10 Best Oil and Gas Penny Stocks To Buy

02. Kosmos Energy Ltd. (NYSE:KOS)

Number of Hedge Fund Holders: 25

Share Price: $3.96

Kosmos Energy Ltd. (NYSE:KOS), founded in 2003 and headquartered in Dallas, Texas, is an oil and gas exploration and production company with key assets located offshore in Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico. The company also has significant gas projects in offshore Mauritania and Senegal. Kosmos Energy Ltd. (NYSE:KOS) has built a diverse portfolio along the Atlantic Margins, focusing on high-quality assets and an extensive exploration program.

Kosmos Energy Ltd. (NYSE:KOS) recently reported its Q2 2024 earnings, missing analysts’ expectations. The reported EPS of $0.1245 was below the expected $0.16. Despite this, Kosmos has demonstrated strong operational momentum across its business units. The company is on track to achieve its year-end production goal of 90,000 barrels of oil equivalent per day (BOEPD), primarily driven by the successful startups of the Jubilee Southeast project in Ghana and the Winterfell project in the Gulf of Mexico. The number of hedge funds holding Kosmos Energy Ltd. was 25 in Q2 2024, compared to 26 in the previous quarter, indicating a stable investor interest in the stock.

During the quarter, Kosmos Energy Ltd. (NYSE:KOS) production increased by 7% year-on-year, reaching 62,000 BOEPD. Although production was at the lower end of the guidance range, the company expects further ramp-up from the GTA project in Mauritania and Senegal, which is expected to deliver meaningful growth. The management highlighted that with the completion of key projects, capital expenditures are anticipated to decrease significantly, leading to a robust free cash flow of $100 million to $150 million per quarter. This strong cash flow will initially be directed towards reducing debt, enhancing Kosmos’ financial flexibility.

The company’s efforts to optimize costs were evident as operating costs for producing assets came in below guidance. As Kosmos brings its projects online, it is expected to generate substantial returns due to low finding and development (F&D) costs, ensuring attractive project economics. With an improved balance sheet and a focus on disciplined capital allocation, Kosmos Energy Ltd. (NYSE:KOS) is well-positioned for future growth. Investors seeking exposure to the oil and gas sector, particularly in high-quality offshore assets, may find Kosmos Energy Ltd. (NYSE:KOS) an attractive addition to their portfolios among oil and gas penny stocks.