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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

TO: Jennifer Kwon, Responsible Partner, Capital Markets, Calderwood & Harkness LLP

FROM: Claire Dempsey, Working Associate, Capital Markets, Calderwood & Harkness LLP; Eric Johannsen, Lead Associate, Capital Markets, Calderwood & Harkness LLP

DATE: April 27, 2025

RE: Dunmore Energy Holdings Ltd. — $850,000,000 9.375% Senior Secured Notes due 2032: Analysis of Safe-Harbor Protections for Net-Zero by 2050 Commitment Disclosure in the Offering Memorandum

Matter No.: 1016-00003

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I. Executive Summary

The purpose of this memorandum is to analyze whether the stated commitment of Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore") to achieve net-zero greenhouse gas ("GHG") emissions by 2050, as disclosed in the "Environmental and Social Responsibility" section of the Offering Memorandum (the "OM") for the $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes"), qualifies for safe-harbor protection under the Private Securities Litigation Reform Act of 1995 (the "PSLRA") and under applicable common-law standards. This analysis has been prepared at the request of Jennifer Kwon, Responsible Partner, in anticipation of the distribution of the Preliminary OM ("Red") on April 28, 2025, and the finalization of the OM and closing of the offering on May 14–15, 2025.

As an initial matter, we note that the offering of the Notes is structured as a Rule 144A / Regulation S private placement. The Notes are not being registered under the Securities Act of 1933, as amended (the "Securities Act"), and the OM is not filed with the U.S. Securities and Exchange Commission (the "SEC"). This structural feature has a dispositive consequence for purposes of safe-harbor analysis: the PSLRA statutory safe harbor does not apply by its terms to offerings exempt from Securities Act registration, including Rule 144A offerings. Section 27A of the Securities Act, which creates the statutory safe harbor for forward-looking statements, is limited in its application to statements made in filings and documents subject to the registration and liability provisions of the Securities Act, and the courts have consistently held that the safe harbor is unavailable in the private-placement context.

In light of this conclusion, our analysis focuses on the following four areas:

(a) the inapplicability of the PSLRA statutory safe harbor to the net-zero commitment as disclosed in the OM;

(b) the common-law "bespeaks caution" doctrine as the primary available protection for forward-looking statements in the OM, including the elements required to invoke the doctrine and their application to the specific net-zero disclosure;

(c) SEC enforcement trends and guidance regarding ESG-related forward-looking statements, including the potential for anti-fraud liability under Rule 10b-5 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and state-law claims, notwithstanding the private-placement structure; and

(d) practical recommendations for drafting the net-zero commitment disclosure and accompanying cautionary language in the OM to maximize the protections available under the bespeaks caution doctrine and to mitigate litigation and regulatory risk.

Conclusion. Based on our analysis, we conclude that meaningful cautionary language, specificity of risk factors, and careful framing of the net-zero commitment as an aspirational goal — rather than a binding contractual obligation or a guarantee of future performance — will be critical to mitigating litigation and regulatory risk. The current draft of the net-zero disclosure, while generally sound in its aspirational framing, presents several vulnerabilities, including the tension between the net-zero pledge and the simultaneous allocation of $250 million in Notes proceeds to the Cayar Offshore Phase II hydrocarbon development, the absence of interim milestones, and the omission of any disclosure regarding Scope 3 emissions. We set forth below detailed recommendations for revisions to the OM disclosure, together with proposed draft language for the ESG section and a standalone forward-looking statement legend.

Coordination Notes. The ESG data underlying the net-zero commitment has been prepared by Barrisford Advisory Group LLC ("Barrisford"), under the direction of Nathan Reyes Linley CPAs LLP, Lead Consultant, and has been reviewed by Calderwood & Harkness LLP ("C&H") through the ESG Data Verification Checklist. Greenwashing liability risks are separately analyzed in a companion C&H memorandum dated April 25, 2025, addressed to Jennifer Kwon. The drafting of ESG-specific risk factors for the OM is addressed in a separate drafting memorandum circulated by Eric Johannsen on April 24, 2025. This memorandum should be read in conjunction with those companion materials.

II. Background

A. The Offering

Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted company registered with the Cayman Islands Registrar of Companies under Registry No. MC-384726, and Dunmore upstream Finance Corp. ("DUFC"), a Delaware corporation (EIN 93-4728106), are co-issuers of $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due May 1, 2032 (the "Notes"). The Notes will be issued pursuant to an Indenture (the "Indenture") to be dated as of May 15, 2025, among DEH, DUFC, the guarantors party thereto, and Northgate Trust Company, N.A., as Trustee and Collateral Agent.

The offering is structured as a private placement exempt from registration under the Securities Act. The Notes are being offered in the United States to "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the Securities Act, and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The OM will not be filed with the SEC and does not constitute a prospectus or registration statement within the meaning of Section 2(a)(10) or Section 6 of the Securities Act.

The Initial Purchasers for the offering are as follows:

Counsel to the Initial Purchasers is Whitfield Baxter & Cohn LLP, with Harrison Cates serving as Lead Partner. Calderwood & Harkness LLP serves as counsel to DEH and DUFC in connection with the offering.

The Preliminary OM (the "Red") is scheduled for distribution to potential investors on April 28, 2025. The Final OM is targeted for distribution on May 14, 2025, with closing and settlement of the offering anticipated on May 15, 2025. The offering timeline is aggressive, and all disclosure revisions recommended in this memorandum should be reflected in the Preliminary OM to be distributed tomorrow.

The Notes have received preliminary credit ratings of B2 with a Stable Outlook from Lodestar Ratings International and B+ with a Stable Outlook from Veridian Credit Assessments Inc. These sub-investment-grade ratings are relevant to the safe-harbor analysis, as they inform the appropriate level of conservatism in the ESG disclosure, as discussed in Section VII below.

B. Dunmore's Business and ESG Profile

DEH, together with its subsidiaries (collectively, the "Company" or "Dunmore"), is an independent upstream and midstream oil and gas company with operations across West Africa and the Gulf of Mexico. The Company's principal producing assets include Oil Mining Leases 47 and 63 ("OML 47" and "OML 63") in the Niger Delta region of Nigeria, the Cayar Offshore Block in Senegal, and deepwater leases in the Green Canyon and Garden Banks areas of the Gulf of Mexico. These assets form the core of Dunmore's hydrocarbon production base and are expected to generate the substantial majority of the Company's revenues and cash flows for the foreseeable future.

In addition to its hydrocarbon operations, Dunmore maintains a nascent renewable energy portfolio consisting of a 220 MW solar portfolio in West Texas, held through Dunmore Renewables LLC, a wholly owned subsidiary. The solar portfolio became operational in phases between 2022 and 2024 and represents the Company's most significant tangible investment in the energy transition to date.

Key financial and operational metrics for fiscal year 2024 are as follows:

• Revenue: $2.14 billion

• EBITDA: $816 million

• Total Proved Reserves: 345.8 MMboe (as estimated by Duval Howard & Partners, independent reserve engineers, with PV-10 value of $6.7 billion)

• Scope 1 GHG Emissions: 1.42 million metric tons CO₂e

• Scope 2 GHG Emissions: 0.18 million metric tons CO₂e

• Total Scope 1 and Scope 2 GHG Emissions: 1.60 million metric tons CO₂e

• Methane Flaring Intensity: 3.8 m³/boe (compared to industry average of approximately 5.1 m³/boe)

• Community Development Spend (Nigeria): $14.2 million

It is important to note for purposes of this memorandum that a meaningful portion of the Notes proceeds — approximately $250 million — is allocated to the Cayar Offshore Phase II development capital expenditure program. This allocation reflects Dunmore's continued investment in hydrocarbon production assets at the same time that it is publicly committing to a net-zero emissions pathway. This tension between the stated net-zero commitment and the simultaneous deployment of offering proceeds to hydrocarbon development is one of the principal vulnerabilities identified in our analysis and must be addressed in the OM disclosure.

C. The Net-Zero Commitment

Dunmore has publicly committed to achieving net-zero Scope 1 and Scope 2 GHG emissions by 2050. The commitment was initially announced by Board Chair Lady Constance Harrowby (a former UK Energy Minister) at the Dunmore Investor Day held on September 12, 2024, and has been referenced by Chief Executive Officer Marcus Ellingham in subsequent investor presentations and earnings calls. The commitment is to be disclosed in the standalone "Environmental and Social Responsibility" section of the OM, consistent with Dunmore's public communications and ESG reporting.

Several features of the commitment are noteworthy for purposes of this analysis:

Aspirational Framing. The commitment is described internally and publicly as aspirational and directional in nature. It does not constitute a binding contractual covenant in the Indenture. There is no provision in the Indenture creating an event of default or a breach of covenant arising from a failure to achieve net-zero emissions by 2050 or by any other date.

Absence of Interim Milestones. As of the date of this memorandum, Dunmore has not publicly set interim milestones — for example, a 2030 or 2035 GHG emissions reduction target — on the path to net-zero by 2050. The Company has stated that it "intends to develop a detailed decarbonization roadmap" but has not disclosed the substance or timeline of any such roadmap.

Scope Limitation. The net-zero commitment is limited to Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased electricity, heat, or steam). It does not extend to Scope 3 emissions (all other indirect emissions, including emissions from the end-use combustion of sold products). For an upstream oil and gas company, Scope 3 emissions typically constitute the vast majority of the total emissions footprint.

Data Support. The data package supporting the disclosure has been prepared by Barrisford Advisory Group LLC, under the direction of Nathan Reyes Linley CPAs LLP, Lead Consultant. The methodology and verification of the Barrisford data have been reviewed by C&H through the ESG Data Verification Checklist. As discussed in Section VIII.D below, C&H has requested certain clarifications from Barrisford regarding Scope 1 emissions methodology and methane flaring intensity calculation methodology, and those responses remain outstanding as of the date of this memorandum.

Board and Management Endorsement. Board Chair Lady Constance Harrowby has championed the net-zero initiative within the Dunmore board and management team. CEO Marcus Ellingham has referenced the commitment in investor presentations on at least three occasions since September 2024. C&H has requested written confirmation from Alistair Forde, General Counsel of DEH, that the board has formally endorsed the commitment by resolution and that no internal analyses or studies contradict the feasibility of pursuing it.

III. Applicability of the PSLRA Statutory Safe Harbor

A. Statutory Framework

The PSLRA, enacted in 1995, created a statutory safe harbor for forward-looking statements in two parallel provisions: Section 27A of the Securities Act (15 U.S.C. § 77z-2) and Section 21E of the Exchange Act (15 U.S.C. § 78u-5). These provisions were designed to encourage companies to share projections and forward-looking information with investors by providing protection from private securities fraud liability, subject to certain conditions.

Under the PSLRA safe harbor, a forward-looking statement is protected from liability in a private action if it satisfies either of two prongs:

(i) The Cautionary Language Prong: The forward-looking statement is identified as such and is accompanied by "meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement." 15 U.S.C. § 77z-2(c)(1)(A)(i). Under this prong, the cautionary language need not identify the specific factor that ultimately causes actual results to differ, but it must be substantive and tailored — not merely boilerplate.

(ii) The Knowledge Prong: The forward-looking statement is not made with "actual knowledge" that it is false or misleading. 15 U.S.C. § 77z-2(c)(1)(B).

The PSLRA defines "forward-looking statements" broadly to include, among other things: (a) statements containing projections of revenues, income, earnings per share, capital expenditures, or other financial items; (b) statements of plans and objectives of management for future operations, including plans or objectives relating to products or services; (c) statements of future economic performance; and (d) any statement of the assumptions underlying or relating to any of the foregoing. 15 U.S.C. § 77z-2(i)(1).

A net-zero commitment for 2050 is quintessentially forward-looking within the meaning of the PSLRA definition. It describes an aspirational future state of operations approximately 25 years in the future, predicated on assumptions regarding commodity prices, technological development, regulatory evolution, capital allocation decisions, portfolio composition, and numerous other variables. If the PSLRA safe harbor were available, it would provide significant protection for the net-zero disclosure — particularly under the cautionary language prong, given the inherent uncertainty of a 25-year projection.

B. Exclusion for Rule 144A and Regulation S Offerings

Notwithstanding the breadth of the PSLRA's forward-looking statement definition, the statutory safe harbor contains express exclusions that render it unavailable for the net-zero disclosure in the OM. These exclusions operate at two levels.

Express Statutory Exclusions. Section 27A(b) of the Securities Act enumerates several categories of statements that are excluded from the safe harbor, including:

(A) statements made in connection with an offering of securities by a blank check company (Section 27A(b)(1)(A));

(B) statements made in connection with a tender offer (Section 27A(b)(1)(B));

(D) statements made in connection with an initial public offering (Section 27A(b)(1)(D)).

While the Dunmore offering does not fall within the IPO exclusion (the Notes offering is a debt offering, not an equity IPO), the enumerated exclusions reflect the PSLRA's general approach of limiting the safe harbor to statements made in specific, regulated contexts.

Structural Inapplicability to Exempt Offerings. More fundamentally, the PSLRA safe harbor is structurally inapplicable to offerings of securities that are exempt from registration under the Securities Act. The safe harbor's protections are keyed to liability under Section 11 of the Securities Act (liability for misstatements in a registration statement), Section 12(a)(2) (liability for misstatements in a prospectus or oral communication in connection with a public offering), and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. However, the safe harbor's operative provisions — particularly the identification and cautionary language requirements — were designed to operate within the framework of SEC filings, registration statements, prospectuses, and periodic reports.

The Notes are being offered in reliance on the exemptions from registration afforded by Rule 144A and Regulation S. The OM is not filed with the SEC. It is not a "prospectus" within the meaning of Section 2(a)(10) of the Securities Act, nor is it a registration statement within the meaning of Section 6 or Section 7. Section 12(a)(2) liability, by its terms, applies to sales made "by means of a prospectus or oral communication" in connection with a public offering, and the Supreme Court's decision in Gustafson v. Alloyd Co. (1995) has been read to limit Section 12(a)(2) to public offerings. Section 11 liability applies only to registration statements.

Accordingly, the statutory framework within which the PSLRA safe harbor was designed to operate simply does not encompass a Rule 144A / Regulation S private placement. Courts have consistently recognized this structural limitation. While there is limited case law directly addressing the PSLRA safe harbor in the Rule 144A context (because the issue tends not to arise in litigation, given the availability of other defenses), the weight of authority and the plain statutory text support the conclusion that the safe harbor is unavailable.

Conclusion. The PSLRA statutory safe harbor is unavailable for the net-zero disclosure in this OM. Dunmore cannot rely on the statutory safe harbor to immunize the net-zero commitment from liability under Rule 10b-5 or state-law fraud claims asserted in connection with the Rule 144A / Regulation S offering of the Notes.

Note Regarding Future Exchange Offer. The offering documents contemplate that DEH may file an exchange-offer registration statement with the SEC pursuant to the Registration Rights Agreement to be entered into in connection with the closing. If and when such a registration statement is filed, any forward-looking statements contained therein — including any updated version of the net-zero commitment — would need to be separately evaluated for PSLRA safe-harbor applicability. The present analysis is limited to the net-zero disclosure as it appears in the Rule 144A / Regulation S OM.

C. Implications

The inapplicability of the PSLRA safe harbor means that Dunmore must rely on the common-law "bespeaks caution" doctrine as its primary defense against claims that the net-zero commitment in the OM is materially misleading. As discussed in Section IV below, the bespeaks caution doctrine provides meaningful protection, but it is narrower and less predictable than the statutory safe harbor. Unlike the PSLRA, which provides a bright-line defense when the statutory requirements are met, the bespeaks caution doctrine is a judge-made standard whose application depends on the specific facts and the sufficiency of the cautionary language in each case.

This reality underscores the importance of drafting the net-zero commitment disclosure and accompanying cautionary language with the greatest possible care. The absence of the PSLRA safe harbor places a premium on the specificity, substantiveness, and tailoring of the cautionary factors that accompany the forward-looking statement.

IV. The "Bespeaks Caution" Doctrine

A. Overview and Elements

The "bespeaks caution" doctrine is a judge-made rule providing that forward-looking statements accompanied by sufficiently specific and meaningful cautionary language are immaterial as a matter of law, thereby defeating a claim of securities fraud at the pleading stage or on summary judgment. The doctrine operates on the principle that when a document's cautionary language adequately identifies the risks that could cause actual results to differ materially from the forward-looking statement, a reasonable investor cannot claim to have been misled by the statement.

The doctrine was developed primarily in the Second Circuit, which is the circuit most likely to adjudicate any litigation relating to the Notes, given that the Indenture and Purchase Agreement are governed by New York law and the Initial Purchasers and underwriter's counsel are New York-based. Key Second Circuit decisions articulating the doctrine include Halperin v. eBanker USA.com, Inc. (2d Cir. 2002), P. Stolz Family P'ship L.P. v. Daum (2d Cir. 2004), and Rombach v. Chang (2d Cir. 2004), among others. The doctrine has been widely adopted in other federal circuits and is recognized as a valid defense in the private-placement context, where the PSLRA safe harbor is unavailable.

The key elements required to invoke the bespeaks caution doctrine are as follows:

(i) The statement must be genuinely forward-looking. The doctrine applies only to statements that are projective or aspirational in nature — i.e., statements about future events, plans, expectations, or goals. It does not protect misstatements of present or historical fact. A statement that a company has already achieved a particular emissions reduction is a statement of historical fact; a statement that a company aspires to achieve net-zero by 2050 is forward-looking.

(ii) The statement must be accompanied by cautionary language that is specific, substantive, and tailored. This is the critical element. The cautionary language must identify the particular risks and uncertainties that could cause actual results to differ materially from the forward-looking statement. Generic, boilerplate disclaimers — such as "forward-looking statements involve risks and uncertainties" or "actual results may differ from those projected" — are insufficient. The cautionary language must be customized to the specific forward-looking statement and must identify the precise factors that render it uncertain.

(iii) The cautionary language must identify important factors that could cause actual results to differ materially. The doctrine does not require that the cautionary language identify the specific factor that ultimately does cause actual results to differ, but it must identify factors that are important and material, not trivial or implausible. A failure to identify a significant and obvious risk will undermine the doctrine's protection.

The bespeaks caution doctrine is not a blanket immunity. Unlike the PSLRA safe harbor, which provides protection even if the defendant acted with scienter (under the cautionary language prong), the bespeaks caution doctrine may be overcome by a showing that the defendant had actual knowledge that the forward-looking statement was false at the time it was made. If Dunmore's management knew at the time of the OM that the net-zero commitment was not genuine — for example, because internal analyses had conclusively determined that net-zero was infeasible — the bespeaks caution doctrine would not provide a defense. This is why we have requested confirmation from General Counsel Alistair Forde regarding the board's good-faith endorsement of the commitment.

It is also important to note that the bespeaks caution doctrine has been applied in private-placement contexts where the PSLRA safe harbor is unavailable. Courts have recognized that the doctrine serves a function analogous to the statutory safe harbor and fills the gap created by the PSLRA's inapplicability to exempt offerings. This is precisely the situation presented by the Dunmore OM.

B. Application to Net-Zero Commitments

A net-zero by 2050 pledge is inherently aspirational and contingent on numerous assumptions. The commitment describes a future state of operations 25 years hence, predicated on a complex web of interrelated variables including, without limitation:

• Future commodity price paths for oil, natural gas, and refined products, which will affect the Company's revenues, cash flows, and capital allocation decisions;

• The pace and commercial viability of emissions-reduction technologies, including carbon capture and storage ("CCS"), direct air capture ("DAC"), green hydrogen production, and electrification of upstream operations;

• The evolution of regulatory frameworks in multiple jurisdictions (Nigeria, Senegal, the United States, the Cayman Islands, and applicable international regimes), including the potential for carbon taxes, cap-and-trade systems, and mandatory emissions-reduction requirements;

• Future capital allocation decisions by Dunmore's board and management, including decisions regarding acquisitions, divestitures, exploration and development expenditures, and investments in renewable energy;

• The composition of Dunmore's asset portfolio over a quarter-century, during which assets will be acquired, developed, depleted, and potentially divested; and

• Changes in GHG accounting methodologies, reporting standards, and third-party verification practices.

Courts have recognized that the more distant and uncertain the projection, the less reasonable an investor's reliance on it as a guarantee of future performance. A 25-year aspiration to achieve net-zero emissions is, by its nature, subject to a degree of uncertainty that is substantially greater than, for example, a revenue projection for the next fiscal quarter. This inherent uncertainty weighs in favor of the bespeaks caution doctrine's applicability, as reasonable investors should understand that a statement of this nature is not a binding commitment or a guarantee.

However, the bespeaks caution doctrine is not a blank check. It requires that the cautionary language specifically address the risks that render the forward-looking statement uncertain. A net-zero commitment accompanied only by generic risk disclaimers would not be protected. The cautionary language must address the specific, identified risks that could prevent Dunmore from achieving net-zero by 2050, and it must do so in a manner that is sufficiently detailed to put a reasonable investor on notice.

Moreover, the doctrine's protection may be limited in circumstances where the forward-looking statement is contradicted by known present facts. If, at the time of the OM, Dunmore had no genuine plan, strategy, or intention to pursue net-zero — or if internal analyses had determined that net-zero was infeasible — the forward-looking nature of the statement would not insulate it from liability. The bespeaks caution doctrine protects honest aspirations that may not be realized due to contingencies; it does not protect knowingly false or reckless statements dressed up as aspirations.

C. Recommended Cautionary Language Categories

Based on our analysis of the bespeaks caution doctrine and the specific characteristics of Dunmore's net-zero commitment, we recommend that the OM include cautionary language addressing each of the following risk categories. These cautionary factors should appear both (i) in close proximity to the net-zero commitment in the ESG section and (ii) in the ESG and climate risk factors section of the OM, with appropriate cross-references.

1. Commodity-Price and Demand Uncertainty. Dunmore's revenues and capital allocation are fundamentally dependent on oil and gas prices, which are inherently volatile and subject to factors beyond the Company's control, including global supply and demand dynamics, OPEC+ production decisions, geopolitical events, and the pace of the energy transition. A sustained downturn in commodity prices could significantly reduce the cash flows available for investment in emissions-reduction initiatives, thereby impairing or delaying the Company's ability to pursue its net-zero aspiration. Conversely, periods of elevated commodity prices may incentivize the Company to increase hydrocarbon production, potentially resulting in higher absolute emissions in the near to medium term.

2. Technological Uncertainty. The achievement of net-zero GHG emissions for an upstream oil and gas company requires the deployment, at commercial scale, of technologies that are not yet commercially viable or that are in early stages of development. These include, without limitation, large-scale carbon capture and storage, direct air capture, green hydrogen production, and the electrification of drilling and production operations. There can be no assurance that these technologies will become available, commercially viable, or deployable at the scale and cost necessary to support Dunmore's net-zero aspiration within the contemplated timeframe. The Company's ability to achieve net-zero is contingent on technological developments that it does not control.

3. Regulatory Uncertainty. Dunmore operates in multiple jurisdictions — Nigeria, Senegal, the United States, and the Cayman Islands — each with distinct and evolving regulatory frameworks governing GHG emissions, environmental protection, and climate policy. Future climate regulations, including the potential imposition of carbon taxes, emissions trading systems, mandatory reduction requirements, and changes to permitting and environmental review processes, could alter Dunmore's decarbonization pathway in unpredictable ways. Regulatory developments could impose compliance costs, require changes to the Company's operations and asset portfolio, or create incentives or disincentives that affect the pace and direction of the Company's emissions-reduction efforts. International climate agreements and frameworks, such as the Paris Agreement and its implementing mechanisms, may also impose requirements or create expectations that influence the Company's strategy.

4. Portfolio Composition. Dunmore continues to invest in hydrocarbon assets, including the allocation of approximately $250 million of the Notes proceeds to the Cayar Offshore Phase II development capital expenditure program. The Company's proved reserves of 345.8 MMboe, with an estimated PV-10 of $6.7 billion, represent a substantial asset base that is expected to generate revenues and emissions for decades. Future acquisitions or divestitures of assets may increase or decrease the Company's emissions profile. The composition of the Company's asset portfolio over the 25-year period to 2050 is inherently uncertain and subject to numerous factors, including market conditions, regulatory developments, and strategic decisions by the Company's board and management.

5. Absence of Interim Targets. As of the date of the OM, the Company has not established binding interim milestones or reduction targets (e.g., 2030 or 2035 targets) on the path to net-zero by 2050. The Company has stated that it intends to develop a detailed decarbonization roadmap, but no such roadmap has been finalized or publicly disclosed. The path to net-zero by 2050 is undefined and subject to future decisions by the Company's board and management. Without interim targets, the Company's progress toward net-zero cannot be measured or evaluated against specific benchmarks during the intervening years.

6. Capital Constraints and Competing Priorities. Dunmore's ability to allocate capital to emissions-reduction initiatives is constrained by its existing and anticipated debt service obligations, including approximately $79.7 million in annual interest expense on the Notes (calculated at 9.375% on $850 million), together with debt service on the Company's existing revolving credit facility and other indebtedness. In addition, the Company must fund required maintenance and development capital expenditures to sustain its producing asset base, as well as general and administrative expenses and community development obligations. These competing demands on the Company's cash flows may limit the funds available for decarbonization investments, particularly during periods of lower commodity prices or operating cash flow.

7. Measurement and Methodology Limitations. GHG emissions accounting methodologies, reporting standards, and verification practices are evolving and may change in ways that affect the comparability of reported emissions data across periods and among peer companies. The Company's reported Scope 1 and Scope 2 emissions data has been prepared by Barrisford Advisory Group LLC using methodologies that the Company believes to be consistent with applicable standards, but such methodologies involve estimates, assumptions, and allocation conventions that may be revised in the future. Furthermore, the Company does not currently measure or report Scope 3 emissions (including emissions from the end-use combustion of sold products), and the net-zero commitment is limited to Scope 1 and Scope 2 emissions only. Changes in measurement methodology, the adoption of new reporting standards, or the expansion of the emissions scope covered by the Company's net-zero commitment could materially affect the feasibility and timeline of the commitment.

8. Political and Operational Risk. A significant portion of Dunmore's operations is located in Nigeria and Senegal, where the Company's assets and operations are subject to political instability, regulatory unpredictability, community relations challenges, security risks, and legal frameworks that may not be aligned with or supportive of a net-zero emissions pathway. Political developments, changes in government policy, community opposition, and security incidents could disrupt operations, require changes to the Company's decarbonization strategy, or impose costs and constraints that affect the Company's ability to pursue net-zero. The Company's West African operations are also subject to the laws and regulations of host countries that may not have established comprehensive climate policy frameworks.

Each of these cautionary factors should be drafted in specific, substantive language tailored to Dunmore's circumstances. Generic disclaimers or vague references to "risks and uncertainties" will not satisfy the bespeaks caution doctrine's requirements and will not provide meaningful protection in litigation.

V. SEC Enforcement and Regulatory Considerations

A. SEC ESG Enforcement Trends

The SEC has significantly increased its scrutiny of ESG-related disclosures in recent years. This trend is relevant to the Dunmore OM even though the OM is not filed with the SEC, because the anti-fraud provisions of Rule 10b-5 apply to any purchase or sale of securities, including securities offered in private placements under Rule 144A and Regulation S.

The SEC's Division of Enforcement established the Climate and ESG Task Force in March 2021, staffed with dedicated personnel charged with identifying and investigating material misstatements or omissions in ESG disclosures by public companies and market participants. While the Task Force's scope has evolved and its mandate has been integrated into broader enforcement priorities (including the expanded Crypto Assets and Cyber Unit), the SEC has continued to pursue enforcement actions related to misleading ESG claims.

Recent enforcement actions have addressed a range of ESG disclosure deficiencies, including:

• Actions against registered investment advisers for misrepresenting the extent to which ESG factors were integrated into their investment decision-making processes, including cases involving misleading claims about portfolio-wide ESG screening and integration;

• Actions against public companies for making misleading statements about the environmental impact of their products or operations, including claims that overstated the environmental benefits of certain product features or operational practices; and

• Actions involving "greenwashing" — the practice of making ESG claims or commitments that are not supported by the company's actual practices, investments, or capabilities.

While these enforcement actions have primarily targeted registered entities and publicly reporting companies, they signal a broader enforcement posture that is relevant to private-placement issuers like Dunmore. The SEC's anti-fraud authority under Rule 10b-5 is not limited to registered offerings or SEC filings; it extends to any statement made "in connection with the purchase or sale of any security." An OM distributed to QIBs and non-U.S. persons in a Rule 144A / Regulation S offering is squarely within this scope.

B. Anti-Fraud Liability in Private Placements

Rule 10b-5, promulgated under Section 10(b) of 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 not misleading, in connection with the purchase or sale of any security. This prohibition applies regardless of whether the securities are registered or exempt from registration. The Supreme Court's decision in SEC v. Zandford (2002) and its progeny confirm the broad reach of Section 10(b) and Rule 10b-5 to all securities transactions.

In the context of the Dunmore OM, the net-zero commitment could give rise to 10b-5 liability under two theories:

(i) Affirmative Misstatement. If the net-zero commitment is materially misleading at the time it is made — for example, if Dunmore has no genuine intention or plan to pursue net-zero, or if internal analyses have determined that net-zero is infeasible given the Company's asset base and investment strategy — the statement could be deemed an untrue statement of a material fact. The "material fact" in this context is not the future achievement of net-zero (which cannot be known), but rather the present genuineness of the Company's commitment and its good-faith intention to pursue net-zero.

(ii) Misleading Omission. If the net-zero commitment omits material facts necessary to make the statement not misleading, liability could arise under the omission prong of Rule 10b-5. For example, if the OM discloses the net-zero commitment but fails to disclose that (a) the Company has no interim milestones or decarbonization roadmap, (b) $250 million of the Notes proceeds are being invested in new hydrocarbon production, (c) the Company's proved reserves represent decades of continued hydrocarbon production, or (d) the Company does not measure or report Scope 3 emissions (which typically represent the vast majority of an upstream E&P company's total emissions), a plaintiff could argue that these omissions render the net-zero disclosure materially misleading.

It is critical to note that Rule 10b-5 requires scienter — the plaintiff must demonstrate that the defendant acted with intent to deceive, manipulate, or defraud, or with severe recklessness. In a private action for damages under Section 10(b), this scienter requirement provides an important layer of protection, particularly for aspirational forward-looking statements. However, in an SEC enforcement action, the SEC may bring claims under Sections 17(a)(2) and 17(a)(3) of the Securities Act, which require only negligence, not scienter.

The litigation risk associated with the net-zero disclosure is mitigated if Dunmore can demonstrate:

(a) a good-faith basis for the commitment, including formal board endorsement, management support, and initial concrete steps (such as the 220 MW solar portfolio and below-industry methane flaring intensity);

(b) robust, specific, and tailored cautionary language in the OM identifying the key risks that could prevent achievement of the net-zero aspiration;

(c) no contemporaneous evidence contradicting the commitment — i.e., no internal studies, analyses, or communications suggesting that the net-zero goal is not genuine or is known to be infeasible; and

(d) a balanced disclosure that acknowledges the tensions inherent in the Company's position, including the simultaneous investment in hydrocarbon production, the absence of interim targets, and the scope limitations of the commitment.

C. State-Law Fraud and Negligent Misrepresentation

In addition to federal securities law claims, holders of the Notes may assert state-law claims for fraud or negligent misrepresentation based on allegedly misleading statements in the OM. New York, which is the governing law for the Indenture and Purchase Agreement and the most likely forum for litigation, recognizes both causes of action.

Common-Law Fraud. Under New York law, a claim for common-law fraud requires proof of (i) a material misrepresentation of fact, (ii) made with knowledge of its falsity (i.e., scienter), (iii) with intent to induce reliance, (iv) justifiable reliance by the plaintiff, and (v) resulting damages. The scienter requirement is analogous to the requirement under Rule 10b-5, though New York courts apply their own standards.

Negligent Misrepresentation. New York also recognizes a claim for negligent misrepresentation, which has a lower scienter threshold. A plaintiff need only show that the defendant made a misstatement or omission through an unreasonable failure to discover or disclose material information, in the context of a relationship in which the defendant owed a duty of care. The negligent misrepresentation standard may be more difficult for Dunmore to satisfy, as it does not require proof of intentional or reckless misconduct — only that the misstatement resulted from a failure to exercise reasonable care.

The bespeaks caution doctrine is equally relevant as a defense under state-law standards. New York courts have applied the doctrine to dismiss state-law fraud and misrepresentation claims based on forward-looking statements accompanied by adequate cautionary language. However, the analysis under state law may be less favorable to the defendant in certain respects, and the lower scienter threshold for negligent misrepresentation claims means that robust cautionary language is especially important as a prophylactic measure.

D. Purchase Agreement Indemnification

The Purchase Agreement to be dated as of May 12, 2025, among DEH, DUFC, and the Initial Purchasers, will contain customary indemnification provisions whereby DEH and DUFC agree to indemnify and hold harmless Ridgeline Capital Markets LLC, Clarion Securities Inc., and Pinnacle Partners LLC (and their respective officers, directors, employees, agents, and affiliates) from and against any and all losses, claims, damages, liabilities, and expenses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the OM, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

These indemnification provisions create a direct financial incentive for Dunmore to ensure that the OM — including the net-zero disclosure — is accurate, complete, and not misleading. They also mean that Whitfield Baxter & Cohn LLP, as counsel to the Initial Purchasers, will scrutinize the net-zero disclosure with particular care and from the perspective of the Initial Purchasers' potential liability exposure. Harrison Cates, Lead Partner at Whitfield Baxter, can be expected to provide detailed comments on the adequacy of the cautionary language accompanying the net-zero commitment, and C&H should be prepared to engage constructively with those comments to reach a mutually acceptable disclosure position.

C&H recommends that the revised net-zero disclosure language (see Appendix A) be shared with Harrison Cates and Priya Naveen at Whitfield Baxter promptly after Jennifer Kwon's review and approval, to allow sufficient time for comment and negotiation before the Preliminary OM is distributed on April 28, 2025.

VI. Analysis of Dunmore's Specific Net-Zero Disclosure

A. Current Draft Language (as of April 27, 2025)

The current draft of the OM's "Environmental and Social Responsibility" section includes the following disclosure regarding Dunmore's net-zero commitment (summarized for purposes of this memorandum):

• A statement that Dunmore is "committed to achieving net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2050."

• A reference to the 220 MW West Texas solar portfolio held through Dunmore Renewables LLC as evidence of the Company's "commitment to the energy transition."

• FY 2024 metrics: Scope 1 emissions of 1.42 million metric tons CO₂e; Scope 2 emissions of 0.18 million metric tons CO₂e; and methane flaring intensity of 3.8 m³/boe (compared to an industry average of approximately 5.1 m³/boe).

• A statement that the Company "intends to develop a detailed decarbonization roadmap to guide its progress toward net-zero."

• No reference to interim milestones for 2030, 2035, or any other interim date.

• No reference to Scope 3 emissions or any explanation of why the net-zero commitment is limited to Scope 1 and Scope 2.

The current draft does not include a standalone forward-looking statement legend preceding the ESG section, though the OM's inside cover contains a general forward-looking statement disclaimer applicable to the document as a whole.

B. Strengths of Current Disclosure

The current draft has several features that are favorable from a bespeaks caution perspective:

Aspirational Framing. The use of the terms "committed to achieving" and "intends to develop" frames the net-zero statement as an aspiration and a statement of management's present intention, rather than a binding promise, guarantee, or prediction of future results. This framing is consistent with the bespeaks caution doctrine's requirement that the statement be genuinely forward-looking.

Concrete Current Data Points. The disclosure is supported by specific, quantified metrics — Scope 1 and Scope 2 emissions data, methane flaring intensity, and the 220 MW solar portfolio capacity — which have been prepared by Barrisford Advisory Group LLC and reviewed by C&H. These data points demonstrate that the Company has a factual basis for its ESG disclosure and is not making unsupported claims.

Consistency with Public Statements. The OM disclosure is consistent with public statements made by CEO Marcus Ellingham and Board Chair Lady Constance Harrowby regarding the net-zero commitment. Consistency between the OM and the Company's prior public communications reduces the risk that the disclosure will be characterized as a departure from or contradiction of the Company's established position.

Tangible Action. The existence of the 220 MW solar portfolio and the Company's below-industry methane flaring intensity provide concrete evidence that Dunmore has taken initial steps toward emissions reduction. These tangible actions support the good-faith basis of the net-zero commitment and undermine any argument that the commitment is purely aspirational with no grounding in actual corporate strategy or investment.

C. Vulnerabilities of Current Disclosure

Notwithstanding the strengths identified above, the current draft presents several significant vulnerabilities that should be addressed through revision:

1. Tension with Continued Hydrocarbon Investment. Perhaps the most significant vulnerability in the current disclosure is the tension between the net-zero commitment and the simultaneous allocation of approximately $250 million of the Notes proceeds to the Cayar Offshore Phase II development capital expenditure program. This allocation — representing nearly 30% of the total offering proceeds — reflects a substantial near-term investment in new hydrocarbon production capacity at the very time that the Company is committing to eliminate its GHG emissions. This tension is compounded by the Company's proved reserves of 345.8 MMboe, which represent decades of continued hydrocarbon production and associated emissions. A plaintiff or regulator could argue that the juxtaposition of a net-zero commitment with a major hydrocarbon development investment, funded by the same offering, undermines the credibility and good faith of the net-zero pledge.

The current draft does not acknowledge or address this tension. We recommend that the revised disclosure include language explaining the Company's strategy of generating near-term cash flows from hydrocarbon operations to fund the long-term energy transition, while acknowledging that continued hydrocarbon investment may result in higher near-term emissions.

2. Absence of Interim Targets. The current draft does not include any interim milestones or reduction targets for 2030, 2035, or any other date between now and 2050. While the absence of interim targets is not uncommon among smaller upstream issuers (as discussed in Section VII below), it is a vulnerability because it may undermine the credibility of the 2050 pledge. A plaintiff or regulator could argue that a net-zero commitment without interim milestones is aspirational to the point of being meaningless — a public-relations gesture with no operational substance or accountability mechanism. The cautionary language should expressly acknowledge the absence of interim targets and state that the path to 2050 is undefined and subject to future board and management decisions.

3. Scope 3 Omission. The current draft does not disclose or address Scope 3 emissions. For an upstream oil and gas company, Scope 3 emissions — which include the emissions generated by end-use consumers who combust the oil and gas products sold by the Company — typically represent the vast majority of the total GHG emissions attributable to the company's value chain. By industry estimates, Scope 3 emissions for upstream E&P companies may constitute 80% or more of total lifecycle emissions.

The omission of Scope 3 from the net-zero disclosure creates a risk that the commitment will be characterized as misleading by omission — i.e., that by committing to net-zero "emissions" without specifying that the commitment excludes the largest category of emissions associated with its business, the Company is painting an incomplete and misleading picture of its environmental impact. While Dunmore's decision to limit the commitment to Scope 1 and Scope 2 is defensible and consistent with market practice among upstream issuers, the OM must expressly state this limitation and explain why Scope 3 is excluded. Silence on Scope 3 is far more dangerous than disclosure of the limitation.

4. No Detailed Pathway. The current draft states that Dunmore "intends to develop a detailed decarbonization roadmap" but provides no information regarding the substance, timeline, or methodology of any such roadmap. While this language is appropriately aspirational, it may be viewed as aspirational to the point of meaninglessness without any supporting specificity. A plaintiff could argue that a company that "intends to develop" a plan is, in substance, a company that has no plan — and that a net-zero commitment without any plan to achieve it is misleading.

We do not recommend that Dunmore attempt to include a detailed decarbonization roadmap in the OM if no such roadmap has been developed, as doing so would introduce additional forward-looking statements with additional liability risk. Rather, we recommend that the cautionary language expressly acknowledge that no detailed roadmap has been finalized and that the Company's decarbonization strategy is in the early stages of development.

5. Quantitative Gap. The current draft discloses Scope 1 emissions of 1.42 million metric tons CO₂e and Scope 2 emissions of 0.18 million metric tons CO₂e, for a combined total of 1.60 million metric tons CO₂e. These are substantial absolute figures. The OM does not describe how emissions of this magnitude would be eliminated or offset over the next 25 years, nor does it identify the specific technologies, investments, or operational changes that would be required to bridge the gap between current emissions levels and net-zero. While we do not recommend that the OM attempt to provide a detailed quantitative pathway (for the reasons noted above), the cautionary language should acknowledge the scale of the challenge and the significant investments and technological developments that would be required.

D. Recommended Revisions

Based on the vulnerabilities identified above and the requirements of the bespeaks caution doctrine, we recommend the following revisions to the net-zero disclosure in the OM:

1. Aspirational Framing. Revise the net-zero commitment language to explicitly frame the commitment as a "long-term aspiration" that is "subject to numerous uncertainties, assumptions, and contingencies," and to state clearly that it "does not constitute a guarantee, prediction, or binding obligation" of the Company. The framing should convey that the commitment reflects management's current intention and the direction endorsed by the Company's board, while acknowledging the inherent uncertainty of projecting outcomes 25 years into the future.

2. Forward-Looking Statement Legend. Add a forward-looking statement identifier and legend immediately preceding the net-zero language in the ESG section. Although the PSLRA safe harbor does not apply, the inclusion of such a legend serves multiple functions: it invokes the bespeaks caution doctrine by expressly identifying the net-zero statement as forward-looking; it sets investor expectations; and it signals the Company's intent to provide balanced disclosure. The proposed legend is set forth in Appendix B.

3. Specific Cautionary Factors. Include specific cautionary factors (drawn from the categories identified in Section IV.C above) immediately following the net-zero statement within the ESG section, not solely in the risk-factors section of the OM. The placement of cautionary language in close proximity to the forward-looking statement is important under the bespeaks caution doctrine, as courts have considered whether the cautionary language is "reasonably proximate" to the statement it is intended to qualify.

4. Cross-References. Include cross-references immediately following the net-zero statement to the relevant risk-factor sections of the OM, including the "ESG and Climate" risk factor section and the "Sanctions, OFAC, and Anti-Corruption" risk factor section (to the extent it addresses operational risks in Nigeria and Senegal). These cross-references alert the reader to additional detailed disclosure and reinforce the comprehensiveness of the cautionary framework.

5. Scope 3 Caveat. Add language expressly acknowledging Scope 3 emissions and stating that the Company does not currently measure or include Scope 3 emissions in its net-zero target. The language should explain that Scope 3 emissions, which for an upstream oil and gas company include emissions from the end-use combustion of sold products, are outside the current scope of the Company's net-zero commitment. This express disclosure avoids an omission argument and is consistent with market practice among peer issuers.

6. Acknowledgment of Hydrocarbon Investment. Add language acknowledging the Company's simultaneous investment in hydrocarbon production, including the allocation of Notes proceeds to the Cayar Offshore Phase II development, and explaining the rationale — i.e., that near-term cash generation from hydrocarbon operations is expected to fund the Company's long-term transition to lower-carbon operations. This language contextualizes the tension between the net-zero aspiration and the continued hydrocarbon investment and reduces the risk that the juxtaposition will be characterized as misleading.

7. Avoidance of Quantitative Interim Targets. Unless and until Dunmore's board is prepared to commit to and track against specific quantitative reduction targets for specific years, the OM should avoid including such targets. The inclusion of quantitative targets would create additional forward-looking statements with additional liability risk and would require ongoing monitoring and potential updating. The cautionary language should expressly state that no interim milestones have been established and that the Company's decarbonization strategy and timeline are subject to future board and management decisions.

8. Flexibility Language. Add language stating that the Company may adjust its net-zero strategy, timeline, and targets in response to evolving conditions, including changes in regulatory requirements, available technologies, commodity markets, capital availability, and other factors. This "evolution clause" preserves the Company's ability to modify or recalibrate its approach without being accused of abandoning a prior commitment.

Proposed revised disclosure language reflecting these recommendations is set forth in Appendix A.

VII. Comparison to Market Practice

A. High-Yield Oil & Gas Precedents

We have surveyed recent Rule 144A high-yield energy offerings to assess market practice regarding net-zero and other climate-related commitments in offering memoranda. Our survey covered approximately fifteen Rule 144A offerings by upstream and midstream oil and gas issuers completed between January 2023 and March 2025, including offerings by companies with comparable asset profiles and credit ratings to Dunmore.

The survey reveals the following trends:

Increasing Prevalence. Net-zero commitments or similar climate-related aspirational statements are increasingly common in high-yield energy offering documents, reflecting broader investor expectations and issuer communication strategies. Approximately two-thirds of the surveyed offerings included some form of climate commitment or emissions-reduction aspiration in the ESG or sustainability section of the OM.

Aspirational Framing. Without exception, the net-zero or emissions-reduction commitments in the surveyed offerings were couched in heavily qualified, aspirational language. Common formulations include "aspires to achieve," "has set a goal of," "is working toward," and "is committed to pursuing," all accompanied by express disclaimers that the commitment does not constitute a guarantee or binding obligation.

Scope Limitation. Most issuers in the survey limited their net-zero or emissions-reduction commitments to Scope 1 and Scope 2 emissions, consistent with Dunmore's approach. Several issuers expressly carved out Scope 3 emissions and explained the rationale for the exclusion. A small number of issuers disclosed Scope 3 emissions data for informational purposes but did not include Scope 3 in their reduction targets.

Interim Targets. Several recent offerings include interim targets — typically 2030 intensity-reduction goals expressed in terms of emissions intensity per unit of production (e.g., CO₂e per barrel of oil equivalent) rather than absolute emissions reductions. Dunmore's absence of interim targets is a relative weakness compared to these issuers but is not uncommon among smaller upstream issuers, particularly those in the B-rated credit category.

Cautionary Language. The surveyed offerings generally included cautionary language of varying specificity accompanying the climate commitments. The best-in-class disclosures included specific risk factors tailored to the climate commitment, placed in close proximity to the commitment, with cross-references to the risk-factors section. The weaker disclosures relied on generic forward-looking statement disclaimers with limited tailoring.

Based on this survey, Dunmore's proposed net-zero disclosure, if revised in accordance with our recommendations, would be consistent with or exceed prevailing market practice for Rule 144A high-yield energy offerings.

B. Investment-Grade vs. High-Yield Standards

It is important to distinguish between the disclosure standards applicable to investment-grade issuers and those applicable to sub-investment-grade issuers like Dunmore. Inves

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
TO: Jennifer Kwon, Responsible Partner, Capital Markets, Calderwood & Harkness LLP
FROM: Claire Dempsey, Working Associate, Capital Markets, Calderwood & Harkness LLP; Eric Johannsen, Lead Associate, Capital Markets, Calderwood & Harkness LLP
DATE: April 27, 2025
RE: Dunmore Energy Holdings Ltd. — $850,000,000 9.375% Senior Secured Notes due 2032: Analysis of Safe-Harbor Protections for Net-Zero by 2050 Commitment Disclosure in the Offering Memorandum
Matter No.: 1016-00003
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I. Executive Summary
The purpose of this memorandum is to analyze whether the stated commitment of Dunmore Energy Holdings Ltd. ("DEH" or "Dunmore") to achieve net-zero greenhouse gas ("GHG") emissions by 2050, as disclosed in the "Environmental and Social Responsibility" section of the Offering Memorandum (the "OM") for the $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes"), qualifies for safe-harbor protection under the Private Securities Litigation Reform Act of 1995 (the "PSLRA") and under applicable common-law standards. This analysis has been prepared at the request of Jennifer Kwon, Responsible Partner, in anticipation of the distribution of the Preliminary OM ("Red") on April 28, 2025, and the finalization of the OM and closing of the offering on May 14–15, 2025.
As an initial matter, we note that the offering of the Notes is structured as a Rule 144A / Regulation S private placement. The Notes are not being registered under the Securities Act of 1933, as amended (the "Securities Act"), and the OM is not filed with the U.S. Securities and Exchange Commission (the "SEC"). This structural feature has a dispositive consequence for purposes of safe-harbor analysis: the PSLRA statutory safe harbor does not apply by its terms to offerings exempt from Securities Act registration, including Rule 144A offerings. Section 27A of the Securities Act, which creates the statutory safe harbor for forward-looking statements, is limited in its application to statements made in filings and documents subject to the registration and liability provisions of the Securities Act, and the courts have consistently held that the safe harbor is unavailable in the private-placement context.
In light of this conclusion, our analysis focuses on the following four areas:
(a) the inapplicability of the PSLRA statutory safe harbor to the net-zero commitment as disclosed in the OM;
(b) the common-law "bespeaks caution" doctrine as the primary available protection for forward-looking statements in the OM, including the elements required to invoke the doctrine and their application to the specific net-zero disclosure;
(c) SEC enforcement trends and guidance regarding ESG-related forward-looking statements, including the potential for anti-fraud liability under Rule 10b-5 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and state-law claims, notwithstanding the private-placement structure; and
(d) practical recommendations for drafting the net-zero commitment disclosure and accompanying cautionary language in the OM to maximize the protections available under the bespeaks caution doctrine and to mitigate litigation and regulatory risk.
Conclusion. Based on our analysis, we conclude that meaningful cautionary language, specificity of risk factors, and careful framing of the net-zero commitment as an aspirational goal — rather than a binding contractual obligation or a guarantee of future performance — will be critical to mitigating litigation and regulatory risk. The current draft of the net-zero disclosure, while generally sound in its aspirational framing, presents several vulnerabilities, including the tension between the net-zero pledge and the simultaneous allocation of $250 million in Notes proceeds to the Cayar Offshore Phase II hydrocarbon development, the absence of interim milestones, and the omission of any disclosure regarding Scope 3 emissions. We set forth below detailed recommendations for revisions to the OM disclosure, together with proposed draft language for the ESG section and a standalone forward-looking statement legend.
Coordination Notes. The ESG data underlying the net-zero commitment has been prepared by Barrisford Advisory Group LLC ("Barrisford"), under the direction of Nathan Reyes Linley CPAs LLP, Lead Consultant, and has been reviewed by Calderwood & Harkness LLP ("C&H") through the ESG Data Verification Checklist. Greenwashing liability risks are separately analyzed in a companion C&H memorandum dated April 25, 2025, addressed to Jennifer Kwon. The drafting of ESG-specific risk factors for the OM is addressed in a separate drafting memorandum circulated by Eric Johannsen on April 24, 2025. This memorandum should be read in conjunction with those companion materials.
II. Background
A. The Offering
Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted company registered with the Cayman Islands Registrar of Companies under Registry No. MC-384726, and Dunmore upstream Finance Corp. ("DUFC"), a Delaware corporation (EIN 93-4728106), are co-issuers of $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due May 1, 2032 (the "Notes"). The Notes will be issued pursuant to an Indenture (the "Indenture") to be dated as of May 15, 2025, among DEH, DUFC, the guarantors party thereto, and Northgate Trust Company, N.A., as Trustee and Collateral Agent.
The offering is structured as a private placement exempt from registration under the Securities Act. The Notes are being offered in the United States to "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the Securities Act, and outside the United States to non-U.S. persons in reliance on Regulation S under the Securities Act. The OM will not be filed with the SEC and does not constitute a prospectus or registration statement within the meaning of Section 2(a)(10) or Section 6 of the Securities Act.
The Initial Purchasers for the offering are as follows:
Counsel to the Initial Purchasers is Whitfield Baxter & Cohn LLP, with Harrison Cates serving as Lead Partner. Calderwood & Harkness LLP serves as counsel to DEH and DUFC in connection with the offering.
The Preliminary OM (the "Red") is scheduled for distribution to potential investors on April 28, 2025. The Final OM is targeted for distribution on May 14, 2025, with closing and settlement of the offering anticipated on May 15, 2025. The offering timeline is aggressive, and all disclosure revisions recommended in this memorandum should be reflected in the Preliminary OM to be distributed tomorrow.
The Notes have received preliminary credit ratings of B2 with a Stable Outlook from Lodestar Ratings International and B+ with a Stable Outlook from Veridian Credit Assessments Inc. These sub-investment-grade ratings are relevant to the safe-harbor analysis, as they inform the appropriate level of conservatism in the ESG disclosure, as discussed in Section VII below.
B. Dunmore's Business and ESG Profile
DEH, together with its subsidiaries (collectively, the "Company" or "Dunmore"), is an independent upstream and midstream oil and gas company with operations across West Africa and the Gulf of Mexico. The Company's principal producing assets include Oil Mining Leases 47 and 63 ("OML 47" and "OML 63") in the Niger Delta region of Nigeria, the Cayar Offshore Block in Senegal, and deepwater leases in the Green Canyon and Garden Banks areas of the Gulf of Mexico. These assets form the core of Dunmore's hydrocarbon production base and are expected to generate the substantial majority of the Company's revenues and cash flows for the foreseeable future.
In addition to its hydrocarbon operations, Dunmore maintains a nascent renewable energy portfolio consisting of a 220 MW solar portfolio in West Texas, held through Dunmore Renewables LLC, a wholly owned subsidiary. The solar portfolio became operational in phases between 2022 and 2024 and represents the Company's most significant tangible investment in the energy transition to date.
Key financial and operational metrics for fiscal year 2024 are as follows:
• Revenue: $2.14 billion
• EBITDA: $816 million
• Total Proved Reserves: 345.8 MMboe (as estimated by Duval Howard & Partners, independent reserve engineers, with PV-10 value of $6.7 billion)
• Scope 1 GHG Emissions: 1.42 million metric tons CO₂e
• Scope 2 GHG Emissions: 0.18 million metric tons CO₂e
• Total Scope 1 and Scope 2 GHG Emissions: 1.60 million metric tons CO₂e
• Methane Flaring Intensity: 3.8 m³/boe (compared to industry average of approximately 5.1 m³/boe)
• Community Development Spend (Nigeria): $14.2 million
It is important to note for purposes of this memorandum that a meaningful portion of the Notes proceeds — approximately $250 million — is allocated to the Cayar Offshore Phase II development capital expenditure program. This allocation reflects Dunmore's continued investment in hydrocarbon production assets at the same time that it is publicly committing to a net-zero emissions pathway. This tension between the stated net-zero commitment and the simultaneous deployment of offering proceeds to hydrocarbon development is one of the principal vulnerabilities identified in our analysis and must be addressed in the OM disclosure.
C. The Net-Zero Commitment
Dunmore has publicly committed to achieving net-zero Scope 1 and Scope 2 GHG emissions by 2050. The commitment was initially announced by Board Chair Lady Constance Harrowby (a former UK Energy Minister) at the Dunmore Investor Day held on September 12, 2024, and has been referenced by Chief Executive Officer Marcus Ellingham in subsequent investor presentations and earnings calls. The commitment is to be disclosed in the standalone "Environmental and Social Responsibility" section of the OM, consistent with Dunmore's public communications and ESG reporting.
Several features of the commitment are noteworthy for purposes of this analysis:
Aspirational Framing. The commitment is described internally and publicly as aspirational and directional in nature. It does not constitute a binding contractual covenant in the Indenture. There is no provision in the Indenture creating an event of default or a breach of covenant arising from a failure to achieve net-zero emissions by 2050 or by any other date.
Absence of Interim Milestones. As of the date of this memorandum, Dunmore has not publicly set interim milestones — for example, a 2030 or 2035 GHG emissions reduction target — on the path to net-zero by 2050. The Company has stated that it "intends to develop a detailed decarbonization roadmap" but has not disclosed the substance or timeline of any such roadmap.
Scope Limitation. The net-zero commitment is limited to Scope 1 (direct emissions from owned or controlled sources) and Scope 2 (indirect emissions from purchased electricity, heat, or steam). It does not extend to Scope 3 emissions (all other indirect emissions, including emissions from the end-use combustion of sold products). For an upstream oil and gas company, Scope 3 emissions typically constitute the vast majority of the total emissions footprint.
Data Support. The data package supporting the disclosure has been prepared by Barrisford Advisory Group LLC, under the direction of Nathan Reyes Linley CPAs LLP, Lead Consultant. The methodology and verification of the Barrisford data have been reviewed by C&H through the ESG Data Verification Checklist. As discussed in Section VIII.D below, C&H has requested certain clarifications from Barrisford regarding Scope 1 emissions methodology and methane flaring intensity calculation methodology, and those responses remain outstanding as of the date of this memorandum.
Board and Management Endorsement. Board Chair Lady Constance Harrowby has championed the net-zero initiative within the Dunmore board and management team. CEO Marcus Ellingham has referenced the commitment in investor presentations on at least three occasions since September 2024. C&H has requested written confirmation from Alistair Forde, General Counsel of DEH, that the board has formally endorsed the commitment by resolution and that no internal analyses or studies contradict the feasibility of pursuing it.
III. Applicability of the PSLRA Statutory Safe Harbor
A. Statutory Framework
The PSLRA, enacted in 1995, created a statutory safe harbor for forward-looking statements in two parallel provisions: Section 27A of the Securities Act (15 U.S.C. § 77z-2) and Section 21E of the Exchange Act (15 U.S.C. § 78u-5). These provisions were designed to encourage companies to share projections and forward-looking information with investors by providing protection from private securities fraud liability, subject to certain conditions.
Under the PSLRA safe harbor, a forward-looking statement is protected from liability in a private action if it satisfies either of two prongs:
(i) The Cautionary Language Prong: The forward-looking statement is identified as such and is accompanied by "meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement." 15 U.S.C. § 77z-2(c)(1)(A)(i). Under this prong, the cautionary language need not identify the specific factor that ultimately causes actual results to differ, but it must be substantive and tailored — not merely boilerplate.
(ii) The Knowledge Prong: The forward-looking statement is not made with "actual knowledge" that it is false or misleading. 15 U.S.C. § 77z-2(c)(1)(B).
The PSLRA defines "forward-looking statements" broadly to include, among other things: (a) statements containing projections of revenues, income, earnings per share, capital expenditures, or other financial items; (b) statements of plans and objectives of management for future operations, including plans or objectives relating to products or services; (c) statements of future economic performance; and (d) any statement of the assumptions underlying or relating to any of the foregoing. 15 U.S.C. § 77z-2(i)(1).
A net-zero commitment for 2050 is quintessentially forward-looking within the meaning of the PSLRA definition. It describes an aspirational future state of operations approximately 25 years in the future, predicated on assumptions regarding commodity prices, technological development, regulatory evolution, capital allocation decisions, portfolio composition, and numerous other variables. If the PSLRA safe harbor were available, it would provide significant protection for the net-zero disclosure — particularly under the cautionary language prong, given the inherent uncertainty of a 25-year projection.
B. Exclusion for Rule 144A and Regulation S Offerings
Notwithstanding the breadth of the PSLRA's forward-looking statement definition, the statutory safe harbor contains express exclusions that render it unavailable for the net-zero disclosure in the OM. These exclusions operate at two levels.
Express Statutory Exclusions. Section 27A(b) of the Securities Act enumerates several categories of statements that are excluded from the safe harbor, including:
(A) statements made in connection with an offering of securities by a blank check company (Section 27A(b)(1)(A));
(B) statements made in connection with a tender offer (Section 27A(b)(1)(B));
(C) financial statements prepared in accordance with GAAP (Section 27A(b)(1)(C)); and
(D) statements made in connection with an initial public offering (Section 27A(b)(1)(D)).
While the Dunmore offering does not fall within the IPO exclusion (the Notes offering is a debt offering, not an equity IPO), the enumerated exclusions reflect the PSLRA's general approach of limiting the safe harbor to statements made in specific, regulated contexts.
Structural Inapplicability to Exempt Offerings. More fundamentally, the PSLRA safe harbor is structurally inapplicable to offerings of securities that are exempt from registration under the Securities Act. The safe harbor's protections are keyed to liability under Section 11 of the Securities Act (liability for misstatements in a registration statement), Section 12(a)(2) (liability for misstatements in a prospectus or oral communication in connection with a public offering), and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. However, the safe harbor's operative provisions — particularly the identification and cautionary language requirements — were designed to operate within the framework of SEC filings, registration statements, prospectuses, and periodic reports.
The Notes are being offered in reliance on the exemptions from registration afforded by Rule 144A and Regulation S. The OM is not filed with the SEC. It is not a "prospectus" within the meaning of Section 2(a)(10) of the Securities Act, nor is it a registration statement within the meaning of Section 6 or Section 7. Section 12(a)(2) liability, by its terms, applies to sales made "by means of a prospectus or oral communication" in connection with a public offering, and the Supreme Court's decision in Gustafson v. Alloyd Co. (1995) has been read to limit Section 12(a)(2) to public offerings. Section 11 liability applies only to registration statements.
Accordingly, the statutory framework within which the PSLRA safe harbor was designed to operate simply does not encompass a Rule 144A / Regulation S private placement. Courts have consistently recognized this structural limitation. While there is limited case law directly addressing the PSLRA safe harbor in the Rule 144A context (because the issue tends not to arise in litigation, given the availability of other defenses), the weight of authority and the plain statutory text support the conclusion that the safe harbor is unavailable.
Conclusion. The PSLRA statutory safe harbor is unavailable for the net-zero disclosure in this OM. Dunmore cannot rely on the statutory safe harbor to immunize the net-zero commitment from liability under Rule 10b-5 or state-law fraud claims asserted in connection with the Rule 144A / Regulation S offering of the Notes.
Note Regarding Future Exchange Offer. The offering documents contemplate that DEH may file an exchange-offer registration statement with the SEC pursuant to the Registration Rights Agreement to be entered into in connection with the closing. If and when such a registration statement is filed, any forward-looking statements contained therein — including any updated version of the net-zero commitment — would need to be separately evaluated for PSLRA safe-harbor applicability. The present analysis is limited to the net-zero disclosure as it appears in the Rule 144A / Regulation S OM.
C. Implications
The inapplicability of the PSLRA safe harbor means that Dunmore must rely on the common-law "bespeaks caution" doctrine as its primary defense against claims that the net-zero commitment in the OM is materially misleading. As discussed in Section IV below, the bespeaks caution doctrine provides meaningful protection, but it is narrower and less predictable than the statutory safe harbor. Unlike the PSLRA, which provides a bright-line defense when the statutory requirements are met, the bespeaks caution doctrine is a judge-made standard whose application depends on the specific facts and the sufficiency of the cautionary language in each case.
This reality underscores the importance of drafting the net-zero commitment disclosure and accompanying cautionary language with the greatest possible care. The absence of the PSLRA safe harbor places a premium on the specificity, substantiveness, and tailoring of the cautionary factors that accompany the forward-looking statement.
IV. The "Bespeaks Caution" Doctrine
A. Overview and Elements
The "bespeaks caution" doctrine is a judge-made rule providing that forward-looking statements accompanied by sufficiently specific and meaningful cautionary language are immaterial as a matter of law, thereby defeating a claim of securities fraud at the pleading stage or on summary judgment. The doctrine operates on the principle that when a document's cautionary language adequately identifies the risks that could cause actual results to differ materially from the forward-looking statement, a reasonable investor cannot claim to have been misled by the statement.
The doctrine was developed primarily in the Second Circuit, which is the circuit most likely to adjudicate any litigation relating to the Notes, given that the Indenture and Purchase Agreement are governed by New York law and the Initial Purchasers and underwriter's counsel are New York-based. Key Second Circuit decisions articulating the doctrine include Halperin v. eBanker USA.com, Inc. (2d Cir. 2002), P. Stolz Family P'ship L.P. v. Daum (2d Cir. 2004), and Rombach v. Chang (2d Cir. 2004), among others. The doctrine has been widely adopted in other federal circuits and is recognized as a valid defense in the private-placement context, where the PSLRA safe harbor is unavailable.
The key elements required to invoke the bespeaks caution doctrine are as follows:
(i) The statement must be genuinely forward-looking. The doctrine applies only to statements that are projective or aspirational in nature — i.e., statements about future events, plans, expectations, or goals. It does not protect misstatements of present or historical fact. A statement that a company has already achieved a particular emissions reduction is a statement of historical fact; a statement that a company aspires to achieve net-zero by 2050 is forward-looking.
(ii) The statement must be accompanied by cautionary language that is specific, substantive, and tailored. This is the critical element. The cautionary language must identify the particular risks and uncertainties that could cause actual results to differ materially from the forward-looking statement. Generic, boilerplate disclaimers — such as "forward-looking statements involve risks and uncertainties" or "actual results may differ from those projected" — are insufficient. The cautionary language must be customized to the specific forward-looking statement and must identify the precise factors that render it uncertain.
(iii) The cautionary language must identify important factors that could cause actual results to differ materially. The doctrine does not require that the cautionary language identify the specific factor that ultimately does cause actual results to differ, but it must identify factors that are important and material, not trivial or implausible. A failure to identify a significant and obvious risk will undermine the doctrine's protection.
The bespeaks caution doctrine is not a blanket immunity. Unlike the PSLRA safe harbor, which provides protection even if the defendant acted with scienter (under the cautionary language prong), the bespeaks caution doctrine may be overcome by a showing that the defendant had actual knowledge that the forward-looking statement was false at the time it was made. If Dunmore's management knew at the time of the OM that the net-zero commitment was not genuine — for example, because internal analyses had conclusively determined that net-zero was infeasible — the bespeaks caution doctrine would not provide a defense. This is why we have requested confirmation from General Counsel Alistair Forde regarding the board's good-faith endorsement of the commitment.
It is also important to note that the bespeaks caution doctrine has been applied in private-placement contexts where the PSLRA safe harbor is unavailable. Courts have recognized that the doctrine serves a function analogous to the statutory safe harbor and fills the gap created by the PSLRA's inapplicability to exempt offerings. This is precisely the situation presented by the Dunmore OM.
B. Application to Net-Zero Commitments
A net-zero by 2050 pledge is inherently aspirational and contingent on numerous assumptions. The commitment describes a future state of operations 25 years hence, predicated on a complex web of interrelated variables including, without limitation:
• Future commodity price paths for oil, natural gas, and refined products, which will affect the Company's revenues, cash flows, and capital allocation decisions;
• The pace and commercial viability of emissions-reduction technologies, including carbon capture and storage ("CCS"), direct air capture ("DAC"), green hydrogen production, and electrification of upstream operations;
• The evolution of regulatory frameworks in multiple jurisdictions (Nigeria, Senegal, the United States, the Cayman Islands, and applicable international regimes), including the potential for carbon taxes, cap-and-trade systems, and mandatory emissions-reduction requirements;
• Future capital allocation decisions by Dunmore's board and management, including decisions regarding acquisitions, divestitures, exploration and development expenditures, and investments in renewable energy;
• The composition of Dunmore's asset portfolio over a quarter-century, during which assets will be acquired, developed, depleted, and potentially divested; and
• Changes in GHG accounting methodologies, reporting standards, and third-party verification practices.
Courts have recognized that the more distant and uncertain the projection, the less reasonable an investor's reliance on it as a guarantee of future performance. A 25-year aspiration to achieve net-zero emissions is, by its nature, subject to a degree of uncertainty that is substantially greater than, for example, a revenue projection for the next fiscal quarter. This inherent uncertainty weighs in favor of the bespeaks caution doctrine's applicability, as reasonable investors should understand that a statement of this nature is not a binding commitment or a guarantee.
However, the bespeaks caution doctrine is not a blank check. It requires that the cautionary language specifically address the risks that render the forward-looking statement uncertain. A net-zero commitment accompanied only by generic risk disclaimers would not be protected. The cautionary language must address the specific, identified risks that could prevent Dunmore from achieving net-zero by 2050, and it must do so in a manner that is sufficiently detailed to put a reasonable investor on notice.
Moreover, the doctrine's protection may be limited in circumstances where the forward-looking statement is contradicted by known present facts. If, at the time of the OM, Dunmore had no genuine plan, strategy, or intention to pursue net-zero — or if internal analyses had determined that net-zero was infeasible — the forward-looking nature of the statement would not insulate it from liability. The bespeaks caution doctrine protects honest aspirations that may not be realized due to contingencies; it does not protect knowingly false or reckless statements dressed up as aspirations.
C. Recommended Cautionary Language Categories
Based on our analysis of the bespeaks caution doctrine and the specific characteristics of Dunmore's net-zero commitment, we recommend that the OM include cautionary language addressing each of the following risk categories. These cautionary factors should appear both (i) in close proximity to the net-zero commitment in the ESG section and (ii) in the ESG and climate risk factors section of the OM, with appropriate cross-references.
1. Commodity-Price and Demand Uncertainty. Dunmore's revenues and capital allocation are fundamentally dependent on oil and gas prices, which are inherently volatile and subject to factors beyond the Company's control, including global supply and demand dynamics, OPEC+ production decisions, geopolitical events, and the pace of the energy transition. A sustained downturn in commodity prices could significantly reduce the cash flows available for investment in emissions-reduction initiatives, thereby impairing or delaying the Company's ability to pursue its net-zero aspiration. Conversely, periods of elevated commodity prices may incentivize the Company to increase hydrocarbon production, potentially resulting in higher absolute emissions in the near to medium term.
2. Technological Uncertainty. The achievement of net-zero GHG emissions for an upstream oil and gas company requires the deployment, at commercial scale, of technologies that are not yet commercially viable or that are in early stages of development. These include, without limitation, large-scale carbon capture and storage, direct air capture, green hydrogen production, and the electrification of drilling and production operations. There can be no assurance that these technologies will become available, commercially viable, or deployable at the scale and cost necessary to support Dunmore's net-zero aspiration within the contemplated timeframe. The Company's ability to achieve net-zero is contingent on technological developments that it does not control.
3. Regulatory Uncertainty. Dunmore operates in multiple jurisdictions — Nigeria, Senegal, the United States, and the Cayman Islands — each with distinct and evolving regulatory frameworks governing GHG emissions, environmental protection, and climate policy. Future climate regulations, including the potential imposition of carbon taxes, emissions trading systems, mandatory reduction requirements, and changes to permitting and environmental review processes, could alter Dunmore's decarbonization pathway in unpredictable ways. Regulatory developments could impose compliance costs, require changes to the Company's operations and asset portfolio, or create incentives or disincentives that affect the pace and direction of the Company's emissions-reduction efforts. International climate agreements and frameworks, such as the Paris Agreement and its implementing mechanisms, may also impose requirements or create expectations that influence the Company's strategy.
4. Portfolio Composition. Dunmore continues to invest in hydrocarbon assets, including the allocation of approximately $250 million of the Notes proceeds to the Cayar Offshore Phase II development capital expenditure program. The Company's proved reserves of 345.8 MMboe, with an estimated PV-10 of $6.7 billion, represent a substantial asset base that is expected to generate revenues and emissions for decades. Future acquisitions or divestitures of assets may increase or decrease the Company's emissions profile. The composition of the Company's asset portfolio over the 25-year period to 2050 is inherently uncertain and subject to numerous factors, including market conditions, regulatory developments, and strategic decisions by the Company's board and management.
5. Absence of Interim Targets. As of the date of the OM, the Company has not established binding interim milestones or reduction targets (e.g., 2030 or 2035 targets) on the path to net-zero by 2050. The Company has stated that it intends to develop a detailed decarbonization roadmap, but no such roadmap has been finalized or publicly disclosed. The path to net-zero by 2050 is undefined and subject to future decisions by the Company's board and management. Without interim targets, the Company's progress toward net-zero cannot be measured or evaluated against specific benchmarks during the intervening years.
6. Capital Constraints and Competing Priorities. Dunmore's ability to allocate capital to emissions-reduction initiatives is constrained by its existing and anticipated debt service obligations, including approximately $79.7 million in annual interest expense on the Notes (calculated at 9.375% on $850 million), together with debt service on the Company's existing revolving credit facility and other indebtedness. In addition, the Company must fund required maintenance and development capital expenditures to sustain its producing asset base, as well as general and administrative expenses and community development obligations. These competing demands on the Company's cash flows may limit the funds available for decarbonization investments, particularly during periods of lower commodity prices or operating cash flow.
7. Measurement and Methodology Limitations. GHG emissions accounting methodologies, reporting standards, and verification practices are evolving and may change in ways that affect the comparability of reported emissions data across periods and among peer companies. The Company's reported Scope 1 and Scope 2 emissions data has been prepared by Barrisford Advisory Group LLC using methodologies that the Company believes to be consistent with applicable standards, but such methodologies involve estimates, assumptions, and allocation conventions that may be revised in the future. Furthermore, the Company does not currently measure or report Scope 3 emissions (including emissions from the end-use combustion of sold products), and the net-zero commitment is limited to Scope 1 and Scope 2 emissions only. Changes in measurement methodology, the adoption of new reporting standards, or the expansion of the emissions scope covered by the Company's net-zero commitment could materially affect the feasibility and timeline of the commitment.
8. Political and Operational Risk. A significant portion of Dunmore's operations is located in Nigeria and Senegal, where the Company's assets and operations are subject to political instability, regulatory unpredictability, community relations challenges, security risks, and legal frameworks that may not be aligned with or supportive of a net-zero emissions pathway. Political developments, changes in government policy, community opposition, and security incidents could disrupt operations, require changes to the Company's decarbonization strategy, or impose costs and constraints that affect the Company's ability to pursue net-zero. The Company's West African operations are also subject to the laws and regulations of host countries that may not have established comprehensive climate policy frameworks.
Each of these cautionary factors should be drafted in specific, substantive language tailored to Dunmore's circumstances. Generic disclaimers or vague references to "risks and uncertainties" will not satisfy the bespeaks caution doctrine's requirements and will not provide meaningful protection in litigation.
V. SEC Enforcement and Regulatory Considerations
A. SEC ESG Enforcement Trends
The SEC has significantly increased its scrutiny of ESG-related disclosures in recent years. This trend is relevant to the Dunmore OM even though the OM is not filed with the SEC, because the anti-fraud provisions of Rule 10b-5 apply to any purchase or sale of securities, including securities offered in private placements under Rule 144A and Regulation S.
The SEC's Division of Enforcement established the Climate and ESG Task Force in March 2021, staffed with dedicated personnel charged with identifying and investigating material misstatements or omissions in ESG disclosures by public companies and market participants. While the Task Force's scope has evolved and its mandate has been integrated into broader enforcement priorities (including the expanded Crypto Assets and Cyber Unit), the SEC has continued to pursue enforcement actions related to misleading ESG claims.
Recent enforcement actions have addressed a range of ESG disclosure deficiencies, including:
• Actions against registered investment advisers for misrepresenting the extent to which ESG factors were integrated into their investment decision-making processes, including cases involving misleading claims about portfolio-wide ESG screening and integration;
• Actions against public companies for making misleading statements about the environmental impact of their products or operations, including claims that overstated the environmental benefits of certain product features or operational practices; and
• Actions involving "greenwashing" — the practice of making ESG claims or commitments that are not supported by the company's actual practices, investments, or capabilities.
While these enforcement actions have primarily targeted registered entities and publicly reporting companies, they signal a broader enforcement posture that is relevant to private-placement issuers like Dunmore. The SEC's anti-fraud authority under Rule 10b-5 is not limited to registered offerings or SEC filings; it extends to any statement made "in connection with the purchase or sale of any security." An OM distributed to QIBs and non-U.S. persons in a Rule 144A / Regulation S offering is squarely within this scope.
B. Anti-Fraud Liability in Private Placements
Rule 10b-5, promulgated under Section 10(b) of 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 not misleading, in connection with the purchase or sale of any security. This prohibition applies regardless of whether the securities are registered or exempt from registration. The Supreme Court's decision in SEC v. Zandford (2002) and its progeny confirm the broad reach of Section 10(b) and Rule 10b-5 to all securities transactions.
In the context of the Dunmore OM, the net-zero commitment could give rise to 10b-5 liability under two theories:
(i) Affirmative Misstatement. If the net-zero commitment is materially misleading at the time it is made — for example, if Dunmore has no genuine intention or plan to pursue net-zero, or if internal analyses have determined that net-zero is infeasible given the Company's asset base and investment strategy — the statement could be deemed an untrue statement of a material fact. The "material fact" in this context is not the future achievement of net-zero (which cannot be known), but rather the present genuineness of the Company's commitment and its good-faith intention to pursue net-zero.
(ii) Misleading Omission. If the net-zero commitment omits material facts necessary to make the statement not misleading, liability could arise under the omission prong of Rule 10b-5. For example, if the OM discloses the net-zero commitment but fails to disclose that (a) the Company has no interim milestones or decarbonization roadmap, (b) $250 million of the Notes proceeds are being invested in new hydrocarbon production, (c) the Company's proved reserves represent decades of continued hydrocarbon production, or (d) the Company does not measure or report Scope 3 emissions (which typically represent the vast majority of an upstream E&P company's total emissions), a plaintiff could argue that these omissions render the net-zero disclosure materially misleading.
It is critical to note that Rule 10b-5 requires scienter — the plaintiff must demonstrate that the defendant acted with intent to deceive, manipulate, or defraud, or with severe recklessness. In a private action for damages under Section 10(b), this scienter requirement provides an important layer of protection, particularly for aspirational forward-looking statements. However, in an SEC enforcement action, the SEC may bring claims under Sections 17(a)(2) and 17(a)(3) of the Securities Act, which require only negligence, not scienter.
The litigation risk associated with the net-zero disclosure is mitigated if Dunmore can demonstrate:
(a) a good-faith basis for the commitment, including formal board endorsement, management support, and initial concrete steps (such as the 220 MW solar portfolio and below-industry methane flaring intensity);
(b) robust, specific, and tailored cautionary language in the OM identifying the key risks that could prevent achievement of the net-zero aspiration;
(c) no contemporaneous evidence contradicting the commitment — i.e., no internal studies, analyses, or communications suggesting that the net-zero goal is not genuine or is known to be infeasible; and
(d) a balanced disclosure that acknowledges the tensions inherent in the Company's position, including the simultaneous investment in hydrocarbon production, the absence of interim targets, and the scope limitations of the commitment.
C. State-Law Fraud and Negligent Misrepresentation
In addition to federal securities law claims, holders of the Notes may assert state-law claims for fraud or negligent misrepresentation based on allegedly misleading statements in the OM. New York, which is the governing law for the Indenture and Purchase Agreement and the most likely forum for litigation, recognizes both causes of action.
Common-Law Fraud. Under New York law, a claim for common-law fraud requires proof of (i) a material misrepresentation of fact, (ii) made with knowledge of its falsity (i.e., scienter), (iii) with intent to induce reliance, (iv) justifiable reliance by the plaintiff, and (v) resulting damages. The scienter requirement is analogous to the requirement under Rule 10b-5, though New York courts apply their own standards.
Negligent Misrepresentation. New York also recognizes a claim for negligent misrepresentation, which has a lower scienter threshold. A plaintiff need only show that the defendant made a misstatement or omission through an unreasonable failure to discover or disclose material information, in the context of a relationship in which the defendant owed a duty of care. The negligent misrepresentation standard may be more difficult for Dunmore to satisfy, as it does not require proof of intentional or reckless misconduct — only that the misstatement resulted from a failure to exercise reasonable care.
The bespeaks caution doctrine is equally relevant as a defense under state-law standards. New York courts have applied the doctrine to dismiss state-law fraud and misrepresentation claims based on forward-looking statements accompanied by adequate cautionary language. However, the analysis under state law may be less favorable to the defendant in certain respects, and the lower scienter threshold for negligent misrepresentation claims means that robust cautionary language is especially important as a prophylactic measure.
D. Purchase Agreement Indemnification
The Purchase Agreement to be dated as of May 12, 2025, among DEH, DUFC, and the Initial Purchasers, will contain customary indemnification provisions whereby DEH and DUFC agree to indemnify and hold harmless Ridgeline Capital Markets LLC, Clarion Securities Inc., and Pinnacle Partners LLC (and their respective officers, directors, employees, agents, and affiliates) from and against any and all losses, claims, damages, liabilities, and expenses arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the OM, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
These indemnification provisions create a direct financial incentive for Dunmore to ensure that the OM — including the net-zero disclosure — is accurate, complete, and not misleading. They also mean that Whitfield Baxter & Cohn LLP, as counsel to the Initial Purchasers, will scrutinize the net-zero disclosure with particular care and from the perspective of the Initial Purchasers' potential liability exposure. Harrison Cates, Lead Partner at Whitfield Baxter, can be expected to provide detailed comments on the adequacy of the cautionary language accompanying the net-zero commitment, and C&H should be prepared to engage constructively with those comments to reach a mutually acceptable disclosure position.
C&H recommends that the revised net-zero disclosure language (see Appendix A) be shared with Harrison Cates and Priya Naveen at Whitfield Baxter promptly after Jennifer Kwon's review and approval, to allow sufficient time for comment and negotiation before the Preliminary OM is distributed on April 28, 2025.
VI. Analysis of Dunmore's Specific Net-Zero Disclosure
A. Current Draft Language (as of April 27, 2025)
The current draft of the OM's "Environmental and Social Responsibility" section includes the following disclosure regarding Dunmore's net-zero commitment (summarized for purposes of this memorandum):
• A statement that Dunmore is "committed to achieving net-zero Scope 1 and Scope 2 greenhouse gas emissions by 2050."
• A reference to the 220 MW West Texas solar portfolio held through Dunmore Renewables LLC as evidence of the Company's "commitment to the energy transition."
• FY 2024 metrics: Scope 1 emissions of 1.42 million metric tons CO₂e; Scope 2 emissions of 0.18 million metric tons CO₂e; and methane flaring intensity of 3.8 m³/boe (compared to an industry average of approximately 5.1 m³/boe).
• A statement that the Company "intends to develop a detailed decarbonization roadmap to guide its progress toward net-zero."
• No reference to interim milestones for 2030, 2035, or any other interim date.
• No reference to Scope 3 emissions or any explanation of why the net-zero commitment is limited to Scope 1 and Scope 2.
The current draft does not include a standalone forward-looking statement legend preceding the ESG section, though the OM's inside cover contains a general forward-looking statement disclaimer applicable to the document as a whole.
B. Strengths of Current Disclosure
The current draft has several features that are favorable from a bespeaks caution perspective:
Aspirational Framing. The use of the terms "committed to achieving" and "intends to develop" frames the net-zero statement as an aspiration and a statement of management's present intention, rather than a binding promise, guarantee, or prediction of future results. This framing is consistent with the bespeaks caution doctrine's requirement that the statement be genuinely forward-looking.
Concrete Current Data Points. The disclosure is supported by specific, quantified metrics — Scope 1 and Scope 2 emissions data, methane flaring intensity, and the 220 MW solar portfolio capacity — which have been prepared by Barrisford Advisory Group LLC and reviewed by C&H. These data points demonstrate that the Company has a factual basis for its ESG disclosure and is not making unsupported claims.
Consistency with Public Statements. The OM disclosure is consistent with public statements made by CEO Marcus Ellingham and Board Chair Lady Constance Harrowby regarding the net-zero commitment. Consistency between the OM and the Company's prior public communications reduces the risk that the disclosure will be characterized as a departure from or contradiction of the Company's established position.
Tangible Action. The existence of the 220 MW solar portfolio and the Company's below-industry methane flaring intensity provide concrete evidence that Dunmore has taken initial steps toward emissions reduction. These tangible actions support the good-faith basis of the net-zero commitment and undermine any argument that the commitment is purely aspirational with no grounding in actual corporate strategy or investment.
C. Vulnerabilities of Current Disclosure
Notwithstanding the strengths identified above, the current draft presents several significant vulnerabilities that should be addressed through revision:
1. Tension with Continued Hydrocarbon Investment. Perhaps the most significant vulnerability in the current disclosure is the tension between the net-zero commitment and the simultaneous allocation of approximately $250 million of the Notes proceeds to the Cayar Offshore Phase II development capital expenditure program. This allocation — representing nearly 30% of the total offering proceeds — reflects a substantial near-term investment in new hydrocarbon production capacity at the very time that the Company is committing to eliminate its GHG emissions. This tension is compounded by the Company's proved reserves of 345.8 MMboe, which represent decades of continued hydrocarbon production and associated emissions. A plaintiff or regulator could argue that the juxtaposition of a net-zero commitment with a major hydrocarbon development investment, funded by the same offering, undermines the credibility and good faith of the net-zero pledge.
The current draft does not acknowledge or address this tension. We recommend that the revised disclosure include language explaining the Company's strategy of generating near-term cash flows from hydrocarbon operations to fund the long-term energy transition, while acknowledging that continued hydrocarbon investment may result in higher near-term emissions.
2. Absence of Interim Targets. The current draft does not include any interim milestones or reduction targets for 2030, 2035, or any other date between now and 2050. While the absence of interim targets is not uncommon among smaller upstream issuers (as discussed in Section VII below), it is a vulnerability because it may undermine the credibility of the 2050 pledge. A plaintiff or regulator could argue that a net-zero commitment without interim milestones is aspirational to the point of being meaningless — a public-relations gesture with no operational substance or accountability mechanism. The cautionary language should expressly acknowledge the absence of interim targets and state that the path to 2050 is undefined and subject to future board and management decisions.
3. Scope 3 Omission. The current draft does not disclose or address Scope 3 emissions. For an upstream oil and gas company, Scope 3 emissions — which include the emissions generated by end-use consumers who combust the oil and gas products sold by the Company — typically represent the vast majority of the total GHG emissions attributable to the company's value chain. By industry estimates, Scope 3 emissions for upstream E&P companies may constitute 80% or more of total lifecycle emissions.
The omission of Scope 3 from the net-zero disclosure creates a risk that the commitment will be characterized as misleading by omission — i.e., that by committing to net-zero "emissions" without specifying that the commitment excludes the largest category of emissions associated with its business, the Company is painting an incomplete and misleading picture of its environmental impact. While Dunmore's decision to limit the commitment to Scope 1 and Scope 2 is defensible and consistent with market practice among upstream issuers, the OM must expressly state this limitation and explain why Scope 3 is excluded. Silence on Scope 3 is far more dangerous than disclosure of the limitation.
4. No Detailed Pathway. The current draft states that Dunmore "intends to develop a detailed decarbonization roadmap" but provides no information regarding the substance, timeline, or methodology of any such roadmap. While this language is appropriately aspirational, it may be viewed as aspirational to the point of meaninglessness without any supporting specificity. A plaintiff could argue that a company that "intends to develop" a plan is, in substance, a company that has no plan — and that a net-zero commitment without any plan to achieve it is misleading.
We do not recommend that Dunmore attempt to include a detailed decarbonization roadmap in the OM if no such roadmap has been developed, as doing so would introduce additional forward-looking statements with additional liability risk. Rather, we recommend that the cautionary language expressly acknowledge that no detailed roadmap has been finalized and that the Company's decarbonization strategy is in the early stages of development.
5. Quantitative Gap. The current draft discloses Scope 1 emissions of 1.42 million metric tons CO₂e and Scope 2 emissions of 0.18 million metric tons CO₂e, for a combined total of 1.60 million metric tons CO₂e. These are substantial absolute figures. The OM does not describe how emissions of this magnitude would be eliminated or offset over the next 25 years, nor does it identify the specific technologies, investments, or operational changes that would be required to bridge the gap between current emissions levels and net-zero. While we do not recommend that the OM attempt to provide a detailed quantitative pathway (for the reasons noted above), the cautionary language should acknowledge the scale of the challenge and the significant investments and technological developments that would be required.
D. Recommended Revisions
Based on the vulnerabilities identified above and the requirements of the bespeaks caution doctrine, we recommend the following revisions to the net-zero disclosure in the OM:
1. Aspirational Framing. Revise the net-zero commitment language to explicitly frame the commitment as a "long-term aspiration" that is "subject to numerous uncertainties, assumptions, and contingencies," and to state clearly that it "does not constitute a guarantee, prediction, or binding obligation" of the Company. The framing should convey that the commitment reflects management's current intention and the direction endorsed by the Company's board, while acknowledging the inherent uncertainty of projecting outcomes 25 years into the future.
2. Forward-Looking Statement Legend. Add a forward-looking statement identifier and legend immediately preceding the net-zero language in the ESG section. Although the PSLRA safe harbor does not apply, the inclusion of such a legend serves multiple functions: it invokes the bespeaks caution doctrine by expressly identifying the net-zero statement as forward-looking; it sets investor expectations; and it signals the Company's intent to provide balanced disclosure. The proposed legend is set forth in Appendix B.
3. Specific Cautionary Factors. Include specific cautionary factors (drawn from the categories identified in Section IV.C above) immediately following the net-zero statement within the ESG section, not solely in the risk-factors section of the OM. The placement of cautionary language in close proximity to the forward-looking statement is important under the bespeaks caution doctrine, as courts have considered whether the cautionary language is "reasonably proximate" to the statement it is intended to qualify.
4. Cross-References. Include cross-references immediately following the net-zero statement to the relevant risk-factor sections of the OM, including the "ESG and Climate" risk factor section and the "Sanctions, OFAC, and Anti-Corruption" risk factor section (to the extent it addresses operational risks in Nigeria and Senegal). These cross-references alert the reader to additional detailed disclosure and reinforce the comprehensiveness of the cautionary framework.
5. Scope 3 Caveat. Add language expressly acknowledging Scope 3 emissions and stating that the Company does not currently measure or include Scope 3 emissions in its net-zero target. The language should explain that Scope 3 emissions, which for an upstream oil and gas company include emissions from the end-use combustion of sold products, are outside the current scope of the Company's net-zero commitment. This express disclosure avoids an omission argument and is consistent with market practice among peer issuers.
6. Acknowledgment of Hydrocarbon Investment. Add language acknowledging the Company's simultaneous investment in hydrocarbon production, including the allocation of Notes proceeds to the Cayar Offshore Phase II development, and explaining the rationale — i.e., that near-term cash generation from hydrocarbon operations is expected to fund the Company's long-term transition to lower-carbon operations. This language contextualizes the tension between the net-zero aspiration and the continued hydrocarbon investment and reduces the risk that the juxtaposition will be characterized as misleading.
7. Avoidance of Quantitative Interim Targets. Unless and until Dunmore's board is prepared to commit to and track against specific quantitative reduction targets for specific years, the OM should avoid including such targets. The inclusion of quantitative targets would create additional forward-looking statements with additional liability risk and would require ongoing monitoring and potential updating. The cautionary language should expressly state that no interim milestones have been established and that the Company's decarbonization strategy and timeline are subject to future board and management decisions.
8. Flexibility Language. Add language stating that the Company may adjust its net-zero strategy, timeline, and targets in response to evolving conditions, including changes in regulatory requirements, available technologies, commodity markets, capital availability, and other factors. This "evolution clause" preserves the Company's ability to modify or recalibrate its approach without being accused of abandoning a prior commitment.
Proposed revised disclosure language reflecting these recommendations is set forth in Appendix A.
VII. Comparison to Market Practice
A. High-Yield Oil & Gas Precedents
We have surveyed recent Rule 144A high-yield energy offerings to assess market practice regarding net-zero and other climate-related commitments in offering memoranda. Our survey covered approximately fifteen Rule 144A offerings by upstream and midstream oil and gas issuers completed between January 2023 and March 2025, including offerings by companies with comparable asset profiles and credit ratings to Dunmore.
The survey reveals the following trends:
Increasing Prevalence. Net-zero commitments or similar climate-related aspirational statements are increasingly common in high-yield energy offering documents, reflecting broader investor expectations and issuer communication strategies. Approximately two-thirds of the surveyed offerings included some form of climate commitment or emissions-reduction aspiration in the ESG or sustainability section of the OM.
Aspirational Framing. Without exception, the net-zero or emissions-reduction commitments in the surveyed offerings were couched in heavily qualified, aspirational language. Common formulations include "aspires to achieve," "has set a goal of," "is working toward," and "is committed to pursuing," all accompanied by express disclaimers that the commitment does not constitute a guarantee or binding obligation.
Scope Limitation. Most issuers in the survey limited their net-zero or emissions-reduction commitments to Scope 1 and Scope 2 emissions, consistent with Dunmore's approach. Several issuers expressly carved out Scope 3 emissions and explained the rationale for the exclusion. A small number of issuers disclosed Scope 3 emissions data for informational purposes but did not include Scope 3 in their reduction targets.
Interim Targets. Several recent offerings include interim targets — typically 2030 intensity-reduction goals expressed in terms of emissions intensity per unit of production (e.g., CO₂e per barrel of oil equivalent) rather than absolute emissions reductions. Dunmore's absence of interim targets is a relative weakness compared to these issuers but is not uncommon among smaller upstream issuers, particularly those in the B-rated credit category.
Cautionary Language. The surveyed offerings generally included cautionary language of varying specificity accompanying the climate commitments. The best-in-class disclosures included specific risk factors tailored to the climate commitment, placed in close proximity to the commitment, with cross-references to the risk-factors section. The weaker disclosures relied on generic forward-looking statement disclaimers with limited tailoring.
Based on this survey, Dunmore's proposed net-zero disclosure, if revised in accordance with our recommendations, would be consistent with or exceed prevailing market practice for Rule 144A high-yield energy offerings.
B. Investment-Grade vs. High-Yield Standards
It is important to distinguish between the disclosure standards applicable to investment-grade issuers and those applicable to sub-investment-grade issuers like Dunmore. Inves

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