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Financial report summary
?Risks
- We have limited proved reserves and areas that we decide to drill may not yield oil and natural gas in commercial quantities or quality, or at all.
- We face substantial uncertainties in estimating the characteristics of our discoveries and our prospects.
- Drilling wells is speculative, often involving significant costs that may be more than we estimate, and may not result in any discoveries or additions to our future production or reserves. Any material inaccuracies in drilling costs, estimates or underlying assumptions will materially affect our business.
- Development drilling may not result in commercially productive quantities of oil and gas reserves.
- Our identified drilling and infrastructure locations are scheduled out over time, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling or infrastructure installation or modification.
- Under the terms of certain of our petroleum contracts, we are contractually obligated to drill wells and declare any discoveries in order to retain exploration and production rights. In the competitive market for our license areas, failure to drill these wells or declare any discoveries may result in substantial license renewal costs or loss of our interests in the undeveloped parts of our license areas, which may include certain of our prospects or undeveloped discoveries.
- The inability of one or more third parties who contract with us to meet their obligations to us may adversely affect our financial results.
- The unit partners’ respective interests in the Jubilee Unit and Greater Tortue Ahmeyim Unit are subject to redetermination and our interests in each such unit may decrease as a result.
- We are not, and may not be in the future, the operator on all of our license areas and facilities and do not, and may not in the future, hold all of the working interests in certain of our license areas. Therefore, we have reduced control over the timing of exploration or development efforts, associated costs, and the rate of production of any non‑operated and to an extent, any non‑wholly-owned, assets.
- Our estimated proved reserves are based on many assumptions that may turn out to be inaccurate. Any significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
- The present value of future net revenues from our proved reserves will not necessarily be the same as the current market value of our estimated oil and natural gas reserves.
- We may not be able to commercialize our interests in any natural gas produced from our license areas.
- Our inability to access appropriate equipment and infrastructure in a timely manner may hinder our access to oil and natural gas markets or delay our oil and natural gas production.
- We are subject to numerous risks inherent to the exploration and production of oil and natural gas.
- We are subject to drilling and other operational and environmental risks and hazards.
- Our operations may be materially adversely affected by weather-related events, including, but not limited to, tropical storms and hurricanes, and the physical effects of climate change.
- The development schedule of oil and natural gas projects, including the availability and cost of drilling rigs, equipment, supplies, personnel and oilfield services, is subject to delays and cost overruns.
- Our offshore and deepwater operations involve special risks that could adversely affect our results of operations.
- We had, and continue to have, disagreements with certain host governments and contractual counterparties regarding certain of our rights and responsibilities and may have future disagreements with our host governments and/or contractual counterparties.
- The geographic locations of our licenses in Africa and the U.S. Gulf of Mexico subject us to a risk of loss of revenue or curtailment of production from factors specifically affecting those areas.
- A substantial or extended decline in both global and local oil and natural gas prices may adversely affect our business, financial condition and results of operations.
- Our business plan requires substantial additional capital, which we may be unable to raise on acceptable terms or at all in the future, which may in turn limit our ability to develop our exploration, appraisal, development and production activities.
- We may be required to take write‑downs of the carrying values of our oil and natural gas assets due to decreases in the estimated future net cash flows from our operations, which may occur as a result of decreases in oil and natural gas prices, poor field performance, increased expenditures or changes in the timing or amount of investment, among other things, and such decreases could result in reduced availability under our corporate revolver and commercial debt facility.
- We face various risks associated with increased activism against, or change in public sentiment for, oil and gas exploration development, and production activities and ESG considerations, including climate change and the transition to a lower carbon economy.
- Outbreaks of disease may adversely affect our business operations and financial condition.
- Deterioration in the credit or equity markets could adversely affect us.
- We may incur substantial losses and become subject to liability claims as a result of future oil and natural gas operations, for which we may not have adequate insurance coverage.
- Slower global economic growth rates may materially adversely impact our operating results and financial position.
- Increased costs and availability of capital could adversely affect our business.
- Our derivative activities could result in financial losses or could reduce our income.
- Our commercial debt facility, revolving credit facility and the indentures governing our Senior Notes contain certain covenants that may inhibit our ability to make certain investments, incur additional indebtedness and engage in certain other transactions, which could adversely affect our ability to meet our future goals.
- Provisions of our Senior Notes could discourage an acquisition of us by a third-party.
- Our level of indebtedness may increase and thereby reduce our financial flexibility.
- We are a holding company and our ability to make payments on our outstanding indebtedness, including our Senior Notes, is dependent upon the receipt of funds from our subsidiaries by way of dividends, fees, interest, loans or otherwise.
- We may be subject to risks in connection with acquisitions and the integration of acquisitions may be difficult.
- If we fail to realize the anticipated benefits of acquisitions, our results of operations may be adversely affected.
- A cyber incident, including a breach of digital security, could result in information theft, data corruption, operational disruption, and/or financial loss.
- Our ability to utilize net operating loss carryforwards may be subject to certain limitations.
- Our business, operations and financial condition may be directly and indirectly adversely affected by political, economic, and environmental circumstances, and changes in laws and regulations, in the countries and regions in which we operate.
- More comprehensive and stringent regulation in the U.S. Gulf of Mexico has materially increased costs and delays in offshore oil and natural gas exploration and production operations.
- The oil and gas industry, including the acquisition of exploratory licenses, is intensely competitive and many of our competitors possess and employ substantially greater resources than us.
- Participants in the oil and gas industry are subject to numerous laws, regulations, and other legislative instruments that can affect the cost, manner or feasibility of doing business.
- We are subject to numerous health, safety and environmental laws and regulations which may result in material liabilities and costs.
- We may be exposed to assertions concerning or liabilities under the U.S. Foreign Corrupt Practices Act and other anti‑corruption laws, and any such assertions or determination that we violated the U.S. Foreign Corrupt Practices Act or other such laws could result in significant costs to Kosmos and have a material adverse effect on our business.
- Federal regulatory law could have an adverse effect on our ability to use derivatives to reduce the effect of commodity price, interest rate and other risks associated with our business.
- We are dependent on certain members of our management and technical team.
- We operate in a litigious environment.
- We face various risks associated with global populism.
- Our share price may be volatile, and purchasers of our common stock could incur substantial losses.
- Holders of our common stock will be diluted if additional shares are issued.
Management Discussion
- Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
- Kosmos is a full-cycle, deepwater, independent oil and gas exploration and production company focused along the offshore Atlantic Margins. Our key assets include production offshore Ghana, Equatorial Guinea and the U.S. Gulf of Mexico, as well as world-class gas projects offshore Mauritania and Senegal. We also pursue a proven basin exploration program in Equatorial Guinea and the U.S. Gulf of Mexico.
- Globally, the impacts of Russia’s war in Ukraine, potential instability in the Middle East, a potential recession, inflationary pressures and other varying macroeconomic conditions has impacted supply and demand for oil and gas, which also resulted in significant variability in oil and gas prices. The Company’s revenues, earnings, cash flows, capital investments, debt capacity and, ultimately, future rate of growth are highly dependent on these commodity prices.