditure increased to $85 million from $67 million, while net interest expense declined to $56 million from $62 million as debt decreased.

Through the first nine months of 2026, Kosmos said production increased by approximately 14%, operating costs declined by about 26% and net debt fell 17% from year-end 2025. Year-to-date net operating expenses decreased by $146 million, or 37%, while non-GAAP EBITDAX increased by $348 million and non-GAAP free cash flow improved by $339 million.

Ghana drilling supports Jubilee production

Gross production from Ghana’s Jubilee field averaged approximately 84,500 barrels of oil per day in the third quarter, in line with the company’s expectations. Year-to-date production through September averaged about 75,000 bopd, within Kosmos’ full-year gross guidance of 70,000 to 80,000 bopd.

The 2025-2026 drilling campaign concluded in September. The J50 producer began operating in August, followed by the J73 water injector in September. Kosmos said field performance following the campaign will depend on sustained water injection, the addition of gas lift on the western side of Jubilee, production-system optimization and high uptime at the floating production, storage and offloading vessel.

Gross production from the TEN fields averaged approximately 14,600 bopd. License extensions and approval of the development plan allow the partnership to continue investing in Jubilee and TEN. The Noble Faye Kozack rig has been contracted for a program of up to 10 wells expected to begin in mid-2027 and run through 2028. Seismic work is being used to refine well selection.

GTA cargo volumes track toward upper end of guidance

At the Greater Tortue Ahmeyim project offshore Mauritania and Senegal, third-quarter gross production was equivalent to approximately 2.44 million tonnes per year. Kosmos said output was affected by higher seasonal temperatures, as previously indicated.

The project lifted 8.5 gross LNG cargoes during the quarter, slightly ahead of guidance, bringing the year-to-date total to 27. Kosmos expects full-year volumes to reach the upper end of its guidance for 32 to 36 gross LNG cargoes. The company also maintained guidance for three gross condensate cargoes in 2026. One condensate cargo, representing about 400,000 barrels net to Kosmos and the national oil companies, was lifted after the quarter ended.

Work also advanced on potential domestic gas use. Construction began on the northern section of an onshore pipeline in Senegal that will connect the Gandon power plant. In Mauritania, a 25-year agreement was signed with ACWA Power covering the development, financing, construction and operation of a 230-megawatt gas-fired power plant that would use GTA gas.

Gulf of America portfolio advances

Net production in the Gulf of America averaged approximately 14,100 boepd, in line with expectations. Kosmos forecasts fourth-quarter production from the region of 10,000 to 11,500 boepd, with output expected to be affected by planned maintenance at the Delta House facility, a Kodiak-1 workover and Hurricane Isaias.

At the Tiberius development, which has an estimated gross resource of about 100 million boe, a final investment decision was taken with Occidental Petroleum in March. Navitas Petroleum acquired a 33.33% interest early in the third quarter, leaving Kosmos with 33.34% and Occidental with 33.33%. The consideration includes upfront cash, development-cost carry and future milestone payments. Kosmos expects the carry to cover its Tiberius spending in the second half of 2026 and first half of 2027.

Shell plans to begin drilling the Trailblazer prospect in the first half of 2027. The prospect targets an estimated gross resource of about 200 million boe, while the broader Norphlet alliance contains prospects with more than 400 million boe of estimated gross ultimate recovery.

Debt reduction remains a priority

Kosmos repaid more than $500 million of debt during the first nine months of 2026, including $50 million of 2027 notes in the third quarter. Liquidity stood at approximately $570 million at September 30.

The company also amended and extended its $1.2 billion reserve-based lending facility, of which $750 million was drawn. The facility matures in April 2033 and initially carries pricing of the Secured Overnight Financing Rate plus 4.5%. Kosmos said its next bond-maturity objective is to address its 2028 notes.

Management expects leverage to move toward two times by the end of 2026. For year-end 2027, the company is targeting approximately $2 billion of net debt at strip pricing while continuing selective investment in Ghana drilling, GTA expansion and Gulf of America exploration.

For the fourth quarter, Kosmos forecast total production of 60,000 to 64,000 boepd, operating expenses of $18 to $20 per boe and capital expenditure of $50 million to $75 million. The guidance excludes Equatorial Guinea following the June 17 asset sale.

The outlook remains subject to commodity prices, operational uptime, drilling and project execution, regulatory approvals and the availability and cost of capital and services. Kosmos also cautioned that resource estimates and potential drilling locations are uncertain and may change as additional development data become available.