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Sanctions
”). Sanctions can be imposed or threatened under International Economic Sanctions on companies engaging in
certain types of transactions with specified countries, entities or individuals.
Sanctions that could be imposed on the Group under International Economic Sanctions could include, among others, a
prohibition or limitation on the Group’s ability to obtain goods or services on the international market or to access the
US or international capital markets, which, in turn, could have a material adverse effect on the Group’s business,
prospects, financial condition and results of operations.
Although the Group implemented formal policies and procedures in July 2013 designed to ensure that the Group
operates in compliance with applicable anti-fraud, anti-bribery and other anti-corruption laws and regulations, the Group
does business, and may continue to do business in the future, in countries and regions where governmental corruption
has been known to exist, and where the Group may face, directly or indirectly, corrupt demands by officials, or the risk
of unauthorised payments or offers of payments by one of its employees or consultants. The Group’s existing safeguards
and any future improvements may prove to be ineffective in preventing such unauthorised payments, and its employees
and consultants may engage in conduct for which the Group might be held responsible, potentially resulting in civil and
criminal penalties and reputational damage for actions taken by its employees, agents and intermediaries, or by the
Group’s JV partners or third party contractors, with respect to the Group’s business. Any such measures, and any
investigation into the Group for potential violations of these laws, regulations and sanctions regimes could also have a
material adverse impact on the Group’s reputation and on its business, prospects, financial condition and results of
operations. Furthermore, any remediation measures taken in response to such potential or alleged violations of these
laws, regulations and sanctions regimes, including any necessary changes or enhancements to the Group’s procedures,
policies and controls and potential personnel changes and/or disciplinary actions, may also materially adversely impact
its business, prospects, financial condition and results of operations.
Tax regimes in certain jurisdictions are subject to differing interpretations and are subject to change.
The tax regimes in certain jurisdictions in which the Group operates, in particular in Kuwait, are not clearly codified and
therefore can be subject to varying or inconsistent interpretation and legislative or administrative change in those
jurisdictions. While the Group operates on the basis that it is not tax resident in Kuwait, the Kuwaiti tax authority could
challenge this position in the future. In addition, in the Netherlands, the Group’s Dutch intermediary holding company
subsidiary has been reliant on favourable rulings from the tax authorities to continue to conduct its business as a non-
resident of the Netherlands for tax purposes. The Group’s interpretation of relevant tax law as applied to its transactions
and activities may not agree with that of the relevant tax authorities in Kuwait, the Netherlands, or other jurisdictions. As
a result, any Group profits from activities in those jurisdictions may be assessed to additional tax or additional
transactional taxes (e.g. stamp duty or VAT), which, in each case, could result in significant additional taxes, penalties
and interest, any of which could have a material adverse impact on the Group’s business, prospects, financial condition
and results of operations.
The Group is subject to risks relating to its workforce, including industrial action and strikes.
The Group’s operations may be affected by strikes, lock-outs or labour disruptions involving its employees and the
employees of third parties, including employees of contractors retained to carry out the Group’s exploration, appraisal or
development programmes and the employees of transportation infrastructure operators needed to run the Group’s
operations. Significant delays or disruptions to operations caused by any labour actions could have a material adverse
impact on the Group’s business, prospects, and results of operations.
Inflation could increase the Group’s costs and decrease the Group’s operating margins.
The economies of the countries in which the Group operates, particularly Iraq and Egypt, have, during certain periods in
the past, experienced high rates of inflation. While the Group incurs a substantial portion of its operating expenses in US
dollars, it has incurred and will continue to incur a certain amount of expenses in the local currencies of the countries in
which it has operations. As a result, the Group tends to experience increases in certain of the Group’s local currency
costs which are sensitive to rises in the general price levels, including salaries and energy utility costs, in countries with
high inflation rates. The Group may not, however, be able to maintain the prices the Group charges for the Group’s
products and services at, or increase the Group’s prices to, levels sufficiently high in order to preserve the Group’s
operating margins, due to competitive pressures, regulatory requirements or other reasons. Accordingly, high rates of
inflation in countries in which the Group operates could have a material adverse effect on the Group’s business,
prospects, financial condition and results of operations.
