Credit action and headline metrics
S&P Global Ratings upgraded Kosmos Energy Ltd. (NYSE:KOS) to a B- issuer credit rating from CCC on Wednesday. The agency left unchanged an issue-level CCC rating on Kosmos’ unsecured debt, alongside a recovery rating of 6, which signals negligible recovery expectations of 0% to 10% in the event of a payment default. S&P assigned a stable outlook that reflects its view that the Dallas-based exploration and production company will produce positive free operating cash flow under the commodity-price assumptions it is using.
Recent financing steps
Since January 2026 Kosmos has completed a sequence of transactions intended to bolster its balance sheet. The company issued $350 million of 11.25% senior secured notes due 2031 through its Kosmos Energy GTA Holdings subsidiary, and used the proceeds to tender $250 million of 2027 unsecured notes and to repay $100 million of borrowings under its reserve-based lending facility. Earlier in January, Kosmos redeemed the remaining $100 million of its 7.125% senior notes due April 2026, funded by the second tranche of its Gulf of Mexico term loan. In March 2026 the company raised roughly $206 million of equity and applied those proceeds to accelerate repayment of the Gulf of Mexico term loan and reduce reserve-based lending balances.
Projections for cash flow and leverage
S&P Global Ratings now expects Kosmos to generate between $300 million and $350 million of free operating cash flow in 2026, a level the agency says will support ongoing debt reduction. The ratings firm projects funds from operations to debt will rise to 25% to 30% in 2026, up from about 1% in 2025, and anticipates debt to EBITDA falling to below 2.5x compared with 5.8x in 2025. That improvement is tied to S&P’s updated oil-price assumptions, which assume Brent will average roughly $100 per barrel for the remainder of 2026, versus the $60-per-barrel assumption in place at the start of the year.
Asset sale and expected proceeds
In February 2026 Kosmos entered a definitive agreement to sell its Equatorial Guinea assets to Panoro Energy for $180 million upfront plus up to $39.5 million of contingent consideration. Based on an effective date of January 1, 2025, Kosmos expects to receive about $150 million in net proceeds, with the transaction anticipated to close around mid-year 2026. Management estimates the divestiture will remove approximately $100 million of combined capital expenditures and general and administrative spending over the two years following closing.
Production and operations outlook
Kosmos reported average daily production of about 75,000 barrels of oil equivalent per day in the first quarter of 2026, the company’s highest quarterly output in its history and roughly 25% above the year-earlier period. S&P Global Ratings projects full-year 2026 net production of 70,000 to 78,000 boe/d. The agency attributes that range to three additional Jubilee development wells expected to come online by mid-2026, continued ramp-up of the Greater Tortue Ahmeyim project, and stable production in the Gulf of Mexico. Kosmos is also targeting at least a 20% reduction in operating costs in 2026.
Context and implications
The ratings action reflects a combination of improved commodity assumptions and company-specific measures to lower leverage and bolster liquidity. The upgraded issuer rating and the unchanged issue-level assessment together underline S&P’s view that, while the company’s market-value recovery prospects on unsecured debt remain limited, near-term cash flows and reduced debt loads support a more favorable issuer-level credit standing under current assumptions.