Kosmos Energy sells Equatorial Guinea assets for $127M

Exhibit 99.1

 

 

KOSMOS ENERGY LTD. AND SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

 

The following Unaudited Pro
Forma Condensed Balance Sheet as of March 31, 2026 and the Unaudited Pro Forma Condensed Statements of Operations for the three months
ended March 31, 2026 and for the year ended December 31, 2025 have been derived from the historical consolidated financial statements
of Kosmos Energy Ltd. (together with its subsidiaries, “Kosmos” or the “Company”), as adjusted to give effect
for the sale of all of the shares of Kosmos International Petroleum, Inc., which indirectly holds a 40.375% participating interest in
the Ceiba Field and Okume Complex production assets located in Block G offshore Equatorial Guinea by the Company (the “Disposition”).
In consideration for the Disposition, Kosmos received upfront cash of approximately $127.0 million based on an initial purchase price
of $180.0 million reduced by certain purchase price adjustments totaling approximately $53.0 million, and is entitled to future contingent
consideration of up to $39.5 million, comprising $12.5 million linked to production performance at the Ceiba field and $9.0 million payable
in each of 2027, 2028 and 2029, which are subject to certain oil price and production thresholds. The contingent consideration has not
been recognized in the pro forma balance sheet. The Unaudited Pro forma Condensed Financial Information is intended to reflect the estimated
impact of the Disposition on the Company on a pro forma basis as of and for the periods indicated.

 

The following Unaudited Pro
Forma Condensed Financial Information is based on and should be read in conjunction with:

 

•

The historical audited consolidated financial statements of the Company and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the Securities and Exchange Commission (“SEC”) on March 2, 2026;

 

•

The historical unaudited condensed consolidated interim financial statements of the Company and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in its quarterly report on Form 10-Q for the three months ended March 31, 2026, as filed with the SEC on May 5, 2026.

 

The Unaudited Pro Forma Condensed
Balance Sheet as of March 31, 2026 and the Unaudited Pro Forma Condensed Statements of Operations for the three months ended March 31,
2026 and for the year ended December 31, 2025 give pro forma effects to the elimination of certain assets and liabilities associated
with the Disposition as if it had been consummated on March 31, 2026 (in the case of the balance sheet) or January 1, 2025 (in the case
of the statement of operations). The unaudited pro forma effects of the Disposition on the Company’s oil and gas reserves and the
standardized measure of future net cash flows, give pro forma effect to the Dispositions of the reserves based on the information disclosed
in the Company’s annual report as of and for the year ended December 31, 2025.

 

The Unaudited Pro Forma Condensed
Financial Information has been prepared to reflect adjustments to the Company’s historical consolidated financial information that
are (i) directly attributable to the Disposition and (ii) factually supportable.

 

The Unaudited Pro Forma Condensed
Financial Information is presented for informational purposes only and is not necessarily indicative of the operating results or financial
position that actually would have been achieved if the Disposition had occurred on the dates indicated or that may be achieved in future
periods. It also does not reflect any cost savings, operating synergies or revenue enhancements that the Company may achieve with respect
to eliminating the companies or the impact of any non-recurring activity and any one-time transaction related costs. Synergies and integration
costs have been excluded from consideration because they do not meet the criteria for unaudited pro forma adjustments.

 

KOSMOS ENERGY LTD. AND SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS

 

AS OF MARCH 31, 2026

 

(In thousands, except share data)

 

		Kosmos				Disposition				Pro Forma
		Historical				Adjustments (A)				Company
Assets:
Current assets:
Cash and cash equivalents		$	129,957			$	—			$	129,957
Receivables			110,510				—				110,510
Inventories			182,725				—				182,725
Prepaid expenses and other			11,543				—				11,543
Derivatives			—				—				—
Assets held for sale			18,707				18,707				—
Total current assets			453,442				18,707				434,735
Property and equipment, net			3,367,489				—				3,367,489
Other assets:
Restricted cash			30,630				—				30,630
Long-term receivables			465,649				—				465,649
Deferred tax assets			2,783				—				2,783
Derivatives			—				—				—
Non-current assets held for sale			408,895				408,895				—
Other			54,554				—				54,554
Total assets		$	4,783,442			$	427,602			$	4,355,840
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	194,969			$	—			$	194,969
Accrued liabilities			332,078				—				332,078
Current maturities of long-term debt			30,220				—				30,220
Derivatives			156,243				—				156,243
Liabilities held for sale			43,544				43,544				—
Total current liabilities			757,054				43,544				713,510
Long-term liabilities:
Long-term debt, net			2,866,043				127,034				2,739,009
Derivatives			14,915				—				14,915
Asset retirement obligations			196,297				—				196,297
Deferred tax liabilities			134,750				—				134,750
Long-term liabilities held for sale			260,601				260,601				—
Other long-term liabilities			38,673				—				38,673
Total long-term liabilities			3,511,279				387,635				3,123,644
Stockholders’ equity:
Preference shares, $0.01 par value; 200,000,000 authorized shares; zero issued at March 31, 2026			—				—				—
Common stock, $0.01 par value; 2,000,000,000 authorized shares; 637,413,155 issued at March 31, 2026			6,374				—				6,374
Additional paid-in capital			2,753,572				—				2,753,572
Accumulated deficit			(2,007,830	)			(3,577	)			(2,004,253	)
Treasury stock, at cost, 44,263,269 shares at March 31, 2026			(237,007	)			—				(237,007	)
Total stockholders’ equity			515,109				(3,577	)			518,686
Total liabilities and stockholders’ equity		$	4,783,442			$	427,602			$	4,355,840

 

 

See accompanying notes.

 

KOSMOS ENERGY LTD. AND SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

 

FOR THE YEAR ENDED DECEMBER 31, 2025

 

(In thousands, except share data)

 

		Kosmos				Disposition				Pro Forma
		Historical				Adjustments (B)				Company
Revenues and other income:
Oil and gas revenue		$	1,288,352			$	165,118			$	1,123,234
Gain on sale of assets			2,200				—				2,200
Other income, net			1,098				—				1,098
Total revenues and other income			1,291,650				165,118				1,126,532
Costs and expenses:
Oil and gas production			708,902				131,501				577,401
Exploration expenses			223,616				321				223,295
General and administrative			76,120				2,658				73,462
Depletion, depreciation and amortization			556,774				78,818				477,956
Impairment of long-lived assets			177,563				—				177,563
Interest and other financing costs, net			223,430				(195	)			223,625
Derivatives, net			(53,665	)			(20,171	)			(33,494	)
Other expenses, net			13,491				8,023				5,468
Total costs and expenses			1,926,231				200,955				1,725,276
Loss before income taxes			(634,581	)			(35,837	)			(598,744	)
Income tax expense (benefit)			65,205				(11,860	)			77,065
Net loss		$	(699,786	)		$	(23,977	)		$	(675,809	)
Net loss per share:
Basic		$	(1.47	)						$	(1.42	)
Diluted		$	(1.47	)						$	(1.42	)
Weighted average number of shares used to compute net loss per share:
Basic			477,591								477,591
Diluted			477,591								477,591

 

 

See accompanying notes.

 

KOSMOS ENERGY LTD. AND SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS

 

FOR THE THREE MONTHS ENDED MARCH 31, 2026

 

(In thousands, except share data)

 

		Kosmos				Disposition				Pro Forma
		Historical				Adjustments (B)				Company
Revenues and other income:
Oil and gas revenue		$	370,728			$	22,395			$	348,333
Gain on sale of assets			—				—				—
Other income, net			169				—				169
Total revenues and other income			370,897				22,395				348,502
Costs and expenses:
Oil and gas production			130,595				14,853				115,742
Exploration expenses			19,744				—				19,744
General and administrative			27,710				815				26,895
Depletion, depreciation and amortization			119,873				4,118				115,755
Interest and other financing costs, net			58,802				(34	)			58,836
Derivatives, net			251,996				68,051				183,945
Other expenses, net			3,264				24				3,240
Total costs and expenses			611,984				87,827				524,157
Loss before income taxes			(241,087	)			(65,432	)			(175,655	)
Income tax expense (benefit)			(15,513	)			650				(16,163	)
Net loss		$	(225,574	)		$	(66,083	)		$	(159,491	)
Net loss per share:
Basic		$	(0.45	)						$	(0.32	)
Diluted		$	(0.45	)						$	(0.32	)
Weighted average number of shares used to compute net loss per share:
Basic			506,198								506,198
Diluted			506,198								506,198

 

 

See accompanying notes.

 

KOSMOS ENERGY LTD. AND SUBSIDIARIES

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED FINANCIAL
STATEMENTS

 

Note 1.      
Description of Transaction

 

On February 24, 2026, Kosmos
Energy Operating (“KEO”), a wholly-owned subsidiary of Kosmos Energy Ltd. (“Kosmos” or the “Company”),
entered into a Share Sale and Purchase Agreement (the “SPA”) for the sale (the “Disposition”) of all of the shares
of KEO’s wholly-owned subsidiary, Kosmos International Petroleum, Inc., which indirectly holds a 40.375% participating interest
in the Ceiba Field and Okume Complex production assets located in Block G offshore Equatorial Guinea. The Disposition closed on June 16,
2026. In consideration for the Disposition, Kosmos received approximately $127.0 million in upfront cash based on an initial purchase
price of $180.0 million reduced by certain purchase price adjustments totaling approximately $53.0 million, and is entitled to future
contingent consideration of up to $39.5 million, comprising $12.5 million linked to production performance at the Ceiba field and $9.0
million payable in each of 2027, 2028 and 2029, which are subject to certain oil price and production thresholds.

 

Note 2. Basis of Presentation

 

The
following Unaudited Pro Forma Condensed Financial Information reflect the consolidated historical results of the Company, on a pro forma
basis to give effect to the Disposition, as if it had been consummated on March 31, 2026 in the Unaudited Pro Forma Condensed Balance
Sheet, and on January 1, 2025 in the Unaudited Pro Forma Condensed Statement of Operations.

 

The
Unaudited Pro Forma Condensed Balance Sheet and Statement of Operations as of and for the three months ended March 31, 2026, respectively,
were derived from Kosmos’ unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2026.
The Unaudited Pro Forma Condensed Statement of Operations for the year ended December 31, 2025 was derived from Kosmos’ audited
consolidated statement of operations for the year ended December 31, 2025.

 

The
Unaudited Pro Forma Condensed Financial Information has been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission.  Certain information and certain footnote disclosures normally included in financial statements prepared in accordance
with U.S. generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations; however,
management believes that the disclosures are adequate to make the information presented not misleading.

 

The
Unaudited Pro Forma Condensed Financial Information reflect events directly attributable to the described Disposition and certain assumptions
that the Company believes are reasonable. The Unaudited Pro Forma Condensed Financial Information are not necessarily indicative of financial
results that would have been attained had the described Disposition occurred on the dates indicated above. The adjustments are based on
currently available information and certain estimates and assumptions. Management believes that the assumptions provide a reasonable basis
for presenting the significant effects of the described Disposition as contemplated and that the pro forma adjustments give appropriate
effect to those assumptions and are properly applied in the unaudited pro forma consolidated and financial statements.

 

The
Unaudited Pro Forma Condensed Financial Information are provided for illustrative purposes only and are not intended to represent or be
indicative of the results of operations or financial position of the company that would have been recorded had the Disposition been completed
as of the dates presented and should not be taken as representative of future results of operations or financial position of the company.
The Unaudited Pro Forma Condensed Financial Information do not reflect the impacts of any potential operational efficiencies or cost savings
that the company may achieve following the Disposition.

 

The
unaudited pro forma condensed financial statements should be read in conjunction with the Company’s financial statements and related
notes included on Form 10-K and Form 10-Q filed on March 2, 2026 and May 5, 2026, respectively.

 

The Unaudited Pro forma Condensed
Financial Information has been prepared by the Company by accounting for the transaction as a long-lived asset disposal under Accounting
Standards Codification (“ASC”) Subtopic 360 — Property, Plant and Equipment,  including the criteria for assets
held for sale and the measurement of the disposal group at the lower of carrying amount for fair value lets cost to sell, as applicable.

 

The
following is a summary of the carrying amounts of the major classes of assets and liabilities that were classified as held for sale as
of March 31, 2026:

 

		March 31, 2026
		(In thousands)
Assets held for sale
Current assets:
Cash and cash equivalents		$	7,960
Receivables			49
Inventories			36
Prepaid expenses and other			10,662
Total current assets			18,707
Non-current assets:
Property and equipment, net			408,895
Total non-current assets			408,895
Total assets held for sale		$	427,602
Liabilities held for sale
Current liabilities:
Accounts Payable		$	42,944
Accrued Liabilities			600
Total current liabilities			43,544
Long-term Liabilities
Asset retirement obligations			139,602
Deferred tax liabilities			120,999
Total long-term liabilities			260,601
Total liabilities held for sale		$	304,145

 

Note
3. Pro Forma Balance Sheet Adjustments

 

The following
adjustments have been made to the accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 2026.

 

A.

Represents the elimination of assets and liabilities related to the sale of KIPI, along with cash proceeds and resulting gain on sale associated with the Disposition.  The cash proceeds are shown as a reduction in long-term debt.

 

 

Note
4. Pro Forma Statement of Operations Adjustments

 

The following
adjustments have been made to the accompanying unaudited pro forma condensed consolidated statements of operations for the three months
ended March 31, 2026, and for the year ended December 31, 2025.

 

B.

Represents the elimination of oil revenues and expenses and related results of operations associated with the Disposition.

 

Note
5. Pro Forma Supplemental Oil and Natural Gas Reserve Information

 

The
following tables set forth certain unaudited pro forma information concerning the Company’s proved oil and natural gas reserves
for the year ended December 31, 2025, giving effect to the Disposition as if it had occurred on January 1, 2025. There are numerous uncertainties
inherent in estimating the quantities of proved reserves and projecting future rates of production and timing of development costs. Further,
the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs. The Company emphasizes that
reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing
oil and natural gas properties. Accordingly, these estimates are expected to change as additional information becomes available in the
future. The estimates of reserves, and the standardized measure of future net cash flow, shown below, reflects the Company’s development
plan for such properties. The following reserve data represent estimates only and should not be construed as being precise.

 

		Kosmos Historical												Disposition Adjustments												Pro Forma Company
		Oil				Natural Gas				Total				Oil				Natural Gas				Total				Total
		(MMBbl)				(Bcf)				(MMBoe)				(MMBbl)				(Bcf)				(MMBoe)				(MMBoe)
Net proved developed and undeveloped reserves at December 31, 2024			122				774				251				18				11				20				231
Extensions and discoveries			—				—				—				—				—				—				—
Production			(18	)			(37	)			(24	)			(3	)			(1	)			(3	)			(21	)
Revision in estimate			17				33				23				(3	)			(4	)			(4	)			26
Purchases of minerals-in-place			—				—				—				—				—				—				—
Net proved developed and undeveloped reserves at December 31, 2025(1)			120				770				249				12				6				13				236
Proved developed reserves
December 31, 2025			63				449				138				12				6				13				125
Proved undeveloped reserves
December 31, 2025			57				321				111				—				—				—				111

 

(1)

The sum of proved developed reserves and proved undeveloped reserves may not add to net proved developed and undeveloped reserves as a result of rounding.

 

Standardized
Measure of Discounted Future Net Cash Flows

 

Summarized
in the following table is information for the standardized measure of discounted cash flows relating to proved reserves as of December
31, 2025, giving effect to the Disposition. The standardized measure of discounted future net cash flows does not purport to be, nor should
it be interpreted to present, the fair value of the oil and natural gas reserves of the property. An estimate of fair value would take
into account, among other things, the recovery of reserves not presently classified as proved, the value of unproved properties, and consideration
of expected future economic and operating conditions.

 

The
estimates of future cash flows and future production and development costs as of December 31, 2025 are based on the unweighted arithmetic
average first-day-of-the-month price for the preceding 12-month period.

 

Estimated
future production of proved reserves and estimated future production and development costs of proved reserves are based on current costs
and economic conditions. All wellhead prices are held flat over the forecast period for all reserve categories. The estimated future net
cash flows are then discounted at a rate of 10%.

 

		Kosmos Historical				Disposition Adjustments				Pro Forma Company
At December 31, 2025							(in millions)
Future cash inflows		$	12,642			$	793			$	11,849
Future production costs			(5,130	)			(480	)			(4,650	)
Future development costs			(3,124	)			(362	)			(2,762	)
Future tax expenses			(1,074	)			(63	)			(1,011	)
Future net cash flows		$	3,314			$	(112	)		$	3,426
10% annual discount for estimating timing of cash flows			(1,424	)			106				(1,530	)
Standardized measure of discounted future net cash flows		$	1,890			$	(6	)		$	1,896

 

In
the foregoing determination of future cash inflows, sales prices used for gas and oil for December 31, 2025 were estimated using the average
price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for each month.
Prices were adjusted by lease for quality, transportation fees and regional price differentials. Future costs of developing and producing
the proved gas and oil reserves reported at the end of each year shown were based on costs determined at each such year-end, assuming
the continuation of existing economic conditions.

 

It
is not intended that the FASB’s standardized measure of discounted future net cash flows represent the fair market value of the
Company’s proved reserves. The Company cautions that the disclosures shown are based on estimates of proved reserve quantities and
future production schedules which are inherently imprecise and subject to revision, and the 10% discount rate is arbitrary. In addition,
costs and prices as of the measurement date are used in the determinations, and no value may be assigned to probable or possible reserves.

 

Changes
in the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows:

 

		Kosmos Historical				Disposition Adjustments				Pro Forma Company
		(in millions)
Balance at December 31, 2024		$	3,302			$	230			$	3,072
Purchase of minerals in place			—				—				—
Sales and transfers 2025			(581	)			(33	)			(548	)
Extensions and discoveries			—				—				—
Net changes in prices and costs			(1,948	)			(218	)			(1,730	)
Previously estimated development costs incurred during the period			208				10				198
Net changes in development costs			(212	)			(6	)			(206	)
Revisions of previous quantity estimates			388				(80	)			468
Net changes in tax expenses			244				38				206
Accretion of discount			442				34				408
Changes in timing and other			47				19				28
Balance at December 31, 2025		$	1,890			$	(6	)		$	1,896

 

Estimates
of economically recoverable oil and natural gas reserves and of future net revenues are based upon a number of variable factors and assumptions,
all of which are to some degree subjective and may vary considerably from actual results. Therefore, actual production, revenues, development
and operating expenditures may not occur as estimated. The reserve data are estimates only, are subject to many uncertainties and are
based on data gained from production histories and on assumptions as to geologic formations and other matters. Actual quantities of oil
and natural gas may differ materially from the amounts estimated.