Kosmos Energy's Q4 2024: Key Contradictions in CapEx, Production Guidance, and Strategic Direction

These are the key contradictions discussed in Kosmos Energy Ltd.'s latest 2024Q4 earnings call, specifically including: CapEx guidance, assumptions for LOE per barrel, Jubilee production guidance and voidage replacement, and BirAllah Exploration:



Cash Generation Strategy and Financial Performance:
- Kosmos Energy expects significantly increased free cash flow in 2025, with a forecasted free cash flow yield that surpasses many U.S. and international peers.
- This is driven by the company's strategy to reduce capital expenditure by over 50%, from over $800 million in 2023 and 2024 to $400 million in 2025, along with a focus on rigorous cost management and overhead reductions.

Reserve and Production Outlook:
- Kosmos has achieved a 2P reserve replacement ratio of 137%, supported by significant gas reserves, and maintains a 2P reserve life of over 20 years.
- With GTA beginning commercial production and increased production expected from Winterfell and Jubilee, Kosmos anticipates a substantial increase in production, which will support sustainable cash generation.

GTA Project Milestones and Future Growth:
- GTA achieved first LNG production and is expected to ship its first cargo, marking a significant milestone for Kosmos.
- The company is focused on leveraging existing infrastructure to drive future phases of the GTA project, with initial data from producing wells providing confidence for further expansion.

Jubilee Field Management Improvements:
- Kosmos is prioritizing improved field management at Jubilee to achieve over 100% voidage replacement, aiming to resolve historical water injection and reliability issues.
- Enhanced field management and additional wells are expected to significantly improve oil production, with gross production guidance for Jubilee ranging between 70,000-76,000 barrels of oil per day.