b'KOSMOS ENERGY LTD.Notes to Consolidated Financial Statements (Continued)2. Accounting Policies (Continued)ASU 2014-09 also requires additional disclosure about the nature, amount, timing and uncertainty ofrevenue and cash flows arising from customer contracts. ASU 2014-09 applies to all contracts withcustomers except those that are within the scope of other topics in the FASB ASC. The new guidanceis effective for annual reporting periods beginning after December 15, 2017 for public companies.Entities have the option of using either a full retrospective or modified retrospective approach to adoptASU 2014-09. The Company adopted the new standard during the first quarter of 2018 using themodified retrospective approach and there is no impact to our previously recorded revenue under thenew standard.In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740). ASU 2018-05 wasissued to include amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118(SAB 118) and addresses certain circumstances that may arise for registrants in accounting for theincome tax effects of the Tax Cut and Jobs Act (the Tax Reform Act), including when certain incometax effects of the Tax Reform Act are incomplete by the time the financial statements are issued. TheCompany adopted the new standard during the first quarter of 2018 and there was no material impactto our financial statements.Not Yet AdoptedIn February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 was issuedto increase transparency and comparability across organizations by recognizing substantially all leaseson the balance sheet through the concept of right-of-use lease assets and liabilities. Under currentaccounting guidance, lessees do not recognize lease assets or liabilities for leases classified as operatingleases. The ASU is effective for fiscal years beginning after December 15, 2018, including interimperiods within those fiscal years with early adoption permitted. In July 2018, the FASB issuedASU 2018-11, which added a transition option permitting entities to apply the provisions of the newstandard at its adoption date instead of the earliest comparative period presented in the consolidatedfinancial statements. Under this transition option, comparative reporting would not be required, andthe provisions of the standard would be applied prospectively to leases in effect at the date ofadoption. The Company intends to elect this transitional practical expedient.In the normal course of business, the Company enters into various lease agreements for real estateand equipment related to its exploration, development and production activities that are currentlyaccounted for as operating leases. The Company continues to evaluate contracts that exist as of theadoption date and performing the necessary calculations to determine the balance sheet impact. At thistime, the Company cannot reasonably estimate the financial impact this will have on its consolidatedfinancial statements; however, the Company believes adoption and implementation of this ASU willsignificantly impact its balance sheet, resulting in an increase in both assets and liabilities relating to itsleasing activities.3. Acquisitions and Divestitures2018 TransactionsIn March 2018, as part of our alliance with BP p.l.c (BP), we entered into petroleum contractscovering Blocks 10 and 13 with the Democratic Republic of Sao Tome and Principe. We presently havea 35% participating interest in the blocks and the operator, BP, holds a 50% participating interest. Thenational petroleum agency, Agencia Nacional Do Petroleo De Sao Tome E Principe (ANP-STP) has a117'