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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2026-03-16 compared with 2025-03-17 · 44 added, 34 removed, 62 unchanged (56% of the section changed)

13 unchanged sentences

dollar has historically fluctuated in response to international political conditions, general economic conditions and other factors beyond our control.

As of December 31, 2024, we had net monetary assets of $35 million (XAF 22.0 million) denominated in XAF.

As of December 31, 2025, we had net monetary liabilities of $113.4 million (XAF 63.2 billion) denominated in XAF.

A 10% weakening of the CFA relative to the U.S.

dollar would have a $3.2 million reduction in the value of these net assets.

dollar would have a $10.3 million increase in the value of these net liabilities.

For the year ended December 31, 2025, we had expenditures of approximately $86.4 million denominated in XAF.

Related to our Canadian operations, our currency exchange risk relates primarily to certain cash and cash equivalents, accounts receivable, lease obligations and accounts payable and accrued liabilities denominated in Canadian dollars.

We estimate that a 10% increase in the value of the Canadian dollar against the US dollar would decrease net earnings for the year ended December 31, 2024 by approximately $0.5 million.

Conversely, a 10% decrease in the value of the Canadian dollar against the US dollar would increase net earnings for the year ended December 31, 2024 by approximately $0.4 million.

We estimate that a 10% increase in the value of the Canadian dollar against the US dollar would increase net earnings for the year ended December 31, 2025 by approximately $0.2 million.

Conversely, a 10% decrease in the value of the Canadian dollar against the US dollar would decrease net earnings for the year ended December 31, 2025 by approximately $0.2 million.

We are also exposed to foreign currency exchange risk on cash balances denominated in Egyptian pounds.

Some collections of accounts receivable from the Egyptian Government are received in Egyptian pounds, and while we are generally able to use the Egyptian pounds received on accounts payable denominated in Egyptian pounds, there remains foreign currency exchange risk exposure on Egyptian pound cash balances.

Using month-end cash balances converted at month-end foreign exchange rates at December 31, 2024, we estimate that a 10% increase in the value of the Egyptian pound against the US dollar would increase net earnings for the year ended December 31, 2024 by approximately $0.2 million.

Conversely, a 10% decrease in the value of the Egyptian pound against the US dollar would decrease net earnings for the year ended December 31, 2024 by approximately $0.1 million.

Using month-end cash balances converted at month-end foreign exchange rates at December 31, 2025, we estimate that a 10% increase in the value of the Egyptian pound against the US dollar would decrease net earnings for the year ended December 31, 2025 by approximately $4.2 million.

Conversely, a 10% decrease in the value of the Egyptian pound against the US dollar would increase net earnings for the year ended December 31, 2025 by approximately $3.5 million.

In Cote d'Ivoire, our currency exchange risk also relates primarily to certain cash and cash equivalents, accounts receivable and accounts payable and accrued liabilities denominated in Swedish Krona.

We estimate that a 10% decrease in the value of the Swedish Krona against the US dollar would decrease the value of the net liabilities for the year ended December 31, 2024 by approximately $2.1 million.

We estimate that a 10% decrease in the value of the Swedish Krona against the US dollar would increase the value of the net assets for the year ended December 31, 2025 by approximately $1.8 million.

Conversely, a 10% increase in the value of the Swedish Krona against the US dollar would decrease the value of the net liabilities for the year ended December 31, 2025 by approximately $2.2 million.

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Sustained low crude oil, natural gas and NGLs prices or a presumption of the decreases in crude oil, natural gas and NGLs prices could have a material adverse effect on our financial condition, the carrying value of our proved reserves, our undeveloped leasehold interests and our ability to borrow funds and to obtain additional capital on attractive terms.

Oil and gas properties are assessed for impairment annually as well as whenever events or changes in circumstances indicate that a property’s carrying amount may not be recoverable.

Crude oil, natural gas and NGLs properties and equipment are assessed for impairment annually as well as whenever events or changes in circumstances indicate that a property’s carrying amount may not be recoverable.

If the carrying amount exceeds the estimated undiscounted future cash flows, the Company would estimate the fair value of its properties and record an impairment charge for any excess of the carrying amount of the properties over the estimated fair value of the properties.

Factors used to estimate fair value may include estimates of proved reserves, estimated future commodity prices, future production estimates, and anticipated capital and operating expenditures, using a commensurate discount rate.

Factors used to estimate fair value may include estimates of proved and probable reserves, estimated future commodity prices, future production estimates, and anticipated capital and operating expenditures, using a commensurate discount rate.

In addition, we include risk adjustment factors in our fair value measurement.

Unfavorable changes in any of these assumptions could result in a reduction in undiscounted future cash flows and could indicate property impairment.

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In most cases, the assumption that generates the most variability in undiscounted future net cash flows is future oil and gas prices.

We observed a decline in commodity prices during the year ended December 31, 2024 which prompted us to evaluate the recoverability of the carrying value of our assets and whether an other than temporary impairment occurred for certain oil and gas properties.

As a result of these tests, no impairments were recorded during the year ended December 31, 2024;

however, certain oil and gas properties may be at risk for impairment if the estimates of future cash flows decline.

We observed a decline in commodity prices during the year ended December 31, 2025 which prompted us to evaluate the recoverability of the carrying value of our assets and whether an other than temporary impairment occurred for certain crude oil, natural gas and NGLs properties and equipment.

As a result of these tests, no impairments were recorded during the year ended December 31, 2025 related to our crude oil, natural gas and NGLs producing properties and equipment, excluding properties held for sale;

however, certain crude oil, natural gas and NGLs properties and equipment may be at risk for impairment if the estimates of future cash flows decline.

It is also reasonably possible that prolonged low or further decline in commodity prices, negative reserve revisions, changes to the Company's drilling plans in response to lower prices or increases in drilling or operating costs could result in material future impairment charges.

If crude oil sales were to remain constant at the most recent annual sales volumes, a $5 per Bbl decrease in crude oil price would decrease our revenues and operating income or increase our operating loss for the year as follows:

2024 Sales Volumes (Mbls) Decrease in Revenues (In Millions) Decrease in Operating Income (Increase in Operating Loss) (In Millions)

2025 Sales Volumes (Mbls) Decrease in Revenues (In Millions) Decrease in Operating Income (In Millions)

Gabon 2,735 $ 13.7 $ 12.3

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In Egypt, depending on the PSCs, our share of excess ranges between 5% and 15%.

If the eligible cost recovery exceeds the maximum allowed percentage, the unclaimed cost recovery is carried forward to the next quarter.

eligible cost recovery exceeds the maximum allowed percentage, the unclaimed cost recovery is carried forward to the next quarter.

Typically, maximum Cost Oil ranges from 25% to 40% in Egypt.

The balance of the production after maximum

cost recovery is shared with the government as Profit Oil.

The balance of the production after maximum cost recovery is shared with the government as Profit Oil.

Depending on the contract, the Egyptian government receives 67% to 84% of the Profit Oil.

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Outstanding derivative contracts at December 31, 2025 are as follows:

Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average Put Price Weighted Average Call Price

(Bbls) (per Bbl) (per Bbl)

January 2025 - March 2025 Collars Dated Brent 70,000 $ 65.00 $ 85.00

April 2025 - June 2025 Collars Dated Brent 70,000 $ 65.00 $ 81.00

Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average SWAP Price in CAD

January 2025 - March 2025 Swap AECO (7A) 67,000 $ 2.80

(a) One gigajoule (GJ) equals one billion joules (J).

A gigajoule of natural gas is about 25.5 cubic metres at standard conditions.

Settlement Period

Instrument Index January 2026 - March 2026 April 2026 - June 2026 July 2026 - September 2026 October 2026 - December 2026

Collars Dated Brent

Total volumes (Bbls) 400,000 360,000 75,000 —

Weighted average floor price ($/Bbl) $ 62.29 $ 61.88 $ 65.00 $ —

Weighted average ceiling price ($/Bbl) $ 68.63 $ 67.95 $ 71.00 $ —

Natural Gas (a) :

Swaps AECO 7A

Total volumes (GJs)(b) 225,000 150,000 150,000 50,000

Weighted average fixed price (CAD/GJ) $ 2.99 $ 2.80 $ 2.80 $ 2.80

(a) Natural gas hedge contracts were assumed by the third-party purchaser upon closing of the sale pursuant to the Canada APA.

(b) One gigajoule (GJ) equals one billion joules (J).

A gigajoule of natural gas is approximately 25.5 cubic meters standard conditions.

Subsequent to December 31, 2025, the Company entered into the following additional derivative contracts to cover its future anticipated production:

Settlement Period Type of Contract Index Average Monthly Volumes Weighted Average Put Price Weighted Average Call Price

(Bbls) (per Bbl) (per Bbl)

July 2025 - September 2025 Collars Dated Brent 60,000 $ 65.00 $ 80.00

Settlement Period

Instrument Index January 2026 - March 2026 April 2026 - June 2026 July 2026 - September 2026 October 2026 - December 2026 January 2027 - March 2027

Collars Dated Brent

Total volumes (Bbls) 260,000 338,000 702,000 692,000 673,000

Weighted average floor price ($/Bbl) $ 62.00 $ 64.22 $ 63.72 $ 64.96 $ 64.68

Weighted average ceiling price ($/Bbl) $ 67.80 $ 70.14 $ 68.49 $ 68.33 $ 72.63

Swaps Dated Brent

Total volumes (Bbls) 100,000 — — — —

Weighted average fixed price ($/Bbl) $ 65.10 $ — $ — $ — $ —

Interest Rate Risk

At both December 31, 2024 and on the filing date of this Annual Report, we had a zero balance outstanding on our Facility.

Subsequent to December 31, 2024, we entered into the 2025 Facility Agreement, which governs the 2025 Facility.

Loans under the 2025 Facility will bear interest at a rate equal to Term SOFR (as defined in the 2025 Facility Agreement) plus the applicable margin (the “Applicable Margin”) of (i) 6.50%, from the date of the 2025 Facility Agreement until the date on which the renovation and repair of the floating production storage and offloading tanker facility named Baobab Ivorian MV10 FPSO for use in connection with the development of the Baobab field meets certain completion tests defined in the 2025 Facility Agreement and (ii) thereafter, 6.00% until the Final Maturity Date (as defined in the 2025 Facility Agreement).

Any increases in these interest rates can have an adverse impact on our results of operations and cash flows.

For additional information on the 2025 Facility Agreements terms and conditions, see Part IV, Item 15., Note 13.

Debt and Note 20.

Subsequent Events to the Consolidated Financial Statements.

As of December 31, 2025, our primary exposure to interest rate risk resulted from our outstanding borrowings under our 2025 RBL Facility of $60.0 million.

The borrowing accrues interest at a rate of 10.8% per annum which is based on the Term SOFR plus the applicable margin of 6.5% per annum.

We currently do not hedge our interest rate exposure.

We estimate that a 10% increase in the applicable average interest rates during the time from the date the debt was drawn through December 31, 2025 would have resulted in an increase in interest expense of $0.2 million.

There were no outstanding borrowings during the year ended December 31, 2024.

Additionally, changes in market interest rates could impact interest costs associated with any future indebtedness.

Consolidated Financial Statements and Supplementary Data

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7A. Quantitative and Qualitative Disclosures About Market Risk