KOS - Kosmos Energy rated new Buy at Redburn as production cash flows step up

2023-07-20 14:49:25 ET

Kosmos Energy ( NYSE: KOS ) +2.6% in Thursday's trading as Redburn initiated coverage with a Buy rating and $9 price target, citing a "combination of stable production underpinned by a strong resource portfolio and favorable cash flow profile, resulting in a short-term distribution catalyst."

Kosmos ( KOS ) is "approaching an inflection in cash flows as growth capex ends and production steps up," Redburn's John de los Santos wrote, as new projects coming online within the next 12 months will drive production from 64K boe/day to more than 90K boe/day, with opportunities for follow-on development as well as farm-downs.

In the Tortue area offshore Senegal and Mauritania, Kosmos ( KOS ) has the potential to add 1.6B boe of resource that is not yet recognized, equivalent to ~40 years of peak production, plus another 250M boe of resource in the Jubilee area, the analyst said.

Kosmos ( KOS ) does not pay a dividend, but de los Santos thinks it could start to return cash to shareholders in 2024, given its outlook and financial goals.

More on Kosmos Energy:

• Financial and valuation comparison to sector peers
• Analysis: Why I Bought Kosmos Energy
• Stock price return: Up 8.5% YTD, up 11.5% in the past 12 months

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