Kosmos Energy Ltd. (“Kosmos” or the “Company”) (NYSE/LSE: KOS) announced today its financial and operating results for the fourth quarter of 2023. For the quarter, the Company generated a net income of $22 million, or $0.04 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income⁽¹⁾ of $149 million, or $0.31 per diluted share for the fourth quarter of 2023.

FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS

• 4Q Net Production⁽²⁾: ~66,000 barrels of oil equivalent per day (boepd), representing ~12% growth year over year; Net sales of ~73,000 boepd

• 4Q Revenues: $508 million, or $75.64 per boe (excluding the impact of derivative cash settlements)

• 4Q Production expense: $104 million, or $15.46 per boe

• 4Q Capital expenditures: $281 million

• 1P reserves of ~280 mmboe as of December 31, 2023, representing a 104% replacement rate ratio

• Assumed operatorship and a greater working interest at Yakaar-Teranga offshore Senegal

• Tiberius infrastructure-led exploration (ILX) oil discovery offshore U.S. Gulf of Mexico

• Maintained AAA rating with MSCI

Commenting on the Company’s 2023 performance, Chairman and Chief Executive Officer Andrew G. Inglis said: “In 2023, we continued to advance our key development projects, which aim to deliver around 50% production growth from the second half of 2022. The start-up of Jubilee Southeast was a major step toward achieving this goal and, in the coming months, we expect production to begin at Winterfell in the Gulf of Mexico followed by first gas at Greater Tortue Ahmeyim offshore Mauritania and Senegal.

“Beyond advancing our development projects, we also strengthened our portfolio of low cost, lower carbon investment opportunities. We delivered a significant oil discovery at Tiberius in the Gulf of Mexico, which added an attractive short-cycle oil development to our portfolio. Kosmos also assumed operatorship and a larger working interest at Yakaar-Teranga, which is a key asset in Senegal’s ‘Gas-to-Power’ and ‘Gas-to-Industry’ initiatives.

“As we pursue these operated developments, as well as other projects in our organic portfolio, we are confident in our ability to deliver growth through the decade while generating strong cash flow. This is expected to strengthen our balance sheet, help us achieve our leverage targets, while providing flexibility around future capital allocation opportunities including returns to shareholders.

“Kosmos is well-positioned to create value for shareholders. We have a clear strategy, top-quality assets with greater than 20 years of 2P reserves/production life, multiple growth catalysts, and an important role in enabling a just and orderly energy transition in the countries where we work.”

FINANCIAL UPDATE

Kosmos exited the fourth quarter of 2023 with approximately $2.4 billion of total long-term debt and approximately $2.3 billion of net debt⁽¹⁾ and available liquidity of approximately $0.7 billion. The Company generated net cash provided by operating activities of approximately $294 million and free cash flow⁽¹⁾ of approximately $(27) million in the fourth quarter.

Net capital expenditure for the fourth quarter of 2023 was $281 million, higher than expected primarily due to the accelerated timing of long-lead equipment purchases for the Equatorial Guinea infill and ILX drilling program.

Net capital expenditures for 2024 are expected to be approximately $700-$750 million, weighted towards the first half of the year as the Ghana drilling campaign concludes and the Winterfell and Tortue projects progress to startup. Our 2024 guidance reflects higher than anticipated subsea expenses at Torture Phase 1 following the replacement of the previous subsea contractor that failed to perform its contractual obligations. BP, on behalf of the partner group, has initiated the process under its agreement with the original subsea contractor to recover the losses incurred. The partnership will seek to recover the maximum recoverable damages in binding arbitration. We estimate Kosmos’ net share of the recoverable damages to be up to $160.0 million.

RESERVES UPDATE

At year-end 2023, Kosmos had 1P reserves of approximately 280 million barrels of oil equivalent (boe), representing a 1P reserves to production ratio of around 12 years and a reserve replacement ratio of 104%, primarily as a result of increased reserve recognition at Jubilee. 2P reserves as of year-end 2023 are approximately 520 million boe, representing a 2P reserves-to-production ratio of over 20 years. 2P reserves do not include any recognition for the Tiberius and Yakaar-Teranga discoveries with changes being driven by 2023 production as well as reduced future activity on TEN. Kosmos’ year-end reserves on all assets have been independently evaluated by Ryder Scott.

OPERATIONAL UPDATE

Production

Total net production⁽²⁾ in the fourth quarter of 2023 averaged approximately 66,000 boepd representing a ~12% increase compared to the fourth quarter of 2022. Production during the quarter was impacted by reduced water injection at Jubilee, which has since been resolved. Production is expected to rise through the year with additional wells at Jubilee coming online and the startup of the Winterfell and Tortue LNG projects. The Company exited the quarter in a net overlift position of approximately 0.2 million barrels.

Ghana

Production in Ghana averaged approximately 43,300 boepd net in the fourth quarter of 2023. Kosmos lifted four cargos from Ghana during the quarter, in line with guidance.

At Jubilee (38.6% working interest), oil production in the fourth quarter averaged approximately 92,400 bopd gross with two water injection wells brought online. In 2024, one new producer well and one injector well were brought online in early 1Q with three additional wells expected online in the coming months before we expect the current rig contract to end.

FPSO reliability remains high at approximately 99% year to date and water injection is currently at record levels of approximately 285,000 barrels of water per day (bwpd). This compares with ~150,000 bwpd in the fourth quarter and ~160,000 bwpd over 2023. At current water and gas injection rates, we expect 100% voidage replacement in 2024, providing the necessary pressure support to maintain elevated production levels.

At TEN (20.4% working interest), production averaged approximately 18,500 bopd gross for the fourth quarter in line with expectations.

The partnership has submitted a draft amended plan of development (“PoD”) for a high-graded activity set at TEN and a combined gas sales agreement for Jubilee and TEN to the Government of Ghana for approval. An interim gas sales agreement for Jubilee associated gas has been extended through May 2024 at a price of $2.95/mmbtu while discussions are ongoing on a longer-term agreement. In the fourth quarter, Ghana gas production net to Kosmos was approximately 5,800 boepd.

As a result of negative proved oil and gas reserve revisions at TEN, driven by a reduction in the partnership’s development work scope for the TEN Fields and well performance, we recorded impairment charges of $222.3 million for the year ended December 31, 2023. The impairment charges resulted in a full impairment of the remaining book value of TEN reducing the carrying value of the TEN Fields to zero. Jubilee 1P reserve additions more than offset the downward revision to TEN 1P reserves during the period.

U.S. Gulf of Mexico

Production in the U.S. Gulf of Mexico averaged approximately 13,900 boepd net (~81% oil) during the fourth quarter, in line with guidance.

The Winterfell development continues to progress with the first of three wells completed in the fourth quarter and the second well completed in the first quarter of 2024. First production is expected early in the second quarter of 2024 with the third well to follow later this year.

As announced in October 2023, the Tiberius ILX well in Keathley Canyon, block 964, encountered approximately 250 feet (~75 meters) of net oil pay in the primary Wilcox target. The Tiberius well is located in approximately 7,500 feet (2,300 meters) of water and was drilled to a total vertical depth of approximately 25,800 feet (7,800 meters). Initial fluid and core analysis supports the production potential of the Tiberius development wells, with characteristics analogous with similar nearby discoveries in the Wilcox trend.

Kosmos is now working with partners on subsea development options with a sanction decision for a phased tie-back development targeted later this year. The discovery is located approximately 6 miles southeast of the Lucius production facility (operated by Occidental, a partner in Tiberius) enabling a short tie-back. In the Gulf of Mexico Lease Sale 261, Kosmos and Occidental were awarded three blocks nearby to Tiberius, including an existing oil discovery, Logan.

The Odd Job subsea pump project, planned to sustain long-term production from the field, was ~90% complete at quarter end. The project remains on track to be in service by mid-2024.

At Kodiak, workover plans for the Kodiak 3 well have been developed and are expected to commence around the middle of 2024.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 24,800 bopd gross and 8,700 bopd net in the fourth quarter. Kosmos lifted one cargo from Equatorial Guinea during the quarter, in line with guidance.

The 2023 Ceiba Field and Okume Complex development rig campaign commenced in the fourth quarter of 2023. The campaign initially completed one production well workover. However, as a result of safety issues with the drilling rig, the operator terminated the rig contract in early February 2024. The partnership is seeking to secure an alternative rig and drilling contractor to resume the work, which is planned to include the drilling of infill production wells in Block G and the Akeng Deep prospect in Block S. Given uncertainty on the timing of procuring a rig, we have not included production related to the drilling program in our 2024 guidance, although the partnership is eager to complete the campaign and drill the Akeng Deep ILX well as soon as possible in a safe, reliable, and environmentally sound manner.

Mauritania & Senegal

On Greater Tortue Ahmeyim, the project continues to make good progress. The following milestones have been achieved:

• Drilling: The operator has successfully drilled and completed all four wells with expected production capacity significantly higher than what is required for first gas.

• Hub Terminal: Construction work is complete, and handover to operations was completed in August 2023.

• Subsea: Significant progress has been made on the installation of the infield flowlines and subsea structures. Work re-commenced in the fourth quarter with completion expected at the end of the second quarter of 2024.

• FLNG: Construction was completed in the fourth quarter of 2023 and the vessel arrived on location offshore Mauritania/Senegal in the first quarter of 2024. Hookup work is now underway.

• FPSO: The vessel is currently in a shipyard in Tenerife for inspection and repair of the fairleads. Completion of this work and transit to the project site is expected early in the second quarter ahead of final hookup and commissioning.

The critical path to first gas, expected in the third quarter of 2024, continues to be through the arrival, hookup and commissioning of the FPSO. Timely execution of this workstream is expected to allow for first LNG in the fourth quarter.

In November 2023, Kosmos assumed operatorship and increased its working interest in Yakaar-Teranga to 90% (from 30%), with government approvals received in January 2024. Kosmos is working closely with Senegal's national oil company (PETROSEN) on pre-FEED work that prioritizes cost-competitive gas to the rapidly growing domestic market, combined with an offshore liquefied natural gas facility targeting exports into international LNG markets. Post completion of pre-FEED, Kosmos plans to farm down its interest in the second half of 2024 to around 33% working interest while retaining operatorship of the project.

(1) A Non-GAAP measure, see attached reconciliation of non-GAAP measure.

(2) Production means net entitlement volumes. In Ghana and Equatorial Guinea, this means those volumes net to Kosmos' working interest or participating interest and net of royalty or production sharing contract effect. In the U.S. Gulf of Mexico, this means those volumes net to Kosmos' working interest and net of royalty.

Conference Call and Webcast Information

Kosmos will host a conference call and webcast to discuss fourth quarter 2023 financial and operating results today, February 26, 2024, at 10:00 a.m. Central time (11:00 a.m. Eastern time). The live webcast of the event can be accessed on the Investors page of Kosmos’ website at http://investors.kosmosenergy.com/investor-events. The dial-in telephone number for the call is +1-877-407-0784. Callers in the United Kingdom should call 0800 756 3429. Callers outside the United States should dial +1-201-689-8560. A replay of the webcast will be available on the Investors page of Kosmos’ website for approximately 90 days following the event.

About Kosmos Energy

Kosmos is 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 the 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 the U.S. Gulf of Mexico. Kosmos is listed on the New York Stock Exchange and London Stock Exchange and is traded under the ticker symbol KOS. As an ethical and transparent company, Kosmos is committed to doing things the right way. The Company’s Business Principles articulate our commitment to transparency, ethics, human rights, safety and the environment. Read more about this commitment in the Kosmos Sustainability Report. For additional information, visit www.kosmosenergy.com.

Non-GAAP Financial Measures

EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt are supplemental non-GAAP financial measures used by management and external users of the Company's consolidated financial statements, such as industry analysts, investors, lenders and rating agencies. The Company defines EBITDAX as Net income (loss) plus (i) exploration expense, (ii) depletion, depreciation and amortization expense, (iii) equity based compensation expense, (iv) unrealized (gain) loss on commodity derivatives (realized losses are deducted and realized gains are added back), (v) (gain) loss on sale of oil and gas properties, (vi) interest (income) expense, (vii) income taxes, (viii) loss on extinguishment of debt, (ix) doubtful accounts expense and (x) similar other material items which management believes affect the comparability of operating results. The Company defines Adjusted net income (loss) as Net income (loss) adjusted for certain items that impact the comparability of results. The Company defines free cash flow as net cash provided by operating activities less Oil and gas assets, Other property, and certain other items that may affect the comparability of results and excludes non-recurring activity such as acquisitions, divestitures and National Oil Company ("NOC") financing. NOC financing refers to the amounts funded by Kosmos under the Carry Advance Agreements that the Company has in place with the national oil companies of each of Mauritania and Senegal related to the financing of the respective national oil companies’ share of certain development costs at Greater Tortue Ahmeyim. The Company defines net debt as total long-term debt less cash and cash equivalents and total restricted cash.

We believe that EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, Net debt and other similar measures are useful to investors because they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the oil and gas sector and will provide investors with a useful tool for assessing the comparability between periods, among securities analysts, as well as company by company. EBITDAX, Adjusted net income (loss), Adjusted net income (loss) per share, free cash flow, and net debt as presented by us may not be comparable to similarly titled measures of other companies.

This release also contains certain forward-looking non-GAAP financial measures, including free cash flow. Due to the forward-looking nature of the aforementioned non-GAAP financial measures, management cannot reliably or reasonably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, we are unable to present a quantitative reconciliation of such forward-looking non-GAAP financial measures to their most directly comparable forward-looking GAAP financial measures. Amounts excluded from these non-GAAP measures in future periods could be significant.

Forward-Looking Statements

This press release 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 press release that address activities, events or developments that Kosmos expects, believes or anticipates will or may occur in the future are forward-looking statements. Kosmos’ estimates and forward-looking statements are mainly based on its current expectations and estimates of future events and trends, which affect or may affect its businesses and operations. Although Kosmos believes 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 Kosmos. When used in this press release, the words “anticipate,” “believe,” “intend,” “expect,” “plan,” “will” or other similar words are intended to identify forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Kosmos (including, but not limited to, the impact of the COVID-19 pandemic), which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Further information on such assumptions, risks and uncertainties is available in Kosmos’ Securities and Exchange Commission (“SEC”) filings. Kosmos undertakes no obligation and does not intend to update or correct these forward-looking statements to reflect events or circumstances occurring after the date of this press release, except as required by applicable law. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.

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