Kosmos Energy Ltd.KOS

Kosmos Energy Ltd. Leases Disclosure

10-KFiled Feb 24, 20252 min read
Leases
We have commitments under operating leases primarily related to office leases. Our leases have initial lease terms ranging from one year to ten years. Certain lease agreements contain provisions for future rent increases.
The components of lease cost for the years ended December 31, 2024, 2023 and 2022 is as follows:
December 31,
202420232022
(In thousands)
Operating lease cost$3,864 $3,866 $3,882 
Variable lease cost1,963 1,766 1,825 
Short-term lease cost(1)12,281 17,464 13,970 
Total lease cost$18,108 $23,096 $19,677 
__________________________________
(1)Includes $10.7 million, $16.0 million and $12.4 million during the years ended December 31, 2024, 2023 and 2022, respectively, of costs associated with short-term drilling contracts.

Other information related to operating leases at December 31, 2024 and 2023, is as follows:
December 31,
20242023
(In thousands, except lease term and discount rate)
Balance sheet classifications
Other assets (right-of-use assets)$12,294 $14,234 
Accrued liabilities (current maturities of leases)2,816 2,492 
Other long-term liabilities (non-current maturities of leases)12,745 15,576 
Weighted average remaining lease term4.6 years5.6 years
Weighted average discount rate9.8 %9.8 %
    
The table below presents supplemental cash flow information related to leases during the years ended December 31, 2024, 2023 and 2022:
December 31,
202420232022
(In thousands)
Operating cash flows for operating leases$7,683 $7,256 $7,170 
Investing cash flows for operating leases(1)10,746 16,029 12,449 
__________________________________    
(1)Represents costs associated with short-term drilling contracts.
Future minimum rental commitments under our leases at December 31, 2024, are as follows:
Operating Leases(1)
(In thousands)
2025$4,189 
20264,260 
20274,201 
20283,844 
20292,808 
Thereafter— 
Total undiscounted lease payments$19,302 
Less: Imputed interest(3,741)
Total lease liabilities$15,561 
__________________________________
(1)Does not include purchase commitments for jointly owned fields and facilities where we are not the operator and excludes commitments for exploration activities, including well commitments, in our petroleum contracts.
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About Leases Disclosures

Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.

Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.

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