Kosmos Energy (KOS) Q2 2026 Earnings Call Transcript

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DATE

Monday, Aug. 3, 2026 at 11 a.m. ET

CALL PARTICIPANTS

• Vice President of Investor Relations - Jamie Buckland
• Chairman and Chief Executive Officer - Andrew Inglis
• Chief Financial Officer - Neal Shah

TAKEAWAYS

• Net Debt Reduction -- 15% versus year-end 2025, reflecting approximately $420 million in debt paydown achieved through free cash flow, an equity raise, and proceeds from the Equatorial Guinea asset sale.
• Jubilee Gross Production -- 90,000 barrels of oil per day expected following the startup of the J50 well, supported by the recent completion of the J76 and J77 wells.
• Jubilee Field Guidance -- 70,000 to 80,000 barrels of oil per day for the full year, with management noting that performance is currently tracking toward the upper end of this range.
• GTA LNG Production -- 2.65 million tonnes per annum equivalent in the second quarter, which management stated was in line with expectations during seasonal summer temperature variations.
• GTA Cargo Liftings -- nine gross liquefied natural gas cargoes in the second quarter, bringing the first half total to 18.5 cargoes against a full-year target of 32 to 36 cargoes.
• OpEx per Barrel Reduction -- 35% target for the full year 2026, driven by the disposal of higher-cost assets in Equatorial Guinea and ongoing cost-saving initiatives.
• Tiberius Farm-down Agreement -- 33.34% retained working interest for the company following a deal with Navitas, which acquired a 33.33% stake in the project.
• Tiberius Asset Valuation -- $250 million gross valuation as of Jan. 1, 2026, based on a total consideration of nearly $45 million in cash, capital expenditure carries, and milestone payments.
• H2 Production Guidance Adjustment -- 2,500 barrels of oil equivalent per day reduction to the full-year midpoint, accounting for the completion of the Equatorial Guinea asset sale in June.
• Liquidity Position -- $500 million in available liquidity at the end of the second quarter, following the successful Nordic bond offering and equity raise earlier in the year.
• Leverage Ratio Target -- 2.0 times by year-end 2026, representing a decrease from higher levels as the company prioritizes absolute debt reduction.
• GTA Unit Operating Cost -- 50% reduction target for operating expense per million British thermal units in 2026, with further reductions anticipated in 2027.
• Jubilee Future Drilling -- up to 10 wells planned for the 2027 to 2028 drilling campaign, which is scheduled to commence in mid-2027 using processed 4D and OBN seismic data.
• Trailblazer Exploration Prospect -- 200 million barrels of oil equivalent gross resource potential, with drilling expected to begin in the first quarter of 2027 under a strategic alliance with Shell.
• Tiberius Production Capacity -- 10,000 barrels of oil per day gross estimated per well, utilizing up to 30,000 barrels per day of available capacity at the Lucius facility.
• RBL Facility Refinancing -- $1.2 billion facility size targeted for the fourth quarter, as management began discussions with lending banks to amend and extend existing maturities.
• Capital Expenditures -- $350 million full-year guidance remains unchanged, focused on advancing the growth portfolio with minimal capital input during the current fiscal year.
• GTA Condensate Liftings -- 300,000 barrels net to the company in the second quarter, with an additional 400,000 barrels expected late in the third quarter.
• Jubilee Water Injection -- 65% voidage replacement in the second quarter, down from 130% in the first quarter due to scheduled maintenance and pump availability issues.
• Gulf of America Production -- 14,000 to 16,000 barrels of oil equivalent per day forecast for the third quarter, despite the temporary abandonment of the Winterfell #5 well.

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RISKS

• Shah stated, "we have been disappointed by the drilling performance on, again, what are relatively routine operations and the additional costs that have been incurred as a result," regarding casing issues that led to the temporary abandonment of the Winterfell #5 well.
• Inglis stated, "Voidage replacement... hasn't been as strong in 2Q. It's been around about half that level, actually around 65%," noting that water injection pump availability is a primary focus for the second half of the year.

SUMMARY

Management reported progress on four key 2026 objectives including production growth, cost reduction, debt paydown, and portfolio advancement. The company completed the sale of Equatorial Guinea assets in June and executed a farm-down agreement for the Tiberius project in the Gulf of America to reduce capital requirements. Operations in Ghana saw the startup of new producer wells at the Jubilee field, while the Greater Tortue Ahmeyim project in Mauritania and Senegal maintained production levels aligned with the floating facility's nameplate capacity. Financial strategy remains focused on reducing leverage to approximately 2.0 times through free cash flow and asset divestitures.

• CEO Inglis attributed Jubilee growth to identifying "bypass oil opportunities" through the use of 4D seismic data and high-grade well selection.
• CFO Shah confirmed a gross valuation for the Tiberius project of approximately $250 million, noting the deal includes upfront cash and a carry that will fund the company's share of development through the first half of 2027.
• Management highlighted progress on the GTA Phase 1 expansion for domestic gas to power, noting the onshore pipeline fabrication is complete and land has been cleared for the Gandon power station connection.
• CEO Inglis noted that the company is working to secure a rig for the next Jubilee drilling campaign, with a target start date in mid-2027 for a program of up to 10 wells.
• CFO Shah indicated that the company may look to repay or refinance the 2028 notes later in the year as it continues methodical efforts to address the maturity schedule.
• Management reported that absolute operating costs in the second quarter fell 25% year over year, following the removal of higher-cost barrels through the Equatorial Guinea divestiture.

INDUSTRY GLOSSARY

• BOE: Barrels of Oil Equivalent, a unit of energy based on the approximate energy released by burning one barrel of crude oil.
• FID: Final Investment Decision, the point in an energy project where the company commits to the full development of the asset.
• FPSO: Floating Production, Storage, and Offloading, a floating vessel used by the offshore oil and gas industry for the processing and storage of hydrocarbons.
• GTA: Greater Tortue Ahmeyim, a major offshore liquefied natural gas project located on the maritime border of Mauritania and Senegal.
• MMBtu: Million British Thermal Units, a standard unit of measurement for natural gas volume and energy content.
• OBN: Ocean Bottom Node, a type of seismic data acquisition technology that provides higher resolution imaging of sub-surface reservoirs.
• RBL: Reserve-Based Lending, a revolving credit facility where the amount available to the borrower is based on the value of its oil and gas reserves.
• Voidage Replacement: The process of replacing the volume of produced fluids from a reservoir with injected fluids, such as water or gas, to maintain reservoir pressure.

Full Conference Call Transcript

Operator: Good day, everyone. Welcome to Kosmos Energy's Second Quarter 2026 Conference Call. As a reminder, today's call is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President of Investor Relations at Kosmos Energy.

Jamie Buckland: Thank you, operator, and thanks to everyone for joining us today. This morning, we issued our second quarter 2026 earnings release. This release and the slide presentation to accompany today's call are available on the Investors page of our website. Joining me on the call today to go through the materials are Andy Inglis, Chairman and CEO; and Neal Shah, CFO. During today's presentation, we will make forward-looking statements that refer to our estimates, plans and expectations. Actual results and outcomes could differ materially due to factors that we note in this presentation and in our U.K. and SEC filings. Please refer to our annual report, stock exchange announcement and SEC filings for more details.

These documents are available on our website. At this time, I'll turn the call over to Andy.

Andrew Inglis: Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our second quarter 2026 results call. I'll begin today's call by reviewing the progress we've made against the 4 2026 goals that we laid out at the start of the year before giving an update on each of our business units. I'll then hand over to Neal to talk about the financials before I wrap up with closing remarks. We'll then open up the call for Q&A. Starting on Slide 3. When we released our full year 2025 results in March, we laid out 4 key objectives for Kosmos in 2026, which is shown on the slide.

I'm pleased to say in the first half of the year, we made excellent progress across all 4. We've grown production from our core assets, namely Jubilee and GTA. We've delivered significant absolute and per BOE cost reductions year-on-year with a specific focus on operating costs. We've delivered a meaningful reduction in net debt already this year and are making good progress towards hitting a 20% reduction in net debt, a target we increased with our first quarter results in May. And we've continued to advance our high-quality growth portfolio, particularly in the Gulf of America with minimal capital input.

Through these actions, we're delivering a stronger and more valuable Kosmos, a company with high production, lower costs and lower debt that is more resilient to future price volatility with significant upside from our deep hopper of future growth opportunities. I'll now go into more detail as we move through the slides. Starting with Ghana on Slide 4. We've seen a lot of positive progress in Ghana this year with an active drilling campaign that is delivering towards the upper end of our expectations, demonstrating Jubilee's potential. We've used a chart on this slide for the last few quarters to highlight the ramp-up in Jubilee production since the start of the current drilling campaign in the second half of 2025.

Since we reported first quarter results in May, 2 new producers have come online, J76 and J77. The final producer well of the campaign J50 is the completion of a previously drilled well is expected to start up in the coming days. With J50 online, we expect Jubilee gross production above 90,000 barrels of oil per day. J76, in particular, came in at the top end of our expectations and based on performance so far, is the best well we've seen at Jubilee in over a decade.

The well is an example of the upside potential of the asset and shows there is a lot of future value left to play for, particularly as we start to integrate the results of the 2025 OBN seismic into our future well planning. With 7 months of production, we have a robust track record that underpins our full year guidance for Jubilee, which remains unchanged at 70,000 to 80,000 barrels of oil per day. The performance of the latest wells continues to support the upper end of this range. An important takeaway from the chart at the top of the slide is the correlation between activity and performance.

During periods of drilling, high FPSO uptime and sustained water injection, the field has performed well. We're, therefore, working closely with the operators to secure a rig for the '27-'28 drilling campaign for up to 10 wells with the objective of starting in mid-2027. This campaign will benefit from both the fully processed 4D and fast track OBN seismic, which will help refine and high-grade future well locations and give the partnership the best opportunity to maximize future reserve recovery. So in summary, it's an exciting time in Ghana. Jubilee, our highest margin production is performing strongly at a time of higher oil prices, helping us to deliver our debt reduction targets for the year.

And looking forward, with the benefit of new technologies, we're working closely with the operator to plan and progress next year's drilling campaign. Turning to Slide 5. GTA has continued to perform well this year. In the second quarter, gross LNG production was around 2.65 million tonnes per annum equivalent, in line with our expectations. 9 gross LNG cargos were lifted during the quarter at the upper end of guidance. For the full year, our guidance of 32 to 36 gross LNG cargos remains unchanged with 18.5 lifted in the first half of the year. During the second quarter, one condensate cargo was jointly lifted by Kosmos and the NOCs with around 300,000 barrels net to Kosmos.

An additional condensate cargo is expected late in the third quarter, which is also expected to be assigned to Kosmos and the NOCs with around 400,000 barrels net to Kosmos. Due to the seasonality that we've flagged in the past, daily LNG production is expected to remain slightly lower during the summer months because of the warmer sea and air temperatures. Volumes should then pick up again later in the year as cooler temperatures return. On costs, we remain on track to hit our 50% reduction target for OpEx per MMBtu this year and see scope for further reduction in 2027.

On the Phase 1 expansion for domestic gas to power, which should materially enhance project returns, there's been good progress on the ground in both Senegal and Mauritania so far this year. In Senegal, the land has now been cleared to the onshore section of the northern segment of the gas pipeline, which will connect GTA to the 250-megawatt Gandon power station being built near St. Louis. The photographs on the top of the slide show the gathering in China in May to celebrate the completion of the fabrication of the onshore pipeline before it was shipped to Senegal.

The pipeline is due to arrive in country in the coming days after taking a longer route than initially planned to avoid the Middle East. In Mauritania, the country just signed a 25-year agreement with the Saudi power company for the development, finance, construction and operation of a new 230-megawatt gas-fired power plant in N'Diago, which is expected to use gas from the GTA field. These developments in Senegal and Mauritania are important steps for both countries to enhance domestic electricity generation, reduce reliance on imported fuels and support the country's long-term energy security and industrial development. Turning to Slide 6.

Production in the Gulf of America for the second quarter was in line with expectations with continued solid performance for our operated Odd Job and Kodiak fields. On Winterfell, the #5 well was temporarily abandoned by the operator due to casing issues encountered during drilling. Turning to the growth side of the business. Following final investment decision in March, the Tiberius project is making good progress. Last week, we successfully completed a highly competitive farm down on Tiberius, bringing Navitas into the project as a 33.33% partner. Following the farm-in, Kosmos will remain as operator with a 33.34% interest. Oxy, the owner and operator of the nearby Lucius facility will have a 33.33% interest.

The farm-in proceeds are a mix of upfront cash, carry for future development CapEx and future milestone payments. We expect the carry element to cover all of our Tiberius CapEx in 2026 and fund our share of the development through the first half of 2027. Tiberius is a low-cost, high-margin development. We now have an aligned partnership to move it forward with first oil expected in the second half of 2028. Elsewhere in the Gulf, as previously discussed, we entered into a strategic exploration alliance with Shell earlier in the year. As part of the alliance, we exchanged interest across multiple blocks across the Norphlet, which houses several material exploration prospects.

Shell plan to start drilling the first of these Trailblazer in the first quarter of 2027. Trailblazer targeting around 200 million barrels of oil gross equivalent resource and Kosmos is designated as a development operator in the event of success. I'll now turn it over to Neal to take you through the financials.

Neal Shah: Thanks, Andy. Turning now to Slide 7, which looks at the financials for the second quarter in detail. As Andy mentioned, it's been a strong quarter for the company with production around 12% higher year-on-year, driven by the new wells coming online at Jubilee and the ramp-up at GTA. Realized price is higher year-on-year, reflecting the elevated pricing seen in the second quarter following the war in the Middle East. As flagged last quarter, some of the pricing of our production has a lag impact. So we should also see some benefit of the higher 2Q pricing in the third quarter. On operating costs, we've seen a material reduction in both absolute and unit cost year-on-year.

Absolute operating costs in the second quarter are around 25% lower year-on-year, consistent with our ongoing efforts to drive down costs across the business. With the EG disposal, we have now sold our highest cost barrels. So we'd expect absolute operating cost per unit to continue to fall through the second half of the year. The rest of the cost lines for the quarter were in line with guidance, but it's worth highlighting the interest expense reduction, which we expect to continue as we deliver on our debt reduction targets for the year.

In terms of guidance for the third quarter and the full year 2026, we have updated the table in the appendix to reflect the Equatorial Guinea sale, which was completed in June. The two main line items that have been updated are production and operating costs. On production, the midpoint of the range has been moved down around 2,500 barrels of oil equivalent per day net, taking out the EG barrels for the second half of the year, with the remaining portfolio on track following the strong performance year-to-date. With slightly lower production post the EG sale and significantly lower costs, we remain on track to reduce OpEx per barrel by around 35% in 2026. Turning to Slide 8.

We have had an active first half of the year, carrying out several important initiatives to drive a meaningful reduction in both debt and leverage, clear near-term maturities and increased liquidity. The successful GTA bond largely addressed the 2027 bond maturity, and we intend to pay the remaining stub with free cash flow. We paid down approximately $420 million of debt through free cash flow, the equity raise and proceeds from the EG sale. And we ended the quarter with over $500 million of available liquidity.

This progress was recognized by the rating agencies with both S&P and Fitch upgrading the company to B-, reflecting the work we've done to enhance the balance sheet in the first half of the year. Looking at the second half of the year and the things that remain on our to-do list. We've commenced discussions with the lending banks around amending and extending the RBL, and we expect that process to close during the fourth quarter, targeting a facility size of around $1.2 billion. As we make further progress on the capital structure, we will also look potentially to repay the 2028 notes later in the year.

And lastly, we'll continue to take advantage of higher prices to layer in more hedges for 2027. With continued execution, we expect leverage to fall further towards 2x by year-end, a pretty significant turnaround in only 12 months. So in summary, we've worked hard in the first half of the year to reduce absolute debt and leverage while improving liquidity. There's more to do in the second half and we are being proactive and methodical to get it all done. With that, I'll hand it back to Andy.

Andrew Inglis: Thanks, Neal. Turning now to Slide 9 to conclude today's presentation. As I stated in my opening remarks, we have 4 key objectives for 2026: grow production, lower costs, reduce debt and advance our quality growth portfolio with minimal CapEx in 2026. This slide shows the progress we've achieved year-to-date against those goals. Production for the first half of 2026 is up 18% versus the same period last year. Absolute operating costs are down 24% in the first half of '26 versus 2025. We delivered a reduction in net debt of around 15% versus year-end 2025.

And we are advancing our growth portfolio with the Tiberius FID and farm-down, continuing progress on GTA expansion and the exploration alliance with Shell in the Gulf of America. We're working hard to deliver stronger, more valuable Kosmos and look forward to delivering on our full year targets to support long-term value creation for our investors. Thank you. And I'd now like to turn the call over to the operator to open the session for questions.

Operator: [Operator Instructions] And our first question comes from Charles Meade with Johnson Rice.

Charles Meade: I'd like to ask about the J-76 well. And if you could characterize for us the setting of that well. And I'm thinking along the lines of is it kind of updip of one of your previous strong producers in a known fault block? Or is it maybe on the other end of the spectrum, maybe it's in some fallback that you hadn't been connected to. And I'm really trying to understand what the nature of the remaining opportunity for you is or maybe not just the nature of the opportunity in the next couple of years in Jubilee for you guys?

Andrew Inglis: Yes. Yes. Thanks, Charles. Look, clearly, J-76 has been a very strong well. I think actually one of the best wells we've drilled in over a decade. I think ultimately, we're in the core part of the field and we've used the latest 4D to be able to identify some opportunities that are in that core part of the field that are updip and being an unswept. So the other interesting thing about 76 is we have actually picked up some deeper horizons as well. So there's a combination of sort of what I would say, the core areas of the field we've looked at in the past, plus some deeper opportunity.

So I think in total, it sort of demonstrates two things. There are significant opportunities in the field where we have oil that has been bypassed by the current drilling program and injection patterns and therefore, can provide wells that have both significant resource and the ability to drill a well where you can have a secondary target deeper that introduces additional resource. I think it's those two elements that are important as we go forward. I think there's significant bypass oil opportunities and I think there will be continuing opportunities to find potentially deeper horizons that we haven't accessed in the past.

Charles Meade: Got it. And that's exactly the kind of detail I was looking for. And then a follow-up question on Tiberius. I read or I went through the Navitas press release and I had a hard time following it even though it wasn't the HBU version. And so I'm wondering if you could -- and I recognize some of this may be sensitive, but I wonder if you could frame up for us how we should think about the value that you achieved for your sell-down of 17% there.

Andrew Inglis: Thanks for looking at this morning. I'll pass it over to Neal, who can give you the full translation.

Neal Shah: Yes, Charles. Yes, if you just take the math simply in terms of what we got for what we sold, it implies a gross valuation for Tiberius of around $250 million as of January 1, 2026. And again, we've got sort of a total of a bit under $45 million of consideration in between sort of upfront cash carry and milestone payments. And so again, I think a very good result from the team in executing a really good competitive farm-down process, and we're excited that we have the right partnership for the future.

Charles Meade: That's exactly the kind of detail I was looking for Neal. And to be clear, that $250 million gross valuation, does that include the future contingent payments?

Neal Shah: No, that's a gross value of the asset. So our net -- you add our net plus the value of the carry.

Operator: Your next question comes from Bob Brackett with Bernstein Research.

Bob Brackett: Question -- a bit of a follow-up, I suppose. Can you talk about the Logan discovery that you all picked up and is now part of this Navitas JV. Maybe what are the volumes in place? And what is the future plan to sort of bring that part of Tiberius into production?

Andrew Inglis: Yes. Thanks, Bob. I'll pass it over to Neal. He's been handling that.

Neal Shah: Yes. Yes, so there's -- we're still sort of -- we've just got updated seismic over Tiberius. There's a good discovery well that's already on Tiberius that was drilled, I think, 10-plus years ago. And so whether it's in the tens of millions of barrels of resource, but we do look at it as a potential add-on into the sort of greater Tiberius area. So we're looking at a handful of wells in Tiberius in terms of different fault blocks and ultimately connecting Logan into the system. But yes, so it's a potential well or 2 into that area to add some additional recovery.

Bob Brackett: Very clear. And a follow-up. I imagine you're frustrated with Winterfell either by the operator, by the reservoir by something. Is there a recourse there? Or do you think you finally tackled some of the challenges there?

Neal Shah: Yes. And so just on -- again, I think just from a Winterfell basis, yes, I mean, I do think -- ultimately, there's a big prize in terms of reserves there. We've drilled a number of wells. There's good pay. But we have been disappointed by the drilling performance on, again, what are relatively routine operations and the additional costs that have been incurred as a result. And so hence, the pause on activity to fully understand sort of what's causing the issues. And again, there hasn't been a material daily impact to sort of production, but we do want to make sure sort of those drilling issues are resolved before any more capital gets spent on the project.

So yes, it has been frustrating, but it's something the team is working hard on with the operator to make sure gets comprehensively resolved.

Operator: Your next question comes from the line of Neil Mehta with Goldman Sachs.

Neil Mehta: I just wanted to first congratulate you guys on the progress on your net debt reduction, 15% since year-end 2025. And so Neal, maybe the first question is for you. On Slide 8, do you want to walk us through the progress that you guys have made and what your plan is through the balance of the year to hit 20% or above?

Neal Shah: Yes, Neil, thank you. Yes, so there has been a lot of good work by the entire team to deliver a good first half in terms of almost $500 million of debt reduction in the first half of the year. So a bit under -- sort of we're at 2.5 and change. And then the goal would be to get closer to 2.4 by the end of the year.

And again, I think from where we are from a production and cost perspective, we feel pretty good about the ability to get there even in a sort of lower commodity price environment, and that will be the big variable that sort of exists between now and the end of the year. But yes, the balance of that difference, which is about, call it, $150 million is expected to be generated from free cash flow, right? And so again, I think the -- we've delivered free cash flow for the last 2 quarters. The expectation is to do that as well and that will get us to sort of that net debt number of around 20% reduction year-on-year.

And then in addition to that, again, I think just we remain proactive in terms of just managing the maturity schedule. So we've tackled the '26s first earlier this year. We tackled the '27s thereafter. We're working on the RBL at the moment, and then we'll tackle the '28. And once we're sort of done with that, we have plus, call it, 3 years plus of runway to -- without sort of worrying about sort of the debt in front of us. And we'll continue to focus on free cash flow and managing that level down beyond the 20% reduction in '26.

And so again, I think the strong financial performance is driven by sort of good operational backbone at the beginning. And so again, the focus on doing both things simultaneously to get to the right result.

Neil Mehta: Yes. And then just a follow-up is on the unit cost at Phase 1. Again, year-over-year, there should be significant reductions in OpEx as we work through start-up costs and you get towards Mauritania Senegal scale. But just talk about where you stand in terms of the reduction in cost? And then how does Phase 1 plus fit into the equation? Like what could the cost trend down to on a multiyear basis as we try to dial in that number?

Andrew Inglis: Yes. I'll pick that up, Neil. Yes, you're correct. Clearly, we're getting the effects of 2 dynamics this year. We clearly pushed volume up on GTA. And the performance through the first half of the year has been very strong. We were targeting 32 to 36 cargos. We did 18.5 in the front end of the year. So the overall production level clearly strong. That's obviously helped in terms of managing the unit cost. And we've also had the benefit of some of the final commissioning costs coming out. And then I think there's still improvement to make in the cost base in '27 with different operating models that we're discussing with BP.

And then you have the additional impacts of increasing production. As we said in the past, you can sort of -- you can add at least another 50% to the FPSO, the current throughput that's been supplied to the LNG vessel for domestic gas. So that additional volume is going to have a significant impact on the unit cost because it comes with no additional cost. So I think the -- as we said in the remarks, the big agenda now, and it's an agenda that's deeply aligned with both countries in Mauritania and Senegal is to push on with the supply of the domestic gas.

We saw the progress, I think some pictures in the deck that showed the progress in Senegal in terms of getting pipe in the ground, connection to the first offtake, which will be the Gandon power station. And then in Mauritania, the work that they've done with a Saudi developer for their power station. So that volumetric effect just simply then impacts the per unit cost. So I think we've got continuing growth in margin in GTA through that Phase 1 expansion. And I think we're aligned with the government in both countries in terms of how we deliver that.

Operator: Your next question comes from the line of David Round with Stifel.

David Round: Jubilee, I mean, the production side there has been really good. I guess I wouldn't mind if you could just touch on, please, and whether previous decline assumptions may change if that's been going well.

Andrew Inglis: Yes. No, thanks, David. I think it's a really good question. Clearly, our focus through the first half of the year has been on the drilling program. And I think we've seen the impact of data, the ability to influence then the selection of good wells. And I think that selection then with good operator drilling performance has led to the current levels that we're experiencing. So I think big check in the box there. I think when it comes to water injection, I'd say this is an area where there is an opportunity to do better. We did well in the first quarter. Voidage replacement around 130%, which is sort of what you need.

That's what sort of world-class performance looks like. It hasn't been as strong in 2Q. It's been around about half that level, actually around 65%. Some of it was scheduled maintenance. Some of it was availability of the water injection pumps. So we're working really hard with the operator now to focus on that issue. And it's just an operational issue. It's not a reservoir issue. It's just simply about keeping the water injection pumps up and with high availability. So we've had high availability on the oil side. We need to sort of match that on the water side.

So that's the focus in 3Q and 4Q and then into the beginning of next year as we take a time out on the drilling program and then planned restart is around the middle of the year. We're making good progress on the rig contract. So I think we're clear about what we need to do. And the back end of the year will be a strong focus on the water injection.

David Round: Okay. In terms of the forward program and the program you're looking at next year, I mean, is it too early to think about how many of those might be injectors versus producers?

Andrew Inglis: Yes. Yes, it's a little early, David. Without being overly simplistic, I think we've say in the core of the field, we've got pretty good injection support. I'm talking more broadly now. And the issue is not so much about needing new injection probably more around getting the water in the ground actually. As we move out of some of the areas where the well density isn't as high, let's say, as you move back into the eastern side of the field, JSE, for instance, it will be more about pairing injectors and producers. So if you sort of [indiscernible] through -- sort of you can look through all of that, there'll be a bias.

I think the bias is still going to be more towards injection -- sorry, more towards producers over injectors. But actually, the injection well that we're drilling at the tail end of this program, that's actually an injector will provide some support for this year. But actually, it's to support a future producer, okay? So you're sort of getting the right balance there between injection and production. But I think the bias will still be that it will be more heavily weighted to producers.

Operator: Your next question comes from the line of Mark Wilson with Jefferies.

Mark Wilson: I'd like to ask a question about the U.S. Gulf, if I may start there. Great to see Tiberius farming completed. One well tieback initially, you speak to 100 million barrels that reminds me of Winterfell. I imagine that 100 million is kind of an area region. So I'm just wondering what you're targeting with that one well tieback in terms of recoverable reserves at Tiberius. And then same sort of question for Trailblazer, great exploration opportunity. Just wondering what Kosmos' net share would be of that $200 million target? That's my first question.

Neal Shah: Mark. Yes, so with Tiberius, yes, I mean, the 100 million barrels is sort of within Tiberius, and then Logan would be sort of additional beyond that. But there are sort of, call it, 3 fault blocks in Tiberius, which we've penetrated one. But the first well is targeting around, call it, 40 million barrels recovery. And again, we've talked about sort of $10 F&D, which is sort of a $400-ish million slightly gross development cost all in. So that sort of squares. But once the infrastructure is in place, that includes sort of the tie-in infrastructure. So once that's in place, then we can add the additional wells and get much production impact much sooner.

And so we'll sort of phase that on post first oil. If I sort of take that to Trailblazer similar sort of -- that's a larger prospect. It's about 200 million barrels gross in terms of prospectivity. And we own about 1/3 -- a little under 1/3, 30% of the projects are next to us, a little under around 60 million barrels. And so again, a pretty material prospect for us. And again, I think you'd expect it to be a multi-well development all in sort of if successful.

But in a similar sort of Kosmos fashion, the idea would be bring -- keep the first well on as a development well, bring that online to put in the infrastructure and then bring in additional producers once it's tied back.

Mark Wilson: That's really appreciated, Neal. If I could move on to GTA because excellent to see the pipe on its way, good news for the domestic power. I'm just wondering what flexibility you have on the pricing for that or if that's part of the actual license agreements? That would be the first point. And then secondly, a lot going on at BP. So just wondering if there's any discussions over further phases at GTA?

Andrew Inglis: Yes. So the agreements we have in place, we get the equivalent netback of the F.O.B less the LNG processing fee because you're not converting it into LNG, you're just delivering it as domestic gas. So it's the F.O.B equivalent for domestic supply.

Neal Shah: And that's been agreed for Phase 1 in terms of the gas price, Mark.

Andrew Inglis: So the point about that is the additional volume comes with the same economics as the LNG export. And then, yes, look, there's a lot going on in BP as you say. So obviously, I don't have any insight into that or can't comment on what their sort of corporate objectives are, whether GTA is core and non-core. I think for us, the most important thing at the moment is to sort of focus on the development of the asset, and we continue to work hard with BP on that and aligned with states around the delivery of the domestic gas, where, as you say, there's real progress being made.

Mark Wilson: Okay. That's great. And obviously, the main one is the net debt coming down, which is, yes, great to see as has been commented by others. And RBL refinanced in the second quarter. And Neal, you also mentioned looking to, I think you said, repay the 2028 bonds, that's the $400 million. Did that's what I understood correct? Or is that a refinance of those targeted this year?

Neal Shah: Yes. No, good question, Mark. Yes. So again, I think like I was trying to refer to say earlier, but this year, we've tried to be really sort of methodical around how we sort of address the financing issues and the maturity schedule. And like I said, we've gone through the '26s earlier this year, we paid the '27s with the Nordic bond, are working on the RBL at the moment, which has matures in '29, but starts amortizing in '27. And then once that's out of the way, the next maturity for us to address is the '28.

And again, I think it's been good to see sort of the yields on the bonds sort of return closer to normal. We'd expect as we continue to address the financial risk, get the debt down, we'll see a continued improvement in yields. And so it's something we're continuing to evaluate in terms of whether it's a repayment or a from -- sort of from an opportunistic repurchase or just potentially refinancing those later in the year. So again, it's something on the agenda. And as the market and the yields evolve, we'll continue to keep an eye on that.

Operator: Your next question comes from the line of Christoffer Bachke with Clarksons Securities.

Christoffer Bachke: Christoffer from Clarksons here. So firstly, congratulations on another very strong quarter. I mean, operational executions continue to impress, so that's great to see. My first question is related to Jubilee and especially with the Jubilee production now tracking at or above the 90,000 barrels per day. How should we think about the sustainable production potential of Jubilee over the next quarters? And could this potentially influence the scope or pace of the 2027, '28 drilling campaign? So that's my first.

Andrew Inglis: Yes. No, Christoffer, that's sort of good question. Look, when you look at Jubilee, I think if you look at the '25-'26 program. It's been a very successful program. It's certainly been supported by the new 4D, and I think that's enabled us to see a lot more opportunity in the field. I think it is actually worth commenting on, if you look at that overall program with payback of less than 6 months. So you want to get back to drilling as soon as possible. There are some logistical issues on that in terms of ordering long lead equipment, wellheads, et cetera.

But we're working with the operator to make sure we get back to drilling as sort of as soon as practicable. And that date is around the middle of next year and we're pushing maybe to get there a little earlier, but I think that's sort of the current target. And then it's a fulsome program. Our objective is to drill up to 10 wells. Not only will we have the fully processed 4D at that point, but we'll also have early product from the OBN, which I think is going to be another step change in our ability to properly describe the opportunity set, potentially some of the things that have been harder to image that are deeper.

So I think for us, we see ongoing opportunity. And as we've said, I think, consistently over probably the last 10 quarters, you need to do sort of 3 things to deliver that potential. You've got to get back to regular drilling, which I've talked about. You have to deliver high FPSO uptime, which the operator has done so far in this year. And you have to get the water injection operating, so you get water in the ground. So as we look forward, we will see some decline clearly. There'll be a little bit of mitigation from the last water injection well. That's primarily to support a future well in '27.

So we will see natural decline from the end of the program which finishes at the end of this quarter through the fourth quarter, first quarter, second quarter and then back to drilling.

Christoffer Bachke: And also staying on Jubilee and the full year guidance, you have highlighted that production is trending towards the upper end of guidance and you also had another well coming online. So assuming current operational performance continues, should we think about ending the year towards the upper end of the production range? And would that potentially allow you to exceed your target of 20% net debt reduction for 2026?

Andrew Inglis: Again, a really good question, and that's obviously our objective, yes. We're working again. It's about eyes down focus on the operational delivery. Again, as I said, it's about picking the right wells. It's about then drilling them. It's about the delivery then of the uptime. And I think the area that's really important now is that water injection availability. But I think when you look at the overall suite of options within Kosmos. It's obviously, GTA has been trending to the upper end of its guidance in terms of the number of cargos. Despite Winterfell 5, we've had strong performance in the Gulf of America, particularly from Kodiak and Odd Job. So you put all that together, Christoffer.

And yes, are we confident we're going to hit our numbers? It's about a managed outlook across all of those production opportunities. And then finally, it's about managing the cost base. We haven't talked about that much on the call. But this is a significant reduction in costs we've achieved in the first half of the year delivering the portfolio optimizations with the sale, the TEN FPSO repurchase, those are structural changes that are enduring. So that, together with rigorous capital management, and again, I think we've talked about the Tiberius farm down, but then that again allows us to manage the CapEx through the back end of '26 and into '27.

So in combination, the 3 things, production performance, cost reduction and capital management then underpin that debt reduction target.

Christoffer Bachke: Just the last one briefly mentioned it already, but you are in ongoing discussions with the lending banks and now also commence that and you expect the amended RBL to be completed during the fourth quarter. Could you elaborate a bit on how those discussions are progressing? And once the RBL is completed, should investors expect you to kind of turn your attention towards addressing the 2028? Or are those kind of two processes going in parallel?

Neal Shah: Yes. I think that's the right way to think about it, Christoffer, in terms of just the series of events. Yes, so we've kicked off the RBL process. And just for those of you who haven't been -- this is the fifth time we get through an extension process on the RBL with a lot of the same banks who've been in there since I joined the company in 2011. So yes, it's a well sort of established program or process, we started exchanging term sheets in terms of what that looks like. So we need to sort of finalize that.

And clearly, on the back of improved Jubilee performance in a constructive commodity price environment, we're well placed to sort of execute that here relatively quickly. But yes, I mean, I think as we get that complete, then like I said, the next maturity on the list is the '28, and that gives us a bit over 3 years of runway without any maturities to manage.

Operator: [Operator Instructions] Your next question comes from Stella Cridge with Barclays.

Stella Cridge: Sorry to add a couple more questions on the refinancing side. Just wondered if you're still targeting 2032 and '33 as potential maturity dates of the new RBL. And I was just wondering regarding the liquidity test that you would usually -- if you'd be tested on the '28 bonds, how does that fit into the next few months in the RBL negotiation? Do you get a waiver? Or is that just kind of rolled into the whole process? That would be great.

Neal Shah: Yes. So yes, I mean, the chart on -- I forgot what slide.

Andrew Inglis: Slide 8.

Neal Shah: Slide 8 is clearly illustrative but in line with what we're working live. And so the extension -- the idea is to get sort of the final maturity beyond the existing bonds. And again, we normally do it in the sort of 6-, 7-year time frame. So that's kind of when the final maturity base would be, but it generally starts amortizing after 3 years. So the shape of the RBL won't be dissimilar to the shape that it's always in. And that essentially puts a sort of refinancing plan in sort of 3 years down the line to force another extension. So that's sort of, again, business as usual from that perspective.

And then same thing with your question around sort of liquidity test along with sort of redetermination. And so essentially, we'll sort of all boil that up into the refinancing. And so we probably won't have a sort of formal full redetermination because generally, again, we'll go into a little detail, but the RBL is always limited by the loan life. And so as you pick the loan life, you have full access to the facility, which keeps all the liquidity available to the company. So we'll do those sort of contemporaneously with the refi.

Stella Cridge: That's great. And if you don't mind me asking on Tiberius, could you just remind us how much gross production would come from that first well? And I noticed you also mentioned a potential second well, it would be great to hear about that as well.

Neal Shah: Yes. Again, every well will be different. But the expectation is, again, I think a good modeling assumption there is around 10,000 barrels a day gross per well. And again, we have up to 30,000 barrels a day of capacity at Lucius and the facility. And so again, the ability to accommodate multiple wells over time.

Operator: Since there are no further questions at this time, I would like to bring the call to a close. Thanks to everyone joining today. You may now disconnect your lines at this time and thank you for your participation.

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