Notes to the Consolidated Financial Statements Continued Consolidated Restated 2021 2020 Note 21. Leases US$’000 US$’000 Current 45,393 203 Non‑current 267,447 1,313 Total lease liabilities 312,840 1,516 Reconciliation Balance at beginning of financial year 1,516 741 Acquisitions (refer note (i) below) 329,815 – Additions 4,109 1,031 Disposals (45) – Adjustment to fixed lease payments (1,107) – Accretion of interest 12,501 95 Payments (34,090) (351) Net foreign currency differences 141 – Total lease liabilities 312,840 1,516 (i)A right‑of‑use asset was recognised as part of the oil and gas assets acquired during the period in relation to an FPSO Charter agreement (refer Note 18). Consolidated Restated 2021 2020 Note 22. Other financial liabilities US$’000 US$’000 Non‑Current – Embedded derivative – contingent consideration payable (refer note (a) below) 71,161 – Total non‑current other financial liabilities 71,161 – (a) reconciliation of contingent consideration payable Balance at beginning of financial year – – Additions 64,529 – Unrealised fair value changes recognised in profit or loss during the period 6,632 – Total contingent consideration payable at fair value 71,161 – As part of the acquisition of Baúna (refer Note 18), Karoon’s wholly owned subsidiary, Karoon Petróleo & Gás Ltda., has agreed to pay Petrobras contingent consideration of up to $285 million (plus interest of 2% per annum). The fair value of the contingent consideration was estimated calculating the present value of the future expected cash out flows. The estimates are based on Group’s internal assessment of future oil prices, which considers industry consensus and observable oil price forecasts. A discount rate of 0.36% and 2% inflation factor has also been applied. The contingent consideration accrues interest at 2% per annum from 1 January 2019 with any amounts payable by 31 January after the completion of the relevant testing period. The relevant testing periods are each calendar year from (and including) 2022 to (and including) 2026 and are based on the achievement of annual average Platts Dated Brent oil prices thresholds commencing at ≥US$50 and ending at ≥US$70 a barrel. After the testing of each year, any amount deemed not payable is cancelled and not carried forward. The amount payable each calendar year excluding interest depending on achievement of certain oil prices is disclosed below: Average Brent Price (in US$ units) CY2022 CY2023 CY2024 CY2025 CY2026 Total B < 50 – – – – – – 50 <= B < 55 3 3 3 2 2 13 55 <= B < 60 17 17 17 8 4 63 60 <= B < 65 34 34 34 15 6 123 65 <= B < 70 53 53 53 24 10 193 B >= 70 78 78 78 36 15 285 Karoon Energy Ltd 110 Annual Report 2021