KOSMOS ENERGY LTD. Management report and analysis of the financial position and operating results (Form 10-Q)

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The following discussion and analysis should be read in conjunction with our
consolidated financial statements and notes thereto contained herein and our
annual financial statements for the year ended December 31, 2020, included in
our annual report on Form 10-K along with the section Management's Discussion
and Analysis of financial condition and Results of Operations contained in such
annual report. Any terms used but not defined in the following discussion have
the same meaning given to them in the annual report. Our discussion and analysis
includes forward-looking statements that involve risks and uncertainties and
should be read in conjunction with "Risk Factors" under Item 1A of this report
and in the annual report, along with "Forward-Looking Information" at the end of
this section for information about the risks and uncertainties that could cause
our actual results to be materially different than our forward-looking
statements.

Overview

We are a full-cycle deepwater independent oil and gas exploration and production
company focused along the Atlantic Margins. Our 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. We also maintain a
sustainable proven basin exploration program in Equatorial Guinea, Ghana and
U.S. Gulf of Mexico.

The ongoing COVID-19 pandemic that emerged at the beginning of 2020 has resulted
in travel restrictions, including border closures, travel bans, social
distancing restrictions and office closures being ordered in the various
countries in which we operate, impacting some of our business operations. These
ongoing restrictions have had an impact on the supply chain, resulting in the
delay of various operational projects. Globally, the impact of COVID-19 has
impacted demand for oil, which also resulted in significant variations in oil
prices. The Company's revenues, earnings, cash flows, capital investments, debt
capacity and, ultimately, future rate of growth are highly dependent on oil
prices.

Recent Developments

Corporate

During the third quarter of 2021, Kosmos received the remainder of the proceeds from
$ 1.0 million of Shell regarding Kosmos’ participation in South Africa as part of the agreement with Shell for the firm of interests in a portfolio of border exploration assets.

In October 2021, Kosmos completed the acquisition of Anadarko WCTP Company
("Anadarko WCTP"), a subsidiary of Occidental Petroleum Corporation, which owns
a participating interest in the WCTP Block and DT Block offshore Ghana,
including an 18.0% participating interest in the Jubilee Unit Area and an 11.1%
participating interest in the TEN fields. In consideration for the acquisition,
Kosmos paid approximately $460.0 million in cash based on an initial purchase
price of $550.6 million reduced by certain purchase price adjustments totaling
$94.7 million. Following closing of the Acquisition, Kosmos' interest in the
Jubilee Unit Area increased from 24.1% to 42.1%, and Kosmos' interest in the TEN
fields increased from 17.0% to 28.1%.

Kosmos initially funded the purchase price through the issuance of $400.0
million aggregate principal amount of floating rate senior notes due 2022 (the
"Bridge Notes") and $75.0 million of borrowings under Kosmos' Facility. Kosmos
then refinanced the Bridge Notes in full with the proceeds from the issuance of
$400.0 million of 7.750% Senior Notes due 2027 and cash on hand. Kosmos also
received $136.6 million in proceeds from a public issuance of 43.1 million
shares of Kosmos' common stock with plans to use the proceeds to repay
outstanding borrowings under the Facility during the fourth quarter of 2021.

Under the Deepwater Tano Block Joint Operating Agreement, certain joint venture
partners have pre-emption rights that, if fully exercised, could reduce our
ultimate interest in the Jubilee Unit Area by 3.8% to 38.3%, and our ultimate
interest in the TEN fields by 8.3% to 19.8%. This pre-emption right exists until
November 12, 2021.

Ghana

During the third quarter of 2021, Ghana production averaged approximately
108,200 Bopd gross (22,700 Bopd net). Jubilee production averaged approximately
77,800 Bopd gross (17,800 Bopd net) with consistent water injection and gas
offtake and TEN production averaged approximately 30,400 Bopd gross (4,900 Bopd
net). In the third quarter of 2021, the multi-year development drilling program
continued to progress, with the successful completion of one producer and one
water injector well in the Jubilee Field. The first Jubilee producer well
(J-56P) started production in July 2021 and the Jubilee injector
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well (J-55W) came online in September 2021. In October 2021, the TEN gas
injector well (NT-06G) was successfully completed and brought online. The rig
then moved to drill and complete the second Jubilee producer well (J57-P), which
is expected online around year-end.

we Gulf of Mexico

Production from the U.S. Gulf of Mexico averaged approximately 17,000 Boepd net
(~81% oil) for the third quarter of 2021. The impact of the unplanned downtime
from hurricanes to production in the U.S. Gulf of Mexico was approximately 4,000
barrels of oil equivalent per day in the third quarter or 1,000 barrels of oil
equivalent to the full year compared to our previous production forecasts for
2021. Production has now returned to around pre-hurricane levels.

In April 2021, the Kodiak #3 infill well located in Mississippi Canyon Block 727
(29.1% working interest) was brought online with one of two zones intermittently
producing. During the third quarter of 2021, the well continued to experience
production issues and has been shut-in. We are currently working with our
partners to evaluate the best options to enhance production from the Kodiak
field.

During the second quarter of 2021, the Tornado-5 infill well located in the
Green Canyon Block 281 (35.0% working interest) was successfully drilled and
completed. The Tornado-5 well was brought online in July 2021 and is performing
at the top end of expectations.

In January 2021, we announced the Winterfell exploration well encountered
approximately 26 meters (85 feet) of net oil pay in two intervals. Winterfell
was designed to test a sub-salt Upper Miocene prospect located in Green Canyon
Block 944. In September 2021, we spudded an appraisal well to the Winterfell
discovery in Green Canyon Block 943, with results expected in the fourth quarter
of 2021. The appraisal well is planned to evaluate the adjacent fault block to
the northwest of the original discovery, which has the same seismic signature as
the Winterfell exploration well, with an exploration tail into a deeper horizon.
The results of the appraisal well will also help refine development options for
the discovery.

In July 2021, the Company commenced drilling the Zora infrastructure-led
exploration prospect located in DeSoto Canyon Block 266 (37.5% working
interest). The well did not find hydrocarbons and was plugged and abandoned in
August 2021. The well results will be integrated into the ongoing evaluation of
the surrounding area. The Company recorded approximately $14.1 million of
exploration expense for the nine months ended September 30, 2021 related to the
well.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 29,900 Bopd gross (9,600
Bopd net) in the third quarter of 2021. In April 2021, one ESP conversion was
completed with two additional ESP conversions planned to be completed in 2022.
The first of three planned infill wells in the Okume Complex was completed in
August 2021 with hookup currently in progress. In the third quarter of 2021, the
operator commenced drilling the an additional well, which is expected to be
online in the fourth quarter of 2021. The third planned well is now expected to
be deferred, as the rig is being utilized to plug and abandon an existing well
in Equatorial Guinea and is required to mobilize for its' next contract before
it can complete the drilling of the last well.

Mauritania and Senegal

During the first quarter of 2021, BP, as the operator of the Cayar block
offshore Senegal, provided notice to the Government of Senegal requesting an
extension of the current license phase in order to provide the block owners
additional time to evaluate the natural gas market for the natural gas discovery
at Yakaar Teranga. On July 5, 2021 a presidential decree was issued extending
the term of the license for up to an additional three years.

Ahmeyim Unit Superior Turtle

Phase 1 of the Greater Tortue project continues to make steady progress in 2021
with first gas for the project expected in the third quarter of 2023. The
following milestones were achieved as of the end of the third quarter of 2021
and post quarter-end:

• FLNG: Mechanical completion activities started with instrument loop checks

• FPSO: activities for integrating topsides and mechanical finishing of the hull and living quarters have started

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• Breakwaters: start of manufacture of the 20th caisson (out of 21) with 12 caissons installed

• Submarine : Nouakchott and Dakar maritime supply bases established

In August 2021, BP, as the operator of the Greater Tortue project ("BP
Operator"), with the consent of the Greater Tortue Unit participants and the
respective States, agreed to sell the Greater Tortue FPSO (which is currently
under construction by Technip Energies in China) to an affiliate of BP ("BP
Buyer"). The Greater Tortue FPSO will be leased back to BP Operator under a
long-term lease agreement, for exclusive use in the Greater Tortue project. BP
Operator will continue to manage and supervise the construction contract with
Technip Energies. Delivery of the Greater Tortue FPSO to BP Buyer will occur
after construction is complete and the Greater Tortue FPSO has been
commissioned, with the lease to BP Operator becoming effective on the same date,
currently estimated to be in the third quarter of 2023.

As a result of the above transactions entered into by BP Operator, Kosmos has
recognized a Long-term receivable of $200.2 million from BP Operator for our
share of the consideration paid from BP Buyer to and held by BP Operator as well
as a $200.2 million FPSO Contract Liability in Other long-term liabilities
related to the deferred sale of the Tortue FPSO. This Long-term receivable will
be non-cash settled against obligations payable to BP Operator. During the third
quarter of 2021, BP Operator settled our payment obligations of $51.2 million of
capital expenditures and $42.7 million of existing Accounts Payable to BP
Operator.

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Results of Operations

All of our results, as presented in the table below, represent operations from
Jubilee and TEN fields in Ghana, the U.S. Gulf of Mexico and Equatorial Guinea.
Certain operating results and statistics for the three and nine months ended
September 30, 2021 and 2020 are included in the following tables:
                                             Three Months Ended September 30,      Nine Months Ended September 30,
                                                 2021                2020             2021                   2020
                                                              (In thousands, except per volume data)
Sales volumes:
Oil (MBbl)                                        2,719               5,160              11,349              14,361
Gas (MMcf)                                        1,078               1,167               3,624               4,451
NGL (MBbl)                                          111                 122                 365                 457
Total (MBoe)                                      3,010               5,477              12,318              15,560
Total (Boepd)                                    32,714              59,527              45,121              56,788

Revenues:
Oil sales                                   $   190,599          $  220,653    $        737,381          $  517,382
Gas sales                                         4,508               2,314              12,727               8,146
NGL sales                                         3,829               1,819               9,347               4,352
Total revenues                              $   198,936          $  224,786    $        759,455          $  529,880

Average oil sales price per Bbl             $     70.10          $    42.76    $          64.97          $    36.03
Average gas sales price per Mcf                    4.18                1.98                3.51                1.83
Average NGL sales price per Bbl                   34.50               14.91               25.61                9.52
Average total sales price per Boe                 66.10               41.05               61.65               34.05

Costs:

Oil and gas production, excluding reconditioning $ 47,182 $ 87,998

    $        201,975          $  233,141
Oil and gas production, workovers                 3,134              (3,721)              9,896               1,486

Total costs of oil and gas production $ 50,316 $ 84,277

$ 211,871 $ 234,627

Depletion, depreciation and amortization $ 64,914 $ 111,231

$ 292,616 $ 326,390

Average cost per Boe:
Oil and gas production, excluding workovers $     15.68          $    16.07    $          16.40          $    14.98
Oil and gas production, workovers                  1.04               (0.68)               0.80                0.10
Total oil and gas production costs                16.72               15.39               17.20               15.08

Depletion, depreciation and amortization          21.57               20.31               23.76               20.98
Total                                       $     38.29          $    35.70    $          40.96          $    36.06






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The following table shows the number of wells in the process of being drilled or
in active completion stages, and the number of wells suspended or waiting on
completion as of September 30, 2021:

                                                     Actively Drilling or                                                  Wells Suspended or
                                                          Completing                                                      Waiting on Completion
                                        Exploration                       Development                        Exploration                        Development
                                   Gross            Net             Gross              Net             Gross             Net             Gross               Net
Ghana
Jubilee Unit                          -                -               -                  -               -                 -               9                2.17
TEN                                   -                -               1               0.17               -                 -               5                0.85
Equatorial Guinea
Block S                               -                -               -                  -               1              0.40               -                   -
Okume                                 -                -               1               0.43               -                 -               1                0.43
U.S. Gulf of Mexico
Winterfell                            1             0.16               -                  -               1              0.18               -                   -

Mauritania / Senegal
Mauritania C8                         -                -               -                  -               2              0.56               -                   -
Greater Tortue Ahmeyim Unit           -                -               -                  -               3              0.80               1                0.27
Senegal Cayar Profond                 -                -               -                  -               3              0.90               -                   -
Total                                 1             0.16               2               0.60              10              2.84              16                3.72



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The discussion of the results of operations and the period-to-period comparisons
presented below analyze our historical results. The following discussion may not
be indicative of future results.

Three months ended September 30, 2021 compared to three months ended September
30, 2020

                                               Three Months Ended
                                                 September 30,             Increase
                                              2021           2020         (Decrease)
                                                         (In thousands)
Revenues and other income:
Oil and gas revenue                        $ 198,936      $ 224,786      $  (25,850)
Gain on sale of assets                         1,538              -           1,538
Other income, net                                 66              1              65
Total revenues and other income              200,540        224,787         

(24,247)

Costs and expenses:
Oil and gas production                        50,316         84,277         

(33,961)

Changes to facility insurance, net 1,554 2,465

   (911)
Exploration expenses                          23,982         13,977          10,005
General and administrative                    22,459         18,269           4,190

Depletion, depreciation and amortization 64,914 111,231 (46,317)

Interest and other financing costs, net 26,873 27,068

   (195)
Derivatives, net                              38,224          1,187          37,037
Other expenses, net                              194          2,805          (2,611)
Total costs and expenses                     228,516        261,279         (32,763)
Loss before income taxes                     (27,976)       (36,492)          8,516
Income tax expense                               621            892            (271)
Net loss                                   $ (28,597)     $ (37,384)     $    8,787



Oil and gas revenue.  Oil and gas revenue decreased by $25.9 million as a result
of lower sales volumes due to cargo timing in our international operations
partially offset by higher oil prices. We sold 3,010 MBoe at an average realized
price per barrel equivalent of $66.10 during the three months ended
September 30, 2021 and 5,477 MBoe at an average realized price per barrel
equivalent of $41.05 during the three months ended September 30, 2020.

Oil and gas production.  Oil and gas production costs decreased by $34.0 million
during the three months ended September 30, 2021, as compared to the three
months ended September 30, 2020 primarily as a result of lower sales volumes in
the current quarter offset by increased workover costs and higher production
costs per barrel from the field production mix in the U.S. Gulf of Mexico.

General and administrative.  General and administrative costs increased by $4.2
million during the three months ended September 30, 2021, as compared with the
three months ended September 30, 2020 primarily as a result of not accruing
employee bonuses in 2020 as part of management's response to COVID-19.

Exploration expenses.  Exploration expenses increased by $10.0 million during
the three months ended September 30, 2021, as compared to the three months ended
September 30, 2020 primarily as result of the Zora exploration well. The well
did not find hydrocarbons and was plugged and abandoned in August 2021 with
$12.6 million of well costs charged to exploration expense for the three months
ended September 30, 2021.

Depletion, depreciation and amortization.  Depletion, depreciation and
amortization decreased $46.3 million during the three months ended September 30,
2021, as compared with the three months ended September 30, 2020 primarily as a
result of lower sales volumes during the current quarter.

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Derivatives, net.  During the three months ended September 30, 2021 and 2020, we
recorded a loss of $38.2 million and a loss of $1.2 million, respectively, on
our outstanding hedge positions. The amounts recorded were a result of changes
in the forward oil price curve during the respective periods.

Income tax expense (benefit). For the three months ended September 30, 2021 and
2020, our overall effective tax rates were impacted by the difference in our 21%
U.S. income tax reporting rate and the 35% statutory tax rates applicable to our
Ghanaian and Equatorial Guinean operations, jurisdictions that have a 0%
statutory tax rate or where we have incurred losses and have recorded valuation
allowances against the corresponding deferred tax assets, and other
non-deductible expenses, primarily in the U.S.

Nine months ended September 30, 2021 compared to nine months ended September 30,
2020

                                                Nine Months Ended
                                                  September 30,              Increase
                                               2021            2020         (Decrease)
                                                          (In thousands)
Revenues and other income:
Oil and gas revenue                        $  759,455      $  529,880      $  229,575
Gain on sale of assets                          1,564               -           1,564
Other income, net                                 210               2             208
Total revenues and other income               761,229         529,882       

231 347

Costs and expenses:
Oil and gas production                        211,871         234,627       

(22,756)

Changes to facility insurance, net 3,495 10,555

   (7,060)
Exploration expenses                           41,452          74,293         (32,841)
General and administrative                     66,628          57,366           9,262

Depletion, depreciation and amortization 292 616 326 390

(33,774)

Impairment of long-lived assets                     -         150,820       

(150 820)

Interest and other financing costs, net 90 727 83 177

    7,550
Derivatives, net                              252,606         (34,776)        287,382
Other expenses, net                             1,003          27,962         (26,959)
Total costs and expenses                      960,398         930,414          29,984
Loss before income taxes                     (199,169)       (400,532)        201,363
Income tax expense                            (22,617)         19,010         (41,627)
Net loss                                   $ (176,552)     $ (419,542)     $  242,990



Oil and gas revenue.  Oil and gas revenue increased by $229.6 million as a
result of higher oil prices partially offset by lower sales volumes due to lower
production rates resulting in fewer scheduled liftings from our international
operations. We sold 12,318 MBoe at an average realized price per barrel
equivalent of $61.65 during the nine months ended September 30, 2021 and 15,560
MBoe at an average realized price per barrel equivalent of $34.05 during the
nine months ended September 30, 2020.

Oil and gas production.  Oil and gas production costs decreased by $22.8
million during the nine months ended September 30, 2021, as compared to the nine
months ended September 30, 2020 primarily as a result of lower sales and
production volumes in the current year (including TEN fields offshore Ghana)
offset by higher production costs per barrel from the field production mix in
the U.S. Gulf of Mexico.

Changes in the insurance of the installations, net. During the nine months ended
September 30, 2021 and 2020, we have recorded $ 3.5 million and $ 10.6 million, respectively related to facility insurance changes associated with the Jubilee long-term turret bearing solution.

Exploration expenses.  Exploration expenses decreased by $32.8 million during
the nine months ended September 30, 2021, as compared to the nine months ended
September 30, 2020. The decrease is primarily a result of lower geological,
geophysical, and seismic costs incurred in 2021 versus the prior period related
to the U.S. Gulf of Mexico business unit and
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other exploration license areas sold to Shell in 2020. This decrease is
partially offset by the Zora exploration well which did not find hydrocarbons
and was plugged and abandoned in August 2021 with $14.1 million of well costs
charged to exploration expense for the nine months ended September 30, 2021.

General and administrative.  General and administrative costs increased by $9.3
million during the nine months ended September 30, 2021, as compared with the
nine months ended September 30, 2020 primarily as a result of not accruing
employee bonuses in 2020 as part of management's response to COVID-19 offset by
reduced expenditures on general office costs.

Depletion, depreciation and amortization.  Depletion, depreciation and
amortization decreased $33.8 million during the nine months ended September 30,
2021, as compared with the nine months ended September 30, 2020 primarily as a
result of lower sales volumes in the current year partially offset by higher
depletion rates from a reduction of proved reserves in the fourth quarter of
2020 and field production mix.

 Impairment of long-lived assets. As a result of the impact of COVID-19 on the
demand for oil and the related significant decrease in oil prices, we recorded
asset impairments totaling $150.8 million during the nine months ended September
30, 2020 for oil and gas proved properties in the U.S. Gulf of Mexico. We did
not recognize impairment of proved oil and gas properties during the nine months
ended September 30, 2021 as no impairment indicators were identified.

Interest and other financing costs, net.  Interest and other financing costs,
net increased $7.6 million primarily a result of $15.2 million for loss on
extinguishment of debt during the second quarter of 2021 related to the Facility
amendment offset by increased interest income on long-term receivable balances
from GNPC in Ghana and the national oil companies in Mauritania and Senegal
during the nine months ended September 30, 2021, as compared to the nine months
ended September 30, 2020.

Derivatives, net.  During the nine months ended September 30, 2021 and 2020, we
recorded a loss of $252.6 million and a gain of $34.8 million, respectively, on
our outstanding hedge positions. The changes recorded were a result of changes
in the forward curve of oil prices during the respective periods.

Other expenses, net.  Other expenses, net decreased $27.0 million during the
nine months ended September 30, 2021, as compared with the nine months ended
September 30, 2020 primarily related to $13.3 million in restructuring charges
for employee severance and related benefit costs and $5.7 million of asset
impairments recorded in 2020. In addition, we received $8.1 million of insurance
recoveries in 2021.

Income tax expense (benefit). For the nine months ended September 30, 2021 and
2020, our overall effective tax rates were impacted by the difference in our 21%
U.S. income tax reporting rate and the 35% statutory tax rates applicable to our
Ghanaian and Equatorial Guinean operations, jurisdictions that have a 0%
statutory tax rate or where we have incurred losses and have recorded valuation
allowances against the corresponding deferred tax assets, and other
non-deductible expenses, primarily in the U.S. Additionally for September 30,
2020, our overall effective tax rate was impacted by a $30.9 million deferred
tax expense related to valuation allowances on U.S. deferred tax assets
recognized in a prior periods, and a $4.9 million tax benefit associated with
the Coronavirus Aid, Relief and Economic Security ACT ("CARES ACT").

Liquidity and capital resources

We are actively engaged in an ongoing process of anticipating and meeting our
funding requirements related to our strategy as a full-cycle exploration and
production company. We have historically met our funding requirements through
cash flows generated from our operating activities and obtained additional
funding from issuances of equity and debt, as well as partner carries.

Current oil prices are volatile and could negatively impact our ability to
generate sufficient operating cash flows to meet our funding requirements. This
volatility could result in wide fluctuations in future oil prices, which could
impact our ability to comply with our financial covenants. To partially mitigate
this price volatility, we maintain an active hedging program and review our
capital spending program on a regular basis. Our investment decisions are based
on longer-term commodity prices based on the nature of our projects and
development plans. Current commodity prices, combined with our hedging program,
partner carries and our current liquidity position support our remaining capital
program for 2021.

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Sources and Uses of Cash

The following table presents the sources and uses of our cash and cash
equivalents and restricted cash for the nine months ended September 30, 2021 and
2020:

                                                             Nine Months Ended
                                                               September 30,
                                                            2021           2020
                                                              (In thousands)

Sources of cash, cash equivalents and restricted cash: Net cash generated by operating activities

                $ 143,841      $ 

20 657

Net proceeds from issuance of senior notes                 444,375          

Borrowings under long-term debt                            250,000       

300,000

Advances under production prepayment agreement                   -        50,000
Proceeds on sale of assets                                   5,327         1,713
                                                           843,543       372,370
Uses of cash, cash equivalents and restricted cash:
Oil and gas assets                                         377,125       215,425
Other property                                                 725         1,838

Notes receivable from partners                              41,712        53,574
Payments on long-term debt                                 400,000             -
Purchase of treasury stock                                   1,100         4,947
Dividends                                                      512        19,174
Deferred financing costs                                    17,291         4,570
                                                           838,465       299,528

Increase in cash, cash equivalents and restricted cash $ 5,078 $ 72,842

Net cash provided by operating activities. Net cash flow generated by operating activities for the nine months ended September 30, 2021 was $ 143.8 million
compared to net cash provided by operating activities for the nine months ended September 30, 2020 of $ 20.7 million. The increase in cash provided by operating activities during the nine months ended September 30, 2021 compared to the same period in 2020 is mainly the result of rising oil prices.

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The following table presents our net debt and liquidity as of September 30,
2021:

                                                       September 30,
                                                            2021
                                                       (In thousands)
Cash and cash equivalents                             $      111,329
Restricted cash                                               43,513
7.125% Senior Notes                                          650,000
7.500% Senior Notes                                          450,000
Borrowings under the Facility                              1,150,000
Borrowings under the Corporate Revolver                            -
Borrowings under the GoM Term Loan                           200,000
Net debt                                              $    2,295,158

Availability under the Facility                       $       85,155
Availability under the Corporate Revolver             $      400,000

Available borrowings plus cash and cash equivalents $ 596,484

Capital expenditure and investments

We plan to incur capital expenditures when we:

• drill additional wells and carry out mining activities in Ghana,
Equatorial Guinea and in the we Gulf of Mexico;

• carry out exploration and assessment efforts focused on infrastructure in the we Gulf of Mexico and Equatorial Guinea; and

• carry out exploration, evaluation and development activities in Mauritania and
Senegal.

We have relied on a number of assumptions in budgeting for our future
activities. These include the number of wells we plan to drill, our
participating, paying and carried interests in our prospects including
disproportionate payment amounts, the costs involved in developing or
participating in the development of a prospect, the timing of third­party
projects, the availability of suitable equipment and qualified personnel and our
cash flows from operations. We also evaluate potential corporate and asset
acquisition opportunities to support and expand our asset portfolio which may
impact our budget assumptions. These assumptions are inherently subject to
significant business, political, economic, regulatory, health, environmental and
competitive uncertainties, contingencies and risks, all of which are difficult
to predict and many of which are beyond our control. We may need to raise
additional funds more quickly if market conditions deteriorate, or one or more
of our assumptions proves to be incorrect, or if we choose to expand our
acquisition, exploration, appraisal, development efforts or any other activity
more rapidly than we presently anticipate. We may decide to raise additional
funds before we need them if the conditions for raising capital are favorable.
We may seek to sell assets, equity or debt securities or obtain additional bank
credit facilities. The sale of equity securities could result in dilution to our
shareholders. The incurrence of additional indebtedness could result in
increased fixed obligations and additional covenants that could restrict our
operations.

2021 Capital Program
We estimate we will spend around $300 million of capital, which includes the
additional acquired interests in Ghana and excludes amounts related to
Mauritania and Senegal, in our base business for the year ending December 31,
2021. Through September 30, 2021, we have spent approximately $184.3 million on
base business capital expenditures.
Capital expenditures associated with the Greater Tortue project in 2021 net to
Kosmos was previously estimated to be around $350 million. With the completion
of the Greater Tortue FPSO sale transaction in August 2021, our 2021 capital
expenditures associated with the Greater Tortue project have been reduced to
around $180 million, with the remaining cash calls on the Greater Tortue project
for 2021 covered through the proceeds of the sale. The balance of the sale
proceeds, as well as the additional savings from the transfer of the remaining
FPSO construction payments to BP Buyer, are expected to be largely realized in
2022. Through September 30, 2021, we have spent approximately $169.2 million of
capital expenditures related to Mauritania and Senegal.
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In relation to the additional capital expenditures associated with the
additional acquired interests in Ghana, certain joint venture partners have
pre-emption rights under the Deepwater Tano Block Joint Operating Agreement
that, if fully exercised, could reduce our ultimate interest in the Jubilee Unit
Area by 3.8% to 38.3%, and our ultimate interest in the TEN fields by 8.3% to
19.8%. This pre-emption right exists until November 12, 2021 and, if exercised,
will reduce our capital expenditures associated with the additional acquired
interests.
The ultimate amount of capital we will spend may fluctuate materially based on
market conditions and the success of our exploitation and drilling results among
other factors. Our future financial condition and liquidity will be impacted by,
among other factors, our level of production of oil and the prices we receive
from the sale of oil, our ability to effectively hedge future production
volumes, the success of our multi-faceted infrastructure-led exploration and
appraisal drilling programs, the number of commercially viable oil and natural
gas discoveries made and the quantities of oil and natural gas discovered, the
speed with which we can bring such discoveries to production, our partners'
alignment with respect to capital plans, and the actual cost of exploitation,
exploration, appraisal and development of our oil and natural gas assets, and
coverage of any claims under our insurance policies.
Significant Sources of Capital

Establishment

The Facility supports our oil and gas exploration, appraisal and development
programs and corporate activities. As of September 30, 2021, borrowings under
the Facility totaled $1.15 billion and the undrawn availability under the
facility was $85.2 million (limited by current commitments). In May 2021, the
Company entered into an amended and restated facility agreement and certain
ancillary documents. The amendments to the terms of the Facility included the
following:

• the extension of the two-year maturity (the final expiry now comes on March, 31st, 2027),

•the extension of the amortization schedule such that amortization of principal
is to commence on March 31, 2024 and continue in equal amounts every six months
thereafter until the maturity date,

• an increase in the interest margin of 0.5% (the interest margin applicable for the first three years is now LIBOR + 3.75%),

• the incorporation of a mechanism for two key ESG performance indicators (“KPIs”) in order to have a positive or negative impact on the interest margin depending on the achievement of emissions targets and the achievement of certain third-party ESG ratings,

• an increase in the Loan Life Coverage Ratio from 1.10x to 1.30x after March 31, 2024,

•the removal of Kosmos Energy Investments Senegal Limited, Kosmos Energy Senegal
and Kosmos Energy Mauritania as borrowers, guarantors and pledged subsidiaries,
and

• a reduction in the size of the installation to $ 1.25 billion (of $ 1.5 billion).

As amended, the Facility has an available borrowing base of approximately
$1.24 billion. As part of the amendment, the Company incurred $15.2 million for
loss on extinguishment of debt during the second quarter of 2021. During the
September 2021 redetermination, the Company's lending syndicate approved a
borrowing base capacity in excess of the facility size of $1.25 billion.

When our net leverage ratio exceeds 2.50x, we are required under the Facility to
maintain a restricted cash balance that is sufficient to meet the payment of
interest and fees for the next six-month period on the 7.125% Senior Notes and
the 7.500% Senior Notes plus the Corporate Revolver or the Facility, whichever
is greater. As of September 30, 2021 we have restricted cash of approximately
$42.9 million to meet our requirements.

As a result of the impact of COVID-19 on the demand for oil and the related
significant decrease in oil prices, our ability to comply with one of our
financial covenants, the debt cover ratio, may be impacted in future periods.
Therefore, in July 2020, we proactively worked with our lender group, prior to
any inability to comply with the financial covenants thereunder, to amend the
debt cover ratio calculation through December 31, 2021. The amendment makes this
covenant less restrictive during the stated period up to a maximum of 4.75x and
thereafter gradually returns to the originally agreed upon ratio of 3.5x. We
were in compliance with the financial covenants as of the most recent assessment
date. The Facility, as amended, contains customary cross default provisions.

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Corporate Revolver

In August 2018, we amended and restated the Corporate Revolver maintaining the
borrowing capacity at $400.0 million, extending the maturity date from November
2018 to May 2022 and lowering the margin to 5%. This results in lower commitment
fees on the undrawn portion of the total commitments, which is 30% per annum of
the respective margin. The Corporate Revolver is available for general corporate
purposes and for oil and gas exploration, appraisal and development programs. As
of September 30, 2021, there were no outstanding borrowings under the Corporate
Revolver and the undrawn availability was $400.0 million.

As a result of the impact of COVID-19 on the demand for oil and the related
significant decrease in oil prices, our ability to comply with one of our
financial covenants, the debt cover ratio, may be impacted in future periods.
Therefore, in July 2020, we proactively worked with our lender group, prior to
any inability to comply with the financial covenants thereunder, to amend the
debt cover ratio calculation through December 31, 2021. The amendment makes this
covenant less restrictive during the stated period up to a maximum of 4.75x and
thereafter gradually returns to the originally agreed upon ratio of 3.5x. We
were in compliance with the financial covenants as of the most recent assessment
date. The Corporate Revolver contains customary cross default provisions.

7.125% senior securities maturing in 2026

In April 2019, the Company issued $650.0 million of 7.125% Senior Notes and
received net proceeds of approximately $640.0 million after deducting fees and
other expenses. We used the net proceeds to redeem all of the previously issued
7.875% Senior Secured Notes due 2021, repay a portion of the outstanding
indebtedness under the Corporate Revolver and pay fees and expenses related to
the redemption, repayment and the issuance of the 7.125% Senior Notes.

The 7.125% Senior Notes mature on April 4, 2026. Interest is payable in arrears
each April 4 and October 4, commencing on October 4, 2019. The 7.125% Senior
Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in
right of payment with all of its existing and future senior indebtedness
(including all borrowings under the Corporate Revolver and the 7.500% Senior
Notes) and rank effectively junior in right of payment to all of its existing
and future secured indebtedness (including all borrowings under the Facility)
and all borrowings under the GoM Term Loan. The 7.125% Senior Notes are
guaranteed on a senior, unsecured basis by certain subsidiaries owning the
Company's U.S. Gulf of Mexico assets, and on a subordinated, unsecured basis by
certain subsidiaries that guarantee the Facility. We were in compliance with the
financial covenants contained in the 7.125% Senior Notes as of September 30,
2021. The 7.125% Senior Notes contain customary cross default provisions.

7.500% senior notes due 2028

In March 2021, the Company issued $450.0 million of 7.500% Senior Notes and
received net proceeds of approximately $444.4 million after deducting fees. We
used the net proceeds to repay outstanding indebtedness under the Corporate
Revolver and the Facility, to pay expenses related to the issuance of the 7.500%
Senior Notes and for general corporate purposes.
The 7.500% Senior Notes mature on March 1, 2028. Interest is payable in arrears
each March 1 and September 1, commencing on September 1, 2021. The 7.500% Senior
Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in
right of payment with all of its existing and future senior indebtedness
(including all borrowings under the Corporate Revolver and the 7.125% Senior
Notes) and rank effectively junior in right of payment to all of its existing
and future secured indebtedness (including all borrowings under the Facility)
and all borrowings under the GoM Term Loan. The 7.500% Senior Notes are
guaranteed on a senior, unsecured basis by certain subsidiaries owning the
Company's U.S. Gulf of Mexico assets, and on a subordinated, unsecured basis by
certain subsidiaries that borrow under, or guarantee, the Facility and, on a
subordinated basis, guarantee the Corporate Revolver and the 7.125% Senior
Notes.
The 7.500% Senior Notes indenture restricts the ability of the Company and its
restricted subsidiaries to, among other things: incur or guarantee additional
indebtedness, create liens, pay dividends or make distributions in respect of
capital stock, purchase or redeem capital stock, make investments or certain
other restricted payments, sell assets, enter into agreements that restrict the
ability of the Company's subsidiaries to make dividends or other payments to the
Company, enter into transactions with affiliates, or effect certain
consolidations, mergers or amalgamations. Certain of these covenants will be
terminated if the 7.500% Senior Notes are assigned an investment grade rating by
both Standard & Poor's Rating Services and Fitch Ratings Inc. and no default or
event of default has occurred. We were in compliance with the financial
covenants contained in the 7.500% Senior Notes as of September 30, 2021. The
7.500% Senior Notes contain customary cross default provisions.
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Production Prepayment Agreement

In June 2020, the Company received $50.0 million from Trafigura under a
Production Prepayment Agreement of crude oil sales related to a portion of our
U.S. Gulf of Mexico production primarily in 2022 and 2023. The Company
terminated the Production Prepayment Agreement and the initial prepayment of
$50.0 million advanced under the Production Prepayment Agreement by Trafigura in
the second quarter of 2020 was extinguished and converted into the GoM Term Loan
as of September 30, 2020.

GoM Term Loan

In September 2020, the Company entered into a five-year $200.0 million senior
secured term-loan credit agreement secured against the Company's U.S. Gulf of
Mexico assets with net proceeds received of $197.7 million after deducting fees
and other expenses. The GoM Term Loan also includes an accordion feature
providing for incremental commitments of up to $100.0 million subject to certain
conditions. The GoM Term Loan bears interest at an effective rate of
approximately 6% per annum and matures in 2025, with principal repayments
beginning in the fourth quarter of 2021. We were in compliance with the
covenants, representations and warranties contained in the GoM Term Loan as of
as of September 30, 2021 (the most recent assessment date). The GoM Term Loan
contains customary cross default provisions.

Contractual obligations

The following table summarizes by period the payments due for our estimated
contractual obligations as of September 30, 2021 and the weighted average
interest rates expected to be paid on the Facility, Corporate Revolver and GoM
Term Loan given current contractual terms and market conditions, and the
instrument's estimated fair value. Weighted-average interest rates are based on
implied forward rates in the yield curve at the reporting date. This table does
not include amortization of deferred financing costs.
                                                                                                                                                                                 Asset
                                                                                                                                                                              (Liability)
                                                                                                                                                                             Fair Value at
                                                                                         Years Ending December 31,                                                           September 30,
                                       2021(2)            2022               2023               2024               2025             Thereafter             Total                  2021
                                                                                                (In thousands, except percentages)
Fixed rate debt:
7.125% Senior Notes                   $     -          $      -          $  

– $ – $ – $ 650,000 $ 650,000 $ (637,728)
7.500% senior notes

                         -                 -                  -                  -                  -              450,000              450,000               (436,905)

Variable rate debt:
Weighted average interest rate
on variable rate debt                    4.22  %           4.26  %            4.63  %            5.36  %            5.77  %              6.38  %
Facility(1)                           $     -          $      -          $ 112,621          $ 207,834          $ 300,192          $   529,353          $ 1,150,000          $  (1,150,000)

GoM Term Loan                           7,500            30,000             30,000             30,000            102,500                    -              200,000               (200,000)
Total principal debt
repayments(1)                         $ 7,500          $ 30,000          $ 142,621          $ 237,834          $ 402,692          $ 1,629,353          $ 2,450,000
Interest & commitment fee
payments on long-term debt             39,498           140,981            140,117            138,484            124,287              133,143              716,510
Operating leases                          426             3,932              4,075              4,146              4,217               15,161               31,957

__________________________________

(1)The amounts included in the table represent principal maturities only. The
scheduled maturities of debt related to the Facility are based on the level of
borrowings and the available borrowing base as of September 30, 2021. Any
increases or decreases in the level of borrowings or increases or decreases in
the available borrowing base would impact the scheduled maturities of debt
during the next five years and thereafter.
(2)Represents the period October 1, 2021 through December 31, 2021.
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The table above does not include purchase commitments for jointly owned fields
and facilities where we are not the operator and excludes commitments for
exploration activities, including well commitments and seismic obligations, in
our petroleum contracts. The Company's liabilities for asset retirement
obligations associated with the dismantlement, abandonment and restoration costs
of oil and gas properties are not included. See Note 14 - Additional Financial
Information for additional information regarding these liabilities.
We currently have a commitment to drill one exploration well in Mauritania and a
$200.2 million FPSO Contract Liability related to the deferred sale of the
Greater Tortue FPSO.

Off-balance sheet provisions

We may enter into off-balance sheet arrangements and transactions that can give
rise to material off-balance sheet obligations. As of September 30, 2021, our
off-balance sheet arrangements and transactions include short-term operating
leases and undrawn letters of credit. There are no other transactions,
arrangements, or other relationships with unconsolidated entities or other
persons that are reasonably likely to materially affect Kosmos' liquidity or
availability of or requirements for capital resources.

Critical accounting policies

We consider accounting policies related to our 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 as critical
accounting policies. The policies include significant estimates made by
management using information available at the time the estimates are made.
However, these estimates could change materially if different information or
assumptions were used. Other than items discussed in Note 2 - Accounting
Policies, there have been no changes to our critical accounting policies which
are summarized in "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" section in our annual report on Form 10-K,
for the year ended December 31, 2020.

Caution Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains estimates and forward-looking
statements, principally in "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Our estimates and forward-looking
statements are mainly based on our current expectations and estimates of future
events and trends, which affect or may affect our businesses and operations.
Although we believe that these estimates and forward-looking statements are
based upon reasonable assumptions, they are subject to several risks and
uncertainties and are made in light of information currently available to us.
Many important factors, in addition to the factors described in our quarterly
report on Form 10-Q and our annual report on Form 10-K, may adversely affect our
results as indicated in forward-looking statements. You should read this
quarterly report on Form 10-Q, the annual report on Form 10-K and the documents
that we have filed with the Securities and Exchange Commission completely and
with the understanding that our actual future results may be materially
different from what we expect. Our estimates and forward-looking statements may
be influenced by the following factors, among others:

•the impact of the COVID-19 pandemic on the Company and the overall business
environment;
•our ability to find, acquire or gain access to other discoveries and prospects
and to successfully develop and produce from our current discoveries and
prospects;
•uncertainties inherent in making estimates of our oil and natural gas data;
•the successful implementation of our and our block partners' prospect discovery
and development and drilling plans;
•projected and targeted capital expenditures and other costs, commitments and
revenues;
•termination of or intervention in concessions, rights or authorizations granted
to us by the governments of the countries in which we operate (or their
respective national oil companies) or any other federal, state or local
governments or authorities;
•our dependence on our key management personnel and our ability to attract and
retain qualified technical personnel;
•the ability to obtain financing and to comply with the terms under which such
financing may be available;
•the volatility of oil, natural gas and NGL prices, as well as our ability to
implement hedges addressing such volatility on commercially reasonable terms;
•the availability, cost, function and reliability of developing appropriate
infrastructure around and transportation to our discoveries and prospects;
•the availability and cost of drilling rigs, production equipment, supplies,
personnel and oilfield services;
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•other competitive pressures;
•potential liabilities inherent in oil and natural gas operations, including
drilling and production risks and other operational and environmental risks and
hazards;
•current and future government regulation of the oil and gas industry or
regulation of the investment in or ability to do business with certain countries
or regimes;
•cost of compliance with laws and regulations;
•changes in, or new, environmental, health and safety or climate change or GHG
laws, regulations and executive orders, or the implementation, or
interpretation, of those laws, regulations and executive orders;
•adverse effects of sovereign boundary disputes in the jurisdictions in which we
operate;
•environmental liabilities;
•geological, geophysical and other technical and operations problems, including
drilling and oil and gas production and processing;
•military operations, civil unrest, outbreaks of disease, terrorist acts, wars
or embargoes;
•the cost and availability of adequate insurance coverage and whether such
coverage is enough to sufficiently mitigate potential losses and whether our
insurers comply with their obligations under our coverage agreements;
•our vulnerability to severe weather events, including tropical storms and
hurricanes in the Gulf of Mexico;
•our ability to meet our obligations under the agreements governing our
indebtedness;
•the availability and cost of financing and refinancing our indebtedness;
•the amount of collateral required to be posted from time to time in our hedging
transactions, letters of credit, performance bonds and other secured debt;
•the result of any legal proceedings, arbitrations, or investigations we may be
subject to or involved in;
•our success in risk management activities, including the use of derivative
financial instruments to hedge commodity and interest rate risks; and
•other risk factors discussed in the "Item 1A. Risk Factors" section of our
quarterly reports on Form 10-Q and our annual report on Form 10-K.

The words "believe," "may," "will," "aim," "estimate," "continue," "anticipate,"
"intend," "expect," "plan" and similar words are intended to identify estimates
and forward-looking statements. Estimates and forward-looking statements speak
only as of the date they were made, and, except to the extent required by law,
we undertake no obligation to update or to review any estimate and/or
forward-looking statement because of new information, future events or other
factors. Estimates and forward-looking statements involve risks and
uncertainties and are not guarantees of future performance. As a result of the
risks and uncertainties described above, the estimates and forward-looking
statements discussed in this quarterly report on Form 10-Q might not occur, and
our future results and our performance may differ materially from those
expressed in these forward-looking statements due to, including, but not limited
to, the factors mentioned above. Because of these uncertainties, you should not
place undue reliance on these forward-looking statements.

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