Kosmos Energy Ltd. (“Kosmos” or the “Company”) (NYSE/LSE: KOS) announced today its financial and operating results for the second quarter of 2022. For the quarter, the Company generated a net income of $117 million, or $0.25 per diluted share. When adjusted for certain items that impact the comparability of results, the Company generated an adjusted net income⁽¹⁾ of $132 million, or $0.28 per diluted share for the second quarter of 2022.

SECOND QUARTER 2022 HIGHLIGHTS

• Net Production⁽²⁾: ~62,200 barrels of oil equivalent per day (boepd) with sales of ~62,400 boepd
• Revenues: $620 million, or $109.28 per boe (excluding the impact of derivative cash settlements)
• Production expense: $90 million, or $15.88 per boe
• Capital expenditures (excluding acquisitions and divestitures): $220 million
• Generated free cash flow⁽¹⁾ of approximately $67 million (~$290 million in 1H 2022)
• Accelerating debt repayment with net leverage falling to ~1.6x
• Phase One of the Greater Tortue Ahmeyim LNG project over 80% complete at quarter end

Commenting on the Company’s second quarter 2022 performance, Chairman and Chief Executive Officer Andrew G. Inglis said: “Kosmos delivered another quarter of strong operational and financial performance. Production at the upper end of guidance and continued free cash flow delivery helped reduce debt and drive net leverage lower. Following the robust underlying business performance year-to-date, and despite seeing some inflationary cost pressures, we expect full year free cash flow generation and debt reduction to be in line with previous guidance with year-end net leverage expected to be lower than our 1.5x target.

"We continued to make good progress on our three core development projects -- Tortue Phase 1, Jubilee Southeast and Winterfell -- which we expect will collectively grow production by ~50% by 2024. We are also advancing our other gas projects in Mauritania and Senegal, which are expected to drive the next phase of growth beyond 2024 as we continue to materially increase the gas weighting of the portfolio.

“With low-cost, high margin oil assets that generate material cash to both de-lever and fund our investment in our world-class gas assets, we believe we have the right portfolio at the right time. We are well positioned for the energy transition and expect to play an increasingly important role alongside our host countries in providing energy security to nations looking to diversify current supply sources.”

FINANCIAL UPDATE

Net capital expenditure for the second quarter of 2022, excluding acquisitions and divestitures, was approximately $220 million. The $20 million increase from guidance was a result of inflationary pressures primarily related to activity in Mauritania and Senegal. Full year capital expenditure guidance for 2022 is now expected to be around $700 million, incorporating the Company’s latest inflation impact estimates (an increase of approximately 5%).

Kosmos exited the second quarter of 2022 with $2.1 billion of net debt⁽¹⁾ and available liquidity of over $1.0 billion. The Company generated $67 million of free cash flow in the second quarter, and around $290 million in the first half of the year. Excluding capital expenditure in Mauritania and Senegal, base business cash flow in the first half of the year was around $450 million. Utilizing free cash flow from the strong business performance in the first half of the year, the Company paid down over $200 million of debt in the quarter. With growing EBITDAX and a reduction in net debt, the Company remains well on track to deliver on its target net leverage ratio of less than 1.5x by year-end.

OPERATIONAL UPDATE

Production

Total net production⁽²⁾ in the second quarter of 2022 averaged approximately 62,200 boepd, at the upper end of guidance. The Company exited the quarter in a slight net overlift position.

Ghana

Production in Ghana averaged approximately 31,600 barrels of oil per day (bopd) net in the second quarter of 2022. Kosmos lifted three cargos from Ghana during the quarter, in line with guidance.

At Jubilee, production averaged approximately 73,600 bopd gross during the quarter, which includes the impact of the planned floating, production, storage and offloading vessel ("FPSO") shutdown. Excluding the planned shutdown, Jubilee production averaged approximately 92,000 bopd gross in the second quarter. At TEN, production averaged approximately 23,600 bopd gross for the second quarter. High reliability of the Ghana production facilities continues, as well as high levels of water injection and gas offtake by the Government of Ghana. As the operator recently communicated, drilling performance has been excellent with wells coming in ahead of schedule and under budget.

During the second quarter, the Jubilee FPSO underwent a planned two-week shut down for routine maintenance and facility upgrades. The key objectives for the shut down were achieved, including facility upgrades necessary to tie-in the Jubilee Southeast wells that are expected to increase production from mid-2023. Production has remained strong since the Jubilee FPSO restarted operations, with a second quarter exit rate of over 90,000 bopd gross.

The Jubilee Southeast development continues to progress and is now approximately 40% complete. Long-lead items necessary for the project have been ordered and drilling is expected to begin in the fourth quarter with initial production expected around mid-2023. The partnership expects the new wells to increase gross production in the field to ~100,000 bopd.

At TEN, the partnership drilled the first of the two riser base wells (NT-10) to initially define the extent of the Ntomme reservoir supporting the TEN Enhancement Project. The well was drilled to test two separate reservoir objectives and encountered better reservoir quality and thickness than expected but was water bearing. A second well (NT-11) is currently being planned to target a different fairway in a structurally higher setting. The results of the two wells will allow the partnership to high-grade and optimize the future drilling plans for the TEN Enhancement Project.

U.S. Gulf of Mexico

Production in the U.S. Gulf of Mexico averaged approximately 20,600 boepd net (82% oil) during the second quarter, an increase over the first quarter as a result of less downtime at third-party facilities. The scheduled drydock of the Helix Producer-1 vessel was deferred from the second quarter to the third quarter, which is expected to result in around 45 days of downtime for the Tornado field in the third quarter.

The Kodiak sidetrack well was drilled during the second quarter. Completion activities are ongoing with production expected to begin in the third quarter.

During the second quarter, Kosmos exercised and closed its preferential right to purchase an additional 5.9% interest in Kodiak from Marubeni for approximately $21 million with additional deferred payments of $8 million.

At the end of the second quarter, Kosmos, as the operator of the Odd Job field, executed a contract with Subsea 7 (US) LLC and OneSubsea LLC to fabricate and install a multi-phase subsea pump to enhance recovery and boost production in the Odd Job field from mid-2024 (Kosmos ~55% working interest).

On Winterfell, the operator has submitted the field development plan, with a final investment decision ("FID") approval expected later this quarter. The development is planned to be phased, with the first phase targeting around 100 million barrels of gross recoverable resource in the central Winterfell area. Five wells in total are expected in the first phase, with three wells online at first oil. Long lead items have been ordered and a rig has been selected for drilling and completion activities in 2023. First oil is expected approximately 18 months from FID approval.

Based on recent pressure work from the initial two wells, the partnership now believes there is significant upside to resources estimates across the greater Winterfell area, with up to 200 million barrels of gross recoverable resource that could be de-risked as the partnership evaluates the results from the first phase development wells.

Equatorial Guinea

Production in Equatorial Guinea averaged approximately 31,300 bopd gross and 10,000 bopd net in the second quarter of 2022. Production was lower than the first quarter due to some facility downtime and maintenance work. As forecasted, Kosmos lifted one cargo from Equatorial Guinea during the quarter.

In the second quarter, Kosmos and its joint venture partners completed the previously announced agreement with the Ministry of Mines and Hydrocarbons of Equatorial Guinea to extend the Block G petroleum contract term. The extension harmonizes the expiration of the Ceiba and Okume field production licenses (2029 and 2034 respectively) to 2040.

After the end of the second quarter, a drilling rig has been selected for the next drilling program which is expected to begin in the second half of 2023.

Mauritania & Senegal

Phase 1 of the Greater Tortue Ahmeyim liquified natural gas (LNG) project continues to make good progress and was over 80% complete at quarter-end with the following developments across the key workstreams:

• FLNG: construction and mechanical completion activities continue and commissioning work has begun
• FPSO: mechanical completion loop checks continue and commissioning work has commenced
• Hub Terminal: all 21 caissons installed. The piling installation is nearing completion and the living quarters platform is currently in transit to site
• Subsea: subsea equipment has begun to arrive in region and installation of the export pipeline has commenced
• Drilling: successfully drilled two of the four wells required for first gas and the third well is in progress

The operator has been unable to make up the delay from the lockdown of the FPSO yard in April and the ongoing Covid-19 restrictions in China. As a result, the FPSO sailaway date is now expected to be in the fourth quarter with the same high level of completion prior to sailaway (previously expected to be end of the third quarter). We continue to target first gas in the third quarter of 2023 with first LNG end-2023.

The plans to develop and optimize Phase 2 of the Greater Tortue Ahmeyim LNG project continue to progress. Given the change in the global gas markets in 2022, the partnership is working closely with host governments to evaluate the optimal solution to best utilize the infrastructure associated with Phase 1 of the project. A development decision is planned at the end of the third quarter.

To optimize the commercial value of sales for the gas production from Greater Tortue Ahmeyim, Kosmos plans to utilize existing contractual rights under our Phase 1 LNG sales agreement to divert cargos to prospective buyers in order to benefit from the current market environment.

In June 2022, the exploration period of Block C8 offshore Mauritania expired. The partnership and the government of Mauritania are currently in the process of finalizing a new Production Sharing Contract (“PSC”) covering the BirAllah and/or Orca discoveries. The new PSC is expected to provide two years to submit a development plan covering these discoveries with the terms of the new PSC substantially similar to the former PSC for Block C8 with additional provisions for potentially enhanced back-in rights for the Government of Mauritania, local content, capacity building and an environmental fund. As a result, during the second quarter of 2022 we wrote off approximately $64.2 million of previously capitalized costs related to the BirAllah and Orca discoveries incurred under the C8 license to exploration expense, however, these costs will still be tax deductible and cost recoverable against our Greater Tortue development.

At Yakaar-Teranga, the partnership continues to make progress for the first phase development concept with the Government of Senegal focused on a domestic gas solution.

(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 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 second quarter 2022 financial and operating results today 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 NOC financing. The Company defines net debt as the sum of notes outstanding issued at par and borrowings on the RBL Facility, Corporate revolver, and GoM Term Loan less cash and cash equivalents and 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.

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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