Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35167 Kosmos Energy Ltd. (Exact name of registrant as specified in its charter) (State or other jurisdiction o ...

Kosmos Energy Ltd. (NYSE:KOS) Q2 2021 Earnings Conference Call August 9, 2021 11:00 AM ET Company Participants Jamie Buckland - VP of IR Andy Inglis - Chairman and CEO Neal Shah - CFO Conference Call Participants Nick Stefanou - Renaissance Capital James Carmichael - Berenberg Mark Wilson - Jefferies Operator Good everyone, welcome to Kosmos Energy’s Second Quarter 2021 Conference Call. Just a reminder, today's call is being recorded. At this time, let me turn the call over to Jamie Buckland, Vice President ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-35167 Kosmos Energy Ltd. (Exact name of registrant as specified in its charter) (State or other jurisdiction of (I. ...

Kosmos Energy Ltd (NYSE:KOS) Q1 2021 Earnings Conference Call May 10, 2021 11:00 AM ET Company Participants Jamie Buckland - VP of IR Andy Inglis - Chairman and CEO Neal Shah - CFO Conference Call Participants James Hosie - Barclays Charles Meade - Johnson Rice Neil Mehta - Goldman Sachs Bob Brackett - Bernstein Research Mark Wilson - Jefferies Nick Stefano - Renaissance Capital Richard Tullis - Capital One Securities Operator Good day, everyone. Welcome to Kosmos Energy's First Quarter 2021 Conference Call ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Glossary and Select Abbreviations](index=4&type=section&id=Glossary%20and%20Select%20Abbreviations) This section defines industry-specific terms and financial metrics for consistent understanding of the company's operations and disclosures - Defines terms such as '2D seismic data', '3D seismic data', 'API', 'Asset Coverage Ratio', 'Barrel', 'Boe', 'EBITDAX', 'Proved reserves', and various financial instruments and operational concepts[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk)[16](index=16&type=chunk) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This item presents Kosmos Energy Ltd.'s unaudited consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, with detailed notes [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and equity at specific points in time Assets (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total current assets | $420,227 | $400,291 | | Property and equipment, net | $3,369,448 | $3,320,913 | | Total assets | $3,959,086 | $3,867,593 | Liabilities & Equity (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Total current liabilities | $481,144 | $460,199 | | Total long-term liabilities | $3,121,157 | $2,967,240 | | Total stockholders' equity | $356,785 | $440,154 | | Total liabilities and equity| $3,959,086 | $3,867,593 | [Consolidated Statements of Operations](index=9&type=section&id=Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific periods Operating Results (Three Months Ended March 31, 2021 vs. 2020) | Metric | March 31, 2021 (in thousands) | March 31, 2020 (in thousands) | | :------------------------------ | :----------------------------- | :----------------------------- | | Total revenues and other income | $176,570 | $177,781 | | Total costs and expenses | $284,043 | $295,005 | | Loss before income taxes | $(107,473) | $(117,224) | | Income tax expense (benefit) | $(16,705) | $65,543 | | Net loss | $(90,768) | $(182,767) | | Basic Net loss per share | $(0.22) | $(0.45) | - Key cost changes year-over-year include a **$15.851 million decrease** in oil and gas production costs, a **$7.367 million decrease** in facilities insurance modifications, a **$36.424 million decrease** in exploration expenses, and a **$150.820 million decrease** in impairment of long-lived assets[20](index=20&type=chunk) - Derivatives, net, swung from a **$136.038 million gain** in 2020 to a **$102.461 million loss** in 2021[20](index=20&type=chunk) [Consolidated Statements of Stockholders' Equity](index=10&type=section&id=Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in the company's equity attributable to stockholders over specific periods Stockholders' Equity (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Balance as of December 31, 2020 | $440,154 | N/A | | Equity-based compensation | $8,327 | N/A | | Net loss | $(90,768) | N/A | | Balance as of March 31, 2021 | $356,785 | N/A | Stockholders' Equity (March 31, 2020 vs. December 31, 2019) | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Balance as of December 31, 2019 | N/A | $841,702 | | Dividends ($0.0452 per share) | $(18,918) | N/A | | Equity-based compensation | $10,078 | N/A | | Net loss | $(182,767) | N/A | | Balance as of March 31, 2020 | $645,148 | N/A | [Consolidated Statements of Cash Flows](index=11&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section summarizes the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (Three Months Ended March 31, 2021 vs. 2020) | Metric | March 31, 2021 (in thousands) | March 31, 2020 (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(46,626) | $(16,963) | | Net cash used in investing activities | $(150,587) | $(107,523) | | Net cash provided by financing activities | $191,893 | $25,897 | | Net decrease in cash, cash equivalents and restricted cash | $(5,320) | $(98,589) | | Cash, cash equivalents and restricted cash at end of period | $144,444 | $130,757 | - Key financing activities in Q1 2021 included **$444.375 million** in net proceeds from senior note issuance and **$(350.000) million** in payments on long-term debt[26](index=26&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the consolidated financial statements [Note 1. Organization](index=12&type=section&id=Note%201.%20Organization) This note describes Kosmos Energy Ltd.'s business, incorporation, and primary operational focus - Kosmos Energy Ltd. is a full-cycle deepwater independent oil and gas exploration and production company, incorporated in Delaware, focusing along the Atlantic Margins[29](index=29&type=chunk) - Key assets include production offshore Ghana, Equatorial Guinea, and U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal[29](index=29&type=chunk) - The company is listed on the New York Stock Exchange and London Stock Exchange under the ticker symbol KOS[29](index=29&type=chunk) [Note 2. Accounting Policies](index=12&type=section&id=Note%202.%20Accounting%20Policies) This note outlines the significant accounting principles and methods used in preparing the financial statements - Interim consolidated financial statements are unaudited and prepared in accordance with SEC requirements for interim reporting, with certain GAAP notes condensed or omitted[31](index=31&type=chunk) Cash, Cash Equivalents and Restricted Cash (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----------------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $95,242 | $149,027 | | Restricted cash - current | $48,660 | $195 | | Restricted cash - long-term | $542 | $542 | | Total cash, cash equivalents and restricted cash | $144,444 | $149,764 | Oil and Gas Revenue by Region (Three Months Ended March 31, 2021 vs. 2020) | Region | 2021 (in thousands) | 2020 (in thousands) | | :------------------ | :------------------ | :------------------ | | Equatorial Guinea | $26,431 | $24,370 | | Ghana | $59,351 | $49,672 | | U.S. Gulf of Mexico | $94,389 | $103,453 | | Provisional oil sales | $(3,697) | $285 | | **Total** | **$176,474** | **$177,780** | [Note 3. Acquisitions and Divestitures](index=14&type=section&id=Note%203.%20Acquisitions%20and%20Divestitures) This note details significant transactions involving the acquisition or divestiture of assets - During Q3 2020, Kosmos agreed with Shell to farm down interests in frontier exploration assets for **$96.0 million** cash and up to **$100.0 million** in future contingent consideration[42](index=42&type=chunk) - Kosmos received **$95.0 million** in proceeds during Q4 2020, with the remaining **$1.0 million** related to South Africa expected in 2021[42](index=42&type=chunk) [Note 4. Joint Interest Billings, Related Party Receivables and Notes Receivables](index=14&type=section&id=Note%204.%20Joint%20Interest%20Billings%2C%20Related%20Party%20Receivables%20and%20Notes%20Receivables) This note provides information on receivables from joint ventures and related parties - Current joint interest billing receivables from GNPC for TEN fields development costs were **$5.8 million** as of March 31, 2021, with long-term portions of **$21.9 million**[44](index=44&type=chunk) - The balance due from national oil companies of Mauritania and Senegal for Greater Tortue Ahmeyim Phase 1 development costs was **$120.3 million** as of March 31, 2021, classified as long-term receivables[45](index=45&type=chunk) [Note 5. Property and Equipment](index=15&type=section&id=Note%205.%20Property%20and%20Equipment) This note details the company's property and equipment, including oil and gas properties, and related depreciation and impairment Property and Equipment, Net (March 31, 2021 vs. December 31, 2020) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------- | :----------------------------- | :----------------------------- | | Oil and gas properties, net | $3,359,670 | $3,310,276 | | Other property, net | $9,778 | $10,637 | | **Total, net** | **$3,369,448** | **$3,320,913** | - Depletion expense was **$70.6 million** for Q1 2021, compared to **$87.2 million** in the prior year period[46](index=46&type=chunk) - No asset impairments were recorded in Q1 2021, compared to **$150.8 million** in Q1 2020 due to fair value assessments for oil and gas proved properties[46](index=46&type=chunk) [Note 6. Suspended Well Costs](index=15&type=section&id=Note%206.%20Suspended%20Well%20Costs) This note provides information on capitalized exploratory well costs pending determination of proved reserves Capitalized Exploratory Well Costs (March 31, 2021) | Metric | Amount (in thousands) | | :--------------------------------------------------------------------- | :-------------------- | | Beginning balance (December 31, 2020) | $186,289 | | Additions to capitalized exploratory well costs pending proved reserves | $11,330 | | Ending balance (March 31, 2021) | $197,619 | - Projects with exploratory well costs capitalized for more than one year include the BirAllah discovery (Mauritania), Yakaar and Teranga discoveries (Senegal), and Asam discovery (Equatorial Guinea), all pending commerciality decisions[49](index=49&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Note 7. Debt](index=16&type=section&id=Note%207.%20Debt) This note details the company's outstanding debt, including senior notes, credit facilities, and term loans Outstanding Debt Principal Balances (March 31, 2021 vs. December 31, 2020) | Debt Type | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------- | :----------------------------- | :----------------------------- | | Facility | $1,000,000 | $1,200,000 | | Corporate Revolver | $50,000 | $100,000 | | 7.125% Senior Notes | $650,000 | $650,000 | | 7.500% Senior Notes | $450,000 | — | | GoM Term Loan | $200,000 | $200,000 | | **Total** | **$2,350,000** | **$2,150,000** | - In March 2021, the company issued **$450.0 million** of 7.500% Senior Notes due 2028, with net proceeds of approximately **$444.4 million** used to repay outstanding indebtedness under the Corporate Revolver and the Facility[62](index=62&type=chunk)[63](index=63&type=chunk) - In May 2021, the Facility was amended, reducing its size to **$1.25 billion**, increasing the interest margin by **0.5%**, extending the tenor by two years to March 2027, and incorporating ESG key performance indicators[57](index=57&type=chunk) [Note 8. Derivative Financial Instruments](index=19&type=section&id=Note%208.%20Derivative%20Financial%20Instruments) This note describes the company's use of derivative contracts to manage commodity price and interest rate risks - The company uses financial derivative contracts (collars, put options, call options, and swaps) to manage exposures to commodity price and interest rate fluctuations, not for trading purposes[74](index=74&type=chunk) Oil Derivative Contracts (March 31, 2021) | Term | Type of Contract | Index | MBbl | Swap Price ($/Bbl) | Sold Put Price ($/Bbl) | Floor Price ($/Bbl) | Ceiling Price ($/Bbl) | | :-------- | :------------------- | :---------- | :---- | :----------------- | :--------------------- | :------------------ | :-------------------- | | 2021 | Swaps with sold puts | Dated Brent | 4,500 | 53.96 | 42.92 | — | — | | 2021 | Three-way collars | Dated Brent | 2,750 | — | 32.95 | 40.45 | 52.84 | | 2021 | Sold calls | Dated Brent | 5,250 | — | — | — | 70.09 | | 2022 | Three-way collars | Dated Brent | 1,500 | — | 40.00 | 50.00 | 70.00 | Gain/(Loss) from Derivatives (Three Months Ended March 31, 2021 vs. 2020) | Type of Contract | 2021 (in thousands) | 2020 (in thousands) | | :--------------- | :------------------ | :------------------ | | Commodity | $(102,461) | $136,038 | | Provisional oil sales | $(3,697) | $284 | | **Total** | **$(106,158)** | **$136,322** | [Note 9. Fair Value Measurements](index=21&type=section&id=Note%209.%20Fair%20Value%20Measurements) This note explains how fair value is determined for financial instruments, categorized into a three-level hierarchy - Fair value measurements are classified into a three-level hierarchy based on input observability: Level 1 (quoted prices in active markets), Level 2 (significant observable inputs), and Level 3 (unobservable inputs)[80](index=80&type=chunk) Fair Value of Derivatives (March 31, 2021) | Type of Contract | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | Total (in thousands) | | :------------------ | :--------------------- | :--------------------- | :--------------------- | :------------------- | | Commodity derivatives (liability) | — | $(93,537) | — | $(93,537) | Debt Fair Values (March 31, 2021) | Debt Type | Carrying Value (in thousands) | Fair Value (in thousands) | | :-------------------- | :----------------------------- | :------------------------- | | 7.125% Senior Notes | $643,778 | $629,792 | | 7.500% Senior Notes | $444,421 | $425,066 | | GoM Term Loan | $200,000 | $200,000 | | Corporate Revolver | $50,000 | $50,000 | | Facility | $1,000,000 | $1,000,000 | | **Total** | **$2,338,199** | **$2,304,858** | [Note 10. Equity-based Compensation](index=24&type=section&id=Note%2010.%20Equity-based%20Compensation) This note details the expense and outstanding amounts related to the company's equity-based compensation plans - Equity-based compensation expense was **$8.3 million** for Q1 2021, compared to **$9.3 million** in the prior year period[88](index=88&type=chunk) - As of March 31, 2021, total equity-based compensation to be recognized on unvested restricted stock units is **$46.6 million** over a weighted average period of **2.07 years**[90](index=90&type=chunk) - The board approved an amendment to the LTIP to add **11.0 million shares**, increasing the total to **61.5 million shares** if approved by stockholders in June 2021[90](index=90&type=chunk) [Note 11. Income Taxes](index=25&type=section&id=Note%2011.%20Income%20Taxes) This note provides information on the company's income tax expense, effective tax rate, and deferred tax assets/liabilities Income (Loss) Before Income Taxes (Three Months Ended March 31, 2021 vs. 2020) | Region | 2021 (in thousands) | 2020 (in thousands) | | :------------ | :------------------ | :------------------ | | United States | $(21,842) | $(190,137) | | Foreign | $(85,631) | $72,913 | | **Total** | **$(107,473)** | **$(117,224)** | - The effective tax rate was **16%** for Q1 2021, compared to **56%** for Q1 2020[93](index=93&type=chunk) - The Q1 2020 effective tax rate was impacted by a **$30.9 million** deferred tax expense related to U.S. deferred tax asset valuation allowances and a **$4.9 million** tax benefit from a 2018 U.S. tax loss carry back under the CARES Act[94](index=94&type=chunk) [Note 12. Net Loss Per Share](index=26&type=section&id=Note%2012.%20Net%20Loss%20Per%20Share) This note presents the basic and diluted net loss per share calculations Net Loss Per Share (Three Months Ended March 31, 2021 vs. 2020) | Metric | 2021 | 2020 | | :---------- | :---- | :---- | | Basic EPS | $(0.22) | $(0.45) | | Diluted EPS | $(0.22) | $(0.45) | - Outstanding restricted stock units of **13.1 million** for Q1 2021 and **11.0 million** for Q1 2020 were excluded from diluted net loss per share computations as their effect would have been anti-dilutive[95](index=95&type=chunk) [Note 13. Commitments and Contingencies](index=26&type=section&id=Note%2013.%20Commitments%20and%20Contingencies) This note discloses the company's legal proceedings, contractual commitments, and other contingent liabilities - The company is involved in litigation, regulatory examinations, and administrative proceedings, but management believes none will have a material adverse effect on financial position[96](index=96&type=chunk) - Commitments include drilling two exploration wells and acquiring approximately **1,000 square kilometers** of 3D seismic in Mauritania[97](index=97&type=chunk) - Performance bonds totaled **$195.5 million** for BOEM supplemental bonding and **$3.5 million** for other operators as of March 31, 2021[98](index=98&type=chunk) - The quarterly cash dividend of **$0.0452 per common share** was paid on March 26, 2020, but subsequently suspended in March 2020 due to economic conditions and oil price volatility[99](index=99&type=chunk) [Note 14. Additional Financial Information](index=27&type=section&id=Note%2014.%20Additional%20Financial%20Information) This note provides supplementary financial details, including accrued liabilities and other expenses Accrued Liabilities (March 31, 2021 vs. December 31, 2020) | Type of Accrued Liability | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Exploration, development and production | $68,464 | $89,162 | | Revenue payable | $21,191 | $15,079 | | Interest | $12,671 | $23,725 | | Income taxes | $29,701 | $37,344 | | **Total** | **$174,147** | **$203,260** | - Ending asset retirement obligations totaled **$259.490 million** as of March 31, 2021[101](index=101&type=chunk) Other Expenses, Net (Three Months Ended March 31, 2021 vs. 2020) | Expense Type | 2021 (in thousands) | 2020 (in thousands) | | :---------------------------- | :------------------ | :------------------ | | Restructuring charges | $819 | $13,915 | | **Total Other expenses, net** | **$3,468** | **$23,929** | [Note 15. Business Segment Information](index=28&type=section&id=Note%2015.%20Business%20Segment%20Information) This note presents financial data segmented by the company's geographic operating regions - Kosmos operates in a single line of business: exploration, development, and production of oil and gas, across four geographic segments: Ghana, Equatorial Guinea, Mauritania/Senegal, and U.S. Gulf of Mexico[102](index=102&type=chunk) Oil and Gas Revenue by Segment (Three Months Ended March 31, 2021) | Segment | Revenue (in thousands) | | :------------------ | :--------------------- | | Ghana | $54,053 | | Equatorial Guinea | $28,032 | | U.S. Gulf of Mexico | $94,389 | | **Total** | **$176,474** | Consolidated Capital Expenditures (Three Months Ended March 31, 2021 vs. 2020) | Segment | 2021 (in thousands) | 2020 (in thousands) | | :------------------ | :------------------ | :------------------ | | Ghana | $4,624 | $16,486 | | Equatorial Guinea | $11,424 | $6,770 | | Mauritania/Senegal | $72,752 | $3,121 | | U.S. Gulf of Mexico | $24,267 | $38,654 | | Corporate & Other | $3,482 | $19,434 | | **Total** | **$116,549** | **$84,465** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's analysis of the company's financial performance, liquidity, and capital management strategies, considering the impact of the COVID-19 pandemic and recent developments [Overview](index=30&type=section&id=Overview) This overview introduces Kosmos Energy's business model and highlights the significant impact of the COVID-19 pandemic on its operations - Kosmos Energy is a full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins[108](index=108&type=chunk) - The COVID-19 pandemic has resulted in travel restrictions, supply chain delays, decreased oil demand, and significant declines in oil prices, impacting the company's revenues, earnings, cash flows, and capital investments[109](index=109&type=chunk) [Recent Developments](index=30&type=section&id=Recent%20Developments) This section outlines key operational and financial events that occurred recently, affecting the company's outlook - In March 2021, the company issued **$450.0 million** of 7.500% Senior Notes due 2028, using net proceeds to repay outstanding indebtedness and for general corporate purposes[110](index=110&type=chunk) - Ghana's Q1 2021 production averaged **109,200 Bopd gross (22,400 Bopd net)**, with a multi-year development drilling program re-commencing in April 2021[111](index=111&type=chunk) - In the U.S. Gulf of Mexico, the Winterfell exploration prospect encountered approximately **26 meters (85 feet)** of net oil pay, with an appraisal well planned for Q3 2021[114](index=114&type=chunk) - Phase 1 of the Greater Tortue project in Mauritania and Senegal is approximately **58% complete**, with first gas expected in the first half of 2023[117](index=117&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, focusing on sales volumes, average prices, revenues, and key cost changes Sales Volumes (Three Months Ended March 31, 2021 vs. 2020) | Metric | 2021 (MBoe) | 2020 (MBoe) | Change (MBoe) | % Change | | :------------ | :---------- | :---------- | :------------ | :------- | | Total (MBoe) | 3,289 | 3,973 | (684) | -17.2% | | Total (Boepd) | 36,543 | 43,659 | (7,116) | -16.3% | Average Sales Price (Three Months Ended March 31, 2021 vs. 2020) | Metric | 2021 ($/Boe) | 2020 ($/Boe) | Change ($/Boe) | % Change | | :---------------------- | :----------- | :----------- | :------------- | :------- | | Average total sales price | $53.66 | $44.74 | +$8.92 | +19.9% | - Oil and gas revenue decreased by **$1.3 million** due to lower sales volumes, partially offset by higher oil prices[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - Oil and gas production costs decreased by **$15.9 million**, and exploration expenses decreased by **$36.4 million**[122](index=122&type=chunk)[123](index=123&type=chunk)[125](index=125&type=chunk) - The company recorded a **$102.5 million loss** on derivatives, net, in Q1 2021, a significant swing from a **$136.0 million gain** in Q1 2020[128](index=128&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash, including sources of funds, capital expenditures, and debt obligations [Sources and Uses of Cash](index=35&type=section&id=Sources%20and%20Uses%20of%20Cash) This subsection analyzes the primary drivers of cash flow from operating, investing, and financing activities - Net cash used in operating activities increased to **$(46.6) million** for Q1 2021, primarily due to lower production and a negative change in working capital[133](index=133&type=chunk) - Net cash provided by financing activities significantly increased to **$191.9 million** in Q1 2021, driven by **$444.4 million** in net proceeds from senior note issuance, partially offset by **$350.0 million** in debt payments[133](index=133&type=chunk) Net Debt and Liquidity (March 31, 2021) | Metric | Amount (in thousands) | | :----------------------------------- | :-------------------- | | Cash and cash equivalents | $95,242 | | Restricted cash | $49,202 | | Total Debt | $2,350,000 | | **Net debt** | **$2,205,556** | | Availability under the Facility | $320,000 | | Availability under the Corporate Revolver | $350,000 | | **Available borrowings plus cash and cash equivalents** | **$765,242** | [Capital Expenditures and Investments](index=36&type=section&id=Capital%20Expenditures%20and%20Investments) This subsection details the company's planned and actual spending on capital projects and investments - The estimated capital program for 2021 is **$225-$275 million**, excluding Mauritania and Senegal, and approximately **$350 million** for Mauritania and Senegal[137](index=137&type=chunk)[138](index=138&type=chunk) - Through March 31, 2021, the company spent approximately **$43.8 million** (excluding Mauritania and Senegal) and **$72.7 million** (Mauritania and Senegal)[137](index=137&type=chunk)[139](index=139&type=chunk) - Funding for capital expenditures is expected from working capital and proceeds from refinancing Carry Advance Agreements with national oil companies of Mauritania and Senegal[139](index=139&type=chunk) [Significant Sources of Capital](index=37&type=section&id=Significant%20Sources%20of%20Capital) This subsection identifies the primary funding mechanisms available to the company, including credit facilities and debt issuances - The Facility's available borrowing base was reduced to **$1.24 billion** (from **$1.5 billion**) in May 2021, with total commitments of approximately **$1.21 billion**, and its tenor extended to March 2027[143](index=143&type=chunk) - The Corporate Revolver has **$50.0 million** outstanding and **$350.0 million** undrawn availability as of March 31, 2021, maturing in May 2022[144](index=144&type=chunk) - The company issued **$450.0 million** of 7.500% Senior Notes due 2028 in March 2021, using proceeds to repay existing debt[149](index=149&type=chunk) - The GoM Term Loan is a five-year **$200.0 million** senior secured term-loan credit agreement, maturing in 2025[153](index=153&type=chunk)[154](index=154&type=chunk) [Contractual Obligations](index=39&type=section&id=Contractual%20Obligations) This subsection details the company's future payment commitments under various contractual agreements Principal Debt Repayments (as of March 31, 2021) | Year | Amount (in thousands) | | :-------- | :-------------------- | | 2021 (Apr-Dec) | $27,500 | | 2022 | $80,000 | | 2023 | $387,143 | | 2024 | $458,571 | | 2025 | $296,786 | | Thereafter | $1,100,000 | | **Total** | **$2,350,000** | - Estimated interest and commitment fee payments on long-term debt total **$655.1 million**, and operating lease obligations total **$35.2 million**[156](index=156&type=chunk) - The table excludes purchase commitments for jointly owned fields where the company is not the operator, and commitments for exploration activities (wells, seismic) in petroleum contracts[158](index=158&type=chunk) [Off-Balance Sheet Arrangements](index=40&type=section&id=Off-Balance%20Sheet%20Arrangements) This subsection describes financial arrangements that are not recognized on the balance sheet but may impact the company's financial position - As of March 31, 2021, off-balance sheet arrangements include short-term operating leases and undrawn letters of credit[160](index=160&type=chunk) - There are no other transactions, arrangements, or relationships with unconsolidated entities or other persons that are reasonably likely to materially affect Kosmos' liquidity or capital resources[160](index=160&type=chunk) [Critical Accounting Policies](index=40&type=section&id=Critical%20Accounting%20Policies) This section identifies the accounting policies that require significant judgment and estimates, which could materially impact financial results - Critical accounting policies include revenue recognition, exploration and development costs, receivables, income taxes, derivative instruments and hedging activities, estimates of proved oil and natural gas reserves, asset retirement obligations, leases, and impairment of long-lived assets[161](index=161&type=chunk) - These policies involve significant management estimates that could change materially if different information or assumptions were used[161](index=161&type=chunk) [Cautionary Note Regarding Forward-looking Statements](index=40&type=section&id=Cautionary%20Note%20Regarding%20Forward-looking%20Statements) This section advises readers that the report contains forward-looking statements subject to risks and uncertainties - The report contains estimates and forward-looking statements based on current expectations and estimates of future events and trends, which are subject to several risks and uncertainties[162](index=162&type=chunk) - Key risk factors include the impact of the COVID-19 pandemic, ability to find and develop discoveries, uncertainties in oil and natural gas data, successful implementation of drilling plans, commodity price volatility, and regulatory changes[163](index=163&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=41&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This item provides information on the company's exposure to market risks, particularly commodity price and interest rate fluctuations, and its mitigation strategies [Commodity Price Risk](index=42&type=section&id=Commodity%20Price%20Risk) This subsection analyzes the company's exposure to volatile crude oil prices and the use of derivative contracts to manage this risk - The company's revenues, earnings, cash flows, capital investments, and future growth are highly dependent on volatile crude oil prices, primarily indexed against Dated Brent and Heavy Louisiana Sweet[169](index=169&type=chunk) - Oil derivative contracts (collars, put options, call options, and swaps) are used to mitigate exposure to commodity price risk[170](index=170&type=chunk) - As of March 31, 2021, open commodity derivative instruments were in a net liability position of **$93.5 million**[173](index=173&type=chunk) - A hypothetical **10% price increase** in commodity futures would decrease future pre-tax earnings by **$65.4 million**, while a **10% decrease** would increase earnings by **$59.5 million**[173](index=173&type=chunk) [Interest Rate Sensitivity](index=42&type=section&id=Interest%20Rate%20Sensitivity) This subsection assesses the company's exposure to changes in interest rates on its variable-rate debt - Outstanding borrowings under the Facility, Corporate Revolver, and GoM Term Loan, totaling **$1.25 billion** as of March 31, 2021, are subject to variable interest rates[174](index=174&type=chunk) - A hypothetical **10% increase** in the floating market rate on this variable rate debt would result in an estimated additional **$0.2 million** interest expense per year[174](index=174&type=chunk) - All other long-term indebtedness is fixed rate, not exposing the company to cash flow loss due to changes in market interest rates[174](index=174&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This item reports on the effectiveness of the company's disclosure controls and internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=43&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This subsection confirms the effectiveness of the company's controls designed to ensure accurate and timely disclosure of information - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[175](index=175&type=chunk) - The controls ensure that information required to be disclosed in SEC reports is accurate, complete, and timely[175](index=175&type=chunk) [Evaluation of Changes in Internal Control over Financial Reporting](index=43&type=section&id=Evaluation%20of%20Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This subsection reports on any material changes in the company's internal control over financial reporting during the quarter - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the most recent fiscal quarter[176](index=176&type=chunk) [PART II. OTHER INFORMATION](index=41&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) This item states that there have been no material changes to the legal proceedings previously reported - No material changes from the information concerning legal proceedings discussed in the annual report on Form 10-K[177](index=177&type=chunk) [Item 1A. Risk Factors](index=43&type=section&id=Item%201A.%20Risk%20Factors) This item indicates that there have been no material changes to the risk factors previously disclosed - No material changes from the risk factors discussed in the annual report on Form 10-K for the year ended December 31, 2020[178](index=178&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=43&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item reports no unregistered sales of equity securities or use of proceeds during the period - None reported for unregistered sales of equity securities and use of proceeds[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=43&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item reports no defaults upon senior securities during the period - None reported for defaults upon senior securities[180](index=180&type=chunk) [Item 4. Mine Safety Disclosures](index=43&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that mine safety disclosures are not applicable to the company's operations - Not applicable[181](index=181&type=chunk) [Item 5. Other Information](index=43&type=section&id=Item%205.%20Other%20Information) This item indicates no material changes required to be reported that have not been previously disclosed - No material changes required to be reported under this Item that have not previously been disclosed in the annual report on Form 10-K[182](index=182&type=chunk) [Item 6. Exhibits](index=43&type=section&id=Item%206.%20Exhibits) This item refers to the Index to Exhibits for a comprehensive list of documents filed with the report - The information required by this Item 6 is set forth in the Index to Exhibits accompanying this quarterly report on Form 10-Q[183](index=183&type=chunk) [Signatures](index=44&type=section&id=Signatures) This section confirms the official signing of the report by the authorized financial officer - The report was signed by Neal D. Shah, Senior Vice President and Chief Financial Officer, on May 10, 2021[186](index=186&type=chunk) [Index to Exhibits](index=45&type=section&id=Index%20to%20Exhibits) This index provides a list of all supporting documents accompanying the quarterly report on Form 10-Q - The index lists various exhibits, including an Exit Agreement, Indenture, CEO/CFO Certifications (Sarbanes-Oxley Act), and XBRL Instance, Schema, Calculation, Label, Presentation, and Definition Documents[188](index=188&type=chunk)

4Q 2020 Results NYSE/LSE: KOS February 22 2021 0 Strictly Private and Confidential Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Kosmos Energy Ltd. ("Kosmos" or the "Company") expects, believes or anticip ...

[Glossary and Selected Abbreviations](index=4&type=section&id=Glossary%20and%20Selected%20Abbreviations) This section provides definitions and abbreviations for industry-specific terms used throughout the report, ensuring clarity and consistent understanding of technical and financial terminology - Defines key industry terms such as '2D seismic data,' '3D seismic data,' 'Barrel,' 'Boe,' 'EBITDAX,' 'Proved reserves,' and various financial ratios and operational terms[17](index=17&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk) [Cautionary Statement Regarding Forward‑Looking Statements](index=8&type=section&id=Cautionary%20Statement%20Regarding%20Forward%E2%80%91Looking%20Statements) This section warns readers that the report contains forward-looking statements based on current expectations and estimates, which are subject to significant risks and uncertainties, and actual results may differ materially - Forward-looking statements are based on current expectations and estimates, subject to risks and uncertainties[23](index=23&type=chunk) - Key risk factors include the impact of the COVID-19 pandemic, the ability to find and develop discoveries, uncertainties in oil and natural gas data estimates, successful implementation of drilling plans, and volatility of oil, natural gas, and NGL prices[24](index=24&type=chunk)[27](index=27&type=chunk) [PART I](index=10&type=section&id=PART%20I) [Item 1. Business](index=10&type=section&id=Item%201.%20Business) Kosmos Energy Ltd. is a full-cycle deepwater independent oil and gas exploration and production company focused on Atlantic Margins, with key assets in Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, and gas development in Mauritania and Senegal - Kosmos is a full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins[29](index=29&type=chunk) - The business strategy is designed to maximize the value of producing assets, progress discovered resources toward production, and add new resources through an efficient low-cost exploration program in proven basins[33](index=33&type=chunk) [General Overview](index=10&type=section&id=General%20Overview) Kosmos Energy, founded in 2003, has successfully opened new hydrocarbon basins with major discoveries like the Jubilee field in Ghana (2007) and Greater Tortue Ahmeyim field (2015) - Kosmos successfully opened two new hydrocarbon basins through the discovery of the Jubilee field offshore Ghana in **2007** and the Greater Tortue Ahmeyim field in **2015**[30](index=30&type=chunk) - The business strategy has evolved to focus on production-enhancing in-fill drilling and well work, as well as infrastructure-led exploration, bolstered by acquisitions in Equatorial Guinea (**2017**) and the U.S. Gulf of Mexico (**2018**)[31](index=31&type=chunk) [Our Business Strategy](index=10&type=section&id=Our%20Business%20Strategy) Kosmos's strategy aims to deliver production and free cash flow by maximizing existing assets, developing discovered resources, and conducting efficient exploration - Business strategy focuses on three key objectives: (1) maximize the value of producing assets; (2) progress discovered resources to production; and (3) add new resources through efficient low-cost exploration in proven basins[33](index=33&type=chunk) - The development approach is designed to deliver first production on an accelerated timeline, leverage early learnings, and maximize returns, often employing a phased approach to optimize full-field development[35](index=35&type=chunk) - Exploration activity is focused on proven basins with high-graded infrastructure-led prospects and material play extension opportunities, targeting areas with sufficient size, long-term contract durations, play type diversity, prospect dependency, and attractive fiscal terms[36](index=36&type=chunk) - Committed to industry-leading ESG performance, including a goal to achieve Scope 1 and Scope 2 carbon neutrality by **2030** or sooner, and adherence to TCFD and SASB guidelines[40](index=40&type=chunk)[43](index=43&type=chunk) - Maintains financial discipline with approximately **$570 million** liquidity as of December 31, 2020, and an active commodity hedging program covering approximately **12.0 million barrels** of oil production in 2021[44](index=44&type=chunk)[45](index=45&type=chunk) [Operations by Geographic Area](index=12&type=section&id=Operations%20by%20Geographic%20Area) Kosmos operates in Africa (Ghana, Equatorial Guinea, Mauritania, Senegal, Sao Tome and Principe, South Africa) and the U.S. Gulf of Mexico, generating revenue primarily from Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico - Kosmos currently has operations in Africa (Ghana, Equatorial Guinea, Mauritania, Senegal, Sao Tome and Principe, South Africa) and the U.S. Gulf of Mexico, with operating revenues generated from Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico[46](index=46&type=chunk) 2020 Sales Volumes, Revenue, and Proved Reserves by Geographic Area | Geographic Area | Sales Volumes (MMboe) | Percentage of Total Sales Volumes | Revenue (in thousands) | Estimated Proved Reserves (MMboe) | Percentage of Total Estimated Proved Reserves | | :---------------- | :---------------------- | :-------------------------------- | :--------------------- | :-------------------------------- | :------------------------------------------ | | Ghana | 9.7 | 44 % | $366,515 | 73 | 53 % | | Equatorial Guinea | 4.0 | 18 % | $152,501 | 27 | 19 % | | U.S. Gulf of Mexico | 8.4 | 38 % | $285,017 | 39 | 28 % | | **Total** | **22.1** | **100 %** | **$804,033** | **139** | **100 %** | [Ghana](index=15&type=section&id=Ghana) In Ghana, Kosmos operates in the Jubilee and TEN fields within the Tano Basin, utilizing FPSOs and gas pipelines, with continuous gas export crucial to avoid impacting oil production - Jubilee Field oil production averaged approximately **83,100 Bopd gross** (**19,000 Bopd net**) during 2020[63](index=63&type=chunk) - TEN fields oil production averaged approximately **48,700 Bopd gross** (**7,900 Bopd net**) during 2020[66](index=66&type=chunk) - The Government of Ghana completed the construction and connection of a gas pipeline in **2017** from the Jubilee Field to transport natural gas to the mainland for processing and sale, and inability to continuously export associated natural gas from Jubilee and TEN fields could impact oil production[61](index=61&type=chunk)[67](index=67&type=chunk) [U.S. Gulf of Mexico](index=16&type=section&id=U.S.%20Gulf%20of%20Mexico) Following the 2018 DGE acquisition, Kosmos's U.S. Gulf of Mexico assets averaged ~22,800 Boepd net (~81% oil) from 13 fields in 2020, with ongoing development and exploration activities - U.S. Gulf of Mexico assets averaged approximately **22,800 Boepd net** (**~81% oil**) from 13 fields during 2020[68](index=68&type=chunk) 2020 Net Production from Key U.S. Gulf of Mexico Fields | Field | Net Production (Boepd) | | :--- | :--- | | Odd Job | ~8,100 | | Tornado | ~4,700 | | Marmalard | ~2,200 | | Kodiak | ~3,200 | | South Santa Cruz / Barataria | ~1,700 | [Mauritania and Senegal](index=16&type=section&id=Mauritania%20and%20Senegal) Kosmos has significant gas discoveries in Mauritania and Senegal, with the Greater Tortue Ahmeyim development ~50% complete for Phase 1, targeting 2.5 MMTPA LNG for export by H1 2023 - The Greater Tortue Ahmeyim project Phase 1 was approximately **50% complete** at year-end 2020, with first gas expected in the **first half of 2023**, designed to produce approximately **2.5 million tons per annum (MMTPA)** of LNG[89](index=89&type=chunk) - Significant gas discoveries include BirAllah and Orca in Mauritania, and Yakaar and Teranga in Senegal, which are being analyzed as potential joint developments to support world-scale LNG projects[90](index=90&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) [Equatorial Guinea](index=20&type=section&id=Equatorial%20Guinea) Kosmos holds interests in EG-21, EG-24, S, and W blocks, and the Ceiba Field and Okume Complex, with oil production averaging ~33,600 Bopd gross in 2020 and appraisal ongoing for the Asam discovery - Oil production from the Ceiba Field and Okume Complex averaged approximately **33,600 Bopd gross** (**11,100 Bopd net**) during 2020[98](index=98&type=chunk) - The Asam discovery in Block S (October 2019) encountered **39 meters of net oil pay** and is currently undergoing an appraisal program to establish resource scale and evaluate development solutions, including potential subsea tieback to the Ceiba FPSO[99](index=99&type=chunk) [Sao Tome and Principe](index=20&type=section&id=Sao%20Tome%20and%20Principe) Kosmos operates Block 5 offshore Sao Tome and Principe, an area with potential extension of a proven petroleum system, where a 3D seismic survey was completed in 2017 to refine prospectivity assessments - Kosmos operates Block 5 offshore Sao Tome and Principe, which represents a potential extension of a proven and prolific petroleum system offshore Equatorial Guinea and northern Gabon[100](index=100&type=chunk)[101](index=101&type=chunk) - A 3D seismic survey of approximately **2,500 square kilometers** was completed in August 2017, and the company is compiling an inventory of prospects on the license area[102](index=102&type=chunk) [Republic of South Africa](index=20&type=section&id=Republic%20of%20South%20Africa) Kosmos acquired a 45% non-operated interest in the Northern Cape Ultra Deep block in 2019, completed a 2D seismic survey in January 2021, and is farming down its interest to Shell pending government approval - Kosmos acquired a **45% non-operated interest** in the Northern Cape Ultra Deep block offshore South Africa in September 2019, and a 2D seismic survey was acquired in January 2021, fulfilling the current phase work commitment[103](index=103&type=chunk) - The company entered into an agreement with Shell to farm down its participating interest in the Northern Cape Ultra Deep block, with transfer subject to customary conditions precedent, including approval by The Republic of South Africa, expected during 2021[103](index=103&type=chunk) [Our Reserves](index=21&type=section&id=Our%20Reserves) As of December 31, 2020, Kosmos's total proved reserves were 139 MMBoe, a decrease from 169 MMBoe in 2019, primarily due to 2020 production and lower commodity prices Summary of Oil and Gas Reserves (Net Proved) | Reserves Category | 2020 (MMBoe) | 2019 (MMBoe) | 2018 (MMBoe) | | :---------------- | :----------- | :----------- | :----------- | | Proved developed | 89 | 116 | 91 | | Proved undeveloped | 50 | 53 | 50 | | **Total Kosmos proved reserves** | **139** | **169** | **141** | - Total proved reserves decreased to **139 MMBoe** in 2020 from **169 MMBoe** in 2019, primarily due to 2020 production and lower commodity prices[106](index=106&type=chunk)[108](index=108&type=chunk) - The Greater Tortue Ahmeyim field, which had approximately **100 MMBoe** of proved undeveloped reserves recognized in February 2020, did not have proved reserves recognition as of December 31, 2020, due to the decrease in commodity prices[111](index=111&type=chunk) Estimated Future Net Revenues and Benchmark Prices (December 31, 2020) | Metric | Amount (in millions, except $/Bbl) | | :--- | :--- | | Estimated future net revenues | $1,575 | | PV-10 | $1,234 | | Standardized Measure | $964 | | Benchmark Dated Brent oil price ($/Bbl) | $41.77 | | Benchmark HLS oil price ($/Bbl) | $40.51 | | Benchmark Henry Hub gas price ($/MMBtu) | $1.99 | - Estimated proved reserves are prepared by Ryder Scott Company, L.P. (RSC), an independent reserve engineering firm, in accordance with SEC rules and regulations, using 12-month historical unweighted first-day-of-the-month average prices[119](index=119&type=chunk)[122](index=122&type=chunk)[123](index=123&type=chunk) [Gross and Net Undeveloped and Developed Acreage](index=26&type=section&id=Gross%20and%20Net%20Undeveloped%20and%20Developed%20Acreage) As of December 31, 2020, Kosmos held a total of 10,932 thousand gross acres (4,191 thousand net acres), with 326 thousand gross developed acres and 10,606 thousand gross undeveloped acres Developed and Undeveloped Acreage (December 31, 2020) | Country | Developed Area (Gross Acres) | Developed Area (Net Acres) | Undeveloped Area (Gross Acres) | Undeveloped Area (Net Acres) | Total Area (Gross Acres) | Total Area (Net Acres) | | :-------------------- | :--------------------------- | :------------------------- | :----------------------------- | :--------------------------- | :----------------------- | :--------------------- | | Ghana | 163 | 32 | 34 | 7 | 197 | 39 | | Equatorial Guinea | 65 | 26 | 2,355 | 1,292 | 2,420 | 1,318 | | Mauritania | — | — | 3,882 | 1,085 | 3,882 | 1,085 | | South Africa | — | — | 1,452 | 653 | 1,452 | 653 | | Sao Tome and Principe | — | — | 527 | 310 | 527 | 310 | | Senegal | — | — | 2,116 | 631 | 2,116 | 631 | | U.S. Gulf of Mexico | 98 | 28 | 240 | 127 | 338 | 155 | | **Total** | **326** | **86** | **10,606** | **4,105** | **10,932** | **4,191** | [Productive Wells](index=26&type=section&id=Productive%20Wells) As of December 31, 2020, Kosmos held interests in 151 gross productive wells (49.66 net), all classified as oil wells, across Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico Productive Wells (December 31, 2020) | Geographic Area | Productive Oil Wells (Gross) | Productive Oil Wells (Net) | Total (Gross) | Total (Net) | | :---------------- | :--------------------------- | :------------------------- | :------------ | :---------- | | Ghana | 47 | 10.25 | 47 | 10.25 | | Equatorial Guinea | 82 | 33.13 | 82 | 33.13 | | U.S. Gulf of Mexico | 22 | 6.28 | 22 | 6.28 | | **Total** | **151** | **49.66** | **151** | **49.66** | [Drilling activity](index=27&type=section&id=Drilling%20activity) In 2020, Kosmos had 5 total wells drilled (1 exploratory/appraisal dry, 4 development productive/dry), with 1 actively drilling/completing well and 24 suspended or waiting on completion as of year-end Drilling Activity (Years Ended December 31, 2020, 2019, 2018) | Year Ended December 31, | Exploratory and Appraisal Wells (Gross Productive) | Exploratory and Appraisal Wells (Gross Dry) | Development Wells (Gross Productive) | Development Wells (Gross Dry) | Total Wells (Gross) | | :---------------------- | :----------------------------------------------- | :---------------------------------------- | :----------------------------------- | :---------------------------- | :------------------ | | 2020 | — | 1 | 2 | 2 | 5 | | 2019 | 2 | 1 | 6 | — | 9 | | 2018 | — | 6 | 5 | — | 11 | Wells Actively Drilling/Completing or Suspended/Waiting on Completion (December 31, 2020) | Category | Exploration (Gross) | Development (Gross) | | :--- | :--- | | Actively Drilling or Completing | 1 | 1 | | Wells Suspended or Waiting on Completion | 9 | 15 | | **Total** | **10** | **16** | [Domestic Supply Requirements](index=28&type=section&id=Domestic%20Supply%20Requirements) Host countries in Kosmos's operating areas often have rights to purchase oil/gas for domestic consumption, with Ghana's Jubilee Field providing 131 Bcf of natural gas to GNPC at no cost as of December 31, 2020 - Many petroleum contracts or applicable laws grant host countries the right to purchase certain amounts of oil/gas for domestic consumption at international market prices[139](index=139&type=chunk) - As of December 31, 2020, **131 Bcf** of the first **200 Bcf** of natural gas produced from the Jubilee Field Phase 1 development has been provided to GNPC at no cost[139](index=139&type=chunk) [Significant License Agreements](index=28&type=section&id=Significant%20License%20Agreements) This section details key petroleum contracts and agreements governing Kosmos's operations in Ghana, Mauritania, Senegal, and Equatorial Guinea, including royalty rates, tax rates, contract durations, and unitization agreements - Ghana's WCTP and DT petroleum contracts require a fixed royalty of **5%**, potential sliding-scale additional oil entitlement, and a corporate tax rate of **35%**[141](index=141&type=chunk)[143](index=143&type=chunk) - The Jubilee Field and Greater Tortue Ahmeyim Field are governed by Unitization and Unit Operating Agreements (UUOAs), with participating interests subject to redetermination[146](index=146&type=chunk)[147](index=147&type=chunk) - Mauritania agreements include a **10% carried interest** for SMHPM during exploration, converting to a **10-14% participating interest** upon commercial discovery, with a **27% corporate tax rate**[148](index=148&type=chunk)[149](index=149&type=chunk) - Equatorial Guinea exploration agreements include a **20% carried interest** for GEPetrol during the exploration period, converting to a **20% participating interest** for all development and production operations upon commercial discovery[151](index=151&type=chunk)[152](index=152&type=chunk) [Sales and Marketing](index=30&type=section&id=Sales%20and%20Marketing) Kosmos markets its share of oil production through agents and monthly contracts, and signed the Tortue Phase 1 SPA in Feb 2020 to sell LNG from Greater Tortue Ahmeyim for up to 20 years, with sales price linked to crude oil benchmarks - Kosmos markets its share of Jubilee and TEN production through oil marketing agents and sells U.S. Gulf of Mexico crude oil and natural gas through monthly contracts[153](index=153&type=chunk)[156](index=156&type=chunk) - In February 2020, the Tortue Phase 1 SPA was signed to sell LNG from the Greater Tortue Ahmeyim Field for an initial term of up to **twenty years**, with the sales price set as a percentage of a crude oil price benchmark[159](index=159&type=chunk) - Revenue can be materially affected by current economic conditions and the price of oil, with the COVID-19 pandemic causing significant economic disruption[158](index=158&type=chunk) [Competition](index=31&type=section&id=Competition) The oil and gas industry is highly competitive, with Kosmos facing competition from larger independent and major oil companies for licenses, resources, and personnel, and is subject to volatility, with COVID-19 significantly decreasing oil demand and prices in 2020 - The oil and gas industry is intensely competitive, with Kosmos facing strong competition from other independent operators and major oil companies for licenses, leases, and personnel[160](index=160&type=chunk) - The industry experienced continued volatility, with the impact of COVID-19 decreasing demand for oil and resulting in significant declines in oil prices, with Dated Brent crude ranging from approximately **$13 to $70 per barrel** during 2020[162](index=162&type=chunk) [Title to Property](index=31&type=section&id=Title%20to%20Property) Kosmos believes it holds satisfactory title to its oil and natural gas assets, subject to customary industry burdens and encumbrances that do not materially interfere with asset use or carrying value - Kosmos believes it has satisfactory title to its oil and natural gas assets in accordance with generally accepted international oil and gas industry standards, subject to customary royalty and other interests, liens, and encumbrances[163](index=163&type=chunk) [Environmental Matters](index=32&type=section&id=Environmental%20Matters) Kosmos is subject to stringent environmental, health, and safety laws, requiring permits and potentially restricting operations, and maintains insurance and emergency response plans, including subsea capping and containment equipment - Kosmos is subject to various stringent international, foreign, federal, state, and local environmental, health, and safety laws and regulations, which may require permits, restrict operations, and increase compliance costs[164](index=164&type=chunk)[165](index=165&type=chunk) - The company maintains insurance coverage typical of the industry and has agreements for subsea capping and containment equipment (excluding U.S. Gulf of Mexico) and is a charter member of the Global Dispersant Stockpile[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk) - U.S. Gulf of Mexico operations comply with updated regulations post-2010 incident, including membership in the Helix Well Containment Group (HWCG) and Clean Gulf Associate (CGA) for oil spill response capabilities[174](index=174&type=chunk) [Human Capital Resources](index=34&type=section&id=Human%20Capital%20Resources) Kosmos prioritizes employee health and safety through a comprehensive HSES management system and strong safety culture, fostering an inclusive, entrepreneurial work environment, investing in employee development, and promoting diversity - The health and safety of employees and contractors is a priority, supported by a comprehensive Health, Safety, Environment and Security (HSES) management system and a strong safety culture[175](index=175&type=chunk)[176](index=176&type=chunk) - Kosmos fosters an inclusive culture that promotes entrepreneurial thinking and teamwork, invests in employee development, and achieved **100% local employees** across all host country offices in 2020[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk) - Offers a robust range of employee benefits, including health plans, equity opportunities, savings plans, and an Employee Assistance Program, contributing to a retention rate greater than **95%** in 2020[182](index=182&type=chunk)[183](index=183&type=chunk) [Corporate Information](index=35&type=section&id=Corporate%20Information) Kosmos Energy Ltd. redomesticated from Bermuda to Delaware in December 2018, is listed on the NYSE and LSE under the symbol KOS, and provides SEC and LSE RNS filings on its website - Kosmos Energy Ltd. changed its jurisdiction of incorporation from Bermuda to the State of Delaware in December 2018[184](index=184&type=chunk) - The company is listed on the NYSE and LSE, trading under the ticker symbol **KOS**, and files reports with the SEC and LSE RNS, which are available on its website[185](index=185&type=chunk)[186](index=186&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially affect Kosmos's business, financial condition, results of operations, or cash flows, categorized into those relating to oil and natural gas operations, business and financial condition, regulation, and general risk factors - Risks are categorized into those relating to oil and natural gas operations, business and financial condition, regulation, and general risk factors[189](index=189&type=chunk)[190](index=190&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk) - Key risks include limited proved reserves, substantial uncertainties in estimating discoveries, speculative drilling, inability of third parties to meet obligations, redetermination of unit interests, and reduced control over non-operated assets[197](index=197&type=chunk)[199](index=199&type=chunk)[201](index=201&type=chunk)[210](index=210&type=chunk)[213](index=213&type=chunk)[215](index=215&type=chunk) - Financial risks include substantial additional capital requirements, potential write-downs of asset carrying values due to price decreases, deterioration in credit or equity markets, and restrictive covenants in debt facilities[252](index=252&type=chunk)[258](index=258&type=chunk)[264](index=264&type=chunk)[271](index=271&type=chunk) - Regulatory and political risks include adverse effects from political and economic circumstances, changes in laws and regulations (e.g., U.S. federal government orders on oil and gas leases, stricter environmental standards), and potential liabilities under anti-corruption laws[296](index=296&type=chunk)[297](index=297&type=chunk)[307](index=307&type=chunk)[315](index=315&type=chunk) [Item 1B. Unresolved Staff Comments](index=65&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) No unresolved staff comments were reported - The registrant has no unresolved staff comments[332](index=332&type=chunk) [Item 2. Properties](index=65&type=section&id=Item%202.%20Properties) This item refers to the 'Item 1. Business' section for details on properties and notes various operating leases for office space, equipment, and vehicles - Information regarding properties is incorporated by reference from 'Item 1. Business'[333](index=333&type=chunk) - The company has various operating leases for rental of office space, office and field equipment, and vehicles[333](index=333&type=chunk) [Item 3. Legal Proceedings](index=65&type=section&id=Item%203.%20Legal%20Proceedings) Kosmos is occasionally involved in legal and regulatory proceedings in the normal course of business, with management believing no pending matter would have a material effect on financial condition or cash flows, though an unfavorable outcome could impact results for a specific period - The company may be involved in various legal and regulatory proceedings arising in the normal course of business[334](index=334&type=chunk) - Management believes that an adverse result in any pending legal or regulatory proceeding, individually or in the aggregate, would not be material to the consolidated financial condition or cash flows, but an unfavorable outcome could have a material adverse effect on results of operations for a specific interim period or year[334](index=334&type=chunk) [Item 4. Mine Safety Disclosures](index=65&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - No mine safety disclosures are applicable[335](index=335&type=chunk) [PART II](index=66&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=66&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Kosmos's common stock trades on the NYSE and LSE under KOS, with 104 record holders as of Feb 19, 2021, and a closing price of $2.74 per share on NYSE, with dividends suspended in March 2020 and no shares repurchased in 2020 - Kosmos's common stock is traded on the NYSE and LSE under the symbol **KOS**[338](index=338&type=chunk) - As of February 19, 2021, the number of holders of record of Kosmos's common stock was **104**, and the last reported sale price on the NYSE was **$2.74 per share**[339](index=339&type=chunk) - In March 2020, the Board of Directors decided to suspend the dividend in response to economic conditions, including oil price volatility and the impact of the COVID-19 pandemic[340](index=340&type=chunk) - During 2020, there were no shares purchased by the issuer[341](index=341&type=chunk) Cumulative Total Stockholder Return (5-year period ended Dec 31, 2020) | Index | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Kosmos Energy Ltd. (KOS) | $100.00 | $134.81 | $131.73 | $78.27 | $112.96 | $47.38 | | S&P 500 (SPX) | $100.00 | $111.95 | $136.38 | $130.39 | $171.44 | $202.96 | | Dow Jones U.S. Exploration & Production Index (DWCEXP) | $100.00 | $125.71 | $126.06 | $101.73 | $112.20 | $74.30 | [Item 6. Selected Financial Data](index=68&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of selected consolidated financial information, including statements of operations, balance sheets, and cash flows, highlighting key trends in revenue, expenses, assets, liabilities, and cash generation Consolidated Statements of Operations Information (Years Ended December 31, 2020-2016) | Metric (in thousands, except per share data) | 2020 | 2019 | 2018 | 2017 | 2016 | | :---------------------------------------- | :--- | :--- | :--- | :--- | :--- | | Oil and gas revenue | $804,033 | $1,499,416 | $886,666 | $578,139 | $310,377 | | Total revenues and other income | $896,198 | $1,509,909 | $902,369 | $636,836 | $385,355 | | Total costs and expenses | $1,312,993 | $1,484,792 | $953,229 | $814,691 | $679,919 | | Net loss | $(411,586) | $(55,777) | $(93,991) | $(222,792) | $(283,780) | | Basic Net loss per share | $(1.02) | $(0.14) | $(0.23) | $(0.57) | $(0.74) | | Diluted Net loss per share | $(1.02) | $(0.14) | $(0.23) | $(0.57) | $(0.74) | | Dividends declared per common share | $0.0452 | $0.1808 | $— | $— | $— | Consolidated Balance Sheets Information (December 31, 2020-2016) | Metric (in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :-------------------- | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $149,027 | $224,502 | $173,515 | $233,412 | $194,057 | | Total current assets | $400,291 | $566,557 | $509,700 | $533,602 | $475,187 | | Total property and equipment, net | $3,320,913 | $3,642,332 | $3,459,701 | $2,317,828 | $2,708,892 | | Total assets | $3,867,593 | $4,317,232 | $4,088,189 | $3,192,603 | $3,341,465 | | Total current liabilities | $460,199 | $539,101 | $384,308 | $428,730 | $370,025 | | Total long-term liabilities | $2,967,240 | $2,936,429 | $2,762,403 | $1,866,761 | $1,890,241 | | Total shareholders' equity | $440,154 | $841,702 | $941,478 | $897,112 | $1,081,199 | | Total liabilities and shareholders' equity | $3,867,593 | $4,317,232 | $4,088,189 | $3,192,603 | $3,341,465 | Consolidated Statements of Cash Flows Information (Years Ended December 31, 2020-2016) | Metric (in thousands) | 2020 | 2019 | 2018 | 2017 | 2016 | | :-------------------- | :--- | :--- | :--- | :--- | :--- | | Net cash provided by (used in) Operating activities | $196,145 | $628,150 | $260,491 | $236,617 | $52,077 | | Net cash provided by (used in) Investing activities | $(345,587) | $(363,931) | $(985,138) | $(152,565) | $(537,763) | | Net cash provided by (used in) Financing activities | $69,860 | $(220,489) | $605,277 | $(52,261) | $448,019 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=70&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Kosmos's financial performance and condition, highlighting the significant impact of the COVID-19 pandemic on oil demand and prices in 2020, leading to operational delays, program deferrals, asset impairments, and a net loss - The COVID-19 pandemic significantly impacted Kosmos's business operations in 2020, leading to project delays, program suspensions, and asset impairments[352](index=352&type=chunk)[353](index=353&type=chunk)[356](index=356&type=chunk) - The company reported a net loss of **$411.6 million** in 2020, primarily due to lower oil and gas revenue and **$154.0 million** in asset impairments[347](index=347&type=chunk)[380](index=380&type=chunk)[387](index=387&type=chunk) - Liquidity was approximately **$570 million** as of December 31, 2020, with a 2021 capital budget of **$225-$275 million** (excluding Mauritania/Senegal) and an additional **$350 million** for Mauritania/Senegal development[44](index=44&type=chunk)[399](index=399&type=chunk)[401](index=401&type=chunk) [Overview](index=70&type=section&id=Overview) Kosmos is a deepwater E&P company with assets across Atlantic Margins, where the COVID-19 pandemic in 2020 caused significant volatility, uncertainty, and economic disruption, impacting operations, delaying projects, and leading to asset impairments and a dividend suspension - Kosmos is a full-cycle deepwater independent oil and gas exploration and production company focused along the Atlantic Margins, with key assets in Ghana, Equatorial Guinea, and the U.S. Gulf of Mexico, as well as a world-class gas development offshore Mauritania and Senegal[351](index=351&type=chunk) - The COVID-19 pandemic in 2020 resulted in travel restrictions, supply chain impacts, delays to operational projects (e.g., Ghana Jubilee CALM buoy, Ghana drilling program, Kodiak in-fill well completion, Greater Tortue Ahmeyim Phase 1 development), deferral of the Equatorial Guinea drilling program, suspension of the quarterly dividend, and **$154.0 million** in asset impairments[352](index=352&type=chunk)[353](index=353&type=chunk)[356](index=356&type=chunk) [Recent Developments](index=72&type=section&id=Recent%20Developments) Recent developments include a $96.0 million farm-down agreement with Shell for frontier exploration assets, a $200.0 million GoM Term Loan, and operational updates across regions, with Ghana production averaging 131,800 Bopd gross in 2020 and Greater Tortue Ahmeyim Phase 1 project 50% complete - Kosmos entered into an agreement with Shell to farm down interests in a portfolio of frontier exploration assets for cash consideration of **$96.0 million**, resulting in a gain on sale of assets of **$92.1 million** in 2020[357](index=357&type=chunk) - The company secured a five-year **$200.0 million** senior secured term-loan credit agreement (GoM Term Loan) against its U.S. Gulf of Mexico assets, which included the conversion of a **$50 million** production prepayment from Trafigura[358](index=358&type=chunk) - Ghana production averaged **131,800 Bopd gross** (**26,900 Bopd net**) during 2020, with Jubilee at approximately **83,100 Bopd gross** and TEN at approximately **48,700 Bopd gross**[359](index=359&type=chunk) - U.S. Gulf of Mexico production averaged approximately **22,800 Boepd net** in 2020; the Winterfell exploration well was successfully drilled in Q4 2020, encountering approximately **26 meters of net oil pay**[360](index=360&type=chunk)[365](index=365&type=chunk) - Equatorial Guinea production averaged approximately **33,600 Bopd gross** (**11,100 Bopd net**) for 2020, and extensions to the current exploration phase for Blocks S, W, 21, and 24 were approved[368](index=368&type=chunk) - Phase 1 of the Greater Tortue Ahmeyim project was approximately **50% complete** at year-end 2020, with first gas expected in the **first half of 2023**[370](index=370&type=chunk) [Results of Operations](index=75&type=section&id=Results%20of%20Operations) In 2020, oil and gas revenue decreased by $695.4 million (46.4%) to $804.0 million due to lower production and oil prices, leading to a net loss of $411.6 million, significantly higher than the $55.8 million loss in 2019, primarily driven by the revenue decline and a $154.0 million impairment of long-lived assets Sales Volumes and Revenues (Years Ended December 31, 2020 vs. 2019) | Metric | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Oil (MBbl) | 20,531 | 23,331 | -12.0% | | Gas (MMcf) | 5,867 | 6,323 | -7.2% | | NGL (MBbl) | 602 | 548 | +9.9% | | Total (MBoe) | 22,111 | 24,933 | -11.3% | | Total (Boepd) | 60,412 | 68,309 | -11.5% | | Oil sales (in thousands) | $786,159 | $1,475,706 | -46.7% | | Gas sales (in thousands) | $11,706 | $15,599 | -25.0% | | NGL sales (in thousands) | $6,168 | $8,111 | -24.0% | | **Total revenues (in thousands)** | **$804,033** | **$1,499,416** | **-46.4%** | Average Sales Prices and Costs per Boe (Years Ended December 31, 2020 vs. 2019) | Metric | 2020 | 2019 | Change (YoY) | | :--- | :--- | :--- | :--- | | Average oil sales price per Bbl | $38.29 | $63.25 | -39.4% | | Average gas sales price per Mcf | $2.00 | $2.47 | -19.1% | | Average NGL sales price per Bbl | $10.25 | $14.80 | -30.8% | | Average total sales price per Boe | $36.36 | $60.14 | -39.5% | | Total oil and gas production costs per Boe | $15.31 | $16.15 | -5.2% | | Depletion, depreciation and amortization per Boe | $21.97 | $22.62 | -2.8% | | **Total costs per Boe** | **$37.28** | **$38.77** | **-3.8%** | - Net loss for 2020 was **$411.6 million**, compared to a net loss of **$55.8 million** in 2019, primarily due to a **$695.4 million** decrease in oil and gas revenue and a **$154.0 million** impairment of long-lived assets[380](index=380&type=chunk)[387](index=387&type=chunk) - Exploration expenses decreased by **$96.3 million** and general and administrative costs decreased by **$37.9 million** in 2020, primarily due to lower unsuccessful well costs, geological, geophysical and seismic costs, and headcount reductions[384](index=384&type=chunk)[385](index=385&type=chunk) [Liquidity and Capital Resources](index=78&type=section&id=Liquidity%20and%20Capital%20Resources) Kosmos manages liquidity through cash flows, equity/debt issuances, and partner carries, with total liquidity of $569.0 million as of Dec 31, 2020, and a 2021 capital budget of $225-$275 million (excluding Mauritania/Senegal) plus $350 million for Mauritania/Senegal, funded by working capital and refinancing - As of December 31, 2020, total liquidity (available borrowings plus cash and cash equivalents) was approximately **$569.0 million**[399](index=399&type=chunk) - The 2021 capital budget is estimated at **$225 - $275 million** (excluding Mauritania and Senegal) and approximately **$350 million** for Mauritania and Senegal, expected to be funded from working capital and proceeds from refinancing[401](index=401&type=chunk) - The Facility's available borrowing base was reduced to approximately **$1.32 billion** in October 2020, with semi-annual redeterminations agreed to begin in March 2021[395](index=395&type=chunk)[396](index=396&type=chunk) - The debt cover ratio covenant in the Facility and Corporate Revolver was amended in July 2020 to be less restrictive (up to a maximum of **4.75x**) through December 31, 2021, due to the impact of COVID-19 on oil prices[411](index=411&type=chunk)[416](index=416&type=chunk) Sources and Uses of Cash (Years Ended December 31, 2020, 2019, 2018) | Metric (in thousands) | 2020 | 2019 | 2018 | | :-------------------- | :--- | :--- | :--- | | Net cash provided by operating activities | $196,145 | $628,150 | $260,491 | | Net proceeds from issuance of senior notes | $— | $641,875 | $— | | Borrowings under long-term debt | $300,000 | $175,000 | $1,175,000 | | Payments on long-term debt | $(250,000) | $(425,000) | $(325,000) | | Oil and gas assets (investing) | $(377,491) | $(340,217) | $(213,806) | Contractual Obligations (December 31, 2020) | Obligation | Total (in thousands) | 2021 (in thousands) | 2022 (in thousands) | 2023 (in thousands) | 2024 (in thousands) | 2025 (in thousands) | Thereafter (in thousands) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Principal debt repayments | $2,150,000 | $7,500 | $258,571 | $458,571 | $458,572 | $316,786 | $650,000 | | Interest payments on long-term debt | $466,436 | $113,603 | $108,561 | $91,972 | $75,364 | $53,780 | $23,156 | | Operating leases | $36,067 | $3,307 | $4,216 | $4,287 | $4,358 | $4,429 | $15,470 | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=83&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Kosmos is exposed to market risks primarily from changes in commodity prices (oil and natural gas) and interest rates, using derivative contracts (collars, puts, calls, swaps) to mitigate these risks, though none are designated as hedges for accounting purposes - The primary objective is to provide forward-looking quantitative and qualitative information about potential exposure to market risks, specifically changes in commodity prices and interest rates[460](index=460&type=chunk) - Kosmos enters into various oil derivative contracts (collars, put options, call options, and swaps) to mitigate exposure to commodity price risk associated with anticipated future oil production, with approximately **12.0 million barrels** of 2021 production hedged as of December 31, 2020[45](index=45&type=chunk)[464](index=464&type=chunk)[629](index=629&type=chunk) - As of December 31, 2020, open commodity derivative instruments were in a net liability position of **$19.7 million**, and a hypothetical **10% price increase** in commodity futures would decrease future pre-tax earnings by approximately **$54.2 million**, while a **10% price decrease** would increase earnings by approximately **$44.1 million**[468](index=468&type=chunk) - Outstanding borrowings under the Facility, Corporate Revolver, and GoM Term Loan, totaling **$1.5 billion** as of December 31, 2020, are subject to variable interest rates, and a hypothetical **10% increase** in the floating market rate would result in an estimated additional **$0.4 million** interest expense per year[470](index=470&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=92&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Kosmos Energy Ltd.'s audited consolidated financial statements, including balance sheets, statements of operations, shareholders' equity, and cash flows for the years ended December 31, 2020, 2019, and 2018, along with detailed notes and unaudited supplemental oil and gas data - Item 8 presents Kosmos Energy Ltd.'s audited consolidated financial statements for the years ended December 31, 2020, 2019, and 2018, along with detailed notes and unaudited supplemental oil and gas data[476](index=476&type=chunk) - The Reports of Independent Registered Public Accounting Firm (Ernst & Young LLP) expressed an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting[476](index=476&type=chunk)[477](index=477&type=chunk)[495](index=495&type=chunk) - Critical audit matters identified include depletion of proved oil and natural gas properties, asset retirement obligations, and impairment of long-lived assets, all involving significant management judgment and the work of independent reserve engineers[482](index=482&type=chunk)[486](index=486&type=chunk)[489](index=489&type=chunk) [Consolidated Balance Sheets](index=97&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show total assets of $3,867.6 million and total liabilities of $3,427.4 million as of December 31, 2020, resulting in total shareholders' equity of $440.2 million Consolidated Balance Sheets (December 31, 2020 vs. 2019) | Metric (in thousands) | 2020 | 2019 | Change (YoY) | | :-------------------- | :--- | :--- | :--- | | Cash and cash equivalents | $149,027 | $224,502 | -33.6% | | Total current assets | $400,291 | $566,557 | -29.4% | | Oil and gas properties, net | $3,310,276 | $3,624,751 | -8.5% | | Total assets | $3,867,593 | $4,317,232 | -10.4% | | Total current liabilities | $460,199 | $539,101 | -14.7% | | Total long-term liabilities | $2,967,240 | $2,936,429 | +1.0% | | Total liabilities | $3,427,439 | $3,475,530 | -1.4% | | Total stockholders' equity | $440,154 | $841,702 | -47.7% | [Consolidated Statements of Operations](index=98&type=section&id=Consolidated%20Statements%20of%20Operations) For the year ended December 31, 2020, Kosmos reported total revenues and other income of $896.2 million, a significant decrease from $1,509.9 million in 2019, leading to a net loss of $411.6 million, compared to a net loss of $55.8 million in 2019 Consolidated Statements of Operations (Years Ended December 31, 2020, 2019, 2018) | Metric (in thousands, except per share data) | 2020 | 2019 | 2018 | | :---------------------------------------- | :--- | :--- | :--- | | Oil and gas revenue | $804,033 | $1,499,416 | $886,666 | | Total revenues and other income | $896,198 | $1,509,909 | $902,369 | | Total costs and expenses | $1,312,993 | $1,484,792 | $953,229 | | Net loss | $(411,586) | $(55,777) | $(93,991) | | Basic Net loss per share | $(1.02) | $(0.14) | $(0.23) | | Diluted Net loss per share | $(1.02) | $(0.14) | $(0.23) | [Consolidated Statements of Shareholders' Equity](index=99&type=section&id=Consolidated%20Statements%20of%20Shareholders%27%20Equity) Total shareholders' equity decreased from $841.7 million at December 31, 2019, to $440.2 million at December 31, 2020, primarily due to the net loss of $411.6 million and dividends declared Consolidated Statements of Shareholders' Equity (December 31, 2020, 2019, 2018) | Metric (in thousands) | 2020 | 2019 | 2018 | | :-------------------- | :--- | :--- | :--- | | Common Stock | $4,497 | $4,458 | $4,429 | | Additional paid-in capital | $2,307,220 | $2,297,221 | $2,341,249 | | Accumulated deficit | $(1,634,556) | $(1,222,970) | $(1,167,193) | | Treasury stock | $(237,007) | $(237,007) | $(237,007) | | **Total shareholders' equity** | **$440,154** | **$841,702** | **$941,478** | - The accumulated deficit increased from **$(1,222,970) thousand** in 2019 to **$(1,634,556) thousand** in 2020, primarily due to the net loss incurred[508](index=508&type=chunk) [Consolidated Statements of Cash Flows](index=100&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities decreased to $196.1 million in 2020 from $628.2 million in 2019, primarily due to lower production and oil prices, with investing activities using $345.6 million and financing activities providing $69.9 million in 2020 Consolidated Statements of Cash Flows (Years Ended December 31, 2020, 2019, 2018) | Metric (in thousands) | 2020 | 2019 | 2018 | | :-------------------- | :--- | :--- | :--- | | Net cash provided by operating activities | $196,145 | $628,150 | $260,491 | | Net cash used in investing activities | $(345,587) | $(363,931) | $(985,138) | | Net cash provided by (used in) financing activities | $69,860 | $(220,489) | $605,277 | | Cash, cash equivalents and restricted cash at end of period | $149,764 | $229,346 | $185,616 | - The decrease in cash provided by operating activities in 2020 compared to 2019 is primarily a result of lower production across assets and lower oil prices stemming from the COVID-19 pandemic[397](index=397&type=chunk) [Notes to Consolidated Financial Statements](index=101&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures on Kosmos's accounting policies, including principles of consolidation, use of estimates, cash and restricted cash, receivables, inventories, leases, exploration and development costs, depletion/depreciation/amortization, asset retirement obligations, impairment of long-lived assets, derivative instruments, revenue recognition, equity-based compensation, restructuring charges, income taxes, and foreign currency translation - The company follows the successful efforts method of accounting for its oil and gas properties, capitalizing acquisition costs for proved and unproved properties and expensing exploration costs as incurred[536](index=536&type=chunk) - Asset retirement obligations totaled **$251.4 million** as of December 31, 2020, reflecting the estimated present value of dismantlement, removal, site reclamation, and similar activities associated with oil and gas properties[486](index=486&type=chunk)[646](index=646&type=chunk) - Kosmos recorded asset impairments totaling **$154.0 million** during 2020 for oil and gas proved properties in the U.S. Gulf of Mexico, primarily due to the impact of COVID-19 on oil demand and prices[387](index=387&type=chunk)[645](index=645&type=chunk) - Total outstanding debt principal balances as of December 31, 2020, were **$2.15 billion**, comprising **$1.2 billion** under the Facility, **$100.0 million** under the Corporate Revolver, **$650.0 million** in Senior Notes, and **$200.0 million** under the GoM Term Loan[595](index=595&type=chunk) - The company has foreign net operating loss carryforwards of **$105.9 million** and United States net operating losses of **$540.1 million** as of December 31, 2020, with valuation allowances against certain deferred tax assets[662](index=662&type=chunk) [Supplemental Oil and Gas Data (Unaudited)](index=137&type=section&id=Supplemental%20Oil%20and%20Gas%20Data%20(Unaudited)) This unaudited section provides detailed information on Kosmos's net proved oil and gas reserves, capitalized costs, and costs incurred in oil and gas activities, along with the standardized measure of discounted future net cash flows, with reserve estimates prepared by independent petroleum engineers (RSC) using SEC guidelines Net Proved Developed and Undeveloped Reserves (December 31, 2020, 2019, 2018) | Reserves Category | 2020 (MMBoe) | 2019 (MMBoe) | 2018 (MMBoe) | | :---------------- | :----------- | :----------- | :----------- | | Net proved developed and undeveloped reserves | 139 | 169 | 166 | | Proved developed reserves | 89 | 116 | 116 | | Proved undeveloped reserves | 50 | 53 | 51 | - Net proved reserves were calculated utilizing the twelve-month unweighted arithmetic average of the first-day-of-the-month oil price for each month based on the respective benchmark price in the period January through December 2020, adjusted for crude handling, transportation fees, quality, and regional price differential[704](index=704&type=chunk) Capitalized Costs Related to Oil and Gas Activities (As of December 31, 2020, 2019) | Category (in millions) | 2020 | 2019 | | :--------------------- | :--- | :--- | | Unproved properties | $495 | $814 | | Proved properties | $5,370 | $4,905 | | Accumulated depletion | $(2,555) | $(2,094) | | **Net capitalized costs** | **$3,310** | **$3,625** | Standardized Measure of Discounted Future Net Cash Flows (December 31, 2020, 2019, 2018) | Metric (in millions) | 2020 | 2019 | 2018 | | :------------------- | :--- | :--- | :--- | | Future cash inflows | $5,021 | $9,401 | $10,568 | | Future production costs | $(2,023) | $(2,670) | $(2,534) | | Future development costs | $(1,423) | $(1,529) | $(1,773) | | Future tax expenses | $(389) | $(1,466) | $(1,847) | | Future net cash flows | $1,186 | $3,736 | $4,414 | | 10% annual discount | $(222) | $(917) | $(1,113) | | **Standardized measure of discounted future net cash flows** | **$964** | **$2,819** | **$3,301** | [Supplemental Quarterly Financial Information (Unaudited)](index=143&type=section&id=Supplemental%20Quarterly%20Financial%20Information%20(Unaudited)) This unaudited section provides quarterly financial data for 2020 and 2019, including revenues, costs, and net income (loss) per share, showing significant quarterly fluctuations Quarterly Financial Information (2020) | Quarter Ended | Revenues and other income (in thousands) | Costs and expenses (in thousands) | Net income (loss) (in thousands) | Basic Net income (loss) per share | Diluted Net income (loss) per share | | :------------ | :------------------------------------- | :-------------------------------- | :------------------------------- | :-------------------------------- | :---------------------------------- | | March 31 | $177,781 | $295,005 | $(182,767) | $(0.45) | $(0.45) | | June 30 | $127,314 | $374,130 | $(199,391) | $(0.49) | $(0.49) | | September 30 | $224,787 | $261,279 | $(37,384) | $(0.09) | $(0.09) | | December 31 | $366,316 | $382,579 | $7,956 | $0.02 | $0.02 | Quarterly Financial Information (2019) | Quarter Ended | Revenues and other income (in thousands) | Costs and expenses (in thousands) | Net income (loss) (in thousands) | Basic Net income (loss) per share | Diluted Net income (loss) per share | | :------------ | :------------------------------------- | :-------------------------------- | :------------------------------- | :-------------------------------- | :---------------------------------- | | March 31 | $296,790 | $358,370 | $(52,906) | $(0.13) | $(0.13) | | June 30 | $395,934 | $346,495 | $16,837 | $0.04 | $0.04 | | September 30 | $356,970 | $317,435 | $16,065 | $0.04 | $0.04 | | December 31 | $460,215 | $462,492 | $(35,773) | $(0.09) | $(0.09) | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=137&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) No changes in or disagreements with accountants on accounting and financial disclosure were reported - No changes in and disagreements with accountants on accounting and financial disclosure were reported[721](index=721&type=chunk) [Item 9A. Controls and Procedures](index=137&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020, with no material changes in internal control over financial reporting during the most recent fiscal quarter, and Ernst & Young LLP attested to the effectiveness of internal control over financial reporting - Management, including the Chief Executive Officer and Chief Financial Officer, concluded that the company's disclosure controls and procedures were effective as of December 31, 2020[722](index=722&type=chunk) - There were no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, internal control over financial reporting during the most recent fiscal quarter[723](index=723&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an attestation report on the effectiveness of internal control over financial reporting as of December 31, 2020, expressing an unqualified opinion[726](index=726&type=chunk)[477](index=477&type=chunk) [Item 9B. Other Information](index=137&type=section&id=Item%209B.%20Other%20Information) No other information required pursuant to Section 13(r) of the Securities Exchange Act of 1934 was applicable - No disclosures required pursuant to Section 13(r) of the Securities Exchange Act of 1934 were applicable[726](index=726&type=chunk) [PART III](index=138&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=138&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the 2021 Proxy Statement - The information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2020[728](index=728&type=chunk) [Item 11. Executive Compensation](index=138&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the 2021 Proxy Statement - The information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2020[729](index=729&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=138&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from the 2021 Proxy Statement - The information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2020[730](index=730&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=138&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information for this item is incorporated by reference from the 2021 Proxy Statement - The information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2020[731](index=731&type=chunk) [Item 14. Principal Accounting Fees and Services](index=138&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information for this item is incorporated by reference from the 2021 Proxy Statement - The information required by this item is incorporated by reference from the Proxy Statement for the Annual Meeting of Shareholders which will be filed with the Securities and Exchange Commission not later than 120 days subsequent to December 31, 2020[732](index=732&type=chunk) [PART IV](index=138&type=section&id=PART%20IV) [Item 15. Exhibits, Financial Statement Schedules](index=138&type=section&id=Item%2015.%20Exhibits,%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules (including condensed parent company financial statements and valuation and qualifying accounts), and exhibits filed as part of the report - The report includes consolidated financial statements, Schedule I (Condensed Parent Company Financial Statements), and Schedule II (Valuation and Qualifying Accounts)[734](index=734&type=chunk)[735](index=735&type=chunk)[747](index=747&type=chunk)[748](index=748&type=chunk) - The Parent Company's condensed financial statements are prepared in accordance with Rule 12-04, Schedule I of Regulation S-X, with the investment in subsidiaries recorded using the equity basis of accounting[736](index=736&type=chunk) [Item 16. Form 10-K Summary](index=150&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K Summary is provided - No Form 10-K Summary is provided in this report[750](index=750&type=chunk)

Kosmos Energy Ltd. (NYSE:KOS) Q4 2020 Earnings Conference Call February 22, 2021 11:00 AM ET Company Participants Jamie Buckland – Vice President-Investor Relations Andy Inglis – Chairman and Chief Executive Officer Neal Shah – Senior Vice President and Chief Financial Officer Conference Call Participants Charles Meade – Johnson Rice Neil Mehta – Goldman Sachs Bob Brackett – Bernstein Research James Carmichael – Berenberg Mark Wilson – Jefferies Nick Stefanou – Renaissance Capital Richard Tullis – Capital O ...

3Q 2020 Results NYSE/LSE: KOS November 9 2020 0 Strictly Private and Confidential Disclaimer Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, included in this presentation that address activities, events or developments that Kosmos Energy Ltd. ("Kosmos" or the "Company") expects, believes or anticipa ...

Kosmos Energy Ltd. (NYSE:KOS) Q3 2020 Earnings Conference Call November 9, 2020 11:00 AM ET Company Participants Jamie Buckland - Vice President of Investor Relations Andy Inglis - Chairman & Chief Executive Officer Neal Shah - Senior Vice President & Chief Financial Officer Conference Call Participants Charles Meade - Johnson Rice & Company David Round - BMO Capital Markets Neil Mehta - Goldman Sachs Bob Brackett - Bernstein Research Nikolas Stefanou - Renaissance Capital James Hosie - Barclays Richard Tul ...