KOS - NYSE

Good day, everyone. Welcome to Kosmos Energy Ltd.'s fourth quarter and full year 2024 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 Ltd. Please go ahead.

Thank you, operator. Thanks to everyone for joining us today. This morning, we issued our fourth quarter and full year 2024 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 we note in this presentation and in our UK 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 will turn the call over to Andy.

Thanks, Jamie, and good morning and afternoon to everyone. Thank you for joining us today for our fourth quarter and full year results call. I'd like to begin today's call by talking about what different cash generation. We'll then provide an update on the operational and financial progress we made in 2024, before discussing the outlook for 2025 and how we will focus on cash generation through maximizing revenue and rigorous cost management. Starting on slide three, Kosmos Energy Ltd. has a unique portfolio for a company of our size with a diverse set of world-scale oil and gas assets. The quality of the portfolio can be seen in the longevity of the asset base with a growing 2P reserve life of more than twenty years. Our oil assets are characterized by low operating costs and high cash margins, while our gas assets are positioned to deliver growth in revenue with increasing margins targeting long-term sustainable cash flow, particularly as gas and LNG continue to grow in the global energy mix. 2025 is an important year for Kosmos Energy Ltd. With increased production and reduced capital expected to drive an attractive free cash flow yield, which can be seen on the chart on the right-hand side of the slide. With Kosmos Energy Ltd. Plated against our U.S. and international peers, as well as the majors. Because most given the ongoing ramp-up of GTA and planned maintenance at other fields in the first quarter of the year, we have used an annual free cash flow from 2Q 2025 forward which we believe is sustainable in the medium term. In addition to our strong cash generation potential, the portfolio also has significant future optionality. With material discovered oil and gas opportunities such as Tiberias and Yakataranga, alongside a quality hopper of infrastructure-led exploration prospects in the Gulf of America. Turning to slide four, in the second half of 2022, we set a target to grow production capacity by around fifty percent through several projects across the portfolio. The chart on this slide shows the foundation we've built to achieve that target which can be achieved with the ramp-up of GTA and Winterfell and new wells in Ghana. Importantly, as these projects start up, the CapEx associated with them is ending. In 2025, total CapEx expected to fall significantly from over $800 million on average in 2023 and 2024 to $400 million this year. A reduction of over fifty percent. We'll be working on ways to potentially reduce it further where possible. We're not just refining the work scope, but the associated costs are also being managed rigorously. The resources needed to build and grow the portfolio are not the same to sustain it. And therefore, we're targeting a reduction in the annual overhead around $25 million by the end of 2025, largely from a reduction in contractors and external consultants. And having the right workforce focused on the right things. This includes focusing our exploration effort in the Gulf of America given the depth of the discovered resource base we have across the rest of the portfolio. With growing production and a lower cost base, our focus is on free cash flow generation. In the near term, we intend to prioritize cash for debt pay down until we reach our leverage goal of below 1.5 times at mid-cycle oil prices. Absa Rich will balance cash across further debt pay down and shareholder returns. Turning now to Slide five. Underpinning the company's cash generation potential is a strong and diverse reserve base. With diversity across multiple geographies, spread broadly fifty-fifty across oil and gas. At the end of 2024, we saw a 2P reserve replacement ratio of 137%. Replacing last year's production adding more reserves during the year. With the upward revisions largely driven by gas as we continue to progress the GTA project. With the project amount to ship its first cargo and more drilling in Winterfell and Jubilee later this year, there is scope for further upward revisions in 2025. Year-end 2024 2P reserves of 513 million barrels of oil equivalent represent a reserves to production ratio of twenty-two years, a major differentiator for Kosmos Energy Ltd. versus our U.S. and international peers as can be seen in the chart on the bottom of the slide. Including the extensive 2C resource base beyond that, the number is closer to thirty years, highlighting the organic running room we have for many years to come. Over time through enhanced seismic imaging, further infill drilling and project sanctions, we expect to migrate 2C resources into 2P reserves and 2P reserves into 1P reserves. The takeaway message from this important slide is while many companies across the sector face declining inventory and reserve lives, we have the reserves and resources to support sustainable cash generation. For many years to come. Turning to slide six where I'd like to briefly touch on some of the highlights from 2024. We achieved a lot in 2024. Ending the year with a better, more resilient company. Looking at some of the achievements, Safety is a key focus at Kosmos Energy Ltd., and we continue to operate safely during the year with zero lost time injuries or total recordable injuries. Safety is a key focus at Kosmos Energy Ltd., and we continue to operate safely during the year with zero last time injuries or total recordable injuries. High safety performance with incident rates well below industry averages is a trend we maintained for many years. As previously mentioned, our two pre reserves grew year on year to 530 million barrels of oil equivalent, a reserve replacement ratio of 137%, highlighting the longevity of the portfolio. We achieved first oil at Wintervale in the summer of 2024 and expect production to rise later this quarter. As Winterfell three comes back online with a fourth well expected online early in the second half of the year. Late in the fourth quarter, the partnership achieved first gas production, the GTA project, Was first LNG production achieved earlier this month and first cargo lifting expected shortly. Through the year, we raised a total of $900 million in new bonds at competitive rate, We refinanced and increased the capacity of our RBL facility. These activities significantly enhance our financial position and extended our weighted average maturities with minimal near-term maturities over the next two years. Neil will now provide some color on the last point and will take you through the results for the quarter and the year.

Thanks, Andy. Turning now to slide seven. Production for the fourth quarter was lower than guidance. Partly due to lower Jubilee production just flagged last month by the operator. Actions have been taken to resolve the water injection and reliability issues at Jubilee with voyage replacement over 100% so far year to date. We also saw a slight delay in the production ramp-up from the EG infill wells and Winterfell one and two were down most of the quarter prior to being brought back online late in the year. The 4Q production issues have been largely addressed but with several planned maintenance programs in the current quarter, production is expected to be broadly flat quarter on quarter. Detailed guidance is provided as an appendix to the slides. The 1Q plan maintenance program clears the shutdown of the Jubilee FPSO a one-month turnaround of doubles tower, which hosts the Kodiak field, and some other scheduled maintenance in Equatorial Guinea. We're also seeing GTA ramp up during 1Q and expect to end the quarter near full capacity. Looking at the cost side, costs were largely in line with budget with CapEx slightly higher due to GTA startup cost. Turning to slide eight. 2024 was an important year in enhancing the financial resilience of the company. As Andy mentioned, we issued $900 million of new bonds refinance and increased the capacity of our reserve-based lending facility bringing in two new banks. Collectively, these transactions increased our average debt maturity to around four years. The top right chart shows our current maturity schedule. We have minimal near-term maturities only $250 million due in 2026, which we anticipate repaying from cash flow. It's also important to note have managed our debt to ensure we don't have any large single maturity in any given year. Enabling us to repay the debt from future cash flow. Further derisking the balance sheet. The chart on the bottom right shift how we continue to actively manage future price volatility through our rolling hedging program. We currently have around 60% of our first half oil production hedged with downside protection of approximately $70 per barrel. Providing solid protection for our cash flow. We will continue to be proactive in the management of oil price volatility through 2025 and into 2026. Turning to slide nine, our financial priorities for the year. Andy was clear in his opening remarks that cash generation is our key financial priority in 2025 and beyond. We therefore intend to be very disciplined in our cost management. Targeting meaningful reductions in both CapEx and overhead. As we come to the end of a capital-intensive period for the company, we expect capital spending to fall sharply with a 2025 capital budget of $400 million or below a reduction of more than 50% year on year. We're also working hard to decrease overhead, targeting a reduction of around $25 million by year-end 2025. As we generate cash flow expected from the second quarter onwards, we will prioritize debt pay down. Initially focusing on the RBL as our highest cost prepayable debt as well as the outstanding 2026 and 2027 notes. And the final deliverable for the year a financial perspective is the refinancing of the GTA FPSO. The financing was initially put in place with the operator during COVID, and we're working with them on bringing down the overall cost. Which should lower our unit operating costs on the project. So in summary, 2025, our goals are clear. Growing production and lowering costs to prioritize cash generation. With that, I'll hand it back to Andy to take you through the assets and the outlook for the year ahead.

Thanks, Neil. Turning now to Slide ten. I want to start with GTA and talk about the journey we've been on to create a new Atlantic basin LNG hub. And why we're excited about the future. The timeline on the top of the slide starts in 2015 when Kosmos Energy Ltd. as operator had the initial exploration success at Tortue discovering a field with around 25 TCF of gas in place. Making it the second largest hydrocarbon discovery in the world that year. A year later, we ran our format process with BP coming in as operator for total consideration to Kosmos Energy Ltd. of around $950 million which includes funding the first $550 million of our development CapEx on the GTA project. In late 2018, the project took final investment decision with first gas production announced at the end of 2024. While there have been some challenges along the way in including COVID-related delays and a major typhoon in China that damaged the FPSO. The project has taken around five years to develop. Earlier this month, we announced the first of a series of important milestones related to the delivery of the project. First LNG production was delivered in early February, and we are very close to loading the first cargo from the project. With LNG tanker standing by at the hub terminal. This new Atlanta basin LNG hub is ideally located in certain markets in Europe, with short sailing distances and low transportation costs. Also advantage because the GTA gas contains minimal calm. They are dioxide or hydrogen sulfide important for both the environment and ongoing maintenance of the infrastructure. Turning now to Slide eleven, which looks at the future. The partners will soon start to receive revenue from the project, another key milestone. Once fully ramped up expected in the second quarter, reducing LNG at the off-takers contracted volume of 2.45 million tons per annum requires around 400 million standard cubic feet of gas per day. This equates to approximately thirty gross cargoes a year. Project partners will co-lift the cargos, which should result in a steady revenue grain. A limited on the left or over lift impact quarter on quarter. With GTA Phase one starting up, the partnership has been working collaboratively the expansion of future phases. The operator, National Oil Companies and Kosmos Energy Ltd., have a shared vision to fully utilize the existing infrastructure to drive a low-cost brownfield expansion. That increases future LNG output while ensuring the local markets gas needs are met. There's a chart on the bottom left shows there is more than enough recoverable gas in place to build out multiple future phases each capable of producing for over twenty years. Initial data from the producing GTA wells has been positive, providing confidence a reserve base for future expansion phases. The partnership is initially focused on phase one plus, a brownfield expansion, which leverages the infrastructure we put in place for the first phase. On phase one cost, year one is a really a transition year, and we'll see higher operating costs as we complete the commissioning phase and ramp up volumes to full capacity. The unit cost should trend lower over time as a facility ramps up to the facility's limit and the start-up costs are behind us. While we have sold 2.45 million tons per annum under the BP sales contract, The floating LNG vessel should be able to achieve a nameplate production of around 2.7 million tons per annum or higher as typically seen on LNG plants. In addition, as Neil mentioned, we're working with our partners to refinance the FPSO lease We should further reduce operating costs. In the medium term, adding growth from the Phase one plus expansion additional uncounted volumes should continue to drive higher margins. In summary, it's been a journey to get where we are today. The project has a lot more running room and we're excited about the future potential. Turning to Slide twelve, which looks at operations in Ghana. Net production in 2024 was just over 41,000 barrels of oil equivalent was below the operator's target for the year. Primarily driven by the J-sixty nine well and Jubilee coupled with insufficient voidage replacement or water injection due to reliability issues primarily related to power generation. We have worked with the operator to address these field management issues. The moderate decline ahead of the upcoming drilling campaign improved power reliability delivering voyage replace in excess of 100% is required. Consistent with what has been delivered through the first two months of 2025. As can be seen on the chart, on the slide. Looking ahead, we have an active year in Ghana beginning with the four d seismic campaign, which is ongoing. This modern four d data will be processed with the latest technology giving us a much better understanding of the subsurface particularly in terms of fluid migration allowing the partnership to choose the best future drilling locations. We continue to believe Jubilee has significant upside and therefore are focused on accessing the best tech technology to increase the recovery factor of more than two billion barrels of oil in place. We're looking to leverage our position in the Gulf of America, accessing the latest seismic processing techniques and reservoir management tools including AI. We're also planning two new wells in Jubilee this year with a rig that returning to Ghana and will continue with a four well program in 2026. In terms of guidance for the year, the operator didn't provide specific guidance for the fields in its recent trading update. We expect gross jubilee production between 70,000 to 76,000 barrels of oil per day and gross ten production at between 15,000 to 16,000 barrels of oil per day. We also expect around 6,000 barrels of oil equivalent of gas net The Kosmos Energy Ltd. Yeah. Turning to slide thirteen. The Gulf of America, we saw a gradual quarterly ramp-up in production from 2Q onwards. As can be seen on the chart as we delivered the first Wintervale wells the production optimization projects on our job and Kodiak both of which are performing ahead of expectations. The year-end exit rate is indicative of the production potential of this business unit before taking into account planned maintenance and hurricane downtime. The operator of the Winterfell project is currently performing the remediation work on the Winterfell tree well before the rig moves to drill the Winterfell four well which is expected online early in the second half of the year. On Tiberias, we continue to progress the development with our partner, Oxy, but at a managed pace, given our focus on 2025 cash generation. We're aiming to complete the farm out around the time of project sanction. In addition, we have an attractive portfolio of VIALX opportunities. The outlook for activity in the Gulf of America has improved under the new administration the potential for more lease sales giving us more opportunity to continuously high grade our future activity set. Full year guidance is 17,000 barrels of oil equivalent per day net an approximate 20% increase year over year. We Turning to Slide fourteen. In extra ordinary, we finished the infill drilling campaign in late 2024. With both wells now online, collectively producing around 9,000 barrels of oil per day. Gross. In the fourth quarter, we drilled the King D Violex well, which did encounter oil zones in the Upper Albion section confirming elements of an active petroleum system. But were deemed sub-commercial the well was plugged and abandoned. Tippie is now working on analyzing the results to better understand the future potential of the area. For 2025, we're seeing the continuing contribution of the two in full wells and we'll be reprocessing the latest seismic we have over the fields to help plan the next infill drilling campaign which we expect to carry out in 2027. Full year guidance is 9,000 to 11,000 barrels of oil per day. Net, an approximate 15% increase year over year. Turning to Slide fifteen to conclude today's presentation. As I've communicated in today's material, we did a lot in 2024 to put in place the foundations deliver value for our shareholders in 2025. Production is rising as new projects come online and ramp up. As we showed in the earlier slides, we have the reserve base support this production well into the future. We're rigorously managing costs to prioritize free cash flow with material reductions planned in both CapEx and overhead. We plan to use cash generated to reduce our absolute debt and leverage enhancing the financial resilience of the company. And we maintained our attractive portfolio of growth opportunities which provides differentiated optionality for Kosmos Energy Ltd. into the future. Thank you. I'd now like to turn the call over to the operator to open the session for questions.

Thank you. We'll now be conducting a question and answer session. The confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment please while we pull for questions. Thank you. Our first question is from Neil Mehta with Goldman Sachs. Please proceed with your question.

Thank you, Ian. Andy, Neil, and team. We've been getting a couple of questions this morning around startup costs and that you highlighted in the deck. So maybe it's a good place to start, which is just talk about the start-up and commissioning costs and these appear to be one-time in nature, but how do you think about, you know, framing those out and working through them?

Yeah. Hey. Thanks, Neil. Yeah. Good to hear. Question. We've talked on prior calls about the key components of the operating costs, you know, namely the F and FLNG toll, the upstream OpEx and the FPSO financing. You know, in today's update, we've given you a pretty fulsome guidance for the year, which reflects our best view of the production ramp-up cargo timings and costs. As we said in our prepared remarks, this year is going to be a We you know, and the cost as we finish up all the commissioning work, and see the volumes to ramp up. Therefore, we would expect to see costs to be this year and then trend lower over time. So what's gonna drive that? Sort of no more one-off commissioning costs, volume ramp-up to the contracted volume which is a ACQ of 2.45 million tons per annum. And then, you know, as I alluded to, you know, in the prepared remarks, you know, testing the facility at name kept plate capacity of 2.7 and potentially higher. And then there's some refinancing of the FPSO lease to do. So yeah, probably good then if Neil can kinda give you a breakdown of those three areas and and and and and ask you a little bit more color around you know, what we're targeting going forward as as we remove some of those one-off costs and get to a steady state.

Yep. Any other so when you look at it sort of going forward in terms of a normalized day, we talked about the two components, which are normal OpEx, which is the SLNG vessel, and the operating expense. And we'd expect that to normalize in the four to five dollar per m type range. And then this question yeah, of the FPSO financing and how much we can bring that too. But it yeah. I think sort of notionally, if you think about that as a as a little more than another dollar per MCS, terms of a a long-term FPSO cost. But, again, it gets significant reduction on the basis of decreasing the cost and actually increasing the volume as Andy pointed out. And then, yeah, and then, like I said, you are prepared, you know, producing very cost-competitive LNG at that point.

Okay. Thanks. Thanks, Andy. Thanks, Neil. And that follow-up just around CapEx. The company's guide to a ceiling of $400 million. Is there a scenario where it comes in lower than that? What are some levers you can pull on to maximize capital efficiency? And that's a twenty-five. Look, I know it's early to talk about twenty-six, but you know, for investors who are worried about the sustainability of that capital efficiency, Are we entering into a harvest mode that could be multiyear in nature?

Good question. Yeah. I think I think as I sort of appropriate emphasized in the prepared remarks, we are prioritizing free cash flow. I think that's what our shareholders have been looking for. And we're clear about, you know, delivering a sustainable pre-tax flow yield today's equity price. Of around, you know, twenty-five percent. That that's what we showed on that on that opening slide. What's that about? We've been through a growth phase. Now it's about rigorous cost management, and, you know, rigorous capital allocation. You know, we're tackling the overhead with a significant reduction delivered by the year-end, which obviously is sustainable going forward. And then on the capital side, as you said, we're targeting $400 million or lower. And primarily in twenty-five, that's capital going into sustaining the base. The Julie. That the the wells in in Winstead. And then you know, going forward, it's about getting that right balance between growth and cash flow returns. And we believe we've got a portfolio where we we can do do that and create the the right balance. Operative projects go going forward, you know, some of those are are are operated. Those growth projects are operated. We have a greater degree of control. You know, you know, in prior calls, we've talked about a a a capital profile. You know, of around five hundred. I So that we said three hundred to three fifty in the base. A hundred and fifty to two hundred growth. In twenty-five, we're at the low end of that guidance, Because we've got, you know, limited spend on on growth. And we are gonna be disciplined around the allocation of of of growth. So it's not about decline. It's not about harvesting. We can absolutely The business. Three hundred to to three fifty. And then it's about the bringing in those quality growth options at the right pace to sustain the company. And know, one of the things that does differentiate Kosmos Energy Ltd. is the quality of its of its portfolio. Now we've got an RFP on a two p basis of over twenty years. We've got plenty of organic material to to to work on. And now it's about the discipline of getting the the free cash flow yield into the right place through delivering the cash and managing that growth portfolio so that we can sustain that free cash flow yield. And and that's absolutely what we're engaged in now. And I and I hopefully by you know, some of the the the points that we've illustrated in the prepared remarks around the discipline around cost. Therefore, you know, should be confident that we can deliver that forward. Together with, you know, the right pacing of the of the growth target. So absolutely, it's not about harvest. It's not about the decline, it's about a sustainable free cash flow yield going forward.

Thank you, Andy.

Great. Thanks, Neil.

Our next question is from Charles Meade with Johnson Rice.

Yes. Good morning, Andy and Neil and the rest of the Kosmos Energy Ltd. team there. Andy, I want to go back to your prepared comments about about GTA. Not not the the the immediate, but but your discussions about phase one plus, I guess you're calling it, Is is that I I wanna understand what that is in the timing. Is that is one plus the the increment from the from the contract of 2.45 to the nameplate of 2.7, or or does that also include some gas that they'll in the local markets? Or do you know, what what is it composed of, and what's the time frame for that?

Yeah. No. Good good question, Charles. I think that you know, the way to think about one plus is fully utilized. Fully utilizing all of the infrastructure that we've got in place. In terms of phase one. Yeah. So the the FPSO actually has a debottleneck capacity of close to eight hundred millimeter cube. So double what it produces to today. And that is a relatively low cost relatively, really low cost debottlenecking. Then it's about utilizing the rest of the infrastructure we have in place to, you know, best move that gas through the existing plan and and and beyond. I think you're gonna see a component which is increasing the capacity of the current vessel. The gimme that's there, and you're gonna probably see an increase in the domestic gas take. But equally, those projects are phenomenally economic. Because it's it's literally at very low capital cost. And you you have the potential to to double the throughput. So that's the journey we're on. And, you know, I think in terms of timing, we have great alignment now between, you know, the NSCs ourselves and VP you know, getting on with the technical studies to deliver that And I think as minister Khaled from Mauritania said, our goal is to accelerate production in the upcoming phase with a target for two thousand and thirty. By ensuring the local gas market needs are met So that's the objective, Charles. Yeah. It's it's about a brand field that's expansion. It's getting the most out of what we have today. And doing that in a really capital efficient way.

No. That that that that makes sense, Andy. Thank you for that. And then if I could go back to I think it's slide you where you talked about Jubilee and I believe it's slide twelve. Can you talk about the the question is about, you know, you you got it to, you know, seventy to seventy-six thousand barrels of oil a day gross. Can you talk about what the assumptions are you have, you know, perhaps specific to to the FPSO you know, generation and and water injection. What what what assumptions do you have are are implicit in that seventy seventy-six for for the performance of the FPSO.

Yeah. So look, Charles, you know, again, it it it's sort of coming back to what are the fundamentals of of Jubilee. Yeah? You know, what I do wanna reenter class oilfield. You know? It's got you know, two point four billion barrels of of of of oil in place. We're currently carrying recovery facts and our reserves are probably around thirty-three percent. Run the math on that. We've just produced maybe fifty-five percent of reserve base. I think the recovery fracture will be in the high thirties of the at the end of the day, so we're probably sort of halfway there. Yeah. Less than halfway there. So to get to the remaining reserves once you have to do, good reservoir management, which You know, it's fundamentally about You know, it's fundamentally about getting, you know, water in the ground in the right places. We struggled, you know, the operator struggled in twenty-four as we show on slide twelve with less than a hundred percent voltage replacement. And that has impacted the entry rate into twenty-five. And that's sort of, you know, that's why the guidance is sort of where it is. You know, our objective is to get to a hundred percent voyage replace through the year. That's one of the key assumptions, and we've started the year strongly on that. And it's really about our generation reliability and we work with the operator to address that. Clearly, there's a a piece around facilities uptime. Facility's uptime has been strong. That that, you know, ninety-eight, ninety-nine percent. So not worried about that. We we do have a plan shutdown built in. Which is taking place at the end of the first quarter. Is sort of impacting, you know, 1Q volumes. So, you know, those are key assumptions. And then the final assumption is the delivery of two additional wells, you know, one producer and one injector The objective starting two q with the wells delivering know, the back end of of three q. So I think you know, we've got a good set of credible assumptions there. And you know, the objective clearly is then, you know, to utilize four d that we're shooting this year we started already. You know, then there's the objective to use the information from that that four d to impact the wealth selection for for for twenty-six. When we have a, you know, a full well program So the combination event of of sort of building forward with a higher exit rate of twenty-five the additional drilling in twenty-six, higher quality data from from the four d that enables you then to sustain the profile going forward. So, you know, we're not short of reserves here. The issue is making sure we get the proper field management, which is fundamentally about about quality replacement water going in the right place. And then, you know, selection of high quality and full wells and the and the delivery of

That's great to great detail. I'll hop back in the queue.

Great. Thank you.

Our next question is from Matthew Smith with Bank of America. Please proceed with your question.

Hi there. Good morning, Andy. Good morning, Neil. I couple of questions. So if I start with one on Tortue again, if I could. I guess, firstly, it would be it's interesting to see you talking about three phases or further phases on TorchU again. Including the phase one plus. So I guess the first question was really whether you've you know, detected a clear change in emphasis from the operator or at least a more impetus perhaps, I should say, with those potential development schemes. And then equally, could I just link it back to, you know, a phase one a looks as though it is potentially progressing, Should we still think about your CapEx go forward run rate and that should we keep that $400 million in mind? In terms of the ceiling for future years beyond 2025. Or could the Torchi CapEx be incremental to that?

Okay. Yeah, man. Let's sort of unpack those questions. Sort of the first question is sort of, you know, is there alignment as it were, which between the the operator ourselves and the NSCs on on the way board. I think, yes, there is. I think You know, BP's always always talked about getting, you know, the first phase on and getting results from the wells. You know, enabling them then to sort of start to think about the the the next phases with new data. You know, what I would add, is that the initial data from actually flowing the wells you know, from the beginning of the year is actually, you know, is actually positive. So that sort of underpins the resource base. That enables you therefore to have, you know, confidence in the future phases. I think you know, that is an important piece of data as it were six weeks into the the flowback or seven weeks into the into the flowback. I think we're also clear about being really carefully efficient about the next phases. So you know, as as I said to to to to Neil and Charles. You know? What we're what we're aiming to do Is you know, expand, you know, phase one plus in a really capital efficient way. It's got very little additional CapEx associated with it. And therefore, we're getting, you know, an an incremental sort of value add from that. Brownfield development. So if you then go to the the you you you your sort of follow on question. Which is okay. We'll find, you know, how does that work within the council allocation? I sort of just, you know, do a rinse and repeat of the of of the prior answer, which is to say that you know, we've always talked about three hundred to three fifty in the base. One hundred and fifty to two hundred in growth. The three hundred to three fifty in the base, you know, sustains the base. That's the focus of the capital spend today. So we're not at harvest mode, it's not declining. Then it's about phasing those growth projects. So we're you know, in the free cash flow yield that we've we forecast, you know, in terms of our you know, current equity price, that takes account of you know, probably a little more growth CapEx, but certainly within that Great. That that that we've talked about in the past. So, you know, the underlying question is sort of are you off to the races again with a massive cap spend? The answer is absolutely no. Yeah. Gonna prioritize the free cash flow. And the capital spend you know, on Torture really, you know, through the end of this decade is going to be minor. It's going to be about sustaining the current well count doing a little bit of brownfield marks, which allows us to get more volume and and maximize the revenue.

So thank you very much for that, Andy. And then if we could ask a second question, just a quick one. Apologies if I missed this earlier, but just around Ghana and Jubilee specifically if I could. So it seems like a pleasing performance in terms of the voided replacement on the water side of things early 2025. I just wondered if you could clarify, and like I say, apologies if I missed it, where the product has run so far in January, February is has the reduction run rate being similar to to the voyage? Replacement.

Yes. So we're absolutely in the range that that that we forecast. And, of course, The only thing is that, you know, if you look at the quarter, you need to remember that we we we have downtime. In the from the the maintenance. So know, we're we're absolutely producing within the range that we're forecasting. Currently, but we'll have a little impact in one q because of the unplanned maintenance. And then we get the benefit of the of the additional wells starting up in the, you know, in three q. So so everything going to plan in terms of the the forecast arranged that we've we've got it to.

Well, thank you very much. Happy to hand it on.

Right. Thanks, man.

Our next question is from David Round with Stifel. Please proceed with your question.

Great. Thanks, guys. Just a follow-up, please, on on Jubilee, which actually I thought guidance pretty upbeat given some of the other comments out there. How much of that guidance and and let's say your feels like a more optimistic view on on Jubilee is down to the results you've seen from voyage replacement. And at what point can we be confident that those issues are in the past Or or is it too early to get carried away there?

Yeah. The you know, it's a good question, David. You know, you know, I don't wanna be over simplistic about it, but if you do the right things in the right way, you'll deliver the right result. So we know what it is we need to focus on. I would say that the the focus for for the operator and and as it works so far, we we've started the the positively. I think the the fundamental issue is just about, you know, power generation reliability. We've done a lot of work to identify the vulnerabilities and address those. We actually did shutdown at one of the generators earlier this year. That's actually gonna be beneficial going forward. So I think know, I I feel comfortable that we know what needs to be done. How it needs to be be delivered. And we're, you know, therefore focused on on delivering the the forecast that we put in place. You know, what are the variables, you know, you know, the the the additional variable will be the addition of of two wells. But I think we know we demonstrated in the past a good track record of delivery of those wells. The rig that's coming back to drill is the same rig that we used in prior campaign. So that sort of derisks that to some degree. I think we've got a very clear set of objectives for the field. We know what it is we're managing and and and and therefore, you know, what you should do is hold us to account for delivering the things that we said we'd do in terms of order displacement, timing of the wells, timing of the shutdown, etcetera.

Okay. Thanks, Andy. Second one then. Just I I think this is the first time we've heard from you since the the terminated discussions with Tullow. I just get your thoughts there, please? And and whether that's off the table from now on?

You know, sort of I sort of step back a little from the crash and and sort of maybe you know, sort of talk about m and a in general. I think the you know, we've been through a a a period of growth for the company and a period of investment. You know, it's now Yeah. Coming to an end. We've built a very strong portfolio, I believe, with a strong and long RFP and with it a a decompression of growth, projects. And, actually, as we've discussed on the call, yeah, the challenge is actually making sure that we get the right balance between the free cash flow delivery and the growth. And as you can see in twenty-five, we're focused absolutely on that free cash flow generation. I think if you then sort of turn to to M and A, I think we've constantly always looked at opportunities through sort of two lenses, and these to be clear value accretion for us. However, and most importantly, free cash flow accretion, which you know, given our focus on leverage reduction, it absolutely has to be part of of any transaction. So you know, that's what we did on the Oxy deal, for instance. So if you sort of come back to Tello, I think the short answer to you is, you know, are we planning to look at it again? And the answer is no. You sort of know the background. David. We we were at a very, very preliminary stage. Before we were forced to put out a press release just to end the talks. We obviously have no intention of using Kosmos Energy Ltd.'s accuracy at at at the current depressed levels, which was a view shared by our shareholders.

Alright. Thanks, Andy.

Great. Thanks, David.

Our next question is from Mark Wilson with Jefferies. Please proceed with your question.

Thank you. Good morning, gents. I just wanted to ask on the the timeline you expect to that one and a half times leverage level and then, yeah, just remind us of your priorities once you get beyond that point possibly for shareholder returns versus further debt, and leverage pay down.

Yeah. Thanks. Well, why don't I let Neil take that?

Yeah. Hey hey, Mark. Yeah. So, you know, again, we've been clear sort of yeah. The priority is generation of free cash flow. That generate that free cash flow we use to pay down debt. In a sort of a regular cadence two q forward In terms of getting to around one and a half times, see that as probably towards the the back half of of twenty-six. In terms of where we are. And, yeah, and that know, was through a combination of debt pay down, and growth in the EBITDAX as sort of production continues to increase. And that's all assuming sort of a normalized oil price. And so as we get to that point, then again, I think then the conversation reopens around where's the the right priority in terms of further debt pay down and shareholder returns. That's in my mind. We'll revisit that conversation and continue to have it with our shareholders as we approach in the back half of twenty-six.

Got it. Okay. That's that's great. Thank you. And then another one moving over to to Tortue and and this speaks to your overall twenty-two year two p reserve life. You spoke clearly to very little additional CapEx required to debottleneck and and otherwise the capacity in the vessel. Could you also speak to the to if we assumed running this facility two point four five or even the the the two point seven million ton per annum, How long would it be before you'd have to drill any wells at all into the Tortue reservoir to extend at that level. Thank you.

Yeah. Thanks. Thanks, Mark. Yeah. You know, always, good questions. I go back to what I said earlier, which is the initial sort of, you know, whatever it is, sort of seven or eight weeks into the the production data we're getting back to the reservoir is sort of positive. Obviously, we need to simulate all of that and build it into that for the timing of the of the next well. So currently, you know, well capacity you know, well exceeds the four hundred million standard cubic feet. That we would need to deliver the current ACQ of around You know, of two point four five. Yeah. Therefore, the timing of the of the current of the next set of wells is dependent on the obviously the connected volume to each well, and therefore the decline rate that we see But, you know, we are know? You know, several years away from from needing that. That well capacity. You know? And then if you were to drill, you would probably add sufficient wells then to increase the capacity overall above the eight hundred million standard cubic feet that will be driving you know, the the profile sort of in that sort of twenty thirty time frame. Yeah. So, you know, I'm not gonna give you exact guidance of how many wells in which in each year. So I think it's slightly early on there. But I think where you can take from that is it's not a significant draw on capital. The infrastructure is in place in terms of tiebacks to the existing manifold. So literally, it is you know, it is the cost of of those individual wells.

Okay. Thank you. I'll I'll hand it over and and good luck with that, Ram.

Right. Thanks, Mark.

Our next question is from Charles Meade. With Johnson Rice. Please proceed with your question.

Andy, thanks for letting me back in the queue here. You touched on this twice, maybe three times. The the performance of the of the wells, which you've seen in the first seven weeks, can you can you talk about that? Is that is that just is that just, you know, you're you're seeing less drawdown and better flowing pressures, or or is there something more that you guys have seen in these early days? Now what you're doing in the early days, Charles, is basically to understand, you know, what you think the size of the tank is associated with each of the wells. Yeah. So in in terms of actual productivity, we did pretty good DSTs of with initial DST, and then we did pretty good flow by extended flowbacks of the wells when we when we commissioned each of the wells. So we had a pretty good idea of the of the rate of each of the wells. So if you like, the next piece of data we needed was just actually what do we think the size of the tank is. Yeah. And and and I would say we're seeing more positive indications of of the size of tank, you know, because clearly we've got sort of weeks of production from one of the wells as opposed to just a few days.

Got it. That's great detail. Thanks, Andy.

Great. Thanks.