KOSMOS ENERGY LTD. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

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, 2021, 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.

Insight

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 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.

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 impacts of COVID-19, Russia invasion of Ukraine, and other variable macroeconomic conditions impacted oil demand, which also led to significant variability in oil prices. The Company’s revenues, earnings, cash flow, capital expenditures, debt capacity and, ultimately, future growth rate are highly dependent on oil prices.

RECENT DEVELOPMENTS

Business

Following the closing of the acquisition of Anadarko WCTP Company ("Anadarko
WCTP") in the fourth quarter of 2021, Kosmos' interest in the Jubilee Unit Area
and the TEN fields offshore Ghana were 42.1% and 28.1%, respectively. Under the
DT Block Joint Operating Agreement, certain joint venture partners have
pre-emption rights in the Jubilee Unit Area and the TEN fields. In November
2021, we received notice from Tullow Oil plc ("Tullow") and PetroSA that they
intend to exercise their pre-emption rights in relation to Kosmos' acquisition
of Anadarko WCTP. After execution of definitive transaction documentation and
receipt of governmental approvals, Kosmos concluded the pre-emption transaction
with Tullow in March 2022. Following the completion of the pre-emption by
Tullow, Kosmos' interest in the Jubilee Unit Area decreased from 42.1% to 38.6%
and Kosmos' interest in the TEN fields decreased from 28.1% to 20.4%. Tullow
paid Kosmos $118.2 million in cash consideration after post closing adjustments
for the pre-emption. During the first quarter of 2022, our oil and gas
properties, net balance was reduced by $175.5 million which includes the cash
proceeds and net liabilities transferred to the purchaser as a result of
concluding the Tullow pre-emption transaction. The difference in the net book
value of the proved property, net liabilities transferred and adjusted purchase
price was treated as a recovery of cost and normal retirement, which resulted in
no gain or loss being recognized. The net 2022 production impact of the Tullow
pre-emption exercise for Kosmos is a reduction of approximately 4,000 barrels of
oil per day, based on the March 17, 2022 closing date, and is expected to result
in one less Ghana cargo lifting this year and a reduction in 2022 capital
expenditure of approximately $30.0 million.

For PetroSA, the pre-emption process is ongoing and remains subject to execution
of definitive agreements and required government approvals. Following completion
of the pre-emption for PetroSA, Kosmos' ultimate interests in the Jubilee Unit
Area and TEN fields would be reduced to 38.3% and 19.8%, respectively.

In March 2022, we refinanced the Corporate Revolver by replacing it with a new
revolving credit facility agreement. The new revolving credit facility decreases
the borrowing capacity from $400.0 million to $250.0 million and extends the
maturity date from May 2022 to the end of 2024. In anticipation of the cessation
of the London Interbank Offered Rate ("LIBOR"), as part of the refinancing,
interest for the Corporate Revolver is now linked to the Secured Overnight
Financing Rate ("SOFR") administered by the Federal Reserve Bank of New York.
The Company expects the reduced borrowing capacity of the Corporate Revolver to
offset an increase in the margin, resulting in slightly lower interest expenses
going forward.

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Under the terms of our 2020 farm-out agreement with Shell, potential contingent
consideration is payable by Shell depending on the results of the first four
exploration wells Shell drills in the purchased assets, excluding South Africa.
Upon approval of the relevant operating committee of an appraisal plan for
submission to the relevant governmental authority for any of those first four
exploration wells, Shell will be required to pay Kosmos $50.0 million of
consideration for each discovery for which an appraisal plan is approved by the
relevant operating committee, capped in the aggregate at a maximum of $100.0
million total. There were two oil discoveries announced in Namibia during the
first half of 2022. Under the terms of Shell's Petroleum Agreement with Namibia,
if Shell decides to appraise one or both of the discoveries, an appraisal plan
is required to be submitted within 150 days from completion of tests on either
discovery well.

Ghana

During the first quarter of 2022, Ghana production averaged approximately
116,200 Bopd gross (42,300 Bopd net). Jubilee production averaged approximately
91,200 Bopd gross (36,000 Bopd net) with consistent water injection and gas
offtake. TEN production averaged approximately 25,000 Bopd gross (6,300 Bopd
net). In the first quarter of 2022, the multi-year development drilling program
continued to progress with the successful drilling and completion of one water
injector well in the Jubilee Field which came online in the first quarter of
2022. A producer and second water injection well have been drilled in Jubilee,
which are now being completed with both wells expected online during the second
quarter of 2022. Following Jubilee completion operations, the rig is expected to
move to the TEN fields and continue drilling operations. In April 2022, the
Jubilee facilities were shut-down to complete a scheduled two week routine
maintenance program.

WE Gulf of Mexico

Manufacture of the WE Gulf of Mexico averaged approximately 18,800 net Boepd (~83% oil) for the first quarter of 2022, impacted by unplanned plant downtime.

In March 2022, the Company commenced operations to plug back and side-track the
original Kodiak #3 infill well located in Mississippi Canyon (29.1% working
interest). The side-tracked well is expected to be online in the third quarter
of 2022, with insurance proceeds expected to cover the costs incurred to return
the Kodiak #3 well to production.

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 January 2022, the Winterfell-2 appraisal well in Green Canyon
Block 943 was drilled to evaluate the adjacent fault block to the northwest of
the original Winterfell discovery and was designed to test two horizons that
were oil bearing in the Winterfell-1 well, with an exploration tail into a
deeper horizon. The well discovered approximately 40 meters (120 feet) of net
oil pay in the first and second horizons with better oil saturation and porosity
than pre-drill expectations. The exploration tail discovered an additional
oil-bearing horizon in a deeper reservoir which is also prospective in the
blocks immediately to the north. We are currently in discussions with partners
to define the development plan. In March 2022, Kosmos completed the acquisition
of an additional 5.5% interest in the Winterfell area in Green Canyon Blocks
943, 944, 987 and 988 and an additional 1.5% interest in Green Canyon blocks 899
and 900 for $9.6 million.

In May 2022, Kosmos exercised our preferential right to purchase an additional
5.9% interest in Kodiak from Marubeni for approximately $21.0 million with an
additional deferred payment of $7.0 million.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 34,900 Bopd gross (11,500
Bopd net) in the first quarter of 2022. In May 2022, Kosmos and its Joint
Venture partners agreed with the Ministry of Mines and Hydrocarbons of
Equatorial Guinea to extend the Block G petroleum contract term which will
harmonize the expiration of the Ceiba and Okume field production licenses
(presently expiring in 2029 and 2034 respectively) to 2040. The license
extension will support the next phase of investment in the license. As part of
the extension, Kosmos has agreed to pay a signature bonus, included in our 2022
capital plan, as well as to undertake an agreed work program.

Mauritania and Senegal

The partnership is currently in discussions with the government of Mauritania to
extend the exploration phase of Block C8 which is currently set to expire in
June 2022. The BirAllah and Orca discoveries are located in Block C8.

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Great Ahmeyim Turtle Unit

Phase 1 of the Greater Tortue project continues to make steady progress in 2022
with first gas for the project expected in the third quarter of 2023. The
following milestones were achieved as of the end of the first quarter of 2022
and post quarter-end:

• FLNG: start of installation and testing of pipe rack equipment and equipment

• FPSO: Mooring piles have been pre-installed offshore and work on the FPSO in the shipyard continues with mechanical finishing activities and inspection tests

• Terminal Hub: construction continues on schedule with the 21st and last caisson shipped offshore at the start of March 2022 and 3 boxes remaining to be installed

•Subsea: the offshore construction campaign should start in May 2022

• Drilling: started with first holes completed on two of the four wells required for first gas



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Operating results

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 months ended March 31,
2022 and 2021 are included in the following tables:

                                                                                      Three Months Ended March 31,
                                                                                        2022                              2021
                                                                                 (In thousands, except per volume data)
Sales volumes:
Oil (MBbl)                                                                          6,348                                  3,068
Gas (MMcf)                                                                          1,004                                  1,325

Total (MBoe)                                                                        6,515                                  3,289
Total (Boepd)                                                                      72,393                                 36,543

Revenues:
Oil sales                                                            $            654,079                             $  171,934
Gas sales                                                                           4,936                                  4,540

Total revenues                                                       $            659,015                             $  176,474

Average oil sales price per Bbl                                      $             103.04                             $    56.04
Average gas sales price per Mcf                                                      4.92                                   3.43

Average total sales price per Boe                                                  101.15                                  53.66

Costs:

Oil and gas production, excluding workovers                          $            121,223                             $   42,492
Oil and gas production, workovers                                                   3,480                                  3,260
Total oil and gas production costs                                   $            124,703                             $   45,752

Depletion, depreciation and amortization                             $            158,969                             $   76,541

Average cost per Boe:
Oil and gas production, excluding workovers                          $              18.61                             $    12.92
Oil and gas production, workovers                                                    0.53                                   0.99
Total oil and gas production costs                                                  19.14                                  13.91

Depletion, depreciation and amortization                                            24.40                                  23.27
Total                                                                $              43.54                             $    37.18






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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 March 31, 2022:

                                                    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                          -              -               1               0.39               -                 -               8                3.09
TEN                                   -              -               -                  -               -                 -               5                1.02
Equatorial Guinea
Block S                               -              -               -                  -               1              0.40               -                   -
Okume                                 -              -               -                  -               -                 -               1                0.43
U.S. Gulf of Mexico
Winterfell                            -              -               -                  -               2              0.44               -                   -
Kodiak 727 #3                         -              -               1               0.29               -                 -               -                   -

Mauritania / Senegal
Mauritania C8                         -              -               -                  -               2              0.56               -                   -
Greater Tortue Ahmeyim Unit           -              -               -                  -               3              0.80               1                0.27
Senegal Cayar Profond                 -              -               -                  -               3              0.90               -                   -
Total                                 -              -               2               0.68              11              3.10              15                4.81



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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 March 31, 2022 compared to three months ended March 31, 2021


                                               Three Months Ended
                                                   March 31,               Increase
                                              2022           2021         (Decrease)
                                                         (In thousands)
Revenues and other income:
Oil and gas revenue                        $ 659,015      $ 176,474      $  482,541
Gain on sale of assets                             -             26             (26)
Other income, net                                 52             70             (18)
Total revenues and other income              659,067        176,570         

482 497

Costs and expenses:
Oil and gas production                       124,703         45,752         

78,951

Facilities insurance modifications, net        7,136            671           6,465
Exploration expenses                          11,876          8,181           3,695
General and administrative                    25,793         22,441           3,352

Depletion, depreciation and amortization 158,969 76,541

82,428

Interest and other financing costs, net 33,139 24,528

  8,611
Derivatives, net                             282,172        102,461         179,711
Other expenses, net                            2,426          3,468          (1,042)
Total costs and expenses                     646,214        284,043         362,171
Income (loss) before income taxes             12,853       (107,473)        

120,326

Income tax expense (benefit)                  11,453        (16,705)         28,158
Net income (loss)                          $   1,400      $ (90,768)     $   92,168



Oil and gas revenue.  Oil and gas revenue increased by $482.5 million during the
three months ended March 31, 2022, as compared to the three months ended March
31, 2021 primarily as a result of higher average realized oil prices and
increased sales volumes related to the timing of liftings in Ghana and
Equatorial Guinea and our acquisition of additional interests in Ghana during
the fourth quarter of 2021. We sold 6,515 MBoe at an average realized price per
barrel equivalent of $101.15 during the three months ended March 31, 2022 and
3,289 MBoe at an average realized price per barrel equivalent of $53.66 during
the three months ended March 31, 2021.

Oil and gas production.  Oil and gas production costs increased by $79.0 million
during the three months ended March 31, 2022, as compared to the three months
ended March 31, 2021 primarily as a result of higher overall sales volumes
across our portfolio and field production mix in our international business
units.

Exploration expenses.  Exploration expenses increased by $3.7 million during the
three months ended March 31, 2022, as compared to the three months ended March
31, 2021 primarily as result of higher geological, geophysical, and seismic
costs in the U.S. Gulf of Mexico and Mauritania and Senegal business units.

Depletion, Depreciation and Amortization. Depletion, depreciation and amortization increased $82.4 million in the three months ended March 31, 2022compared to the three months ended March 31, 2021 primarily due to higher overall sales volumes in the quarter.

Interest and other financing costs, net. Interest and other financing costs, net
increased $8.6 million during the three months ended March 31, 2022, as compared
with the three months ended March 31, 2021 primarily as a result of increased
interest expense on the 7.750% Senior Notes and the 7.500% Senior Notes issued
during 2021 partially offset by increased capitalized interest related to the
Greater Tortue Ahmeyim project.

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Derivatives, net.  During the three months ended March 31, 2022 and 2021, we
recorded a loss of $282.2 million and a loss of $102.5 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 March 31, 2022 and
2021, 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.


Cash 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 2022.

Sources and Uses of Cash

The following table presents the sources and uses of our cash and cash
equivalents and restricted cash for the three months ended March 31, 2022 and
2021:


                                                                            Three Months Ended
                                                                                 March 31,
                                                                          2022               2021
                                                                           

(In thousands) Sources of cash, cash equivalents and restricted cash: Net cash provided by (used in) operating activities

                   $ 329,628          $ (46,626)
Net proceeds from issuance of senior notes                                    -            444,375
Borrowings under long-term debt                                               -            100,000
Proceeds on sale of assets                                              118,222                631
                                                                        447,850            498,380

Uses of Cash, Cash Equivalents and Restricted Cash: Oil and Gas Assets

                                                      108,834            128,802

Notes receivable from partners                                                -             22,416
Payments on long-term debt                                              107,500            350,000
Purchase of treasury stock                                                2,753              1,018
Dividends                                                                   642                430
Deferred financing costs                                                  5,738              1,034
                                                                        225,467            503,700

Increase (decrease) in cash, cash equivalents and restricted cash $222,383 ($5,320)



Net cash provided by (used in) operating activities.  Net cash provided by
operating activities for the three months ended March 31, 2022 was
$329.6 million compared with net cash used in operating activities for the three
months ended March 31, 2021 of $46.6 million. The increase in cash provided by
operating activities in the three months ended March 31, 2022 when compared to
the same period in 2021 is primarily a result of increased sales volumes and
higher oil prices.
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The following table presents our net debt and liquidity as of March 31, 2022:


                                                          March 31,
                                                            2022
                                                       (In thousands)
Cash and cash equivalents                             $       337,834
Restricted cash                                                59,445
7.125% Senior Notes                                           650,000
7.750% Senior Notes                                           400,000
7.500% Senior Notes                                           450,000
Borrowings under the Facility                                 900,000

Borrowings under the GoM Term Loan                            167,500
Net debt                                              $     2,170,221

Availability under the Facility(1)                    $       335,155
Availability under the Corporate Revolver             $       250,000

Available borrowings plus cash and cash equivalents $922,989

(1)In April 2022commitments under the facility were increased to $1.25 billion and the availability, under the Facility, $350.0 million.

Capital expenditure and investments

We expect to incur capital expenditures when we:

• drill additional infill wells and carry out exploration and production activities in Ghana, Equatorial Guinea and the WE Gulf of Mexico;

• Execute infrastructure-focused exploration and evaluation efforts WE Gulf of Mexico and Equatorial Guinea; and

• carry out 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.

2022 Capital Program

We estimate that we will spend approximately $670 million capital for the year ending
December 31, 2022, excluding any acquisition or disposal of oil and gas properties during the year. This investment budget includes:

•Approximately $225-275 million related to maintenance activities in our
Ghana, Equatorial Guinea and WE Gulf of Mexico assets, including infill development drilling and integrity expenditures

•Approximately $100-$140 million related to growth activities across our Ghana,
Equatorial Guinea and U.S. Gulf of Mexico assets, primarily pre-investment for
infrastructure required to support production growth in 2023 and beyond
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•Approximately $250 million related to the development of GTA phase 1, net of the benefit of the FPSO transaction

•Approximately $50 million related to the progress of evaluation plans for our largest gas resource in Mauritania and Senegalincluding GTA Phase 2, BirAllah and Yakaar-Teranga.

Through March 31, 2022, we have spent approximately $100.5 million on capital
expenditures, excluding the offsetting impact of the proceeds received for the
Tullow pre-empt transaction.

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.

Important sources of capital

Facility

The Facility supports our oil and gas exploration, appraisal and development
programs and corporate activities with a borrowing base calculation that
includes value related to the Jubilee, TEN, Ceiba and Okume fields, however, the
additional interests in Jubilee and TEN acquired in the October 2021 acquisition
of Anadarko WCTP are not included in the borrowing base calculation. During the
first quarter of 2022, the Company made principal repayments totaling
$100.0 million on the Facility. In April 2022, during the Spring 2022
redetermination, the Company's lending syndicate approved a borrowing base
capacity in excess of the facility size of $1.25 billion. As of March 31, 2022,
borrowings under the Facility totaled $900.0 million and the undrawn
availability under the facility was $335.2 million. In April 2022, the Company
made a voluntary early principal repayment of an additional $100 million with
the proceeds from the Tullow pre-emption transaction. See Note 3 - Acquisitions
and Divestitures. Accordingly, $100 million of the total $900.0 million of
borrowings under the Facility have been classified within Current maturities of
long-term debt on our consolidate balance sheet as of March 31, 2022.

The Facility provides a revolving credit and letter of credit facility. The
availability period for the revolving credit facility expires one month prior to
the final maturity date. The letter of credit facility expires on the final
maturity date. The available facility amount is subject to borrowing base
constraints and, beginning on March 31, 2024, outstanding borrowings will be
constrained by an amortization schedule. The Facility has a final maturity date
of March 31, 2027. As of March 31, 2022, we had no letters of credit issued
under the Facility.

We have the right to cancel all the undrawn commitments under the amended and
restated Facility. The amount of funds available to be borrowed under the
Facility, also known as the borrowing base amount, is determined every March and
September. The borrowing base amount is based on the sum of the net present
values of net cash flows and relevant capital expenditures reduced by certain
percentages as well as value attributable to certain assets' reserves and/or
resources in Ghana and Equatorial Guinea, however, excludes the additional
interests in Jubilee and TEN acquired in the recent acquisition of Anadarko
WCTP.

If an event of default exists under the Facility, the lenders can accelerate the
maturity and exercise other rights and remedies, including the enforcement of
security granted pursuant to the Facility over certain asset. We were in
compliance with the financial covenants contained in the Facility as of
March 31, 2022 (the most recent assessment date). The Facility contains
customary cross default provisions.

company revolver

On March 31, 2022, we refinanced the Corporate Revolver by replacing it with a
new revolving credit facility agreement resulting in the following changes to
the terms:

• The total size of the Corporate Revolver is reduced by $400 million for $250 million.

• The due date is extended by May 2022 for December 31, 2024.

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•Borrowings under the Corporate Revolver now bear interest at a rate equal to
the secured overnight financing rate administered by the Federal Reserve Bank of
New York plus a credit adjustment spread plus a 7.0% margin plus mandatory
costs, if applicable.

•Addition of a negative pledge covenant over the participating interests held by
the Company's wholly-owned subsidiary, Kosmos Energy Ghana Investments, in the
WCTP and DT blocks offshore Ghana.

•As the Corporate Revolver is intended to continue to largely remain undrawn,
the Company is required to use the proceeds from any capital markets and loan
transactions to first repay any drawn outstanding balance under the Corporate
Revolver and the Company is subject to a cash sweep of at least 50% of the
Company's Excess Cash (as defined in the Corporate Revolver) to pay outstanding
balances as of March 31 or September 30 in any calendar year.

The Corporate Revolver is available for general corporate purposes and for oil
and gas exploration, appraisal and development programs. The Company expects the
reduced Corporate Revolver size to offset an increase in the margin, resulting
in slightly lower interest expenses going forward. As of March 31, 2022, there
were no outstanding borrowings under the Corporate Revolver and the undrawn
availability was $250.0 million.

The available amount is not subject to borrowing base constraints. We have the
right to cancel all the undrawn commitments under the Corporate Revolver. We are
required to repay certain amounts due under the Corporate Revolver with sales of
certain subsidiaries or sales of certain assets. If an event of default exists
under the Corporate Revolver, the lenders can accelerate the maturity and
exercise other rights and remedies, including the enforcement of security
granted pursuant to the Corporate Revolver over certain assets held by us.

We were in compliance with the financial covenants contained in the Corporate
Revolver as of March 31, 2022 (the most recent assessment date). The Corporate
Revolver contains customary cross default provisions.

The U.S. and many foreign economies continue to experience uncertainty driven by
varying macroeconomic conditions. Although some of these economies have shown
signs of improvement, macroeconomic recovery remains uneven. Uncertainty in the
macroeconomic environment and associated global economic conditions have
resulted in extreme volatility in credit, equity, and foreign currency markets,
including the European sovereign debt markets and volatility in various other
markets. If any of the financial institutions within our Facility or Corporate
Revolver are unable to perform on their commitments, our liquidity could be
impacted. We actively monitor all of the financial institutions participating in
our Facility and Corporate Revolver. None of the financial institutions have
indicated to us that they may be unable to perform on their commitments. In
addition, we periodically review our banking and financing relationships,
considering the stability of the institutions and other aspects of the
relationships. Based on our monitoring activities, we currently believe our
banks will be able to perform on their commitments.

Senior Notes

We have three series of senior notes outstanding, which we collectively referred
to as the "Senior Notes." Our 7.125% Senior Notes mature on April 4, 2026, and
interest is payable on the 7.125% Senior Notes each April 4 and October 4. Our
7.500% Senior Notes mature on March 1, 2028, and interest is payable on the
7.500% Senior Notes each March 1 and September 1. Our 7.750% Senior Notes mature
on May 1, 2027, and interest is payable on the 7.750% Senior Notes each May 1
and November 1.

The Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and
rank equally in right of payment with all of its existing and future senior
indebtedness (including all borrowings under the Corporate Revolver) and rank
effectively junior in right of payment to all of its existing and future secured
indebtedness (including all borrowings under the Facility and the GoM Term
Loan). The Senior Notes are jointly and severally guaranteed on a senior,
unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico
assets and the interests acquired in the Anadarko WCTP Acquisition, and on a
subordinated, unsecured basis by entities that borrow under, or guarantee, our
Facility.

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. As of March 31, 2022, borrowings under the GoM Term Loan totaled
$167.5
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million. From March 31, 2022, $30.0 million of the total $167.5 million
the GoM term loan outstanding has been classified as current maturities of long-term debt in our consolidated balance sheet.

The GoM Term Loan contains customary affirmative and negative covenants,
including covenants that affect our ability to incur additional indebtedness,
create liens, merge, dispose of assets, and make distributions, dividends,
investments or capital expenditures, among other things. The GoM Term Loan is
guaranteed on a senior, secured basis by certain subsidiaries owning the
Company's U.S. Gulf of Mexico assets.

The GoM Term Loan includes certain representations and warranties, indemnities
and events of default that, subject to certain materiality thresholds and grace
periods, arise as a result of a payment default, failure to comply with
covenants, material inaccuracy of representation or warranty, and certain
bankruptcy or insolvency proceedings. If there is an event of default, all or
any portion of the outstanding indebtedness may be immediately due and payable
and other rights may be exercised including against the collateral.

Contractual obligations

The following table summarizes by period the payments due for our estimated
contractual obligations as of March 31, 2022 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,                                                              March 31,
                                          2022(2)             2023               2024               2025               2026             Thereafter            Total(3)                2022
                                                                                                   (In thousands, except percentages)
Fixed rate debt:
7.125% Senior Notes                     $       -          $      -         

$-$- $650,000 $-

    $   650,000          $     638,248
7.750% Senior Notes                             -                 -                  -                  -                  -              400,000          $   400,000          $     394,004
7.500% Senior Notes                             -                 -                  -                  -                  -              450,000              450,000                432,666

Variable rate debt:
Weighted average interest rate               5.42  %           6.61  %            6.87  %            6.62  %            6.82  %              7.03  %
Facility(1)                             $ 100,000          $      -          $ 107,785          $ 242,977          $ 289,350          $   159,888          $   900,000          $     900,000

GoM Term Loan                              22,500            30,000             30,000             85,000                  -                    -              167,500                167,500

Total principal debt
repayments(1)                           $ 122,500          $ 30,000         

$137,785 $327,977 $939,350 $1,009,888

    $ 2,567,500
Interest & commitment fee
payments on long-term debt                144,337           183,429            179,550            154,354            109,312               68,982              839,964
Operating leases(4)                         2,997             4,065              4,136              4,207              4,278               10,866               30,549

__________________________________


(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 March 31, 2022. 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. In April 2022, the Company made a voluntary
early principal repayment of an additional $100.0 million with the proceeds from
the Tullow pre-emption transaction. See Note 3 - Acquisitions and Divestitures.
Accordingly, $100.0 million of the total $900.0 million of borrowings under the
Facility have been classified within Current maturities of long-term debt on our
consolidated balance sheet as of March 31, 2022.

(2)Represents the period April 1, 2022 by December 31, 2022.

(3)Does not include our share of operator's 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.

(4) Mainly concerns corporate leases and offices abroad.

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We are currently committed to drilling an exploration well in Mauritania and one
$200.2 million Contractual liability of the FPSO related to the deferred sale of the Greater Tortue FPSO.

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, 2021.

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;
•the impact of Russia's invasion of Ukraine and the effects it has on the oil
and gas industry as a whole, including increased volatility with respect to oil,
natural gas and NGL prices and operating and capital expenditures
•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;
•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;
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•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.

Item 3. Qualitative and quantitative information on market risk

The primary objective of the following information is to provide forward-looking
quantitative and qualitative information about our potential exposure to market
risks. The term "market risks" as it relates to our currently anticipated
transactions refers to the risk of loss arising from changes in commodity prices
and interest rates. These disclosures are not meant to be precise indicators of
expected future losses, but rather indicators of reasonably possible losses.
This forward-looking information provides indicators of how we view and manage
ongoing market risk exposures. We enter into market-risk sensitive instruments
for purposes other than to speculate.

We manage market and counterparty credit risk in accordance with our policies.
In accordance with these policies and guidelines, our management determines the
appropriate timing and extent of derivative transactions. See "Item 8. Financial
Statements and Supplementary Data - Note 2 - Accounting Policies, Note 9 -
Derivative Financial Instruments and Note 10- Fair Value Measurements" section
of our annual report on Form 10-K for a description of the accounting procedures
we follow relative to our derivative financial instruments.

The following table reconciles changes in the fair values ​​of our open derivative contracts during the three months ended March 31, 2022:

                                                                                Derivative Contracts Assets (Liabilities)
                                                                                               Commodities
                                                                                             (In thousands)
Fair value of contracts outstanding as of December 31, 2021                   $                                  (66,315)
Changes in contract fair value                                                                                  (290,806)
Contract maturities                                                                                               93,050
Fair value of contracts outstanding as of March 31, 2022                      $                                 (264,071)



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Commodity Price Risk

The Company's revenues, earnings, cash flows, capital investments and,
ultimately, future rate of growth are highly dependent on the prices we receive
for our crude oil, which have historically been very volatile. Substantially all
of our oil sales are indexed against Dated Brent, and Heavy Louisiana Sweet. Oil
prices in the first three months of 2022 ranged between $78.99 and $137.64 per
Bbl for Dated Brent, with Heavy Louisiana Sweet experiencing similar volatility
during the first three months of 2022.

Commodity derivatives

We enter into various oil derivative contracts to mitigate our exposure to
commodity price risk associated with anticipated future oil production. These
contracts currently consist of collars, put options and call options. In regards
to our obligations under our various commodity derivative instruments, if our
production does not exceed our existing hedged positions, our exposure to our
commodity derivative instruments would increase. In addition, a reduction in our
ability to access credit could reduce our ability to implement derivative
contracts on commercially reasonable terms.

Commodity price sensitivity

The following table provides information about our oil derivative financial
instruments that were sensitive to changes in oil prices as of March 31, 2022.
Volumes and weighted average prices are net of any offsetting derivatives
entered into.

                                                                                                                            Weighted Average Price per Bbl                      Asset
                                                                                                              Net Deferred                                                                        (Liability)
                                                                                                                Premium                                                                          Fair Value at
                                                                                                                Payable/                       Sold                                                March 31,
Term                           Type of Contract                   Index                  MBbl                 (Receivable)                     Put             Floor           Ceiling              2022(2)
                                                                                                                                                                                                (In thousands)
2022:
    Apr - Dec            Three-way collars                     Dated Brent                3,375          $     0.64                         $ 43.33          $ 56.67          $ 76.91          $      (85,675)
    Apr - Dec            Three-way collars                      NYMEX WTI                   750                1.45                           50.00            65.00            85.00                 (11,149)
    Apr - Dec            Two-way collars                       Dated Brent                5,000                1.15                               -            63.25            84.00                (100,470)
    Apr - Dec            Sold calls(1)                         Dated Brent                1,186                   -                               -                -            60.00                 (46,964)

2023:

    Jan - Dec            Three-way collars                     Dated Brent                2,000                0.92                           47.50            65.00            95.25                 (19,813)

__________________________________

(1) Represents call option contracts sold to counterparties to improve other derivative positions

(2) Fair values ​​are based on average forward oil prices March 31, 2022.


At March 31, 2022, our open commodity derivative instruments were in a net
liability position of $264.1 million. As of March 31, 2022, a hypothetical 10%
price increase in the commodity futures price curves would decrease future
pre-tax earnings by approximately $97.3 million. Similarly, a hypothetical 10%
price decrease would increase future pre-tax earnings by approximately
$98.3 million.

Sensitivity to interest rates

Changes in market interest rates affect the amount of interest we pay on certain
of our borrowings. Outstanding borrowings under the Facility and GoM Term Loan,
which as of March 31, 2022 total $1.1 billion and have a weighted average
interest rate of 4.5%, are subject to variable interest rates which expose us to
the risk of earnings or cash flow loss due to potential increases in market
interest rates. If the floating market rate increased 10% at this level of
floating rate debt, we would pay an estimated additional $0.5 million interest
expense per year. The commitment fees on the undrawn availability under the
Facility and the Corporate Revolver are not subject to changes in interest
rates. All of our other long-term indebtedness is fixed rate and does not expose
us to the risk of cash flow loss due to changes in market interest rates.
Additionally, a change in the market interest rates could impact interest costs
associated with future debt issuances or any future borrowings.

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