Kosmos Energy's Q2 2025: Unpacking Key Contradictions in Breakeven Prices, Jubilee Production, and Cost Reduction Strategies

Breakeven prices and cost efficiency for GTA, Jubilee production strategy and well numbers, GTA Phase I cost reduction plan, Jubilee production decline and maintenance strategy, and GTA Phase I plus expansion and cost reduction strategies are the key contradictions discussed in Kosmos Energy's latest 2025Q2 earnings call.



Jubilee Field Production and Decline:
- Kosmos Energy reported a 40% decline in Jubilee production between the first half of 2024 and the second quarter of 2025.
- This decline is attributed to a combination of factors, including a 12-month drilling hiatus, facility issues, and higher-than-expected decline in some wells, particularly on the eastern side of the field.

GTA Project Startup and Cost Optimization:
- The GTA project achieved its Commercial Operations Day (COD) in late June, signaling the end of Kosmos funding the NOC's capital expenditure on the project.
- The company is focusing on reducing costs by exploring alternative operating models and working on the refinancing of the GTA FPSO, with expectations of significant cost reductions in the second half of the year.

CapEx Reduction and Balance Sheet Priorities:
- Kosmos lowered its full-year CapEx forecast from $400 million to $350 million.
- The reduction is part of a broader strategy to enhance financial resilience by prioritizing cash flow and debt paydown, with a focus on addressing upcoming debt maturities through a secured term loan and additional financing activities.

Hedging and Financial Resilience:
- The company has hedged 7 million barrels of 2026 oil production, aiming for 50% of 2026 production coverage, and secured a term loan of up to $250 million against Gulf of America assets.
- These actions are part of efforts to increase financial protection against commodity price volatility and improve liquidity to repay upcoming debt maturities.

GTA Expansion and Domestic Gas Potential:
- The GTA project is expected to initially produce 2.7 million tonnes per annum, with the potential to double this production through a low-cost brownfield expansion.
- The expansion is contingent on resolving domestic gas volumes and negotiating gas sales agreements, which could involve both pipeline gas and LNG into regas facilities to cater to growing economic needs in Senegal and Mauritania.