Transparency

Transparency in Exploration and Production

Kosmos believes resource revenues are more likely to be managed in the best interests of a country if payments and receipts are made transparently, and if accountability measures are in place for the use of these revenues. Ideally, this process is underpinned by a national dialogue in which industry plays its part as a partner with government and civil society. Kosmos is committed to advocating for transparency in our dealings with host governments.

Extractive Industries Transparency Initiative

Kosmos is a Supporting Company of the Extractive Industries Transparency Initiative (EITI), a leading global standard that strengthens governance by promoting transparency and accountability in the oil, gas, and mining industries. For more information, please visit eiti.org/eiti.

We are committed to exceeding EITI requirements and have resolved to report and publish annually material payments to governments. In our Business Principles, we recognize the critical importance of resource revenues in contributing to sustainable development in our host countries. We commit to honesty in our declarations and will not allow any form of abusive transfer pricing. Where it is legally possible and acceptable to our host governments, we also prefer to make the material terms of our Petroleum Agreements (PAs) and Production Sharing Contracts (PSCs) publicly available. All of our PAs and PSCs have been filed with the Securities Exchange Commission and can be accessed here.

2016 Payments to Government (USD)(1)
Ghana Mauritania Morocco(7) Senegal Suriname
SIGNATURE BONUS
$
4,000,000
$
$
$
$
SURFACE RENTALS
18,000
$
58,000
$
$
97,000
$
$
TRAINING(2)
175,000
$
953,000
$
$
600,000
$
$
PERMITTING FEES
61,000
$
$
$
$
$
TAXES(3)
5,675,000
$
579,000
$
861,000
$
151,000
$
257,000
$
INCOME TAXES(4)
2,232,550
$
$
$
$
$
OTHER(5)
$
53,000
$
4,000,000
$
$
$
TOTAL
8,161,550
$
5,643,000
$
4,861,000
$
848,000
$
257,000
$
ROYALTIES
(in barrels of oil)(6)
370,007
  • (1) Our project-level disclosures are available on this website and in the chart below.
  • (2) Represents payments made directly to government for satisfaction of training obligations per the Petroleum Agreements and/or Petroleum Sharing Contracts (PSCs), as applicable. In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $1.0 million for Morocco.
  • (3) Primarily local payroll-related taxes and withholding taxes on interest payment in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.
  • (4) In addition to this, Kosmos Energy paid the U.S. government $11.7 million in income tax payments during 2016.
  • (5) Primarily relates to costs associated with withdrawing from the Tarhazoute Offshore Area of interest in Morocco.
  • (6) Royalties represent the production entitlement to the Government of Ghana paid in barrels of oil out of Kosmos’ working interest share of production. Based on the annual average of daily Brent prices in 2016, this is worth approximately $16.2 million.
  • (7) Not reflected in the numbers above are payments to the port authority in Morocco primarily for leased use of port facilities in the amount of $75,000.

In 2014, we made a policy decision to disclose payments to governments at a project level, as laid out in the new European Union Accounting Directive, an initiative that aims to improve corporate accounting practices and transparency. We believe that this type of disclosure is beneficial to investors, civil society, and local communities, and reflects evolving international expectations.

Click to enlarge graphic

2016 Payments to Government (USD)
Voluntary Project Level Disclosures
(1)
Production Entitlements
(bbls)(2)
Production Entitlements  
Income Taxes(3)
Royalties
(cash only)
Dividends Bonus Payments License Fees Infrastructure Improvement Training (4) Taxes (Non-Income) (5) Other (6) TOTAL
JUBILEE
370,007
$
$
$
$
$
$
$
$
$
$
$
$
WEST CAPE THREE POINTS
$
$
$
$
$
$
18,000
$
$
175,000
$
$
61,000
$
254,000
$
COMPANY LEVEL
$
$
2,232,550
$
$
$
$
$
$
$
5,675,000
$
$
7,907,550
$
TOTAL GHANA
370,007
$
$
2,232,550
$
$
$
$
18,000
$
$
175,000
$
5,675,000
$
61,000
$
8,161,550
$
C-6
$
$
$
$
$
4,000,000
$
1,500
$
$
53,000
$
$
53,000
$
4,107,500
$
C-8
$
$
$
$
$
$
25,500
$
$
300,000
$
$
$
325,500
$
C-12
$
$
$
$
$
$
14,500
$
$
300,000
$
$
$
314,500
$
C-13
$
$
$
$
$
$
16,500
$
$
300,000
$
$
$
316,500
$
COMPANY LEVEL
$
$
$
$
$
$
$
$
$
579,000
$
$
579,000
$
TOTAL MAURITANIA
$
$
$
$
$
4,000,000
$
58,000
$
$
953,000
$
579,000
$
53,000
$
5,643,000
$
CAYAR OFFSHORE PROFOND
$
$
$
$
$
$
43,500
$
$
300,000
$
$
$
343,500
$
SAINT LOUIS OFFSHORE PROFOND
$
$
$
$
$
$
53,500
$
$
300,000
$
$
$
353,500
$
COMPANY LEVEL
$
$
$
$
$
$
$
$
$
151,000
$
$
151,000
$
TOTAL SENEGAL
$
$
$
$
$
$
97,000
$
$
600,000
$
151,000
$
$
848,000
$
TARHAZOUTE
$
$
$
$
$
$
$
$
$
$
4,000,000
$
4,000,000
$
COMPANY LEVEL
$
$
$
$
$
$
$
$
$
861,000
$
$
861,000
$
TOTAL MOROCCO
$
$
$
$
$
$
$
$
$
861,000
$
4,000,000
$
4,861,000
$
SURINAME
$
$
$
$
$
$
$
$
$
257,000
$
$
257,000
$
TOTAL
370,007
$
$
$2,232,550
$
$
$4,000,000
$173,000
$
$1,728,000
$7,523,000
$4,114,000
$19,770,550
  • (1) Figures are reflective of direct payments made to government entities by Kosmos Energy. These payments to the port authority in Morocco primarily for leased use of port facilities in the amount of $75,000.
  • (2) Production entitlements in barrels represent non-cash royalties paid in barrels of oil out of Kosmos Energy’s working interest share of production. Based on the annual average of daily Brent prices in 2016, this is worth approximately $16.2 million.
  • (3) In addition to this, Kosmos Energy paid the U.S. government $11.7 million in income tax payments during 2016.
  • (4) Represent payments made directly to government for satisfaction of training obligations per the Petroleum Agreement and/or Petroleum Sharing Contracts (PSCs), as applicable. In addition to the numbers above, Kosmos made payments to third party training providers and/or national oil company employees in accordance with training obligations per the PSCs totaling $1.0 million for Morocco.
  • (5) Primarily local payroll-related taxes and withholding taxes on intestines payments in Ghana. These values are exclusive of withholding taxes remitted on behalf of service providers.
  • (6) Primarily relates to costs associated with withdrawing from the Tarhazoute Offshore Area of Interest in Morocco.

In October 2015, Kosmos submitted a comment letter to the United States Securities and Exchange Commission (SEC) as part of the SEC rulemaking process for Section 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which proposes requiring US-listed companies to disclose payments to US and foreign governments as a standard part of their reporting to the SEC.  In our comment letter to the SEC, we highlighted our commitment to transparency, including our project level disclosure in accordance with the EU Accounting Directive.  A copy of this letter is available here.

 

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