incurred (‘‘cost recovery oil’’) and our share of remaining oil (‘‘profit oil’’). Cost recovery oil is
apportioned to Kosmos from up to 80% of gross production prior to profit oil being split between the
government of Suriname and the contractor. Profit oil is then apportioned based upon ‘‘R-factor’’
tranches, where the R-factor is cumulative net revenues divided by cumulative net investment. A
corporate tax rate of 36% is applied to profits. The initial period of the exploration phase is three years
and there are two renewal periods consisting of two years each. Each renewal period carries a one well
drilling obligation. In the event of commercial success, the duration of the contract will be 30 years
from the effective date or 25 years from governmental approval of a plan of development, whichever is
longer. Block 45 comprises approximately 1.3 million acres (approximately 5,126 square kilometers). In
November 2012, Kosmos closed an agreement with Chevron under which Kosmos assigned half of its
interest in Block 45, offshore Suriname, to Chevron. Each party now has a 50% participating interest in
Block 45.
In October 2012, we completed a 3D seismic data acquisition program which covered
approximately 3,900 square kilometers of portions of Block 42 and Block 45, both in the SurinameGuyana Basin. Processing of the data is ongoing.
Mauritania Exploration Agreements
Effective June 15, 2012, we entered into three petroleum contracts covering offshore Mauritania
blocks C8, C12 and C13 with the Islamic Republic of Mauritania. We have a 90% participating interest
´´
and are the operator. The Mauritanian national oil company, Societe Mauritanienne des Hydrocarbures
(‘‘SMH’’) now called Soci´t´ Mauritanienne des Hydrocarbures et de Patrimoine Minier (‘‘SMHPM’’),
ee
currently has a 10% carried participating interest during the exploration period only. Should a
commercial discovery be made, SMHPM’s 10% carried interest is extinguished and SMHPM will have
an option to acquire a participating interest of 10% to 14%. SMHPM’s interest in a commercial
development will not be carried as to appraisal and development costs. Cost recovery oil is apportioned
to Kosmos from up to 55% of total production prior to profit oil being split between the government
of Mauritania and the contractor. Profit oil is then apportioned based upon ‘‘R-factor’’ tranches, where
the R-factor is cumulative net revenues divided by the cumulative investment. We are required to pay a
royalty of 7%. These royalties are to be paid in-kind or, at the election of the government of
Mauritania, in cash. A corporate tax rate of 27% is applied to profits at the license level. The Blocks
C8, C12 and C13 currently comprise approximately 2.9 million acres (11,900 square kilometers),
1.7 million acres (7,075 square kilometers) and 1.9 million acres (7,800 square kilometers) respectively.
The terms of exploration periods of these Offshore Blocks are all ten years and include an initial
exploration period of four years followed by the first extension period of three years and the second
extension period of three years. Kosmos is currently in the first exploration period of the blocks,
expiring in June 2016. In the event of commercial success, we have the right to develop and produce oil
for 25 years and gas for 30 years from the grant of an exploitation authorization from the government,
which may be extended for an additional period of 10 years under certain circumstances.
Ireland Exploration Agreements
Effective April 17, 2013, we entered into three farm-in agreements, whereby we have an 85%
participating interest in Frontier Exploration License 2/13 and 3/13, and a 75% participating interest in
Frontier Exploration License 1/13, all part of the Porcupine Basin, offshore Ireland. We are the
operator of the three blocks. We completed 3D s eismic acquisition over the blocks and processing of
the data is underway.
In Frontier Exploration License 2/13 and 3/13, Europa has a 15% participating interest in the
areas. Each License comprises approximately 0.2 million acres (700 square kilometers). In addition to
the fully funded 3D seismic acquisition, we will also fund 100% of the costs of the first exploration well
on each block, subject to an investment cap. The per-well investment cap for the first well is
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