Consolidated Weighted Average Floating Fixed Non‑interest Carrying Interest Rate Interest Rate Interest Rate Bearing Fair Value Amount Restated 2020 % p.a. US$’000 US$’000 US$’000 US$’000 US$’000 Financial assets Cash and cash equivalents 0.06 260,545 20,058 15,817 296,420 296,420 Receivables – – – 9,380 9,380 9,380 Security deposits 1.30 1,134 3,854 85 5,073 5,073 Total financial assets 261,679 23,912 25,282 310,873 310,873 Financial liabilities Trade and other payables – – – 21,167 21,167 21,167 Lease liabilities – – – 1,516 1,516 1,516 Total financial liabilities – – 22,683 22,683 22,683 Interest Rate Sensitivity Analysis The following table details the Group’s sensitivity to a 1% p.a. increase or decrease in interest rates, with all other variables held constant. The sensitivity analysis is based on the balance of floating interest rate amounts held at the end of the financial year. The sensitivity analysis is not fully representative of the inherent interest rate risk, as the financial year end exposure does not necessarily reflect the exposure during the course of a financial year. These sensitivities should not be used to forecast the future effect of movements in interest rates on future cash flows. Consolidated Restated 2021 2020 US$’000 US$’000 Change in profit (loss) before income tax – Increase of interest rate by 1% p.a. 304 2,617 – Decrease of interest rate by 1% p.a. (43) (24) Change in financial instruments – Increase of interest rate by 1% p.a. 304 2,617 – Decrease of interest rate by 1% p.a. (43) (24) (b) Commodity Price Risk The Group is exposed to commodity price fluctuations associated with the production and sale of oil. Commodity price risk is managed on a Group basis at the corporate level. The Group may enter into crude oil price swap and option contracts to manage its commodity price risk. However, there are no oil price swap nor option contracts in place as at 30 June 2021. Commodity Price Sensitivity Analysis As part of the acquisition of Baúna, the Group has agreed to pay Petrobras contingent consideration of up to US$285 million plus interest of 2% per annum accruing from 1 January 2019. The fair value of the contingent consideration has been accounted for as an embedded derivative and was estimated calculating the present value of the future expected cash out flows. The estimates are based on the Group’s internal assessment of future oil prices. A discount rate of 0.36% and 2% inflation factor has also been applied. Refer to Note 22 for more details. Karoon Energy Ltd 95 Annual Report 2021