Monday 6 August 2018

Kosmos Energy announced that the company has entered into an agreement to acquire Deep Gulf Energy (“DGE”)(1), a leading deepwater company operating in the Gulf of Mexico, from First Reserve and other shareholders for a total consideration of $1.225 billion, subject to certain adjustments. By acquiring DGE, Kosmos adds to its deepwater Atlantic Margin portfolio an established business with attractive assets and a strong record of growing production and reserves through infrastructure-led exploration. This immediately accretive acquisition enhances the scale of the company and is expected to generate significant free cash flow, enabling Kosmos to return cash to shareholders through a dividend, beginning in the first quarter of 2019.

Transaction Highlights

Immediately accretive:

- Acquisition EV / 2018 estimated EBITDAX: 3.4x vs. Kosmos at 6.4x(2)

- Acquisition EV / 2018 estimated 2P reserves: approximately $15 per barrel of oil equivalent (boe) vs. Kosmos at approximately $21 per boe

- Adds approximately 25,000 barrels of oil equivalent per day (boed) production (~85% oil), with an estimated reserves to production ratio of 8.8, growing 2018 pro forma production by 50% from approximately 45,000 to 70,000 boed

- Adds estimated 2P reserves of approximately 80 million barrels of oil equivalent(3) (MMboe), increasing total 2P reserves by 40% from over 200 MMboe to approximately 280 MMboe

- Adds experienced deepwater Gulf of Mexico management team with track record of delivering short-cycle, high-margin production

- Attractive acquisition with NPV-10 breakeven of approximately $48.00 per barrel WTI

- Low asset retirement obligation of approximately $100 million undiscounted

- Enables commencement of dividend payment in the first quarter of 2019, underpinned by expected production growth and sustainable free cash flow

Transaction Details

Under the terms of the transaction, Kosmos will acquire DGE for total consideration of $1.225 billion, comprised of $925 million in cash and $300 million in Kosmos common shares issued to First Reserve, management, and other DGE shareholders. Kosmos intends to fund the cash portion of the purchase price with borrowings under its existing credit facilities. In connection with the transaction, Kosmos has received $200 million of additional firm commitments to increase its reserves-based loan facility capacity.

The acquisition is expected to close around the end of the third quarter 2018, subject to receipt of regulatory approval and the satisfaction of customary closing conditions.

Evercore Inc. and Goldman Sachs & Co. LLC acted as financial advisors to Kosmos.

A slide presentation will be made available on the Investors page of Kosmos’ website at www.kosmosenergy.com immediately after this news release is issued. A replay of the webcast will be available on the website for approximately 90 days following the event.

Note:

(1) Includes Deep Gulf Energy LP, Deep Gulf Energy II, LLC and Deep Gulf Energy III, LLC (collectively “DGE”)

(2) Acquisition EBITDAX based on Kosmos’s internal estimates which assume pricing based on the July 26, 2018 NYMEX WTI strip of $67.32 per barrel in 2018. Kosmos enterprise value calculated using Kosmos’s July 30, 2018 closing price and second quarter 2018 net debt. Kosmos EV / EBITDAX multiple calculated using Bloomberg consensus EBITDAX.

(3) Estimated 2P reserves as of June 30, 2018