PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 425 Lexington Avenue New York, NY 10017
MEMORANDUM
TO: Jennifer Kwon, Responsible Partner; Theodore Langston, Billing Partner
FROM: Eric Johannsen, Lead Associate; Claire Dempsey, Working Associate
DATE: April 27, 2025
RE: Due Diligence Memorandum — Material Contracts of the Dunmore Group
MATTER NO.: 1016-00003
CLIENT: Dunmore Energy Holdings Ltd.
SUBJECT: $850,000,000 9.375% Senior Secured Notes due 2032 — Rule 144A / Regulation S Offering
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I. EXECUTIVE SUMMARY AND PURPOSE
This memorandum summarizes the results of Calderwood & Harkness LLP's ("C&H") review of the material contracts of Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore"), Dunmore upstream Finance Corp. ("DUFC"), and each of the Guarantor subsidiaries (collectively, the "Dunmore Group" or the "Group") in connection with the proposed offering (the "Offering") of $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes"). The Notes will be issued by DEH and guaranteed on a senior secured basis by DUFC and each of the other Guarantors identified in the Security Documents. The Notes will be offered and sold in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and Regulation S thereunder.
The purpose of this memorandum is fourfold:
(i) to identify contracts material to the business and operations of the Dunmore Group for disclosure in the Offering Memorandum (the "OM") to be prepared in connection with the Offering, including for purposes of the "Description of Material Contracts" section and associated risk factor disclosure;
(ii) to assess whether any contract contains provisions that could conflict with, or be triggered by, the issuance of the Notes, the granting of liens under the Security Documents (including the U.S. Collateral Agreement, the Nigerian Collateral Agreement, the Senegalese Collateral Agreement, and the English Debenture), or the entry into the Intercreditor Agreement among the Notes Collateral Agent and the agent under the existing ABL facility;
(iii) to identify contracts constituting Collateral (in particular, material hydrocarbon offtake contracts) under the U.S. Collateral Agreement dated as of the Closing Date by and among the Guarantors and Northgate Trust Company, N.A., as Collateral Agent (the "U.S. Collateral Agreement"), and under the parallel foreign collateral documents; and
(iv) to flag change-of-control, assignment, and consent provisions across the material contracts that may require pre-closing action, impose ongoing compliance obligations, or warrant disclosure in the OM.
The documents reviewed in connection with this memorandum were produced by Dunmore in response to our Master Due Diligence Request List dated March 15, 2025 (items 7.1 through 7.14, covering production sharing contracts, joint operating agreements, offtake agreements, transportation agreements, existing debt instruments, renewable energy contracts, trading arrangements, and other material contracts). The document production was supplemented through a series of management interviews conducted between March 28, 2025 and April 22, 2025, with CEO Marcus Ellingham, CFO Deepa Rajaram, and General Counsel Alistair Forde, as well as follow-up telephone calls and written responses from Dunmore's in-house legal team.
This review was conducted by Eric Johannsen and Claire Dempsey under the supervision of Jennifer Kwon, Responsible Partner. As noted throughout, certain aspects of the review required coordination with and reliance upon local counsel opinions and analyses:
• Nigerian law issues: Reviewed in coordination with Abayomi Chambers, Lagos, Nigeria (Chidinma Okafor, Partner), which provided analysis of the Nigerian Collateral Agreement (including the debenture and fixed and floating charges over the assets of Dunmore Nigeria E&P Ltd.), the interaction of such security with the production sharing contracts and joint operating agreements governed by Nigerian law, and applicable regulatory filing requirements.
• Senegalese law issues: Reviewed in coordination with Theron Moss & Associates SARL, Dakar, Senegal (Moustapha Sy, Associé Gérant), which provided analysis of the Senegalese Collateral Agreement (including the nantissement and cession fiduciaire over the assets of Dunmore Senegal S.A.), the interaction of such security with the Cayar Offshore Block PSC, and applicable regulatory requirements under the Code Pétrolier of Senegal.
• English law issues: Reviewed in coordination with Cresswell & Greaves LLP, London, England (Fiona Halsted, Partner), which provided analysis of the English Debenture to be granted by Dunmore Trading Ltd. and the effectiveness of the charge over English law-governed offtake agreements and ISDA master agreements, as well as the mechanics of enforcement under English law.
This memorandum should be read in conjunction with the separate memoranda prepared by C&H addressing: (a) the Indenture and Security Documents; (b) the Intercreditor Agreement; (c) the corporate structure and organizational documents of the Dunmore Group; and (d) the environmental and regulatory due diligence review.
II. SUMMARY OF MATERIAL CONTRACTS BY CATEGORY
We reviewed a total of approximately twenty-eight (28) material contracts across the Dunmore Group. The following table provides an overview of these contracts organized by category, identifying the contracting Dunmore entity, the counterparty, the governing law, the date of execution, key economic terms, and whether the contract constitutes Notes Priority Collateral under the U.S. Collateral Agreement or the applicable foreign collateral document.
Note (1): ISDA counterparty claims are generally unsecured or subject to CSA-posted collateral; however, ISDA-related receivables are captured by the English Debenture as security. The Intercreditor Agreement does not include ISDA counterparties as first-lien secured parties.
The foregoing table is a summary only. Additional contracts (including sub-agreements, amendments, side letters, and ancillary documents) were reviewed as part of the due diligence process and are catalogued in Appendix A. The balance of this memorandum addresses each category of material contract in detail.
III. PRODUCTION SHARING CONTRACTS (PSCs)
The Dunmore Group's upstream oil and gas production is governed primarily by three production sharing contracts in Nigeria and Senegal, which together account for the substantial majority of the Group's proved reserves and revenue. Each PSC is discussed below.
A. OML 47 Production Sharing Contract — Nigeria
Contracting Entity: Dunmore Nigeria E&P Ltd. ("DNEPL"), acting as contractor and operator under the PSC.
Counterparty: Nigerian National Petroleum Company ("NNPC"), acting in its capacity as the national oil company of the Federal Republic of Nigeria and holding back-in rights under the PSC. The Federal Government of Nigeria ("FGN") is represented by the Department of Petroleum Resources ("DPR"), now reconstituted as the Nigerian upstream Petroleum Regulatory Commission ("NUPRC") pursuant to the Petroleum Industry Act, 2021.
Date of PSC: The OML 47 PSC was originally executed circa 2009 in connection with the initial award of Oil Mining Lease 47 to a predecessor entity and was renewed and comprehensively amended in 2019 following the acquisition of the participating interest by Dunmore Nigeria E&P Ltd.
Location: Oil Mining Lease 47, Niger Delta, Federal Republic of Nigeria. The OML 47 acreage encompasses approximately 340 square kilometers in the shallow-water and onshore Niger Delta region, with producing fields accessed through an established network of wellbores, flowlines, and processing facilities.
Proved Reserves: As of December 31, 2024, the independent reserves report prepared by Duval Howard & Partners (Dr. Evelyn Marchetti, Lead Consultant) attributes proved reserves of 142.6 million barrels of oil equivalent ("MMboe") to OML 47, with a PV-10 value (Discounted at 10% using SEC pricing assumptions) of approximately $2,840,000,000. These reserves constitute the single largest asset in the Dunmore Group's portfolio and are critical to the collateral coverage analysis for the Notes.
Key Terms: The OML 47 PSC follows the standard Nigerian production sharing contract structure, adapted to the specific commercial terms negotiated between the contractor and NNPC. The principal provisions are summarized as follows:
(a) Participating Interest and NNPC Back-In Rights. Dunmore Nigeria holds the contractor interest under the PSC, subject to NNPC's back-in rights. Under the terms of the PSC, NNPC is entitled to a back-in interest of up to 60% on commercial terms, which it has exercised in part. The back-in right is a standard feature of Nigerian PSCs and reflects the FGN's policy of ensuring national participation in upstream petroleum operations.
(b) Cost Recovery Oil. The PSC provides for cost recovery from a designated portion of total production. Cost oil is allocated to the contractor to reimburse allowable exploration, development, and operating expenditures incurred in accordance with the approved work program and budget. Cost recovery is subject to a ceiling, expressed as a percentage of total production (typically in the range of 60%–80% depending on the production tranche).
(c) Profit Oil Split. After allocation of cost oil, the remaining production (profit oil) is divided between NNPC and the contractor in accordance with a graduated sharing formula based on cumulative production levels. The profit oil split escalates in favor of NNPC as cumulative production thresholds are achieved.
(d) Royalty Obligations. Royalties are payable to the FGN on the contractor's share of production in accordance with the applicable royalty rate schedule prescribed under Nigerian petroleum legislation (as amended by the Petroleum Industry Act, 2021). Royalty rates are determined by reference to water depth and production volume.
(e) Minimum Work Program and Expenditure Commitments. The PSC specifies a minimum work program for each contract phase, including minimum expenditure commitments for exploration, appraisal, and development activities. The annual work program and budget are subject to approval by the NNPC-chaired management committee.
(f) Term. The initial term of the PSC is twenty (20) years from the effective date, with renewal options exercisable by the contractor subject to NNPC and ministerial approval. The current term extends through approximately 2029 (original) or 2039 (as renewed), subject to compliance with renewal conditions.
Change of Control / Assignment: The OML 47 PSC contains restrictions on the assignment or transfer of the contractor's participating interest. Any assignment, transfer, or other disposition of the contractor's interest (or any part thereof) requires the prior written consent of both NNPC and the relevant minister (now the Minister of Petroleum Resources or the NUPRC, as applicable). These assignment restrictions are standard in Nigerian PSCs and reflect the FGN's interest in maintaining oversight of the identity and technical and financial qualifications of PSC contractors.
A critical question for the Offering is whether the granting of security interests by Dunmore Nigeria E&P Ltd. under the Nigerian Collateral Agreement (which includes a debenture and fixed and floating charge over DNEPL's assets, including its rights under the OML 47 PSC) constitutes an "assignment" or "transfer" requiring NNPC and ministerial consent. We coordinated with Abayomi Chambers (Chidinma Okafor, Partner) on this analysis. Abayomi Chambers has confirmed, in a legal opinion letter dated April 20, 2025, that:
(i) the creation of a security charge (fixed and floating) over DNEPL's assets, including its contractual rights under the OML 47 PSC, does not constitute an "assignment" or "transfer" of the contractor's participating interest within the meaning of the PSC's assignment provisions, and accordingly does not require NNPC or ministerial consent at the time of grant;
(ii) however, any enforcement of the security charge that results in an actual transfer of the contractor's participating interest under the PSC — whether through a sale of the charged assets, the appointment of a receiver, or any other enforcement mechanism — would constitute a transfer requiring NNPC and ministerial consent; and
(iii) any foreclosure sale or other enforcement disposition must comply with applicable Nigerian law, including the requirements of the Petroleum Industry Act, 2021, and the regulations promulgated thereunder.
This distinction between the grant of security and the enforcement of security is a fundamental element of the collateral structure and is addressed in the OM under the risk factors relating to limitations on the Collateral Agent's ability to realize value from the Collateral.
OFAC/Sanctions Screening: OFAC, EU, and UK OFSI sanctions screening of NNPC and all identified JV partners under the OML 47 PSC was completed on April 25, 2025, by Sandoval Compliance Solutions LLC (Rosa Medina, Lead Consultant). No hits were identified on the SDN List, the Sectoral Sanctions Identifications List, the EU Consolidated List, or the UK OFSI Consolidated List.
Relevance to Offering: The OML 47 PSC is among the most significant contracts in the Dunmore Group's portfolio. It constitutes Notes Priority Collateral under the U.S. Collateral Agreement and the Nigerian Collateral Agreement. It is a key revenue-generating asset and the single largest contributor to the Group's proved reserves and PV-10 value. The PSC and associated operations are disclosed as a risk factor in the OM (including risks related to the Niger Delta security environment, Nigerian regulatory and fiscal regime changes, NNPC back-in rights, and the limitations on the Collateral Agent's enforcement rights). The OML 47 PSC is summarized in the "Description of Material Contracts" section of the OM, but is not filed in full due to confidentiality restrictions.
B. OML 63 Production Sharing Contract — Nigeria
Contracting Entity: Dunmore Nigeria E&P Ltd. ("DNEPL"), acting as contractor and operator.
Counterparty: NNPC (back-in rights); Federal Government of Nigeria (represented by NUPRC).
Date of PSC: Originally executed circa 2012 in connection with the award of Oil Mining Lease 63; amended in 2020 to reflect updated work program commitments and fiscal terms.
Location: Oil Mining Lease 63, Niger Delta, Federal Republic of Nigeria. The OML 63 acreage is located in the onshore/shallow-water Niger Delta, approximately 85 kilometers east of the OML 47 acreage, and encompasses approximately 260 square kilometers of prospective and producing area.
Proved Reserves: As of December 31, 2024, Duval Howard & Partners attributes proved reserves of 87.3 MMboe to OML 63, with a PV-10 value of approximately $1,620,000,000. OML 63 is the Group's second-largest producing asset in Nigeria.
Key Terms: The OML 63 PSC is substantially similar in structure and key terms to the OML 47 PSC, reflecting the standard Nigerian PSC model. The cost recovery and profit oil split mechanisms, NNPC back-in rights, royalty obligations, and management committee structure are consistent with those described above for OML 47. The following provisions are specific to OML 63 or merit separate attention:
(a) Phase II Infill Drilling Commitments. The 2020 amendment to the OML 63 PSC includes a commitment to a Phase II infill drilling campaign, which is currently underway and scheduled to continue through 2027. The infill drilling program is designed to optimize recovery from existing producing reservoirs and to access undrained compartments. The capital expenditure associated with the Phase II program is included in the Group's development budget and is a consideration in the use of proceeds analysis for the Notes.
(b) Gas Utilization Obligations. The OML 63 PSC, as amended, includes obligations relating to gas utilization in compliance with the Nigerian Gas Flare Commercialization Programme. Dunmore Nigeria is required to reduce associated gas flaring to specified targets and to develop gas utilization projects (including gas reinjection, gas-to-power, and potential LPG extraction). Non-compliance with gas flaring reduction targets may result in penalties under Nigerian law, including the payment of flare gas penalties to the FGN. This is a relevant ESG and regulatory risk factor for the OM.
Change of Control / Assignment: The assignment and transfer provisions of the OML 63 PSC are substantially identical to those of the OML 47 PSC. NNPC and ministerial consent is required for any transfer of the contractor's participating interest. Abayomi Chambers has provided a consistent opinion regarding the distinction between the grant of security and the enforcement of security, confirming that the Nigerian Collateral Agreement does not require NNPC consent at the time of grant but that enforcement resulting in a transfer would require such consent.
OFAC/Sanctions Screening: Completed by Sandoval Compliance Solutions LLC as part of the same screening engagement. No hits identified.
Relevance to Offering: The OML 63 PSC constitutes Notes Priority Collateral and is a material revenue contributor. The PSC is summarized in the "Description of Material Contracts" section of the OM. The Phase II infill drilling commitments and gas utilization obligations are disclosed in the OM as part of the description of the Group's Nigerian operations and as relevant risk factors.
C. Cayar Offshore Block Production Sharing Contract — Senegal
Contracting Entity: Dunmore Senegal S.A. ("DSSA"), acting as contractor and operator under the PSC.
Counterparty: The Republic of Senegal, acting through the Ministère de l'Énergie et du Pétrole (the "Ministry"); and the Société des Pétroles du Sénégal ("PETROSEN"), the Senegalese state oil company, which holds a carried interest and option to acquire additional participating interest.
Date of PSC: Executed in 2017 in connection with the initial award of the Cayar Offshore Block exploration license to Dunmore Senegal S.A.; amended in 2022 to reflect the approved Phase I development plan and updated fiscal terms following first commercial discovery.
Location: Cayar Offshore Block, located approximately 90 kilometers off the coast of Senegal in water depths ranging from 800 to 2,400 meters. The block encompasses an area of approximately 6,200 square kilometers and includes the producing Cayar Deep discovery (Phase I) and additional exploration prospects.
Proved Reserves: As of December 31, 2024, Duval Howard & Partners attributes proved reserves of 64.1 MMboe to the Cayar Offshore Block, with a PV-10 value of approximately $1,190,000,000. The Cayar asset represents a significant growth opportunity for the Dunmore Group, with Phase II development expected to materially increase production volumes and reserves over the coming years.
Key Terms: The Cayar PSC is structured under the Senegalese Code Pétrolier and follows the standard Senegalese PSC model, with certain bespoke provisions reflecting the offshore deepwater nature of the block and the negotiations between Dunmore Senegal and the Senegalese government. The principal provisions are as follows:
(a) PETROSEN Carried Interest and Option. PETROSEN holds a carried interest through the exploration phase of the Cayar Block, meaning that PETROSEN's share of exploration costs is borne by the contractor (Dunmore Senegal). Upon declaration of commerciality and the commencement of the development phase, PETROSEN has the option to convert its carried interest into a participating interest and to acquire additional participating interest on commercial terms, up to a specified maximum percentage. PETROSEN exercised its option in connection with the Phase I development plan.
(b) Cost Recovery. The PSC provides for cost recovery from a designated portion of total production, subject to a cost recovery ceiling of 70% of gross production. This ceiling is higher than the typical Nigerian PSC ceiling and reflects the higher capital intensity and risk profile of deepwater offshore development in West Africa.
(c) Profit Oil Split. After allocation of cost recovery oil, the remaining production (profit oil) is divided between the Republic of Senegal/PETROSEN and the contractor pursuant to a graduated sharing formula based on an R-factor (the ratio of cumulative revenues to cumulative costs). As the R-factor increases (i.e., as the project becomes more profitable), the government's share of profit oil escalates. This is a standard mechanism in Senegalese PSCs designed to ensure that the government captures an increasing share of economic rent as project profitability increases.
(d) Phase I Development; Phase II Funding from Notes Proceeds. Phase I development of the Cayar Deep discovery has been completed, with first oil achieved in late 2023. Phase II development, which contemplates additional subsea wells, flowlines, and topside processing capacity, is expected to be funded in part from the proceeds of the Notes offering. Specifically, $250,000,000 of the net proceeds of the Notes offering is expected to be allocated to Phase II capital expenditures at the Cayar Block, as disclosed in the "Use of Proceeds" section of the OM.
(e) Exploration and Appraisal Obligations. The PSC specifies minimum exploration and appraisal work program commitments, including seismic acquisition and exploratory drilling. The current exploration period obligations have been substantially fulfilled, and the PSC has transitioned to the development and production phase for the Cayar Deep area.
(f) Stabilization Clause. The Cayar PSC includes a fiscal stabilization clause providing that the fiscal terms applicable to the contractor (including tax rates, royalty rates, and profit oil split percentages) will be stabilized for a period of ten (10) years from the date of first commercial production. This stabilization clause provides the contractor with protection against adverse changes in the Senegalese fiscal regime during the initial production phase and is a significant risk-mitigating feature for the project economics and, by extension, for the collateral value supporting the Notes.
(g) Community Engagement Commitments. The Cayar PSC includes provisions requiring the contractor to undertake community engagement and social investment programs in connection with the development of the Cayar Block. These obligations include commitments to local content, employment of Senegalese nationals, and funding of community development initiatives. These provisions are relevant to the OM's ESG disclosure, particularly the "Environmental and Social Responsibility" section.
Change of Control / Assignment: The Cayar PSC requires the prior approval of the Ministry and PETROSEN for any transfer or assignment of the contractor's participating interest (or any part thereof). This requirement is consistent with the standard approach under the Senegalese Code Pétrolier and reflects the government's interest in ensuring that PSC contractors have the requisite technical and financial capacity.
We coordinated with Theron Moss & Associates SARL (Moustapha Sy, Associé Gérant) regarding the interaction between the Cayar PSC's assignment restrictions and the security interests to be granted under the Senegalese Collateral Agreement. Theron Moss & Associates has confirmed, in a legal opinion letter dated April 18, 2025, that:
(i) the nantissement (pledge) and cession fiduciaire (fiduciary assignment by way of security) over the assets of Dunmore Senegal S.A. under the Senegalese Collateral Agreement are permissible under Senegalese law and do not constitute a "transfer" or "assignment" of the contractor's participating interest within the meaning of the Cayar PSC's assignment provisions, and accordingly do not require governmental approval at the time of grant;
(ii) enforcement of the security interests — whether through a judicial or extra-judicial realization, including a sale of the pledged assets or the definitive transfer of the fiduciary-assigned rights — that results in a change in the identity of the contractor under the PSC would require the prior approval of the Ministry and PETROSEN; and
(iii) the nantissement and cession fiduciaire must be registered with the relevant Senegalese registry (the Registre du Commerce et du Crédit Mobilier) in accordance with applicable OHADA Uniform Act requirements, and Theron Moss is coordinating with C&H on the timing and mechanics of such registration.
Relevance to Offering: The Cayar Offshore PSC constitutes Notes Priority Collateral. The allocation of $250,000,000 of the Notes proceeds to Phase II development at the Cayar Block is a key element of the "Use of Proceeds" disclosure. The Cayar asset is an important growth asset for the Dunmore Group and contributes to the Group's geographic and asset diversification. The PSC is summarized in the OM, and the associated ESG and community engagement commitments are addressed in the OM's sustainability disclosures. Sanctions screening of PETROSEN and all identified consortium members was completed by Sandoval Compliance Solutions LLC with no hits.
IV. JOINT OPERATING AGREEMENTS (JOAs)
The Dunmore Group's operations under each of the PSCs and the Gulf of Mexico leases are governed by joint operating agreements among the participants. Each JOA establishes the rights and obligations of the parties in relation to the conduct of operations, the approval of work programs and budgets, the allocation of costs, and the transfer of participating interests. The material JOAs are summarized below.
A. OML 47 Joint Operating Agreement
Parties: Dunmore Nigeria E&P Ltd. (operator) and the JV partner entities holding participating interests in OML 47 (the names of the JV partners have been identified in the confidential annex to this memorandum and were screened by Sandoval Compliance Solutions LLC for OFAC, EU, and UK OFSI sanctions compliance; no hits were identified as of April 25, 2025).
Governing Law: Nigerian law. Disputes are subject to arbitration in Lagos under the rules of the Nigerian Arbitration and Conciliation Act.
Key Terms:
(a) Operating Committee Structure. The JOA establishes an operating committee comprising representatives of each party, with voting rights proportional to participating interests. Decisions of the operating committee require the affirmative vote of parties holding a specified percentage of the aggregate participating interests (typically 65%–70% for ordinary decisions and higher thresholds for extraordinary decisions such as the approval of sole risk operations or the surrender of acreage).
(b) Work Programs and Budgets. The operator is required to prepare and submit annual work programs and budgets for approval by the operating committee. Approved work programs form the basis for cash calls to the non-operating parties.
(c) Sole Risk / Non-Consent Provisions. The JOA contains provisions permitting any party to undertake optional drilling operations (e.g., exploration wells in areas outside the approved work program) on a sole risk basis if other parties elect not to participate. Non-consenting parties may be penalized through a premium on re-entry (typically a multiple of their share of sole risk costs) if the sole risk operation results in a commercial discovery.
(d) Default and Forfeiture. The JOA includes provisions addressing default by a party in the payment of cash calls. A defaulting party is subject to interest charges, suspension of voting rights, and, in the event of a continuing default, potential forfeiture of its participating interest to the non-defaulting parties on a pro rata basis.
(e) Operator Liability. The operator's liability is limited to losses arising from its willful misconduct or gross negligence. The operator is indemnified by the non-operating parties on a proportional basis for all other losses, costs, and liabilities arising from the conduct of operations.
(f) Pre-Emption Rights. The JOA grants each non-operating party a right of first refusal (pre-emption right) in the event that any party proposes to transfer its participating interest to a third party. The pre-emption right is triggered by a bona fide offer from a third-party purchaser and provides the non-transferring parties with the opportunity to acquire the transferring party's interest on the same terms and conditions as the third-party offer.
Assignment Restrictions: In addition to the pre-emption rights described above, any transfer of a participating interest under the OML 47 JOA is subject to the assignment restrictions in the OML 47 PSC (requiring NNPC and ministerial consent). The combined effect of these provisions is that any transfer resulting from enforcement of the security interests under the Nigerian Collateral Agreement would require both the exercise (and potential waiver) of the pre-emption rights by the JV partners and the consent of NNPC and the relevant minister.
Relevance to Offering: The OML 47 JOA is a material contract forming part of the collateral package. The pre-emption and consent provisions are flagged for disclosure in the OM (particularly in the risk factors relating to limitations on the Collateral Agent's ability to realize value from the Collateral) and for consideration in the structuring of the Security Documents.
B. OML 63 Joint Operating Agreement
Parties: Dunmore Nigeria E&P Ltd. (operator) and the JV partner entities holding participating interests in OML 63 (names screened by Sandoval — no hits).
Governing Law: Nigerian law; arbitration in Lagos.
Key Terms: The OML 63 JOA is substantially similar in structure and terms to the OML 47 JOA, reflecting the standard Nigerian JOA model. The operating committee structure, voting thresholds, sole risk provisions, default and forfeiture mechanics, operator liability limitations, and pre-emption rights are consistent with those described above for the OML 47 JOA. The key differences relate to the specific participating interest percentages, the composition of the JV partners, and the work program commitments (including the Phase II infill drilling campaign discussed in Section III.B above).
Relevance to Offering: Same analysis as the OML 47 JOA. The pre-emption and consent provisions are flagged for OM disclosure and Security Document structuring.
C. Cayar Offshore Block Joint Operating Agreement
Parties: Dunmore Senegal S.A. (operator), PETROSEN, and other consortium members holding participating interests in the Cayar Offshore Block.
Governing Law: Senegalese law. The JOA includes an arbitration clause providing for arbitration under the rules of the International Chamber of Commerce ("ICC"), with the seat of arbitration in Paris, France.
Key Terms:
(a) Operator Obligations. Dunmore Senegal, as operator, is responsible for the day-to-day conduct of operations in accordance with the approved work program and budget, applicable law, and good oilfield practice. The operator is obligated to maintain adequate insurance coverage and to comply with all health, safety, and environmental requirements.
(b) Work Program and Budget Approvals. Annual work programs and budgets are submitted by the operator for approval by the operating committee. Approval requires the affirmative vote of parties holding more than 50% of the aggregate participating interests.
(c) PETROSEN Carried Interest. As noted in the discussion of the Cayar PSC above, PETROSEN's interest is carried through the exploration phase, with costs borne by the other consortium members on a proportional basis. During the development and production phases, PETROSEN participates as a full cost-bearing partner.
(d) Change of Operator. The JOA includes provisions permitting the replacement of the operator upon the occurrence of specified events (including material default, insolvency, or a change of control of the operator). The replacement of the operator requires the consent of parties holding more than 50% of the aggregate participating interests (excluding the interest of the operator itself).
(e) Exclusive Operations and Sole Risk. The JOA includes provisions for exclusive operations (similar to the sole risk provisions in the Nigerian JOAs), permitting any party to propose and undertake operations that are not included in the approved work program, subject to specified notice and election procedures.
Assignment Restrictions: Transfers of participating interests under the Cayar JOA are subject to the assignment restrictions in the Cayar PSC (requiring Ministry and PETROSEN approval) and to pre-emption rights of the non-transferring consortium members. Theron Moss & Associates has confirmed that the security package under the Senegalese Collateral Agreement does not conflict with these assignment restrictions, consistent with the analysis described in Section III.C above.
D. Green Canyon / Garden Banks Joint Operating Agreements (Gulf of Mexico)
Contracting Entity: Dunmore Gulf Operations LLC ("DGO"), the Dunmore Group's U.S. operating subsidiary for Gulf of Mexico deepwater operations.
Counterparties: Other working interest holders in the Green Canyon and Garden Banks deepwater leases. The specific counterparties have been identified and are party to separate JOAs for each lease block.
Governing Law: Texas law.
Proved Reserves (Combined GoM): As of December 31, 2024, Duval Howard & Partners attributes combined proved reserves of 51.8 MMboe to the Group's Gulf of Mexico operations (including both Green Canyon and Garden Banks leases), with a combined PV-10 value of approximately $1,050,000,000.
Key Terms:
(a) BOEM/BSEE Standard-Form Provisions. The GoM JOAs incorporate or are consistent with the standard-form operating agreement provisions prescribed by the Bureau of Ocean Energy Management ("BOEM") and the Bureau of Safety and Environmental Enforcement ("BSEE") for offshore leases on the Outer Continental Shelf. These provisions address operator responsibilities, well control, environmental compliance, and reporting obligations.
(b) Decommissioning and P&A Obligations. The GoM JOAs include provisions addressing the parties' obligations for decommissioning of production facilities and plugging and abandonment ("P&A") of wells at the end of field life. These obligations represent a material future liability for the Group and are subject to supplemental bonding requirements imposed by BOEM/BSEE. The estimated decommissioning liability for the Group's GoM operations (as of December 31, 2024) is approximately $185,000,000 (undiscounted), which is reflected in the Group's financial statements and disclosed as a risk factor in the OM.
(c) Area of Mutual Interest. The GoM JOAs include area of mutual interest ("AMI") provisions requiring each party to offer any new lease or interest acquired within a defined geographic area to the other parties on the same terms and conditions. The AMI provisions are designed to prevent competitive bidding among the JOA parties for adjacent acreage.
(d) Pre-Emption Rights. Consistent with standard industry practice for GoM JOAs, each party has a right of first refusal on any proposed transfer of a working interest to a third party.
Assignment Restrictions: Transfers of working interests under the GoM JOAs are subject to the pre-emption rights of the non-transferring parties and to BOEM approval requirements. BOEM requires that any assignee of a lease interest demonstrate adequate technical and financial qualifications and provide evidence of compliance with bonding and financial assurance requirements.
Relevance to Offering: The GoM assets constitute Notes Priority Collateral through the U.S. Collateral Agreement (which includes a pledge of equity interests in DGO and a security interest in DGO's assets). The decommissioning and P&A liability is noted for OM risk factor disclosure, and the pre-emption rights and BOEM approval requirements are flagged as potential limitations on the Collateral Agent's enforcement remedies.
V. HYDROCARBON OFFTAKE AND SALES AGREEMENTS
The Dunmore Group's revenue is generated primarily through the sale of crude oil, condensate, and natural gas produced from its upstream assets. The material offtake and sales agreements are summarized below. These agreements are critical to the collateral analysis because the contracts themselves (as opposed to the receivables arising thereunder) constitute Notes Priority Collateral, while the receivables flow through collection accounts that form part of the ABL Priority Collateral.
A. Crude Oil Offtake Agreement — Nigerian Production (OML 47 and OML 63)
Contracting Entity: Dunmore Trading Ltd. ("DTL"), a company incorporated in England and Wales that serves as the Dunmore Group's offtake and trading arm. DTL purchases crude oil from Dunmore Nigeria E&P Ltd. at the wellhead or at Nigerian export terminals and sells the production to international crude oil purchasers.
Counterparty/Purchaser(s): The specific international crude oil purchasers have been identified in our review. The purchasers include a mix of international oil trading houses, refinery operators, and end-user purchasers. All counterparties have been screened by Sandoval Compliance Solutions LLC for OFAC, EU, and UK OFSI sanctions compliance. No hits were identified.
Governing Law: English law. Disputes are subject to arbitration under the rules of the London Court of International Arbitration ("LCIA").
Key Terms:
(a) Term and Renewal. The crude oil offtake agreements are structured as a combination of term contracts (with durations of 12 to 24 months and automatic renewal provisions, subject to termination notice periods) and spot market sales. The term contracts provide a baseline level of revenue certainty, while spot sales provide flexibility to capture market opportunities.
(b) Pricing. Pricing under the term contracts is benchmarked to the Bonny Light crude oil benchmark, with quality and location differentials reflecting the specific characteristics of the OML 47 and OML 63 crude streams (including API gravity, sulfur content, and delivery location). Pricing under spot sales is negotiated on a cargo-by-cargo basis.
(c) Delivery. Delivery is on an FOB (free on board) basis at Nigerian export terminals, with title and risk of loss transferring to the purchaser upon loading at the terminal.
(d) Force Majeure. The agreements include standard force majeure provisions, which may be triggered by events including (among others) natural disasters, acts of war or terrorism, government actions, and community disruptions. Given the security environment in the Niger Delta region, force majeure provisions are of particular relevance and are addressed in the OM risk factors.
(e) Sanctions Compliance and Anti-Corruption. The agreements include representations and covenants relating to compliance with applicable sanctions laws (including OFAC, EU, and UK sanctions) and anti-corruption laws (including the U.S. Foreign Corrupt Practices Act and the UK Bribery Act 2010). These provisions are consistent with market practice for international crude oil sales and are relevant to the sanctions compliance workstream for the Offering.
(f) Volume Commitments. The term contracts include volume commitments tied to the production forecasts for OML 47 and OML 63. Dunmore Trading Ltd. has committed to deliver specified minimum volumes during each delivery period, subject to force majeure and operational adjustments.
Assignment/Collateral: The crude oil offtake agreements constitute "material hydrocarbon offtake contracts" forming part of the Collateral under the U.S. Collateral Agreement and the English Debenture granted by Dunmore Trading Ltd. in favor of Northgate Trust Company, N.A. (as Notes Collateral Agent).
We coordinated with Cresswell & Greaves LLP (Fiona Halsted, Partner) on the analysis of the assignment and charge provisions of the offtake agreements under English law. Cresswell & Greaves has confirmed that:
(i) the English law debenture (which creates a fixed charge over DTL's contractual rights under the offtake agreements, and a floating charge over its general undertaking and assets) effectively captures the offtake agreements as security in favor of the Collateral Agent;
(ii) the fixed charge over the contractual rights crystallizes upon the occurrence of an enforcement event and entitles the Collateral Agent (or a receiver appointed by it) to exercise DTL's rights under the agreements, including the right to receive payment for crude oil deliveries;
(iii) the offtake agreements include provisions permitting assignment by either party with the consent of the counterparty, or (in some cases) assignment by way of security without consent but with notice to the counterparty — the specific requirements vary by agreement, but in general, the Collateral Agent will be required to provide notice to the offtake counterparties upon enforcement of the security; and
(iv) the priority of the Collateral Agent's charge over the offtake contracts will be subject to the rules of English law regarding priority of charges and the requirements for registration at Companies House.
Relevance to Offering: The crude oil offtake agreements are a direct source of revenue for the Dunmore Group and constitute Notes Priority Collateral. The distinction between the contracts themselves (Notes Priority Collateral) and the receivables arising under the contracts (ABL Priority Collateral, once deposited into collection accounts) is a key feature of the Intercreditor Agreement and must be clearly described in the OM. Counterparty credit risk is disclosed in the OM as a risk factor, as is the risk of sanctions exposure in connection with Nigerian crude oil sales.
B. Crude Oil and Condensate Offtake Agreement — Cayar Offshore (Senegal)
Contracting Entity: Dunmore Senegal S.A. / Dunmore Trading Ltd. (depending on the specific sales arrangement — DTL generally acts as the marketing and trading counterparty for international sales).
Counterparty: International oil trading firms (the specific counterparties have been screened by Sandoval for sanctions compliance; no hits identified).
Governing Law: English law.
Key Terms:
(a) Phase I Production. The existing offtake agreements are linked to Phase I production from the Cayar Deep field. Phase II incremental volumes (which are expected to be funded in part from the $250,000,000 of Notes proceeds allocated to Phase II development) will be covered by future offtake agreements to be negotiated and entered into as Phase II production comes on stream.
(b) Delivery. Delivery is on an FOB basis at the Dakar-area floating storage and offloading ("FSO") facility. The FSO facility serves as the primary export point for Cayar production and is operated by a third-party contractor under a separate agreement.
(c) Pricing. Pricing is linked to the Brent crude oil benchmark, with quality and location differentials reflecting the characteristics of the Cayar crude and condensate streams.
Assignment/Collateral: The Cayar offtake agreements are included in the collateral package through the Senegalese Collateral Agreement (nantissement) and the English Debenture (to the extent the agreements are governed by English law and entered into by DTL). The analysis of assignment and charge mechanics is consistent with that described for the Nigerian offtake agreements in Section V.A above.
C. Natural Gas Sales Agreement — Gulf of Mexico
Contracting Entity: Dunmore Gulf Operations LLC ("DGO").
Counterparty: A U.S. gas purchaser/aggregator (the specific counterparty has been identified and screened for sanctions compliance).
Governing Law: New York law.
Key Terms:
(a) Term. The gas sales agreement has a five-year term (with remaining term of approximately three years as of the date of this memorandum), with renewal provisions.
(b) Pricing. Pricing is based on the Henry Hub natural gas benchmark, with adjustments for quality and delivery point.
(c) Minimum Volume and Make-Whole. The agreement includes minimum volume commitments, with make-whole payment obligations in the event that DGO fails to deliver the specified minimum volumes. The make-whole provisions are designed to compensate the purchaser for the incremental cost of procuring replacement gas volumes from alternative sources.
Assignment/Collateral: The gas sales agreement is included in the U.S. Collateral Agreement as a material offtake contract and constitutes Notes Priority Collateral. The agreement permits assignment by way of security without the consent of the purchaser, subject to notice.
VI. PIPELINE AND MIDSTREAM TRANSPORTATION AGREEMENTS
The Dunmore Group's production is transported from the wellhead to export terminals, processing facilities, and delivery points through a network of pipelines and midstream infrastructure, some of which is owned by the Group (through Dunmore Midstream Holdings Inc.) and some of which is operated by third parties under tariff-based transportation and processing agreements.
A. Niger Delta Pipeline Transportation Agreements
Contracting Entity: Dunmore Midstream Holdings Inc. / Dunmore Nigeria E&P Ltd.
Counterparties: Third-party pipeline operators for crude oil and gas transportation within the Niger Delta. The Niger Delta pipeline network is a shared infrastructure system, and the Group relies on multiple third-party operators for the transportation of its production from the wellhead to export terminals and gas processing facilities.
Governing Law: Nigerian law.
Key Terms:
(a) Tariff-Based Transportation. Transportation services are provided on a tariff-based basis, with tariffs determined by reference to published rates or negotiated schedules. Tariffs are typically denominated in U.S. dollars per barrel (for crude oil) or per million British thermal units (for natural gas).
(b) Ship-or-Pay Commitments. Certain of the transportation agreements include ship-or-pay commitments, under which the Group is obligated to pay a minimum tariff regardless of the volume of product actually shipped. These commitments provide revenue certainty to the pipeline operators but create a fixed cost obligation for the Group.
(c) Throughput Guarantees and Deficiency Payments. Related to the ship-or-pay commitments, certain agreements include throughput guarantee provisions, with deficiency payments payable by the Group in the event that actual throughput falls below the guaranteed minimum.
(d) Force Majeure. The agreements include force majeure provisions, which are of particular relevance in the Niger Delta context. The force majeure provisions specifically address events such as community disruption, sabotage, vandalism, and pipeline interdiction — risks that have historically affected pipeline operations in the Niger Delta region and are disclosed as risk factors in the OM.
(e) Maintenance and Turnaround Scheduling. The agreements include provisions for scheduled maintenance and turnaround events, during which pipeline throughput may be reduced or interrupted. The Group coordinates its production schedules with the pipeline operators to minimize the impact of planned maintenance on production and revenue.
B. Gulf of Mexico Pipeline Transportation and Processing Agreements
Contracting Entity: Dunmore Gulf Operations LLC / Dunmore Midstream Holdings Inc.
Counterparties: Third-party midstream operators for deepwater pipeline gathering and onshore processing and fractionation services.
Governing Law: Texas law.
Key Terms:
(a) Firm Transportation. The GoM pipeline transportation agreements include firm transportation commitments, providing the Group with reserved capacity on deepwater gathering pipelines connecting the Group's production platforms to onshore landing points. Firm transportation is subject to demand charges, which are payable regardless of actual utilization.
(b) Processing and Fractionation. The Group has entered into processing and fractionation agreements for the processing of wet gas and the separation of natural gas liquids ("NGLs") from the gas stream. Processing fees are based on a combination of fixed monthly charges and variable fees based on throughput volume.
(c) Minimum Volume Commitments. The processing agreements include minimum volume commitments, with deficiency payments applicable in the event that the Group fails to deliver the specified minimum volumes to the processing facilities.
Assignment/Collateral: The GoM pipeline transportation and processing agreements are included in the U.S. Collateral Agreement as material contracts and constitute Notes Priority Collateral.
C. West Texas Solar Interconnection and Transmission Agreements
Contracting Entity: Dunmore Renewables LLC.
Counterparties: Utility and transmission operators within the Electric Reliability Council of Texas ("ERCOT") market.
Governing Law: Texas law.
Key Terms:
(a) Interconnection Agreements. The 220 MW solar portfolio operated by Dunmore Renewables LLC is interconnected to the ERCOT grid through interconnection agreements that specify the technical requirements, costs, and responsibilities for the interconnection of each solar facility to the transmission network.
(b) Transmission Service Agreements. Dunmore Renewables has entered into transmission service agreements providing for the delivery of electricity generated by the solar facilities to load-serving entities and wholesale market participants.
(c) Curtailment Risk. The interconnection and transmission agreements include provisions addressing the allocation of curtailment risk — i.e., the risk that the transmission system operator may curtail the output of the solar facilities due to transmission congestion, system reliability concerns, or other grid management considerations. Curtailment risk is a material consideration for the economics of the solar portfolio and is disclosed as a risk factor in the OM.
VII. EXISTING DEBT AGREEMENTS
The Dunmore Group's existing debt structure consists of two principal instruments: (a) the ABL revolving credit facility with Velthorn National Bank, N.A. as administrative agent, and (b) the outstanding 7.50% Senior Unsecured Notes due 2028. The proposed Notes offering is designed to (i) refinance a portion of the existing 2028 Unsecured Notes and (ii) provide funding for Phase II development at the Cayar Block and general corporate purposes. The existing debt agreements are reviewed in detail below, with particular attention to the covenant compliance analysis and the mechanics of the Intercreditor Agreement.
A. ABL Revolving Credit Facility
Borrower: Dunmore Energy Holdings Ltd. and designated subsidiary borrowers.
Administrative Agent: Velthorn National Bank, N.A. Contact: Robert Cavanaugh, Relationship Manager. Address: 1111 Fannin Street, Suite 2500, Houston, TX 77002.
Agent's Counsel: Pruitt Halsey LLP, Houston, Texas.
Facility Size: $750,000,000 aggregate revolving credit commitment.
Outstanding Balance: As of the most recent borrowing base certificate reviewed (dated March 31, 2025), $470,000,000 was drawn under the facility, with additional availability under the borrowing base of approximately $168,000,000 (subject to satisfaction of borrowing base conditions).
Maturity: June 30, 2028.