PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP Capital Markets Group
MEMORANDUM
This memorandum constitutes attorney work product prepared in anticipation of litigation and at the direction of counsel. This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the internal use of Calderwood & Harkness LLP and its client, Dunmore Energy Holdings Ltd., and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
I. Purpose and Executive Summary
A. Purpose
This memorandum analyzes the applicable Environmental, Social, and Governance ("ESG") disclosure frameworks and standards relevant to the preparation of the Offering Memorandum (the "OM") for the $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes") to be issued by Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore") and Dunmore upstream Finance Corp. ("DUFC" and, together with DEH, the "Issuers") in a private placement to qualified institutional buyers ("QIBs") pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and to non-U.S. persons in offshore transactions pursuant to Regulation S under the Securities Act (the "Offering"). This memorandum has been prepared to guide the drafting team in structuring and populating the standalone "Environmental and Social Responsibility" section of the OM, as well as the ESG-related risk factors to be included therein. It is intended to serve as a comprehensive reference document for the internal working group and should be read in conjunction with the companion memoranda identified in Section VIII.B below.
B. Background and Context
Dunmore is a Cayman Islands exempted company with operating subsidiaries engaged in upstream and midstream oil and gas operations across West Africa and the Gulf of Mexico, as well as a nascent renewable energy portfolio. Specifically, Dunmore operates upstream oil and gas assets in Nigeria (OML 47 and OML 63), Senegal (Cayar Offshore Block), and the Gulf of Mexico (Green Canyon and Garden Banks deepwater leases), together with midstream pipeline and processing infrastructure, a London-based trading subsidiary, and a 220 MW solar portfolio in West Texas operated through Dunmore Renewables LLC. The multi-jurisdictional nature of Dunmore's operations, the environmental sensitivities inherent in upstream oil and gas extraction, and the company's exposure to both developed and developing regulatory regimes present a complex ESG disclosure landscape that must be carefully navigated in the OM.
Because the Offering is structured as a private placement pursuant to Rule 144A and Regulation S, DEH is not an SEC reporting company, and accordingly no SEC registrant reporting obligations apply directly to this Offering. However, market practice in the 144A high-yield energy sector has evolved considerably in recent years, driven by institutional investor demand, rating agency integration of ESG factors, and the overarching anti-fraud liability imposed by Rule 10b-5 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Section 17(a) of the Securities Act. These considerations necessitate robust, accurate, and carefully calibrated ESG disclosure in the OM, notwithstanding the absence of formal registrant obligations.
C. Data Sources
The ESG data underlying the disclosure analysis in this memorandum has been sourced from the ESG data package prepared by Barrisford Advisory Group LLC ("Barrisford"), an independent sustainability consulting firm engaged by Dunmore for purposes of the Offering. The lead consultant at Barrisford is Nathan Reyes Linley CPAs LLP, located at 1700 K Street NW, Suite 900, Washington, DC 20006. Barrisford has provided quantitative and qualitative ESG data covering Dunmore's global operations, including greenhouse gas emissions, methane flaring metrics, community development expenditures, and other environmental and social performance indicators. The data package has not yet been subject to the full fact-checking and verification process that will be applied during the OM drafting and diligence process, and certain data clarifications remain outstanding as discussed in Section V.A.2 below.
Key data points currently available from the Barrisford data package include:
• Scope 1 GHG Emissions: 1.42 million metric tons CO₂e (FY 2024)
• Scope 2 GHG Emissions: 0.18 million metric tons CO₂e (FY 2024)
• Community Development Spend (Nigeria): $14.2 million (FY 2024)
• Methane Flaring Intensity: 3.8 m³/boe (vs. industry average of 5.1 m³/boe)
• Net-Zero Commitment: Net-zero greenhouse gas emissions by 2050
D. Preliminary Credit Ratings
The Notes have received preliminary credit ratings from two rating agencies: Lodestar Ratings International ("Lodestar") has assigned a preliminary rating of B2 with a Stable outlook (Lead Analyst: Catherine Irvine), and Veridian Credit Assessments Inc. ("Veridian") has assigned a preliminary rating of B+ with a Stable outlook (Lead Analyst: James Fenwick). Both agencies have increasingly integrated ESG factors into their credit assessment methodologies, and the quality of Dunmore's ESG disclosure in the OM may influence the stability of these ratings over the life of the Notes. This consideration further underscores the importance of a well-structured, data-supported ESG disclosure framework for the Offering.
E. Summary Recommendation
Based on the analysis set forth in this memorandum, we recommend that Dunmore adopt a hybrid disclosure approach for the OM, drawing primarily from the SASB Oil & Gas Exploration & Production Standard (EM-EP) and the TCFD Recommendations, with selective reference to ISSB IFRS S1/S2 metrics where those metrics overlap with SASB and TCFD. This approach should be calibrated to the expectations of high-yield energy investors, the data currently available from the Barrisford data package, and the anti-fraud liability framework applicable to the Offering. Dunmore should state that its ESG disclosure is "informed by" rather than "in accordance with" any particular framework, in order to manage potential liability for non-compliance with framework-specific requirements. A detailed set of recommendations and action items is set forth in Section VIII below.
II. Background on the Issuer and Transaction
A. Dunmore Energy Holdings Ltd. — Corporate Overview
Dunmore Energy Holdings Ltd. is a Cayman Islands exempted company incorporated under the laws of the Cayman Islands (Registry No. MC-384726), with its registered office c/o Maples Corporate Services Ltd., PO Box 309, Ugland House, George Town, Grand Cayman KY1-1104. DEH's principal executive offices are located at 14th Floor, Harbour Place Tower, 103 South Church Street, George Town, Grand Cayman KY1-1002, with an additional operational headquarters at 2900 Post Oak Boulevard, Suite 3100, Houston, TX 77056.
Dunmore's senior management team includes Marcus Ellingham, Chief Executive Officer; Deepa Rajaram, Chief Financial Officer; and Alistair Forde, General Counsel. The Board of Directors is chaired by Lady Constance Harrowby, an independent director and former UK Energy Minister, whose background in energy policy and governance is relevant to the ESG governance narrative discussed in Section IV.B.2 below.
Dunmore employs approximately 3,400 individuals worldwide across its upstream, midstream, renewable energy, and trading operations. For the fiscal year ended December 31, 2024 ("FY 2024"), Dunmore reported consolidated revenue of $2.14 billion, EBITDA of $816 million, and an EBITDA margin of 38.1%. Total consolidated assets as of December 31, 2024 were $4.87 billion.
Dunmore's equity capitalization is concentrated among a small number of institutional and management investors. Harborview Capital Partners Fund VI, L.P. ("Harborview Fund VI") holds a majority interest of 62.4% of DEH's outstanding equity. Management holds 18.3%, with the remaining equity held by co-investors Solstice Infrastructure Fund LP (11.1%) and Alderman Family Office LLC (8.2%). The private equity-backed ownership structure is relevant to the ESG disclosure analysis insofar as Harborview Fund VI and its limited partners may be subject to their own ESG reporting obligations, which may create indirect pressure on Dunmore to enhance its ESG disclosure practices. This dynamic is discussed further in Section III.C below.
B. Asset Profile with ESG Relevance
Dunmore's operational footprint spans multiple geographies and asset types, each presenting distinct ESG considerations that must be reflected in the OM disclosure. The following provides a summary of the key assets and their ESG relevance:
Nigerian upstream Operations. Dunmore Nigeria E&P Ltd. operates two oil mining leases in the Niger Delta region: OML 47 (proved reserves of 142.6 MMboe; PV-10 of $2,840 million) and OML 63 (proved reserves of 87.3 MMboe; PV-10 of $1,620 million). The Niger Delta is among the most environmentally sensitive operating environments for upstream oil and gas producers globally. Key ESG considerations for the Nigerian operations include gas flaring and associated greenhouse gas emissions, community impact and social license to operate in host communities, pipeline integrity and oil spill prevention, biodiversity impacts in the Niger Delta ecosystem, and compliance with evolving Nigerian environmental regulations. The community development spend of $14.2 million in FY 2024 is attributable entirely to the Nigerian operations and represents a material component of Dunmore's social impact narrative.
Senegalese upstream Operations. Dunmore Senegal S.A. operates the Cayar Offshore Block (proved reserves of 64.1 MMboe; PV-10 of $1,190 million), an emerging deepwater asset in an oil province with a developing regulatory framework. The Cayar Offshore Block is located in proximity to Senegalese marine protected areas, which raises biodiversity and marine ecosystem considerations. Additionally, $250 million of the Net Proceeds of the Offering will be allocated to Cayar Offshore Phase II development capital expenditures, making the ESG profile of this asset particularly relevant to the Offering narrative. Senegal's petroleum regulatory framework and environmental oversight are still maturing, which both reduces the regulatory burden on the operator and increases the reputational risk associated with any environmental incidents.
Gulf of Mexico Operations. Dunmore Gulf Operations LLC operates deepwater leases in the Green Canyon and Garden Banks areas of the Gulf of Mexico (proved reserves of 51.8 MMboe; PV-10 of $1,050 million). These operations are subject to the comprehensive regulatory framework administered by the Bureau of Ocean Energy Management ("BOEM") and the Bureau of Safety and Environmental Enforcement ("BSEE"). ESG considerations for the GoM operations include offshore safety, well control, oil spill prevention and response capability, and hurricane exposure as a physical climate risk.
Midstream Operations. Dunmore Midstream Holdings Inc. operates pipeline and processing infrastructure supporting Dunmore's upstream operations. While the midstream segment is not the primary focus of ESG disclosure for this Offering, the integrity and environmental management of pipeline assets is a relevant consideration.
Renewable Energy Portfolio. Dunmore Renewables LLC operates a 220 MW solar portfolio in West Texas. While modest relative to Dunmore's overall asset base, this portfolio is a central component of Dunmore's energy transition narrative and should be prominently featured in the ESG section of the OM as evidence of the company's diversification strategy and commitment to the energy transition.
Trading Operations. Dunmore Trading Ltd. is incorporated in England and Wales and conducts the company's commodity trading activities. The ESG reporting implications of the English subsidiary are discussed in Section VI.E below.
Total Reserves. As of December 31, 2024, Dunmore's total proved reserves across all operating segments were 345.8 MMboe, with a total PV-10 value of $6.7 billion, as set forth in the independent reserves report prepared by Duval Howard & Partners (Dr. Evelyn Marchetti, lead engineer).
C. Offering Structure Summary
The Notes will be issued by the co-Issuers in an aggregate principal amount of $850,000,000, bearing interest at a rate of 9.375% per annum, payable semi-annually in arrears, and maturing on May 1, 2032. The Notes will be issued at an issue price of 98.50% of par, resulting in gross proceeds of approximately $837.25 million and an original issue discount of 1.50%, or approximately $12.75 million.
The intended use of proceeds is as follows:
• Approximately $450 million to partially repay and retire the existing 7.50% Senior Unsecured Notes due 2028;
• Approximately $250 million to fund Cayar Offshore Phase II development capital expenditures;
• Approximately $114.75 million for general corporate purposes; and
• Approximately $22.5 million to pay estimated fees and expenses of the Offering.
On a pro forma basis after giving effect to the Offering and the application of Net Proceeds, Dunmore's total consolidated debt will be approximately $1.72 billion, resulting in a pro forma gross leverage ratio of approximately 2.11x total debt / EBITDA and a pro forma net leverage ratio of approximately 1.88x.
The Initial Purchasers for the Offering are Ridgeline Capital Markets LLC (55% allocation / $467.5 million, Lead Left Bookrunner; contact: Thomas Whitford), Clarion Securities Inc. (30% allocation / $255 million), and Pinnacle Partners LLC (15% allocation / $127.5 million). Northgate Trust Company, N.A. (William Kerrigan) will serve as Trustee and Collateral Agent under the Indenture.
The allocation of $250 million of Net Proceeds to Cayar Phase II development capital expenditures is particularly relevant to the ESG disclosure framework analysis, as investors will expect disclosure of the environmental management practices and commitments associated with the development of a new deepwater oil production asset in an emerging frontier province.
III. Regulatory Landscape: ESG Disclosure for Private Offerings
A. No Direct SEC Registrant Obligations
As a threshold matter, DEH is not an SEC reporting company. The Notes are being offered and sold in reliance on the exemptions from registration provided by Rule 144A and Regulation S under the Securities Act, and neither DEH nor DUFC is or will become subject to the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act as a result of the Offering. Accordingly, the SEC's rules and regulations applicable to SEC registrants — including the climate-related disclosure rules adopted by the SEC in March 2024 (the "SEC Climate Disclosure Rule"), which require registrants to disclose material climate-related risks, greenhouse gas emissions, and other climate-related information in their registration statements and periodic reports — do not directly apply to Dunmore or to the OM for this Offering.
It is worth noting that the SEC Climate Disclosure Rule has itself been subject to significant judicial challenge since its adoption. Following the filing of multiple petitions for review in various U.S. Courts of Appeals, the Eighth Circuit Court of Appeals issued a stay of the Rule's implementation, and as of the date of this memorandum, the Rule's ultimate enforceability and scope remain uncertain. Even if the Rule were to take full effect, however, it would apply only to SEC registrants and would not impose direct obligations on Dunmore in connection with a Rule 144A / Regulation S offering.
Notwithstanding the absence of direct SEC registrant obligations, the practical relevance of the SEC Climate Disclosure Rule and the broader SEC focus on ESG disclosure should not be underestimated. The Rule has contributed to a general market expectation — shared by institutional investors, rating agencies, and the Initial Purchasers — that issuers of high-yield debt securities, including in private placements, will provide substantive ESG disclosure in their offering documents. This market dynamic is discussed further in Section III.C below.
B. Anti-Fraud Liability Considerations
Although the OM is not a registered offering document, the Offering remains subject to the general anti-fraud provisions of the federal securities laws, which apply regardless of registration status. Specifically:
• Rule 10b-5 under the Exchange Act prohibits any person from making any untrue statement of a material fact, or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, in connection with the purchase or sale of any security.
• Section 17(a) of the Securities Act prohibits any person from employing any device, scheme, or artifice to defraud, obtaining money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made not misleading, or engaging in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser, in the offer or sale of any security.
• State blue-sky anti-fraud provisions may also apply to the extent that the Offering has any state-law nexus, although the preemptive effect of the National Securities Markets Improvement Act of 1996 generally limits the applicability of state registration requirements for Rule 144A offerings.
The anti-fraud framework has direct implications for the ESG disclosure in the OM. Any material misstatement or omission regarding Dunmore's ESG performance, environmental liabilities, climate-related risks, or social impact — whether in the standalone ESG section, the risk factors, or elsewhere in the OM — could give rise to liability under these provisions. This is particularly true with respect to forward-looking ESG statements, such as Dunmore's commitment to achieve net-zero greenhouse gas emissions by 2050, which must be accompanied by careful cautionary language to mitigate the risk of fraud-based claims in the event that the company does not achieve the stated targets. We note that the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995 ("PSLRA") is not available for statements made in connection with an offering of securities that are exempt from registration, including offerings under Rule 144A and Regulation S. Dunmore must therefore rely on the common-law "bespeaks caution" doctrine and include meaningful cautionary language identifying the specific assumptions and uncertainties underlying any forward-looking ESG statements. A detailed analysis of greenwashing liability and the net-zero commitment disclosure is deferred to the companion Greenwashing Liability Analysis and Net-Zero Commitment Disclosure Review memoranda, which are being prepared concurrently.
We further note that the OM Backup Memorandum, which is a standard component of the documentation for this Offering, will document the factual basis for each material statement in the OM, including each material ESG statement. This backup process is essential to the anti-fraud analysis and should be closely coordinated with the Barrisford data verification process described in Section V.A.2 below.
C. Investor Expectations in the High-Yield Energy Market
The practical driver for substantive ESG disclosure in the OM is not regulatory mandate but rather the expectations of the institutional investors who will purchase the Notes. Several factors contribute to the current market environment:
Institutional Investor ESG Integration. The QIBs to whom the Notes will be marketed — including large asset managers, insurance companies, pension funds, and hedge funds — have increasingly integrated ESG factors into their credit analysis and investment decision-making processes over the past several years. Many institutional investors have adopted formal ESG screening policies or have signed on to investor-led initiatives that commit them to considering ESG factors in their investment processes. While the precise weight assigned to ESG factors varies by investor, the expectation that high-yield offering documents will contain substantive ESG disclosure has become a standard feature of the market.
Rating Agency ESG Integration. Both Lodestar Ratings International and Veridian Credit Assessments Inc. have published methodologies that explicitly incorporate ESG risk factors into their credit rating assessments. For oil and gas issuers in particular, environmental considerations — including greenhouse gas emissions, regulatory compliance, and climate transition risk — are identified as material credit factors. The quality and completeness of Dunmore's ESG disclosure in the OM may influence the rating agencies' ongoing assessment of Dunmore's credit profile and the stability of the preliminary B2/B+ ratings assigned to the Notes.
Market Practice in 144A High-Yield E&P Offerings. Based on our review of recent market practice, 144A high-yield offerings by exploration and production companies have increasingly included standalone ESG sections in the OM, quantified emissions data (at a minimum, Scope 1 and Scope 2 greenhouse gas emissions), climate-related risk factors, and discussion of the issuer's approach to energy transition and environmental management. This trend has accelerated over the past two to three years, and the absence of substantive ESG disclosure in a high-yield E&P offering would now be viewed as a notable omission by sophisticated investors and the Initial Purchasers.
Private Equity-Backed Issuer Scrutiny. Harborview Capital Partners Fund VI, L.P., as the majority equity holder of DEH at 62.4%, is itself subject to reporting obligations to its own limited partners. Many institutional LPs in private equity funds have adopted ESG reporting requirements that flow through to portfolio companies, and Harborview Fund VI may face questions from its LP base regarding the ESG practices and disclosure of its portfolio companies. This dynamic creates an additional layer of scrutiny for Dunmore's ESG disclosure, and the ESG section of the OM may serve a dual purpose — not only satisfying the expectations of noteholders, but also demonstrating to Harborview Fund VI's LPs that the portfolio company is providing transparent and credible ESG disclosure to the capital markets.
IV. Analysis of Applicable ESG Disclosure Frameworks
This Section provides a detailed analysis of the ESG disclosure frameworks and standards that are potentially applicable to or relevant for the Dunmore OM, together with our recommendation as to the appropriate framework or combination of frameworks to adopt.
A. SASB — Oil & Gas Exploration & Production Standard
1. Overview of the SASB Framework
The Sustainability Accounting Standards Board ("SASB") has developed a set of industry-specific sustainability disclosure standards designed to facilitate the communication of financially material sustainability information between companies and their investors. SASB standards are distinguished from other ESG frameworks by their emphasis on financial materiality, industry specificity, and decision-usefulness for investors and creditors. The standards are widely adopted in U.S. capital markets and have been recognized by the International Sustainability Standards Board ("ISSB") as a foundational baseline for the development of global sustainability disclosure standards.
The SASB Oil & Gas Exploration & Production Standard, codified under the industry classification EM-EP, identifies the sustainability topics and associated quantitative and qualitative metrics that are most likely to be financially material for companies engaged in the exploration, development, and production of oil and natural gas. The EM-EP standard is the most directly applicable industry-specific ESG disclosure framework for Dunmore's upstream operations, which represent the overwhelming majority of the company's revenue, assets, and proved reserves.
2. Material Topics Under EM-EP
The SASB EM-EP standard identifies the following material sustainability topics, each of which is analyzed below in the context of Dunmore's operations and the available Barrisford data:
Greenhouse Gas Emissions. The EM-EP standard calls for disclosure of gross global Scope 1 greenhouse gas emissions, emissions intensity metrics, and a discussion of the company's strategy to manage and reduce emissions. This is the most prominent ESG metric for oil and gas issuers and is the single most important quantitative data point for the OM ESG section.
Dunmore data available from the Barrisford data package includes Scope 1 GHG emissions of 1.42 million metric tons CO₂e for FY 2024 and Scope 2 GHG emissions of 0.18 million metric tons CO₂e for FY 2024. We recommend disclosing both Scope 1 and Scope 2 emissions in the OM, with clear definitions of the organizational boundary (operational control approach vs. equity share approach) and the emissions factors and methodologies used. The methodology description should be reviewed against the Barrisford data package to ensure accuracy, and any material assumptions or estimation techniques should be disclosed.
With respect to Scope 3 emissions (i.e., indirect emissions in the company's value chain, including from the combustion of sold products), we do not recommend disclosure in this Offering. Barrisford has confirmed that Scope 3 data has not yet been compiled for Dunmore, and the calculation of Scope 3 emissions for an upstream oil and gas producer involves significant methodological complexity and uncertainty. Market practice for high-yield E&P offerings is to note the absence of Scope 3 data and to indicate that the company is evaluating the feasibility of Scope 3 measurement as an area for future reporting development. This approach balances transparency with the practical limitations of the available data.
Air Quality. The EM-EP standard calls for disclosure of NOₓ (nitrogen oxides), SOₓ (sulfur oxides), and other significant air emissions. The Barrisford data package includes methane flaring intensity data — specifically, Dunmore's methane flaring intensity of 3.8 m³/boe as compared to an industry average of 5.1 m³/boe. This metric is a particularly favorable data point for Dunmore and should be highlighted in the OM ESG section as evidence of the company's relative performance in managing air quality impacts associated with its upstream operations, particularly in Nigeria, where gas flaring remains a material environmental concern.
Water Management. The EM-EP standard addresses total fresh water withdrawn, percentage recycled, and water management in water-stressed regions. Water management is relevant to Dunmore's GoM deepwater operations (produced water management) and to the West Texas solar operations (arid region water considerations). We recommend assessing the availability of water management data from the Barrisford data package and including qualitative discussion in the OM if quantitative data is available, or noting the topic as an area for future disclosure development if data is not yet compiled.
Biodiversity Impacts. The EM-EP standard addresses operations in or near areas of high biodiversity value. This topic is directly relevant to Dunmore's operations in the Niger Delta, which is recognized as an ecologically significant and sensitive ecosystem, and to the Cayar Offshore Block, which is located in proximity to Senegalese marine protected areas. The OM should include a qualitative discussion of Dunmore's approach to biodiversity management in these sensitive operating environments, including any environmental impact assessments, mitigation measures, and monitoring programs in place.
Community Relations. The EM-EP standard addresses community engagement, social license to operate, and community development investments. Dunmore's community development spend of $14.2 million in Nigeria in FY 2024 is a material and positive data point that should be prominently disclosed. The OM should also include a qualitative discussion of Dunmore's community engagement practices in Nigeria and Senegal, including the nature of the community development programs funded, the process for engaging with host communities, and any formal community development agreements in place.
Workforce Health & Safety. The EM-EP standard calls for disclosure of the total recordable incident rate ("TRIR"), fatalities, and other occupational health and safety metrics. These are standard disclosures in high-yield E&P offering documents, and we recommend including the available health and safety data in the OM. The availability of quantitative health and safety data from Barrisford and Dunmore's internal records should be confirmed. This is identified as an open question for client discussion in Section VIII.C below.
Business Ethics & Transparency. The EM-EP standard addresses anti-corruption policies, compliance programs, and political contributions. For Dunmore, this topic links directly to the FCPA, UK Bribery Act, and sanctions/OFAC compliance workstreams that are being addressed separately in the OM risk factors and in the OFAC Covenant and Representation Drafting Memorandum. The ESG section should include a brief cross-reference to Dunmore's anti-corruption and compliance framework, with the detailed analysis reserved for the risk factors.
Reserves Valuation & Capital Expenditures. The EM-EP standard addresses the sensitivity of reserves and capital expenditure plans to the energy transition, including the concept of "stranded asset" risk — i.e., the risk that oil and gas reserves may not be fully extracted and monetized due to shifts in energy policy, technology, and demand. This topic is relevant to the Offering given that $250 million of Net Proceeds will be directed to Cayar Offshore Phase II development capital expenditures, representing a significant investment in new upstream oil production capacity. The OM should address stranded asset risk in the risk factors section rather than in the standalone ESG section, and the reserves risk factor should include appropriate disclosure of the sensitivity of Dunmore's reserves and development plans to climate transition scenarios.
3. Recommendation on SASB Alignment
We recommend that the SASB EM-EP standard serve as the primary structuring framework for the standalone ESG section of the OM. The SASB standard provides a well-recognized, investor-grade framework that covers the full range of material sustainability topics for an oil and gas exploration and production company. Dunmore should disclose quantitative metrics aligned with the EM-EP standard where the Barrisford data package supports such disclosure (i.e., Scope 1 and Scope 2 emissions, methane flaring intensity, community development spend, and health and safety data if available), and should include qualitative discussion for those EM-EP topics where quantitative data is not yet compiled (i.e., water management, certain biodiversity metrics).
Critically, the OM should state that Dunmore's ESG disclosure is "informed by" the SASB EM-EP standard, rather than claiming to be "in accordance with" or "fully compliant with" the standard. This "informed by" formulation is important for liability management purposes: it communicates to investors that Dunmore has used the SASB framework as a reference point for structuring its disclosure, without creating an expectation that every metric and disclosure topic specified in the standard has been fully addressed. Any gap between Dunmore's actual disclosure and the full requirements of the SASB EM-EP standard could, if Dunmore were to claim full compliance, be characterized as a material omission. The "informed by" approach mitigates this risk while still providing the investor community with the frame of reference it expects.
B. TCFD — Task Force on Climate-Related Financial Disclosures
1. Overview of the TCFD Framework
The Task Force on Climate-Related Financial Disclosures ("TCFD") was established by the Financial Stability Board in 2015 and published its final recommendations in 2017. The TCFD recommendations are organized around four thematic pillars:
(a) Governance: The organization's governance around climate-related risks and opportunities, including board-level oversight and management's role.
(b) Strategy: The actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning, including scenario analysis.
(c) Risk Management: The processes used by the organization to identify, assess, and manage climate-related risks, and how those processes are integrated into the organization's overall risk management.
(d) Metrics and Targets: The metrics and targets used to assess and manage relevant climate-related risks and opportunities, including greenhouse gas emissions metrics and climate-related targets.
The TCFD recommendations have been widely adopted by institutional investors and rating agencies as a reference point for climate-related financial disclosure. Although the TCFD itself was formally dissolved in October 2023 following the publication of the ISSB's IFRS S2 standard (which subsumes and builds upon the TCFD recommendations), the TCFD framework remains independently recognized and widely referenced in the investment community. Many institutional investors continue to evaluate issuers' climate disclosure against the TCFD's four-pillar structure, and the TCFD framework provides a well-understood and credible lens for organizing climate-related disclosure in the OM.
2. Applicability to Dunmore
Each of the four TCFD pillars has relevance to Dunmore's ESG disclosure in the OM, although the depth of disclosure warranted under each pillar varies:
Governance. The TCFD Governance pillar calls for disclosure of the board's oversight of climate-related risks and opportunities and the role of management in assessing and managing those risks. Dunmore has a strong governance narrative to present: Lady Constance Harrowby, as Board Chair and a former UK Energy Minister, brings direct energy policy expertise to the board's oversight of climate-related matters. The OM should describe the board's committee structure as it relates to ESG oversight (including whether a dedicated ESG or sustainability committee exists or whether ESG oversight is housed within an existing committee, such as the audit or risk committee) and should identify the management-level officers responsible for ESG matters. This is a relatively straightforward disclosure that can be prepared based on existing corporate governance information from Dunmore.
Strategy. The TCFD Strategy pillar calls for disclosure of the climate-related risks and opportunities the organization has identified, the impact of those risks and opportunities on the organization's businesses, strategy, and financial planning, and the resilience of the organization's strategy under different climate scenarios (including a 2°C or lower scenario). For Dunmore, the relevant climate-related risks include: (i) transition risks, such as potential carbon pricing regimes, tightening environmental regulations, shifts in investor and lender sentiment away from fossil fuels, and the long-term decline in fossil fuel demand under decarbonization scenarios; (ii) physical risks, such as flooding in the Niger Delta, hurricane exposure in the Gulf of Mexico, and sea-level rise affecting coastal infrastructure; and (iii) opportunities, such as Dunmore's 220 MW solar portfolio and the potential for further diversification into renewable energy.
We recommend that the Strategy discussion be incorporated primarily into the risk factors section of the OM rather than the standalone ESG section, as the risk factors are the appropriate location for a candid assessment of the risks and uncertainties associated with Dunmore's climate-related exposures. The standalone ESG section should include a high-level overview of Dunmore's energy transition strategy, with a cross-reference to the risk factors for the detailed risk discussion.
With respect to scenario analysis — a core TCFD recommendation — we do not recommend inclusion in this Offering. Dunmore does not yet have the analytical infrastructure or data to support a credible, quantified scenario analysis (e.g., modeling the impact of a 2°C or 1.5°C warming scenario on Dunmore's reserves, revenues, and financial position). The inclusion of a preliminary or unsupported scenario analysis could expose Dunmore to liability if the analysis were later shown to be materially flawed or misleading. We recommend that the OM note scenario analysis as an area for future development and that Dunmore consider building the analytical capability for scenario analysis in connection with its evolving sustainability reporting program.
Risk Management. The TCFD Risk Management pillar calls for disclosure of the processes used to identify, assess, and manage climate-related risks and how those processes are integrated into the organization's overall enterprise risk management framework. As with the Strategy pillar, we recommend that this discussion be incorporated into the risk factors section rather than the standalone ESG section. The OM should include a description of Dunmore's enterprise risk management processes to the extent that they incorporate climate-related risk identification and assessment, particularly across the company's multi-jurisdictional operating footprint.
Metrics and Targets. The TCFD Metrics and Targets pillar calls for disclosure of the metrics used to assess climate-related risks and opportunities, greenhouse gas emissions data (Scope 1, Scope 2, and, if appropriate, Scope 3), and any climate-related targets set by the organization. This pillar aligns closely with the SASB EM-EP emissions disclosure discussed above and should be addressed in the standalone ESG section of the OM. Specifically, the OM should disclose:
• Scope 1 GHG emissions: 1.42 million metric tons CO₂e (FY 2024)
• Scope 2 GHG emissions: 0.18 million metric tons CO₂e (FY 2024)
• Methane flaring intensity: 3.8 m³/boe (vs. 5.1 m³/boe industry average)
• Net-zero by 2050 target
• Any interim emissions reduction milestones, if committed to by Dunmore (see open question in Section VIII.C)
3. Recommendation on TCFD Alignment
We recommend partial TCFD alignment in the OM, focused primarily on the Governance and Metrics and Targets pillars. The Governance pillar should be addressed in the standalone ESG section of the OM through a description of board-level and management-level ESG oversight. The Metrics and Targets pillar should be addressed in the standalone ESG section through the disclosure of quantified emissions data and climate-related targets, as described above.
The Strategy and Risk Management pillars should be addressed through the ESG-related risk factors rather than the standalone ESG section, which is the appropriate location for a balanced discussion of climate-related risks and uncertainties. Scenario analysis should not be included in this Offering but should be noted as an area for future development.
As with SASB, the OM should state that Dunmore's climate-related disclosure is "informed by" the TCFD recommendations, without claiming full alignment or compliance. This approach provides investors with a recognized reference point for evaluating the disclosure while managing Dunmore's liability exposure.
C. ISSB — IFRS Sustainability Disclosure Standards (S1 and S2)
1. Overview. The International Sustainability Standards Board ("ISSB"), a standard-setting body established under the IFRS Foundation, issued two inaugural sustainability disclosure standards in June 2023: IFRS S1, General Requirements for Disclosure of Sustainability-related Financial Information, and IFRS S2, Climate-related Disclosures. These standards became effective for annual reporting periods beginning on or after January 1, 2024, for jurisdictions that have adopted or endorsed them. IFRS S1 establishes general requirements for the disclosure of sustainability-related financial information, while IFRS S2 specifically addresses climate-related disclosures. IFRS S2 consolidates and builds upon the TCFD recommendations and incorporates the industry-specific metrics developed by SASB (now maintained by the ISSB), creating a comprehensive, globally oriented framework for climate-related financial disclosure.
2. Applicability Analysis
The ISSB standards are not mandatory in any jurisdiction relevant to Dunmore's Offering or operations as of the date of this memorandum:
• Cayman Islands: DEH's jurisdiction of incorporation. The Cayman Islands Monetary Authority ("CIMA") has not adopted or endorsed the ISSB standards, and there is no indication that mandatory adoption is imminent.
• Nigeria: Nigeria has not adopted the ISSB standards. The Financial Reporting Council of Nigeria has indicated interest in monitoring ISSB developments, but no mandatory adoption timeline has been established.
• Senegal: Senegal has not adopted the ISSB standards. The Organisation pour l'Harmonisation en Afrique du Droit des Affaires ("OHADA"), of which Senegal is a member, has not incorporated ISSB standards into its regional accounting framework.
• United States: The SEC has not adopted or endorsed the ISSB standards. The SEC's own Climate Disclosure Rule, discussed in Section III.A above, is a separate and distinct regulatory initiative.
• United Kingdom: The UK Government has endorsed the ISSB standards in principle and has established a process through the UK Sustainability Disclosure Standards ("UK SDS") initiative to develop UK-specific endorsement. However, as of the date of this memorandum, the ISSB standards have not been mandated for application by UK companies, and the initial scope of any UK endorsement is expected to be limited to large listed companies and financial institutions, which would not include Dunmore Trading Ltd.
Despite the absence of mandatory applicability, the ISSB standards are increasingly recognized by institutional investors as an emerging global baseline for sustainability disclosure. Reference to ISSB-aligned metrics can enhance the credibility of Dunmore's ESG disclosure with a globally oriented investor base.
3. Recommendation. We do not recommend structuring the OM's ESG disclosure around full ISSB compliance. The ISSB standards are not mandatory in any relevant jurisdiction, and a claim of full compliance would impose significant data and disclosure requirements that are not warranted for a 144A high-yield offering. Instead, we recommend that the OM selectively reference ISSB-aligned metrics where those metrics overlap with the SASB and TCFD disclosures that form the primary framework for the OM (i.e., Scope 1 and Scope 2 emissions, climate-related financial risks). Additionally, we recommend that the OM include a brief acknowledgment of the ISSB standards as an emerging global framework that Dunmore is monitoring and may adopt more fully in future reporting periods. This approach positions Dunmore as aware of and responsive to evolving global disclosure standards without creating compliance obligations that the company cannot currently meet.
D. Other Frameworks Considered
1. GRI (Global Reporting Initiative)
The Global Reporting Initiative ("GRI") Standards are a widely used set of sustainability reporting standards that take a multi-stakeholder approach to materiality — that is, GRI Standards are designed to address the information needs not only of investors and creditors, but also of employees, communities, regulators, and other stakeholders. The GRI framework is comprehensive and covers a wide range of environmental, social, and governance topics. However, the GRI's multi-stakeholder orientation makes it less well-suited to a 144A high-yield offering document, where the primary audience is institutional investors and the primary purpose of ESG disclosure is to provide decision-useful information for credit analysis and investment decisions. GRI reports are more commonly produced as standalone corporate sustainability reports rather than as components of offering documents.
Recommendation: We do not recommend adopting the GRI framework for this Offering. The SASB and TCFD frameworks are more appropriate for the investor audience and the offering document context. However, if Dunmore develops a standalone corporate sustainability report in the future (which may be warranted given Harborview Fund VI's LP reporting obligations), the GRI Standards would be a suitable framework for that report, potentially in combination with SASB and ISSB disclosures.
2. UN Sustainable Development Goals (SDGs)
The United Nations Sustainable Development Goals are a set of 17 broad aspirational goals adopted by the UN General Assembly in 2015, covering topics ranging from poverty and hunger to climate action, clean energy, and responsible production and consumption. The SDGs are widely recognized and provide a common language for discussing sustainability challenges and priorities. Dunmore's operations touch on several SDGs, including SDG 7 (Affordable and Clean Energy — through the Dunmore Renewables solar portfolio), SDG 13 (Climate Action — through the net-zero commitment and emissions management), and SDG 11 (Sustainable Cities and Communities — through community development investments in Nigeria).
Recommendation: The SDGs may be optionally referenced in the qualitative narrative of the OM ESG section as a way of situating Dunmore's sustainability activities within a recognized global framework. However, the SDGs should not serve as a structuring framework for the OM ESG disclosure, as they are too broad and aspirational to provide the specificity and quantitative rigor expected by high-yield debt investors. Any SDG references should be carefully calibrated to avoid creating the impression that Dunmore's operations are broadly aligned with sustainable development when the company's core business remains upstream oil and gas extraction.
3. Equator Principles / IFC Performance Standards
The Equator Principles are a risk management framework adopted by financial institutions for determining, assessing, and managing environmental and social risk in project finance transactions. The IFC Performance Standards on Environmental and Social Sustainability provide a set of standards for managing environmental and social risks in private sector investments in developing countries. Both frameworks are primarily relevant in the context of project finance and development finance transactions, and are less applicable to a corporate-level high-yield notes offering such as the Dunmore Offering.
Recommendation: The Equator Principles and IFC Performance Standards are not applicable to this Offering and should not be referenced in the OM.
V. Recommended Disclosure Scope for the Offering Memorandum
A. Standalone "Environmental and Social Responsibility" Section
1. Recommended Structure
We recommend that the OM include a standalone chapter titled "Environmental and Social Responsibility" (or, alternatively, "Environmental, Social, and Governance Matters"), positioned in the OM after the "Business" section and before the "Description of Notes" section. This placement is consistent with market practice for recent 144A high-yield E&P offerings and ensures that the ESG disclosure is presented in the context of the issuer's broader business description, while remaining distinct from the technical description of the Notes themselves.
The standalone ESG section should be organized into the following subsections:
(a) Overview and ESG Philosophy. This introductory subsection should set forth Dunmore's overarching approach to sustainability, including an acknowledgment of the environmental and social challenges inherent in the oil and gas industry and the company's commitment to operating responsibly across its multi-jurisdictional portfolio. The tone should be measured and realistic — avoiding aspirational language that could be characterized as greenwashing, while affirmatively communicating Dunmore's commitment to ESG performance and transparency. This subsection should also include the disclosure that the ESG section is "informed by" the SASB EM-EP standard and the TCFD recommendations.
(b) Governance. This subsection should describe the board-level and management-level governance structures in place for oversight of ESG and climate-related matters. Specific elements to include are: the role of Lady Constance Harrowby as Board Chair and her relevant background as a former UK Energy Minister; the board committee or committees with responsibility for ESG oversight (noting the open question in Section VIII.C regarding whether Dunmore wishes to constitute a formal ESG or sustainability committee); and the management-level officers responsible for ESG strategy and execution. If Dunmore has adopted any formal ESG policies or charters, these should be referenced.
(c) Climate and Emissions. This subsection should present Dunmore's quantified greenhouse gas emissions data, including Scope 1 emissions of 1.42 million metric tons CO₂e (FY 2024) and Scope 2 emissions of 0.18 million metric tons CO₂e (FY 2024), together with the organizational boundary definition and methodology used for the emissions calculation. This subsection should also present the methane flaring intensity metric of 3.8 m³/boe (as compared to the industry average of 5.1 m³/boe), highlighting Dunmore's favorable performance relative to industry peers. The subsection should include a qualitative discussion of Dunmore's emissions reduction initiatives, including any specific operational measures taken to reduce flaring, improve energy efficiency, or reduce fugitive emissions. The absence of Scope 3 data should be noted, with a statement that Dunmore is evaluating the feasibility of Scope 3 measurement for future reporting.
(d) Net-Zero Commitment. This subsection should disclose Dunmore's commitment to achieving net-zero greenhouse gas emissions by 2050. The disclosure should include any interim milestones or targets (if Dunmore commits to interim targets following the client discussion contemplated in Section VIII.C), the strategic pathway envisioned for achieving the net-zero target, and a clear statement of the key assumptions, uncertainties, and risks that could affect the company's ability to achieve the target. Robust forward-looking statement cautionary language must be included in this subsection. The drafting of this subsection should be closely coordinated with the separate Net-Zero Commitment Disclosure Review memorandum.
(e) Energy Transition Strategy. This subsection should describe Dunmore's 220 MW solar portfolio in West Texas, operated through Dunmore Renewables LLC, as a tangible element of the company's energy transition strategy. The subsection should include the current installed capacity, any planned expansion of the renewables portfolio, and the strategic rationale for diversification beyond upstream oil and gas. This subsection provides an opportunity to present a forward-looking, positive narrative about Dunmore's energy transition positioning, but care must be taken to ensure that the renewable energy portfolio is presented in proper proportion to the company's overall asset base and revenue profile (which remains overwhelmingly weighted toward upstream oil and gas production).
(f) Environmental Management. This subsection should describe Dunmore's approach to operational environmental management across its various jurisdictions and asset types. Key topics to address include: environmental management in the Niger Delta (OML 47, OML 63), including oil spill prevention and response, pipeline integrity, and ecosystem protection; marine environmental management for the Cayar Offshore Block in Senegal, including proximity to marine protected areas and the environmental management plan for Phase II development; deepwater spill prevention and safety protocols for GoM operations (Green Canyon, Garden Banks), including compliance with BOEM/BSEE requirements; and environmental management of the West Texas solar operations.
(g) Community and Social Impact. This subsection should present Dunmore's community development spend of $14.2 million in Nigeria for FY 2024, together with a qualitative description of the community development programs funded (e.g., education, healthcare, infrastructure, economic empowerment), the community engagement process, and the importance of social license to operate in the Niger Delta. Stakeholder engagement in Senegal should also be discussed, particularly in the context of the Cayar Offshore Phase II development. If Dunmore has formal community development agreements or memoranda of understanding with host communities, these should be referenced.
(h) Health and Safety. This subsection should present quantitative workforce health and safety data, including (if available) the total recordable incident rate, lost-time injury rate, and any fatalities during FY 2024, together with a qualitative description of Dunmore's health and safety management systems, training programs, and safety culture. The availability of this data from the Barrisford data package and Dunmore's internal records needs to be confirmed, as noted in Section VIII.C below.
(i) Anti-Corruption and Compliance. This subsection should include a brief overview of Dunmore's anti-corruption and compliance framework, including its FCPA and UK Bribery Act compliance programs, and should cross-reference the detailed risk factor disclosure on sanctions, OFAC, and anti-corruption risks. The detailed analysis of these topics is beyond the scope of this ESG framework memorandum and is being addressed in the OM Supplement — Risk Factors: Sanctions, OFAC, and Anti-Corruption and the OFAC Covenant and Representation Drafting Memorandum.
2. Data Source Verification
All quantitative data included in the OM ESG section must be rigorously verified as part of the OM fact-checking and backup process. Specifically:
• All quantitative ESG data points to be included in the OM should be cross-referenced against the Barrisford Advisory Group LLC ESG data package, with each data point traced to a specific source document or dataset within the Barrisford deliverable.
• A separate ESG Data Verification Checklist (in spreadsheet format) should be prepared documenting each quantitative data point, its source within the Barrisford data package, any adjustments or reclassifications applied, and the verification status (confirmed, pending clarification, or unverified).
• I intend to send an email to Nathan Reyes Linley CPAs LLP at Barrisford requesting clarification on the following items: (i) the specific methodology used for calculating Scope 1 GHG emissions (e.g., whether the operational control or equity share approach was used, which emission factors were applied, and whether any emissions sources were excluded from the boundary); (ii) the methodology for calculating methane flaring intensity (including the basis for the 3.8 m³/boe figure and the source of the 5.1 m³/boe industry average); and (iii) a detailed breakdown of the $14.2 million community development spend in Nigeria by program type, geographic area, and verification method. This email will be sent for OM fact-checking purposes and should be transmitted promptly to ensure that responses are received in time for the April 26, 2025 ESG section drafting deadline.
B. ESG-Related Risk Factors
1. Two Standalone ESG Risk Factors Recommended
Based on our analysis, we recommend the inclusion of two standalone ESG-related risk factors in the OM, in addition to the integration of ESG-adjacent risks into other risk factors as described in Section V.B.2 below:
(a) Sanctions, OFAC, and Anti-Corruption Risk Factor. This risk factor should address Dunmore's exposure to sanctions risk arising from its operations in Nigeria and Senegal, including potential exposure under the Office of Foreign Assets Control ("OFAC") sanctions programs administered by the U.S. Department of the Treasury, European Union sanctions, and United Kingdom sanctions. The risk factor should also address Dunmore's exposure to anti-corruption liability under the Foreign Corrupt Practices Act ("FCPA") and the UK Bribery Act 2010, given the company's operations in jurisdictions with elevated corruption risk profiles. The risk factor should note that OFAC screening was conducted by Sandoval Compliance Solutions LLC (Rosa Medina, Lead Compliance Officer) and was completed on April 25, 2025, with no hits identified. The detailed analysis of this risk factor is being addressed in the separate OM Supplement — Risk Factors: Sanctions, OFAC, and Anti-Corruption, and the covenant and representation language is being developed in the OFAC Covenant and Representation Drafting Memorandum being prepared by Eric Johannsen.
(b) ESG and Climate Risk Factor. This risk factor should address Dunmore's exposure to climate transition risk (including the potential impact of regulatory changes such as carbon pricing, restrictions on fossil fuel development, and shifts in energy policy; the risk of declining fossil fuel demand under decarbonization scenarios; and the risk of technological disruption from renewable energy and electrification), physical climate risk (including flooding in the Niger Delta, hurricane exposure in the Gulf of Mexico, and sea-level rise affecting coastal infrastructure), the evolving ESG regulatory landscape (including the potential for new mandatory ESG reporting obligations in one or more of the jurisdictions in which Dunmore operates), and reputational risk associated with ESG performance and public perception. The risk factor should also include appropriate forward-looking statement cautionary language with respect to Dunmore's net-zero commitment and any other forward-looking ESG statements. The detailed analysis of this risk factor is being addressed in the separate OM Supplement — Risk Factors: ESG and Climate.
2. Integration with Other Risk Factors
In addition to the two standalone ESG risk factors, ESG-adjacent risks should be integrated into other risk factors in the OM as appropriate:
• Operational risk factors should incorporate disclosure of environmental liabilities (including potential remediation costs, fines, and penalties for environmental violations), regulatory compliance risks across multiple jurisdictions, and the operational impact of environmental incidents such as oil spills or pipeline failures.
• Reserves risk factor should address stranded-asset considerations — specifically, the risk that some or all of Dunmore's proved reserves may not be extracted and monetized if fossil fuel demand declines materially as a result of the energy transition, or if regulatory changes impose prohibitive costs on extraction. This is particularly relevant given the $250 million allocation of Net Proceeds to Cayar Offshore Phase II development.
• Nigerian regulatory risk factors should address the specific environmental regulatory framework in Nigeria, including gas flaring regulations and the Nigerian Gas Flare Commercialization Programme, environmental impact assessment requirements, and the regulatory posture of the Department of Petroleum Resources / Nigerian National Petroleum Corporation.
• Senegalese regulatory risk factors should address the environmental regulatory framework applicable to the Cayar Offshore Block, including the requirements of the Senegalese petroleum code, marine environme