0001509991false12/312021Q100015099912021-01-012021-03-31xbrli:shares00015099912021-05-05iso4217:USD00015099912021-03-3100015099912020-12-31iso4217:USDxbrli:shares00015099912020-01-012020-03-310001509991us-gaap:CommonStockMember2020-12-310001509991us-gaap:AdditionalPaidInCapitalMember2020-12-310001509991us-gaap:RetainedEarningsMember2020-12-310001509991us-gaap:TreasuryStockMember2020-12-310001509991us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310001509991us-gaap:CommonStockMember2021-01-012021-03-310001509991us-gaap:RetainedEarningsMember2021-01-012021-03-310001509991us-gaap:CommonStockMember2021-03-310001509991us-gaap:AdditionalPaidInCapitalMember2021-03-310001509991us-gaap:RetainedEarningsMember2021-03-310001509991us-gaap:TreasuryStockMember2021-03-310001509991us-gaap:CommonStockMember2019-12-310001509991us-gaap:AdditionalPaidInCapitalMember2019-12-310001509991us-gaap:RetainedEarningsMember2019-12-310001509991us-gaap:TreasuryStockMember2019-12-3100015099912019-12-310001509991us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-310001509991us-gaap:CommonStockMember2020-01-012020-03-310001509991us-gaap:RetainedEarningsMember2020-01-012020-03-310001509991us-gaap:CommonStockMember2020-03-310001509991us-gaap:AdditionalPaidInCapitalMember2020-03-310001509991us-gaap:RetainedEarningsMember2020-03-310001509991us-gaap:TreasuryStockMember2020-03-3100015099912020-03-31kos:segmentxbrli:pure0001509991kos:TheFacilityMember2021-03-310001509991kos:FacilityInterestOrSeniorNotesPlusTheCorporateRevolverMember2021-01-012021-03-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2019-04-300001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2021-03-310001509991kos:FacilityInterestOrSeniorNotesPlusTheCorporateRevolverMember2021-01-310001509991srt:ScenarioForecastMemberkos:FacilityInterestOrSeniorNotesPlusTheCorporateRevolverMember2021-04-012021-06-300001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMember2021-03-310001509991country:GQ2021-01-012021-03-310001509991country:GQ2020-01-012020-03-310001509991country:GH2021-01-012021-03-310001509991country:GH2020-01-012020-03-310001509991kos:U.S.GulfOfMexicoMember2021-01-012021-03-310001509991kos:U.S.GulfOfMexicoMember2020-01-012020-03-310001509991us-gaap:OilAndGasMember2021-01-012021-03-310001509991us-gaap:OilAndGasMember2020-01-012020-03-310001509991kos:FarmDownAgreementMemberkos:BlocksOffshoreSaoTomeAndPrincipeSurinameNamibiaAndSouthAfricaMember2020-09-300001509991kos:FarmDownAgreementMemberkos:BlocksOffshoreSaoTomeAndPrincipeSurinameAndNamibiaMembersrt:MaximumMember2020-09-300001509991kos:FarmDownAgreementMemberkos:BlocksOffshoreSaoTomeAndPrincipeSurinameAndNamibiaMember2020-10-012020-12-310001509991kos:FarmDownAgreementMemberkos:BlocksOffshoreSaoTomeAndPrincipeSurinameAndNamibiaMember2020-01-012020-12-310001509991kos:FarmDownAgreementMemberkos:BlockSouthAfricaMember2021-03-31kos:well0001509991kos:FarmDownAgreementMemberkos:BlocksOffshoreSaoTomeAndPrincipeSurinameAndNamibiaMember2020-09-30kos:payment0001509991kos:TweneboaEnyenraAndNtommeDiscoveriesMemberkos:GhanaNationalPetroleumCorporationMember2021-01-012021-03-310001509991kos:TweneboaEnyenraAndNtommeDiscoveriesMemberkos:GhanaNationalPetroleumCorporationMember2021-03-310001509991kos:TweneboaEnyenraAndNtommeDiscoveriesMemberkos:GhanaNationalPetroleumCorporationMember2020-12-31kos:agreement0001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2019-02-012019-02-280001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2021-03-310001509991kos:NationalOilCompaniesOfMauritaniaAndSenegalMemberkos:CarryAdvanceAgreementsMember2020-12-31kos:projectutr:km0001509991kos:YakaarAndTerangaDiscoveriesMember2019-09-012019-09-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2021-03-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2020-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2021-03-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2020-12-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2021-03-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2020-12-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2020-12-310001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMember2020-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2020-03-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2020-04-300001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2020-10-310001509991kos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMemberkos:DebtInstrumentPeriodOneMember2020-07-012020-07-310001509991kos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMemberkos:DebtInstrumentPeriodTwoMember2020-07-012020-07-310001509991us-gaap:SubsequentEventMemberkos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMember2021-05-100001509991us-gaap:SubsequentEventMemberkos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMember2021-05-012021-05-100001509991us-gaap:SubsequentEventMemberus-gaap:LondonInterbankOfferedRateLIBORMemberkos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMember2021-05-012021-05-100001509991srt:ScenarioForecastMemberkos:TheFacilityMemberus-gaap:RevolvingCreditFacilityMember2021-04-012021-06-300001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2018-08-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2018-08-012018-08-310001509991us-gaap:RevolvingCreditFacilityMemberkos:DebtInstrumentPeriodOneMemberkos:CorporateRevolverMember2020-07-012020-07-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMemberkos:DebtInstrumentPeriodTwoMember2020-07-012020-07-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2019-04-012019-04-300001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7875Due2021Member2019-04-300001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2021-03-012021-03-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Memberus-gaap:DebtInstrumentRedemptionPeriodFourMember2021-03-012021-03-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Memberus-gaap:DebtInstrumentRedemptionPeriodFiveMember2021-03-012021-03-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Memberus-gaap:DebtInstrumentRedemptionPeriodOneMember2021-03-012021-03-310001509991us-gaap:DebtInstrumentRedemptionPeriodTwoMemberus-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2021-03-012021-03-310001509991us-gaap:SeniorNotesMemberus-gaap:DebtInstrumentRedemptionPeriodThreeMemberkos:SeniorNotes7500Due2028Member2021-03-012021-03-310001509991kos:TrafiguraMember2020-06-012020-06-300001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMember2020-09-012020-09-300001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMember2020-09-30utr:MBbls0001509991kos:TermApril2021ToDecember2021Memberkos:SwapsWithSoldPutsMemberkos:DatedBrentMember2021-01-012021-03-31iso4217:USDutr:bbl0001509991kos:TermApril2021ToDecember2021Memberkos:SwapsWithSoldPutsMemberkos:DatedBrentMember2021-03-310001509991kos:NYMEXWTIMemberkos:TermApril2021ToJune2021Memberkos:SwapsWithSoldPutsMember2021-01-012021-03-310001509991kos:NYMEXWTIMemberkos:TermApril2021ToJune2021Memberkos:SwapsWithSoldPutsMember2021-03-310001509991kos:TermApril2021ToDecember2021Memberkos:DatedBrentMemberkos:ThreeWayCollarsMember2021-01-012021-03-310001509991kos:TermApril2021ToDecember2021Memberkos:DatedBrentMemberkos:ThreeWayCollarsMember2021-03-310001509991kos:NYMEXWTIMemberkos:TermApril2021ToDecember2021Memberkos:ThreeWayCollarsMember2021-01-012021-03-310001509991kos:NYMEXWTIMemberkos:TermApril2021ToDecember2021Memberkos:ThreeWayCollarsMember2021-03-310001509991kos:TermApril2021ToDecember2021Memberkos:DatedBrentMemberkos:SoldCallsMember2021-01-012021-03-310001509991kos:TermApril2021ToDecember2021Memberkos:DatedBrentMemberkos:SoldCallsMember2021-03-310001509991kos:TermJanuary2022ToDecember2022Memberkos:DatedBrentMemberkos:ThreeWayCollarsMember2021-01-012021-03-310001509991kos:TermJanuary2022ToDecember2022Memberkos:DatedBrentMemberkos:ThreeWayCollarsMember2021-03-310001509991kos:TermJanuary2022ToDecember2022Memberkos:DatedBrentMemberkos:SoldCallsMember2021-01-012021-03-310001509991kos:TermJanuary2022ToDecember2022Memberkos:DatedBrentMemberkos:SoldCallsMember2021-03-310001509991us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2021-03-310001509991us-gaap:NondesignatedMemberus-gaap:CommodityContractMember2020-12-310001509991kos:ReceivablesOilSalesMemberus-gaap:NondesignatedMemberkos:ProvisionalOilSalesMember2021-03-310001509991kos:ReceivablesOilSalesMemberus-gaap:NondesignatedMemberkos:ProvisionalOilSalesMember2020-12-310001509991us-gaap:NondesignatedMember2021-03-310001509991us-gaap:NondesignatedMember2020-12-310001509991us-gaap:SalesMemberkos:ProvisionalOilSalesMember2021-01-012021-03-310001509991us-gaap:SalesMemberkos:ProvisionalOilSalesMember2020-01-012020-03-310001509991us-gaap:DerivativeMemberus-gaap:CommodityContractMember2021-01-012021-03-310001509991us-gaap:DerivativeMemberus-gaap:CommodityContractMember2020-01-012020-03-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel3Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2021-03-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMember2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMemberus-gaap:FairValueInputsLevel2Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMemberus-gaap:FairValueInputsLevel3Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMember2021-03-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-03-310001509991us-gaap:FairValueMeasurementsRecurringMember2021-03-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel2Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMemberus-gaap:FairValueInputsLevel3Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommodityContractMember2020-12-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMember2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMemberus-gaap:FairValueInputsLevel2Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMemberus-gaap:FairValueInputsLevel3Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberkos:ProvisionalOilSalesMember2020-12-310001509991us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-12-310001509991us-gaap:FairValueMeasurementsRecurringMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2021-03-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMember2020-12-310001509991kos:SeniorNotes7.125Due2026Memberus-gaap:SeniorNotesMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2021-03-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Member2020-12-310001509991us-gaap:SeniorNotesMemberkos:SeniorNotes7500Due2028Memberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:GoMTermLoanMemberus-gaap:SecuredDebtMember2021-03-310001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberkos:GoMTermLoanMemberus-gaap:SecuredDebtMember2020-12-310001509991kos:GoMTermLoanMemberus-gaap:SecuredDebtMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2021-03-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMember2020-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:CorporateRevolverMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2021-03-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMemberus-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMember2020-12-310001509991us-gaap:RevolvingCreditFacilityMemberkos:TheFacilityMemberus-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMember2021-03-310001509991us-gaap:EstimateOfFairValueFairValueDisclosureMember2021-03-310001509991us-gaap:CarryingReportedAmountFairValueDisclosureMember2020-12-310001509991us-gaap:EstimateOfFairValueFairValueDisclosureMember2020-12-310001509991us-gaap:FairValueMeasurementsNonrecurringMember2020-03-3100015099912020-10-012020-12-3100015099912020-01-012020-12-310001509991kos:LongTermIncentivePlanMember2021-01-012021-03-310001509991kos:LongTermIncentivePlanMember2020-01-012020-03-310001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2020-12-310001509991kos:MarketAndServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2020-12-310001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2021-01-012021-03-310001509991kos:MarketAndServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2021-01-012021-03-310001509991kos:ServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2021-03-310001509991kos:MarketAndServiceVestingRestrictedStockUnitsMemberkos:LongTermIncentivePlanMember2021-03-310001509991kos:MarketAndServiceVestingRestrictedStockUnitsMembersrt:MinimumMemberkos:LongTermIncentivePlanMember2021-01-012021-03-310001509991kos:MarketAndServiceVestingRestrictedStockUnitsMembersrt:MaximumMemberkos:LongTermIncentivePlanMember2021-01-012021-03-310001509991kos:LongTermIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-03-310001509991kos:LongTermIncentivePlanMemberus-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001509991us-gaap:SubsequentEventMemberkos:LongTermIncentivePlanMember2021-04-012021-04-300001509991kos:LongTermIncentivePlanMember2021-03-310001509991srt:ScenarioForecastMemberkos:LongTermIncentivePlanMember2021-06-300001509991country:US2021-01-012021-03-310001509991country:US2020-01-012020-03-310001509991kos:OtherForeignCountriesMember2021-01-012021-03-310001509991kos:OtherForeignCountriesMember2020-01-012020-03-310001509991kos:GhanaAndEquatorialGuineaMember2021-01-012021-03-310001509991country:MR2021-01-012021-03-31utr:sqkm0001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMemberkos:BureauOfOceanEnergyManagementMember2021-03-310001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMemberkos:BureauOfOceanEnergyManagementMember2020-12-310001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMemberkos:ThirdPartyMember2021-03-310001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMemberkos:ThirdPartyMember2020-12-310001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMember2020-12-310001509991kos:U.S.GulfOfMexicoMemberus-gaap:SuretyBondMember2021-03-3100015099912020-03-262020-03-260001509991us-gaap:OperatingSegmentsMemberkos:GhanaSegmentMember2021-01-012021-03-310001509991us-gaap:OperatingSegmentsMemberkos:EquatorialGuineaSegmentMember2021-01-012021-03-310001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalSegmentMember2021-01-012021-03-310001509991us-gaap:OperatingSegmentsMemberkos:U.S.GulfOfMexicoSegmentMember2021-01-012021-03-310001509991us-gaap:CorporateNonSegmentMember2021-01-012021-03-310001509991us-gaap:IntersegmentEliminationMember2021-01-012021-03-310001509991us-gaap:OperatingSegmentsMemberkos:GhanaSegmentMember2021-03-310001509991us-gaap:OperatingSegmentsMemberkos:EquatorialGuineaSegmentMember2021-03-310001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalSegmentMember2021-03-310001509991us-gaap:OperatingSegmentsMemberkos:U.S.GulfOfMexicoSegmentMember2021-03-310001509991us-gaap:CorporateNonSegmentMember2021-03-310001509991us-gaap:IntersegmentEliminationMember2021-03-310001509991us-gaap:OperatingSegmentsMemberkos:GhanaSegmentMember2020-01-012020-03-310001509991us-gaap:OperatingSegmentsMemberkos:EquatorialGuineaSegmentMember2020-01-012020-03-310001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalSegmentMember2020-01-012020-03-310001509991us-gaap:OperatingSegmentsMemberkos:U.S.GulfOfMexicoSegmentMember2020-01-012020-03-310001509991us-gaap:CorporateNonSegmentMember2020-01-012020-03-310001509991us-gaap:IntersegmentEliminationMember2020-01-012020-03-310001509991us-gaap:OperatingSegmentsMemberkos:GhanaSegmentMember2020-03-310001509991us-gaap:OperatingSegmentsMemberkos:EquatorialGuineaSegmentMember2020-03-310001509991us-gaap:OperatingSegmentsMemberkos:MauritaniaAndSenegalSegmentMember2020-03-310001509991us-gaap:OperatingSegmentsMemberkos:U.S.GulfOfMexicoSegmentMember2020-03-310001509991us-gaap:CorporateNonSegmentMember2020-03-310001509991us-gaap:IntersegmentEliminationMember2020-03-31
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One) 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from               to              
 
Commission file number:  001-35167
 
Kosmos Energy Ltd.
(Exact name of registrant as specified in its charter)
Delaware 98-0686001
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8176 Park Lane
Dallas, Texas75231
(Address of principal executive offices)(Zip Code)
 
Title of each classTrading SymbolName of each exchange on which registered:
Common Stock $0.01 par valueKOSNew York Stock Exchange
London Stock Exchange
 
Registrant’s telephone number, including area code: +1 214 445 9600
 
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes   No 
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes   No 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer
   
Non-accelerated filer  Smaller reporting company
(Do not check if a smaller reporting company)  
  Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
ClassOutstanding at May 5, 2021
Common Shares, $0.01 par value 408,048,315


Table of Contents

TABLE OF CONTENTS
 
Unless otherwise stated in this report, references to “Kosmos,” “we,” “us” or “the company” refer to Kosmos Energy Ltd. and its wholly owned subsidiaries. We have provided definitions for some of the industry terms used in this report in the “Glossary and Selected Abbreviations” beginning on page 3.
 
 Page
PART I. FINANCIAL INFORMATION 
  
  
  
PART II. OTHER INFORMATION 
  
2

Table of Contents

KOSMOS ENERGY LTD.
GLOSSARY AND SELECTED ABBREVIATIONS
 
The following are abbreviations and definitions of certain terms that may be used in this report. Unless listed below, all defined terms under Rule 4-10(a) of Regulation S-X shall have their statutorily prescribed meanings.
 
“2D seismic data”Two‑dimensional seismic data, serving as interpretive data that allows a view of a vertical cross‑section beneath a prospective area.
“3D seismic data”Three‑dimensional seismic data, serving as geophysical data that depicts the subsurface strata in three dimensions. 3D seismic data typically provides a more detailed and accurate interpretation of the subsurface strata than 2D seismic data.
"ANP-STP"Agencia Nacional Do Petroleo De Sao Tome E Principe.
“API”A specific gravity scale, expressed in degrees, that denotes the relative density of various petroleum liquids. The scale increases inversely with density. Thus lighter petroleum liquids will have a higher API than heavier ones.
"Asset Coverage Ratio"The "Asset Coverage Ratio" as defined in the GoM Term Loan means, as of each March 31, June 30, September 30 and December 31 of each Fiscal Year, commencing December 31, 2020, the ratio of (a) Total PDP PV-10 (as defined in the GoM Term Loan) as of such date to (b) outstanding principal amount of Loans (as defined in the GoM Term Loan) as of such date.
“ASC”Financial Accounting Standards Board Accounting Standards Codification.
“ASU”Financial Accounting Standards Board Accounting Standards Update.
“Barrel” or “Bbl”A standard measure of volume for petroleum corresponding to approximately 42 gallons at 60 degrees Fahrenheit.
“BBbl”Billion barrels of oil.
“BBoe”Billion barrels of oil equivalent.
“Bcf”Billion cubic feet.
“Boe”Barrels of oil equivalent. Volumes of natural gas converted to barrels of oil using a conversion factor of 6,000 cubic feet of natural gas to one barrel of oil.
"BOEM"Bureau of Ocean Energy Management.
“Boepd”Barrels of oil equivalent per day.
“Bopd”Barrels of oil per day.
"BP"BP p.l.c. and related subsidiaries.
“Bwpd”Barrels of water per day.
"Corporate Revolver"Revolving Credit Facility Agreement dated November 23, 2012 (as amended or as amended and restated from time to time).
"COVID-19"Coronavirus disease 2019.
“Debt cover ratio”The “debt cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) total long‑term debt less cash and cash equivalents and restricted cash, to (y) the aggregate EBITDAX (see below) of the Company for the previous twelve months.
“Developed acreage”The number of acres that are allocated or assignable to productive wells or wells capable of production.
“Development”The phase in which an oil or natural gas field is brought into production by drilling development wells and installing appropriate production systems.
"DGE"Deep Gulf Energy (together with its subsidiaries).
"DST"Drill stem test.
“Dry hole” or "Unsuccessful well"A well that has not encountered a hydrocarbon bearing reservoir expected to produce in commercial quantities.
"DT"Deepwater Tano.
3

Table of Contents
“EBITDAX”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.
"ESG"Environmental, social, and governance.
"ESP"Electric submersible pump.
“E&P”Exploration and production.
"Facility"Facility agreement dated March 28, 2011 (as amended or as amended and restated from time to time).
“FASB”Financial Accounting Standards Board.
“Farm‑in”An agreement whereby a party acquires a portion of the participating interest in a block from the owner of such interest, usually in return for cash and/or for taking on a portion of future costs or other performance by the assignee as a condition of the assignment.
“Farm‑out”An agreement whereby the owner of the participating interest agrees to assign a portion of its participating interest in a block to another party for cash and/or for the assignee taking on a portion of future costs and/or other work as a condition of the assignment.
"FEED"Front End Engineering Design.
“Field life cover ratio”
The “field life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) the forecasted net present value of net cash flow through depletion plus the net present value of the forecast of certain capital expenditures incurred in relation to the Ghana and Equatorial Guinea assets, to (y) the aggregate loan amounts outstanding under the Facility.
"FLNG"Floating liquefied natural gas.
“FPS”Floating production system.
“FPSO”Floating production, storage and offloading vessel.
"GAAP"Generally Accepted Accounting Principles in the United States of America.
"GEPetrol"Guinea Equatorial De Petroleos.
"GHG"Greenhouse gas.
"GJFFDP"Greater Jubilee Full Field Development Plan.
"GNPC"Ghana National Petroleum Corporation.
"GoM Term Loan"Senior Secured Term Loan Credit Agreement dated September 30, 2020.
“Greater Tortue Ahmeyim”Ahmeyim and Guembeul discoveries.
"GTA UUOA"Unitization and Unit Operating Agreement covering the Greater Tortue Ahmeyim Unit.
"HLS"Heavy Louisiana Sweet.
"H&M"Hull and Machinery insurance.
"Jubilee UUOA"Unitization and Unit Operating Agreement covering the Jubilee Unit.
“Interest cover ratio”The “interest cover ratio” is broadly defined, for each applicable calculation date, as the ratio of (x) the aggregate EBITDAX (see above) of the Company for the previous twelve months, to (y) interest expense less interest income for the Company for the previous twelve months.
"LNG"Liquefied natural gas.
“Loan life cover ratio”The “loan life cover ratio” is broadly defined, for each applicable forecast period, as the ratio of (x) net present value of forecasted net cash flow through the final maturity date of the Facility plus the net present value of forecasted capital expenditures incurred in relation to the Ghana and Equatorial Guinea assets, to (y) the aggregate loan amounts outstanding under the Facility.
"LSE"London Stock Exchange.
"LTIP"Long Term Incentive Plan.
“MBbl”Thousand barrels of oil.
4

Table of Contents
“MBoe”Thousand barrels of oil equivalent.
“Mcf”Thousand cubic feet of natural gas.
“Mcfpd”Thousand cubic feet per day of natural gas.
“MMBbl”Million barrels of oil.
“MMBoe”Million barrels of oil equivalent.
"MMBtu"Million British thermal units.
“MMcf”Million cubic feet of natural gas.
“MMcfd”Million cubic feet per day of natural gas.
"MMTPA"Million metric tonnes per annum.
“Natural gas liquid” or “NGL”Components of natural gas that are separated from the gas state in the form of liquids. These include propane, butane, and ethane, among others.
"NYSE"New York Stock Exchange.
"Ophir"Ophir Energy plc.
“Petroleum contract”A contract in which the owner of hydrocarbons gives an E&P company temporary and limited rights, including an exclusive option to explore for, develop, and produce hydrocarbons from the lease area.
“Petroleum system”A petroleum system consists of organic material that has been buried at a sufficient depth to allow adequate temperature and pressure to expel hydrocarbons and cause the movement of oil and natural gas from the area in which it was formed to a reservoir rock where it can accumulate.
“Plan of development” or “PoD”A written document outlining the steps to be undertaken to develop a field.
“Productive well”An exploratory or development well found to be capable of producing either oil or natural gas in sufficient quantities to justify completion as an oil or natural gas well.
“Prospect(s)”A potential trap that may contain hydrocarbons and is supported by the necessary amount and quality of geologic and geophysical data to indicate a probability of oil and/or natural gas accumulation ready to be drilled. The five required elements (generation, migration, reservoir, seal and trap) must be present for a prospect to work and if any of these fail neither oil nor natural gas may be present, at least not in commercial volumes.
“Proved reserves”Estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be economically recoverable in future years from known reservoirs under existing economic and operating conditions, as well as additional reserves expected to be obtained through confirmed improved recovery techniques, as defined in SEC Regulation S‑X 4‑10(a)(2).
“Proved developed reserves”Those proved reserves that can be expected to be recovered through existing wells and facilities and by existing operating methods.
“Proved undeveloped reserves”Those proved reserves that are expected to be recovered from future wells and facilities, including future improved recovery projects which are anticipated with a high degree of certainty in reservoirs which have previously shown favorable response to improved recovery projects.
"RSC"Ryder Scott Company, L.P.
"SEC"Securities and Exchange Commission.
"7.125% Senior Notes"7.125% Senior Notes due 2026.
"7.500% Senior Notes7.500% Senior Notes due 2028.
“Shelf margin”The path created by the change in direction of the shoreline in reaction to the filling of a sedimentary basin.
"Shell"Royal Dutch Shell and related subsidiaries.
“Stratigraphy”The study of the composition, relative ages and distribution of layers of sedimentary rock.
“Stratigraphic trap”A stratigraphic trap is formed from a change in the character of the rock rather than faulting or folding of the rock and oil is held in place by changes in the porosity and permeability of overlying rocks.
“Structural trap”A topographic feature in the earth’s subsurface that forms a high point in the rock strata. This facilitates the accumulation of oil and gas in the strata.
5

Table of Contents
“Structural‑stratigraphic trap”A structural‑stratigraphic trap is a combination trap with structural and stratigraphic features.
“Submarine fan”A fan‑shaped deposit of sediments occurring in a deep water setting where sediments have been transported via mass flow, gravity induced, processes from the shallow to deep water. These systems commonly develop at the bottom of sedimentary basins or at the end of large rivers.
"TAG GSA"TEN Associated Gas - Gas Sales Agreement.
"TEN"Tweneboa, Enyenra and Ntomme.
“Three‑way fault trap”A structural trap where at least one of the components of closure is formed by offset of rock layers across a fault.
"Tortue Phase 1 SPA"
Greater Tortue Ahmeyim Agreement for a Long Term Sale and Purchase of LNG.
"TrafiguraTrafigura Group PTD, Ltd. and related subsidiaries including Trafigura Trading LLC.
“Trap”A configuration of rocks suitable for containing hydrocarbons and sealed by a relatively impermeable formation through which hydrocarbons will not migrate.
"Trident"Trident Energy.
“Undeveloped acreage”Lease acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of natural gas and oil regardless of whether such acreage contains discovered resources.
"WCTP"West Cape Three Points.

6

Table of Contents


KOSMOS ENERGY LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 March 31, 2021December 31, 2020
 (Unaudited) 
Assets  
Current assets:  
Cash and cash equivalents $95,242 $149,027 
Restricted cash 48,660 195 
Receivables:
Joint interest billings, net 25,305 26,002 
Oil sales 51,236 44,491 
Other 15,866 8,320 
Inventories 153,650 128,972 
Prepaid expenses and other 30,268 27,870 
Derivatives 15,414 
Total current assets 420,227 400,291 
Property and equipment:  
Oil and gas properties, net 3,359,670 3,310,276 
Other property, net 9,778 10,637 
Property and equipment, net 3,369,448 3,320,913 
Other assets:  
Restricted cash 542 542 
Long-term receivables142,220 117,497 
Deferred financing costs, net of accumulated amortization of $17,951 and $17,296 at March 31, 2021 and December 31, 2020, respectively
3,051 3,706 
Derivatives 964 
Other23,598 23,680 
Total assets $3,959,086 $3,867,593 
Liabilities and stockholders’ equity  
Current liabilities:  
Accounts payable $188,704 $221,430 
Accrued liabilities 174,147 203,260 
Current maturities of long-term debt35,000 7,500 
Derivatives 83,293 28,009 
Total current liabilities 481,144 460,199 
Long-term liabilities:  
Long-term debt, net 2,271,112 2,103,931 
Derivatives 10,244 8,069 
Asset retirement obligations 252,208 244,166 
Deferred tax liabilities551,540 573,619 
Other long-term liabilities 36,053 37,455 
Total long-term liabilities 3,121,157 2,967,240 
Stockholders’ equity:  
Preference shares, $0.01 par value; 200,000,000 authorized shares; zero issued at March 31, 2021 and December 31, 2020
  
Common stock, $0.01 par value; 2,000,000,000 authorized shares; 452,125,539 and 449,718,317 issued at March 31, 2021 and December 31, 2020, respectively
4,521 4,497 
Additional paid-in capital 2,314,595 2,307,220 
Accumulated deficit (1,725,324)(1,634,556)
Treasury stock, at cost, 44,263,269 shares at March 31, 2021 and December 31, 2020, respectively
(237,007)(237,007)
Total stockholders’ equity 356,785 440,154 
Total liabilities and stockholders’ equity $3,959,086 $3,867,593 
See accompanying notes.
7

Table of Contents
KOSMOS ENERGY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 (Unaudited)
 
 Three Months Ended
 March 31,
 20212020
Revenues and other income:  
Oil and gas revenue $176,474 $177,780 
Gain on sale of assets 26  
Other income, net 70 1 
Total revenues and other income 176,570 177,781 
Costs and expenses:  
Oil and gas production 45,752 61,603 
Facilities insurance modifications, net671 8,038 
Exploration expenses 8,181 44,605 
General and administrative 22,441 20,911 
Depletion, depreciation and amortization76,541 93,302 
Impairment of long-lived assets 150,820 
Interest and other financing costs, net24,528 27,835 
Derivatives, net 102,461 (136,038)
Other expenses, net 3,468 23,929 
Total costs and expenses 284,043 295,005 
Loss before income taxes(107,473)(117,224)
Income tax expense (benefit)(16,705)65,543 
Net loss$(90,768)$(182,767)
Net loss per share:  
Basic $(0.22)$(0.45)
Diluted $(0.22)$(0.45)
Weighted average number of shares used to compute net loss per share:
  
Basic 407,365 404,759 
Diluted 407,365 404,759 
Dividends declared per common share
$ $0.0452 
 
See accompanying notes.
8

Table of Contents
KOSMOS ENERGY LTD.
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
 (In thousands)
(Unaudited)
 
   Additional   
 Common SharesPaid-inAccumulatedTreasury 
 SharesAmount CapitalDeficitStockTotal
2021:
Balance as of December 31, 2020449,718 $4,497 $2,307,220 $(1,634,556)$(237,007)$440,154 
Dividends— — 90 — — 90 
Equity-based compensation — — 8,327 — — 8,327 
Restricted stock units 2,408 24 (24)— —  
Tax withholdings on restricted stock units— — (1,018)— — (1,018)
Net loss— — — (90,768)— (90,768)
Balance as of March 31, 2021452,126 $4,521 $2,314,595 $(1,725,324)$(237,007)$356,785 
2020:
Balance as of December 31, 2019445,779 $4,458 $2,297,221 $(1,222,970)$(237,007)$841,702 
Dividends ($0.0452 per share)
— — (18,918)— — (18,918)
Equity-based compensation — — 10,078 — — 10,078 
Restricted stock units 3,590 36 (36)— —  
Tax withholdings on restricted stock units— — (4,947)— — (4,947)
Net loss— — — (182,767)— (182,767)
Balance as of March 31, 2020449,369 $4,494 $2,283,398 $(1,405,737)$(237,007)$645,148 
 
See accompanying notes.
9

Table of Contents
KOSMOS ENERGY LTD.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months Ended March 31,
 20212020
Operating activities  
Net loss$(90,768)$(182,767)
Adjustments to reconcile net loss to net cash used in operating activities:
Depletion, depreciation and amortization (including deferred financing costs)79,112 95,585 
Deferred income taxes (22,079)72,177 
Unsuccessful well costs and leasehold impairments1,469 19,228 
Impairment of long-lived assets 150,820 
Change in fair value of derivatives 106,158 (136,322)
Cash settlements on derivatives, net (including $(28.6) million and $12.0 million on commodity hedges during 2021 and 2020)
(32,998)9,016 
Equity-based compensation 8,281 9,346 
Gain on sale of assets (26) 
Other (890)3,974 
Changes in assets and liabilities:
Increase in receivables(13,278)(26,932)
Increase in inventories(25,045)(27,123)
(Increase) decrease in prepaid expenses and other(2,409)6,344 
Increase (decrease) in accounts payable(32,726)79,009 
Decrease in accrued liabilities(21,427)(89,318)
Net cash used in operating activities(46,626)(16,963)
Investing activities  
Oil and gas assets (128,448)(83,716)
Other property (354)(1,537)
Proceeds on sale of assets 631 1,713 
Notes receivable from partners(22,416)(23,983)
Net cash used in investing activities(150,587)(107,523)
Financing activities  
Borrowings under long-term debt 100,000 50,000 
Payments on long-term debt (350,000) 
Net proceeds from issuance of senior notes444,375  
Tax withholdings on restricted stock units(1,018)(4,947)
Dividends(430)(19,156)
Deferred financing costs (1,034) 
Net cash provided by financing activities191,893 25,897 
Net decrease in cash, cash equivalents and restricted cash(5,320)(98,589)
Cash, cash equivalents and restricted cash at beginning of period 149,764 229,346 
Cash, cash equivalents and restricted cash at end of period $144,444 $130,757 
Supplemental cash flow information  
Cash paid for:  
Interest, net of capitalized interest $33,587 $54,694 
Income taxes, net of refund received $12,947 $26,874 
 
See accompanying notes.
10

Table of Contents

KOSMOS ENERGY LTD.
 
Notes to Consolidated Financial Statements
(Unaudited)
 
1. Organization
 
Kosmos Energy Ltd. was originally incorporated pursuant to the laws of Bermuda in January 2011 to become a holding company for Kosmos Energy Holdings. Kosmos Energy Ltd. changed its jurisdiction of incorporation from Bermuda to the State of Delaware in December 2018 and transferred all of our equity interests in Kosmos Energy Holdings to a new, wholly-owned subsidiary, Kosmos Energy Delaware Holdings, LLC, a Delaware limited liability company. As a holding company, Kosmos Energy Ltd.’s management operations are conducted through a wholly-owned subsidiary, Kosmos Energy, LLC. The terms “Kosmos,” the “Company,” “we,” “us,” “our,” “ours,” and similar terms refer to Kosmos Energy Ltd. and its wholly-owned subsidiaries, unless the context indicates otherwise.

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 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 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.
 
Kosmos is engaged in a single line of business, which is the exploration, development, and production of oil and natural gas. Substantially all of our long-lived assets and all of our product sales are related to operations in four geographic areas: Ghana, Equatorial Guinea, Mauritania/Senegal and U.S. Gulf of Mexico.
 
2. Accounting Policies
 
General
 
The interim consolidated financial statements included in this report are unaudited and, in the opinion of management, include all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim periods. The results of the interim periods shown in this report are not necessarily indicative of the final results to be expected for the full year. The consolidated financial statements were prepared in accordance with the requirements of the SEC for interim reporting. As permitted under those rules, certain notes or other financial information that are normally required by GAAP have been condensed or omitted from these interim consolidated financial statements. These consolidated financial statements and the accompanying notes should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2020, included in our annual report on Form 10-K.

Reclassifications
 
Certain prior period amounts have been reclassified to conform with the current presentation. Such reclassifications had no significant impact on our reported net loss, current assets, total assets, current liabilities, total liabilities, stockholders’ equity or cash flows.

Cash, Cash Equivalents and Restricted Cash 
 March 31, 2021December 31, 2020
 (In thousands)
Cash and cash equivalents $95,242 $149,027 
Restricted cash - current48,660 195 
Restricted cash - long-term542 542 
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows
$144,444 $149,764 
 
Cash and cash equivalents include demand deposits and funds invested in highly liquid instruments with original maturities of three months or less at the date of purchase. When our net leverage ratio exceeds 2.50x, we are required under the
11

Table of Contents
Facility to maintain a restricted cash balance that is sufficient to meet the payment of interest and fees for the next six-month period on the 7.125% Senior Notes and the 7.500% Senior Notes plus the Corporate Revolver or the Facility, whichever is greater. In January 2021, we restricted cash of approximately $28.5 million and expect to restrict cash of an additional $15.0 million in the second quarter of 2021 to meet our requirements. In February 2021, we amended certain terms of the GoM Term Loan agreement, and as a result we restricted cash of $20.0 million which we expect to be released or be used to paydown the GoM Term Loan in the third quarter of 2021.
 
In accordance with certain of our petroleum contracts, we have posted letters of credit related to performance guarantees for our minimum work obligations. Certain of these letters of credit are cash collateralized in accounts held by us and as such are classified as restricted cash. Upon completion of the minimum work obligations and/or entering into the next phase of the respective petroleum contract, the requirement to post the existing letters of credit will be satisfied and the cash collateral will be released. However, additional letters of credit may be required should we choose to move into the next phase of certain of our petroleum contracts.
 
Inventories
 
Inventories consisted of $128.5 million and $127.5 million of materials and supplies and $25.2 million and $1.5 million of hydrocarbons as of March 31, 2021 and December 31, 2020, respectively. The Company’s materials and supplies inventory primarily consists of casing and wellheads and is stated at the lower of cost, using the weighted average cost method, or net realizable value.
 
Hydrocarbon inventory is carried at the lower of cost, using the weighted average cost method, or net realizable value. Hydrocarbon inventory costs include expenditures and other charges incurred in bringing the inventory to its existing condition. Selling expenses and general and administrative expenses are reported as period costs and excluded from inventory costs.

Revenue Recognition

Our oil and gas revenues are recognized when hydrocarbons have been sold to a purchaser at a fixed or determinable price, title has transferred and collection is probable. Certain revenues are based on provisional price contracts which contain an embedded derivative that is required to be separated from the host contract for accounting purposes. The host contract is the receivable from oil sales at the spot price on the date of sale. The embedded derivative, which is not designated as a hedge, is marked to market through oil and gas revenue each period until the final settlement occurs, which generally is limited to the month after the sale.
    
    Oil and gas revenue is composed of the following:
Three Months Ended March 31,
 20212020
 (In thousands)
Revenues from contract with customer - Equatorial Guinea$26,431 $24,370 
Revenues from contract with customer - Ghana59,351 49,672 
Revenues from contract with customers - U.S. Gulf of Mexico94,389 103,453 
Provisional oil sales contracts(3,697)285 
Oil and gas revenue$176,474 $177,780 

12

Table of Contents
Concentration of Credit Risk

Our revenue can be materially affected by current economic conditions and the price of oil and natural gas. However, based on the current demand for crude oil and natural gas and the fact that alternative purchasers are available, we believe that the loss of our marketing agents and/or any of the purchasers identified by our marketing agents would not have a long‑term material adverse effect on our financial position or results of operations. The continued economic disruption resulting from the COVID-19 pandemic could materially impact the Company’s business in future periods. Any potential disruption will depend on the duration and intensity of these events, which are highly uncertain and cannot be predicted at this time.

Recent Accounting Standards

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”. Our adoption of ASU 2019-12 on January 1, 2021, did not have a material impact on our income tax expense.

3. Acquisitions and Divestitures

During the third quarter of 2020, Kosmos entered into an agreement with Shell to farm down interests in a portfolio of frontier exploration assets for cash consideration of $96.0 million and future contingent consideration of up to $100.0 million. Under the terms of the agreement, Shell acquired Kosmos' participating interest in blocks offshore Sao Tome and Principe, (excluding Block 5 offshore Sao Tome and Principe), Suriname and Namibia, and will acquire our participating interest in South Africa. Kosmos received proceeds totaling $95.0 million during the fourth quarter of 2020 resulting in gain on sale of assets of $92.1 million, with the remaining proceeds of $1.0 million related to Kosmos' participating interest in South Africa expected to be received in 2021 upon customary approval by the government of The Republic of South Africa. The future contingent consideration is payable by Shell upon approval of the relevant operating committee of an appraisal plan for submission to the relevant governmental authority for any of the first four exploration wells it elects to drill in the purchased assets, excluding South Africa. Shell will pay us $50.0 million for each appraisal plan approved by the relevant operating committee to be submitted, subject to an aggregate cap of $100.0 million, or two $50.0 million payments.

4. Joint Interest Billings, Related Party Receivables and Notes Receivables
 
Joint Interest Billings

The Company’s joint interest billings consist of receivables from partners with interests in common oil and gas properties operated by the Company for shared costs. Joint interest billings are classified on the face of the consolidated balance sheets as current and long-term receivables based on when collection is expected to occur.
 
In Ghana, the foreign contractor group funded GNPC’s 5% share of the TEN development costs. The foreign contractor group is being reimbursed for such costs plus interest out of a portion of GNPC’s TEN production revenues. As of March 31, 2021 and December 31, 2020, the current portions of the joint interest billing receivables due from GNPC for the TEN fields development costs were $5.8 million and $5.8 million, respectively, and the long-term portions were $21.9 million and $21.2 million, respectively.

Notes Receivables    

In February 2019, Kosmos and BP signed Carry Advance Agreements with the national oil companies of Mauritania and Senegal obligating us separately to finance the respective national oil company’s share of certain development costs incurred through first gas production for Greater Tortue Ahmeyim Phase 1, currently projected in 2023. Kosmos’ share for the two agreements combined is up to $239.7 million, which is to be repaid with interest through the national oil companies’ share of future revenues. As of March 31, 2021 and December 31, 2020, the balance due from the national oil companies was $120.3 million and $96.3 million, respectively, which is classified as Long-term receivables on our consolidated balance sheets.

13

Table of Contents
5. Property and Equipment
 
Property and equipment is stated at cost and consisted of the following:
 
 March 31, 2021December 31, 2020
 (In thousands)
Oil and gas properties:  
Proved properties $5,479,875 $5,369,737 
Unproved properties 505,254 495,390 
Total oil and gas properties 5,985,129 5,865,127 
Accumulated depletion (2,625,459)(2,554,851)
Oil and gas properties, net 3,359,670 3,310,276 
Other property 59,952 59,949 
Accumulated depreciation (50,174)(49,312)
Other property, net 9,778 10,637 
Property and equipment, net $3,369,448 $3,320,913 
 
We recorded depletion expense of $70.6 million and $87.2 million for the three months ended March 31, 2021 and 2020, respectively. During the three months ended March 31, 2021 and 2020, we recorded asset impairments totaling zero and $150.8 million, respectively, in our consolidated statement of operations in connection with fair value assessments for oil and gas proved properties.
 
6. Suspended Well Costs
 
The following table reflects the Company’s capitalized exploratory well costs on drilled wells as of and during the three months ended March 31, 2021.
 
 March 31, 2021
 (In thousands)
Beginning balance $186,289 
Additions to capitalized exploratory well costs pending the determination of proved reserves 11,330 
Reclassification due to determination of proved reserves  
Capitalized exploratory well costs charged to expense  
Ending balance $197,619 

The following table provides an aging of capitalized exploratory well costs based on the date drilling was completed and the number of projects for which exploratory well costs have been capitalized for more than one year since the completion of drilling:
 
 March 31, 2021December 31, 2020
 (In thousands, except well counts)
Exploratory well costs capitalized for a period of one year or less$8,841 $ 
Exploratory well costs capitalized for a period of one to two years29,110 28,692 
Exploratory well costs capitalized for a period of three years or greater159,668 157,597 
Ending balance$197,619 $186,289 
Number of projects that have exploratory well costs that have been capitalized for a period greater than one year
3 3 
14

Table of Contents
 
As of March 31, 2021, the projects with exploratory well costs capitalized for more than one year since the completion of drilling are related to the BirAllah discovery (formerly known as the Marsouin discovery) in Block C8 offshore Mauritania, the Yakaar and Teranga discoveries in the Cayar Offshore Profond block offshore Senegal and the Asam discovery in Block S offshore Equatorial Guinea.
 
BirAllah Discovery — In November 2015, we completed the Marsouin-1 exploration well in the northern part of Block C8 offshore Mauritania, which encountered hydrocarbon pay. Following additional evaluation, a decision regarding commerciality is expected to be made. During the fourth quarter of 2019, we completed the nearby Orca-1 exploration well which encountered hydrocarbon pay. Following additional evaluation, a decision regarding commerciality is expected to be made. The BirAllah and Orca discoveries are being analyzed as a joint development.

Yakaar and Teranga Discoveries — In May 2016, we completed the Teranga-1 exploration well in the Cayar Offshore Profond block offshore Senegal, which encountered hydrocarbon pay. In June 2017, we completed the Yakaar-1 exploration well in the Cayar Offshore Profond block offshore Senegal, which encountered hydrocarbon pay. In November 2017, an integrated Yakaar-Teranga appraisal plan was submitted to the government of Senegal. In September 2019, we completed the Yakaar-2 appraisal well which encountered hydrocarbon pay. The Yakaar-2 well was drilled approximately nine kilometers from the Yakaar-1 exploration well. Following additional evaluation, a decision regarding commerciality is expected to be made. The Yakaar and Teranga discoveries are being analyzed as a joint development.

Asam Discovery — In October 2019, we completed the S-5 exploration well offshore Equatorial Guinea, which encountered hydrocarbon pay. In July 2020, an appraisal plan was approved by the government of Equatorial Guinea. The well is located within tieback range of the Ceiba FPSO and work is currently ongoing to integrate all available data into models to establish the scale of the discovered resource. Additionally, engineering is progressing concepts around required subsea infrastructure necessary for a subsea tieback. Once the appraisal plan involving this work is complete, a decision regarding commerciality will be made.

7. Debt
 
 March 31, 2021December 31, 2020
 (In thousands)
Outstanding debt principal balances:  
Facility $1,000,000 $1,200,000 
Corporate Revolver50,000 100,000 
7.125% Senior Notes
650,000 650,000 
7.500% Senior Notes
450,000  
GoM Term Loan200,000 200,000 
Total 2,350,000 2,150,000 
Unamortized deferred financing costs and discounts(43,888)(38,569)
Total debt, net2,306,112 2,111,431 
Less: Current maturities of long-term debt(35,000)(7,500)
Long-term debt, net$2,271,112 $2,103,931 
__________________________________

Facility
 
The Facility supports our oil and gas exploration, appraisal and development programs and corporate activities. As of March 31, 2021, borrowings under the Facility totaled $1.0 billion and the undrawn availability under the facility was $320.0 million. In April 2020, following the lenders' annual redetermination, the available borrowing base and Facility size were both reduced from $1.6 billion to approximately $1.5 billion. In October 2020, as a result of the September 2020 redetermination, the available borrowing base was reduced to approximately $1.32 billion. Additionally, the Company agreed to conduct semi-annual redeterminations every March and September, beginning with March 2021. When our net leverage ratio exceeds 2.50x, we are required under the Facility to maintain a restricted cash balance that is sufficient to meet the payment of interest and fees for the next six-month period on the 7.125% Senior Notes and the 7.500% Senior Notes plus the Corporate Revolver or the
15

Table of Contents
Facility, whichever is greater. In January 2021, we restricted approximately $28.5 million in cash and expect to restrict an additional $15.0 million in the second quarter of 2021 to meet our requirements.

As a result of the impact of COVID-19 on the demand for oil and the related significant decrease in oil prices, our ability to comply with one of our financial covenants, the debt cover ratio, may be impacted in future periods. Therefore, in July 2020, we proactively worked with our lender group, prior to any inability to comply with the financial covenants thereunder, to amend the debt cover ratio calculation through December 31, 2021. The amendment makes this covenant less restrictive during the stated period up to a maximum of 4.75x and thereafter gradually returns to the originally agreed upon ratio of 3.5x. We were in compliance with the financial covenants as of the most recent assessment date. The Facility contains customary cross default provisions.

In May 2021, in conjunction with the spring borrowing base redetermination, the Company agreed to an amendment and restatement of the Facility. The amendment includes the following material changes: a reduction in the facility size to $1.25 billion (from $1.5 billion), an increase in the interest margin by 0.5% (applicable interest margin for the first three years is now LIBOR + 3.75%) and an extension in the tenor by two years (final maturity date now occurs in March 2027). The amendment also includes a mechanism for two ESG key performance indicators ("KPIs") to impact the interest margin either positively or negatively based upon delivering emissions targets and achieving certain third party ESG ratings. The KPIs are expected to be agreed upon at the September 2021 redetermination. As amended, the Facility has an available borrowing base of $1.24 billion and total commitments of approximately $1.21 billion. As part of the amendment, Kosmos estimates approximately $15 million for loss on extinguishment of debt during the second quarter of 2021.

 Corporate Revolver
 
In August 2018, we amended and restated the Corporate Revolver maintaining the borrowing capacity at $400.0 million, extending the maturity date from November 2018 to May 2022 and lowering the margin to 5%. This results in lower commitment fees on the undrawn portion of the total commitments, which is 30% per annum of the respective margin. The Corporate Revolver is available for general corporate purposes and for oil and gas exploration, appraisal and development programs. As of March 31, 2021, there were $50.0 million in outstanding borrowings under the Corporate Revolver and the undrawn availability was $350.0 million.

As a result of the impact of COVID-19 on the demand for oil and the related significant decrease in oil prices, our ability to comply with one of our financial covenants, the debt cover ratio, may be impacted in future periods. Therefore, in July 2020, we proactively worked with our lender group, prior to any inability to comply with the financial covenants thereunder, to amend the debt cover ratio calculation through December 31, 2021. The amendment makes this covenant less restrictive during the stated period up to a maximum of 4.75x and thereafter gradually returns to the originally agreed upon ratio of 3.5x. We were in compliance with the financial covenants as of the most recent assessment date. The Corporate Revolver contains customary cross default provisions. 

7.125% Senior Notes due 2026

In April 2019, the Company issued $650.0 million of 7.125% Senior Notes and received net proceeds of approximately $640.0 million after deducting fees and other expenses. We used the net proceeds to redeem all of the previously issued 7.875% Senior Secured Notes due 2021, repay a portion of the outstanding indebtedness under the Corporate Revolver and pay fees and expenses related to the redemption, repayment and the issuance of the 7.125% Senior Notes.

The 7.125% Senior Notes mature on April 4, 2026. Interest is payable in arrears each April 4 and October 4, commencing on October 4, 2019. The 7.125% Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in right of payment with all of its existing and future senior indebtedness (including all borrowings under the Corporate Revolver and the 7.500% Senior Notes) and rank effectively junior in right of payment to all of its existing and future secured indebtedness (including all borrowings under the Facility) and all borrowings under the GoM Term Loan. The 7.125% Senior Notes are guaranteed on a senior, unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico assets, and on a subordinated, unsecured basis by certain subsidiaries that guarantee the Facility. We were in compliance with the financial covenants contained in the 7.125% Senior Notes as of March 31, 2021. The 7.125% Senior Notes contain customary cross default provisions.

7.500% Senior Notes due 2028
In March 2021, the Company issued $450.0 million of 7.500% Senior Notes and received net proceeds of approximately 444.4 million after deducting fees. We used the net proceeds to repay outstanding indebtedness under the
16

Table of Contents
Corporate Revolver and the Facility, to pay expenses related to the issuance of the 7.500% Senior Notes and for general corporate purposes.
The 7.500% Senior Notes mature on March 1, 2028. Interest is payable in arrears each March 1 and September 1, commencing on September 1, 2021. The 7.500% Senior Notes are senior, unsecured obligations of Kosmos Energy Ltd. and rank equal in right of payment with all of its existing and future senior indebtedness (including all borrowings under the Corporate Revolver and the 7.125% Senior Notes) and rank effectively junior in right of payment to all of its existing and future secured indebtedness (including all borrowings under the Facility) and all borrowings under the GoM Term Loan. The 7.500% Senior Notes are guaranteed on a senior, unsecured basis by certain subsidiaries owning the Company's U.S. Gulf of Mexico assets, and on a subordinated, unsecured basis by certain subsidiaries that borrow under, or guarantee, the Facility and, on a subordinated basis, guarantee the Corporate Revolver and the 7.125% Senior Notes.
At any time prior to March 1, 2024, and subject to certain conditions, the Company may, on one or more occasions, redeem up to 40% of the original principal amount of the 7.500% Senior Notes with an amount not to exceed the net cash proceeds of certain equity offerings at a redemption price of 107.500% of the outstanding principal amount of the 7.500% Senior Notes, together with accrued and unpaid interest and premium, if any, to, but excluding, the date of redemption. Additionally, at any time prior to March 1, 2024 the Company may, on any one or more occasions, redeem all or a part of the 7.500% Senior Notes at a redemption price equal to 100%, plus any accrued and unpaid interest, and plus a “make-whole” premium. On or after March 1, 2024, the Company may redeem all or a part of the 7.500% Senior Notes at the redemption prices (expressed as percentages of principal amount) set forth below plus accrued and unpaid interest:
YearPercentage
On or after March 1, 2024, but before February 28, 2025 103.750 %
On or after March 1, 2025, but before February 28, 2026 101.875 %
On or after March 1, 2026 and thereafter 100.000 %

We may also redeem the 7.500% Senior Notes in whole, but not in part, at any time if changes in tax laws impose certain withholding taxes on amounts payable on the 7.500% Senior Notes at a price equal to the principal amount of the 7.500% Senior Notes plus accrued interest and additional amounts, if any, as may be necessary so that the net amount received by each holder after any withholding or deduction on payments of the 7.500% Senior Notes will not be less than the amount such holder would have received if such taxes had not been withheld or deducted.

Upon the occurrence of a change of control triggering event as defined under the 7.500% Senior Notes indenture, the Company will be required to make an offer to repurchase the 7.500% Senior Notes at a repurchase price equal to 101% of the principal amount, plus accrued and unpaid interest to, but excluding, the date of repurchase.
If we sell assets, under certain circumstances outlined in the 7.500% Senior Notes indenture, we will be required to use the net proceeds to make an offer to purchase the 7.500% Senior Notes at an offer price in cash in an amount equal to 100% of the principal amount of the 7.500% Senior Notes, plus accrued and unpaid interest to, but excluding, the repurchase date.
The 7.500% Senior Notes indenture restricts the ability of the Company and its restricted subsidiaries to, among other things: incur or guarantee additional indebtedness, create liens, pay dividends or make distributions in respect of capital stock, purchase or redeem capital stock, make investments or certain other restricted payments, sell assets, enter into agreements that restrict the ability of the Company's subsidiaries to make dividends or other payments to the Company, enter into transactions with affiliates, or effect certain consolidations, mergers or amalgamations. Certain of these covenants will be terminated if the 7.500% Senior Notes are assigned an investment grade rating by both Standard & Poor’s Rating Services and Fitch Ratings Inc. and no default or event of default has occurred and is continuing. We were in compliance with the financial covenants contained in the 7.500% Senior Notes as of March 31, 2021. The 7.500% Senior Notes contain customary cross default provisions.
Production Prepayment Agreement

In June 2020, the Company received $50.0 million from Trafigura under a Production Prepayment Agreement of crude oil sales related to a portion of our U.S. Gulf of Mexico production primarily in 2022 and 2023. The Company terminated the Production Prepayment Agreement and the initial prepayment of $50.0 million advanced under the Production Prepayment Agreement by Trafigura in the second quarter of 2020 was extinguished and converted into the GoM Term Loan as of September 30, 2020.

17

Table of Contents
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. The GoM Term Loan bears interest at an effective rate of approximately 6% per annum and matures in 2025, with principal repayments beginning in the fourth quarter of 2021. We were in compliance with the covenants, representations and warranties contained in the GoM Term Loan as of as of March 31, 2021 (the most recent assessment date). The GoM Term Loan contains customary cross default provisions.

Principal Debt Repayments

At March 31, 2021, the estimated repayments of debt during the five fiscal year periods and thereafter are as follows: 
 Payments Due by Year
 Total2021(2)2022202320242025Thereafter
 (In thousands)
Principal debt repayments(1)$2,350,000 $27,500 $80,000 $387,143 $458,571 $296,786 $1,100,000 
__________________________________
(1)Includes the scheduled principal maturities for the $650.0 million aggregate principal amount of the 7.125% Senior Notes, the $450.0 million aggregate principal amount of the 7.500% Senior Notes and borrowings under the Facility, Corporate Revolver and GoM Term Loan. The scheduled maturities of debt related to the Facility as of March 31, 2021 are based on our level of borrowings and our estimated future available borrowing base commitment levels in future periods. 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.
(2)Represents payments for the period April 1, 2021 through December 31, 2021.

Interest and other financing costs, net
 
Interest and other financing costs, net incurred during the periods is comprised of the following:
 
 Three Months Ended March 31,
 20212020
 (In thousands)
Interest expense$31,435 $31,766 
Amortization—deferred financing costs2,571 2,283 
Capitalized interest (8,641)(6,527)
Deferred interest (194)314 
Interest income (1,825)(1,079)
Other, net1,182 1,078 
Interest and other financing costs, net $24,528 $27,835 


8. Derivative Financial Instruments
 
We use financial derivative contracts to manage exposures to commodity price and interest rate fluctuations. We do not hold or issue derivative financial instruments for trading purposes.
 
We manage market and counterparty credit risk in accordance with our policies and guidelines. In accordance with these policies and guidelines, our management determines the appropriate timing and extent of derivative transactions. We have included an estimate of non-performance risk in the fair value measurement of our derivative contracts as required by ASC 820 — Fair Value Measurement.
 
18

Table of Contents
Oil Derivative Contracts
 
The following table sets forth the volumes in barrels underlying the Company’s outstanding oil derivative contracts and the weighted average prices per Bbl for those contracts as of March 31, 2021. Volumes and weighted average prices are net of any offsetting derivative contracts entered into.
   Weighted Average Price per Bbl
   Net Deferred    
   Premium    
Payable/Sold
TermType of ContractIndexMBbl(Receivable)SwapPutFloorCeiling
2021:
Apr — DecSwaps with sold putsDated Brent4,500 $ $53.96 $42.92 $ $ 
Apr — JunSwaps with sold putsNYMEX WTI500  47.75 37.50   
Apr — DecThree-way collarsDated Brent2,750 0.37  32.95 40.45 52.84 
Apr — DecThree-way collarsNYMEX WTI750 1.00  37.50 45.00 55.00 
Apr — DecSold calls(1)Dated Brent5,250     70.09 
2022:
Jan — DecThree-way collarsDated Brent1,500 1.05  40.00 50.00 70.00 
Jan — DecSold calls(1)Dated Brent1,581     60.00 
__________________________________
(1)Represents call option contracts sold to counterparties to enhance other derivative positions
    
The following tables disclose the Company’s derivative instruments as of March 31, 2021 and December 31, 2020, and gain/(loss) from derivatives during the three months ended March 31, 2021 and 2020, respectively:
 
  Estimated Fair Value
  Asset (Liability)
Type of Contract Balance Sheet LocationMarch 31, 2021December 31, 2020
  (In thousands)
Derivatives not designated as hedging instruments:   
Derivative assets:   
CommodityDerivatives assets—current$ $15,414 
Provisional oil salesReceivables: Oil Sales (677)
CommodityDerivatives assets—long-term 964 
Derivative liabilities: 
CommodityDerivatives liabilities—current(83,293)(28,009)
CommodityDerivatives liabilities—long-term(10,244)(8,069)
Total derivatives not designated as hedging instruments  $(93,537)$(20,377)

  Amount of Gain/(Loss)
  Three Months Ended
  March 31,
Type of ContractLocation of Gain/(Loss)20212020
  (In thousands)
Derivatives not designated as hedging instruments:
   
Provisional oil salesOil and gas revenue$(3,697)$284 
CommodityDerivatives, net(102,461)136,038 
Total derivatives not designated as hedging instruments
 $(106,158)$136,322 
19

Table of Contents

Offsetting of Derivative Assets and Derivative Liabilities
 
Our derivative instruments which are subject to master netting arrangements with our counterparties only have the right of offset when there is an event of default. As of March 31, 2021 and December 31, 2020, there was not an event of default and, therefore, the associated gross asset or gross liability amounts related to these arrangements are presented on the consolidated balance sheets.

9. Fair Value Measurements
 
In accordance with ASC 820 — Fair Value Measurement, fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. We prioritize the inputs used in measuring fair value into the following fair value hierarchy:
 
Level 1 — quoted prices for identical assets or liabilities in active markets.
Level 2 — quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs derived principally from or corroborated by observable market data by correlation or other means.
Level 3 — unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement in its entirety falls is determined based on the lowest level input that is significant to the measurement in its entirety.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020, for each fair value hierarchy level: 
 Fair Value Measurements Using:
 Quoted Prices in   
 Active Markets forSignificant OtherSignificant 
 Identical AssetsObservable InputsUnobservable Inputs 
 (Level 1)(Level 2)(Level 3)Total
 (In thousands)
March 31, 2021    
Assets:    
Commodity derivatives $ $ $ $ 
Provisional oil sales    
Liabilities:
Commodity derivatives  (93,537) (93,537)
Total $ $(93,537)$ $(93,537)
December 31, 2020
Assets:
Commodity derivatives $ $16,378 $ $16,378 
Provisional oil sales (677) (677)
Liabilities:
Commodity derivatives  (36,078) (36,078)
Total $ $(20,377)$ $(20,377)
 
The book values of cash and cash equivalents and restricted cash approximate fair value based on Level 1 inputs. Joint interest billings, oil sales and other receivables, and accounts payable and accrued liabilities approximate fair value due to the short-term nature of these instruments. Our long-term receivables, after any allowances for credit losses, and other long-term assets approximate fair value. The estimates of fair value of these items are based on Level 2 inputs.
20

Table of Contents
 
Commodity Derivatives
 
Our commodity derivatives represent crude oil collars, put options, call options and swaps for notional barrels of oil at fixed Dated Brent, NYMEX WTI, or Argus LLS oil prices. The values attributable to our oil derivatives are based on (i) the contracted notional volumes, (ii) independent active futures price quotes for the respective index, (iii) a credit-adjusted yield curve applicable to each counterparty by reference to the credit default swap (“CDS”) market and (iv) an independently sourced estimate of volatility for the respective index. The volatility estimate was provided by certain independent brokers who are active in buying and selling oil options and was corroborated by market-quoted volatility factors. The deferred premium is included in the fair market value of the commodity derivatives. See Note 8 — Derivative Financial Instruments for additional information regarding the Company’s derivative instruments.
 
Provisional Oil Sales
 
The value attributable to provisional oil sales derivatives is based on (i) the sales volumes and (ii) the difference in the independent active futures price quotes for the respective index over the term of the pricing period designated in the sales contract and the spot price on the lifting date.
 
Debt
 
The following table presents the carrying values and fair values at March 31, 2021 and December 31, 2020:
 
 March 31, 2021December 31, 2020
 Carrying ValueFair ValueCarrying ValueFair Value
 (In thousands)
7.125% Senior Notes
$