Kosmos Energy: Why Analysts Are Bullish on This Non-Permian Stock


Sep. 7 2018, Updated 2:45 p.m. ET

Kosmos Energy in sixth place

Kosmos Energy (KOS) is in sixth place in terms of analysts’ ratings among upstream companies. It’s the only upstream company among the top seven companies in this series that doesn’t have exposure to the Permian Basin. It’s involved in offshore exploration and production with assets in offshore Ghana and Equatorial Guinea. It’s actively involved in exploration activities in other locations along the Atlantic Margin.

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The company recently announced entry into the Gulf of Mexico with the acquisition of Deep Gulf Energy in a transaction valued at $1.23 billion. According to the press release, the acquisition “adds approximately 25,000 barrels of oil equivalent per day (boed) production (~85% oil), with an estimated reserves to production ratio of 8.8, growing 2018 pro forma production by 50% from approximately 45,000 to 70,000 boed.” It adds 80 MMboe (million barrels of oil equivalent) of 2P (proved plus probable) reserves.

Analyst ratings

About 93% of analysts rate Kosmos Energy a “buy,” and the remaining 7% rate it a “hold” as of September 4. RBC Capital last upgraded KOS to “outperform,” which is equivalent to a “buy,” from “sector perform,” which is equivalent to a “hold.” Overall, the company has seen five rating updates since the start of this year, including four upgrades and one downgrade.

KOS saw several target price upgrades following its acquisition announcement. Its average target price of $9.50 implies a ~9% upside potential from its current price.

In the next part, we’ll look at analysts’ ratings for Pioneer Natural Resources (PXD).


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