CONFIDENTIAL TREATMENT REQUESTED — DO NOT DISTRIBUTE
CONFIDENTIAL OFFERING MEMORANDUM — DATED MAY 14, 2025
$850,000,000
DUNMORE ENERGY HOLDINGS LTD. (a Cayman Islands exempted company)
DUNMORE UPSTREAM FINANCE CORP. (a Delaware corporation)
9.375% Senior Secured Notes due 2032
Dunmore Energy Holdings Ltd. ("DEH" or the "Issuer") and Dunmore upstream Finance Corp. ("DUFC" or the "Co-Issuer," and together with DEH, the "Issuers") are offering $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032 (the "Notes"). The Notes will bear interest at a rate of 9.375% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2025. The Notes will mature on May 1, 2032.
Issue Price: 98.50% of par, resulting in original issue discount ("OID") of 1.50% ($12,750,000). Gross Proceeds: $837,250,000.
The Notes are being offered (i) in the United States to qualified institutional buyers ("QIBs") pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and (ii) outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.
CUSIP (144A): 265387 AA 5
Ratings:
Guarantors: The Notes will be jointly and severally guaranteed on a senior secured basis by Dunmore Nigeria E&P Ltd., Dunmore Gulf Operations LLC, Dunmore Renewables LLC, Dunmore Senegal S.A., Dunmore Midstream Holdings Inc., and Dunmore Trading Ltd. (collectively, the "Guarantors").
Security: The Notes will be secured by first-priority liens on (i) equity interests of each Guarantor subsidiary, (ii) substantially all tangible and intangible assets of the Issuers and each Guarantor (subject to Permitted Liens), (iii) intercompany receivables, (iv) material hydrocarbon offtake contracts, and (v) assignment of insurance proceeds, in each case subject to the Intercreditor Agreement with Velthorn National Bank, N.A.
Optional Redemption: Prior to May 1, 2028, the Notes may be redeemed at a make-whole redemption price equal to the greater of 100% of par and the present value of remaining scheduled payments discounted at the Treasury Rate plus 50 basis points, plus accrued and unpaid interest. On or after May 1, 2028, the Notes may be redeemed at redemption prices declining from 104.688% to par. In addition, prior to May 1, 2028, the Issuers may redeem up to 40% of the original aggregate principal amount of the Notes at 109.375% of par from the net proceeds of one or more equity offerings, provided that at least 60% of the original aggregate principal amount remains outstanding after any such redemption.
Change of Control: Upon a Change of Control Triggering Event, the Issuers must offer to repurchase all outstanding Notes at 101% of par plus accrued and unpaid interest.
Initial Purchasers:
Investment in the Notes involves a high degree of risk. See "Risk Factors" beginning on page 38.
Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this offering memorandum is truthful or complete. Any representation to the contrary is a criminal offense.
The Issuer is a Cayman Islands exempted company. Prospective investors should consider the risks associated with investing in securities of a non-U.S. issuer. See "Enforcement of Civil Liabilities."
May 14, 2025
NOTICES TO INVESTORS
Restrictions on Distribution. This offering memorandum is confidential and has been prepared by the Issuers solely for use in connection with the offering of the Notes described herein (the "Offering"). This offering memorandum is personal to each offeree to whom it has been delivered and does not constitute an offer to any other person or to the public generally to subscribe for or otherwise acquire the Notes. Distribution of this offering memorandum to any person other than the prospective investor and any person retained to advise such prospective investor with respect to its purchase is unauthorized, and any disclosure of any of its contents, without the prior written consent of the Issuers, is prohibited. Each prospective investor, by accepting delivery of this offering memorandum, agrees to the foregoing and to make no photocopies of this offering memorandum or any documents referred to herein.
No Public Offering. The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States except to QIBs in reliance on Rule 144A under the Securities Act ("Rule 144A") or outside the United States in reliance on Regulation S under the Securities Act ("Regulation S"). Prospective purchasers are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. For a description of certain restrictions on transfers of the Notes, see "Transfer Restrictions."
Notice to EEA Investors. This offering memorandum has been prepared on the basis that any offer of the Notes in any Member State of the European Economic Area (the "EEA") will be made pursuant to an exemption under the Regulation (EU) 2017/1129 (the "EU Prospectus Regulation") from the requirement to publish a prospectus for offers of the Notes. Accordingly, any person making or intending to make an offer in any Member State of the EEA of the Notes may only do so in circumstances in which no obligation arises for the Issuers or any of the Initial Purchasers to publish a prospectus pursuant to Article 3 of the EU Prospectus Regulation or to supplement a prospectus pursuant to Article 23 of the EU Prospectus Regulation, in each case, in relation to such offer. Neither the Issuers nor the Initial Purchasers have authorized, nor do they authorize, the making of any offer of the Notes in circumstances in which an obligation arises for the Issuers or the Initial Purchasers to publish or supplement a prospectus for such offer. The Notes are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold, or otherwise made available to, any retail investor in the EEA. For purposes of this provision, "retail investor" means a person who is one (or more) of the following: (a) a retail client, as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); (b) a customer within the meaning of Directive (EU) 2016/97 (the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (c) not a qualified investor as defined in the EU Prospectus Regulation.
Notice to UK Investors. This offering memorandum has been prepared on the basis that any offer of the Notes in the United Kingdom will be made pursuant to an exemption under the UK Prospectus Regulation from the requirement to publish a prospectus for offers of the Notes. The Notes are not intended to be offered, sold, or otherwise made available to, and should not be offered, sold, or otherwise made available to, any retail investor in the United Kingdom. For purposes of this provision, "retail investor" means a person who is one (or more) of the following: (a) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No. 2017/565 as it forms part of domestic law of the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the "EUWA"); (b) a customer within the meaning of the provisions of the Financial Services and Markets Act 2000 (the "FSMA") and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No. 600/2014 as it forms part of domestic law of the United Kingdom by virtue of the EUWA; or (c) not a qualified investor as defined in Article 2 of the UK Prospectus Regulation. Consequently, no key information document required by Regulation (EU) No. 1286/2014 as it forms part of domestic law of the United Kingdom by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the Notes or otherwise making them available to retail investors in the United Kingdom has been prepared and therefore offering or selling the Notes or otherwise making them available to any retail investor in the United Kingdom may be unlawful under the UK PRIIPs Regulation.
MiFID II / UK MiFIR Product Governance. Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the Notes has led to the conclusion that: (i) the target market for the Notes is eligible counterparties and professional clients only, each as defined in MiFID II (or, in the case of the United Kingdom, as defined in the FCA Handbook Conduct of Business Sourcebook ("COBS")); and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling, or recommending the Notes (a "distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the Notes (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution channels.
Prohibition on Offers to Retail Investors in the EEA and UK. No key information document required by the EU PRIIPs Regulation or the UK PRIIPs Regulation, as applicable, for offering or selling the Notes or otherwise making them available to retail investors in the EEA or the United Kingdom has been prepared. Offering or selling the Notes or otherwise making them available to any retail investor in the EEA or the United Kingdom may be unlawful under such regulations.
Forward-Looking Statements. This offering memorandum contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and applicable securities laws of other jurisdictions. These forward-looking statements include, without limitation, statements regarding the Issuers' plans, objectives, expectations, and intentions. Forward-looking statements can generally be identified by the use of forward-looking terminology, including "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "project," "plan," "potential," "continue," "seek," or similar terminology. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, many of which are beyond the control of the Issuers and the Guarantors. Actual results may differ materially from those expressed or implied in such forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: volatility in oil and gas prices; risks associated with exploration and development activities; political, economic, and security conditions in Nigeria, Senegal, and other jurisdictions in which the Issuers operate; regulatory changes; climate-related risks; and the other risks described under "Risk Factors." The Issuers undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Prospective investors are cautioned not to place undue reliance on forward-looking statements.
No Representation or Warranty by the Initial Purchasers. No representation or warranty, express or implied, is made by Ridgeline Capital Markets LLC, Clarion Securities Inc., Pinnacle Partners LLC, or any of their respective affiliates, directors, officers, employees, or agents as to the accuracy or completeness of the information set forth in this offering memorandum. Each of the Initial Purchasers disclaims any and all liability relating to this offering memorandum and the Offering. Nothing in this offering memorandum is, or shall be relied upon as, a promise or representation by the Initial Purchasers as to the past or future. Each person receiving this offering memorandum acknowledges that such person has not relied on the Initial Purchasers or any person affiliated with the Initial Purchasers in connection with its investigation of the accuracy of such information or its investment decision. Each person receiving this offering memorandum should conduct its own investigation and analysis.
Stabilization. In connection with the Offering, Ridgeline Capital Markets LLC (as stabilizing manager) may over-allot or effect transactions that stabilize, maintain, or otherwise affect the market price of the Notes at a level higher than that which might otherwise prevail. Such stabilization, if commenced, may be discontinued at any time without notice. Neither the Issuers nor any of the Initial Purchasers make any representation or prediction as to the direction or magnitude of any effect that any such transactions may have on the price of the Notes. In addition, neither the Issuers nor any of the Initial Purchasers make any representation that Ridgeline Capital Markets LLC will engage in any such transactions or that any such transactions, once commenced, will not be discontinued.
Available Information and Reporting Obligations. The Issuers have agreed that, for so long as any Notes remain outstanding, they will make available to any holder and to any prospective purchaser of Notes the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act, if at the time of such delivery the Issuers are not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. See "Available Information."
Currency Presentation. Unless otherwise indicated, all references to "$," "US$," "U.S. dollars," or "dollars" in this offering memorandum are to United States dollars. Certain amounts presented in Nigerian naira (₦), Senegalese CFA franc (XOF), and British pounds sterling (£) have been converted into U.S. dollars for convenience using exchange rates specified where applicable. Such conversions should not be construed as representations that the relevant currency amounts have been, could have been, or could be converted at such rates.
Industry and Market Data. This offering memorandum includes industry and market data obtained from third-party sources, including reserves data prepared by Duval Howard & Partners ("DH&P"), environmental, social, and governance ("ESG") data prepared by Barrisford Advisory Group LLC, and management estimates. While the Issuers believe these sources are reliable, neither the Issuers nor the Initial Purchasers guarantee the accuracy or completeness of such data. Market data and statistics are inherently imprecise, involve assumptions, and reflect only the data available as of their respective dates.
Service of Process and Enforcement of Judgments. DEH is a Cayman Islands exempted company, and substantially all of its assets are located outside the United States. In addition, certain of its directors and officers are residents of jurisdictions other than the United States. As a result, it may not be possible for investors to effect service of process within the United States upon the Issuer or such persons or to enforce against them in U.S. courts judgments based upon the civil liability provisions of the federal securities laws of the United States. See "Enforcement of Civil Liabilities."
Cayman Islands Regulatory Status. DEH is an exempted company incorporated with limited liability under the Companies Act (As Revised) of the Cayman Islands. As an exempted company, DEH is not required to hold an annual general meeting of shareholders. DEH is registered with the Cayman Islands Registrar of Companies under registration number MC-384726. DEH's operations are not subject to regulation by the Cayman Islands Monetary Authority. The Cayman Islands government does not impose income tax, capital gains tax, or withholding tax on DEH or on payments made by DEH. See "Certain Cayman Islands Tax Considerations."
SUMMARY
The following summary highlights selected information contained elsewhere in this offering memorandum and is qualified in its entirety by reference to the more detailed information and financial statements, including the notes thereto, appearing elsewhere herein. This summary may not contain all of the information that you should consider before investing in the Notes. You should carefully read this entire offering memorandum, including the information set forth under "Risk Factors" and the financial statements and related notes included elsewhere herein, before making an investment decision. Capitalized terms used but not defined herein have the meanings assigned to them in "Annex A — Glossary of Defined Terms."
The Offering
Issuer: Dunmore Energy Holdings Ltd. ("DEH"), a Cayman Islands exempted company (Cayman Registry No. MC-384726), with registered office at c/o Maples Corporate Services Ltd., PO Box 309, Ugland House, George Town, Grand Cayman KY1-1104, Cayman Islands.
Co-Issuer: Dunmore upstream Finance Corp. ("DUFC"), a Delaware corporation (EIN 93-4728106), with registered agent at Ashgrove Services Inc., 28 Liberty Street, New York, NY 10005.
Principal Executive Offices: 14th Floor, Harbour Place Tower, 103 South Church Street, George Town, Grand Cayman KY1-1002, Cayman Islands. Houston office: 2900 Post Oak Boulevard, Suite 3100, Houston, TX 77056, United States.
Securities Offered: $850,000,000 aggregate principal amount of 9.375% Senior Secured Notes due 2032.
Issue Price: 98.50% of par, resulting in OID of 1.50% ($12,750,000).
Maturity Date: May 1, 2032.
Interest Rate: 9.375% per annum, payable semi-annually in arrears on May 1 and November 1 of each year, commencing November 1, 2025. Semi-annual interest payments will equal $39,843,750.
Guarantees: The Notes will be jointly and severally guaranteed on a senior secured basis by the following Guarantors:
• Dunmore Nigeria E&P Ltd. (incorporated in Nigeria)
• Dunmore Gulf Operations LLC (organized in Delaware)
• Dunmore Renewables LLC (organized in Delaware)
• Dunmore Senegal S.A. (organized in Senegal)
• Dunmore Midstream Holdings Inc. (incorporated in Delaware)
• Dunmore Trading Ltd. (incorporated in England & Wales)
Ranking: The Notes will constitute senior secured obligations of the Issuers. As such, they will:
• rank pari passu in right of payment with all existing and future senior indebtedness of the Issuers;
• rank senior in right of payment to all future subordinated indebtedness of the Issuers;
• be effectively senior to all unsecured indebtedness of the Issuers and the Guarantors to the extent of the value of the Collateral securing the Notes;
• be effectively junior to indebtedness secured by ABL Priority Collateral (to the extent of the value thereof); and
• be structurally subordinated to all existing and future liabilities of non-guarantor subsidiaries of the Issuers.
Security: The Notes will be secured by first-priority liens on a collateral package consisting of (i) equity interests of each Guarantor subsidiary, (ii) substantially all tangible and intangible assets of the Issuers and each Guarantor (subject to Permitted Liens), (iii) intercompany receivables, (iv) material hydrocarbon offtake contracts, and (v) assignment of insurance proceeds, in each case subject to the terms of the Intercreditor Agreement with the ABL Agent.
Intercreditor Agreement: The Intercreditor Agreement governs the relative priorities of the Notes liens and the ABL liens:
• ABL Priority Collateral (accounts receivable, inventory, deposit accounts): first-priority lien in favor of Velthorn National Bank, N.A. (as ABL Agent); second-priority lien in favor of the Notes Collateral Agent.
• Notes Priority Collateral (PP&E, equity interests, intellectual property, material contracts): first-priority lien in favor of Northgate Trust Company, N.A. (as Notes Collateral Agent); second-priority lien in favor of the ABL Agent.
Trustee and Collateral Agent: Northgate Trust Company, N.A., 100 Wall Street, Suite 1600, New York, NY 10005 (William Kerrigan, VP, Corporate Trust).
Paying Agent, Registrar, and Transfer Agent: Beacon Fiduciary Services LLC, 240 Greenwich Street, 7th Floor, New York, NY 10007 (Sandra Mitchum, Relationship Manager).
Governing Law: State of New York.
Placement: Rule 144A (within the United States to QIBs) and Regulation S (outside the United States to non-U.S. persons).
Optional Redemption
Make-Whole Redemption (Prior to May 1, 2028). At any time prior to May 1, 2028, the Issuers may redeem the Notes, in whole or in part, at a redemption price equal to the greater of (i) 100% of par and (ii) the present value as of the redemption date of all remaining scheduled payments of principal and interest (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months) at the Treasury Rate plus 50 basis points, plus, in each case, accrued and unpaid interest thereon to, but excluding, the date of redemption.
Scheduled Optional Redemption (On or After May 1, 2028). On or after May 1, 2028, the Issuers may redeem the Notes, in whole or in part, at the following redemption prices (expressed as a percentage of principal amount), plus accrued and unpaid interest:
The initial scheduled redemption premium of 104.688% represents one-half of the annual coupon rate (9.375% ÷ 2), and each subsequent annual step-down reduces the premium by approximately one-half of the preceding period's premium until reaching par.
Equity Clawback. At any time prior to May 1, 2028, the Issuers may redeem up to 40% of the original aggregate principal amount of the Notes (i.e., up to $340,000,000) at a redemption price of 109.375% of par, plus accrued and unpaid interest, from the net cash proceeds of one or more equity offerings by the Issuers or any direct or indirect parent entity. As a condition to any such redemption, at least 60% of the original aggregate principal amount of the Notes (i.e., at least $510,000,000) must remain outstanding immediately after giving effect to any such redemption. Any such redemption must occur within 180 days following the closing of the applicable equity offering.
Change of Control
Upon the occurrence of a Change of Control Triggering Event, the Issuers will be required to make an offer to purchase all outstanding Notes at a purchase price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. A "Change of Control" is generally defined as the acquisition of more than 50% of the voting stock of DEH by any person or group (other than Harborview Capital Partners Fund VI, L.P. and its affiliates and permitted transferees), the sale of all or substantially all of the assets of the Issuers and the Guarantors taken as a whole, or a merger or consolidation resulting in the existing equity holders of DEH ceasing to hold more than 50% of the voting power of the surviving entity.
The Issuers and the Business
Dunmore Energy Holdings Ltd. is a Cayman Islands exempted company that, together with its subsidiaries (collectively, "Dunmore" or the "Company"), conducts upstream and midstream oil and gas operations across West Africa and the Gulf of Mexico, complemented by a nascent renewable energy portfolio. The Company operates through six principal subsidiaries:
• Dunmore Nigeria E&P Ltd. — operates oil mining leases OML 47 and OML 63 in the Niger Delta, Nigeria.
• Dunmore Senegal S.A. — operates the Cayar Offshore Block under a production sharing contract with the Senegalese government.
• Dunmore Gulf Operations LLC — holds and operates deepwater leases in the Green Canyon and Garden Banks areas of the Gulf of Mexico.
• Dunmore Midstream Holdings Inc. — owns and operates pipeline and processing infrastructure supporting the Company's upstream operations.
• Dunmore Renewables LLC — owns and operates a 220 MW solar portfolio in West Texas.
• Dunmore Trading Ltd. — serves as the Company's hydrocarbon offtake and trading arm.
Management. The Company is led by an experienced management team, including:
• Marcus Ellingham (age 54), Chief Executive Officer and Director. Mr. Ellingham brings 28 years of upstream E&P experience and formerly served as Chief Operating Officer of Praetorian Petroleum plc.
• Deepa Rajaram (age 47), Chief Financial Officer. Ms. Rajaram previously served as Vice President, Finance at Kestrel Resources Corp.
• Alistair Forde (age 51), General Counsel and Secretary.
• Lady Constance Harrowby, Board Chair (Independent). Lady Harrowby is a former UK Energy Minister with extensive experience in energy policy and governance.
The Company has approximately 3,400 employees worldwide, with operations spanning multiple jurisdictions and regulatory environments.
Key Financial Metrics (FY 2024):
Proved Reserves (as of December 31, 2024, per Duval Howard & Partners): 345.8 MMboe, with an aggregate PV-10 value of $6.7 billion.
Ownership. DEH is majority-owned by Harborview Capital Partners Fund VI, L.P. (62.4% equity interest). Management and directors hold 18.3%, with co-investors Solstice Infrastructure Fund LP (11.1%) and Alderman Family Office LLC (8.2%) holding the remainder.
Summary of Key Financial Data
The following table summarizes key financial data for the Company as of and for the fiscal year ended December 31, 2024, presented on an actual basis and on a pro forma basis after giving effect to the Offering and the application of the net proceeds therefrom:
(1) Adjusted for incremental interest expense on the Notes offset by reduced interest expense on the repaid portion of the 2028 Notes and adjusted for OID amortization and transaction costs. (2) Excludes $250 million in Cayar Offshore Phase II development capital expenditures to be funded from the net proceeds of the Offering, which will be deployed post-closing. (3) Before deployment of $250 million for Cayar Offshore Phase II development capital expenditures. (4) Pro forma net leverage computed as ($1,720M − $549.75M) ÷ $816M = 1.43x before Cayar capex deployment, or ($1,720M − $185M) ÷ $816M = 1.88x assuming Cayar capex deployment. The 1.88x figure assumes the $250M Cayar capex and the $114.75M general corporate purposes have been deployed. (5) Net leverage of 1.88x assumes the deployment of the $250M for Cayar Phase II and the $114.75M for general corporate purposes and working capital.
Pro Forma Total Debt: $1,720,000,000, consisting of $470 million drawn under the ABL Revolver, $400 million of remaining 7.50% Senior Unsecured Notes due 2028 (after repayment of $450 million from the Offering proceeds), and $850 million of the Notes offered hereby.
Pro Forma Gross Leverage: 2.11x ($1,720,000,000 ÷ $816,000,000).
Pro Forma Net Leverage: 1.88x (($1,720,000,000 − $185,000,000) ÷ $816,000,000), assuming full deployment of the net proceeds.
Pro Forma Fixed Charge Coverage Ratio: 7.10x ($816,000,000 ÷ $114,930,000 estimated total annual interest expense), computed as follows: Notes annual interest of $79,687,500, plus remaining 2028 Notes annual interest of $30,000,000, plus estimated ABL annual interest of approximately $5,242,500 (reflecting $470 million at an estimated all-in rate of approximately SOFR + 275 bps), for total estimated annual interest expense of approximately $114,930,000.
Use of Proceeds Summary
The following table summarizes the intended application of the gross proceeds from the Offering:
Summary of Existing Indebtedness
Ratings
The Notes have received the following preliminary ratings:
• Lodestar Ratings International: Preliminary B2 / Stable (Lead Analyst: Catherine Irvine)
• Veridian Credit Assessments Inc.: Preliminary B+ / Stable (Lead Analyst: James Fenwick)
A rating is not a recommendation to buy, sell, or hold the Notes. Ratings are subject to revision or withdrawal at any time by the rating agency. There can be no assurance that a rating will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by the rating agency. A downgrade or withdrawal of ratings could adversely affect the market price and liquidity of the Notes.
RISK FACTORS
An investment in the Notes involves a high degree of risk. You should carefully consider the following risk factors, in addition to all other information set forth in this offering memorandum, before deciding whether to invest in the Notes. If any of the following risks actually occur, the Issuers' business, financial condition, results of operations, and prospects could be materially and adversely affected, which could in turn adversely affect the Issuers' ability to make payments on the Notes. In that case, the trading price of the Notes could decline, and you may lose all or part of your investment. The risks described below are not the only risks relevant to the Notes or the Issuers' business. Additional risks not presently known to the Issuers or that the Issuers currently deem immaterial may also impair the Issuers' business operations and ability to service the Notes.
Risks Related to Our Business and Industry
Volatility of oil and gas prices could materially adversely affect our revenues, cash flows, and ability to service the Notes. Our revenue and EBITDA are highly correlated with prevailing prices for crude oil (principally West Texas Intermediate ("WTI") and Brent) and natural gas. Commodity prices are subject to wide fluctuations in response to numerous factors beyond our control, including global and regional supply and demand dynamics, decisions by the Organization of Petroleum Exporting Countries and its allies ("OPEC+"), geopolitical events, weather conditions, global economic conditions, government regulations, and speculation in the commodities markets. In recent years, oil prices have experienced significant volatility, with Brent crude oil trading at prices ranging from below $20 per barrel to above $120 per barrel. Sustained periods of low commodity prices would reduce our revenues and EBITDA, potentially impairing our ability to service the Notes and comply with our debt covenants. A decline in commodity prices could also result in impairment charges against the carrying value of our oil and gas properties, further adversely affecting our financial condition. For the fiscal year ended December 31, 2024, our revenue was $2.14 billion, and our EBITDA was $816 million. A sustained 10% decline in realized commodity prices, all other factors being held constant, would reduce our annual EBITDA by an estimated $80 million to $85 million.
Our estimates of proved oil and gas reserves are inherently uncertain, and actual production, revenues, and expenditures may differ materially from estimates. As of December 31, 2024, our total proved reserves were estimated at 345.8 million barrels of oil equivalent ("MMboe") by our independent petroleum engineers, Duval Howard & Partners, with an aggregate PV-10 value of $6.7 billion. These estimates are based on various assumptions, including commodity prices, production rates, operating costs, and future development expenditures, and are subject to revision as additional technical data becomes available. Actual quantities of oil and gas produced, revenues generated, and expenses incurred may differ significantly from reserves estimates. Additionally, the methodology used to calculate PV-10 value is based on SEC pricing assumptions and a 10% discount rate, which may not reflect the actual market value of our reserves. If our reserves estimates prove to be substantially overstated, our financial condition, results of operations, and ability to service the Notes could be materially adversely affected.
Our exploration and development activities are subject to numerous risks, including the risk of cost overruns and dry holes, and the Cayar Offshore Phase II development program may not achieve expected results. We intend to use $250 million of the gross proceeds from the Offering to fund the Cayar Offshore Phase II development program, which involves the drilling of appraisal wells, the installation of subsea infrastructure, and the procurement and deployment of a floating production, storage, and offloading vessel ("FPSO"). Exploration and development activities in the offshore Senegalese waters are subject to numerous geological, technical, and logistical risks, including the risk that appraisal wells may not encounter commercially productive formations, the risk of equipment failure, the risk of cost overruns, and the risk of delays arising from weather conditions, supply chain disruptions, or regulatory approvals. There can be no assurance that the Cayar Offshore Phase II development program will be completed on time or on budget, or that it will achieve the expected production volumes and cash flows. Failure to successfully develop the Cayar Offshore could materially adversely affect our business, financial condition, and ability to service the Notes.
Our operations are concentrated in certain geographic areas, particularly Nigeria and Senegal, which are subject to significant political, regulatory, and security risks. A substantial portion of our proved reserves and production is located in Nigeria, where our Nigerian subsidiary, Dunmore Nigeria E&P Ltd., operates OML 47 (proved reserves of 142.6 MMboe, PV-10 of $2.84 billion) and OML 63 (proved reserves of 87.3 MMboe, PV-10 of $1.62 billion) in the Niger Delta region. Our operations in Nigeria are subject to risks associated with political instability, changes in government policy, armed conflict and insurgency (including in the Niger Delta region, which has historically been affected by militant activity), inadequate infrastructure, corruption, and government expropriation or nationalization of assets. The Nigerian National Petroleum Company ("NNPC") holds back-in rights in OML 47 and OML 63, and changes in the terms of those rights or in the regulatory framework governing oil mining leases could adversely affect our operations. Similarly, our operations in Senegal, where Dunmore Senegal S.A. operates the Cayar Offshore Block under a production sharing contract with the Senegalese government, are subject to political and regulatory risks, including the risk of changes to the production sharing contract terms, changes in the applicable petroleum code, or government intervention. An adverse event in Nigeria or Senegal, including civil unrest, a change in government, or a revision to the fiscal regime applicable to oil and gas operations, could materially adversely affect our business, financial condition, results of operations, and ability to service the Notes.
Our Gulf of Mexico deepwater operations are subject to hurricane, environmental, and regulatory risks. Dunmore Gulf Operations LLC operates deepwater leases in the Green Canyon and Garden Banks areas of the U.S. Gulf of Mexico (proved reserves of 51.8 MMboe, PV-10 of $1.05 billion). These operations are subject to risks associated with hurricanes and tropical storms, which may cause significant damage to production facilities, pipelines, and other infrastructure, and which may result in the temporary or permanent suspension of production. The Gulf of Mexico region is also subject to stringent environmental regulations administered by the Bureau of Ocean Energy Management ("BOEM") and the Bureau of Safety and Environmental Enforcement ("BSEE"), and the costs of compliance with such regulations are substantial and may increase. Furthermore, the potential for environmental disasters, including oil spills, blowouts, and other accidents, could result in significant liabilities, fines, remediation costs, and reputational harm. Any such event could materially adversely affect our business and our ability to service the Notes.
Our renewable energy portfolio is nascent and subject to integration and development risks. Dunmore Renewables LLC owns and operates a 220 MW solar portfolio in West Texas. The renewable energy business is a relatively new initiative for the Company, and we have limited operating history in this sector. The solar portfolio is subject to risks associated with weather variability, equipment failure, grid interconnection issues, changes in government incentives (including investment tax credits and renewable energy credits), and the evolving regulatory landscape for renewable energy. Integration of the renewable energy operations with our core oil and gas business may also present operational and management challenges. There can be no assurance that our renewable energy portfolio will achieve the expected returns or contribute meaningfully to our overall business strategy.
We depend on key personnel, the loss of whom could adversely affect our operations. Our success depends, in large part, on the continued services of Marcus Ellingham, our Chief Executive Officer, Deepa Rajaram, our Chief Financial Officer, and other members of our senior management team. Mr. Ellingham has 28 years of upstream E&P experience and plays a central role in shaping our strategic direction. The loss of any of these key individuals, or our inability to attract and retain qualified replacements, could adversely affect our business, operations, and ability to execute our strategy.
We operate in a highly competitive industry. The upstream oil and gas exploration and production industry is highly competitive. We compete with major integrated oil companies, national oil companies, independent producers, and other entities for access to exploration and development acreage, skilled personnel, drilling rigs and equipment, pipeline capacity, and capital. Many of our competitors have significantly greater financial, technical, and other resources than we do. Increased competition could result in higher costs, reduced access to opportunities, and lower returns, any of which could adversely affect our business and financial condition.
Our insurance may not be adequate to cover all risks and losses. Our operations are subject to catastrophic risks, including blowouts, fires, explosions, oil spills, pipeline failures, mechanical failures, hurricanes, and other natural disasters. Although we maintain insurance coverage that we believe is customary in the industry, our coverage may not be adequate to cover all losses or liabilities that we may incur. In addition, insurance may become more expensive or unavailable in the future. Any uninsured or underinsured loss could have a material adverse effect on our business, financial condition, and ability to service the Notes.
We are dependent on third-party infrastructure for our midstream and trading operations. Our midstream operations, conducted through Dunmore Midstream Holdings Inc., are dependent on third-party pipeline, processing, and transportation capacity. Any disruption in the availability or capacity of such third-party infrastructure, including as a result of maintenance, capacity constraints, regulatory action, or force majeure events, could result in reduced production volumes and revenues. Similarly, our trading operations, conducted through Dunmore Trading Ltd., are dependent on the performance of counterparties under material hydrocarbon offtake contracts. The failure of any significant counterparty to perform its obligations could adversely affect our revenues and cash flows.
Risks Related to Our Indebtedness
We have substantial indebtedness, and our ability to service our debt obligations depends on our cash flows from operations. After giving effect to the Offering and the application of the net proceeds therefrom, we will have approximately $1.72 billion of total indebtedness, consisting of $470 million drawn under our ABL Revolver, $400 million of remaining 7.50% Senior Unsecured Notes due 2028, and $850 million of the Notes offered hereby. Our pro forma gross leverage ratio is 2.11x, and our pro forma net leverage ratio is 1.88x, in each case based on EBITDA of $816 million for the fiscal year ended December 31, 2024. Our ability to make scheduled payments on the Notes and our other indebtedness depends on our future financial performance, which is subject to various factors, including commodity prices, production volumes, operating costs, and general economic conditions, many of which are beyond our control. If our cash flows from operations are insufficient to service our debt obligations, we may be required to take one or more of the following actions: reduce or delay capital expenditures; sell assets; seek additional equity or debt financing; or restructure our debt. There can be no assurance that any of these actions could be effected on satisfactory terms, if at all.
The Indenture and our ABL facility contain restrictive covenants that may limit our operational and financial flexibility. The Indenture governing the Notes and the credit agreement governing our ABL Revolver each contain covenants that, among other things, restrict our ability to incur additional indebtedness, pay dividends or make other restricted payments, make investments, sell assets, enter into transactions with affiliates, create liens, and engage in mergers or consolidations. While these covenants are incurrence-based rather than maintenance-based, they may nonetheless limit our ability to take actions that we believe to be in the best interests of our business. In addition, the ABL Revolver contains a springing fixed charge coverage ratio that becomes effective when availability under the facility falls below a specified threshold. A breach of any of these covenants could result in an event of default, which could lead to acceleration of our indebtedness and enforcement of the Collateral.
A portion of our indebtedness bears interest at floating rates, and increases in interest rates could increase our debt service costs. Our ABL Revolver bears interest at a floating rate equal to SOFR plus 275 basis points. As of the date of this offering memorandum, $470 million is drawn under the ABL Revolver. An increase in SOFR of 100 basis points would increase our annual interest expense on the ABL by approximately $4.7 million. While we may from time to time enter into hedging arrangements to mitigate interest rate risk, there can be no assurance that such arrangements will be effective or that they will not result in additional costs.
The split-collateral structure under the Intercreditor Agreement creates enforcement complexities. The Collateral securing the Notes and the collateral securing the ABL Revolver are subject to a split-collateral intercreditor arrangement pursuant to the Intercreditor Agreement among the Issuers, the Guarantors, Northgate Trust Company, N.A. (as Notes Collateral Agent), and Velthorn National Bank, N.A. (as ABL Agent). Under this arrangement, the ABL Agent holds a first-priority lien on ABL Priority Collateral (accounts receivable, inventory, and deposit accounts), while the Notes Collateral Agent holds a first-priority lien on Notes Priority Collateral (PP&E, equity interests, intellectual property, and material contracts). The Intercreditor Agreement contains provisions regarding lien priorities, enforcement rights, application of proceeds, and standstill periods. In the event of a default and enforcement action, the terms of the Intercreditor Agreement may limit the ability of the Trustee or the Notes Collateral Agent to exercise remedies with respect to certain portions of the Collateral, and the proceeds of any such enforcement may be subject to competing claims. The complexity of the Intercreditor Agreement and the split-collateral structure could result in delays, disputes, or diminished recoveries for holders of the Notes.
Our ability to incur additional indebtedness under Permitted Debt baskets may dilute the collateral coverage available to the Notes. The Indenture governing the Notes permits us to incur additional indebtedness subject to compliance with certain incurrence-based covenants and within specified Permitted Debt baskets. To the extent that we incur additional indebtedness that is secured by liens on the Collateral (whether on a pari passu or junior basis), the collateral coverage available to holders of the Notes would be diluted. Additionally, to the extent that additional indebtedness is incurred at the subsidiary level by entities that are not Guarantors, such indebtedness would be structurally senior to the Notes with respect to the assets of such subsidiaries.
The Notes are structurally subordinated to liabilities of non-guarantor subsidiaries. The Notes are guaranteed by the Guarantors listed herein, but not by all of the Issuers' subsidiaries. To the extent that any subsidiary of the Issuers that is not a Guarantor incurs liabilities (including trade payables, tax obligations, and other indebtedness), such liabilities will be structurally senior to the Notes with respect to the assets of such subsidiary. In the event of a bankruptcy, liquidation, or similar proceeding of any non-guarantor subsidiary, creditors of such subsidiary would generally be entitled to payment from the assets of such subsidiary before any distribution could be made to the Issuers or any Guarantor.
Enforcement of the Collateral in foreign jurisdictions is subject to local law limitations, court procedures, and sovereign immunity considerations. The Collateral securing the Notes includes assets located in multiple jurisdictions, including the United States, Nigeria, England, and Senegal. The perfection, validity, priority, and enforceability of the security interests in each jurisdiction are governed by local law, which may differ materially from U.S. law. In Nigeria, enforcement of the debenture and charge over the assets of Dunmore Nigeria E&P Ltd. (including OML 47 and OML 63) is subject to Nigerian law requirements, including the potential need for government consent or approval by the NNPC for the transfer of oil mining lease interests. In Senegal, enforcement of the nantissement and cession fiduciaire over the assets of Dunmore Senegal S.A. (including the Cayar Offshore Block) is subject to Senegalese law, including potential delays associated with court proceedings and the requirement for government consent under the production sharing contract. In England, enforcement of the debenture granted by Dunmore Trading Ltd. is governed by English law. In each case, the remedies available to the Trustee and the Notes Collateral Agent in such jurisdictions may be limited, delayed, or otherwise impaired by local law considerations, including sovereign immunity, insolvency laws, and procedural requirements. There can be no assurance that the Trustee or the Notes Collateral Agent would be able to realize the full value of the Collateral in a timely manner or at all in any foreign jurisdiction.
We may not have sufficient funds to repurchase the Notes upon a Change of Control. Upon a Change of Control Triggering Event, the Issuers are required to offer to repurchase all outstanding Notes at 101% of the aggregate principal amount thereof, plus accrued and unpaid interest. However, we may not have sufficient funds at the time of a Change of Control to make the required repurchase. In addition, the terms of the ABL Revolver and other existing or future indebtedness may restrict our ability to make such a repurchase or may provide that a Change of Control constitutes a default or event of default thereunder, which could result in the acceleration of such indebtedness. If we are unable to repurchase all tendered Notes upon a Change of Control, this would constitute an event of default under the Indenture and could have a material adverse effect on our financial condition.
Risks Related to the Collateral
The value of the Collateral may be insufficient to satisfy our obligations under the Notes. While the Collateral securing the Notes includes, among other things, equity interests in the Guarantor subsidiaries, substantially all tangible and intangible assets of the Issuers and Guarantors, intercompany receivables, material hydrocarbon offtake contracts, and insurance proceeds, the value of such Collateral may fluctuate significantly and may be insufficient to satisfy our obligations under the Notes. PV-10 values assigned to our oil and gas reserves are estimates based on assumptions regarding future commodity prices, production rates, and operating costs, and actual realizable values in a foreclosure or liquidation scenario may be materially less than such estimates. In addition, the realizable value of certain types of collateral (such as equity interests in foreign subsidiaries, intercompany receivables, and hydrocarbon offtake contracts) is inherently uncertain and may depend on the financial condition of the relevant entities and the enforceability of such contracts.
Liens on the Collateral may be subject to challenge, and perfection requirements across multiple jurisdictions create the risk of imperfect liens. The security interests in the Collateral are governed by the laws of multiple jurisdictions, including New York, Delaware, Nigeria, England, and Senegal. The perfection of security interests in each jurisdiction requires compliance with distinct filing, registration, and other procedural requirements. Failure to comply with any such requirement could result in the imperfection of the lien and the loss of priority. In addition, security interests may be challenged by third parties, including creditors of the Issuers or Guarantors, on various grounds, including that the security interests were not properly created, that the collateral descriptions were inadequate, or that the security interests are voidable as preferences or fraudulent transfers under applicable insolvency or bankruptcy laws.
ABL Priority Collateral is carved out of the Notes' first-priority lien. Pursuant to the Intercreditor Agreement, accounts receivable, inventory, and deposit accounts constitute ABL Priority Collateral and are subject to a first-priority lien in favor of Velthorn National Bank, N.A. (as ABL Agent). The Notes Collateral Agent holds only a second-priority lien on such ABL Priority Collateral. Accordingly, in the event of enforcement, the ABL Agent would have the first claim on the proceeds of any ABL Priority Collateral, and holders of the Notes would receive distributions from such collateral only after the ABL obligations have been satisfied in full. As of the date of this offering memorandum, $470 million is drawn under the ABL Revolver, with a total commitment of $750 million. Any increase in ABL borrowings (up to the commitment amount) would further reduce the potential recovery available to holders of the Notes from ABL Priority Collateral.
Enforcement of liens on Nigerian and Senegalese assets may require government consent or regulatory approvals. In Nigeria, the transfer or disposition of interests in oil mining leases (including OML 47 and OML 63) requires the consent of the Minister of Petroleum Resources and, in certain cases, the approval of the NNPC. In Senegal, the transfer or disposition of interests in the Cayar Offshore Block may require the consent of the Senegalese government under the terms of the production sharing contract. These consent requirements could delay or prevent the realization of the Collateral in such jurisdictions and could materially reduce the recoveries available to holders of the Notes.
Certain liens are permitted under the Indenture and could prime the Notes' security interest. The Indenture permits the Issuers and Guarantors to grant certain liens on the Collateral (referred to as "Permitted Liens"), including liens in favor of the ABL Agent, liens securing purchase money obligations, liens arising by operation of law, and other customary permitted liens. To the extent that Permitted Liens encumber the same Collateral that secures the Notes, the claims of the holders of such Permitted Liens could have priority over, or be pari passu with, the claims of holders of the Notes with respect to such Collateral.
Risks Related to Sanctions, OFAC, and Anti-Corruption
Our operations in Nigeria and Senegal expose us to sanctions and export controls. We conduct significant operations in Nigeria and Senegal, which are regions where sanctions risks may exist. Although Sandoval Compliance Solutions LLC completed a comprehensive sanctions screening on April 25, 2025, which resulted in no hits on the U.S. Office of Foreign Assets Control ("OFAC") Specially Designated Nationals and blocked Persons List ("SDN List"), the Sectoral Sanctions Identifications List ("SSI List"), the European Union Consolidated List of Financial Sanctions, or the UK Office of Financial Sanctions Implementation ("OFSI") Consolidated List, sanctions designations are subject to change at any time. If any of our counterparties, partners, or operations become the subject of sanctions designations, our ability to conduct business with such parties or in such jurisdictions could be restricted, which could materially adversely affect our business, financial condition, and ability to service the Notes. In addition, we are subject to various export control laws and regulations that restrict the export of certain goods, technology, and services. Violation of sanctions or export control laws could result in significant fines, penalties, criminal prosecution, reputational harm, and the loss of operating licenses.
The NNPC holds back-in rights in our Nigerian oil mining leases, and any future sanctions designation of the NNPC or its affiliates could materially disrupt our operations. The Nigerian National Petroleum Company holds back-in rights in OML 47 and OML 63. If the NNPC or any of its affiliates or designees were to become the subject of sanctions designations by the United States, the European Union, or the United Kingdom, our ability to operate under the existing oil mining lease arrangements could be severely impaired. Any such designation could require us to suspend operations, terminate contracts, or seek waivers from applicable sanctions authorities, any of which could materially adversely affect our business and ability to service the Notes.
Our operations in Nigeria and Senegal subject us to significant anti-corruption risks under the FCPA and the UK Bribery Act. Our operations in Nigeria and Senegal are conducted in jurisdictions that have historically been associated with elevated corruption risks, as assessed by Transparency International and other anti-corruption organizations. We are subject to the U.S. Foreign Corrupt Practices Act of 1977, as amended (the "FCPA"), the UK Bribery Act 2010, and applicable local anti-corruption laws. Violation of these laws could result in severe civil and criminal penalties, including fines, imprisonment of responsible individuals, disgorgement of profits, and debarment from government contracts. While we have implemented anti-corruption compliance programs, there can be no assurance that our employees, agents, or partners will not violate applicable anti-corruption laws. Any such violation, or any investigation into potential violations, could have a material adverse effect on our business, reputation, financial condition, and ability to service the Notes.
Our hydrocarbon exports are subject to government regulation in multiple jurisdictions. The export of crude oil, natural gas, and refined products from Nigeria and Senegal is subject to government regulation, including export licensing requirements, tariffs, quotas, and other restrictions. Changes in trade policies, the imposition of trade sanctions, or the disruption of established trade routes could adversely affect our ability to export hydrocarbons and could reduce our revenues.
Risks Related to ESG and Climate
Evolving climate-related regulations and policies could increase our operating costs or reduce demand for our products. The global transition to lower-carbon energy sources has resulted in an evolving regulatory landscape that may affect our business. Carbon pricing mechanisms, emissions reduction mandates, restrictions on fossil fuel production and consumption, and other climate-related regulations have been adopted or proposed in various jurisdictions in which we operate. The implementation of such regulations could increase our operating costs, reduce the demand for hydrocarbons, or impair the value of our oil and gas reserves. In addition, increased investor and public scrutiny of the oil and gas industry's contribution to climate change could adversely affect our ability to access capital markets and could increase our cost of capital.
Our Gulf of Mexico operations are vulnerable to physical climate risks, including hurricanes and severe weather. Climate change may increase the frequency and severity of hurricanes, tropical storms, and other extreme weather events in the Gulf of Mexico, where we operate deepwater leases in the Green Canyon and Garden Banks areas. Such events could cause significant damage to our production facilities, pipelines, and other infrastructure, resulting in production shutdowns, property damage, environmental liabilities, and increased insurance costs. Our West African operations are also vulnerable to physical climate risks, including flooding, heat stress, and sea-level rise, which could disrupt operations and increase costs.
Our greenhouse gas emissions are substantial and may become subject to increasingly stringent regulation. For the fiscal year ended December 31, 2024, our Scope 1 greenhouse gas ("GHG") emissions were approximately 1.42 million metric tons of CO₂ equivalent, and our Scope 2 GHG emissions were approximately 0.18 million metric tons of CO₂ equivalent, for total Scope 1 and Scope 2 emissions of approximately 1.60 million metric tons of CO₂ equivalent. These emissions levels subject us to current and potential future regulatory requirements, including carbon taxes, emissions trading schemes, and reporting mandates. Compliance with increasingly stringent emissions regulations could require significant capital expenditures, operational changes, or the purchase of emissions allowances or offsets, any of which could increase our costs and reduce our profitability.
Our methane flaring practices may become subject to increasingly stringent regulation. Our methane flaring intensity for FY 2024 was 3.8 m³ per barrel of oil equivalent, compared to an industry average of 5.1 m³ per barrel of oil equivalent. While our flaring intensity is below the industry average, increasingly stringent flaring regulations in Nigeria, the United States, and other jurisdictions could limit our production flexibility, require additional investment in gas capture and utilization infrastructure, and increase our operating costs.
Our net-zero by 2050 commitment is aspirational and subject to significant uncertainties. We have publicly committed to achieving net-zero Scope 1 and Scope 2 GHG emissions by 2050. This commitment is a forward-looking statement that is subject to significant uncertainties, including those related to technological developments, regulatory frameworks, market conditions, the availability and cost of carbon capture and offset mecha