Kosmos Energy – Updated Equity Research

Kosmos is a company we have been following since 2020 due to its relationship with Golar LNG in the Greater Tortue Ahmeyim (GTA) LNG project, where, together with BP, it contracted Golar’s FLNG Gimi.

Just two months ago, we published our initial equity research on the company, in which we explained in detail its asset portfolio across four core geographies:

• Ghana (Jubilee & TEN) – 31,300 boepd (3Q25)
• Equatorial Guinea – 6,200 boepd (3Q25)
• Mauritania & Senegal (GTA) – 11,400 boepd (3Q25)
• Gulf of America – 16,600 boepd (3Q25)

We also covered all the issues the company has faced in recent years that pushed the business to its limits, such as COVID-related delays and cost overruns at GTA, combined with operational underperformance and deferred investment at Jubilee, which severely constrained cash generation and raised questions about solvency.

The situation was particularly challenging in 2025, when the company’s market capitalization fell by more than 75% due to the sharp decline suffered by its flagship asset and core of the investment thesis, largely driven by Tullow’s poor reservoir management and delayed seismic refresh work, as well as the issuance of 2026 guidance implying a steeper decline rate than recent operational data would justify—guidance that appears to be proving inaccurate just two months later (and which was published to put pressure on bondholders).

This led the company to be capitalized at around $450 million, with nearly $3 billion of debt and EBITDA below $500 million over the last twelve months, making it highly dependent on flawless execution across several fronts, both operationally and in terms of refinancing.

Today, just two months later, the company has re-rated by more than 50%, driven by a combination of higher oil prices (the company has very high beta to oil), successful recent drilling at the Jubilee field (adding 10,000 new boepd), and refinancing transactions that have practically eliminated its 2026 and 2027 maturities, giving the company a two-year window to generate the cash flows needed to face post-2028 maturities under better conditions.

The key question we are now asking is whether these developments – together with GTA reaching peak production (during winter), new Jubilee drilling, and upcoming corporate actions – are sufficient to remove the company from danger and unlock significant upside potential, or whether the real oil price required to make the story work is higher than management suggests, meaning that if current prices are not sustained, the company could realistically face bankruptcy (as several credit analysts have warned).

The million-dollar question is: are we facing a value trap or a spectacular multi-bagger opportunity?

In today’s analysis, we attempt to answer this question through an in-depth review of:

• The company’s new debt structure following the refinancings completed over the past two months
• Each operational hub in detail (Jubilee, TEN, GoM, Equatorial Guinea and GTA), including the production profile of each asset after the latest operational updates
• A detailed valuation model (DCF) (explaining the assumptions behind each variable) with multiple scenarios and sensitivity analysis to oil prices and production
• An assessment of the most relevant upcoming events and their impact over the next six months
• Our view on the complex situation facing Kosmos Energy