We recently compiled a list of the 10 Worst Performing Energy Stocks in 2024. In this article, we are going to take a look at where Kosmos Energy Ltd. (NYSE:KOS) stands against other worst performing energy stocks in 2024.
U.S. Crude oil prices fell 2.56% on Tuesday, January 21, with U.S. crude closing at $76.89 per barrel. Global benchmark Brent crude also declined, settling at $79.29 per barrel, a decrease of 86 cents or 1.07%. The drop in oil prices came as President Donald Trump, following his inauguration on Monday, announced that his administration was considering imposing 25% tariffs on Canada and Mexico. These tariffs could potentially slow economic growth and, in turn, impact fuel demand.
In addition to the tariff considerations, President Trump signed a series of executive actions aimed at boosting domestic energy production. He declared a national energy emergency, sought to roll back restrictions on offshore drilling that were implemented during the Biden administration, and lifted the pause on new liquified natural gas (LNG) exports. These moves are expected to stimulate the U.S. energy sector by increasing domestic production and easing regulatory constraints.
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In an interview with Yahoo Finance on January 22, Andy Lipow, President at Lipow Oil Associates, discussed the implications of President Trump’s declaration of a national energy emergency and his push for increased oil and gas production in the United States.
Andy Lipow noted that while the Trump Administration’s policy of “drill baby drill” aims to boost domestic oil production, it does not necessarily translate into immediate or significant increases in exploration and production. The decision to invest in new drilling operations, especially in high-cost areas such as the offshore Gulf of Mexico and Alaska, depends on the financial viability and the current price of crude oil. Despite the easing of regulations and the availability of more acreage, oil companies will weigh the potential financial rewards of investing large sums of money to increase production.
Lipow acknowledged that the United States is already at peak oil production, outpacing both Russia and Saudi Arabia. This trend has developed over the past decade, and while the U.S. is expected to set another production record in 2025, the impact on global oil prices is not straightforward. The market is more influenced by the Administration’s policies overseas, such as sanctions on Russian oil exports and Iranian oil production. According to Lipow. the imposition of 25% tariffs on oil imports from Canada and Mexico could divert these supplies elsewhere, potentially raising the cost of gasoline and diesel for U.S. consumers. This is contrary to the Trump Administration’s goal of lowering energy costs. Lipow expressed that the combination of these factors, including sanctions on Russia, Iran, and Venezuela, coupled with slow global oil demand growth, is likely to result in higher prices throughout the year.
Lipow believes that the rollback of executive orders, such as lifting the freeze on new liquefied natural gas (LNG) permits, is seen as positive for U.S. energy production. The recent opening of new LNG export facilities in Louisiana and Corpus Christi, along with several more facilities coming online in the next couple of years, is expected to boost U.S. energy exports.
The Trump administration’s focus on supporting domestic energy production through regulatory rollbacks, increased access to resources, and incentives for new projects is expected to provide much-needed relief for companies currently facing challenges.
A drilling platform in the middle of the ocean, showing the oil and gas exploration process.
Our Methodology
To compile our list of the 10 worst performing energy stocks in 2024, we used the Finviz and Yahoo stock screeners to find stocks that have experienced the most significant decline over the last year and have a market cap of more than $1 billion as of January 21. We then narrowed our choices to 10 stocks with the worst performance. We also included their market cap and hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in descending order of their performance as of January 21.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Kosmos Energy Ltd. (NYSE:KOS)
1-Year Performance as of January 21: -44.43%
Market Cap as of January 21: $1.67 Billion
Number of Hedge Fund Investors: 27
Kosmos Energy Ltd. (NYSE:KOS) is a full-cycle deepwater oil and gas exploration and production company. The firm focuses on projects in the Atlantic Margins, including West Africa, the Gulf of Mexico, and South America. Kosmos Energy Ltd. (NYSE:KOS) generates revenue through hydrocarbon production and by selling crude oil and natural gas to global markets. The company is known for its partnerships with governments and major energy players.
Kosmos Energy Ltd. (NYSE:KOS) is pursuing a comprehensive strategy that includes investing in new projects, optimizing existing operations, and prioritizing free cash flow generation. In the Gulf of Mexico, the company has successfully achieved first production at the Winterfell project and completed two production enhancement projects at Kodiak and Odd Job, both of which are performing strongly. In addition, Kosmos Energy Ltd. (NYSE:KOS) is advancing its drilling campaign in Equatorial Guinea, which is anticipated to support the company’s objective of increasing production by 50% to approximately 90,000 barrels of oil equivalent per day.
Kosmos Energy Ltd. (NYSE:KOS) is also committed to strengthening its financial resilience and discipline. The company has implemented measures to extend debt maturities, enhance liquidity, and streamline its capital structure. With no maturities in 2025 and only a small obligation in 2026, which is expected to be covered by free cash flow, the company is well-positioned financially. Furthermore, Kosmos Energy Ltd. (NYSE:KOS) is actively managing price volatility through its rolling hedging program, with approximately 45% of its first-half 2025 oil production hedged at a downside protection level of around $70 per barrel.
Overall KOS ranks 3rd on our list of the worst performing energy stocks in 2024. While we acknowledge the potential of KOS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KOS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.