Schedule I—Condensed Parent Company Financial Statements

Under the terms of agreements governing the indebtedness of subsidiaries of Kosmos Energy Ltd. for 2016, 2015 and 2014 (collectively “KEL,” the “Parent Company”), such subsidiaries are restricted from making dividend payments, loans or advances to KEL. Schedule I of Article 5‑04 of Regulation S‑X requires the condensed financial information of the Parent Company to be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year.

The following condensed parent‑only financial statements of KEL have been prepared in accordance with Rule 12‑04, Schedule I of Regulation S‑X and included herein. The Parent Company’s 100% investment in its subsidiaries has been recorded using the equity basis of accounting in the accompanying condensed parent‑only financial statements. The condensed financial statements should be read in conjunction with the consolidated financial statements of Kosmos Energy Ltd. and subsidiaries and notes thereto.

The terms “Kosmos,” the “Company,” and similar terms refer to Kosmos Energy Ltd. and its wholly owned subsidiaries, unless the context indicates otherwise. Certain prior period amounts have been reclassified to conform with the current year presentation. Such reclassifications had no impact on our reported net income, current assets, total assets, current liabilities, total liabilities or shareholders equity.

KOSMOS ENERGY LTD.

CONDENSED PARENT COMPANY BALANCE SHEETS

(In thousands, except share data)


	December 31,
	2016		2015
Assets
Current assets:
Cash and cash equivalents	$	1,092	$	74,683
Receivables from subsidiaries		14,131		—
Prepaid expenses and other		417		469
Total current assets		15,640		75,152
Investment in subsidiaries at equity		1,580,459		1,759,419
Deferred financing costs, net of accumulated amortization of $11,213 and $8,475, respectively		5,248		7,986
Total assets	$	1,601,347	$	1,842,557
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable	$	13	$	11
Accounts payable to subsidiaries		—		1,070
Accrued liabilities		17,939		17,629
Total current liabilities		17,952		18,710
Long-term debt		502,196		498,334
Shareholders’ equity:
Preference shares, $0.01 par value; 200,000,000 authorized shares; zero issued at December 31, 2016 and December 31, 2015		—		—
Common shares, $0.01 par value; 2,000,000,000 authorized shares; 395,859,061 and 393,902,643 issued at December 31, 2016 and 2015, respectively		3,959		3,939
Additional paid-in capital		1,975,247		1,933,189
Accumulated deficit		(850,410)		(564,686)
Treasury stock, at cost, 9,101,395 and 8,812,054 shares at December 31, 2016 and 2015, respectively		(47,597)		(46,929)
Total shareholders’ equity		1,081,199		1,325,513
Total liabilities and shareholders’ equity	$	1,601,347	$	1,842,557

KOSMOS ENERGY LTD.

CONDENSED PARENT COMPANY STATEMENTS OF OPERATIONS

(In thousands)


	Years Ended December 31,
	2016		2015		2014
Revenues and other income:
Oil and gas revenue	$	—	$	—	$	—
Total revenues and other income		—		—		—
Costs and expenses:
General and administrative		48,542		85,103		88,789
General and administrative recoveries—related party		(40,047)		(72,543)		(78,880)
Interest and other financing costs, net		55,253		49,572		20,559
Other expenses, net		1		240		1,319
Equity in (earnings) losses of subsidiaries		220,031		7,464		(311,157)
Total costs and expenses		283,780		69,836		(279,370)
Income (loss) before income taxes		(283,780)		(69,836)		279,370
Income tax expense		—		—		—
Net income (loss)	$	(283,780)	$	(69,836)	$	279,370

KOSMOS ENERGY LTD.

CONDENSED PARENT COMPANY STATEMENTS OF CASH FLOWS

(In thousands)


	Years Ended December 31,
	2016		2015		2014
Operating activities
Net income (loss)	$	(283,780)	$	(69,836)	$	279,370
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Equity in (earnings) losses of subsidiaries		220,031		7,464		(311,157)
Equity-based compensation		40,423		75,267		79,741
Amortization		3,070		3,190		3,188
Other		3,530		2,704		269
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and other		52		(34)		89
(Increase) decrease due to/from related party		(15,201)		1,224		(3,915)
Increase in accounts payable and accrued liabilities		312		2,721		10,593
Net cash provided by (used in) operating activities		(31,563)		22,700		58,178
Investing activities
Investment in subsidiaries		(40,047)		(293,545)		(208,879)
Net cash used in investing activities		(40,047)		(293,545)		(208,879)
Financing activities
Net proceeds from issuance of senior secured notes		—		206,774		294,000
Purchase of treasury stock		(1,981)		(18,110)		(11,096)
Deferred financing costs		—		(9,030)		(1,401)
Net cash provided by (used in) financing activities		(1,981)		179,634		281,503
Net increase (decrease) in cash and cash equivalents		(73,591)		(91,211)		130,802
Cash and cash equivalents at beginning of period		74,683		165,894		35,092
Cash and cash equivalents at end of period	$	1,092	$	74,683	$	165,894