Information Document and Offer to acquire all shares in

Transcription

1 Information Document and Offer to acquire all shares in Det Norske Oljeselskap ASA (renamed NOIL Energy ASA) submitted by Pertra ASA (renamed Det norske oljeselskap ASA) Exchange ratio 3 existing shares in Det Norske Oljeselskap ASA give 1 new share in Pertra ASA Acceptance Period From and including 21 November 2007 to 30 November 2007 at 16:30 (CET) Managed by 19 November 2007

2 Important information This document (the Information Document or the Offer Document ) has been prepared by Pertra ASA ( Pertra ) in order to (i) document the terms of its exchange offer for the shares in Det Norske Oljeselskap ASA ( NOIL or Det Norske Oljeselskap ) not already owned by Pertra and (ii) to provide information to comply with section 3.5 of Oslo Børs rules for continuing obligations for listed companies. The document has been reviewed by Oslo Børs in accordance with section of said rules, and also serve as listing document for up to 39,439,924 new Pertra Shares. Oslo Børs has not reviewed, and not approved, the document pursuant to the rules relating to prospectuses, and no prospectus will be issued in connection with the Offering and the listing of new Pertra Shares under the Offer. For the definitions of capitalized terms used throughout this Offer Document, see Section 2 Definitions and Glossary of Terms of this Offer Document, which also applies to the preceeding pages of this Offer Document. Following resolutions in the companies extraordinary general meetings on 8 November 2007, and effective 15 November 2007, Det Norske Oljeselskap has as part of the exchange offer and the combination of the companies been renamed NOIL Energy ASA, while Pertra has taken the name Det Norske Oljeselskap ASA. For the purpose of this doccument, and as defined above and below, the old company names are used. Shareholders in NOIL and other investors must rely upon their own examination of this Offer Document and should thus study it carefully so that a balanced judgment can be made of the Offer and the information that is discussed and described herein. When considering what actions to take, shareholders in Det Norske Oljeselskap and other investors are urged to seek the advice of financial, legal, tax or other advisors. The information contained, and incorporated by reference, in this Offer Document with respect to Det Norske Oljeselskap and its subsidiaries and the Shares in NOIL is, or consists of, extracts from, or summaries of, publicly available information. Neither Pertra nor Pareto Securities nor any other person accepts any responsibility for the contents and distribution of this Offer Document other than as set out in the Responsibility statement. The issue and distribution of this Offer Document does not imply that the information included herein will continue to be correct and complete at any date subsequent to the date hereof. With the exception of Pertra and persons authorised by Pertra, no person or entity is entitled or authorised to provide any information or make any representations in connection with the Offer. If such information or representation is provided or made by any other subject than Pertra or persons authorised by Pertra, such information or representation should not be relied upon as having been provided or made by or on behalf of Pertra. This Offer Document will be distributed to the shareholders registered in NOIL's shareholder registry on 19 November 2007 and will also be available, free of charge at the offices of Pareto Securities at the below address: Pareto Securities ASA Dronning Mauds gate 3 P.O. Box 1411 Vika 0115 Oslo Norway Telephone: Telefax: Financial Advisor Pareto Securities is acting as financial advisor to both Pertra and NOIL in connection with the Offer. Pareto Securities is acting for no one else in their respect and will not be responsible to any subject other than Pertra and NOIL for providing (i) the protections normally granted to their customers or (ii) advice in relation to the Offer. i

3 Restrictions General The distribution of this document or any separate summary documentation regarding the offer contained herein (the Offer ), and the making of the Offer may, in certain jurisdictions (including, but not limited to, the United States of America, Canada, Australia and Japan), be restricted by law. Therefore, persons obtaining this document or into whose possession this document otherwise comes, are required to inform themselves of and observe all such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Pertra and Pareto Securities do not accept or assume any responsibility or liability for any violation by any person whomsoever of any such restriction. This document is not directed to persons whose acceptance of the Offer requires that (i) further documents are issued in order for the Offer to comply with local law or (ii) registration or other measures are taken pursuant to local law. No document or material relating to the Offer may be distributed in or into any country where such distribution or offering requires any of the aforementioned measures to be taken or would be in conflict with any law or regulation of such country. In the event such distribution or offering nevertheless is made, an acceptance form sent from such a country may be disregarded as non-binding on Pertra. This Offer Document does not represent an offer to acquire or obtain securities other than the shares in NOIL that are subject to the Offer. The Offer and this Offer Document are governed by Norwegian law. United States of America The Offer is not being made, directly or indirectly, in or into the United States, or by use of the United States mail, or by any means or instrumentality (including, without limitation, the post, facsimile transmission, telex, telephone or electronically) of United States interstate or foreign commerce, or of any facility of a United States national securities exchange, and the Offer cannot be accepted by any such use, means or instrumentality or from within the United States. Accordingly, neither this Offer Document nor the accompanying Acceptance Form is being or may be mailed or otherwise sent in, into or from the United States. Persons receiving Offer Documents (including nominees) must not distribute or send them in, into or from the United States and doing so will render invalid any related purported acceptance of the Offer. THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED, ("THE US SECURITIES ACT") AND MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, US PERSONS (AS DEFINED IN REGULATION S UNDER THE US SECURITIES ACT) EXCEPT IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE US SECURITIES ACT. As used herein, the United States or the US means the United States of America, its territories and possessions, any state of the United States of America, and the District of Columbia. Canada Neither this document nor any copy of it may be taken or transmitted into Canada or distributed or redistributed in Canada or to any individual outside Canada who is a resident of Canada, except in compliance with applicable rules. Japan Neither this document nor any copy of it may be taken or transmitted into Japan or distributed or redistributed in Japan for the purpose of solicitating an acceptance of the Offer to any resident of Japan. Australia The Offer is not being made directly or indirectly in or into and may not be accepted in or from Australia. Accordingly, if any copies of this document (and any accompanying documents) are mailed or otherwise distributed or sent in or into Australia, that action does not constitute an offer, and any purported acceptance by or on behalf of an Australian resident on the basis thereof will be invalid. No document reflecting the Offer has been or will be lodged with the Australian Securities & Investments Commission ( ASIC ) and ASIC has not approved the Offer in Australia. ii

4 TABLE OF CONTENTS 1. RESPONSIBILITY STATEMENT DEFINITIONS AND GLOSSARY OF TERMS THE EXCHANGE OFFER BACKGROUND FOR THE OFFER THE OFFER PRICE PRESENTATION OF PERTRA MARKET CONDITIONS AND TRENDS FINANCIAL INFORMATION AND OPERATING REVIEW FOR PERTRA UNAUDITED PRO FORMA FINANCIAL INFORMATION CAPITAL RESOURCES FOR PERTRA BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES SHARE CAPITAL AND SHAREHOLDER INFORMATION SHORT PRESENTATION OF DET NORSKE OLJESELSKAP (NOIL ENERGY) TAX CONSEQUENCES ADDITIONAL INFORMATION RISK FACTORS...90 APPENDICES APPENDIX 1: UNAUDITED Q3 REPORT 2007 FOR PERTRA...A 1 APPENDIX 2: 2006 ANNUAL REPORT FOR PERTRA (IFRS)...A 12 APPENDIX 3: 2005 ANNUAL REPORT FOR PERTRA (NGAAP)...A 31 APPENDIX 4: 2006 ANNUAL REPORT NOIL...A 44 APPENDIX 5: UNAUDITED Q3 REPORT 2007 FOR NOIL...A 53 APPENDIX 6: AUDITOR S ASSURANCE REPORT ON THE PRO FORMA FINANCIAL INFORMATION A 55 APPENDIX 7: ACCEPTANCE FORM...A 56 This document has been produced in the English language only. 1

5 1. RESPONSIBILITY STATEMENT This document has been prepared by Pertra ASA in order to provide the shareholders of NOIL with the terms and condition for Pertra ASA's offer for all of the shares in Det Norske Oljeselskap ASA and to provide information to comply with section 3.5 of Oslo Børs rules for continuing obligations for listed companies. The board of directors of Pertra ASA confirms that, having taken all reasonable care to ensure that such is the case, the information contained in this document is, to the best of our knowledge, in accordance with the facts and contains no omissions likely to affect its import. The information in Section 13 and elsewhere in this document regarding Det Norske Oljeselskap ASA has been based on publicly available information and the board of directors of Pertra ASA assumes no liability in this regard. Trondheim, 19 November 2007 The board of directors of Pertra ASA Kaare Moursund Gisvold Chairman Ivar Brandvold Tore Lilloe-Olsen Eva Skøelv Guri Ingebrigtsen Barbro Hætta-Jacobsen Svein Sivertsen Øistein Høimyr 2

6 2. DEFINITIONS AND GLOSSARY OF TERMS The following terms shall, when used in this document, have the following meaning: Acceptance... The acceptance of the Offer by a Shareholder in Det Norske Oljeselskap. Acceptance Form... The form to be used by Shareholders in Det Norske Oljeselskap when accepting the Offer, such form is enclosed hereto as Appendix 7. Acceptance Period... The period during which Shareholders in Det Norske Oljeselskap may accept the Offer, such period running from and including 21 November 2007 to and including 30 November at 16:30 hours CET. Acceptant... A Shareholder in Det Norske Oljeselskap who accepts the Offer. DNO... DNO ASA, with or without subsidiaries as the case may be. Det Norske Oljeselskap or NOIL... Det Norske Oljeselskap ASA, org.no , which as of 15 November 2007 has been renamed NOIL Energy ASA. NOIL Shares... All Shares in Det Norske Oljeselskap, each having a par value of NOK CET... Consideration Shares... NOK... NOIL... Offer or the Exchange Offer... Central European Time. The new shares in Pertra to be issued by Pertra as settlement to the Accepting Shareholders in Det Norske Oljeselskap, as described in Section 3 herein. Norwegian Kroner, the lawful currency of Norway. Det Norske Oljeselskap ASA. The offer, described in this Offer Document, to be settled in Pertra Shares for Shares in Det Norske Oljeselskap not already owned or acquired by Pertra. Pertra... Pertra ASA, org no , which as of 16 November 2007 has been renamed to Det norske oljeselskap ASA. Pertra Shares or Shares... Shares in Pertra, each with a nominal value of NOK Norwegian Public Companies Act... Norwegian Securities Trading Act... The Norwegian Public Limited Liability Companies Act of 19 June 1997 no. 45. The Norwegian Securities Trading Act of 29 June 2007 no. 75. Offer Document or Information Document... This document dated 19 November Exchange ratio... Shareholders accepting the Offer will receive a consideration of NOK 24 per Share. The Consideration is payable in New Shares in Pertra in accordance with the terms and conditions set forth herein. The consideration is based on an exchange ratio of 1 New Pertra Share for each 3 Shares in Det Norske Oljeselskap, giving a value of NOK 72 for each Pertra Share. Oslo Børs (Oslo Stock Exchange)... Oslo Børs ASA. Pareto Securities... Pareto Securities ASA. Receiving Agent... Pareto Securities ASA. Settlement Date... The date on which the Consideration Shares are being transferred to each Acceptant s VPS account, being approximately 7 business days after the last day of the Acceptance Period. VPS... The Norwegian Central Securities Depository ( Verdipapirsentralen ). 3

7 3. THE EXCHANGE OFFER This Offer Document serves the purpose of being an offer to acquire all outstanding and issued shares in Det Norske Oljeselskap and contains the terms and conditions upon and subject to which Pertra offers to acquire all Det Norske Oljeselskap Shares not already owned by Pertra. The Offer is made to all shareholders in Det Norske Oljeselskap, and has been sent to those shareholders to appearing in the shareholder register of Det Norske Oljeselskap in VPS as of 20 November 2007 to the addresses registered therein on said date. Shareholders in Det Norske Oljeselskap residing in jurisdictions where the Offer Document may not be lawfully distributed have been excluded from the distribution of the Offer Document. 3.1 INTRODUCTION Overview On 9 October 2007, Pertra and DNO announced that they had entered into an integration agreement with the intention to execute a combination of Pertra and NOIL. The combination was to be structured as an exchange offer by way of a capital increase in Pertra. To accommodate the agreed shareholding of DNO, on 8 October, DNO entered into agreements for a conditional secondary sale of a total of 27,572,262 shares in NOIL to professional and institutional investors in Norway and internationally at a price of NOK per share. The sale was subject to the fulfillment of the conditions for the combination of the two companies. Such agreements taken into account, the exchange offer would entail that DNO were to receive 23,800,000 Pertra Shares in return of its remaining stake of 71,400,000 shares in NOIL, giving DNO a total shareholding of 39.97% of the combined company. The major shareholder in NOIL, DNO, pre-committed to the combination, however subject to confirmation by an extraordinary general meeting in DNO which was resolved on the extraordinaray general meeting held in DNO held on 8 November An extraordinary general meeting of Pertra held on the same day resolved on the capital increase issuing 33,000,000 new shares in Pertra which at the same time were subscribed by DNO also on behaf of the professional and institutional investors which had agreed to purchase NOIL shares from DNO as described. On 8 November 2007, the extraordinary general meeting of NOIL unanimously approved the combination with Pertra as described herein. As of 15 November the conditions for the combination of the two companies as described in the integration agreement has been fulfilled (see description in section below). As agreed in the integration agreement, Pertra should, subject to the successful completion of the exchange offer described above, put forward a second exhange offer towards the remaining shareholders of NOIL. On the above basis, Pertra hereby offers to purchase the remaining Shares in Det Norske Oljeselskap Shares not already owned by Pertra by way of a capital increase in Pertra where the remaining shareholders of NOIL will receive shares in Pertra in return of shares in NOIL with an exchange ratio of 3:1, terms similar to the first exhange offer. As set out in the integration agreement, Pertra and NOIL are, subsequent of completion of the Offer, planned merged through a statutory merger as set out in the Norwegian Public Companies Act Section 14 within yearend The integration agreement In brief the material provisions included in the integration agreement, in addition to the description of the transaction structure agreed upon, are as follows: According to the agreement, DNO shall, in one or several steps within 31 December 2008, reduce its ownership position in Pertra to a maximum of 25 % by applicable means, hereunder (i) by sale, (ii) by distribution or of dividend in kind consisting of Pertra shares to the shareholders of DNO or (iii) by dilution resulting from non participation in one or more capital increases in Pertra, however authorization to the board to increase the share capital issued in extraordinary shareholders meeting 8 November 2006 shall not be used to dilute DNO. DNO may however, participate in future private placements in Provide provided that its ownership does not exceed 25%. DNO shall however be entitled to increase its shareholding in Pertra above the 25 % maximum should Pertra be subject to a takeover situation deemed as hostile. Further, if deemed appropriate by the board of 4

8 Directors of Pertra, the Board of Directors of Pertra may at any time waive the obligation to fulfil the obligation of the Subsequent Share Reduction. DNO may regardless of the above and during the 2 year period request that the Board of Directors disregard the 25% maximum ownership limitation and allow DNO to purchase additional shares. Further, the agreement states that Pertra will be named Det norske oljeselskap ASA. NOIL will be named NOIL Energy ASA and DNO will be named DNO International ASA. Further Pertra and NOIL intend during 2008 to complete the combination by a Norwegian statutory merger pursuant to Norwegian Public Limited Companies Act Chapter 13. The agreement further provides for that the board of directors of Pertra shall, effective from when the consummation of the capital increase comprise of seven (7) directors elected by the shareholders. Kaare Gisvold shall continue as Chairman of the Board. The Integration agreement further provides for that the election Committee of Pertra should nominate three board members including Kaare Gisvold and that DNO should nominate three board members including deputy chairman. Further DNO and Pertra shall agree on the nomination of the seventh board member. In addition, and subject to agreements with the employees and approval by the relevant authority, the employees shall elect two (2) directors, of which the employees from NOIL shall be entitled to elect one (1) director and the employees from Pertra shall be entitled to elect one (1) director. The agreement also includes a provision stating that a new board of directors of NOIL will be elected by the general meeting according to the Public Limited Companies Act, observing no particular agreement of the composition of such board of directors. Also the agreement set forth that Erik Haugane will continue as CEO of Pertra and that Pertra shall have head office functions split between Trondheim and Oslo, consequently, the CEO shall have offices in Trondheim and in Oslo, while CFO and part of the IR management will be located in Oslo. Pertra and NOIL will until otherwise deemed appropriate maintain dual competence centers related to exploration and production in Oslo and Trondheim, as well as branch offices in Harstad and Stavanger reflecting the operations of the Combination. A consultative integration and advisory committee comprising of four members, two members appointed by the Board of Directors of DNO and Pertra respectively, shall be established to act for the first 6 month period following the resolution by the general meeting of Pertra approving the combination. 3.2 THE OFFEROR The Offer is made by Pertra ASA, Nedre Bakklandet 58 C, 7014 Trondheim, Norway. Pertra is a public limited liability company incorporated under the laws of Norway, and is registered in the Norwegian Register of Business Enterprises with organisation number The shares of Pertra have been listed on Oslo Børs since 10 November 2006 with the ticker code: PERTRA. Pertra's shares are registered in the VPS with International Securities Identification Number (ISIN) NO For a further description of Pertra and its business, see section 6 below. 3.3 TARGET COMPANY The target company is NOIL, Stranden 1 Aker Brygge, P.O. Box 1345 Vika, 0113 Oslo, Norway. Det Norske Oljeselskap is a public limited liability company incorporated under the laws of Norway, and is registered in the Norwegian Register of Business Enterprises with organisation number The Shares in NOIL are not listed on any regulated market, but have been registered on the OTC-list managed by the Norwegian Securities Dealers Association ( Norges Fondsmeglerforbund ) since 22 June The shares in NOIL are registered in VPS under the International Securities Identification Number (ISIN) NO For a further description of Det Norske Oljeselskap and its business, see section 13 below. 5

9 3.4 OFFER PRICE/CONSIDERATION Shareholders accepting the Offer will receive a consideration of NOK 24 per Share, payable in new shares in Pertra in accordance with the terms and conditions set forth herein. The consideration is based on a value of NOK 72 for each Pertra Share, giving an exchange ratio of 1 New Pertra Share for each 3 Shares in Det Norske Oljeselskap. Fractional Consideration Shares will not be issued. The number of Consideration Shares to be issued to each Acceptant will be rounded down to the nearest whole number in the event the Acceptant owns and tenders a number of Det Norske Oljeselskap Shares which does not result in a whole number of Pertra shares. The excess Shares in Pertra will be paid out in cash. Further details about the Consideration Shares, including the rights attached to these, are given in section 3.8 below. The Offer Price values Det Norske Oljeselskap to NOK 2.8 billion. For more details on the offer price, see section 4 The Offer Price. Pareto Securities has prepared a fairness opinion on the exchange ratio of Pertra Shares and NOIL Shares in the combination. The fairness opinion was presented on the extraordinary general meetings of Pertra, DNO and NOIL, all held on 8 November ACCEPTANCE PERIOD The Acceptance Period shall commence on and include 21 November 2007 and shall expire at 16:30 hours CET on 30 November ACCEPTANCE OF THE OFFER In order for a shareholder in Det Norske Oljeselskap to accept the Offer, the Acceptance Form must be correctly filled out, signed and delivered to the Receiving Agent together with any supplementary documents prior to expiry of the Acceptance Period. Information on individual shareholdings and certain other matters relating to each Shareholder in Det Norske Oljeselskap have already been included in the Acceptance Form. The Acceptance Form also contains information on settlement of the Offer price/consideration. Acceptance Forms that are incomplete or incorrectly completed or that are received after the expiry of the Acceptance Period may be disregarded without further notice to the Acceptant. Pertra or the Receiving Agent will not issue confirmation of receipt of Acceptance Forms. Properly completed Acceptance Forms must be received by the Receiving Agent at the address below by means of post, delivery or telefax: Pareto Securities ASA Dronning Maudsgate 3 P.O. Box 1411 Vika 0105 Oslo Norway Telephone: Telefax: Shareholders in Det Norske Oljeselskap whose shares in Det Norske Oljeselskap are registered on several VPS accounts will receive a separate Acceptance Form for each such account and are required to submit separate Acceptance Forms for each such account. ANY SHAREHOLDER IN DET NORSKE OLJESELSKAP WHOSE SHARES IN DET NORSKE OLJESELSKAP ARE REGISTERED IN THE NAME OF A BROKER, DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE MUST CONTACT SUCH PERSON IF SUCH SHAREHOLDER IN DET NORSKE OLJESELSKAP WISHES TO ACCEPT THE OFFER. 6

10 IN ORDER FOR A SHAREHOLDER IN DET NORSKE OLJESELSKAP TO VALIDLY ACCEPT THE OFFER, THE ACCEPTANCE FORM MUST BE SIGNED BY SUCH SHAREHOLDER OR HIS AUTHORISED ATTORNEY. All Shares in NOIL to be sold by an Acceptant under the Offer must be transferred to Pertra free of any encumbrances or other third-party rights whatsoever and with all shareholder rights attached to them. Any third party with registered encumbrances or other third-party rights over the relevant VPS-account(s) must sign the Acceptance Form and thereby waive its rights to the Shares in Det Norske Oljeselskap recorded thereon and approve the transfer of such shares to Pertra, free of any encumbrances. The Acceptance will be irrevocable and cannot be withdrawn after having been received by the Receiving Agent. If an Acceptant wishes to accept the Offer for less than all of the Shares in Det Norske Oljeselskap registered on the Acceptant's VPS account, such Acceptant must fill out item 2 in the Acceptance Form. A Shareholder in NOIL is, by returning the Acceptance Form to the Receiving Agent, bound to accept the consideration offered in the Offer on the terms and conditions set forth herein and in the Acceptance Form, and to subscribe for the Consideration Shares requested. By completing and returning the Acceptance Form to the Receiving Agent, the Acceptant irrevocably authorises the Receiving Agent to subscribe for the Consideration Shares allocated. By completing and returning the Acceptance Form to the Receiving Agent, the Acceptant furthermore irrevocably authorises the Receiving Agent to block, in favour of Pareto Securities, the Acceptant s VPS account with regard to the Shares in NOIL tendered under the Offer, and upon settlement transfer such Shares in NOIL to Pertra. 3.7 SETTLEMENT Settlement of Acceptances received before 16:30 hours CET on 30 November 2007 will be made in the form of Pertra Shares delivered to the Acceptant on or about 11 December The Consideration Shares will be delivered to the same VPS account as the Shares in Det Norske Oljeselskap are transferred from. In the event a Shareholder in Det Norske Oljeselskap wishes to have the Consideration Shares delivered to a separate VPS account, they must indicate this on the Acceptance Form. Settlement will only be made towards Acceptants whose acceptances are approved by Pertra in accordance with Section 3.6 above. 3.8 THE CONSIDERATION SHARES The Consideration Shares On 8 November 2007 the Extraordinary General Meeting of Pertra resolved to authorise the Pertra Board of Directors to issue up to 29,750,000 new shares, each with a nominal value of NOK The Extraordinary General Meeting authorised Pertra s Board of Directors to set aside the pre-emptive rights of the Pertra Shareholders. The complete authorisation is included in Section below. The Board of Directors will use its right under the autorisation granted 8 November 2007 to issue Pertra Shares as settlement for the shares in Det Norske Oljeselskap acquired under the Offer. The authorisation is described under section below. On 14 November 2007 the Board of Directors of Pertra resolved to initiate the Offer managed by Pareto Securities. Payment for the new shares shall be made by transfer of shares in NOIL to Pertra with exchange ratio 3:1 and at a subscription price of NOK 72 per share. The new shares will have right to dividends from the date of registration of the capital increase in the Norwegian Register of Business Enterprises. The Offer is subject to a formal resolution by the Board of Directors to issue the Consideration Shares to the Acceptants. Such resolution and thus the issuance of the Consideration Shares will be made after the expiry of the Offer Period, i.e. on or about 11 December Pareto Securitites will be autorised to subscribe for the Consideration Shares on behalf of the Acceptants. As the number of Consideration Shares to be issued is dependent on the acceptance level from the remaining shareholders in NOIL, it is at the date of this Offer Document uncertain what the exact number of Consideration Shares will be. After completion of the Offer, the issued share capital of Pertra will be a maximum of NOK 1,287, through the issuance of maximum of 6,439,924 Pertra Shares each with a par value of NOK 0.20 as per 7

11 calculations made on 19 November The total share capital after the share issue will be a maximum NOK 13,195, divided on a maximum of 65,978,274 Pertra Shares The rights of the Consideration Shares The Consideration Shares will be delivered to each Acceptant s VPS account as soon as possible after the Consideration Shares have been registered with the Norwegian Registry of Business Enterprises ( Foretaksregisteret ), expected on or about 11 December The Consideration Shares will in all respects be equal to the existing Shares of the Company once they have been issued and registered at the Norwegian Registry of Business Enterprises (Foretaksregisteret), including the right to receive dividends, if any. Each Consideration Share issued in connection with the Offer will confer the right to one vote at Pertra s general meetings. For more information on the Pertra Shares, see section 12 below Trading of the Consideration Shares The Consideration Shares issued to the Acceptants, will be tradable from the time they are issued and delivered to each Acceptant s VPS account, expected to be on or about 11 December Dilution The existing Pertra shareholders will be diluted by up to approximately 60% as a consequence of the Offer and issuance of the Consideration Shares to Shareholders in Det Norske Oljeselskap. The following describes the dilutive effect of the issuance of Consideration Shares: Prior to the issuance of shares to DNO Prior to the issuance of shares to Acceptants Subsequent the Offer 2 Ordinary shares, nominal value NOK 0.2 each, issued and outstanding... 26,538,350 59,538,350 65,978,274 % dilution relative to prior to issuance of shares % 44.6% 40.2% 3.9 FINANCING OF THE OFFER Pertra will finance the purchase of the Det Norske Oljeselskap Shares by issuing the Consideration Shares as described in this Offer Document COSTS AND EXPENSES The Company s current estimated costs and expenses in connection with the Offer are approximately NOK 11.1 million (not including VAT). Such costs and expenses will be covered by Pertra and paid in cash. Pertra will pay all commissions and costs directly related to any VPS transaction required to complete the purchase of the Det Norske Oljeselskap Shares under the Offer, and Det Norske Oljeselskap Shareholders accepting the Offer will not incur any brokerage fees or other costs directly related to VPS transactions in connection with their possible acceptance of the Offer.Pertra will on the other hand, not be liable for or payany tax consequences or costs incurred by the shareholders in Det Norske Oljeselskap for financial or legal advice or any other costs incurred by them in connection with the Offer CONDITIONS FOR COMPLETION OF THE OFFER Completion of the Offer is conditional upon a resolution by the Board of Directors, to issue the Consideration Shares to the Acceptants. Apart from this, there are no conditions for completion of the Offer. 1 Including 33,000,000 shares in Pertra issued to DNO as settlement for their conditional sale of 99,000,000 shares in Det Norske Oljeselskap ASA. 2 Assuming acceptance from all remaining shareholders in Det Norske Oljeselskap. 8

12 3.12 ANNOUNCEMENTS AND AMENDMENTS TO THE OFFER Announcements issued by or on behalf of Pertra regarding the Offer and/or the Offer Document will be deemed to have been made once they have been distributed through Oslo Børs electronic information system. Pertra will have no obligation to publish, advertise or otherwise communicate any such announcement through other means. Pertra reserves the right to amend the Offer and/or issue a new offer. Such amended and/or new offer shall be considered as accepted by the Acceptants having already accepted the Offer, provided that the amendments do not represent a diminution to the previous Acceptants when compared with the original Offer. Any amendments to the Offer will be announced prior to expiry of the Offer Period CONSEQUENCES OF THE OFFER Consequences for Det Norske Oljeselskap's employees, board and management By making the Offer, Pertra has an intention to obtain full ownership of NOIL and to make NOIL a wholly owned subsidiary of Pertra. However, the Offer is not conditional upon accept from all of or a certain number of the remaining shareholders in NOIL. The completion of the Offer will not have any legal, economic, commercial or work-related consequences for the employees in Det Norske Oljeselskap. No members of the board or the executive management in Pertra or NOIL will receive special favorable terms or advantages in connection with the Offer Regulatory and competition law matters No regulatory approval or competition filing is required for completion of the Offer Tax Acceptants will be responsible for their individual tax liability arising as a result of their Acceptance of the Offer and any costs incurred in obtaining advice on this matter ACQUISITION OF DET NORSKE OLJESELSKAP SHARES OUTSIDE THE OFFER Pertra reserves the right to acquire shares in NOIL outside the Offer both during and after the Acceptance Period, provided such transactions comply with Norwegian and other applicable law COMPULSORY ACQUISITION OF SHARES IN DET NORSKE OLJESELSKAP If, as a result of the Offer, Pertra becomes the owner of Shares in NOIL representing more than 90% of the total number of shares issued by NOIL and shares in NOILrepresenting more than 90% of the voting rights in Det Norske Oljeselskap s general meeting, Pertra will have the right (and each remaining shareholder in Det norske Oljselskap will have the right to require Pertra) to commence a compulsory acquisition for cash of the shares in NOIL not owned by Pertra pursuant to section 4-25 of the Norwegian Public Limited Companies Act. The price payable in such compulsory acquisition, will, in the absence of an agreement between Pertra and the remaining shareholders in Det Norske Oljeselskap, be determined in accordance with section 4-25, second and third paragraph of the Norwegian Public Limited Liability Companies Act. According to such provisions, Pertra shall first offer the remaining shareholders in NOIL the price it is willing to pay for the shares. If Pertra presents the offer in writing to all of the remaining shareholders in NOIL with a known address, and the offer is announced in the Norwegian Register of Business Enterprises' electronic information system and in a newspaper generally read at Det Norske Oljeselskap's place of business, Pertra may set a time limit for each shareholder in NOIL to contest or refuse the offer (such period not be shorter than two months). Shareholders in NOIL who have not contested such offer within the expiration of such time limit are deemed to have accepted such offer. The price payable to those shareholders in NOIL who do not accept such offer will absent any agreement be determined by a Norwegian court. The Norwegian court will have full discretion with respect to evaluating the price to be paid for such shares as of the commencement of the compulsory acquisition. The consideration paid by Pertra and accepted by the Acceptants pursuant to the Offer is likely to be among the factors considered by such court. 9

13 3.16 JURISDICTION AND CHOICE OF LAW The Offer is subject to Norwegian law. Any dispute arising out of or in connection with the Offer or the Offer Document shall be subject to the exclusive jurisdiction of the Norwegian courts with Trondheim District Court as the agreed venue ADVISORS The Manager in connection with the Offering is Pareto Securities ASA. Advokatfirmaet Selmer DA has acted as legal advisor to the Offeror and Advokatfirmaet Vogt & Wiig AS has acted as legal advisor to DNO and NOIL in connection with the Offering. Advokatfirmaet Schjødt DA has acted as legal advisor to the Manager. 10

14 4. BACKGROUND FOR THE OFFER 4.1 CONTACT BETWEEN PERTRA AND DET NORSKE OLJESELSKAP Det Norske Oljeselskap and Pertra have over the last few years worked together in consession rounds and production licenses at the NCS. In recent consession rounds, agreements of Area of Mutual interests have been followed by joint lisence applications and awards. The process has demonstrated a common approach to exploration activities and mutual respect for professional competence. This formed the basis for a prospective successful combination of the companies. The negotiations were held in October 2007 by Chairman Kaare M. Gisvold and CEO Erik Haugane from Pertra. Shareholders of NOIL were represented by Chairman Berge Gerdt Larsen in DNO ASA and CFO Haakon Sandborg on behalf of NOIL. The Integration Agreement was signed on 8 October BACKGROUND FOR THE OFFER It is the intention of the parties to create a combined company to become one of Norway`s largest operators. The combination of the two companies is part of the strategy to establish a mid-cap operating company creating shareholder value. The combination together with further growth enables the companies to achieve a critical mass to pursue exploration and development projects on the Norwegian Continental Shelf. The statistical leverage increases the probability to make discoveries each year. Likewise, the size will make new rig contracts more available due to the rig companies preference for mid-cap and large-cap companies. The size will also make the company improve the asset diversification both in terms of fields in production and fields in development. Due to the size, diversification and news flow the combined company will have a better reach for alternative financing sources, including debt. The conditions for sustainable levels of long term profitability and asset growth are improved. Strategic benefits of the combination: Creates the no 2 Norwegian exploration and production company on the Norwegian Continental Shelf Similar strategy focusing on operatorships of exploration licenses makes the companies a good fit The companies have cooperated well in the past, evidenced by mutual license partnerships The increased size resulted by the combination, improves the conditions for fast growth and value creation due to an expected increased number of license awards, operational and financial leverage, portfolio optimization, leadership in sector consolidation, better rig capacity, increased sample of drilling candidates, stock liquidity, recruitment, etc. The combined company will operate 18 licenses offshore Norway and expects to operate 20 exploration wells over the next three years. This higher level of exploration by a Norwegian independent focusing solely in Norway, corresponds to the level of exploration historically conducted by Saga Petroleum and Norsk Hydro, combined. The combined company will have its registered office in Trondheim, with the head office functions split between Trondheim and Oslo. Consequently, the CEO shall have offices in Trondheim and in Oslo, while the CFO and part of the IR management will be located in Oslo. The combined company will build on the competence centers already established in Trondheim and Oslo as well as the offices in Harstad and Stavanger. The combined company will initially have a staff of around 80 people and will be ideally positioned for further growth, with an expected doubling of the number of employees over the next two years. 11

15 5. THE OFFER PRICE 5.1 THE PRICE OFFERED The Offer Price is NOK 24 for each NOIL Share with settlement in shares in Pertra (see Section 3 above). The Offer Price values Det Norske Oljeselskap's to NOK 2.8 billion. Prior to the opening of Oslo Børs on 9 October 2007, Pertra announced its intention to make an offer for all of the outstanding Shares in Det Norske Oljeselskap. The price offered was NOK 24 per Share, payable in New Shares in Pertra. The closing price for the Shares was NOK on 8 October 2007, the day prior to Pertra s announcement. The Offer Price constitutes a premium of 2.1% for the Shares compared to the closing price the day prior to Pertra s offer. 5.2 SHARE PRICE DEVELOPMENT FOR DET NORSKE OLJESELSKAP (CLOSING PRICE) The graph below shows the development in the trading price (closing price) and the traded volume for Shares in Det Norske Oljeselskap on the OTC in the period from and including 22 June 2007 to and including 19 November 2007: NOK /22/07 6/27/07 7/2/07 7/7/07 7/12/07 7/17/07 7/22/07 7/27/07 8/1/07 8/6/07 8/11/07 8/16/07 8/21/07 8/26/07 8/31/07 9/5/07 9/10/07 9/15/07 9/20/07 9/25/07 9/30/07 10/5/07 10/10/07 10/15/07 10/20/07 10/25/07 10/30/07 11/4/07 11/9/07 11/14/07 11/19/07 Volume 1,000, , , , , , , , , ,000 0 Volume Closing price Source: Norwegian Securities Dealers Association 12

16 6. PRESENTATION OF PERTRA The following section contains a brief presentation of Pertra and its operations. For a more detailed description of the Pertra Group, please refer to Pertra's homepage: COMPANY INFORMATION Pertra ASA is a Norwegian public limited liability company organised and existing under the laws of Norway, pursuant to the Norwegian Public Limited Liability Companies Act. The Company was incorporated on 11 February 2005 as a private limited liability company (AS) under the name Artrep AS, which was later changed to Pertra AS. The founder was Pertra Management AS, Beddingen Trondheim Norway. Pertra AS was converted to a public limited liability company (ASA) in February The Company s registered office and principal place of business is at Nedre Bakklandet 58 c, 7014 Trondheim, Norway. The Company s telephone number is and the fax number is The Company s business registration number with the Norwegian Register of Business Enterprise is Pertra is an independent E&P company focused on exploration and development of small and medium-sized petroleum resources in the North Sea, Norwegian Sea and the Barents Sea, all on the Norwegian Continental Shelf. The Company is based in Trondheim, with offices in Harstad and Stavanger. Pertra has 53 employees in addition to an extensive network of collaborating partners. Following (and subject to) completion of the Offer, NOIL will be a subsidiary of Pertra. Other than this, Pertra does not have any subsidiaries or material holdings in other companies. 6.2 HISTORY The original company Pertra ( Pertra I ) was established by Petroleum Geo-Services ASA (PGS) in January 2002 as a wholly-owned E&P company to pursue small-field opportunities on the Norwegian Continental Shelf. The foundation was a direct follow-up of White Paper 39 ( ), which created an opening for new participants on the Norwegian Shelf. Pertra I purchased 70% of the Varg Field, then in the process of being shut down, and took over as Operator 1 August Daily production from Varg was doubled, and an additional reserve of 40 million barrels was discovered and included in the Varg Field. Toward the end of 2004, PGS ASA decided to sell Pertra and withdraw from the E&P business. PGS sold Pertra I to Talisman Energy UK Ltd., the effective date being 1 January The management of Pertra I established a new oil company on 11 February 2005 and re-purchased from Talisman the name Pertra, physical onshore property, procedures, computer equipment, and license interests in five licenses, the effective date also here being 1 January The authorities approved the license share transfers from Talisman to Pertra on 29 April Furthermore, the Norwegian authorities re-approved Pertra s formal competence as a Licensee and Operator on the NCS. In connection with the start-up, Pertra became the Operator for one exploration license. 15 of the 19 people who were employed by Pertra when the company was purchased by Talisman in January 2005 continued in the new Pertra. In 2005, Pertra purchased shares in six licenses on the Norwegian Shelf, including 5% in the producing Varg Field. The Ministry of Petroleum and Energy re-appointed Pertra as operator of PL 321 on 29 April 2005 and of PL 337 on 26 August In 2005, Pertra raised NOK million in new equity from Norwegian and international investors. Petro Midt-Norge AS and Pertra Management AS were the two major shareholders with respectively 40% and 32% ownership interest as of 31 December In December 2005, Pertra was awarded two new operatorships and two partnerships in the Awards in Predefined Areas ( APA ) For both of the partnerships NOIL was operator. On 10 November 2006, Pertra was listed on Oslo Børs ASA. The portfolio was again extended in January 2007 with the award of three new operatorships in the APA 2006, and in June 2007 by an additional partnership in connection with the last part of the APA 2006 awards. Currently the Company s license portfolio comprises a total of seven operatorships and nine partnerships, taking into account the split of the PL 316 and the additional acreage awarded in APA In October 2007, the 13

17 Company signed an agreement with ExxonMobil to acquire a 25% interest in PL 027D. Completion of the transaction is contingent upon conditions precedent, including approval by the Norwegian authorities. In September 2007, Pertra submitted its most extensive application ever in connection with the Award in Predefined Areas (APA) 2007, the government's annual licensing round in the so-called mature areas on the Norwegian Shelf. The Ministry of Petroleum and Energy (MPE) aims to award new production licenses in APA 2007 at the end of 2007 or at the beginning of Pertra is among the most experienced small operators on the Norwegian Shelf. From 2002 until the present, The Company has drilled 11 well targets, using four different drilling rigs. On 28 September 2007, the Company announced a discovery in PL 337, the first exploration well drilled by the Company since its re-establishment in Pertra 1 s drilling operations have been benchmarked by Rushmore Reviews, showing excellent results compared to other European companies. Plan for Production and Operation (PDO) of the Yme Field was approved by the authorities 11 May All main contracts for the development have been awarded. The planned date for start-up of oil production is June The Yme Field is operated by Talisman, and Pertra has a 10% interest. In Production License (PL) 364, a jack-up platform with drilling, production, storage, and loading facilities has been selected as the development solution for Frøy. Technical studies of various platform solutions from relevant contractors are in progress, as well as work with tender documentation. On 9 October 2007, it was announced that Pertra ASA and NOIL ( NOIL ) had resolved to execute a combination of the two companies. The combined Company will have its registered office in Trondheim, with head office functions split between Trondheim and Oslo. The new name is "Det norske oljeselskap ASA". 6.3 BUSINESS OBJECTIVES AND STRATEGY The vision of the company is to be a successful and effective company with respect to exploration, development, and operation of small and medium-sized oil fields on the Norwegian continental shelf. This will be obtained through the acquisition of new exploration acreage in licensing rounds, and through acquisition of exploration acreage. Development and operations will be managed in close cooperation with the vendors of relevant services. The business plan has several strategic objectives that are prerequisites for the overall objective for the Company. These are summarized below. Values are built by maturing assets from prospects and resources to reserves and from reserves into production. The Company s geographical focus is acreage in shallow areas of the Norwegian Sea and the Norwegian North Sea. From 2007 the Company also put emphasis on the opportunities in the Barents Sea. The Company concentrates its activities in areas near existing finds and existing infrastructure. The Company aims to build a balanced portfolio of prospects, resources and reserves. Acreage will be acquired through applications in licensing rounds, buy-ins and swaps either by sole investments or by cooperation with other companies. Development and operations will be managed in close cooperation with the vendors of relevant services. The strategy puts a high emphasis on the need to secure rig capacity and to maintain and develop a fruitful relationship with the oil service industry. Pertra may choose to sell discoveries before production start-up. 6.4 BUSINESS OVERVIEW Exploration approach Pertra s main focus has been to create value through exploration for oil and gas on the NCS. A highly skilled staff and access to relevant data have been the basis for this effort. An early initiative to merge and enhance the quality of available 3D seismic data has resulted in extensive coverage of the main hydrocarbon basins. The portfolio is balanced with respect to timing of development possibilities, with several discoveries and exploration acreage in the North Sea, where economic discoveries can be brought on stream early through existing infrastructure, as well as exploration acreage in the Norwegian Sea where prospects are larger, but also requiring longer lead time for development due to infrastructure requirements. The portfolio is well balanced with respect to exploration play and basin composition, meaning that the prospects have different type and 14

18 magnitude of risk, offering portfolio protection through diversification. In this manner, any one exploration well outcome will have limited impact on the remaining prospects in the portfolio. Successful exploration starts by acquiring knowledge based on available data, using skilled and experienced personnel using efficient interpretation tools. Through access to data and applying regional and detailed geoscience expertice, prospects can be matured on the exploration acreage. Access to the exploration acreage is through competitive licensing rounds offered by the Norwegian State or through acquisition or farm-in into licenses held by other oil companies when such opportunity emerge or can be generated. Since the formation of the Company, Pertra has filed applications in three license award rounds; the APA 2005 (6 licenses) and APA 2006 (5 licenses, of which 3 operatorships). Pertra has also applied for further exploration licenses in the APA The next step in the exploration sequence is to prepare the prospect for drilling. The work consists of a very detailed interpretation of geological and geophysical data to define the hydrocarbon system and the possible trapping of hydrocarbons in good reservoir rock. The studies identify the main risks for the hydrocarbon system to be defect (ie not containing hydrocarbons) as well as a preliminary technical development study and economic assessment to determine if a successful exploration effort will result in a project with sound economic value. If the project analysis is positive, the decision to go ahead with exploration drilling is normally given. However, should the analysis show that for some reason it will not be possible to economically develop the prospects on a license, or that the exploration risk is found to be unacceptable, a decision to hand the license back to the authorities can be made providing any license commitments have been fulfilled. These decision points are key milestones determined by the license conditions laid out in the award documents. An example of such milestone is the Drill or Drop decision, where the license needs to commit to an exploration well or relinquish the exploration acreage. Pertra and the operators of Pertra licenses have prospects in different stages of evaluation in all the licenses in the portfolio. The time-span from acquisition of a license to drilling is normally in the range of two to four years. Prior to exploration drilling the volume of oil and gas in prospects on a exploration license are classified as exploration resources and reported as an unrisked volume, and a risk factor indicating the probability of finding hydrocarbon in the license. The risked exploration resources for a license is the unrisked volume multiplied by the exploration risk for the individual prospects. Pertra took an early position in the rig market and has so far secured four rig contracts. Pertra entered into an agreement with Maersk Contractors Norge late 2004, regarding the use of the jack-up drilling rig Maersk Giant for one exploration well second half Later Pertra has entered into agreements for use of the semisubmersible rigs Bredford Dolphin, Aker Barents and an extensive contract for the use of Deepsea Delta Oil and gas discoveries If a well discovers oil or gas in a prospect (chance of success in most cases around from 20% to 30%), the discovery normally requires further studies and possibly also further appraisal drilling prior to assess economic viability and collect further subsurface data to guide development concept selection. During the delineation phase the volumes are classified as discoveries and even though the geological exploration risk is eliminated, there can still be significant uncertainty with respect to in place volumes, productability, flow performance and so forth. This uncertainty is often reflected in a commercial risk factor, indicating the probability of the discovery being matured into an economic development. If the delineation studies prove that the discovery is economically attractive to exploit, a Plan for Development and Operation (PDO) is issued by the licensees and approved by the authorities, and the development can start. The volumes are following the PDO classified as reserves. The timeline from PDO to first oil (gas) on stream varies according to type of development, from months for a subsea tie-back to months for a standalone development. When the production has started, the volumes are classified as reserves split into three categories; P1 are called proven reserves and is the part with reasonable certainty (normally more than 90% probability) to be produced. P2 are called probable reserves, normally reflecting 50% probability of recoverability and P3 are named possible reserves reflecting 10% probability of production. 15

19 During its existence, Pertra has built a substantial portfolio of risked resources and some discoveries. Volumes in mmboe Resources Of which are Comments discoveries Acquisitions / APA round Reassessment 2007 (3 Quarter) APA round/reassessment/divesture Drilling program In addition to this, and due to increasing activity in the drilling rig market Pertra, in cooperation with Revus and DNO, initiated work aimed at securing drilling capacity as early as in In January 2006, a contract with Dolphin AS regarding use of the semi-submersible drilling rig Bredford Dolphin was signed. A total of seven oil companies have joined the consortium, whereof several partners and operators in licenses where Pertra is engaged, thus securing drilling capacity for Pertra. Pertra s share of the 3-year contract consists of 115 fixed + 75 buffer days. The consortium has a total drilling program of 20 exploration wells during the 3-year contract period. Pertra ASA and Revus Energy ASA entered in August 2007 into an agreement with Odfjell Drilling regarding lease of the drilling rig "Deepsea Delta" for drilling of exploration wells. "Deepsea Delta" will be ready for operation for Pertra and Revus at the end of its present engagement with Norsk Hydro. The contract is expected to commence in March The duration of the contract is three years, and the rate is set at USD 435,000 per day. The contract value is approx. USD 480 million. The contract also encompasses Casing Running Services. In addition, an agreement has been entered into with Odfjell Drilling for the provision of Drilling Management Services, including planning, logistics and procurements of miscellaneous services, drilling supervision and emergency preparedness. The Drilling Management Agreement also comprises Pertra's drilling activities on the Frøy field (PL 364). "Deepsea Delta" is presently under contract with StatoilHydro ASA. The rig will be available for Revus/Pertra during the first half of The drilling rig was built in 1981 and considerably upgraded in "Deepsea Delta" is equipped with a 15,000 psi BOP and is capable of drilling in water depths up to 450 meters. Pertra and Revus have the option to expand the contract to five years at a reduced day rate within December The rig agreement with Odfjell Drilling has been achieved in cooperation with Revus Energy, who will cover one third of the duration of the contract. Revus and Pertra will coordinate activities to ensure maximum utilization of the rig. The schedule above is currently not supported by formal license approvals, and indicates a tentative drilling plan for Pertra. Also licenses not yet in the portfolio may be included in the drilling programme from

20 In addition to the operated licenses, Pertra expects a significant drilling programme in the partner licenses. These licenses are operated by Talisman and NOIL. Both Talisman and NOIL have secured rigs in the coming three years period which enable them to drill at least five wells in this period in licenses where Pertra has an interest. Pertra has a prospect portfolio comprising more than 50 prospects in 16 licenses. All formal work obligations are completed. The Company will at certain times have to make decisions between relinquishing a licence, or drill an exploration well or commit to a PDO, as the case may be. Pertra expects to mature minimum six prospects per year that meet Pertra s criteria for drilling decisions, i.e., P50 reserves constitutes commercial volumes, and with a success rate higher than 30%. 6.5 OVERVIEW OF THE PORTFOLIO Pertra s main goal is to create value through oil and gas exploration development and production activities. The process starts by identifying interesting prospects, and after being awarded a license, further studies based on existing or new data are carried out. Some prospects will be drilled, and some will result in discoveries being made. If drilling activities indicate that oil or gas volumes are sufficient, this might result in development and production. Oil companies have explored and identified a number of large oil and gas fields on the Norwegian Shelf. However, hydrocarbons are not only trapped in large fields. There are several small fields not yet mapped nor drilled. Many of these will obviously prove very profitable, also with considerably lower oil prices than what the Company have seen lately. Pertra s portfolio of reserves and prospective resources is distributed approximately equally between the North Sea and the Norwegian Sea the two most prolific provinces on the NCS as shown in the figure below: Exploration activities in Pertra consequently focus on small and medium-sized prospects in open areas in the North Sea and the Norwegian Sea. The Company also studies areas tied up by previous and current licenses to prepare for the time when increased area fees might result in relinquishment of parts of this acreage, and also with the aim of exchanging or purchasing interests in existing licenses. 17

21 Below is an overview of the licenses held by Pertra: 6.6 THE PERTRA OPERATED LICENSES PL 432 (Blocks 6507/9 and 12 (parts) in the Norwegian Sea, Operator Pertra (100%). PL 432 was awarded in APA 2006 and is situated in the Norwegian Sea east and northeast of the Midgard Field. Interesting prospects that may have trapped oil or gas spilling over from the Midgard Field have been identified. The work program involves shooting 400 km 2 3D seismic and decide whether to drill or relinquish the license within three years. The 3D seismic survey was successfully executed by Fugro Geoteam in June Processing of the data will be completed by the end of this year. The License period is 6 years with 6 (3+2+1) with 25 years extension. 18

22 6.6.2 PL 380 incl. Fongen (Block 6407/2 in the Norwegian Sea), Operator Pertra (70%), License partner Det Norske Oljeselskap (30%). PL 380 is situated due west of the Midgard Field in the Norwegian Sea. The license was awarded in APA 2005, and the authorities allowed the license partners one year by which to complete studies providing a basis for determining whether to drill or relinquish the license. Within the deadline, 6 January 2007, the license partners decided to drill the prospect "Fongen". The license has thus initiated phase 2 of the work program, with a twoyear drilling deadline. A site survey has been conducted in 2007 in preparation for the drilling. A prospective discovery is sought produced by means of third-party infrastructure located nearby. The prospect is planned drilled in 2008 using the semi-submersible drilling rig "Bredford Dolphin". The license period is 5 years (1+2+2), plus 10 years extension PL 321 (Blocks 6306/2, 3 & 5 on Frøyhøgda in the Norwegian Sea, totally 1,373 km2), Operator Pertra (25%), License partners Talisman Production Norge (25%), HydroStatoil (20%), and Aker Exploration (35%). This license is located on the Frøy High east of Ormen Lange and south of Draugen and was awarded in the 18 th APA round on 18 June The acquisition of new 3D seismic data was completed in July 2006 and processed in the end of December These data were utilized in studies ending in June 2007, when the license partners decided to drill two exploration wells in the license. A site survey has been carried out in 2007 in order to be prepared to drill the first well in The license period is 6 years with a 30 years extension PL 364 incl. the Frøy Field (Blocks 25/2, 25/3, 25/5 & 25/6 (parts) in the North Sea ), Operator Pertra (50%), licence partner Premier Oil Norge (50 %) The license was awarded in the APA round in 2005, on 6 January Pertra is currently in the process of preparing a possible redevelopment of the Frøy Field. A prospective Plan for Development and Operation (PDO) is expected concluded during Q Production start-up is expected in The field has been in production from and accumulate production was 35mbbls, equivalent to 18 % recovery. The field was closed during the low oil price regime. The expected remaining recoverable reserves are mbbls. The license period is 3 years (2+1), with 20 years extension PL 414 (Blocks 25/3, 5 and 6 (parts) in the North Sea), Operator Pertra (40%), License partners Faroe (20%), Noreco (20%) and PA Resources (20%). The partnership consisting of Pertra (operator), Færøy Petroleum, Noreco, and PA Resources was awarded Blocks 25/3 and 25/6 in PL 414 in APA 2006 on 16 February The license is located east and northeast of Frøy (PL 364). In PL 414 prospects in Jurassic and Paleocene have been identified. These may be produced through the Frøy Field if they are drilled and discoveries made. The work program stipulates two years by which to reprocess 3D seismic data and complete studies before a drilling decision has to be reached. The license period is 5 years (2+2+1) with 20 years extension PL 408 (Blocks 15/8 and 9 (parts) in the North Sea), Operator Pertra (70 %), License Partner Altinex (30%). In APA 2006, Pertra and license partner Altinex were awarded PL 408 in Blocks 15/8 and 15/9 in the area situated between Sleipner and PL 337. Interesting prospects in Jurassic and Paleocene have been identified in this area. The license was assigned two years by which to reprocess 3D seismic and interpret existing data prior to deciding whether to drill or relinquish the license. The license period is 5 years (2+2+1) with 25 years extension. 19

23 6.6.7 PL 337 incl. Storskrymten (Block 15/12 and 16/10 (parts) in the Southern North Sea, just north of the Varg Field close to the UK border, a total of 674 km 2), Operator Pertra (45%), License partners Bridge Energy (10%), Revus Energy (20%) and Dana Petroleum Norway (25%). This license is located north of the Varg Field and was awarded in APA Having subjected the license to thorough and extensive analyses, the decision to drill the prospects Storskrymten and Grytkollen in one exploration well was made. Drilling commenced early in Q using the jack-up drilling rig Mærsk Giant. Hydrocarbon discovery was made in the prospect Storskrymten in late September. Pertra is investigating whether the found is sufficient for a commercial development. The license period is 5 years (2+2+1), with 15 years extension. 6.7 PARTNER-OPERATED LICENSES PL 447 (Block 6608/7 (part) in the Norwegian Sea), Operator Det Norske Oljeselskap (30%), Licence partners Petro-Canada (30%), Pertra (20%) and Noreco (20%). PL 447 is situated in the Træna Basin north of the Norne Field. The license was awarded in the second part of APA 2006, on 15 June The main prospect is a four-way dip closure in Paleocene (Lower Tertiary). The license area is covered by existing 3D surveys, and using these data the license will decide whether to drill within 3 years. The License period is 6 years with 6 (3+2+1) with 25 years extension PL 383 (Blocks 6507/3 & 6508/1 in the Norwegian Sea), Operator Det Norske Oljeselskap (50%), Licence partner Pertra (50%). PL 383 is located south of Norne and is operated by Det Norske Oljeselskap, who holds the other 50% license interest. The licence was awarded in the APA round in 2005, on 6 January Seabed logging (EM surveys) was conducted during the summer of The interpretation of these data has not yet been completed, but shows anomalies that may prove positive. The decision whether to drill an exploration well or relinquish the license is to be made during The licence period is 5 years (2+2+1) with 20 years extension period PL 038 incl. the Varg Field (Block 15/12 in Southern North Sea, 32km south of Sleipner, and close to UK border ), Operator Talisman Energy (65%), License partners Petoro (30%) and Pertra (5%). The company s production revenues stem entirely from its 5 % license share in PL 038 the Varg Field. In Q production amounted to 56,578 barrels (8,200 Sm 3 ). The production is performed by the FPSO Petrojarl Varg. The Varg Field has been in production since 1998 and has as per 31 December 2006 produced 10.0 MSm3 oil. Expected total reserves are 13.0 MSm 3 oil. The operator continues a process to evaluate the prospects in the license. The initial license period is 30 years, extended to PL B (Blocks 9/2, 9/3, 9/5, 9/6 & 10/4 in the North Sea. Part of Block 9/1 (PL 316B, APA 2006), Operator Talisman Energy Norge (70%), license partners Revus Energy (20%) and Pertra (10%) The license was awarded in the 18 th Round, of the APA on 18. June The PL316B field was awarded in the APA in 2006 on 29 January The PL 316 has during the second half of 2007 been split into three separate licenses (PL 316, PL 316 CS, PL 316 DS). In addition to the Yme Field, currently in the process of being redeveloped, this license also comprises considerable exploration acreage in the Egersund Basin. Talisman, as operator, has mapped a series of prospects and is now about to conclude an evaluation of these. A drill site survey aimed at commencing drilling in 2008 has been completed. The license period is 6 years with extension of 20 years. 20

24 6.7.5 PL 332 (Block 2/2 in the North Sea), Operator Talisman Energy (50%), license partners DNO (20%), Pertra (20%) and PA Resources (10%) This license is located in Block 2/2 and was awarded in APA 2004 with Talisman as operator. DNO, PA Resources, and Pertra are license partners. The license contains some minor discoveries. 3D seismic was acquired in 2005 and The decision whether to drill or not has to be made by the end of The license period is 6 years (3+2+1) with an extension period of 15 years PL 356 (Blocks 3/4 & 3/5 in the North Sea), Operator Det Norske Oljeselskap (50%), license partner Pertra (50%) The license was awarded in APA 2005 and has been assigned three years before a drilling decision has to be made. Approximately 500 km 2 3D seismic was acquired in March April 2006, and the data processing was completed in Q The license period is 6 years (3+2+1) with extension period of 20 years Future license acquisition activity Future license acquisition activity will be based on licence applications to the authorities. As Pertra has a relative high interest in several licenses, a share of these might be swapped against other near term exploration licences of similar or better quality. 6.8 PRODUCTION Pertra currently only has production from the 5% interest in PL038 Varg. The production is declining and the field is at the late tail-end stage. However, the opertor is evaluating remaining prospectivity. Funds are also included in the proposed 2008 budget to drill and test one exploration well, subject to fully reviewed and risked economic evaluation and partner approval. Two new infill development wells are included in the firm 2008 budget proposal. 6.9 RESERVES AND RESOURCES The classification of resources used in this report is consistent with the guidelines set forward by the Norwegian Petroleum Directorate ( NPD ) and by Oslo Børs circular no. 2/2007. Prospective resources are concurrent with resource class (RC) 8 in NPD s classification. RC9 (leads) are not reported. The discoveries reported as contingent resources are all in RC 4 and 5, without discrimination. The reporting for the future will reflect both the NPD s classification (RC 1 3), indicating maturity of development and the commonly used SPE/WPC/AAPG classification reflecting the degree of geological understanding of the reservoir. Further information may be found in the annual report of Pertra for 2006 issued on 23 March 2007, which can be obtained on the Company s web page or at the Company s offices. The Company's resource figures are normally based on the operators calculations. The actual producible resources may differ from these estimates, and will vary over time Reserves Reserves are those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a given date forward (reference is made to the Oslo Børs circular no. 2/2007). Pertra reserves estimates are split between producing reserves and non-developed reserves. The producing reserves are the reserves from currently producing fields, while the non-developed reserves are the reserves expected from field/discoveries where development is considered economic, but not yet decided/approved. Producing reserves (as per Q3 2007): Licence Name of field Equity Reserves Volumes in net mmboe P1 P2 P3 PL 038 Varg 5% 0.4 0,7 0,7 Total 0.4 0,7 0,7 21

25 Non-developed reserves (as per Q3 2007): Licence Name of field Equity Reserves Volumes in net mmboe P1 P2 P3 PL 316 Yme 10% Total The Yme field is under development and first oil is expected July Contingent Resources Contingent Resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known accumulations, but which are not currently considered to be commercially recoverable. (reference is made to the Oslo Børs circular no. 2/2007). Pertra s contingent resources are resources in fields and discoveries that require further appraisal before economic viability can be concluded. Potentially economic resources (as per Q3 2007): Licence Name of field Equity Contingent Resources Volumes in net mmboe Most Likely PL % 4 PL 364 Frøy 50% 25 Total 29 PDO for Frøy is expected by year-end The oil discovery in PL 337 Storskrymten is under evaluation. Hencem Storskrymten is still included in Prospective Resources. Thereafter it will be included in Potentially economic resources Prospective resources Prospective resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations. Pertra s prospective resources reported as unrisked exploration potential and risked exploration potential. Pertra has not partner approval to disclose Prospective resources for PL 321(interest 25%). Resource figures for PL 321 are not included in the table below. The table below shows the resources as per Q3 2007: Licence Equity Resources Volumes in net mmboe Unrisked exploration Risk Risked exploration PL 038 5% 3 24 % 1 PL % % 2 PL % n.a. n.a. n.a. PL % % 5 PL % % 46 PL % % 14 PL % % 13 PL % % 11 PL % % 40 PL % % 17 PL % % 32 PL % % 12 Total

26 6.10 RESEARCH AND DEVELOPMENT Pertra does not hold any material R&D patents or IPR licenses. As operator of joint venture licenses, Pertra manages 1-2% of license total expenditure which is earmarked for general research and development. These funds are used for smaller R&D studies, and the findings are the property of the joint venture licenses. Research and development costs are not material, and all R&D costs are expensed PATENTS AND INTELLECTUAL PROPERTY RIGHTS, LICENSES ETC The Company is not dependanton any material patents or other intellectual property rights. In order to conduct its business, the Company is, however, dependent on its interest in exploration licenses, as well as certain rig and drilling contracts. For details of such licenses and contracts, see sections 6.6, 6.7 and 6.13 above and below ENVIRONMENTAL ISSUES The Company is not obliged to carry out environmental protection measures that would be significant to the business or financial situation. See also section below MATERIAL CONTRACTS As further described under Section Capital Resources, the Company has a drawing facility of NOK 1,000 million with DnBNor. The Company has entered into 10 Joint Operating Agreements (JOA). All JOAs except JOA for PL 038 are unamended standard documents for Awards in 18 th licensing round and Awards in Predefined Areas. The Company has entered into an Acquisition Agreement with Talisman on 11 March The Agreement includes the acquisition by Pertra of interests in PL 321, 332, 337, 349 and 038. The consideration of the contract was USD 8.75 million. The contract includes a Decomissioning Securities Agreement (DSA). According to the DSA, Talisman may require a guarantee to cover plug and abandonment expenses up to NOK 20 million. The Company has entered into a Farm-In Agreement with Paladin on 20 September 2005 regarding Pertra s 10 % interest in PL 316. Pertra has carried all costs related to Paladin s remaining 40 % interest in PL 316, up to USD 35 million. Pertra has been obliged to vote in the management committee according to the instructions of Paladin until payment of the consideration is completed. The Company has entered into acquisition Agreement with Revus Energy on 5 September Pertra assigns 20 % in PL 337 to Revus. Revus assigns to Pertra one of its drilling slots under the Bredford Dolphin Consortium Agreement. The Company has entered in to an Acquisition Agreement with Marathon on September Marathon assigns 30 % in PL 337 to Pertra. Pertra assigns to Marathon one of its drilling slots under the Bredford Dolphin Consortium Agreement. The Company has entered into a rig consortium agreement with six other oil companies to hire the rig Bredford Dolphin. The consortium has reserved the rig for a period of 1,095 days. Of these 945 days are regular and 150 days are buffer days that can be used if delays or unforeseen events occur. Pertra and Revus have entered into a separate agreement with Dolphin to guarantee for the use of the buffer days. Pertra has two slots totalling 115 days during the contract period and a maximum of 150 buffer days shared with Revus. The members of the consortium will pay an operating rate of USD 378,000 per day, including USD 20,000 per day to Revus and Pertra as compensation for the guaranteed buffer days. Completion date is 3 years from commencement date. Pertra has made a prepayment of USD 5.15 million to Dolphin AS as security for its obligation in the 115 days period. The Company has entered into a contract with Maersk Giant Norge AS for the provision of jack-up drilling rig Maersk Giant and drilling services, incorporating CRINE General Conditions of Contract for Mobile Drilling Rigs. With amendments signed on 19 January 2006 by Pertra as operator of PL 337 which consists of Pertra (45%), Revus Energy (10%), Brigde Energy (20%) and Dana Petroleum (25%). The operating rate is USD 295,000 per day. The drilling is planned completed in November

27 The Company has entered into a Sales and Purchase Agreement (SPA) with Aker Exploration AS (AkerX) on 21 December Pertra assigns 15% in PL321 to AkerX and in consideration of the assignment, AkerX shall carry a disproportionate share of the total exploration cost in relation to exploration activities carried out pursuant to a decision in the PL321 MC to fulfil the PL 321 obligatory work commitment. The Company has entered into an Acquisition Agreement with ExxonMobile 8 th of October 2007, thereby acquiring a 25% interest in the Eitri prospect located in PL 027B, 7 km from the Jotun Field. Subject to an agreement with PL 027B, Pertra will operate one exploration well and plans to use the rig Bredford Dolphin for the drilling operation, estimated start-up Q Pertra will earn a 25% interest in the license (excluding the Jotun Field) by carrying ExxonMobil's part of the costs associated with one well for their remaining 25% interest. The area outside the Jotun Field will be designated as a new license, PL 027D, pending approval by the Norwegian authorities. In August 2007, Pertra ASA and Revus Energy ASA entered into an agreement with Odfjell Drilling regarding lease of the drilling rig "Deepsea Delta" for drilling of exploration wells on the Norwegian Continental Shelf. "Deepsea Delta" will be ready for operation for Pertra and Revus at the end of its present engagement with Norsk Hydro. The contract is expected to commence in March The duration of the contract is three years, and the rate is set at USD 435,000 per day. The contract value is approx. USD 480 million. The contract also encompasses Casing Running Services. In addition, an agreement has been entered into with Odfjell Drilling for the provision of Drilling Management Services, including planning, logistics and procurements of miscellaneous services, drilling supervision and emergency preparedness. "Deepsea Delta" is presently under contract with StatoilHydro ASA. The drilling rig was built in 1981 and considerably upgraded in "Deepsea Delta" is equipped with a 15,000 psi BOP and is capable of drilling in water depths up to 450 meters. Pertra and Revus have the option to expand the contract to five years at a reduced day rate within December The rig agreement with Odfjell Drilling has been achieved in cooperation with Revus Energy, who will cover one third of the duration of the contract. Revus and Pertra will coordinate activities to ensure maximum utilization of the rig. 24

28 7. MARKET CONDITIONS AND TRENDS 7.1 ENERGY OVERVIEW The world s energy consumption has increased constantly during recent years. The trend shows that there still is a growth in consumption of oil, together with natural gas and coal while the use of nuclear energy and hydroelectric energy has stagnated. The oil market is an integral part of the world economy, where demand moves in line with the general economy. The International Monetary Fund (IMF) estimates world economic growth at ~5% in 2007 and Demand for oil is estimated by the Energy Information Administration (EIA) to 85.8Mbd in 2007 (growing 1.2 Mbd in 2007) and growing 1.5 Mbd in 2008 to 87.3 Mbd. EIA s supply and consumption estimates for the second quarter of 2007 suggest OECD inventories on a days-of-supply basis will continue to decline to the low end of the 5-year average range and if OPEC does not increase production, inventory levels could fall below the 5-year average, with the attendant price effects according to EIA. This is also reflected in the declining forward price on oil (see 4 th graph below), which indicates that is better to sell oil spot in the market than to maintain oil inventories. OPEC is an international organization of twelve countries, which are heavily reliant on oil revenues as their main source of income. Membership is open to any country which is a substantial net exporter of oil and shares the ideals of the organization. The current members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Twice a year, or more frequently if required, the Oil and Energy Ministers of the OPEC countries meet to decide on the organization s output level and consider whether any action to adjust output is necessary in the light of recent and anticipated oil market developments. As oil prices have increased further, it has become evident that OPEC at the moment does not have enough production capacity to meet the growth in world demand. The organization is planning to increase its capacity in the coming years, mainly from Saudi-Arabia, to attempt to regain control over prices. World Oil Consumption by Region MMBOE/Day North America S&C America Europe Middle East Africa Asia Pacific Source: BP 2006, As a consequence of a solid global economy and a strong increase in oil demand, the general international offshore oil and gas market showed a healthy development from 1995 until The financial crisis in Asia and the oil price collapse in 1998/99 led to a weak market in the period from 1998 to As energy prices increased, this contributed to an improvement during 2001, but the upturn was short as the weakening in global economy negatively influenced the rate of new investments in new oil and gas fields, whereas the market for 25

29 offshore services and modifications were only modesty affected due to the continuous upgrading and production support. This development continued into 2002 and 2003, but during the end of 2003 and 2004, demand for oil showed a significant improvement. The demand and prices in the offshore modification and services markets provide a favorable market outlook for 2008 after record high oil prices have boosted investments in the industry. Despite strong oil prices from late 1999, oil companies have until recently been reluctant to increase exploration and production spending accordingly. Until mid 2003, the high prices were more a result of OPEC s success in controlling the supply side rather than growing demand. However, since then the situation has changed and oil demand has shown a strong year-to-year growth. Since there is currently close to no excess production capacity worldwide, increased exploration and production activity is expected to continue. A 2007 Lehman Brothers survey of 300 oil and gas companies ( found that the long term cycle in worldwide exploration expenditures and drilling activity, currently in its fifth year, is very much intact. According to the survey, E&P spending is expected to increase by 13 percent in 2007, following a growth of 28 percent in According to Rigzone ( overall utilization for the entire competitive worldwide rig fleet is currently around 86.9%. This is up from 85.9% a year ago. Within this average, drill ship utilization is 77.1%, semisubmersibles 85.8% and jack-ups 88.1%. These data reflect utilization of competitive rigs and do not distinguish by capability. According to ODS Petrodata ( the utilization of drill rigs capable of operating in water depth exceeding 5,000 feet has been running 100% since mid THE OIL MARKET The oil price The oil price as of today is at record highs in nominal terms but not in real terms. As can be seen from the second graph below, it is still under the level in the early eighties after the Iranian Revolution when the price peaked at US$ 90/Bbl in 2006 dollars (average annual price). The oil price (Brent December) is currently US$ 91/Bbl with the current average price in 2007 standing at US$ 72/Bbl. 100 The Brent Crude-Current Month 15/11/ Crude Oil-Brent Cur. Month FOB U$/BBL Source: Datastream, 26

30 Real and future Oil Price Real Average Crude Oil Price (inflation adjusted) in $2006 (2007: current average) Brent Forward Curve (Source: Bloomberg) USD/bbl BRENT 01/11/07 BRENT 09/11/07 70 Dec-12 Jun-12 Dec-11 Jun-11 Dec-10 Jun-10 Dec-09 Jun-09 Dec-08 Jun-08 Dec-07 Source: BP, Pareto Research, Bloomberg The oil price is affected by a number of factors, including changes in supply and demand, OPEC regulations, weather conditions, regulations from domestic and foreign authorities, political and economic conditions and the price of substitutes. The use of oil with respect to the total energy consumption has also increased, but it must be noted that the market is dynamic and that means that the demand for oil is inversely linked to the price. Longer periods of high oil prices can therefore lead to increased use of alternative energy sources at the cost of oil demand. 27

31 7.2.2 Oil market balance World oil demand and supply (mmboe/day) Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07E Supply Demand Source: EIA 2007, THE NORWEGIAN CONTINENTAL SHELF According to the Ministry of Petroleum and Energy, the NCS offers a significant remaining resource potential. Of estimated 82bn boe of oil and gas reserves, some 1/3 of total resource potential is produced, 1/3 discovered and 1/3 still undiscovered. NCS oil and gas reserves Source: Ministry of Petroleum and Energy, In order to tap this resource potential, the oil industry has to increase its exploration efforts on the NCS. The Norwegian government is emphasizing the importance of exploration by having a generous tax regime that recoups up to 78% of the exploration costs. New entrants have been awarded an increasing number of new licenses and the major existing players are increasing their activity levels. 28

32 As of today, 60 % of the NCS is opened for exploration activity. In the Barents Sea, only the southern part is currently available to the industry, with the possibility that huge areas will be opened in near future. According to the Ministry of Petroleum and Energy Norway is currently experiencing a period of vigorous activity on the NCS. Higher oil prices have brought significant increases in the activity level providing ample business opportunities for the global supply and service industry. There is a substantial potential for enhanced production and new discoveries. Norway's cluster of high-technology service companies can turn even marginal reservoirs into profit centres, and the stable political scene lets the Company plan for the long-term. Norway is among others perceived to be the most stable country in the world according to The failed states index 2007 by Foreign Policy. In 2003 the Norwegian Government introduced the APA system in mature parts of the NCS. The APA system ensures that very large areas close to existing and planned infrastructure are available for the industry in the years to come. This will lead to efficient use of production and transportation installations on the NCS. The APA system gives new and smaller players on the NCS good opportunities. The APA area will be expanded as new areas mature, but the area is not to be reduced. The production licenses are awarded through licensing rounds (APA and normal licensing rounds). The Ministry of Petroleum and Energy announces what areas are available for production licenses. The applicants are able to apply individually or as a group. The Ministry of Petroleum and Energy considers among others the applicant s geological understanding, technical expertise, experience regarding the applicant s activities and financial strength. All happens through an objective, non-discriminatory process with announced terms and the Ministry of Petroleum and Energy experience with certain applicants may have significance. Number of production licenses Source: Ministry of Petroleum and Energy, 29

33 The number of both production licenses and the number of companies to receive license offers has increased significantly the last years (see figures). A record high of 43 companies applied in APA 2006, and 46 in APA The increased number of interested companies have focused on new areas that otherwise would not get enough attention, and the competition for acreage has increased. Number of companies to receive license offer Source: Ministry of Petroleum and Energy, In APA 2007, the Norwegian Government wanted to give the industry access to new, prospective acreage. It is important to develop the Barents Sea as a petroleum province, and the Ministry of Petroleum and Energy has chosen to prioritise an expansion in this area. In APA 2007, 13 new blocks have been made available to the industry in the Barents Sea, the first new blocks in this area since APA Areas to be awarded (km2) Source: Ministry of Petroleum and Energy, 30

34 The aim of a well defined licensing policy is to organize licensing rounds with a scale and tempo that secures the right activity level, cost-efficiency and high value creation. The maps show licensed acreage and announced blocks as of 9 February 2007: Source: Ministry of Petroleum and Energy, 31

35 8. FINANCIAL INFORMATION AND OPERATING REVIEW FOR PERTRA You should read the following discussion of the financial condition and results of operations in conjunction with the financial statements included in this Offer document. The following discussion contains forward-looking statements that are based on current assumptions and estimates by the Company s management regarding future events and circumstances. The Company s actual results could differ materially from those expressed or implied by the forward-looking statements as a result of many factors, including those described in Section 16 Risk factors. 8.1 BASIS FOR PREPARATION In connection with this Offer document the annual reports prepared based on IFRS as adopted by EU for Pertra for the years 2006 with comparable 2005 figures are included as Appendix 2. The Company s annual report for 2005 based on NGAAP is included as Appendix 3. The annual financial statements have been audited by the Company s statutory auditor, Deloitte. The interim condensed financial information for Q as included below has been prepared by the Company is unaudited. The Company s unaudited interim condensed financial statement for the third quarter 2007 is enclosed as Appendix 1 to this Offer Document. 8.2 SUMMARY OF SIGNIFICANT POLICIES Main principles The consolidated financial statements of Pertra have been prepared in accordance with international accounting standards published by International Accounting Standards Board as adopted by EU, as well additional provisions pursuant to the Norwegian accounting Act Significant accounting judgments, estimates and assumptions The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are employed in the financial statements to determine reported amounts, including the possibility for realisation of certain assets, the useful lives of tangible and intangible assets, income taxes and others. Although these estimates are based on management s best knowledge of historical experience, current events and actions, actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis. Changes in estimates will be recognised when new estimates can be determined with certainty. The key sources of estimation uncertainty for the Company relates to the following: Proved and probable oil and gas reserves. Oil and gas reserves have been estimated by internal experts in accordance with industry standards. The estimates are based on both Pertra ASA s own assessment and information from the operators, partners and independent experts. Proved and probable oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements but not on escalations based upon future conditions. Proved and probable reserves are used when calculating the unit of production rates used for depreciation, depletion, and amortisation. Reserve estimates are also used when testing upstream assets for impairment. Future changes in proved and probable oil and gas reserves, for instance as a result of changes in prices, could have a material impact on unit of production rates used for depreciation and amortisation and for decommissioning and removal provisions, as well as for the impairment testing of upstream assets, which could have a material adverse effect on operating income as a result of increased deprecation and amortisation or impairment charges. 32

36 Exploration and leasehold acquisition costs. Pertra s accounting policy is to capitalise the costs of drilling exploratory wells pending determination of whether the wells have found proved and probable oil and gas reserves. Judgments on whether these expenditures should remain capitalised or expensed in the period may materially affect the operating income for the period. Oil and gas properties that are not deemed as proved and probable properties are assessed quarterly and unsuccessful wells are expensed. Exploratory wells that have found reserves, but classification of those reserves as proved and probable depends on whether a major capital expenditure can be justified, may remain capitalised for more than one year. The main conditions are that either firm plans exist for future drilling in the license or a development decision is planned in the near future. Impairment/reversal of impairment. Pertra has significant investments in long-lived assets such as property, plant and equipment, and changes in expectations of future value from individual assets may result in some assets being impaired, with the book value being written down to estimated fair value. Impairments should be reversed if the conditions for impairment are no longer present. Making judgments of whether an asset is impaired or not, and if an impairment should be reversed, are complex decisions that rest on a high degree of judgment and to a large extent on key assumptions. Complexity is related to the modeling of relevant future cash flows, to the determination of the extent of the asset for which impairment is to be measured, and to establishing a fair value of the asset in question. Impairment testing requires long-term assumptions to be made concerning a number of often volatile economic factors such as future market prices, currency exchange rates and future output, discount rates among others, in order to establish relevant future cash flows. There is a high degree of reasoned judgment involved in establishing these assumptions, including determining relevant factors such as forward price curves, estimating production outputs, and determining the ultimate termination value of an asset. Likewise, establishing a fair value of the asset, when required, will require a high degree of judgment in many cases where there is no ready third party market in which to obtain the fair value of the asset in question. Decommissioning and removal liabilities. Pertra has significant legal obligations to decommission and remove offshore installations at the end of the production period. Legal obligations associated with the retirement of non-current assets are recognised at their fair value at the time the obligations are incurred. Upon initial recognition of a liability, that cost is capitalised as part of the related non-current asset and allocated to expense over the useful life of the asset. It is difficult to estimate the costs of these decommissioning and removal activities, which are based on current regulations and technology. Most of the removal activities are many years into the future and the removal technology and costs are constantly changing. The estimates include, among others, cost assumptions relating to removal complexity, rigs, marine operations and heavy lift vessels. As a result, the initial recognition of the liability and the capitalised cost associated with decommissioning and removal obligations, and the subsequent adjustment of these balance sheet items, involve the application of significant judgment. Employee retirement plans. When estimating the present value of defined pension benefit obligations that represent a gross long-term liability in the balance sheet, and indirectly, the period s net pension expense in the income statement, management make a number of critical assumptions affecting these estimates. Most notably, assumptions made on the discount rate to be applied to future benefit payments, the expected return on plan assets and the annual rate of compensation increase have a direct and material impact on the amounts presented. Significant changes in these assumptions between periods can have a material effect on the accounts. Income tax. The Company annually incurs significant amounts of income taxes payable, and also recognises significant changes to deferred tax assets and deferred tax liabilities, all of which are based on management s interpretations of applicable laws, regulations and relevant court decisions. The quality of these estimates is highly dependent upon management s ability to properly apply at times very complex sets of rules, to recognise changes in applicable rules and, in the case of deferred tax assets, management s ability to project future earnings from activities that may apply loss carry forward positions against future income taxes Property, plant and equipment Oil and gas properties Expenditures to drill and equip exploratory wells that find proved and probable reserves are capitalised and depreciated using the unit of production method based on proved and probable developed reserves expected to be recovered from the well. Development expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells are capitalised as 33

37 producing oil and gas properties and are depreciated using the unit of production method based on proved and probable developed reserves expected to be recovered from the area during the concession or contract period. Capitalised acquisition cost of proved and probable properties is depreciated using the unit of production method based on proved and probable reserves. Any change in the reserves affecting unit of production calculations are reflected prospectively. Depreciation of other assets than oil and gas properties are calculated on a straight-line basis at rates varying from 3-5 years and adjusted for impairment charges and residual value, if any. The carrying value of the property, plant and equipment on the balance sheet represents the cost less accumulated depreciation and any impairment charges. Expenses on leased premises are capitalised and depreciated over the leasing period. Expected useful lives of long-lived assets are reviewed at each balance sheet date and, where they differ significantly from previous estimates, depreciation periods are changed accordingly. Any change is accounted for prospectively. The residual value of an asset is the estimated amount that the Company would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the assets were already of the age and in the condition expected at the end of its useful life. Ordinary repairs and maintenance costs, defined as day-to-day servicing costs, are charged to the income statement during the financial period in which they are incurred. The cost of major overhauls is included in the asset s carrying amount. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in other operating expenses. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less selling costs. Component cost accounting The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts, and depreciates separately each such part over their useful lives. Exploration and development cost for oil and gas properties The Company employs the successful efforts method to account for exploration and development costs. All exploration costs (including seismic acquisitions, seismic studies, and own time ), with the exception of acquisition costs of licenses and drilling costs for exploration wells, are charged to expense as incurred. Drilling costs for exploration wells are temporarily capitalised pending the evaluation of potential existence of oil and gas reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the costs are expensed. The costs for acquiring licenses are capitalised and assessed for impairment at each reporting date. Capitalized exploration cost is classified as intangible assets and is re-classified to tangible assets upon start of development. All costs for developing commercial oil and/or gas fields are capitalised as tangible assets. Pre operating cost is expensed as incurred Consolidated Financial statements The consolidated financial statements comprise Pertra as well as subsidiary in which Pertra has a controlling influence on the business finances and operations in order to gain financial or other benefit. A controlling interest is normally achieved when the group controls directly or indirectly, more than 50% of the votes in the other company or is otherwise able to exercise de facto control of the other company. The consolidated financial statements have been produced by adding together the accounts of the parent company and the subsidiary, which have been drawn up using the same accounting principles. For consolidation purposes, intra-group revenues and cost, shareholdings, outstanding balances, dividends, group contribution, and realized and unrealized gains on transactions between consolidated companies has been eliminated. 34

38 8.2.5 Business combinations Accounting principles related to the sale and purchase of license shares in joint venture activities are individually assessed for each agreement. Acquisitions of interests in oil and gas producing licenses are regarded as business combinations and are accounted for using the purchase method of accounting. The acquirer purchases net assets and recognises the assets acquired and liabilities and contingent liabilities assumed, including those not previously recognised by the seller. At the acquisition date, the costs of a business combination are allocated by recognising the identifiable assets, liabilities and contingent liabilities at their fair values at that date. For oil and gas producing properties the purchase price is allocated between exploration rights, facilities, wells and goodwill. The acquisition date is the date which effective control is transferred to the acquirer (transaction date). The acquirer s income statement incorporates the profits and losses of the acquired interest from the transaction date. Acquisition of interests in exploration and development J/Vs are regarded as transfer of assets under IFRS. Farm-ins generally occurs in the exploration or development phase and is characterized by the transferor giving up future economic benefits, in the form of reserves, in exchange for reduced future funding obligations. In the exploration phase Pertra accounts for farm-ins on a historical cost basis. As such no gain or loss is recognized. In the development phase, Pertra accounts for farm-ins as an acquisition at fair value when the Company is the transferee and a disposal at fair value when the Company is the transferor of a part of an oil and gas property. The fair value is determined by the costs that have been agreed as being borne by the transferee Exploration and assessment cost The Company employs the successful efforts method to account for exploration and development costs. All exploration costs (including seismic acquisitions, seismic studies, and own time ), with the exception of acquisition costs of licenses and drilling costs for exploration wells, are charged to expense as incurred. Drilling costs for exploration wells are temporarily capitalised pending the evaluation of potential existence of oil and gas reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the costs are expensed. The costs for acquiring licenses are capitalised and assessed for impairment at each reporting date. Capitalized exploration cost is classified as intangible assets and is re-classified to tangible assets upon start of development. All costs for developing commercial oil and/or gas fields are capitalised as tangible assets. Pre operating cost is expensed as incurred Income taxes Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Current income tax relating to items recognised directly to equity is recognised in equity and not in the income statement Deferred tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. 35

39 Deferred income tax liabilities are recognised for all taxable temporary differences, except: where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. The effect of uplift, a special deduction for petroleum surtax in Norway, is recognised in the current tax calculation Goodwill Excess value on the purchase of operations that cannot be allocated to identifiable assets or liabilities on the acquisition date is classified in the balance sheet as goodwill. For internal management purposes goodwill is monitored on the individual field bases (cash generating unit). The goodwill acquired in a business combination is measured after initial recognition at cost less any accumulated impairment losses. The goodwill is tested for impairment annually and more frequently if events and changes in circumstances indicate that it might be impaired Cash and cash equivalents Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less. Bank overdrafts are included within borrowings in current liabilities on the balance sheet Debt Debt is recognized at fair value, less transaction cost, when the loan is paid out. In subsequent accounting periods debt is recorded at amortized cost, calculated on the basis of the effective interest rate. The difference 36

40 between the amounts of the loan received and the amounts to be repaid is recorded as a financial expense over the estimated terms of the loan. The first year s installment of long-term debt is classified as current liability Provisions A provision is recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the carrying amount of the provision increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognised as an interest expense. 8.3 HISTORICAL FINANCIAL INFORMATION Income statements Pertra Nine months ended Nine months ended FY ended 31 FY 30 Sept Sept 2006 Q Q Dec 2006 Feb - Dec 2005 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) (Audited) Amounts in NOK IFRS IFRS IFRS IFRS IFRS IFRS Operating revenues and expenses Petroleum revenues Other operating revenues Total operating revenues Exploration expenses Change in inventories Production costs Payroll and payroll-related expenses Depreciation and amortsation expenses Other operating expenses Total operating expenses Operating income (-loss) Financial income and expenses Interest income Other financial income Interest expenses Other financial expenses Net financial items Income (loss) before taxes Taxes (+)/tax income (-) on ordinary income/(loss) Net income (loss)

41 8.3.2 Balance sheet Pertra As of 30 As of 31 As of 31 Sept 2007 Dec 2006 Dec 2005 Amounts in NOK (Unaudited) (Audited) (Audited) Assets IFRS IFRS IFRS Fixed assets Intangible assets Goodwill Capitalised exploration expenditures Other intangibles assets Tangible fixed assets Property, plant and equipment Financial fixed assets Calcuated tax receivable Total non-current asset Current Assets Inventories Inventories Receivables Trade receivables Tax receivables Other receivables Cash and cash equivalents Cash and cash equivalents Total current assets Total assets

42 Pertra As of 30 As of 31 As of 31 Sept 2007 Dec 2006 Dec 2005 Amounts in NOK (Unaudited) (Audited) (Audited) Equity and liabilities IFRS IFRS IFRS Equity Paid in capital Share capital Share premium Total equity Liabilities Provisions Deferred taxes Deferred income Pension obligations Abandonment provision Total provisions Current liabilities Bank overdraft Trade creditors Taxes withheld and public duties payable Other current liabilities Total current liabilities Total liabilities Total equity and liabilities

43 8.3.3 Cash flow statements Pertra Nine months ended FY ended 31 FY ended Sept Dec 2006 Feb - Dec 2005 (Unaudited) (Audited) (Audited) Amounts in NOK IFRS IFRS IFRS Cash flow from operating activities Income /(loss) before taxes Paid taxes -28 Direct tax payout from the State Depreciation and amortisation expenses Changes in plugging and abandonment liabilities Discount shares to employees Changes in inventories, accounts payable and receivable Changes in net current capital and in other current balance sheet items NET CASH FLOW FROM OPERATING ACTIVITIES Cash flow from investment activities Purchase of offshore PP&E Purchase of software, inventory, etc NET CASH FLOW FROM INVESTMENT ACTIVITIES Cash flow from financing activities Paid-in share capital / capital increase Bank overdraft NET CASH FLOW FROM FINANCING ACTIVITIES Net change in cash and cash equivalents Cash and cash equivalents at start of period CASH AND CASH EQUIVALENTS AT END OF PERIOD Specification of cash and cash equivalents at end of period Bank deposits, etc Other financial investments Total cash and cash equivalents at end of period

44 8.3.4 Statements of changes in Equity Amounts in NOK Share capital Share premium reserve Other paid-in capital Other Equity Total Equity Equity at the time of establishment Share issue May Share issue September Share issue December Share issue cost December Profit/(Loss) for the period Equity as at (IFRS) Share issue June (employees) Share issue October (privat placement) Share issue October (public offering/employees) Share issue costs booked to equity Tax effect of share issue costs booked to equity Profit (loss) for the period Equity as at (IFRS) Share issue Mars (employees) Profit (loss) for the period Equity as of (Unaudited IFRS) KEY FINANCIAL FIGURES Per Q Operating revenues (NOK Million) Earnings before Interest, Taxes, Depreciation and Amortization (NOK million) Net income (NOK million) Book equity (end of period) (NOK million) Earnings per share (adjusted for split) -0, Book equity per share (end of period) (adjusted for split) Equity ratio (%) end of period Annualized return on equity (%) Dividend per share Definitions of financial key figures: Book equity per share: Book equity / Number of shares Earnings per share: Profit/loss of the year / Number of shares Equity ratio: Book equity at period end / Total assets at period end Annulised return on equity: Profit after taxes / Book equity at end of period 41

45 8.5 INFORMATION ON FINANCIAL CONDITION AND OPERATING RESULTS Development in the year 2005 Operations and result Pertra was established 11 February 2005 after a previous company of the same name was purchased by Talisman Production. The Company is focused on exploration activities and production of oil on the Norwegian Continental Shelf. Pertra was approved as License Holder and Operator in April The operating revenues for the year 2005 are included for the period June-December. This also applies for operating costs. The production on the Varg field in the first quarter of 2005 was negatively effected due to replacement work of a riser. The Company s share of production from Varg amounted to 39,373 Sm 3 (247,774 bbls). Operating profit on for the PL 038 license (Varg) for the first five months of 2005 was very modest and adjusting for this would not change the Pertra s net income significantly. Net income for the year amounted to NOK million before taxes and NOK million after taxes. Exploration costs were NOK million and this explains the deficit. Exploration costs include Pertra s share of exploration costs in licenses, dry exploration well Aimée in PL 316, seismic data, and other exploration costs. Average sale price was NOK per barrel. Inventory increased moderate during the year. In 2005 the Sale and Purchase Agreement with Talisman Production Norge was implemented on 1 June. The purchase comprised the shares in PL 038, including the producing Varg Field, but exclusive Varg South gas discoveries, PL 321 Frøyhøgda, PL 337, PL 332, and PL 349. The takeover date of this agreement was 1 January 2005, the acquisition date being 1 June The Profit and Loss Account displays operating revenues and expenses in these five licenses from the implementation date 1 June. Operating income and expenses in the 1 January - 1 June period have been incorporated in the Balance Sheet. A Farm-in Agreement related to the acquisition of a 10% share of PL 316 was concluded, effective as of 1 July As compensation for purchasing 10 % Pertra is to carry the costs for Paladin s (the seller) remaining 40 % share in the producion license, limited upwards to USD 35 USD. Pertra was awarded interests in PL 364, PL 380, PL 383 and PL 356 in the APA round in December. Balance sheet The Company was supplied with NOK 125 million by means of a private placement in May 2005, NOK 2.8 million in a Private Placement in September and an additional NOK 84.1 million in December As per 31 December 2005, the book value of the Company s equity was NOK million, corresponding to a book equity ratio to total assets of 57 %. Cash equivalents amounted to NOK million in Tax receivable to be received in December 2006 was calculated to NOK 82.2 million. Interest bearing debt was NOK 15.3 million in Cash flow Cash flow from operating activities for 2005 was NOK million. Investments in 2005 were NOK 66.9 million, reflecting the purchase of assets from Talisman. New share issues amounted to NOK 212 million. Net cash flow was NOK million Development in the year 2006 Operations and result In 2006, the production from the Varg field decreased in Q1 as compared to 2005 due to problems pertaining to certain production wells. The operator Talisman, however, mobilized the drilling rig Mærsk giant to convert a water injection well to a production well by drilling a sidetrack. In addition, a new sidetrack to a production well was drilled. The wells started production in September and November, respectively. The total production in 2006 was 272,762 barrels (Pertra s share). In the period June-December 2005 the production was 247,774 barrels. Average sale price was USD 63.6 per barrel. Inventory decreased somewhat during the year. In 2006 the net income for the year amounted to NOK million before taxes and NOK million after taxes. Exploration costs were NOK million, of which a significant portion relates to seismic costs. Expenses for the Yme development project was capitalised as of second half The PL 349 was relinquised to the state in the 4 th quarter. Balance sheet Share issues of NOK million gross proceeds increased the Company s equity and cash postion. As per 31 December 2006 the book value of the Company s equity was NOK million, corresponding to a book 42

46 equity ratio to total assets of 86%. Cash equivalents amounted to NOK million in Tax receivable to be received in December 2007 was calculated to NOK million excluding interest. There was no interest bearing debt at 31 December The liquidity and equity position represented a solid financial position. Cash flow Cash flow from operating activities for 2006 was NOK million, of which tax payout from the State amounted to NOK 81.9 million. Investments in 2006 were NOK 69.6 million, reflecting the farmed in capitalised development costs on Yme. New share issues amounted to NOK million. Net cash was increased by NOK million Development per 3rd quarter 2007 Operations and result The production from the Varg field has been on a declining trend during The total production during the nine month period was 197,877 barrels (Pertra s share). However, the production in Q3 was dampened by a revision stop on Varg and several well operations. Average sale price was USD 65.6 per barrel. Inventory has increased somewhat during the year. The net income for the nine month period amounted to NOK million before taxes and NOK million after taxes. Exploration costs were NOK million, of which a significant portion relates to seismic costs. Pertra was awarded interests in PL 408, PL 414, PL 432 and PL 316 B in the APA round in January In addition, Pertra was awarded interest in PL 447 in second quarter Balance sheet As per 30 September 2007 the book value of the equity was NOK million, corresponding to a book equity ratio to total assets of 74%. Cash equivalents amounted to NOK million. Tax receivable to be received in December 2007 and December 2008 is calculated to NOK million in total. There was no interest bearing debt at the end of 3 rd quarter. The liquidity and equity position is satisfactory. Cash flow Cash flow from operating activities for the nine months was NOK million. There has been an increase in short term debt. Investments for the period were NOK million, of which Yme counts for the most part and the exploration well on PL 337 counts for a lesser part. Net cash was reduced by NOK million. 8.6 FACTORS INFLUENCING THE COMPANY S OUTLOOK Pertra considers the following factors to be most significant for the Company s outlook The staff s ability and the statistical likelyhood of finding commerciable feasible hydrocarbon discoveries during drilling campaigns Outcome of licensing rounds on the Norwegian Continental Shelf The oil price Value generating portfolio management Keeping a highly skilled work force Management of development projects Cost level Ability to exploit technological development and change Strategic moves Conditions in the financial markets 8.7 COMPETITIVE POSITION AND SEGMENT INFORMATION Pertra is a small player in the transparant global commodity market. The sales price of its oil production is closely connected to the the Brent Blend oil quality. The Company s relevant competive position depends on its ability to be awarded licenses from the authorities, the ability to optimize asset portfolio, the ability to discover petroleum and develop this into production, and the ability to attract a highly skilled work force. Pertra focuses solely on the Norwegian Continental Shelf, which constitutes one business segment, and sells its products directly to the international market for oil and gas. With regard to geography, products and markets, Pertra business is limited to one single segment. Hence, Pertra s aggregate information is not devided into separate segments. 43

47 8.8 SIGNIFICANT CHANGES IN THE COMPANY S FINANCIAL OR TRADING POSITION SINCE 30 SEPTEMBER 2007 On 8 November 2007, the Extraordinary General Meeting of Pertra resolved to execute a combination of Pertra and Det Norske Oljeselskap by means of a share capital increase directed at DNO. Pertra is the acquiring company. The combination of DNO s Norwegian operations and Pertra constitutes part of a strategy to establish a significant Norwegian operating company with the purpose of creating value for society and shareholders. The combined company will operate 18 licenses in Norway and already emerges as a significant contributor to exploration on the NCS, second only to StatoilHydro. Pertra has as part of the combination resolved to change its name to Det norske oljeselskap ASA, effective as of 15 November DNO will be the largest shareholder in the combined company, holding initially approximately 39.97%. The parties have agreed that DNO will reduce its initial ownership position in Pertra by sale, dilution and or dividends to a maximum of 25% at the latest 31 December Furthermore, on 8 November the Company s Extraordinary General Meeting provided the Board with a general authorization to increase the share capital by issuing up to 29,750,000 new shares. The authorization is valid until the Ordinary General Meeting, though at the latest until 30 June It is planned to use parts of this authorization to offer the remaining shareholders in NOIL a transfer of Pertra shares with exchange ratio 3:1. Pertra has entered into an agreement with ExxonMobil to acquire a 25% interest in the Eitri prospect located in PL 027B, 7 km from the Jotun Field in the North Sea. Pertra will carry ExxonMobil's part of the costs associated with one well. Subject to an agreement with PL 027B, Pertra will operate one exploration well and plans to use the rig Bredford Dolphin for the drilling operation. Likely start-up for the exploration well is Q Subsequent to being separated from PL 027B, the prospect will be designated PL 027D. Completion of the transaction is contingent upon conditions precedent, including approval by the Norwegian authorities. The formal implementation will take place when the drilling operation has been completed in Pertra has received a committed offer from DnB NOR regarding a new drawing facility with available amount MNOK 1,500 to replace the current drawing facility of MNOK 1,000. The purpose of the new drawing facility is to fund the group s exploration activities until and including The facility will fund exploration expenditure for both Pertra as well as its new subsidiary. The loan agreement is expected to be signed in Q The Ministry of Petroleum and Energy has in a letter dated 14 November complied with the Company s application regarding additional acreage in PL 321. The new license will be designated PL 321 B. Except and other as described herein, there has not occurred any significant change in the financial or trading position of the Company since the end of the last interim financial period. 8.9 INDEPENDENT AUDITOR Pertra s auditor since its incorporation in 2005 has been Deloitte AS (org.no ) ( Deloitte ). Their address is TMV-kaia 23, 7485 Trondheim. The audit partners of Deloitte are members of the Norwegian Institute of Public Accountants (DnR). Deloitte has audited the Company s annual accounts for 2006 and 2005 prepared in accordance with IFRS as adopted by EU and included in Appendix 2 hereto, and have issued their statement in accordance with RS 800 (Auditor`s statement regarding special purpose audits). Deloitte has performed a limited review of the unaudited condensed interim financial report for the nine months ended 30 September 2007, based in accordance SBR 2410 Rewiev of Interim Financial Information Performod by the independent Auditor of the Entity. The Auditor s report has been issued without qualifications. Deloitte has also issued a statement regarding the unaudited pro forma financial information in accordance with Norwegian Standard on Assurance Engagemens 3000 (Assurance Engangements Other than Audits or Rewievs of Historical Financial Information) This unaudit pro forma financial information is included in section 9.6 and the review report is set out in Appendix 6 to this Offer Document. Deloitte has not audited or reviewed or produced any other report on other information provided in this Offer Document. 44

48 9. UNAUDITED PRO FORMA FINANCIAL INFORMATION 9.1 DESCRIPTION OF THE ACQUISITION REQUIRING PREPARATION OF PRO FORMA FINANCIAL INFORMATION Pro forma financial information is required if an acquisition/disposal is considered to be a significant gross change. In this respect, significant is defined by the Committee of European Securities Regulators (CESR) as 25% of total assets, revenue or operating profit, cf. the CESR s advice to the European Commission on a possible amendment to Regulation (EC) 809/2004 and Oslo Stock Exchanges Continuing Obligations regarding the historical financial information which must be included in an Offer document. On 9 October 2007, Pertra announced a proposed combination of Pertra and Det Norske Oljeselskap. DNO had pre-committed to the combination for all shares owned in NOIL, totaling 99 million shares corresponding to 83% of the share capital in NOIL. The acquisition of NOIL is represents a significant gross change for Pertra and will be recorded as an acquisition. The combination was approved by the shareholders of Pertra in an extraordinary shareholders meeting on 8 November 2007 and will result in the issuance of 33,000,000 shares to DNO with a subscription price of NOK 72 (total of NOK 2,376,000) and an issuance of additional shares to acceptants accepting the Offer as set out herein. All conditions for completion of the transaction was as per 15 November 2007 met or waived. 9.2 SOURCES OF PRO FORMA INFORMATION The unaudited pro forma financial information has been compiled based on Pertra s audited financial statements for the year ended 31 December 2006 (prepared in accordance with IFRS as adopted by EU), the audited financial statements of Det Norske Oljeselskap for the year ended 31 December, 2006 (prepared in accordance with NGAAP), the unaudited condensed interim financial report of Pertra (IFRS) and the unaudited condensed interim financial information of Det Norske Oljeselskap (NGAAP) for the nine months ended 30 September BASIS FOR PREPARATION OF THE PRO FORMA FIGURES The unaudited pro forma financial information has been compiled for illustrative purposes to show how the acquisition of NOIL might have impacted: Pertra s income statement for 2006 and the unaudited condensed income statement for YTD 3Q 2007 for Pertra as if the acquisition had occurred on 1 January 2006 and 1 January 2007 respectively. Pertra s unaudited condensed balance sheet as of 30 September 2007 as if the transaction had occurred on 30 September The unaudited pro forma financial information has been prepared in accordance with EU Regulation No 809/2004, as included in the Norwegian Securities Trading Act section 7-13 and the CESR s Level 3 guidance. Because of its nature, the pro forma financial information addresses a hypothetical situation and therefore does not represent the Company s actual financial position or results. The unaudited pro forma income statement and balance sheet information is prepared for illustrative purposes only. 9.4 PRO FORMA ACCOUNTING PRINCIPLES The unaudited pro forma financial information has been compiled using accounting principles that are consistent with the accounting principles of Pertra as described in section 9.8 in this Offer Document. These accounting principles are those implemented by Pertra when implementing IFRS as adopted by EU. 45

49 9.5 UNAUDITED PRO FORMA INCOME STATEMENT 2006 The notes in section 9.8 are an integral part of the unaudited pro forma income statement. Pertra NOIL IFRS PRO FORMA IFRS NGAAP adj. adj. PRO FORMA Amounts in NOK Notes audited audited unaudited unaudited unaudited Operating revenues and expenses Petroleum revenues Other operating revenues Total operating revenues Exploration expenses Change in inventories Production costs Payroll and payroll-related expenses Depreciation and amortsation expenses 1, Provison for plugging and abandonment liabilities Other operating expenses Total operating expenses Operating income (-loss) Financial income and expenses Interest income Other financial income Intercompany interest expenses Interest expenses Other financial expenses Net financial items Income (loss) before taxes Taxes (+)/tax income (-) on ordinary income/(loss) 1, Net income (loss) All the unaudited pro forma adjustments will have a continuing impact. 46

50 9.6 UNAUDITED PRO FORMA CONDENSED INCOME STATEMENT FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2007 Pertra NOIL IFRS PRO FORMA IFRS NGAAP adj. adj. PRO FORMA Amounts in NOK Notes unaudited unaudited unaudited unaudited unaudited Operating revenues and expenses Petroleum revenues Other operating revenues Total operating revenues Exploration expenses Change in inventories Production costs Payroll and payroll-related expenses Depreciation and amortsation expenses 1, Provison for plugging and abandonment liabilities Other operating expenses Total operating expenses Operating income (-loss) Financial income and expenses Interest income Other financial income Intercompany interest expenses Interest expenses Other financial expenses Net financial items Income (loss) before taxes Taxes (+)/tax income (-) on ordinary income/(loss) 1, Net income (loss) All the unaudited pro forma adjustments will have a continuing impact. 47

51 9.7 UNAUDITED PRO FORMA CONDENSED BALANCE SHEET 30 SEPTEMBER 2007 Pertra NOIL IFRS PRO FORMA Amounts in NOK IFRS NGAAP adj. adj. PRO FORMA Assets Notes unaudited unaudited unaudited unaudited unaudited Fixed assets Intangible assets Goodwill Capitalised exploration expenditures Other intangibles assets Tangible fixed assets Property, plant and equipment Oil and gas fields 1, Financial fixed assets Calcuated tax receivable Long term receivable Total non-current assets Current Assets Inventories Inventories Receivables Other short term reveivables Trade receivables Tax receivables Other receivables Cash and cash equivalents Cash and cash equivalents Total current assets Total assets

52 Pertra NOIL IFRS PRO FORMA Amounts in NOK IFRS NGAAP adj. adj. PRO FORMA EQUITY AND LIABILITIES Notes unaudited unaudited unaudited unaudited unaudited Equity Paid in capital Share capital Share premium Other paid in capital Total paid in capital Other equity Other equity 1, Total other equity Minority interests Total equity Liabilities Provisions Deferred taxes Asset reteirement obligation Deferred income Pension obligations Abandonment provision Total provisions Other long term liabillities Long term liabillities to group company Long term liabillities to creditinstitution Total other long term liabillities Current liabilities Short term liabillities to group company Short term liabillities to creditinstitution Trade creditors Taxes payable Taxes withheld and public duties payable Other current liabilities Total current liabilities Total liabilities Total equity and liabilities NOTES TO THE UNAUDITED PRO FORMA FINANCIAL INFORMATION IFRS-adjustments Note 1 NOIL s capitalized expenditures for oil and gas properties are depreciated using the unit of production method. The rate of depreciation is equal to the ratio of oil and gas production for the period over the estimated remaining proved and provable reserves (expected to be recovered during the concession or contract period). The future development expenditures necessary to bring those reserves into production are included in the basis for depreciation, and are estimated by the management. The IFRS adjustment in depreciation is related to a changes of principle where the future development expenditures necessary to bring those reserves into production are not included in the basis for depreciation. The adjustment in 2007 represents NOK 0.7 million and NOK 0.5 million in The total effect of NOK 1.2 million is reflected in balance sheet Oil and gas fields. The corresponding tax effect of 78% equals an amount of NOK 0.9 million which is shown as Deferred taxes in the balance sheet. The net effect post tax is reflected in Other equity with NOK 0.3 million. 49

53 The adjustments in capitalised exploration expenditures and oil and gas fields are related to a reclassification from tangibles asset under NGAAP to intangibles assets under IFRS. Total amount reclassified is NOK million Unaudited pro forma adjustments - allocation of excess values related to purchases of NOIL Note 2 The Company has provisionally performed an allocation of the cost of the business combination to the assets acquired and liabilities and contingent liabilities assumed in accordance with IFRS 3. The Company has provisionally determined that the excess values based on the purchase price compared to book values as of 30 September 2007 primarily relate to offshore producing properties and non-producing discoveries and goodwill. Excess value on the purchase of operations that cannot be allocated to identifiable assets or liabilities on the acquisition date is classified in the balance sheet as goodwill. These can bee: System value System value is defined as organizational capabilities and solutions in relation to exploration and production activities. System value meet the contractual-legal criterion for identification as intangible assets when an entity has a routine of establishing contracts i.e, as described in IFRS 3 IE paragraphs B3. However, due to the short history of the spun of company, there is not much information available to make any estimates of possible system values. Thus, it is concluded that System value does not meet the identification criteria, as described in IFRS 3 IE paragraphs B3. Rigs/Rig contract value NOIL is participating in a rig consortium having a 340 days direct lease of the rig Bredford Dolphin. The lease is USD/Day. NOIL holds 7 slots (where of one already drilled) in the agreed drilling program. In total 7 partner companies participate in the lease contract. The slot program is individually agreed and coordinated between these partners. Additionally indirect rig capacity is secured via Eni (Polar Pioneer) for Goliat and StatoilHydro (West Epsilon) for Freke and Ragnarrock. Since NOIL is participating in a consortium with several partners for Bredford Dolphin, it is concluded that it will be difficult to estimate a reliabel value. The rig contracts for Polar Pioneer and West Epsilon are held by Eni/StatoilHydro. Thus, NOIL does only have indirect benefit from these. In summary it is therefore concluded that the involved Rig contract values does not meet the identification criteria in IAS 38, paragraphs Seismic data NOIL does have a catalogue of seismic data. In a given situation this information could be sold to another player, meeting the identification criteria in IAS 38, paragraphs However, this can be data originally collected by a 3rd party. In such a situation contractual constrains will limit the possibility for selling such data. If the information is collected by NOIL as part of a larger seismic study it could in addition be difficult to obtain information about the actual costs of data covering a smaller area. Thus, it is concluded that seismic data value does not meet the identification criteria in IAS 38, paragraphs Other intangible assets Other intangible assets like technology, customer relationships, brand name/trademarks and workforce is concluded not to be separable. Based on this it is concluded that other intangible assets does not meet the identification criteria in IAS 38, paragraphs 11-12, or IFRS 3 paragraph 37.c Prior to the combination, DNO was the major shareholder of NOIL, holding as of 8 October 99,000,000 shares (83.7%). DNO has approved to exchange its current holding of NOIL shares in an exchange ratio of 3:1. Subsequently the exchange return will be 33,000,000 Pertra shares. However, through a post transaction private placement of 27,572,262 NOIL shares, the DNO ownership will be reduced to 71,427,738 shares. Thus, DNO will receive 23,809,246 Pertra exchange shares, making DNO an initial 39.9% owner in the combined company. Post applicants to the DNO private placement of 27,572,262 existing NOIL shares will receive the remaining 9,190,754 Pertra exchange shares. The direct costs related to the transaction comprise corporate advisors fee, legal fees, due diligence and accounting services amounts to NOK 11.1 million. 50

54 The shareholders of NOIL will receive one share in Pertra for three shares in NOIL. Pertra is listed on Oslo Børs, whereas NOIL is quoted on the OTC list. Pertra will acquire 83.7% (99,000,000 shares) of the issued share capital of NOIL in the transaction. The total consideration will be NOK 2,376 million of which the total amount will be paid by issue of 33,000,000 Pertra exchange shares. The total cost of the business combination is NOK 2,387 million, which consists of the consideration of NOK 2,376 million and total transaction costs of NOK 11.1 million. Provisional allocation of excess value (NOK 000): Other intangibles assets Oil and gas fields -684 Goodwill Deferred taxes The Company amortizes its production facilities. In the unaudited pro forma financial information, the producing properties has been amortized based on produced quantities of oil and gas on the respective years using the amortization rate per bbl estimated at 30 September This results in amortized recognition of NOK 0.2 million in 2006, and NOK 0.2 million in 2007 (YTD Q3), with associated tax benefits of NOK -0.1 million and NOK 0.1 million. According to IFRS, non-producing properties shall not be amortized until they become producing properties. Until then such properties will be evaluated for impairment. No amortization of non-producing properties is therefore included in the unaudited pro forma income statements. The oil and gas properties to NOIL are located in Norwegian Continental Shelf within a tax regime with a marginal tax rate of 78%. Consequently, deferred taxes have been recorded based on the tax rate applicable to the relevant locations (78%). The final purchase price allocation will be based on the purchase price and the book values at the date of acquisition and this may differ from those used in the above calculation. The split between the various assets may subsequently change after the completion of the purchase price allocation as the Company obtains improved information about the estimated future cash flows and reserves. If more of the cost of the business combination should be allocated to producing properties this would have increased the amortization expenses in the unaudited pro forma income statements. With respect to the acquisition there has been a capital increase of NOK 2,376 million. The amount is divided between Share capital of NOK 6.6 million and Share premium of NOK 2,369 million. This amount increases the equity. Furthermore the share capital, the share premium and the other paid in capital from NOIL is eliminated. Tables below summarizes the total adjustments to equity. Adjustment to Equity (NOK 000) Comment Share capital Adjusting for Share capital NOIL capital increase Pertra Share premium Adjusting for Share premium NOIL capital increase Pertra Other paid in capital Adjusting for Other paid in equity NOIL Other equity See table below Minority interest Minority adjustment of equity (16,33%) Pro forma adjustment other equity (NOK 000) Other intangibles assets Oil and gas fields -684 Goodwill Deferred taxes Minorities Total recorded against paid in capital Total adjustment other equity

55 Note 3 Pertra is assuming responsibility for the loan for Bank of Scotland. At the time of acquisition, NOIL has a short term loan of NOK million, and a long term loan of NOK 63.2 million. Both loans are related to exploration activity and are secured with the calculated tax refund. The short-term loan has maturity in December, which is simultaneously as the repayment of the tax refund. The short-term loan relates to this years repayment, and the long term loan is related to next year s repayment of the tax refund. Both of these loans will continue to be an obligation in NOIL, but Pertra is to assume the responsibility currently held by DNO. The rate of the loan with Bank of Scotland is Nibor which is the same rate as the loan held by Pertra with DnB NOR. The takeover of this responsibility did not effect the Pro forma adjustment. The pro forma adjustments of NOK million to Long term liabilities to group company and NOK 34.5 million to Short term liabilities to group companies reflects the fact that the inter company loan to DNO ASA is to be terminated prior to the completion of the NOIL acquisition. The total amount of this loan, NOK million, is adjusted against Cash and cash equivalents. Note 4 Ernst & Young has performed a limited review of the unaudited condensed interim financial report for the nine months ended 30 September 2007, prepared in accordance with SBR 2410 (Review of Interim Financial Information Performed by the independent Auditor of the Entity). The Auditor s report has been issued without qualifications. Ernst and Young has been the auditor for Det Norske Oljeselskap also in 2005 and From 2007, NOIL is using USD as functional currency in their quarterly accounts. For the purpose of this Offer Document, both the historical information and pro forma of NOIL is presented using NOK as functional currency. Any differences compared to the official Q3 report of NOIL is related to the difference in functional currency. 9.9 ACCOUNTING PRINCIPLES IFRS Main principles Pertra is an oil production company engaged in exploration, development and operation of oil and gas properties on the Norwegian Continental Shelf. The Company is a limited company incorporated and domiciled in Norway, whose shares are publicly traded. The Company has its registered office in Trondheim Statement of compliance The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU Basis for preparation The financial statements have been prepared on a historical cost basis. The consolidated financial statements are presented in Norwegian kroner and all values are rounded to the nearest thousand except when otherwise indicated Consolidated Financial statements The consolidated financial statements comprise Pertra as well as subsidiary in which Pertra has a controlling influence on the business finances and operations in order to gain financial or other benefit. A controlling interest is normally achieved when the group controls directly or indirectly, more than 50% of the votes in the other company or is otherwise able to exercise de facto control of the other company. The consolidated financial statements are prepared by adding the accounts of the parent company and the subsidiary, which have been drawn up using the same accounting principles. For consolidation purpose, intragroup revenues and cost, shareholdings, outstanding balances, dividends, group contribution, and realized and unrealized gains on transactions between consolidated companies has been eliminated. 52

56 9.9.5 Significant accounting judgment, estimates and assumptions The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Accounting estimates are employed in the financial statements to determine reported amounts, including the possibility for realisation of certain assets, the useful lives of tangible and intangible assets, income taxes and others. Although these estimates are based on management s best knowledge of historical experience, current events and actions, actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis. Changes in estimates will be recognised when new estimates can be determined with certainty. The key sources of estimation uncertainty for the Company relates to the following: Proved and probable oil and gas reserves Oil and gas reserves have been estimated by internal experts in accordance with industry standards. The estimates are based on both Pertra ASA s own assessment and information from the operators, partners and independent experts. Proved and probable oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e., prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements but not on escalations based upon future conditions. Proved and probable reserves are used when calculating the unit of production rates used for depreciation, depletion, and amortisation. Reserve estimates are also used when testing upstream assets for impairment. Future changes in proved and probable oil and gas reserves, for instance as a result of changes in prices, could have a material impact on unit of production rates used for depreciation and amortisation and for decommissioning and removal provisions, as well as for the impairment testing of upstream assets, which could have a material adverse effect on operating income as a result of increased deprecation and amortisation or impairment charges. Exploration and leasehold acquisition costs. Pertra s accounting policy is to capitalise the costs of drilling exploratory wells pending determination of whether the wells have found proved and probable oil and gas discovery. Judgments on whether these expenditures should remain capitalised or expensed in the period may materially affect the operating income for the period. Oil and gas properties that are not deemed as proved and probable properties are assessed quarterly and unsuccessful wells are expensed. Exploratory wells that have found discovery, but classification of those discovery as proved and probable depends on whether a major capital expenditure can be justified, may remain capitalised for more than one year. The main conditions are that either firm plan exists for future drilling in the license or a development decision is planned in the near future. Impairment/reversal of impairment Pertra has significant investments in long-lived assets such as property, plant and equipment, and changes in expectations of future value from individual assets may result in some assets being impaired, with the book value being written down to estimated fair value. Impairments should be reversed if the conditions for impairment are no longer present. Making judgments of whether an asset is impaired or not, and if an impairment should be reversed, are complex decisions that rest on a high degree of judgment and to a large extent on key assumptions. Complexity is related to the modeling of relevant future cash flows, to the determination of the extent of the asset for which impairment is to be measured, and to establishing a fair value of the asset in question. Impairment testing requires long-term assumptions to be made concerning a number of often volatile economic factors such as future market prices, currency exchange rates and future output, discount rates among others, in order to establish relevant future cash flows. There is a high degree of reasoned judgment involved in establishing these assumptions, including determining relevant factors such as forward price curves, estimating production outputs, and determining the ultimate termination value of an asset. Likewise, establishing a fair 53

57 value of the asset, when required, will require a high degree of judgment in many cases where there is no ready third party market in which to obtain the fair value of the asset in question. Decommissioning and removal liabilities Pertra has significant legal obligations to decommission and remove offshore installations at the end of the production period. Legal obligations associated with the retirement of non-current assets are recognised at their fair value at the time the obligations are incurred. Upon initial recognition of a liability, that cost is capitalised as part of the related non-current asset and allocated to expense over the useful life of the asset. It is difficult to estimate the costs of these decommissioning and removal activities, which are based on current regulations and technology. Most of the removal activities are many years into the future and the removal technology and costs are constantly changing. The estimates include, among others, cost assumptions relating to removal complexity, rigs, marine operations and heavy lift vessels. As a result, the initial recognition of the liability and the capitalised cost associated with decommissioning and removal obligations, and the subsequent adjustment of these balance sheet items, involve the application of significant judgment. Employee retirement plans When estimating the present value of defined pension benefit obligations that represent a gross long-term liability in the balance sheet, and indirectly, the period s net pension expense in the income statement, management make a number of critical assumptions affecting these estimates. Most notably, assumptions made on the discount rate to be applied to future benefit payments, the expected return on plan assets and the annual rate of compensation increase have a direct and material impact on the amounts presented. Significant changes in these assumptions between periods can have a material effect on the accounts. Income tax The Company annually incurs significant amounts of income taxes payable, and also recognises significant changes to deferred tax assets and deferred tax liabilities, all of which are based on management s interpretations of applicable laws, regulations and relevant court decisions. The quality of these estimates is highly dependent upon management s ability to properly apply at times very complex sets of rules, to recognise changes in applicable rules and, in the case of deferred tax assets, management s ability to project future earnings from activities that may apply loss carry forward positions against future income taxes Revenue recognition Revenue from sale of petroleum is recognized on the basis of the Company s net working interest, regardless of whether the petroleum is sold (entitlement method). Other revenue is recognized at the time of delivery of goods and services Balance sheet classification Current asset and short-term liabilities include items due less than a year from the balance sheet date, and items related to the operating cycle, if longer. The current portion of long-term debt is included as current liabilities. Financially motivated investments in shares are classified as current assets, while strategic investments are classified an non current asset. Other assets are classified as non-current assets Business combination Accounting principles related to the sale and purchase of license shares in joint venture activities are individually assessed for each agreement. Acquisitions of interests in oil and gas producing licenses are regarded as business combinations and are accounted for using the purchase method of accounting. The acquirer purchases net assets and recognises the assets acquired and liabilities and contingent liabilities assumed, including those not previously recognised by the seller. At the acquisition date, the costs of a business combination are allocated by recognising the identifiable assets, liabilities and contingent liabilities at their fair values at that date. For oil and gas producing properties the purchase price is allocated between exploration rights, facilities, wells and goodwill. The acquisition date is the date which effective control is transferred to the acquirer (transaction date). 54

58 The acquirer s income statement incorporates the profits and losses of the acquired interest from the transaction date. Acquisition of interests in exploration and development J/Vs are regarded as transfer of assets under IFRS. Farm-ins generally occurs in the exploration or development phase and is characterized by the transferor giving up future economic benefits, in the form of reserves, in exchange for reduced future funding obligations. In the exploration phase Pertra ASA accounts for farm-ins on a historical cost basis. As such no gain or loss is recognized. In the development phase, Pertra ASA accounts for farm-ins as an acquisition at fair value when the Company is the transferee and a disposal at fair value when the Company is the transferor of a part of an oil and gas property. The fair value is determined by the costs that have been agreed as being borne by the transferee. Exchanges of assets are measured at the fair value of the asset given up unless the exchange transaction lacks commercial substance or the fair value of neither the asset received nor the asset given up is reliably measurable. If the exchanges only comprise of assets in the exploration and evaluation phase, the exchanges are accounted for on a historical cost basis Goodwill Excess value on the purchase of operations that cannot be allocated to identifiable assets or liabilities on the acquisition date is classified in the balance sheet as goodwill. For internal management purposes goodwill is monitored on the individual field bases (cash generating unit). The goodwill acquired in a business combination is measured after initial recognition at cost less any accumulated impairment losses. The goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired Impairment of goodwill Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the cash-generating unit, to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount of the cash-generating unit to which goodwill has been allocated, and impairment loss is recognised. Impairment losses relating to goodwill cannot be reversed in future periods. The Company performs its annual impairment test of goodwill as at 31 December Property, plant and equipment General Property, plant and equipment acquired by the Company are stated at historical cost. Depreciation of other assets than oil and gas properties are calculated on a straight-line basis at rates varying from 3-5 years and adjusted for impairment charges and residual value, if any. The carrying value of the property, plant and equipment on the balance sheet represents the cost less accumulated depreciation and any impairment charges. Expenses on leased premises are capitalised and depreciated over the leasing period. Expected useful lives of long-lived assets are reviewed at each balance sheet date and, where they differ significantly from previous estimates, depreciation periods are changed accordingly. Any change is accounted for prospectively. The residual value of an asset is the estimated amount that the Company would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the assets were already of the age and in the condition expected at the end of its useful life. Ordinary repairs and maintenance costs, defined as day-to-day servicing costs, are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the asset s carrying amount. 55

59 Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in other operating expenses. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less selling costs. Exploration and development cost for oil and gas properties The Company employs the successful efforts method to account for exploration and development costs. All exploration costs (including seismic acquisitions, seismic studies, and own time ), with the exception of acquisition costs of licenses and drilling costs for exploration wells, are charged to expense as incurred. Drilling costs for exploration wells are temporarily capitalised pending the evaluation of potential existence of oil and gas reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the costs are expensed. The costs for acquiring licenses are capitalised and assessed for impairment at each reporting date. Capitalized exploration cost is classified as intangible assets and is re-classified to tangible assets upon start of development. For accounting purposes, the field enters into the development phase when the partners in the license declare the commerciality decision, or the field has matured to a similar level. All costs for developing commercial oil and/or gas fields are capitalised as tangible assets. Pre operating cost is expensed as incurred. Depreciation of oil and gas properties Expenditures to drill and equip exploratory wells that find proved and probable reserves are capitalised and depreciated using the unit of production method based on proved and probable developed reserves expected to be recovered from the well. Development expenditure on the construction, installation or completion of infrastructure facilities such as platforms, pipelines and the drilling of development wells are capitalised as producing oil and gas properties and are depreciated using the unit of production method based on proved and probable developed reserves expected to be recovered from the area during the concession or contract period. Capitalised acquisition cost of proved and probable properties is depreciated using the unit of production method based on proved and probable reserves. Any change in the reserves affecting unit of production calculations are reflected prospectively. Component cost accounting The Company allocates the amount initially recognised in respect of an item of property, plant and equipment to its significant parts, and depreciates separately each such part over their useful lives Intangible assets Amortisation of intangible assets is based on the following expected useful lives: Computer software 3-5years Impairment of long-lived asset Property, plant and equipment and intangible assets with finite useful life (excluding goodwill) are reviewed for potential impairment indicators annually, and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. For oil and gas properties this is done on a field by field basis. For capitalized exploration expenditures the impairment test is done for each well. An impairment loss is the amount by which the carrying amount of the assets exceeds the recoverable amount. The recoverable amount is the higher of the asset s net selling price and its value in use. The value in use is determined by reference to discounted future net cash flows expected to be generated by the asset. Cash flows are discounted using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount, however, not to a higher amount than if no impairment loss had been recognized. Such reversal is recognized in profit or loss. After such a reversal, the depreciation charge is adjusted in future periods to allocate the asset s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. 56

60 Shares in joint venture activities The Company's license shares on the Norwegian Continental Shelf are included in the Profit and Loss Account and Balance Sheet in accordance with the gross method. Accounting principles related to the sale and purchase of license shares in joint venture activities are individually assessed for each agreement. Such transactions are assessed at fair value or at the best estimate of fair value. So-called farm-in/farm-out agreements involve one party covering the costs on behalf of the other party; these are limited to a specific type of cost or limited upward to a fixed amount. This consideration is entered in the books when incurred and classified as either expense or asset Provisions A provision is recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the carrying amount of the provision increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognised as an interest expense Assets retirement obligations In accordance with the terms of the license concessions for licenses where the Company has an ownership interest, the Norwegian State may instruct the license holders to partly or completely remove the facilities at the end of production or when the concession period expires. Upon initial recognition of a removal liability, the Company calculates and records the net present value related to future abandonment and decommissioning. A corresponding asset is recognised in plant and equipment and depreciated using the unit of production method. The change in the time value (net present value) of the liability is charged as a finance cost (accretion) and increases the future liability related to abandonment and decommissioning. Any change in the best estimate related to expenditures associated with abandonment and decommissioning liabilities are accounted for prospectively. The discount rate used when calculating the net present value of the abandonment and decommissioning liability is calculated based on a risk free interest rate plus a risk premium related to the individual offshore asset Income taxes Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date. Current income tax relating to items recognised directly to equity is recognised in equity and not in the income statement Deferred tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except: where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future. 57

61 Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except: where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority. The effect of uplift, a special deduction for petroleum surtax in Norway, is recognised in the current tax calculation Foreign currency translation and transactions Functional currency Transactions in foreign currency are entered at transaction exchange rates. Monetary items in foreign currency are converted into the exchange rate of the Balance Sheet date. Realized and unrealized foreign exchange gains and losses are included in the annual results. The financial statements are presented in Norwegian Kroner (NOK), which is the functional currency of the Company Borrowing cost Borrowing costs are recognised as an expense in the period in which they are incurred Employee benefits Pension obligations The Company has a retirement benefit plan for employees, which are managed and funded through a Norwegian life insurance company. The projected benefit obligations are calculated based on actuarial methods, and compared with the value of pension assets. Pension costs and pension obligations are calculated on a straight line earning profile basis, based on assumptions relating to discounts rates, projected salaries, the amount of benefits from the National Insurance Scheme, future return on plan assets, and actuarial calculations related to mortality rate, voluntary retirement, etc. Plan assets are valued at fair value. Pension liabilities are reported net of plan assets in the balance sheet. Changes in the pension obligation due to changes in the pension plans are accounted for prospectively over the estimated remaining service period. The same applies to changes in estimates which exceed 10 per cent of the higher of the pension obligation and pension assets (corridor). 58

62 Trade receivable Trade receivables are recognised and carried at their anticipated realisable value, which is the original invoice amount less an estimated valuation allowance for any uncollectible amounts. A provision is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are expensed when identified Inventories Spare parts are valued at the lower of cost and net realisable value. The cost is determined by the first-in, firstout (FIFO) method. Cost includes raw material, freight, and direct production costs together with a share of indirect costs. Net realisable value is the estimated selling price, less the estimated selling expenses. Inventory of petroleum is valued at the lower of cost and net realisable value Research and development Research and development costs are expensed as incurred Leases Operating lease payments are recognized as an expense in the income statement on a straight line basis over the lease term Cash and cash equivalents Cash and cash equivalents comprise cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less. Bank overdrafts are included within borrowings in current liabilities on the balance sheet Interest-bearing liabillities All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issuing costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the effective interest method; any difference between proceeds (net of transaction costs) and the redemption value is recognized on the income statement over the period of the interest-bearing liabilities. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognised in other financial income or expenses when the liabilities are derecognised or impaired, as well as through the amortisation process Financial risk management Risk management procedures contribute to transparent and diligent reporting for the long terms benefit of the company and its shareholder. The Company`s risk management shall ensure that risk that may have an impact on Pertra`s management procedures provided a good basis for reporting and follows up if the risk to which the company is exposed Segment reporting Pertra ASA focuses solely on the Norwegian Continental Shelf, which constitutes one business segment, and sells its products directly to the international market for oil and gas. Thus, the transition to IFRS will not have any effect on the segment reporting Cash flow analysis The cash flow statement is based on the indirect method, and the Company's bank inventory is shown as means of payment Related party transactions All transactions, agreements and business activities with related parties are conducted based on ordinary business terms and conditions (arm s length principles). 59

63 Event after balance sheet date Information that is available after the balance sheet date and which applies to matters that existed on the balance sheet date, will be taken into account when the figures and supplementary information are updated in the notes. Events after the balance sheet date that do not affect the Company s financial position as of the balance sheet date, but will affect the Company s financial position in the future, are disclosed if they are significant Earnings per share Earnings per share are calculated by dividing the ordinary result by the weighted average number of shares outstanding. Shares issued during the year are included relative to the number of days they have been outstanding. Diluted earnings per share are calculated as the ordinary result divided by the average number of shares outstanding during the period adjusted for the effect of dilutive options. The profit due to the ordinary shareholders and the weighted average number of ordinary shares outstanding are adjusted for all the dilution effects relating to share options. All shares that can be received by conversion of share options that is in the money and that can be exercised are included in the calculation. The share options are assumed to be converted at the date of assignment Comparatives Comparative figures have been adjusted to conform to changes in presentation in the current year, where necessary APPROVED STANDARDS AND INTERPRETATIONS YET TO COME INTO EFFECT IFRS 8 Operating Segments IFRS 8 replaces IAS 14 Segment Reporting. The standard requires that the company/group uses a management approximation to identify segments. In general the information to be reported must be that used by management internally for the evaluation of the segment s results and to decide how resources shall be allocated to the segments. IFRS 8 requires information on the basis from which the segment information is prepared, and from which type of products and services each segment receives earnings. The Company will apply IFRS 8 with effect from January 1, IAS 1 - Presentation of Financial Statements The revised standard will come into effect for the annual periods beginning on or after 1 January The standard requires an entity to present, in a statement of changes in equity, all owner changes in equity. All nonowner changes in equity (ie comprehensive income) are required to be presented in one statement of comprehensive income or in two statements. The standard also requires an entity to present a statement of financial position as at the beginning of the earliest comparative period in a complete set of financial statements when the entity applies an accounting policy retrospectively or when the entity reclassifies items in the financial statements. The Company will apply IAS 1 with effect from January 1, IAS 23 Borrowing Costs A revised IAS 23 Borrowing costs was issued in March 2007, and becomes effective for financial years beginning on or after 1 January The standard has been revised to require capitalisation of borrowing costs when such costs relate to a qualifying asset. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready for its intended use or sale. In accordance with the transitional requirements in the Standard, the Company will adopt this as a prospective change. Accordingly, borrowing costs will be capitalised on qualifying assets with a commencement date after 1 January No changes will be made for borrowing costs incurred to this date that have been expensed. IFRIC 12 Accounting for Service Concession Arrangements IFRIC Interpretation 12 was issued in November 2006 and becomes effective for annual periods beginning on or after 1 January This Interpretation applies to service concession operators and explains how to account for the obligations undertaken and rights received in service concession arrangements. The Company is not an operator and hence this Interpretation will have no impact on the Company. 60

64 IFRIC 13 Customer Loyalty Programmes IFRIC Interpretation 13 was issued in June 2007 and becomes effective for annual periods beginning on or after 1 July This Interpretation requires customer loyalty award credits to be accounted for as a separate component of the sales transaction in which they are granted and therefore part of the fair value of the consideration received is allocated to the award credits and deferred over the period that the award credits are fulfilled. The Company expects that this interpretation will have no impact on the Company s financial statements as no such schemes currently exist. I FRIC 14 IAS 19 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction IFRIC Interpretation 14 was issued in July 2007 and becomes effective for annual periods beginning on or after 1 January This Interpretation provides guidance on how to assess the limit on the amount of surplus in a defined benefit scheme that can be recognised as an asset under IAS 19 Employee Benefits. The Company expects that this Interpretation will have no impact on the financial position or performance of the Company as all defined benefit schemes are currently in deficit AUDITOR S STATEMENT ON THE UNAUDITED PRO FORMA FINANCIAL INFORMATION The Company s auditor, Deloitte AS, has issued a report on the unaudited pro forma financial information presented in this section 9. Their report is included in Appendix 6 to this Offer Document. 61

65 10. CAPITAL RESOURCES FOR PERTRA As of 30 September 2007, Pertra had cash, cash equivalents and marketable securities of NOK 311 million WORKING CAPITAL STATEMENT In the opinion of Pertra, its working capital is sufficient for its present requirements for the next 12 months THE PRIMARY SHORT AND LONG TERM SOURCES OF CASH FLOW Pertra is pursuing an extensive exploration program and is facing considerable development tasks on the Yme Field and the Frøy Field. The company has a NOK 1,000 million drawing facility with DnB NOR Bank. See section 10.4 for a description of this facility. At 30 September 2007 there were no interest bearing debt outstanding. Short term (up to one year) capital resources consist of: cash position September 2007 (NOK 311 million), expected tax refund of NOK 117 million in December 2007 drawing facility of NOK 1,000 million, limited to 95% of costs eligible for the annual tax refund Long tem capital resources (minimum one year from present) consist of expected tax refund of NOK 176 million (accrued per third quarter 2007) to be paid December 2008 accumulated cash flow from the Varg field further tax refunds to be received in 2008 and 2009 drawing facility of NOK 1,000 million, limited to 95% of costs eligible for the annual tax refund The operating cash flow stems from the 5% share of the Varg field. In addition, disposals of parts of licenses could add to sources of funds if carried out. Due to projected tax refunds to be paid by the Norwegian tax authorities generally in December, Pertra s liquidity will tend to have the seasonality of being at the low of the year in the third or fourth quarter. Drawing facilities are preferable compared to ordinary bank loans. Pertra will evaluate alternative debt financing arrangements, including bonds, as time progresses. Project financing will also be of interest. Short term liquidity is liquidity related to expected uses within a year DEBT OBLIGATIONS The Company has on 10 October 2007 entered into a NOK 1,000 million drawing facility with DnB NOR Bank. The loan agreement shall fund approximately 75% of the exploration costs until and including The facility enables Pertra to borrow on basis of the state tax refund amount from the time the exploration costs accrue and up to the points in time when the company receives the tax refund from the state. At 30 September 2007 there were no interest bearing debt outstanding. The facility has an interest rate of NIBOR plus a moderate margin, due to a high quality of the bank s security. The facility expires 31 December However, the latest year for eligible costs is The Company s obligation is secured by pledge in the tax refund account, a first priority assignments of the refunds, a first priority assignment of the insurances and a first priority pledge of the Company s participation interests in licenses. However, lender will release the pledge of the licenses as a result of disposal of licenses and for financing purposes. Pertra shall on a consolidated basis on the first utilisation date have in its possession funds which, together with the available drawing amount, are sufficient to perform the business plan of the Group up to 31 December Thereafter Pertra shall annually as of 1 January each year, on a consolidated basis, have in its possession funds which together with the available drawing amount are sufficient to perform such business plan for the next 12 months. The facility contains material adverse effect clauses and change of control clause. Pertra has currently not issued other debt obligations. 62

66 10.4 FUNDING STRUCTURE AND RESTRICTIONS OF USE OF CAPITAL RESOURCES As per 30 September 2007, Pertra is funded by NOK 787 million in equity. It has no interest bearing debt outstanding. At 30 September 2007 there is NOK 165 million in current liabilities of which other current liabilities stand for NOK 125 million. These other current liabilities mainly consists of the Company s proportion of short term debt in its licenses. Going forward, any new investments in exploration will be financed partly by cash and partly by the drawing facility. Capex, acquisitions and other needs will be financed by cash and a selection of various financing sources. Pertra has in connection with SPA with Talisman entered into a Decommissioning Security Agreement (DSA). Talisman may request a performance guarantee from Pertra. In case of breach of the DSA, Talisman has the right to re-acquire the 5% interest in for USD 1. See section 10.3 concerning restrictions of use of the drawing facility. 63

67 10.5 CAPITALISATION AND INDEBTEDNESS The table below sets forth the Company s capitalisation as of 30 September The table should be read together with the financial statements and the related notes thereto, as well as the information under Section 8 Financial Information. The table below is prepared for illustrative purposes only. All amounts in NOK 1, September 2007 Share capital... 5,308 Share premium reserve ,106 Shareholders equity (A) ,413 Current debt Secured... 0 Unsecured ,733 Total current debt ,733 Non-current debt Secured... 0 Unsecured ,797 Total non-current debt ,797 Total indebtedness (B) ,530 Total capitalisation (A + B)... 1,070,943 Cash... 0 Cash equivalents ,393 Trading securities... 56,081 Liquidity (C) ,474 Current financial receivable (D) ,899 Current bank debt... 0 Current portion of non-current debt... 0 Other current financial debt ,733 Current financial debt (E) ,733 Non-current bank loans... 0 Other non-current loans... 0 Non-current financial debt (F)... 0 Net financial indebtedness (E+F-C-D) ,640 64

68 10.6 BORROWINGS The Group s total gross borrowings amounted to 0 as of 30 September The table below sets out the composition of the borrowings as of 30 September 2007 Figures in NOK Current Non-current Total Bank overdraft Borrowings Financial leasing Sum GUARANTEES As of the date of this Offer Document, Pertra has furnished no guarantees to third parties. 65

69 11. BOARD OF DIRECTORS, MANAGEMENT AND EMPLOYEES 11.1 BOARD OF DIRECTORS In accordance with Norwegian law, the Board of Directors is responsible for administering the Company s affairs and for ensuring that the Company s operations are organized in a satisfactory manner. The Company s business address serves as c/o address in relation to the board members in the Company. The Pertra board of directors has 9 voting members representing approximately 1.7% of the voting shares in the Company. Below is an overview of the members of the board: Name Position Member Since Term Shareholdings 1 Kaare Moursund Gisvold Chairman ,635 Ivar Brandvold Director Tore Lilloe-Olsen Director Eva Skøelv Director Guri Ingebrigtsen Director Barbro Hætta-Jacobsen Director Svein Sivertsen Director ,000 Øistein Høimyr Director ,730 1) Includes direct and indirect shareholdings as of the date of this Information Document The total remuneration to the board of directors in 2006 was NOK 1,101 million, cf. the annual report for 2006 attached hereto as Appendix 3. Kaare Moursund Gisvold (born 1943), Chairman of the Board. Mr Gisvold is an independent investor and advisor. He holds a Master of Science and PhD in naval architecture/ marine technology from NTNU, Trondheim. Responsible for establishing and commissioning MARINTEK laboratories. He was one of the founders of Pertra and for 20 years the CEO/President of Petrojarl ASA (Golar-Nor Offshore AS /PGS Production AS). He was the first chairman of Pertra in Several board memberships including Boa Offshore, Aker Marine Contractors, Corrocean. Mr. Gisvold is a Norwegian citizen with residence in Trondheim, Norway. Ivar Brandvold (born 1956), Board member. Mr. Ivar Brandvold s current position is Chief Operating Officer in DNO ASA, being the Corporate Head of all upstream activities in the geographical areas where the company is involved. Mr. Brandvold holds a Masters degree in mechanical engineering from NTH in Trondheim, Norway. He has 23 years of experience from several management positions in Norsk Hydro, and came to DNO in 2007 from the position as Head of Drilling in Norsk Hydro with worldwide responsibility for drilling operations. Before joining Norsk Hydro in 1984, he worked in Kongsberg Engineering. Mr. Brandvold is a Norwegian citizen with residence in Bergen, Norway. Tore Lilloe-Olsen (born 1956), Board member. Mr. Lilloe-Olsen is Corporate Head of Exploration in DNO ASA. He holds a Master of Science, Geology and Geophysics, from the University of Oslo, Mr. Lilloe- Olsen has more than 25 years of experience from the petroleum industry. He has previously held positions as Geophysicist in Elf and Hydro, and Project Manager Troll Thin Oil Plan for Development and Operation (PDO). Mr. Lilloe-Olsen was also Senior Geophysicist in Hydro O&E, Asset Manager BL 34 Angola Sonangol P&P, Human Resources Manager in Development Norway, and NCS Exploration Manager and Vice President, Hydro O&E. Mr. Lilloe-Olsen is a Norwegian citizen with residence in Bærums Verk, Norway. Eva Helene Skøelv (born 1966), Board member. Ms. Skøelv is Finance Manager in DNO ASA, and has more than 15 years of finance and accounting experience from international industrial firms. She holds an MBA from the Norwegian School of Economics and Business Administration. Ms. Skøelv has previously held positions as Chief Financial Officer of Gamma Medica-Ideas (a medical-technical company), Business Controller in Yara International, Controller in Norsk Hydro Hong Kong, Accounting Department Manager, in addition to various positions within the financial section of Hydro Oil & Energy. Ms. Skøelv is a Norwegian citizen with residence in Oslo, Norway. 66

70 Svein Sivertsen (born 1951), Board member. Mr. Sivertsen is an independent advisor and board member. He holds a Master of Science from NTNU. Has has previously held CEO positions in Nidar, Fokus Bank, and SINTEF. Several board memberships. Mr. Sivertsen is a Norwegian citizen with residence in Trondheim, Norway. Guri Ingebrigtsen (born 1952), Board member. Ms. Ingebrigtsen, physician and politician, was Mayor of Vestvågøy In 1996 and she served as Political Advisor to the Norwegian Minister of Health and Social Affairs, and Minister of the same department in the first cabinet Stoltenberg. Several board memberships, including Orkana Publishing House, LoVe Petro, the Amathea Foundation, the Norwegian Healthy Cities Network, and Narvik University College. Ms. Ingebrigtsen is a Norwegian citizen with residence in Vestvågøy, Norway. Barbro Hætta-Jacobsen (born 1972), Board member. Ms. Hætta-Jacobsen is physician and politician, and served as Deputy Mayor in Harstad She was Political Advisor in the Ministry of Local Government and Regional Development Board memberships include a.o. Tromsø 2018 AS, the Norwegian State Housing Bank, Harstad Labor Party, and Sparebanken Nord-Norge, Region Hålogaland. Ms. Hætta-Jacobsen is a Norwegian citizen with residence in Harstad, Norway. Øistein Høimyr (born 1958), Board member. Mr. Høimyr is currently a Senior Reservoir Engineer at Pertra, a position he has held since He has previously worked in Statoil E&P Norway as Supervisor for subsurface engineers and geoscientists in the Early Phase Projects Development off Mid-Norway ( ), as Senior Reservoir Engineer; Small field development projects at DNO ( ) and as Lead Subsurface Engineer in Saga Petroleum ( ). He holds a Master of Science from NTH in Mr. Høimyr is a Norwegian citizen and resides in Trondheim, Norway MANAGEMENT Pertra executive management is responsible for the daily management and the operations of the Company. Eirik Haugane Chief Executive Officer Sigmund Hanslien Sr. Advisor G&G TomBugge Exploration Manager Stein Fines VP Technology and HSE Anton Trondstad VP Drilling & Well operations Vidar B. Larsen VP Business Development Paul Hjelm-Hansen Chief Financial Officer Name Position Shareholdings 1 Erik Haugane Chief Executive Officer 1,376,938 Paul Hjelm-Hansen Chief Financial Officer 239,290 Tom Bugge Exploration Manager 758,640 Stein Fines Vice President HSE & Technology 690,978 Anton Tronstad Vice President Drilling and Well 786,040 Operations Sigmund Hanslien Senior Advisor G&G 57,755 Vidar B. Larsen Vice President Business Development 4,500 1) Includes direct and indirect shareholdings as of the date of this Information Document The Company s registered business address, Nedre Bakklandet 58 C, NO-7014 Trondheim, Norway, serves as c/o address in relation to the senior managements employment in the Company. 67

71 Erik Haugane, (born 1953), Chief Executive Officer (CEO). Erik Haugane founded Pertra in He holds a Cand. Real. degree in Exogene Geology from the University of Tromsø. He has 20 years of experience from the oil industry and has been employed as Exploration Geologist with Esso, Research Scientist with SINTEF, Advisor in Energy Matters with the Governor of Sør-Trøndelag, and Secretary of the Mid-Norwegian Oil Council. He joined PGS in 1992 where he worked internationally and was stationed in Singapore for 2 years. He became Corporate Advisor for PGS before starting Pertra in He was awarded the title Oilman of the Year in 2004 by SPE, Norway. Mr. Haugane is a Norwegian citizen with residence in Trondheim, Norway. Paul Hjelm-Hansen, (born 1962), Chief Financial Officer (CFO). Hjelm-Hansen received his MBA from the University of Denver, USA, in 1988 and is a Certified European Financial Analyst (AFA) from The Norwegian School of Economics and Business Administration. In addition, he is a Certified Portfolio Manager (The Norwegian Society of Financial Analysts/The Norwegian School of Economics and Business Administration). He has previously held positions as Financial Analyst, Equity Asset Manager and Financial Manager (Christiania Bank og Kreditkasse, Fokus Bank, Bachke & Co). He has several board appointments, one which has been with Pertra. As Chief Financial Officer he is responsible for financial strategy, financing activities, financial analysis, financial reporting, and investor relations. He is Head of the Accounting and Administrative departments. Mr. Hjelm-Hansen is a Norwegian citizen with residence in Trondheim, Norway. Tom Bugge, (born 1948), Exploration Manager. Tom Bugge holds a Ph.D. in Geology from the Norwegian University of Science and Technology in Trondheim. He has more than 30 years of working experience in companies such as Norsk Hydro, Saga Petroleum, IKU, and NTNF. Mr. Bugge is a Norwegian citizen with residence in Trondheim, Norway. Stein Fines, (born 1951), Vice President HSE & Technology. Stein Fines holds a M.Sc. degree in Engineering from the Norwegian University of Science and Technology in Trondheim. He has 30 years of experience from the offshore oil and gas industry, including design, engineering, construction and operation of offshore oil and gas installations for different companies (Det Norske Veritas, Saga Petroleum, Norsk Hydro, PGS Production, and Pertra). Mr. Fines has held several managerial positions in the Snorre and Varg Field Development Projects for Saga Petroleum, and has been responsible for several technology development projects related to development of deep water technology. In Pertra, he has been responsible for the Varg Field Operations, and is presently management committee member for PL316 (Yme), and Project Manager for the Frøy Redevelopment Project. Mr. Fines is a Norwegian citizen with residence in Hønefoss, Norway. Anton Tronstad, (born 1957), Vice President Drilling and Well Operations. Anton Tronstad holds a M.Sc. degree in Engineering from the Norwegian University of Science and Technology in Trondheim. He has more than 23 years of diversified experience with different oil companies (Statoil, Conoco, and Pertra), primarily within drilling and well operations. His experience and core competencies are within planning and managing of offshore drilling & well intervention activities. Mr. Tronstad also has extensive experience from subsea project developments. Before joining Pertra in 2003, he held the position as Drilling Superintendent for Statoil on the Kristin HTHP Development project. Mr. Tronstad is a Norwegian citizen with residence in Inderøy, Norway. Sigmund Hanslien, (born 1950), Senior Advisor G&G. Sigmund Hanslien holds a M.Sc. in Petroleum Geology from the Norwegian University of Science and Technology (NTNU) in Trondheim. He has more than 30 years of experience in exploration and production activities from major oil companies. He has held a number of both technical and managerial positions, primarily in ExxonMobil and Statoil, where his latest position was Chief Geologist. Mr. Hanslien serves as an advisor in technical and business matters and is a member of Pertra s management team. With his office location in Stavanger he is an important link to the business community in Stavanger. Mr. Hanslien is a Norwegian citizen with residence in Stavanger, Norway. Vidar Bergo Larsen (born 1949), Vice President Business Development. Vidar Bergo Larsen joined Pertra in October He holds a Cand. Real. in Petroleum Geology from the University of Bergen. Mr. Larsen has 30 years of experience from Statoil, where he has held several managerial positions within exploration on the NCS as well as internationally. He was also Manager of Statoil s research activities within the field of exploration at Statoil Research Centre in Trondheim. Mr. Larsen was Exploration Manager for Russia in Statoil prior to joining Pertra. Mr. Larsen is a Norwegian citizen with residence in Stavanger, Norway, where he will be responsible for the company s business development activities. 68

72 As far as the Company and the Board are aware of, there are no conflicts of interest between any duties to the Company of the members of the administrative, management of supervisory bodies, and their private interests and/or other duties ELECTION COMMITTEE Pertra has an Election Committee consisting of the following persons: Berit Kjeldsberg, CEO R. Kjeldsberg AS Kjetil Grønskag, Partner Northbridge Capital Partners Ltd. Berge Gerdt Larsen, Chairman DNO ASA. The members were elected in the Extraordinary General Meeting held on 8 November The Election Committee shall submit a recommendation for the election and remuneration of Board Members. The reasons for the Election Committee s proposal shall be given. The members of the Election Committee shall be elected for two years at a time REMUNERATION AND BENEFITS Remuneration and Benefits to the Management The total salary amount comprises all considerations/benefits that are regarded as taxable income salary, including base salary, holiday pay, bonuses, the value of benefits such as free car and phone. The base salary is the cash salary received for 11 months. Holiday pay pursuant to the Holiday Act is not included in base salary, however included in the total salary. The table below sets out the remuneration and benefits to the management for the year 2006: Name Position Total Renumeration incl Pension (NOK 1000) Erik Haugane Chief Executive Officer 2,030 Paul Hjelm-Hansen Chief Financial Officer 1,357 Tom Bugge Exploration Manager 1,269 Stein Fines Vice President HSE & Technology 1,246 Anton Tronstad Vice President Drilling and Well Operations 1,563 Sigmund Hanslien Senior Advisor G&G 1,968 Having reached an age of 60 years, Erik Haugane is obliged to resign his position if so required by the Board. As compensation for resignation prior to 67 years, he is entitled to a compensation equivalent to 70% of wages from 60 to 67 years. A life account with running payments has been established to ensure this arrangement. Except for this, no members of the Company s administrative, management or supervisory bodies have service contracts with the Company providing for benefits upon termination of employment Pensions Pertra operates a contributory pension scheme for its employees. Pension costs and pension obligations are calculated on a straight-line earning profile basis, based on assumptions relating to discount rates, projected salaries, the amount of benefits from the National Insurance Scheme, future return on plan assets, and actuarial calculations relating to mortality rate, voluntary retirement, etc. Plan assets are valued at net realizable value and are reported net of pension liabilities in the balance sheet. Changes in the pension obligation due to changes in the pension plans are accounted for prospectively over the estimated remaining service period. The same applies to changes in estimates which exceed 10% of the higher of the pension obligation and pension assets (corridor). Social security fees are expensed on basis of pension premiums paid for insured (collective) pension schemes. The Company s accrual to cover future pension liabilities is NOK 4 million. 69

73 Bonus Incentive Scheme The Board has adopted a bonus share incentive program for Pertra s employees. The Board will on an annual basis assess achievement during the previous year. The bonus consists of payment of cash and shares. The Board will then decide if there is basis for bonus shares to be distributed. Bonus shares plus accompanying payment shall not exceed 40% of the salary. All employees are evenly qualified to receive bonus shares in terms of salary respectively. Notwithstanding the above and based on power of attorney given in the Extraordinary General Meeting held on 24 February 2006, the Board decided to issue 8,007 shares as bonus for achieved milestones during employees still employed by the Company, received bonus shares. On 23 March 2007, the Board resolved to issue 27,700 shares under the employees bonus incentive scheme based on power of attorney given in Extraordinary General Meeting held on 2 October The power of attorney as of 2 October 2006 had replaced the former power of attorney. The power of attorney granted to the Board in the EGM held on 8 November 2007 may also be used to issue shares under the employees bonus incentive scheme EMPLOYEES As of the date of the Offer Document, Pertra has 53 employees. The table below illustrates the development in number of employees over the last two years, as per the end of each calendar year. Number of employees October CORPORATE GOVERNANCE Pertra complies with the NCG with the following exceptions: - According to NCG article 3, authorisations granted to the board of directors to increase the company s share capital should be restricted to defined puposes. The authorisation granted to the Company s board by the Extraordinary General Meeting held 8 November 2007, cf. section below, is not restricted to a defined purpose. In order to facilitate the purpose of the authorization it is not possible to identify the purposes in a more specific way; i.e. to identify possible merger targets, contribution in kind to be and the exact timing and volume of a possible capital increase based on utilization of the authorization. - According to NCG article 9 the board of directors should consider appointing board committees. Due to the relative limited activities of the Company and the importance of decisions in the Company s initial phase, which necessitates a close focus by all board members, the board of directors does not yet organise its work in permanent committees. The members of the board of directors do not participate in the Company s bonus share program. For further details on corporate governance issues, please refer to the annual report for 2006 issued 23 March 2007 which is available on the Company s web page and and at its offices. 70

74 12. SHARE CAPITAL AND SHAREHOLDER INFORMATION The following description includes certain information concerning the Company s share capital, a brief description of certain provisions contained in the Company s Articles of Association as they are in effect at the date of this Offer Document and a brief description of certain aspects of Norwegian law, including the Norwegian Public Companies Act. The summary does not purport to be complete and is qualified in its entirety by the Company s Articles of Association and Norwegian law. Any change in the Articles of Association is subject to approval by a general meeting of shareholders SHARE CAPITAL AND SHARES Pertra's share capital is, at the date hereof, NOK , consisting of 59,538,350 shares, 3 all fully paid, each with a nominal value of NOK 0.2 per Share. All shares are vested with equal shareholder rights in all respects. There is only one class of shares and all shares are freely transferable. The shares have been created under the Norwegian Public Limited Companies Act, and registered in book-entry form in the VPS under the international securities identification number (ISIN): NO The registrar for the shares is Sparebanken Midt-Norge, verdipapirservice, Søndre g. 4, N-7467 Trondheim, Norway. Pertra has since 10 November 2006 been listed on Oslo Børs with the ticker code PERTRA. Based on calculations per 19 November 2007, the maximum number of Consideration Shares to the remaining Det Norske Oljeselskap Shareholders will be 6,439,924. After completion of the Offer, the issued share capital of Pertra will be increased by up to NOK 1,287, through issuance of up to 6,439,924 new Pertra Shares with a par value of NOK 0.20, constituting a total share capital of up to NOK 13,195, comprising up to 65,978,274 Pertra Shares OUTSTANDING AUTHORISATIONS Authorisation to issue shares At the Extraordinary General Meeting held 8 November 2007, the share capital of Pertra was increased by NOK 6,600,000 by the issuance of 33,000,000 shares with a nominal value ofnok 0.2 per share. Contibution for the new shares shall be made by transfer of shares in NOIL to Pertra with exchange ratio 3:1. The subscription price was NOK 72 per share. The shares were subscribed for by DNO ASA. At the Extraordinary General Meeting held 8 November 2007, the board of directors was granted the following authorisation to issue new shares (in-house translation): 1. The share capital may, in one or more rounds, be increased to a total of up to NOK 5,950,000 by issue of up to 29,750,000 shares, each share with a nominal value of NOK The authorisation shall be valid until the Ordinary Shareholders Meeting in 2008, though at the latest until 30 June The shareholders pre-emptive rights pursuant to the Norwegian Public Limited Companies Act section 10-4 may be set aside. 4. The authorisation encompasses increase of share capital with contribution in kind and right to incur the Company special obligations in accordance with the Norwegian Public Limited Companies Act section The authorisation encompasses a resolution of merger pursuant to the Norwegian Public Limited Companies Act section Including 33,000,000 shares in Pertra issued to DNO as settlement for their conditional sale of 99,000,000 shares in Det norske Oljeselskap ASA. 71

75 6. The authorisation may be used in a take over situation, as described in the Norwegian Stock Exchange Act section 5-15 and the Norwegian Securities Trading Act section 4-17, even if this is not approved by the Shareholders Meeting subsequent to the announcement of the takeover bid. 7. The authorisation replaces current Board authorisations. The authorisation was registered with the Norwegian Register of Business Enterprises on 16 November HISTORICAL DEVELOPMENT IN SHARE CAPITAL AND NUMBER OF SHARES Below is a table showing the development of the Company s share capital: Date of registration Type of change Change in share capital (NOK) Subscription price (NOK) Nominal value per share (NOK) Total share capital Number of shares Incorporation 1,000, ,000,000 1,000, Share issuance 1,250, ,250,000 2,250, Share issuance 27, ,277,945 2,277, Share issuance 650, ,927,945 2,927, Share issuance 185, ,113,130 3,113, Share split ,113,130 15,565, Share issuance 8, ,114, ,573, Private Placement 2,000, ,114, ,573, Retail Offering 166, ,281, ,677, Employee Offering 20, ,302, ,510, Employee offering 5, ,307,670 26,538, Share issuance 6,600, ,907,670 59,538,350 72

76 12.4 OWNERSHIP STRUCTURE As of 16 November 2007, Pertra has a total of 1,318 shareholders, of which 1,253 were Norwegian, and 65 were non-norwegian. There are no restrictions on foreign ownership of Pertra's shares. The table below shows the 20 largest shareholders in Pertra as per 16 November 2007: Shareholder No. of shares % 1 Credit Suisse Securities (Europe) Prime Broke*... 2,945, % 2 Kørven AS v/erik Haugane... 1,372, % 3 Verdipapirfondet KLP... 1,159, % 4 H.L.Management and C LTD , % 5 UBS AG, London Branc S/A IPB segregated C* , % 6 Sjækerhatten AS , % 7 Vilje 2M AS , % 8 Oleum AS , % 9 Verdipapirfond ODIN , % 10 Bear Stears Securit A/C customer SAFE KE* , % 11 Sparebanken MIDT-NOR , % 12 Vinn Invest v/stein Fines , % 13 Bank of New York, BR BNY GCM client account* , % 14 R Kjeldsberg AS , % 15 Månemelk AS , % 16 Credit Agricole Inve Bank, non treaty acc* , % 17 Taubåtkompaniet AS , % 18 Trønderenergi AS , % 19 Koteng Ivar Johannes , % 20 Roll Severin AS , % Total 20 largest... 16,448, % Others... 10,089, % Total... 26,538, % * Registered as nominee shareholder with VPS. Each Share represents one vote in the Company s general meetings, and none of Company s major shareholders have different voting rights TRANSACTIONS WITH RELATED PARTIES The Company has in April 2006 entered a 10 year rental agreement with Brubakka Eiendom AS for a one-man office in Inderøya. The office is used by the VP Drilling and Well Operations Anton Tronstad for his daily employment with Pertra. The lease is NOK 8,750 per month for the first 12 months. After this period the lease amount will be renegotiated. The agreement can be terminated by each party with a 3 month notice. Anton Tronstad has indirect minority ownership in Brubakka Eiendom. He is also a board member of Brubakka Eiendom. Nomination committee member Kjetil Grønskag is also a board member of Odfjell Drilling Ltd and some of its subsidiaries. Close assosiates to Grønskag has substantial sharesholdings in Odfjell Drilling Ltd. Pertra has, together with Revus Energy ASA, entered into a 3-year rig-contract with Deep Sea Rig AS, a company related to Odfjell Drilling Ltd. Pertra, Revus Energy and Odfjell Drilling Ltd. have entered into an agreement related to drilling services which encompass projecting, logistics and other related services. This agreement also encompass Pertras drilling operations related to Frøy (PL364). The above agreements are entered into on arm s length terms. 73

77 12.6 THE ARTICLES AND CERTAIN ASPECTS OF NORWEGIAN COMPANIES LAW The Articles of Association Pursuant to the Company s Articles of Association, i.a.: - the Company s registered office, where a substantial portion of the company s administration and operational activities takes place, is located in the municipality of Trondheim, Norway. - the Company s scope of business is petroleum exploration and production and activities related to this, as well as independently or in cooperation with other companies and stakeholders subscribe for shares or otherwise participate in such or other related enterprises. - the Board of Directors shall consist of five to eight directors. The Articles of Association does not provide any special voting rights, majority requirements or similar The general meeting of shareholders The general meeting of shareholders is the highest authority of a Norwegian Public Limited Company. The Company must arrange for the annual general meeting to be held within six months of the end of each financial year. The annual general meeting shall approve the annual accounts and any dividends payable. An extraordinary general meeting shall be called if the Board resolves to do so or the auditor or shareholders representing 5% of the Shares and votes requires it. In accordance with the Public Limited Companies Act Article 5-6, the general meeting shall be held prior to the end of June each year. In accordance with the articles section 7 and the Norwegian Public Limited Companies Act, a written notice shall be sent to all shareholders with known address at the latest two weeks prior to a general meeting. The shareholders may participate in person or by proxy The Board of Directors The administration of the Company pertains to the Board, which shall oversee the proper organization of the business. The Board shall supervise the administration of the Company, hereunder supervise the Chief Executive Officer. The members of the Board are elected by the general meeting by majority vote. The general meeting also resolves the annual remuneration of the Board members The management of the Company The Board employs the Chief Executive Officer (CEO) of the Company and resolves his/her remuneration. The CEO conducts the day-to-day business in accordance with the guidelines and instructions of the Board. The CEO has the right to participate at Board meetings. The CEO employs the other members of the executive management and their remuneration. Under Norwegian law the members of the executive management do not become members of the Board, unless the general meeting elects them. The CEO can in any case not be elected as Chairman of the Board of the company Voting rights Each share in the Company carries one vote at the general meeting. As a general rule, resolutions that shareholders are entitled to make pursuant to Norwegian law or the Articles of the Company, requires approval by a simple majority of the votes cast. However, in the case of election of directors to the Board, the person who obtains the most votes is elected. Further, certain decisions, including resolutions to waive pre-emptive rights in connection with a waiver of the shareholders pre-emption rights in connection with the issue of shares, convertible bonds, warrants etc., to approve a merger or de-merger, to amend the Articles, to authorize an increase or reduction in the share capital, to authorize an issuance of convertible loans or warrants or to authorize the Board to purchase the Company s own Shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a shareholders meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of all the holders of such shares or class of shares as well as the majority required for amendments to the Articles of the Company. Decisions that (i) would reduce any existing shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the shares require a majority vote of at least 90% of the share capital represented at the general meeting in 74

78 question as well as the majority required for amendments to the Articles of the Company. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amendments to the Articles of the Company. In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of shares in the share register kept by the VPS. Beneficial owners of shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register as holding such shares as nominees. Readers should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee-registered shares. For example, Oslo Børs has in a statement on 21 November 2003 held that in its opinion nominee-shareholders may vote in general meetings if they prove their actual shareholding prior to the general meeting No restriction on ownership of the Shares Neither the Articles of the Company nor the Norwegian Public Limited Companies Act restricts ownership of the Shares. There are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote the shares Freely transferable shares There are no limitations on the transferability of the Shares under Norwegian law or the Articles Additional issuances and preferential rights All issuances of shares by the Company, including bonus issues, require an amendment to the Articles of the Company, which requires support by at least two-thirds of the votes cast. Furthermore, under the Norwegian Public Limited Companies Act the Company s shareholders have a pre-emptive right to subscribe for new shares issued. The pre-emptive rights may be waived by a resolution in a general meeting by two-thirds of the votes cast. A waiver of the shareholders preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class. Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the Company s free equity or from its share premium reserve. Such bonus issues may be effectuated either by issuing shares or by increasing the par value of the shares outstanding. To issue shares to holders who are citizens or residents of the United States upon the exercise of preferential rights, the Company may be required to file a registration statement in the United States under United States securities laws. If the Company decides not to file a registration statement, such holders may not be able to exercise their preferential rights and in such event would be required to sell such rights to eligible Norwegian persons or other eligible non-u.s. holders to realize the value of such rights Dividends Under Norwegian law, no interim dividends may be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of shareholders. Any proposal to pay a dividend must be recommended or accepted by the Board and approved by the shareholders at a general meeting. The shareholders at the annual general meeting may vote to reduce (but not to increase) the dividends proposed by the Board. Dividends in cash or in kind are payable only out of (i) the annual profit according to the adopted income statement for the last financial year, (ii) retained profit from previous years, and (iii) distributable reserves, after deduction of (a) any uncovered losses, (b) the book value of research and development, (c) goodwill, (d) net deferred tax assets recorded in the balance sheet for the last financial year, (e) the aggregate value of any treasury shares that the Company has purchased or been granted security over during the preceding financial years, (f) any credit or security given pursuant to sections 8-7 to 8-9 of the Norwegian Public Limited Companies Act and provided always that such distribution is compatible with good and prudent business practice with due regard to any losses which may have occurred after the last balance sheet date or which may be expected to occur. The Company cannot distribute any dividends if the equity, according to the balance sheet, amounts to less than 10% of the total balance sheet without a two months creditor notice period. 75

79 Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior government approval. However, all payments to and from Norway shall be registered with the Norwegian Currency Registry. Such registration is made by the entity performing the transaction. Further, each physical transfer of payments in currency shall be notified to the Norwegian customs. Consequently, a non- Norwegian resident may receive dividend payments without Norwegian exchange control consent if such payment is made through a licensed bank. The Board will consider the amount of dividend (if any) to recommend for approval by the Company s shareholders, on an annual basis, based upon the earnings of the Company for the years just ended and the financial situation of the Company at the relevant point in time Mandatory offer requirement Norwegian law requires any person, entity or group acting in concert that acquires more than 40% of the voting rights of a Norwegian company listed on Oslo Børs to make an unconditional general offer for the purchase of the remaining shares in the company. The offer is subject to approval by Oslo Børs before submission of the offer to the shareholders. The Offer Price per share must be at least as high as the highest price paid or agreed by the offeror in the six-month period prior to the date the 40% threshold was exceeded, but equal to the market price if the market price was higher when the 40% threshold was exceeded. In the event that the acquirer thereafter, but prior to the expiration of the bid period acquires, or agrees to acquire, additional shares at a higher price, the acquirer is obliged to restate its bid at that higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. A shareholder who fails to make the required offer must within four weeks dispose of sufficient shares so that the obligation ceases to apply (i.e. reduce the ownership to a level below 40%). Otherwise, Oslo Børs may cause the shares exceeding the 40% limit to be sold by public auction. Until the mandatory bid is given or the shares exceeding the 40% threshold are sold, the shareholder may not vote for shares exceeding the 40% threshold, unless a majority of the remaining shareholders approve. The shareholder can, however, exercise the right to dividends and pre-emption rights in the event of a share capital increase. Oslo Børs may impose a daily fine upon a shareholder who fails to make the required offer or sell down below 40%. A shareholder or consolidated group that owns shares representing more than 40% of the votes in a listed company, and that has not made an offer for the purchase of the remaining shares in the company in accordance with the provisions concerning mandatory offers (e.g., due to available exemptions), is obliged, in general, to make a mandatory offer in the case of each subsequent acquisition. However, there are exceptions to this rule, including for a shareholder or a consolidated group that, upon admission of the company to listing on a stock exchange, owns more than 40% of the shares in the company. New mandatory offer regulation in compliance with EU s Take-Over-Directive (Directive 2004/25/EF) has been adopted by the Norwegian legislators in the New Securities Trading Act (Act of 29 June 2007 No 75) Chapter 6. The regulation included in Chapter 6 will come into force on 1 January 2008 and a mandatory offer obligation will be invoked when passing 1/3 of the issued shares of the Company. There will be a repeated obligation when passing 40% and 50 %. Shareholders holding shares above the mentioned thresholds at the time of implementation of the new rules will be required to give a mandatory offer for all issued Shares if acquiring additional shares after the effectuation of the new rules. The Company has not received any takeover bids or bids to acquire controlling interest during the last 12 months Compulsory Acquisition If a shareholder, directly or via subsidiaries, acquires shares representing more than 90% of the total number of issued shares as well as more than 90% of the total voting rights attached to such shares, then such majority shareholder has a right (and each remaining minority shareholder of the Company have a right to require such majority shareholder) to effect compulsory acquisition for cash of the shares not already owned by such majority shareholder. Such compulsory acquisition would imply that the majority shareholder has become the owner of the thus acquired shares with immediate effect. If the majority shareholder has not completed a mandatory offer he will have to do so simultaneously with the compulsory acquisition under the current legislation. Upon effecting the compulsory acquisition the majority shareholder would have to offer the minority shareholders a specific price per share, the determination of which price would be at the discretion of the majority shareholder. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months duration, request that the price be set by the Norwegian courts. Absent such request or other objection to the price being offered, the minority shareholders 76

80 would be deemed to have accepted the offered price after the expiry of the two months deadline. The cost of such court procedure would, as a general rule, be for the account of the majority shareholder, and the courts would have full discretion in respect of the valuation of the shares as per the effectuation of the compulsory acquisition Insolvency/Liquidation According to the Norwegian Public Limited Companies Act, the Company may be liquidated by a resolution in a general meeting of the Company passed by a two-thirds majority of the aggregate votes cast as well as two thirds of the aggregate share capital represented at such meeting. The Shares rank pari passu in the event of a return on capital by the Company upon a liquidation or otherwise SHAREHOLDER AND DIVIDEND POLICY Shareholder policy The Company will inform the Company s shareholders and the market in general on an ongoing basis of the Company s development, activities and special events, ensuring that as far as possible the pricing of the Company s Shares reflects the underlying values and expectations on future profits. Such information will, among other things, take the form of annual reports, quarterly reports, stock exchange bulletins, press releases and investor presentations when appropriate Dividend policy The need for additional capital to further develop Pertra implies a restrictive dividend policy going forward. The Company expects that it will not pay dividend to its Shareholders until 2010, at the earliest.the Shares have equal rights to the Company s profits unless otherwise approved by all the shareholders. Witholding tax related to distribution of dividens is described in Section 14. The Company has not previously paid any dividends SHAREHOLDER S AGREEMENTS ETC. The Company is not aware of any shareholders agreement in place between the Company s shareholders as regards shares in Pertra. 77

81 13. SHORT PRESENTATION OF DET NORSKE OLJESELSKAP (NOIL ENERGY) This section contains a brief presentation of Det Norske Oljeselskap (renamed to NOIL Energy) and its operations. The information has been derived from publicly available information. Pertra does not accept any liability for the accuracy or completeness of the information regarding Det Norske Oljeselskap and its subsidiaries set forth herein or elsewhere in this document COMPANY INFORMATION NOIL is a public limited liability company organised and existing under the laws of Norway, pursuant to the Norwegian Public Limited Liability Companies Act. The company was established on 13 November 1989 and registered in the Norwegian Register of Business Enterprises on 12 March From 22 June 2007, the shares of NOIL have been trading on the OTC list in Oslo under the ticker NOIL. NOIL s registered office is presently located at Stranden 1, Aker Brygge, P.O. Box 1345 Vika, N-0113 Oslo, Norway. The company s registration number is The company s telephone number is and fax number is: NOIL s web site can be found at HISTORY AND DEVELOPMENT OF THE COMPANY NOIL was founded on 13 November 1989 to engage in petroleum exploration and production activities. The Company was a wholly owned subsidiary of the parent company DNO ASA, which was established in 1971 and was the first Norwegian oil company to be listed on Oslo Børs. DNO ASA trades under the ticker DNO. In the year 2000, NOIL s presence in the Norwegian sector of the North Sea was strengthened by acquiring working interests in the Jotun and Glitne fields and the PL203 license, and an important milestone was reached in 2002 when the company was approved as an operator on the Norwegian Continental Shelf. In 2003 a sale and purchase agreement with Lundin Petroleum AB of Sweden was entered into by DNO ASA for the sale of certain assets. The total settlement for the licenses sold (in Norway and UK/Ireland) amounted to approximately NOK 1.7 billion. Since 2004 the company has followed an exploration-led strategy utilising the full range of exploration tools to strengthen its position as a committed player on the Norwegian Continental Shelf. Several new licenses have been acquired and awarded through organic growth. The organization has increased significantly during these years, and rig capacity for exploration drilling has been secured. In June 2007, the NOIL was converted from a limited liability company into a public limited liability company, and carried out a private placement raising a total of NOK million in new equity BUSINESS OVERVIEW NOIL s business activities are located solely on the Norwegian Continental Shelf, where the company as of July 2007 participates in 26 licenses. The company is operator on 11 licenses and partner in 15 licenses, whereof 2 are in production; the Glitne and Enoch fields. The company has since the transaction in 2003 established a strong multidisciplinary team with considerable knowledge and experience in exploring for and finding hydrocarbons. The core disciplines, geology, geophysics and reservoir have also been supplemented by including a drilling team of highly experienced professionals capable of running rig operations. NOIL sees this as an important strategic move to achieve its goal to become the largest independent Norwegian exploration and production company. NOIL currently has 28 employees with extensive subsurface compentence as well as operational and drilling expertice. The Managing Director is Tore Lilloe-Olsen and the senior management consist of Tormod Frøland, Bjarne Syrstad and Per Gustav Granvold, all with long experience within the oil and gas industry. As from 15 November 2007, and following appointment on 8 November 2007, the board of directors of NOIL consist of: Erik Haugane (chairman), Kaare M. Gisvold, Ivar Brandvold, Eva Skøelv and Bente Vold. The company increased its exploration activity significantly on the Norwegian Continental Shelf during A significant discovery was made early 2006 in the Goliat field in the Barents Sea, where the Company is a partner with a 15% working interest. 78

82 Minimising exploration costs through partnerships is a key element for NOIL s strategy to transform resources to reserves at low cost. An example is the farm-out agreement signed with PA Resources Norway AS in January 2006 allowing the company to transfer parts of the exploration costs for eight licenses in exchange for part of the working interest. This agreement has given NOIL the opportunity to mitigate risk but still maintain a high share in these licenses. New licenses on the NCS are awarded either through regular concession rounds or through annual Awards in Predefined Areas (APA) rounds. Licenses awarded in the APA rounds have a less committed work program as used to be the case in the past. These work programs may include geological studies, seismic re-processing and interpretation, etc. Some licenses may have a more extensive work program, as for example PL 356 where one commitment was a 3D seismic acquisition program, and in rare cases there might also be a well commitment. For the APA rounds, drill or drop decisions made on the technical work program is more common than firm wells. The licenses awarded in the regular concession rounds generally have more commitments attached to them. These are often in new unexplored areas that requires larger seismic acquisitions and more extensive exploration. The initial license period is 5-6 years, with a possibility for extension if the license partners have fulfilled the work commitment defined in the award letter. The extension period would normally be a maximum of 30 years. During the first years of the work program there is usually no area fee, but after this initial period with work commitment, the licenses will be charged an area fee per square kilometre. The fee has been increased significantly and is an incentive to return areas that are of no interest to the license partners. The maximum area fee for exploration licenses is currently NOK 120,000 per square kilometre. The fee is to be paid until a Plan for Development and Operation (PDO) is submitted, or the partners relinquish the license Recent developments During the last 3 months, NOIL has participated in two exploration wells in the North Sea, PL305 (Lie) and PL265 (Ragnarrock). The Lie well (24/9-8) was drilled with the Bredford Dolphin rig and was plugged and abandoned as a dry well. The Lie well was the first operated well drilled by the company. The Ragnarrock well (16/2-3), drilled with West Epsilon, proved the presence of moveable oil within a low productivity chalk reservoir. The field is currently being appraised by West Epsilon (16/2-4). In June 2007, a new production well was spudded on the Glitne field in the North Sea, and this should extend the life of the field by one year to mid In September 2007, NOIL delivered an extensive application in the APA2007 license round. The Norwegian Ministry of Petroleum and Energy is expected to award licenses in December

83 13.4 EXPLORATION LICENSES Twentyfour of NOIL s current license portfolio are in the exploration phase. The licenses are located in all three areas on the Norwegian Continental Shelf as presented below North Sea In the North Sea the area is mature with developed infrastructure with available capacity. There is still a substantial undiscovered potential in this area and NOIL has the majority of its activities here with a total of 22 licenses (whereof 9 as operator). One prospect, PL341 (Thorkildsen), is planned to be drilled in 2007, with NOIL as operator. The unrisked volume potential to NOIL is 17.2 mmboe, and the well costs are carried through a farm-out agreement with PA Resources. The rig capacity has been secured through a consortium of several operators on the Norwegian Continental Shelf, with the Bredford Dolphin rig. Licenses/prospects both confirmed and unconfirmed that are planned for exploration drilling in 2008 and early 2009 include PL001B / 242 (Draupne), PL029B (Freke), PL229 (Goliat North), PL332 (Skruven), PL334 (C), PL341 (Tufte), PL369 (Trow) and PL442 (East Frigg/Delta). The combined unrisked potential to NOIL is mmboe. The Draupne well is operated by the company Norwegian Sea The Norwegian Sea is located further north, and NOIL has three license interests in this area; PL380, PL383 and PL447. The plan is to drill two exploration wells in 2008 one in PL380 (Fongen) and one in PL383 (Struten), and the unrisked potential for NOIL is 57.7 mmboe. 80

84 Barents Sea This area is relatively unexplored, however, the Goliat field which is NOIL s largest discovery, is located here (see section below) FIELDS UNDER DEVELOPMENT/IN EVALUATION PHASE Goliat (PL229) The Goliat field was discovered in 2000 and was the first commercial oil discovery in the Barents Sea. The field is operated by Eni, and NOIL has a 15% working interest. The field was the largest oil discovery made on the Norwegian Continental Shelf for 10 years, and the development is likely to act as a catalyst for further activities in the area. The Goliat South well in 2006 increased the P50 reserves/resources to 250 mmboe. A plan for development and operation is expected in the first half of 2008 with production start-up late in There is considerable additional prospectivity in the license area within different reservoir levels. The Goliat North prospect with an unrisked potential of 34.2 mmboe net to the company is expected drilled by Polar Pioneer in Ragnarrock (PL265) The Ragnarrock field was discovered in September 2007 when well 16/2-3 proved the presence of moveable oil within a low productivity chalk reservoir. The field is currently being appraised with the jack-up drilling rig, West Epsilon. Prior to the drilling, NOIL estimated resources of 38.7 mmboe net to the company. After the result of the appraisal well the resources discovered in the Ragnarrock field will be defined as contingent resources Hanz and West Cable (PL028B and PL001B/PL242) Discoveries in license 028B (Hanz) and 001B/242 (West Cable) in the North Sea basin have been classified as contingent resources. Total gross recoverable resources are estimated to 16 and 4 million barrels oil equivalents respectively. After a farm-out to PA Resources in 2006, NOIL s working interest is now 35%, and net volume to NOIL is 7 million barrels of oil equivalents PRODUCING FIELDS Glitne (PL 048B) Glitne is an oilfield located 40 kilometer northeast of Sleipner and is developed via a subsea solution tied back to the leased FPSO Petrojarl 1. Glitne is operated by Statoil and started production in The production continued its expected decline in 2006 to 10,030 bopd (2005: 14,250 bopd) including a one week planned shutdown. NOIL has a 10% working interest in Glitne. P50 gross reserves at 31 December 2006 have been estimated at 52 mmboe, where 44 mmboe have already been produced. An additional well was spudded in June 2007 and this should extend the life of the field by one year to mid Enoch (PL 048D) The Enoch field is a small oil and gas field located on the UK/Norway median line and came on-stream in May It is developed utilising a single subsea well tied back to the Brae A platform, and NOIL s working interest is 10% of PL048D and 2% of the unitised field SUMMARY OF RESERVES AND CONTINGENT RESOURCES A summary of the remaining proven and probable hydrocarbon reserves and contingent resources (P1+P2, working interest) as at 31 December 2006 for NOIL s license portfolio is given in the table below. Volumes classified as reserves are those quantities of petroleum which are anticipated to be commercially recovered from known accumulations from a given date forward to the end of the field life. Contingent resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known accumulations, but which are not currently considered to be commercially recoverable, or where a PDO has not yet been submitted. NOIL s reported contingent resources are included as resources class 4 (in planning phase) and class 5 (development likely) under NPD s classification system. The reserves are furthermore restricted to those volumes that are expected to be produced prior to the termination date of the current license. 81

85 NOIL s reserve updates are done in accordance with standard guidelines advised by the Society of Petroleum Engineers (SPE) and comply with the guidelines from Oslo Børs. (For a full description please see ASR report for DNO ASA submitted to Oslo Børs on 31 March 2007). An oil price of USD 58/bbl at year end 2006 has been used for economic evaluation of the reserves. Remaining reserves and contingent resources as of 31 December 2006 working interest Licence Classification Gross Working interest Net (mmboe) (mmboe) (%) Glitne (PL048B) Reserves in production % 0.8 Enoch (PL048D) Reserves in production % 0.3 Goliat (PL229) Contingent resources % 37.5 Hanz (PL028B) Contingent resources % 5.6 West Cable (PL001B/242) Contingent resources % 1.4 Total 45.6 Resources discovered in the Ragnarrock field will be added to the resource base as of 31 December HISTORICAL FINANCIAL INFORMATION (NOIL) Ernst & Young has performed a limited review of the unaudited condensed interim financial report for the nine months ended 30 September 2007, based in accordance with SBR 2410 (Review of Interim Financial Information Performed by the independent Auditor of the Entity). The Auditor s report has been issued without qualifications. Ernst and Young has been the auditor for Det Norske Oljeselskap also in 2005 and From 2007, NOIL is using USD as functional currency in their quarterly accounts. For the purpose of this Offer Document, both the historical information and pro forma of NOIL is presented using NOK as functional currency. Any differences compared to the official Q3 report of NOIL is related to the difference in functional currency. Except and other as described herein, there has not occurred any significant change in the financial or trading position of NOIL since the end of the last interim financial period. 82

86 Income statements NOIL Nine months ended FY ended 31 FY ended Sept 2007 Dec 2006 Dec 2005 (Unaudited) (Audited) (Audited) Amounts in NOK NGAAP NGAAP NGAAP Operating revenues and expenses Revenue, oil and gas Other operating revenues Total operating revenues Exploration expenses Change in inventories Production costs Payroll and payroll-related expenses Depreciation and amortsation expenses Provison for plugging and abandonment liabilities Other operating expenses Total operating expenses Operating income (-loss) Financial income and expenses Interest income Other financial income Intercompany interest expenses Interest expenses Other financial expenses Net financial items Income (loss) before taxes Taxes (+)/tax income (-) on ordinary income/(loss) Net income (loss)

87 Balance Sheets NOIL As of 30 As of 31 As of 31 Sept 2007 Dec 2006 Dec 2005 Amounts in NOK (Unaudited) (Audited) (Audited) Assets NGAAP NGAAP NGAAP Fixed assets Oil and gas fields Property, plant and equipment Total fixed assets Finacial assets Long term receivables Total non-current assets Current Assets Inventories Inventories and accrued income Short term reveivables on Group company Trade receivables Other receivables Tax receivables Money market funds Cash and cash equivalents Total current assets Total assets

88 NOIL As of 30 As of 31 As of 31 Sept 2007 Dec 2006 Dec 2005 Amount in NOK (Unaudited) (Audited) (Audited) EQUITY AND LIABILITIES NGAAP NGAAP NGAAP Equity Paid in capital Share capital Share premium Other paid in capital Total paid in capital Other equity Other equity Total equity Liabilities Provisions Asset retirement obligation Defferd tax liabilities Total provisions Other long term liabilities Long term liabilities to group company Long term liabilities to credit institution Total other long term liabillities Short term liabillities Short term liabilities to Group company Short term liabilities to credit institutions Trade creditors Taxes payable Dividend Other short termt liabilities Total current liabilities Total liabilities Total equity and liabilities

89 Cash flows NOIL Nine months ended FY ended 31 FY ended Sept 2007 Dec 2006 Dec 2005 (Unaudited) (Audited) (Audited) Amounts in NOK NGAAP NGAAP NGAAP Cash flow from operating activities Income /(loss) before taxes Tax refund Direct tax payout from the State Depreciation and amortisation expenses Asset retirement obligation Gain on sales of tangible asset Other Changes in inventories, accrud income Change in receivables Changes in net current capital and in other current balance sheet items NET CASH FLOW FROM OPERATING ACTIVITIES Cash flow from investment activities Purchase of property plant and equipment Gail on sales of share and securities Proceeds from sales of shares and securities Proceeds from sales og tangibles assets NET CASH FLOW FROM INVESTMENT ACTIVITIES Cash flow from financing activities Proceeds from borrowing, Group companies Proceeds from borrowing, other Repayment from borrowing, Group companies Proceeds from issuance of ordinary share Dividendes paid Group contribution paid NET CASH FLOW FROM FINANCING ACTIVITIES Net change in cash and cash equivalents Cash and cash equivalents at beginning of period Specification of cash and cash equivalents at end of period

90 Statement of changes in Equity NOIL Amount in NOK Share capital Share premium reserve Other paid-in capital Other Equity Total Equity Equity as at Revision OB 1 januar Dividend payment Group constribution net after tax Profit/(Loss) for the period Equity as at (NGAAP) Capital increases Profit (loss) for the period Equity as at (NGAAP) Private placement in June Subsequent offering in August Share issue costs booked to equity Profit (loss) for the period Equity as of (Unaudited NGAAP) SHAREHOLDER INFORMATION Det Norske Oljeselskap's share capital is, at the date hereof, NOK 23,663, divided on 118,319,772 shares each with a nominal value of NOK 0.20 per share. As of 16 November 2007, NOIL had a total of 1,505 shareholders, of which 1,409 were Norwegian, and 96 were non-norwegian. There are no restrictions on foreign ownership of NOIL's shares. The table below shows the 20 largest shareholders in NOIL as per 16 November 2007: Shareholder No. of shares % 1 DNO ASA... 99,000, % 2 Morgan Stanley and C /A MSIL IPB CLIENT... 4,628, % 3 Dresdner Bank AG London S/A Prime Brokerage... 3,360, % 4 Larsen Oil & Gas AS... 1,250, % 5 Credit Suisse Securities (Europe) prime broker... 1,249, % 6 Bear Stearns Securities A/V Clearing Account... 1,021, % 7 Danske Bank A/S 3887 Settlements NOR , % 8 AS Flu , % 9 Slethei AS Leif Inge , % 10 IOT Holding ASA , % 11 Verdipapirfondet Han Norge , % 12 Anfar Invest AS , % 13 Slethei, Leif Inge , % 14 SEB London A/C Non treaty , % 15 Goldman Sachs Int. Security Client Segr , % 16 Verdipapirfondet Fond , % 17 BNP Paribas Sec. S/A Henderson UK , % 18 Bank of New York, BT Treaty Account United , % 19 Slethei, Siri , % 20 Amagerbanken Egenhandel S/A egne midler , % Total 20 largest ,786, % Others... 3,533, % Total ,319, % 87

91 14. TAX CONSEQUENCES Below is a summary of some of the Norwegian tax rules which may be relevant to the possible sale of NOIL Shares on the terms set forth in the Offer. This summary is not an exhaustive description of all tax issues that may be of significance to every Shareholder in NOIL. The summary is based on Norwegian tax law as of the date of this Offer Document. Such laws may be amended, also with retroactive effect. The summary is only meant to provide general information and does not analyze all aspects that may be of importance to every Sharholders in NOIL. The taxation of each Shareholder in NOIL depends on the respective Shareholder's specific situation, and each Shareholder should thus consult a tax adviser in order to establish the specific tax consequences of an acceptance of the Offer by him/it, as well as the relevance and implications of Norwegian or international tax law and possible amendments thereof TAX CONSEQUENCES FOR NORWEGIAN SHAREHOLDERS Companies that are Det Norske Oljeselskap Shareholders Limited companies that are NOIL Shareholders, such as AS-companies, ASA-companies and similar entities taxed as separate entities, are not subject to taxation for a capital gain originating from realisation of Shares in NOIL, whereas any loss incurred upon such realisation does not give any right to tax deductions. The same apply to non-limited companies such as ANS, DA and KS companies which are transparent entities for tax puposes. Consequently, such companies may sell their NOIL Shares under the Offer without tax consequences. Costs incurred in connection with the acquisition and sale of NOIL Shares under the Offer are not deductible for tax purposes for such companies Private individuals who are Det Norske Oljeselskap Shareholders A gain from the sale of NOIL Shares by a NOIL Shareholder who is an individual is added to his or her general income which is taxed at a rate of 28%. A loss is deducted from the general income. The taxable gain is calculated as the difference between the received consideration and the tax purchase price, including any RISK-adjustments up to 1 January 2006, and less any unused calculated allowance on a share per share basis. The main purpose of the calculated allowance is to determine the dividends and gains which will be exempt from tax. If the dividends distributed one year do not exceed the calculated allowance, the unused allowance will be added to the tax purchase price of the share by the computation of the allowance the following year, and may also be carried forward and set off against future dividends received on, or capital gains originated from realisation of the same share. The annual allowance will be allocated to the shareholder owning the share on 31 December the relevant income year. The deduction for any unused allowance by the realisation may not lead to or increase a deductible loss. Any unused allowance exceeding the capital gain originated from the realisation of a share will be annulled. If a NOIL Shareholder sells NOIL Shares acquired at various points in time, the Shares that were acquired first shall be regarded as being sold first (first in-first out; Norwegian: først inn-først ut prinsippet) when calculating the taxable gain or loss. Costs incurred in connection with acquisition and sale of NOIL Shares are deductible in the year of sale TAX CONSEQUENCES FOR NON-NORWEGIAN SHAREHOLDERS A gain from the sale of NOIL Shares will be subject to taxation in Norway for a non-norwegian tax resident NOIL Shareholder being an individual holding the NOIL Shares effectively connected with a business carried out in Norway. For NOIL Shareholders being companies holding the NOIL Shares effectively connected with a business carried out in Norway, the same rules apply as for Norwegian tax resident company NOIL Shareholders. For individuals recently emigrated from Norway, who were resident in Norway for tax purposes within the five calendar years prior to a sale of NOIL Shares, particular provisions apply. A capital gain on the NOIL Shares may be subject to taxation in Norway. Such taxation of capital gains must however be pursuant to an applicable tax treaty. 88

92 15. ADDITIONAL INFORMATION 15.1 LEGAL ISSUES/DISPUTES Neither Pertra nor NOIL are or haveduring the course of the preceding 12 months been involved in any legal, governmental or arbitration proceedings which may have, or have had in the recent past, significant effects on the companies financial positions or profitability. Nor are Pertra or NOIL aware of any such proceedings which are pending or threatened DOCUMENTS ON DISPLAY For the life of this Offer Document the following documents may be inspected at and at the Company s offices at Nedre Bakklandet 58 c, 7014 Trondheim, Norway: The Company s Memorandum of Incorporation and Articles of Association The Company s historical financial information and auditors report for the 2006 and 2005 financial year The Company s historical financial information for the nine months ended 30 September 2007 The Prospectus for NOIL dated 3 August 2007 Any other report, letter, and other documents, historical financial information, valuations and statements prepared by any expert at the Company s request, any part of which is included or referred to in this Information Document STATEMENT REGARDING SOURCES When using third party sources regarding market data, information has been sourced from different databases on different times and the data are usually compiled in a different format by the Company and/or other third parties. The Company confirms that when information in this Offer Document has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading STATEMENT REGARDING EXPERT OPINIONS This Offer Document does not include any expert opinions. 89

93 16. RISK FACTORS Before accepting the Offer to receive Consideration Shares or otherwise make any investment in shares issued by the Company, investors should carefully consider all of the information contained in this Offer Document, and in particular the following risk factors, which may affect some or all of the Company s activities, the industry in which it operates and the securities being offered. However, the risk factors described below are not the only ones that will be faced by the Company. Other risks and uncertainties, including those not currently considered material by the Company s management and board, may impair the Company s business. The risk factors discussed below may adversely affect the business, financial condition, operating results or cash flow of the Company RISK FACTORS RELATING TO THE COMBINATION OF THE TWO COMPANIES The combination of Pertra and Det Norske Oljeselskap involves the integration of two companies that have previously operated independently. There can be no assurances the combined entity will not encounter difficulties in integrating the respective organizations and operations or that the benefits from the combination will be realized RISK FACTORS RELATING TO THE COMPANY AND THE INDUSTRY IN WHICH IT OPERATES General The business of exploration and production of oil and gas involves a certain degree of risk. Few prospects that are explored are ultimately developed into producing oil and gas fields. Significant expenditure is required to establish the extent of oil and gas reserves through seismic and other surveys and drilling and there can be no certainty that oil and gas reserves will be found. The exploration and development of oil and gas assets may be curtailed, delayed or cancelled by unusual or unexpected geological formation pressures, oceanographic conditions, hazardous weather conditions or other factors. There are numerous risks inherent in drilling and operating wells, many of which are beyond the Company s control. Pertra s operations may be curtailed, delayed or cancelled as a result of environmental hazards, industrial accidents, occupational and health hazards, technical failures, shortage or delays in the delivery of rigs and/or other equipment, labor disputes and compliance with governmental requirements. Drilling may involve unprofitable efforts, not only with respect to dry wells, but also with respect to wells which, though yielding some petroleum, are not sufficiently productive to justify commercial development or cover operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs. The reserves data included in this document are estimates. The nature of reserve quantification studies means that there can be no guarantee that estimates of quantities and quality of oil and gas disclosed will be available for extraction. Therefore, actual production, revenues, cash flows, royalties and development and operating expenditures may vary from these estimates. Such variances may be material Political Risk Changes in the legislative and fiscal framework governing the activities of the companies engaged within the oil and gas sector may have a material impact on exploration and development activity or directly affect the Company s operations. In particular, changes in political regimes will constitute a material risk factor for the Company s operations in foreign countries. Below is a short overview of the political and economical risks presents in the countries where the Company operates Environmental risks All phases of the oil business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and gas operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental 90

94 legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to foreign governments and third parties and may require the Company to incur costs to remedy such discharge. No assurance can be given that environmental laws will not result in a curtailment of production or a material increase in the costs of production, development or exploration activities or otherwise adversely affect the Company s financial condition, results of operations or prospects Competition The oil and gas industry is highly competitive. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. Pertra competes with other exploration and production companies, many of which have great financial resources. Joint selling of oil or gas may have serious repercussions for the sellers, including fines, invalidity of contracts and refund claims, provided such sales can be held to have affected the competitive situation in the market Commodity prices The profitability and cash flow of Pertras operations will be dependent upon the market price of oil and gas. This is known to fluctuate. Oil and gas prices are affected by numerous factors beyond Pertras control, including economic and political conditions, levels of supply and demand, the policies of the Organisation of Petroleum Exporting Countries (Opec), currency exchange rates and the availability of alternate fuel sources. If the price of oil and gas products should drop significantly, the economic prospects of the projects in which Pertra has an interest would be significantly reduced RISK FACTORS RELATING TO THE COMPANY S FINANCING Borrowing and leverage Borrowings create leverage. To the extent income derived from assets obtained with borrowed funds exceeds the interest and other expenses that the Company will have to pay, the Company s net income will be greater than if borrowings were not used. Conversely, if the income from the assets obtained with borrowed funds is not sufficient to cover the cost of borrowings, the net income of the Company will be less than if borrowing were not used. Furthermore, the income must be sufficient to meet the repayment schedule for the borrowed funds in order to avoid default under the financing facilities. The Company will seek to borrow only when the directors of the Company believe that such borrowings will benefit the Company after taking into account considerations such as the costs of the borrowing, the repayment schedules and the likely returns on the assets financed with the borrowed monies. However, no assurance can be given that the income will exceed the interests and costs associated with the loans, nor be sufficient to repay the loans when due RISK FACTORS RELATING TO THE SHARES IN PERTRA Volatility of share price The market price of the Shares subsequent to completion of the Offer could fluctuate widely in response to a number of factors, including the following: actual or anticipated variations in operating results and/or production levels; fluctuations in oil prices and reserve levels changes in financial estimates or recommendations by stock market analysts regarding the Company or its competitors; announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; sales or purchases of substantial blocks of stock; additions or departures of key personnel; future equity or debt offerings by the Company and its announcements of these offerings; and general market and economic conditions. Moreover, in recent years, the stock market in general has experienced large price fluctuations. These broad market fluctuations may adversely affect the Company's stock price, regardless of its operating results. 91

95 Shareholders not participating in future offerings may be diluted Unless otherwise resolved or authorised by the general meeting, shareholders in Norwegian public companies such as the Company have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect to new shares issued by the company. For reasons relating to US securities laws (and the laws in certain other jurisdictions) or other factors, US investors (and investors in such other jurisdictions) may not be able to participate in a new issuance of shares or other securities and may face dilution as a result (see below) Pre-emptive rights may not be available to U.S. holders of the Company s Shares Under Norwegian law, prior to the Company s issuance of any new shares for consideration in cash, the Company must offer holders of the Company s then-outstanding Shares pre-emptive rights to subscribe and pay for a sufficient number of shares to maintain their existing ownership percentages, unless these rights are waived at a general meeting of the Company s shareholders. U.S. holders of the Shares may not be able to receive, trade or exercise pre-emptive rights for new Shares unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. The Company is not a registrant under the U.S. securities laws. If U.S. holders of the Shares are not able to receive, trade or exercise pre-emptive rights granted in respect of their Shares in any rights offering by the Company, then they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted Holders of the Company s Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose shares are registered in their own names with the VPS Beneficial owners of the Company s Shares that are registered in a nominee account may not be able to vote such shares unless their ownership is re-registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Company s Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their shares or otherwise vote their shares in the manner desired by such beneficial owners The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company has not registered the Shares under the Securities Act or the securities laws of other jurisdictions other than Norway and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act) nor may they be offered or sold in any other jurisdiction in which the registration of the shares is required but has not taken place, unless an exemption from the applicable registration requirement is available or the offer or sale of the shares occurs in connection with a transaction that is not subject to these provisions. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or subscription rights The ability of shareholders to make claims against the Company following registration of the share capital increase in the Norwegian Companies Register is severely limited under Norwegian law Following the registration of the capital increase relating to any Shares of the Company (including the Offer Shares) in the Norwegian Companies Registry, purchasers of those Shares have very limited rights against the Company under Norwegian law. 92

96 Appendix 1: Unaudited Q3 report 2007 for Pertra A 1

97 A 2

98 A 3

99 A 4

100 A 5

101 A 6

102 A 7

103 A 8

104 A 9

105 A 10

106 A 11

107 Appendix 2: 2006 Annual report for Pertra (IFRS) A 12

108 A 13

109 A 14

110 A 15

111 A 16

112 A 17

113 A 18

114 A 19

115 A 20

116 A 21

117 A 22

118 A 23

119 A 24

120 A 25

121 A 26

122 A 27

123 A 28

124 A 29

125 A 30

126 Appendix 3: 2005 Annual report for Pertra (NGAAP) ANNUAL REPORT 2005 A 31

127 The Board of Directors Annual Report 2005 History The original company Pertra was established by Petroleum Geo-Services ASA (PGS) in 2002 as a direct follow-up of White Paper 39 ( ), which created an opening for new participants on the Norwegian Shelf. Pertra purchased 70% of the Varg Field, at the time in the process of being shut down, and assumed the operatorship 1 August Daily production from Varg was doubled, and an additional reserve of 40 million barrels was discovered and included in the Varg Field. PGS sold Pertra to Talisman Energy UK Ltd., the acquisition date being 1 January The Management of Pertra re-established Pertra AS as a new oil company on 11 February 2005 and purchased from Talisman the name Pertra, physical onshore property, procedures, computer equipment, and license interests in five licenses, the acquisition date also here being 1 January The authorities approved the license share transfers from Talisman to Pertra on 29 April In connection with the start-up Pertra became the operator for one exploration license. 16 of the 19 who were employed by Pertra when the company was purchased by Talisman in January 2005 continued in the new Pertra. At the turn of the year, Pertra had 19 employees. Pertra owns a 5% share of one producing field (Varg in PL 038). Pertra owns shares in two licenses where work aimed at submitting a PDO has been initiated, PL 316 where the Yme Field is located, and PL comprising the Frøy Field. Three discoveries in PL 332 are expected to be of commercial interest provided that additional resources in the area are discovered. Of the total number of 36 mapped prospects not yet drilled in our licenses, plans for drilling have been made for only one prospect. It is expected that the decision to drill one additional prospect in a Pertra-operated license will be made during The decision to drill further two prospects in partner-operated licenses may be made in Pertra s license shares are all located in wellknown petroleum provinces in the Norwegian sector of the North Sea and the Norwegian Sea. Four licenses are in the Norwegian Sea, and six in the North Sea. The operatorships are equally distributed, with two in each area. License Share Ownership In 2005, Pertra obtained NOK million in new capital from Norwegian and international investors. Petro Midt-Norge AS and Pertra Management are the two major shareholders with respectively 40% and 32% owner s shares as of Pertra Management AS and Petro Midt-Norge AS have submitted notification regarding the dissolution of the companies to the Brønnøysund Register Centre. The actual dissolution will take place in April 2006, approximately. The purpose of the dissolution is to provide the owners of these holding companies with direct ownership in Pertra. This will in itself increase the liquidity of Pertra s shares, but is primarily a step in the process of listing Pertra on the stock exchange. PL 038 5% PL % PL 321 (O) 40% PL % PL 337 (O) 35% PL 34 5% PL % PL 364 (O) 50% PL 380 (O) 70% PL % The work programs for these licenses require that geophysical evaluations be made within two to three years, resulting in a decision to drill an exploration well or relinquish the production license to the authorities. Area of Activity The company s activities consist of petroleum production and activities related to this, and by means of share subscription or otherwise participate in such or other activities independently or in cooperation with other enterprises and stakeholders. The company s main offices are located in Trondheim. Portfolio The company has license interests in a total of 10 licenses. The license interests vary from 5% to 70%. Pertra is the operator for a total of four licenses. The company s comprehensive activities in 2005 constituted the basis for the development of resources. Remaining proven developed reserves, estimated in accordance with guidelines issued by SEC (Securities and Exchange Commission in the U.S.) on the Varg Field (the entire field, of which the company owns 5%) as of amounted to 5.7 million barrels (0.9 million Sm 3 ). The company s estimate for reserves in the Varg Field are higher than this, and the company s 5% share of this estimate is discussed in the chapter Oil Resources and Reserves in the form of million barrels. 25 A 32

128 26 Exploration and Development Activities The company participated in three development wells on Varg in In addition, Pertra participated in one exploration well in PL 316 (Aimee) in In 2006 one additional production well on Varg is scheduled to be drilled, which may prolong the production from the field somewhat. Oil Resources and Reserves At 1 January 2005 Pertra had no license interests; the entire portfolio has consequently been established during a period of less than one year. Pertra s risked resources have been estimated at 190 million barrels as compared to 110 million barrels as of Q2. The APAAwards in December 2005 resulted in an increase of 72 million barrels risked resources in the form of prospects and discoveries. We find it appropriate to divide the prospects into six resource classes, cf. the table below, which also relates Pertra s resources and reserves in accordance with the NPD s resource classifications. Pertra s share of resources under assessment constitutes 31 million barrels in Yme and Frøy. Pertra has 1.3 million barrels reserves in production on the Varg Field, as compared to 1.5 million after Q2. The decrease is caused by production during the period and correction following thirdparty verification of reserves. Pertras risked ressources Development from 2Q 2005 to 4Q 2005 MMBBL 140,0 136 per 2Q ,0 per 4Q ,0 80,0 60,0 40, , ,5 1,3 0,0 Prospects Prospects to Discoveries Commercial Fields with PDO Fields in production be drilled Discoveries Graph indicating how Pertra in one year has established a significant portfolio and during Q4 matured resources toward production. Resource classifications are based on NPD s definitions. The resource estimate as of Q is compared to the estimate as of Q Health, Safety and Environment It is Pertra s objective that all operations shall be carried out with zero damage to people or to the environment. Safety for people, the environment, and financial values is an integrated part of the company s management systems. This is to be achieved by means of systematic work with regard to follow-up as well as maintaining a sharp focus on continuous improvement processes. Registration, reporting, and assessment of causal relations and potential consequences constitute a vital part of the work. In 2005, Pertra has received good feedback with regard to its HSE work after audits carried out by the Petroleum Safety Authority Norway (PSA). The company received no orders or notifications of orders during Equal Opportunities It is Pertra s objective that the company shall constitute a workplace with equal gender opportunities. In its procedures the company has incorporated that there shall be no gender discrimination with regard to salary, promotion, or recruitment. The company has traditionally recruited from working environments where the number of men and women is unequally represented. Of the company s 19 employees, eight are women. As of there were one woman and seven men on the Board of Directors. After the turn of the year this composition has been altered to two women and six men. Working time arrangements in the company are in accordance with the terms for the various positions and independent of the employee s gender. Working Environment The company maintained a high level of activity in 2005, and the working environment is considered to be good. Improvement measures are continuously being implemented. At the end of the year, the company had 19 permanent employees, corresponding to a total of 15.6 man-labor years. A total of 24 sick days, or 0.9%, were registered in No serious occupational injuries or accidents, resulting in bodily injuries or material damage, have been registered during the year. The company s personnel safety representative has participated in the planning and design of the new office premises. In 2005, no injuries or accidents were registered among the company s employees. The Environment Pertra is not an operator for producing fields. For environmental data for the Varg Field, including emissions to air and discharges to sea as well as the use of chemicals, we refer to the environmental data reported by the operator Talisman Production Norge AS to the Petroleum Safety Authority Norway (PSA), the Norwegian Petroleum Directorate (NPD), and the Norwegian Pollution Control Authority. 27 A 33

129 28 FINANCIAL STATEMENT 2005 Effective as of , Pertra has been transformed into a public limited company (ASA). The company s 2005 Financial Statement Report has been formally submitted in accordance with the regulations stated by the Companies Act. To the best of its knowledge, the Board is not aware of any significant conditions that may impact the evaluation of the company s standing as of 31 December 2005 or the 2005 annual result, beyond that which has been disclosed in the above and otherwise in the Financial Statement. Profit / (Loss) It is the Board s opinion that the Financial Statement provides a true representation of Pertra s assets and liabilities, financial standing, and result. The company s total turnover for 2005 amounted to NOK 94.4 million. The crude oil was sold CIF for an average price of NOK/barrel (NOK 2,377/Sm 3 ). This result is relatively high, and exceeds our expectations. The company continuously assesses the need for limiting the risk of oil price fluctuations. The company s currency exposure is reduced by the fact that the majority of both production costs and petroleum revenue are in USD. As of yet, it has not been deemed necessary to hedge currency risk. Pertra incurred a net operating loss amounting to NOK 129 million in Extensive exploration costs being charged as expenses, including an exploration well in PL 316 (Aimee), has adversely affected the result. Taxable income due to exploration costs has been estimated at NOK 82 million. The financial result for 2005 was NOK 42 million. Balance and Liquidity At the company has a positive equity of NOK 171 million. The company has no free equity. At the end of the year, the company had a shortterm bank overdraft. No long-term debts have been established. Plug and abandonment obligations are listed as NOK 10 million at the end of the year. Cash Flow Cash flow from operating activities for 2005 amounted to NOK 53.8 million. As of , means of payment amounted to NOK 106 million. Production The company s total share of the production from Varg totaled 39,373 Sm 3 crude oil. The company s share of non-allocated inventory amounted to 2,894 Sm 3. Financial Risk Market Risk As the company s revenue is in foreign currency, the company is exposed to fluctuations in oil prices and exchange rates. The company has not entered into forward contracts or other agreements aimed at reducing the company s oil price and exchange risk and thus the operation-related market risk. Credit Risk The risk of opposing parties not having the financial means required to fulfill their contractual obligations is considered low, as historically there have been no losses on accounts receivable. Liquidity Risk The company s liquidity status is assessed as being good, and it has not been decided to introduce measures aimed at altering liquidity risk. Deadlines for accounts receivable are maintained. Annual Result and Dispositions The Board proposes that the financial results for Pertra be disposed as follows: NOK 0,857 million to be transferred from other paid-in equity, and NOK -41,346 million to be transferred from the share premium account. Continued Operation In accordance with the Norwegian Accounting Act 3-3a it is confirmed that the assumptions for continued operation are present. The company has sufficient liquidity from completed share issues and existing production to implement the obligations and investment programs approved for 2006 in the various licenses. The Board recognizes considerable long-term opportunities for increase of reserves and non-developed resources in the various licenses where Pertra has license interests. However, this will require further supply of capital, and the company is currently making preparations for an IPO. Future Prospects Pertra s share of production on Varg is expected to amount to approximately 1,200 barrels per day in It is anticipated that there will be a gradual decline of production on Varg in the years to come. The production on Varg may continue until , depending on oil prices and access to production capacity. The company s prospects for the next two years are to a significant degree related to the development of the Yme Field (PL 316) and the Frøy Field (PL 364). Work aimed at completing a Plan for Development and Operation (PDO) for Yme by 2006 and for Frøy by 2007 is ongoing. A successful development process may result in production from these two fields in and onward. It is Pertra s ambition to participate in six to ten exploration wells by the end of To secure capacity in Pertra-operated licenses, Pertra has entered into an agreement with Maersk Contractors regarding the lease of Maersk The Board of Pertra ASA Giant for a well in Pertra, in cooperation with several other operators, has also signed an agreement with Fred Olsen Energy regarding the lease of Bredford Dolphin for three years from the fall of No exploration wells have been planned for the company s operator licenses in For the time being, two exploration wells have been planned for The Government has recently announced the APA (Awards in Predefined Areas) 2006, with a total of 192 blocks. Pertra will instigate work aimed at obtaining awards in APA The company s financial standing may be subjected to major variations due to oil price fluctuations, produced volumes, development costs, and exploration activities. The value of the company s risked reserves and resources will correlate with the above-mentioned factors. The Board would like to emphasize that there is considerable uncertainty associated with assessments of future conditions. 29 A 34

130 2005 Financial Statement A 35

131 2005 Profit and Loss Account (All figures in NOK 1000) Note Petroleum revenues Other operating revenues 884 OPERATING REVENUES Exploration costs Change in inventories Production costs Payroll and payroll-related expenses 5, Depreciation and amortisation expenses Provisions for plugging and abandonment liabilities Other operating expenses 188 TOTAL OPERATING EXPENSES OPERATING PROFIT/(LOSS) Interest received Other financial income Interest paid Other financial expenses PROFIT/(LOSS) OF FINANCIAL ITEMS PROFIT/(LOSS) BEFORE TAXES Taxes (+)/taxable income (-) on ordinary profit/(loss) ANNUAL PROFIT/(LOSS) Transferred from other paid-in equity -857 Transferred from share premium reserve TOTAL TRANSFERRED A 36

132 34 Balance Sheet (All figures in NOK 1000) Note 2005 ASSETS Deferred tax Tangible assets TOTAL TANGIBLE ASSETS Inventories Accounts receivables Other receivables Calculated tax receivable Cash and cash equivalents TOTAL CURRENT ASSETS TOTAL ASSETS EQUITY AND LIABILITIES Share capital Share premium reserve TOTAL EQUITY Pension liabilities Provisions for plug- and abandonment obligations TOTAL PROVISIONS Bank overdraft Accounts payable Public deductions and taxes Other current liabilities TOTAL CURRENT LIABILITIES TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Cash Flow Statement (All figures in NOK 1000) Cash flow from operating activities Profit/(loss) before taxes Taxes paid Depreciation and amortisation expenses Provisions for plugging and abandonment liabilities Discount shares to employees 857 Changes in inventories, accounts payable and receivable Changes in net current capital and in other current balance sheet items NET CASH FLOW FROM OPERATING ACTIVITIES Cash flow from investing activities Investment in and development of oil and gas fields Investment in software, inventory etc NET CASH FLOW FROM INVESTING ACTIVITIES Cash flow from financing activities Paid-in share capital Deductions bank overdraft NET CASH FLOW FROM FINANCING ACTIVITIES Net change in cash and cash equivalents Cash and cash equivalents at CASH AND CASH EQUIVALENTS AT Specification of cash and cash equivalents at Bank deposits, etc A 37

133 36 Accounting Principles The annual accounts have been kept in accordance with regulations stated in the Accounting Act and with generally accepted accounting principles. Revenue Revenue from the Company's ownership of production licenses is recognized when ownership of produced oil passes to the customer (delivery). Expenses Expenses are entered in the Profit/(Loss) Account according to the matching principle, i.e. either juxtaposed with the corresponding income or identified as a period expense. Assessment and Classification of Balance Sheet Items Current assets and short-term liabilities comprise items that are due within one year, as well as items related to goods circulation. Other items are classified as fixed assets/long-term liabilities. Current assets are valued at the lower of acquisition cost and actual value. Short-term liabilities are capitalized to nominal amount at the time of establishment. Fixed assets are valued at acquisition cost, but are depreciated to actual value if the decrease in value is not considered temporary. Long-term liabilities are capitalized to nominal amount at the time of establishment, after deduction for paid installments. Oil and Gas Assets Drilling costs are capitalized if the development of proven reserves is reasonably certain. In accordance with the matching principle expenses are capitalized even though operating time is less than three years. Depreciation of drilling expenses and production rights are computed in accordance with the production unit method. The relationship between this year's production and secured developed reserves constitutes the basis for depreciations. Wells are included in the depreciation basis from the time of production start-up. Oil and gas assets onshore are capitalized and depreciated linearly throughout the expected lifetime of assets if these are estimated to have a lifetime exceeding three years and a production cost exceeding NOK Exploration Costs Exploration costs related to drilling of exploration wells are managed according to the Successful Effort method. The method implies that purchase of seismic data and expenses related to seismic and geophysical explorations will be expensed. Exploration wells are temporarily capitalized pending an evaluation of prospective discoveries of oil and gas reserves. Such expenses are charged to the Profit and Loss Account if commercial oil reserves are not proven. Shares in Joint Venture Activities The Company's license shares on the Norwegian Continental Shelf are included in the Profit and Loss Account and capitalized in accordance with the gross method Inventory The value of the petroleum inventory on board the FPSO Varg is estimated as the lower of total production cost and actual value. Provisions for Plugging and Abandonment Costs relating to future plugging and abandonment of offshore petroleum installations are calculated as nominal value of estimated future expenses. Current provisions for this future obligation are entered in the Profit and Loss Account in accordance with the production unit method. Taxes Taxes in the Profit and Loss Account encompasses both taxes payable this period and changes in deferred tax liabilities. Deferred tax liabilities are calculated using a 28% tax rate and a 50% surtax rate, after deductions for nontaxable income related to effected investments, based on the temporary differences between accounting values and fiscal values at The effect of tax-increasing and tax-reducing temporary differences that reverse or may reverse in the same period has been capitalized and entered as net in the Balance Sheet. Net deferred tax assets are capitalized to the extent that it is probable it will be utilized. Calculated outstanding tax in consequence of deficit related to exploration activities are entered as current receivables in the balance sheet. Currency Transactions in foreign currency are entered at transaction exchange rates. Money items in foreign currency are converted into the exchange rate of the Balance Sheet date. Realized and unrealized foreign exchange gains and losses are included in the annual results. Pensions Pension costs and liabilities are calculated according to linear contribution based on discount rate, future wage regulations, pensions and National Insurance benefits, future return on pension resources, and actuarial assumptions regarding mortality rates, voluntary retirement, etc. Pension assets are assessed at actual value and deducted in net pension liabilities in the balance. Altered liabilities caused by changes in pension plans are divided over the expected remaining contribution time. The same applies to estimate deviations to the extent that these exceed 10% of the larger of pension liabilities and pension assets (corridor). Cash Flow Analysis The cash flow statement is based on the indirect method, and the Company's bank inventory is indicated as means of payment. Share-based Compensation When allotting shares to employees at a discount, the difference between market value and purchase value is expensed as salary. In equity, the discount appears as other paid equity. Pertra was one of the main sponsors of the Norwegian National Biathlon Championship held in Trondheim. Here we see Liv Grete Skjelbreid Poiree rounding off her successful career by winning the very last individual event before she retired. 37 A 38

134 38 Notes (All figures in NOK 1000) Note 1 The Company and Significant Events in 2005 Pertra was established 11 February 2005 after a previous company of the same name was purchased by Talisman Energy. The Company is focused on exploration activities and production of oil on the Norwegian Continental Shelf. The Company owns the following shares in production and exploration licenses on the Norwegian Shelf: No. Name Share Operator PL 038 Varg 5 % Talisman PL 038 Varg Outside 5 % Talisman PL 316 Yme 10 % Paladin PL 321 Frøyhøgda 40 % Pertra PL % Talisman PL % Pertra PL % Marathon PL % DNO PL 364 Frøy 50 % Pertra PL 380 Midgard West 70 % Pertra PL % DNO Approval as License Holder and Operator Pertra was approved as License Holder and Operator in April Increase of Capital The Company was supplied with NOK in equity by means of a private placing in May 2005, and with additional NOK through a private placing in December See Note 14 for further information related to equity. Talisman Sales and Purchase Agreement The Sales and Purchase Agreement with Talisman Production Norge was implemented 1 June. The purchase comprised the shares in PL 038, including the producing Varg Field but exclusive Varg South gas discoveries, PL 321 Frøyhøgda, PL 337, PL 332, and PL 349. The takeover date of this Agreement was 1 January 2005, the implementation date being 1 June The Profit and Loss Account displays operating revenues and expenses in these five licenses from the implementation date 1 June. Operating income and expenses in the 1 January - 1 June period have been incorporated in the Balance Sheet. Paladin Farm-in Agreement A Farm-in Agreement related to the acquisition of a 10 % share of PL 316 was concluded, effective as of 1 July See Note 16 for a description of obligations related to this Agreement. Four New Licenses in APA 2005 Pertra was awarded license shares in PL 364, PL 356, PL 380, and PL 383 in APA The Agreements were formally signed 2 February The Aimee Prospect The drilling of the Aimee prospect was completed in November. The well showed no traces of hydrocarbons was expensed in accordance with the "Successful Effort" method for accounting of oil and gas activities. Note 2 Petroleum Revenue The petroleum revenue is in its entirety related to the Varg Field in PL 038 in the North Sea. The Company's total share of production from Varg amounted to Sm 3 crude oil for the June - December period. The Company' share of non-allocated inventory was Sm 3 at Note 3 Production Costs Production costs apply to PL 038 Varg and comprise costs related to the lease of production ship and additional costs related to the production of oil, including operation and maintenance of installations, well intervention and work-over activities, CO 2 fees, etc. The Varg FPSO Lease Agreement may be terminated with 3 months' notice if regular production falls below Sm 3 per day. The rent consists of a fixed element of USD per day in addition to USD 6,30 per barrel produced. Note 4 Inventory Inventory consists entirely of petroleum in tanks on board the FPSO Varg and is valued at full production cost Inventory (implementation date Talisman Agreement, see Note 1) Inventory Change in inventory In addition, spare parts are entered into the Balance Sheet with 84. Note 5 Wage costs, number of employees, remuneration, loans to employees and auditor's fee Wage costs 2005 Salaries Pension costs, payroll tax included (Note 10) ) Discount shares to employees 857 Payroll tax Other contributions 295 Other personnel costs 831 Reclassification of wage costs to exploration and production costs Total 582 The average number of employees in the accounting year was 16. There were 19 employees at A 39

135 40 Share-based payment The Company's employees were able to purchase shares at a discount during the fall of The last existing rate of issue plus interest was used to estimate market value. The difference between estimated market value and purchase price is presented as wage cost and other paid-in equity. Management remuneration Other Pension cost Total remu- Name Salary remuneration share neration Erik Haugane (CEO) Tom Bugge (Exploration Manager) Anton E Tronstad (VP Drilling/Well Op.) Stein Fines (VP Technology & HSE) The remunerations apply from the time of employment in May to Other remuneration includes payment in kind and compensation for tax charge due to pension premium above 12G being reported as salary. Having reached an age of 60 years, the CEO is obliged to resign his position if required by the Board. As compensation for resignation prior to 67 years, he is entitled to a compensation equivalent to 70 % of wages from 60 to 67 years. A life account with running payments has been established to ensure this arrangement. These are consecutively earmarked in the account, and the cost has been calculated according to the same actuarial conditions applicable to the Company's other pension obligations. Board remunerations in the amount of 58 have been disbursed to each Member of the Board, and 146 to the Chairman. No loans or guarantees have been granted to persons holding management positions. Shares owned by persons holding management positions The company management and several Board Members own shares in the company. The summary below shows the number of shares and owner's shares in the company, owned both directly and indirectly through other companies. Name Total no. of shares Owner's share in % Erik Haugane (CEO) ,07 % Tom Bugge (Exploration Manager) ,84 % Anton E Tronstad (VP Drilling/Well Op.) ,84 % Stein Fines (VP Technology & HSE) ,41 % Kaare M Gisvold (Chairman of the Board) ,85 % Halfdan Carstens (Member of the Board) ,06 % Kjetil Grønskag (Member of the Board) ,74 % Svein Sivertsen (Member of the Board) ,10 % Ivar Aarseth (Member of the Board) ,06 % Auditor Auditor's fees for ordinary audit are expensed at 130, VAT not included. Fees related to delivered consulting services from Deloitte Statsautoriserte Revisorer AS or coadjutant companies are not expensed. Note 6 Exploration Costs Specification of exploration costs: 2005 Seismology, well data, field studies and other exploration costs Share of exploration costs from participation in licenses Dry exploration well in PL 316 charged as expenses Share of wage and operation costs reclassified as exploration costs Total exploration costs Note 7 Currency In 2005, has been expensed as foreign exchange losses, and a profit of has been entered as income. Note 8 Tangible Assets Production Capitalized Fixtures and license drilling and fittings, tools, oil and development office gas fields expenses machinery etc. Total Purchased tangibles Disposals Acquisition cost at Accumulated depreciation Capitalized value Depreciations this year Production license and capitalized drilling and development costs are depreciated in accordance with the production unit method. Fixtures and fittings, office machinery, software, etc. are depreciated linearly over the lifetime, 3-5 years. 41 A 40

136 42 Note 9 Taxes Calculation of taxable income 2005 Loss before taxes Permanent differences: Depreciation production license Other permanent differences 118 Change in temporary differences Taxable income, statutory tax rate 28 % Financial items without special oil tax rate 50 % -82 Taxable income, special oil tax rate 50 % Taxes paid for the year appear as follows: 2005 Taxable income due to exploration-related losses Change deferred tax liabilities Total taxes Effective tax rate in % 66,8 % Harmonization of taxes 28 % Corporate income tax of earnings before taxes % Special oil tax of earnings before taxes Tax effect of financial items without special oil tax (50%) 41 Effect of permanent differences (78 %) Taxes this year Specification of basis for deferred taxes 2005 Tangible assets 728 Capitalized drilling expenses/production license Pension liabilities Inventory Provision after generally accepted accounting principles Net temporary differences % Corporate income tax % Special oil tax Deferred tax liabilities/(assets) in balance sheet The Company has no free income. The Varg Field's lifespan is less than three years, and all expenses are continuously charged as expenses, as related to taxes. Deferred tax liabilities/(assets) are capitalized in its entirety due to the Company's expected future earnings, as well as the level of expected future exploration costs. Calculated outstanding tax in consequence of deficit related to exploration activities are entered as current receivables in the balance sheet. Note 10 Pensions The Company's pension scheme covers a total of 16 employees. The pension scheme gives the right to defined future payments, which are mainly dependent on number of years of earning, salary level at time of retirement and the amount of payment from the National Insurance Office. The obligations are covered through an insurance company Service cost Interest cost - Return on pension plan assets -30 Plan deviations/estimate changes expensed -16 Administration costs 51 Payroll tax 330 Net pension costs Earned pension obligations at Estimated effect of future salary increase 530 Estimated pension obligations at Pension plan assets (market value) at Unrecognized effects of estimate deviations 208 Payroll tax 184 Net benefit obligations Principal assumptions: Discount rate 5,0 % Expected compensation increase 3,0/3,0/3,0 % Expected return on pension plan assets 6,0 % Expected yearly voluntary terminations before 40 years 2,0 % Expected yearly voluntary terminations after 40 years 0,0 % The actuarial assumptions are based on assumptions of demographical factors normally used within the insurance industry. Note 11 Current Receivables Specification of other current receivables 2005 Share of prepaid seismic Other prepaid expenses VAT receivable Other receivables Total other receivables A 41

137 44 Note 12 Current Liabilities Specification of other current liabilities 2005 Incurred liabilities to Paladin related to 40 % share in PL 316, ref. Note Current liabilities related to overcall/undercall from licenses Share other current liabilities from licenses Other current liabilities Total other current liabilities Note 13 Restricted Bank Deposit, Bank Overdraft Tax deduction assets The employees' tax deduction assets are deposited in a separate tax deduction account. Balance per was Bank overdraft As of the Company had a total guarantee and overdraft limit which amounted to Per year end was used. Unused amount was Assets pledged as security As security for the above-mentioned guarantee and drawing rights, the Company has mortgaged the inventory, machinery and plant, and charge over receivables. Booked value of mortgaged property as of was as follows: 2005 Stock of oil Machinery and plant Receivables Total booked value Note 14 Equity Share Share Other paid-in Changes in equity for the year capital premium equity Sum Equity at time of establishment Share issue May Capital increase September Share issue December Share issue costs for December share issue Profit/(loss) Equity The share capital is NOK , consisting of A shares and B shares, each at face value NOK 1,- fully paid up. B shares have no voting rights. Main shareholders at : No. of shares Ownership Name share Petro Midt-Norge AS ,15 % Pertra Management AS ,12 % Credit Suisse Secure (Europe) Prime Broke ,10 % Pareto Securities AS ,64 % Bear Stearns Security ,40 % Koteng Ivar ,32 % Staur Holding ,32 % Bernhrd. Brekke AS ,32 % Jenssen & CO AS ,32 % Kjeldsberg Eiendom AS ,32 % Taubåtkompaniet AS ,32 % Sparebanken Midt-Norge ,32 % Dammåsen AS ,32 % Uniqum AS ,32 % Heglund Holding AS ,99 % Danske Bank AS ,95 % Grendahl Holding AS ,92 % Tinbuen AS ,66 % K. Lund Holding AS ,66 % Motor-Trade Eiendom ,66 % Johan Vinje Stål AS ,66 % Others ,22 % Total ,00 % Note 15 Related Parties No transactions involving closely related parties of significance have been carried out. There is a Shareholder's Agreement between Pertra Management and Petro Midt-Norge. The Agreement addresses a number of issues that have since been implemented. This applies to e.g. an OTC listing of the company, a conversion of the company into a public limited company, and the establishment of an incentive scheme for employees. In addition, the Agreement involves a lock-in period for the shares held by the remaining founders of the company. The Agreement also regulates that Pertra Management and Petro Midt-Norge are to be liquidated, thus transforming the shareholders in the two respective companies into direct owners in Pertra. 45 A 42

138 46 Note 16 Liabilities Plug and abandonment liabilities Pertra has taken on a share of the plug and abandonment liabilities for the Varg field. There are elements of uncertainty related to how long production can be sustained, it is thus uncertain when these liabilities will be settled. The Company's share of the total liabilities is estimated at As of has been earmarked, estimated at nominal value according to the production unit method. Other liabilities Farm-in Agreement PL 316 Pertra has purchased a 10 % share of PL 316 from Paladin. As compensation Pertra is to carry the costs for Paladin's remaining 40 % share in the production license, limited upwards to USD 35,0 mill. The compensation is included in the account as it accumulates, and is classified in the appropriate item in accordance with the Company's accounting principles described above. The remaining share of the liability as of amounted to USD 26,0 mill. There is uncertainty related to when the liability will be settled. This depends upon the progress in the license. The license includes the Yme Field, currently being evaluated with reference to reopening. PDO is expected to be submitted during Note 17 Reserves (not audited) Reserves The Company's estimate of remaining proven developed reserves for the Varg Field has been calculated in accordance with guidelines issued by SEC (The Securities and Exchange Commission, USA) and constitutes as of of Sm 3 for the Company's 5 % share and of Sm 3 for the entire field. The field's total reserves (proven and probable) from the Varg Field have currently been estimated to exceed 13,0 mill. Sm 3, whereof approximately 8,9 mill. Sm 3 had been produced as of 31 Desember Accordingly, the remaining part amounts to 4,1 Sm 3. The license period expires 1 April Note 18 Segments In 2005, the company's activities have in their entirety been conducted within one segment only, defined as exploration and production of petroleum in Norway. For the time being is has not been deemed necessary to split the company's activities into other segments. Note 19 Financial Market Risk Pertra is exposed to market risk where oil prices, foreign exchange rates, and interest rates are concerned. The company's exposure to risk is continuously being monitored, but the company has not found it necessary to utilize financial instruments during Interest rate risk In 2005, the company has not been particularly exposed to interest rate risk, as interest-bearing liabilities were initiated at year-end only. At the company carried interest-bearing liabilities in the amount of , at floating rate of interest. For the present, no maximum limit has been determined for share of liabilities with floating rate of interest. Exchange risk Directly and indirectly, foreign exchange rate developments pose a financial risk to the company. The company's petroleum revenue is stated in U.S. Dollars (USD), whereas the main costs incurred in 2005 have been in Norwegian Kroner (NOK). The company's means of payment are in both USD and NOK. When converted, a decrease in USD value will involve a lower amount in NOK. Oil price risk The company's revenues consist mainly of income from the sale of petroleum. The company is consequently exposed to risk related to oil price changes. Note 20 Health, Security and Environment Pertra is not operator for producing oil fields. Procedures for the safe implementation of activities, with no damage to people or the environment, have nevertheless been established. The company has taken over a share of the plug and abandonment liabilities for the Varg Field, cf. Note 16. In addition, the company covers a part of the running expenses for the various licenses where the company has owner's shares. In 2005, Pertra has received good feedback with regard to its HSE work after audits carried out by the Petroleum Safety Authority Norway. The company received no orders or notifications of orders during A 43

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146 A 51

147 A 52

148 Appendix 5: Unaudited Q3 report 2007 for NOIL THIRD QUARTER 2007 Det Norske Oljeselskap ASA Det Norske Oljeselskap Interim Report Third Quarter Highlights Third Quarter 2007 Well 24/9-8 on the Lie prospect in PL305 was spudded on 18 July. This was the first well operated by Det Norske Oljeselskap ASA on the Norwegian Continental Shelf and thus represents an important milestone for the company. Well 24/9-8 was drilled into the reservoir section to TD at 2,165m below sea level. Hydrocarbons were not encountered and the well was plugged and abandoned. Through a transaction reported 19 January 2006, all well related costs for the company s share will be paid by PA Resources. This was the first well to be drilled by the Bredford Dolphin rig in the three year drilling contract the company and six other operators in a consortium have with Dolphin. The rig will drill one well for another operator prior to returning to Det Norske Oljeselskap ASA to drill well 24/12-5S; the Thorkildsen prospect in PL341. The company s share of the well related costs for the Thorkildsen well will also be paid by PA Resources. In PL265 (operated by StatoilHydro) the Ragnarrock well 16/2-3 was spudded 1 August and drilled to a TD of 1,856m below sea level. The well was drilled with the West Epsilon rig and the well was cored, logged and tested with multiple mini-dst s prior to being plugged and abandoned. The main purpose of the well was to prove the presence of moveable oil within a low productivity chalk reservoir. Based upon the positive well results the PL265 license partners decided to move the West Epsilon rig and drill the 16/2-4 appraisal well immediately. The water depth in the area is 113 metres. In June, DNO launched a new growth strategy in Norway, where the mission was to build the largest independent Norwegian exploration and production company. On 8 October 2007 the company entered into an Integration Agreement with Pertra ASA and DNO ASA. The main purpose of the agreement is to join the activities of Pertra ASA and Det Norske Oljeselskap ASA into one major privately owned Norwegian exploration and production company, called Det norske oljeselskap ASA. The combined company will become Norway s second largest operator. The combination of the two companies is part of the strategy to establish a mid-cap operating company creating shareholder value. The company will operate 17 licenses offshore Norway and will operate 20 exploration wells over the next three years. In the parties shareholders meetings on 8 November the respective Boards decisions to enter into the Integration Agreement of 8 October were approved. At the Goliat field, conceptual and field evaluation studies are taking place related to development of the field. Selection of main development concept is scheduled for December this year. The production from Glitne was in line with plan in the third quarter. Drilling of the new infill well has been completed and the plan is to bring this well on stream towards the end of November this year. Production from the Enoch field started at the end of May. The current production is around 9,000 bopd whereof Det Norske Oljeselskap ASA has a 2 % working interest share. The operating revenues in the third quarter were NOK 60,1 million (NOK 43,9 million) and in the first nine months NOK 142,9 million (NOK 146,5 million). The operating result showed a loss of NOK 20,9 million (NOK 24,6 million) and in the first nine months NOK 46,7 million (NOK 87,2 million). The net profit was in the third quarter NOK 15,8 million versus a loss of NOK 2 million in the same period last year, while the profit in the first nine months was NOK 53,4 million (NOK -27,3 milllion). INCOME STATEMENT, DET NORSKE OLJESELSKAP ASA QUARTER YEAR TO DATE NOK 1,000 Q Q Q Operating revenue Sale of petroleum products Other operating revenues Total operating revenue Operating expenses Production expenses Exploration expenses Ordinary depreciation Payroll/administrative expenses Other operating expenses Net gain (loss) from sale of PP&E Total operating expenses Operating result Financial income and expenses Other interest income Interest expense within Group Other interest expenses Net revenue (loss) from foreign exchange transactions Net finance Result before tax Tax income (expense) Net profit (loss) Det Norske Oljeselskap Interim Report Third Quarter 2007 A 53

149 BALANCE SHEET, DET NORSKE OLJESELSKAP ASA NOK 1, September September December 2006 ASSETS Intangible assets Deferred tax asset Other intangible assets Total intangible assets Tangible assets Oil and gas fields Property, plant and equipment Total tangible assets Total non-current assets Current assets Inventories Short term receivables from Group Trade receivables Other receivables Derivative financial instruments Cash & cash equivalents Total current assets TOTAL ASSETS EQUITY Paid in capital Share capital Share premium account Other paid in capital Total paid in capital Retained earnings Other equity Total retained earnings TOTAL EQUITY LIABILITIES Provisions for liabilities and charges Asset retirement obligation Deferred tax liabilities Total provisions for liabilities and charges Other long-term liabilities Other long-term debt Long-term liabilities to Group Total other long-term liabilities Short-term liabilities Short-term liabilities to Group Trade and other payables Taxes payable -59 Dividend/Group contribution Other short-term liabilities Total short-term liabilities TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Det Norske Oljeselskap Interim Report Third Quarter CASH FLOW STATEMENT, DET NORSKE OLJESELSKAP ASA QUARTER YEAR TO DATE NOK 1,000 Q Q Q Operating activities Result before tax Tax refund for the period Depreciation Profit/(loss) from tangible assets Asset retirement obligation Other Changes in operating assets and liabilities: change in inventories change in current receivables change in other current assets and short-term liabilities Net cash from operating activities Investing activities Proceeds from sale of PP&E Purchase of PP&E Proceeds from financial assets Payment from sale of financial assets Purchase of financial assets Net cash used in investing activities Financing activities Proceeds from borrowings, Group Repayment of borrowings, Group Proceeds from borrowings Paid in capital Dividends paid Group contribution Net cash (used in)/from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period The financial statements have been prepared in accordance with Norwegian Generaly Accepted Accounting Practice (NGAAP). Det Norske Oljeselskap Interim Report Third Quarter 2007 A 54

150 Appendix 6: Auditor s assurance report on the pro forma financial information A 55