KOS

Kosmos is a deepwater E&P whose 2025 reset is real, not cosmetic. After three straight profitable years ($227M/$214M/$190M in FY22–24), FY2025 revenue fell 23.1% to $1.29B and the company swung to a $700M net loss (-$1.47 diluted EPS, -54.3% net margin, -132% ROE). The MD&A shows why: realized price per Boe dropped from $71.27 to $57.48, production costs jumped $178M on the GTA LNG ramp ($237.6M of LNG production cost), and the loss was deepened by a $177.6M impairment plus large dry-hole/exploration write-offs — $143.7M of previously capitalized Yakaar/Teranga costs and a $58.5M Winterfell-4 abandonment. Interest and financing cost also ballooned to $223M. Operating cash flow collapsed 80% to $134M against $565M of D&A, so the business is barely self-funding its capital intensity.

The balance sheet is the core of the bear case. Long-term debt is $2.92B plus $132M current, roughly $3.05B against just $529M of equity (down 56% YoY) and $91.5M of cash — about 5.8x debt-to-equity, with retained earnings at -$1.78B. Working capital is negative ($428M current assets vs $572M current liabilities, a 0.75 current ratio), and principal payments on the GoA Term Loan begin June 30, 2026. Management spent the year in defensive liability management — a secured GoA term loan, redeeming the 2026 notes, and pricing $350M of 11.250% Nordic bonds to retire 2027 notes. Refinancing near-term maturities is prudent, but an 11.25% coupon and first-lien pledges on the Gulf of America and Mauritania/Senegal assets signal stressed cost of capital, not strength.