Kosmos Energy (NYSE/LSE: KOS) reported Q2 2026 oil and gas revenue of $607.3 million, up 54.7% from $392.6 million a year earlier, while diluted EPS improved to $0.31 from a loss of $0.18. Net production increased about 12% to 71,400 barrels of oil equivalent per day (boepd), driven largely by the GTA ramp-up and new Jubilee wells. The company also generated $88.9 million of free cash flow and reduced net debt to approximately $2.56 billion.
Key Earnings Data
Revenue benefited from both higher sales volumes and pricing. Volumes sold increased about 5% to 7.005 million barrels of oil equivalent, while the average sales price excluding derivative cash settlements rose 47% to $86.68 per boe.
Production costs moved in the opposite direction, falling 26% to $179.4 million. GAAP net income was substantially higher than adjusted net income because the reconciliation excluded selected items led by derivative-related adjustments and commodity hedge cash settlements.
| Metric | Q2 2026 | Q2 2025 | Year-over-year change |
|---|---|---|---|
| Oil and gas revenue | $607.3 million | $392.6 million | +54.7% |
| Production expense | $179.4 million | $243.1 million | -26.2% |
| Net income (loss) | $184.8 million | $(87.7) million | Returned to profit |
| Diluted EPS | $0.31 | $(0.18) | Improved by $0.49 |
| Adjusted net income (loss) | $68.2 million | $(92.7) million | Returned to profit |
| Adjusted diluted EPS | $0.11 | $(0.19) | Improved by $0.30 |
| EBITDAX | $311.7 million | $149.5 million | +108.5% |
| Operating cash flow | $175.0 million | $127.2 million | +37.6% |
| Free cash flow | $88.9 million | $44.6 million | +99.1% |
Adjusted earnings, EBITDAX, free cash flow and net debt are non-GAAP measures as defined by Kosmos.
Business and Segment Performance
Ghana
Net production in Ghana averaged approximately 36,300 boepd, including about 7,000 boepd of gas. Jubilee gross oil production averaged approximately 72,000 barrels per day, while TEN averaged about 14,700 barrels per day gross.
The J76 Jubilee well started production in mid-June, and J77 followed in early July. Kosmos said initial performance was near the high end of expectations. The J50 completion was due shortly after the earnings release and was expected to lift Jubilee gross production above 90,000 barrels per day.
Mauritania and Senegal
GTA Phase 1 averaged about 15,700 boepd net, equivalent to approximately 2.65 million tonnes per annum of LNG gross. Production was slightly below the first quarter because of warmer seasonal temperatures.
The partnership lifted nine gross LNG cargoes during the quarter, bringing the first-half total to 18.5. Kosmos maintained its full-year forecast of 32 to 36 gross cargoes. The partnership also remained on track to reduce GTA net operating costs per boe by more than 50% year over year.
Gulf of America
Net production averaged approximately 14,300 boepd, with oil representing about 83% of the total. Following quarter-end, Kosmos completed the Tiberius farm-down to Navitas, leaving Kosmos with a 33.34% interest alongside Navitas and Occidental.
The consideration includes upfront cash, future development spending carried by the new partner and potential milestone payments. Kosmos expects the carry to cover its Tiberius spending through 2026 and into mid-2027. At Winterfell, however, the fifth well was temporarily abandoned because of production casing issues, and the partnership is evaluating how to restore output from the fault block.
Equatorial Guinea
Kosmos produced about 5,100 barrels per day net from Equatorial Guinea through June 16, when the asset sale closed. The partial-quarter contribution increased consolidated Q2 production by about 1,000 boepd compared with a quarter excluding the assets.
The company received approximately $127 million of final cash consideration and used the proceeds to repay borrowings under its reserve-based lending facility. It may receive up to another approximately $40 million if specified oil-price and production thresholds are met.
Profitability, Cash Flow and the Balance Sheet
Production expense per boe declined to $25.61 from $36.49. Excluding Mauritania and Senegal, the cost fell to $20.91 per boe from $28.22. This reduction, combined with higher sales prices and production, supported the increase in EBITDAX and operating cash flow.
Kosmos reported $105 million of net capital expenditure, in line with its guidance. Its free cash flow reconciliation uses $76.4 million of cash spending on oil and gas assets plus $9.7 million of finance lease payments, producing free cash flow of $88.9 million under the company’s non-GAAP definition.
Net debt fell by approximately $419 million, or 14%, from the end of 2025 to $2.56 billion. Kosmos ended June with $102.1 million of cash and cash equivalents and more than $500 million of liquidity. The RBL borrowing base was reduced to approximately $1.2 billion following the Equatorial Guinea sale, and the company is targeting completion of its refinancing by the fourth quarter.
Higher Sales Prices Lifted Revenue, but Hedge Settlements Reduced Realized Proceeds
The average total sales price rose to $86.68 per boe from $58.93, while oil and gas revenue increased 55%. Oil pricing was the main contributor: Kosmos received an average of $108.57 per barrel compared with $66.10 a year earlier.
However, cash settlements on commodity derivatives were negative $105.4 million, compared with a positive $11.4 million in Q2 2025. As a result, realized revenue was $501.9 million, below reported oil and gas revenue but still up about 24% year over year. The income statement also recorded a $51.8 million net derivative benefit, illustrating why reported revenue and GAAP net income should be considered alongside realized revenue and adjusted earnings.
2026 Guidance
Kosmos updated its guidance to exclude Equatorial Guinea production after the asset sale. The release did not provide the previous production or cost ranges, so their numerical direction cannot be determined; full-year capital spending and GTA cargo guidance were explicitly unchanged.
| Metric | Q3 2026 guidance | FY 2026 guidance | Status or context |
|---|---|---|---|
| Production | 68,000-72,000 boepd | 69,000-74,000 boepd | Adjusted for Equatorial Guinea sale |
| Operating expense | $18-$20 per boe | $19-$21 per boe | Updated portfolio basis |
| DD&A | $15.50-$17.50 per boe | $16-$18 per boe | Updated portfolio basis |
| G&A | $15-$20 million | Approximately $75 million | About 65% cash |
| Exploration expense | Approximately $5 million | Approximately $20 million | Excludes impairments and dry-hole costs |
| Net interest expense | $55-$60 million | $220-$240 million | — |
| Tax | $7-$10 per boe | $7-$9 per boe | — |
| Capital expenditure | $75-$100 million | Approximately $350 million | Full-year guidance unchanged |
| GTA LNG cargoes | 8 gross | 32-36 gross | Full-year guidance unchanged |
Risks Investors Need to Watch
- Commodity hedging: Kosmos has 3.25 million barrels hedged for the remainder of 2026 at an average floor of approximately $66 per barrel. Hedging can reduce exposure to lower prices, but Q2’s negative cash settlements show that it can also limit the cash benefit from higher market prices.
- Debt refinancing: Net debt has declined, but it remains approximately $2.56 billion. Completion of the RBL refinancing by the fourth quarter is an important step in managing the company’s maturity schedule and liquidity.
- Dependence on core-asset execution: Following the Equatorial Guinea sale, production is more dependent on Jubilee, GTA and the Gulf of America. Delays in new wells, cargo liftings or infrastructure could affect production and cash flow.
- Winterfell well issues: Production casing problems caused Winterfell-5 to be temporarily abandoned. The timing and cost of restoring production from the fault block remain unresolved in the release.
- GTA operating variability: Seasonal temperatures reduced GTA output from the first quarter, while annual results also depend on maintaining the planned LNG cargo schedule and lowering operating costs as expected.
Conclusion
Kosmos Energy’s Q2 results reflected higher production, stronger sales prices and lower production costs, which moved both GAAP and adjusted earnings into profit and supported improved cash generation. The next points to monitor are the Jubilee well ramp, GTA cargo performance, resolution of the Winterfell issue and progress toward the company’s debt-reduction and RBL-refinancing objectives.
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