v3.25.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements Fair Value Measurements
 
In accordance with ASC 820 — Fair Value Measurement, fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. We prioritize the inputs used in measuring fair value into the following fair value hierarchy:
 
•Level 1 — quoted prices for identical assets or liabilities in active markets.
•Level 2 — quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means.
•Level 3 — unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.
The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2025 and December 31, 2024, for each fair value hierarchy level: 
 Fair Value Measurements Using:
 Quoted Prices in   
 Active Markets forSignificant OtherSignificant 
 Identical AssetsObservable InputsUnobservable Inputs 
 (Level 1)(Level 2)(Level 3)Total
 (In thousands)
June 30, 2025    
Assets:    
Commodity derivatives $— $18,793 $— $18,793 
Interest rate derivatives— 875 — 875 
Decommissioning trust fund:
Debt securities— 23,190 — 23,190 
Liabilities:
Commodity derivatives — (6,396)— (6,396)
Total $— $36,462 $— $36,462 
December 31, 2024
Assets:
Commodity derivatives $— $7,226 $— $7,226 
Provisional oil sales— 2,242 — 2,242 
Interest rate derivatives— 2,202 — 2,202 
Decommissioning trust fund:
Debt securities— 10,653 — 10,653 
Total $— $22,323 $— $22,323 
 
The book values of cash and cash equivalents and restricted cash approximate fair value based on Level 1 inputs. Joint interest billings, oil and gas sales and other receivables, and accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. Our long-term receivables, after any allowances for credit losses, and other long-term assets approximate fair value. The estimates of fair value of these items are based on Level 2 inputs.
 
Commodity Derivatives
 
Our commodity derivatives represent swaps, crude oil collars, put options and call options for notional barrels of oil at fixed Dated Brent oil prices. The values attributable to our oil derivatives are based on (i) the contracted notional volumes, (ii) independent active futures price quotes for the respective index, (iii) a credit-adjusted yield curve applicable to each counterparty by reference to the credit default swap (“CDS”) market and (iv) an independently sourced estimate of volatility for the respective index. The volatility estimate was provided by certain independent brokers who are active in buying and selling oil options and was corroborated by market-quoted volatility factors. The deferred premium is included in the fair market value of the commodity derivatives. See Note 7 — Derivative Financial Instruments for additional information regarding the Company’s derivative instruments.
 
Provisional Oil Sales
 
The value attributable to provisional oil sales derivatives is based on (i) the sales volumes and (ii) the difference in the independent active futures price quotes for the respective index over the term of the pricing period designated in the sales contract and the spot price on the lifting date.

Interest Rate Derivatives

Our interest rate derivatives consist of interest rate swaps, whereby the Company pays a fixed rate of interest and the counterparty pays a variable SOFR-based rate. The values attributable to the Company’s interest rate derivative contracts are based on (i) the contracted notional amounts, (ii) SOFR yield curves provided by independent third parties and corroborated
with forward active market-quoted SOFR yield curves and (iii) a credit-adjusted yield curve as applicable to each counterparty by reference to the CDS market.

Decommissioning Trust Fund

In April 2024, a decommissioning trust agreement with the Jubilee unit partners to cash fund future retirement costs associated with the Jubilee Field was finalized. Each partner will contribute annually to the trust in proportion to its respective paying interest of the estimated future dismantlement, abandonment and restoration costs associated with the decommissioning of the Jubilee Field. Contributions to the trust are used by the trustee of the fund, the Bank of Ghana, to purchase and sell authorized securities at the direction of the Jubilee unit partners.

As of June 30, 2025, the investments held in the decommissioning trust fund are US Treasury debt securities. We have classified the investments as trading securities and recorded such investments at fair market value as a long-term investment in our consolidated balance sheet using observable inputs including Kosmos’ share of the fund and broker/dealer bid/ask prices of the investments held by the fund at June 30, 2025. Contributions made to the decommissioning trust are reported as investing activities in our consolidated cash flows. All realized and unrealized gains and losses resulting from the sales and maturities or changes in fair value of the securities are recognized in Other income, net. During the six months ended June 30, 2025, we contributed $11.5 million to the decommissioning trust fund.

The following table summarizes Kosmos’ portion of the investment activity in debt securities held by the decommissioning trust during the three and six months ended June 30, 2025 and 2024:
Three Months Ended June 30,Six Months Ended June 30,
Type of Security
Purchases
Net Proceeds (1)
Unrealized Gain (Loss)
Purchases
Net Proceeds (1)
Unrealized Gain (Loss)
2025
Debt securities
$198 $— $22 $12,406 $— $131 
Cash and cash equivalents
— 2 — — (745)— 
Other(1)
— 23 — — 166 — 
Total
$198 $25 $22 $12,406 $(579)$131 
2024
Debt securities
$— $— $— $— $— $— 
Cash and cash equivalents
— — — — — — 
Other(1)
— — — — — — 
Total
$— $— $— $— $— $— 

(1)    Represents net receivables relating to interest.

The following table presents the costs and fair values of investments in debt securities held in the decommissioning trust fund according to the contractual maturities at June 30, 2025 and December 31, 2024:

June 30, 2025December 31, 2024
Cost
Estimated Fair Value
Cost
Estimated Fair Value
(In thousands)
Less than 5 years
$23,114 $23,190 $10,708 $10,653 
5 years to 10 years
— — — — 
Due after 10 years
— — — — 
Total
$23,114 $23,190 $10,708 $10,653 
Debt
 
The following table presents the carrying values and fair values at June 30, 2025 and December 31, 2024:
 
 June 30, 2025December 31, 2024
 Carrying ValueFair ValueCarrying ValueFair Value
 (In thousands)
7.125% Senior Notes
$249,580 $241,655 $249,315 $246,565 
7.750% Senior Notes
348,326 311,279 347,910 339,927 
7.500% Senior Notes
398,042 329,446 397,672 379,404 
8.750% Senior Notes
495,275 377,360 494,997 470,965 
3.125% Convertible Senior Notes
392,343 275,208 391,603 332,792 
Facility1,000,000 1,000,000 900,000 900,000 
Total$2,883,566 $2,534,948 $2,781,497 $2,669,653 
 
The carrying values of our 7.125% Senior Notes, 7.750% Senior Notes, 7.500% Senior Notes, 8.750% Senior Notes and 3.125% Convertible Senior Notes represent the principal amounts outstanding less unamortized discounts. The fair values of our 7.125% Senior Notes, 7.750% Senior Notes, 7.500% Senior Notes, 8.750% Senior Notes and 3.125% Convertible Senior Notes are based on quoted market prices, which results in a Level 1 fair value measurement. The carrying value of the Facility approximates fair value since they are subject to short-term floating interest rates that approximate the rates available to us for those periods.

Nonrecurring Fair Value Measurements - Long-lived assets

Certain long-lived assets are reported at fair value on a non-recurring basis on the Company's consolidated balance sheet. These long-lived assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. Our long-lived assets are reviewed for impairment when changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

The Company calculates the estimated fair values of its long-lived assets using the income approach described in the ASC 820 — Fair Value Measurements. Significant inputs associated with the calculation of estimated discounted future net cash flows include anticipated future production, pricing estimates, capital and operating costs, market-based weighted average cost of capital, and risk adjustment factors applied to reserves. These are classified as Level 3 fair value assumptions. The Company utilizes an average of third-party industry forecasts of Dated Brent, adjusted for location and quality differentials, to determine our pricing assumptions. In order to evaluate the sensitivity of the assumptions, we analyze sensitivities to prices, production, and risk adjustment factors.

During the three and six months ended June 30, 2025 and 2024, the Company did not recognize impairment of proved oil and gas properties. If we experience material declines in oil pricing expectations in the future, significant increases in our estimated future expenditures or a significant decrease in our estimated production profile, our long-lived assets could be at risk of impairment.