Key Takeaways:
(Bloomberg) -- Kosmos Energy Ltd. (NYSE: KOS) missed first-quarter revenue and profit expectations even as production hit a company record, with higher output failing to offset weaker-than-expected pricing and sending shares down more than 6%.
"Earlier this year, we set four goals for 2026: increase production from our core assets; lower costs; reduce debt; and advance our high-quality growth portfolio with minimal capital," Andrew G. Inglis, Chairman and Chief Executive Officer, said. "We are delivering strongly on all four of these goals."
The deepwater oil and gas producer reported revenue of $370.9 million, an increase of 27.7% from the prior year but a nearly 9% miss compared to the $407 million analysts expected. The company posted an adjusted loss of $0.07 per share, a significant miss from the consensus estimate of a $0.02 profit. Following the announcement, Kosmos shares fell 6.3% to $3.06.
The results highlight a disconnect between operational performance and financial results. While record production of 75,000 barrels of oil equivalent per day (boe/d) and a 47% year-over-year drop in operating costs to below $20 per boe demonstrate efficiency gains, the benefits of higher international oil prices are lagging due to contract timing. Management noted that the full impact of premium pricing for its West African and Gulf of Mexico barrels will materialize in the second and third quarters.
The record output was driven by the ramp-up of the Greater Tortue Ahmeyim (GTA) LNG project and new wells at the Jubilee field in Ghana. Jubilee production averaged about 70,000 barrels per day (bpd) and is expected to rise in the second quarter. The GTA project is producing above its nameplate capacity, lifting 9.5 LNG cargoes in the quarter.
However, the company's Gulf of America output is now forecast at the lower end of guidance after a well was shut-in. Looking ahead, Kosmos reached a final investment decision on the Tiberius project in the Gulf of Mexico with partner Occidental Petroleum Corp., targeting first oil in the second half of 2028.
Despite the earnings miss, Kosmos accelerated its debt-reduction plans. The company doubled its 2026 net debt reduction target to about 20%, supported by a recent $200 million equity raise and the planned sale of assets in Equatorial Guinea. The company ended the quarter with approximately $500 million in liquidity and aims to bring net debt below $2 billion. This focus on strengthening the balance sheet was recognized by Fitch, which upgraded Kosmos’ corporate rating to B-.
This article is for informational purposes only and does not constitute investment advice.
