KOSMOS ENERGY LTD. Notes to Consolidated Financial Statements (Continued) 2. Accounting Policies (Continued) Concentration of Credit Risk Our revenue can be materially affected by current economic conditions and the price of oil. However, based on the current demand for crude oil and the fact that alternative purchasers are readily available, we believe that the loss of our marketing agent and/or any of the purchasers identified by our marketing agent would not have a long-term material adverse effect on our financial position or results of operations. Recent Accounting Standards Recently Adopted In January 2017, the FASB issued ASU 2017-1, ‘‘Business Combinations (Topic 805): Clarifying the Definition of a Business.’’ ASU 2017-1 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether those transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. Effective October 1, 2017, we early adopted ASU 2017-1 in connection with our accounting treatment of the Equatorial Guinea acquisition during the fourth quarter of 2017. Not Yet Adopted In May 2014, the FASB issued ASU 2014-9, ‘‘Revenue from Contracts with Customers (Topic 606),’’ which supersedes the revenue recognition requirements in ASC Topic 605, ‘‘Revenue Recognition,’’ and most industry-specific guidance. ASU 2014-9 is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-9 also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. ASU 2014-9 applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. The new guidance is effective for annual reporting periods beginning after December 15, 2017 for public companies. Early adoption is not permitted. Entities have the option of using either a full retrospective or modified retrospective approach to adopt ASU 2014-9. The Company completed its assessment of the new accounting standard and does not expect the adoption of this standard to have a material impact to our revenue recognition based on our existing contracts with customers. We will adopt the new standard during the first quarter of 2018 using the modified retrospective approach and there will be no impact to our previously recorded revenue under the new standard. In February 2016, the FASB issued ASU 2016-2, ‘‘Leases (Topic 842).’’ ASU 2016-2 was issued to increase transparency and comparability across organizations by recognizing substantially all leases on the balance sheet through the concept of right-of-use lease assets and liabilities. Under current accounting guidance, lessees do not recognize lease assets or liabilities for leases classified as operating leases. The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted. The new leasing standard requires the modified retrospective adoption method. The Company is in the process of evaluating the impact of this accounting standard on its consolidated financial statements. 118