UNAUDITED HALF YEARLY REPORT FOR. All Statements contained in this document are subject to legal disclaimer and risk factors detailed in Appendix 1.

Transcription

1 H UNAUDITED HALF YEARLY REPORT FOR TULIP OIL HOLDING B.V. GROUP The Hague, 30 August 2018 All Statements contained in this document are subject to legal disclaimer and risk factors detailed in Appendix 1. Forward-looking statements in this report reflect current views about future events and are, by their nature, subject to significant risks as detailed and uncertainties because they relate to events and depend on circumstances that will occur in the future.

2 Important information and disclaimer THIS REPORT (THE REPORT ) CONTAINS FINANCIAL INFORMATION (THE FINANCIAL INFORMATION ), OPERATIONAL, LEGAL AND OTHER INFORMATION CONCERNING TULIP OIL NETHERLANDS B.V. (THE COMPANY ) AND ITS BUSINESS. THE REPORT HAS BEEN PREPARED BY OR AT THE DIRECTION OF THE COMPANY FOR INFORMATION PURPOSES ONLY. THE INFORMATION CONTAINED IN THIS REPORT MAY INCLUDE RESULTS OF ANALYSES FROM A QUANTITATIVE MODEL THAT MAY REPRESENT POTENTIAL FUTURE EVENTS THAT MAY OR MAY NOT BE REALIZED, AND IS NOT A COMPLETE ANALYSIS OF EVERY MATERIAL FACT RELATING TO THE COMPANY OR ITS BUSINESS. THIS REPORT CONTAINS PROJECTIONS AND FORWARD LOOKING STATEMENTS. THE WORDS BELIEVE, EXPECT, COULD, MAY, ANTICIPATE, INTEND AND PLAN AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACTS INCLUDED IN THE REPORT, INCLUDING, WITHOUT LIMITATION, THOSE REGARDING THE FINANCIAL INFORMATION, THE COMPANY S FINANCIAL POSITION, POTENTIAL BUSINESS STRATEGY, POTENTIAL PLANS AND POTENTIAL OBJECTIVES, ARE FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE COMPANY S ACTUAL RESULTS, PERFORMANCE, ACHIEVEMENTS AND VALUE TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE, ACHIEVEMENTS OR VALUES EXPRESSED OR IMPLIED BY SUCH FORWARD- LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS ARE BASED ON NUMEROUS ASSUMPTIONS REGARDING THE COMPANY S PRESENT AND FUTURE BUSINESS STRATEGIES AND THE ENVIRONMENT IN WHICH THE COMPANY WILL OPERATE IN THE FUTURE. NO WARRANTY OR REPRESENTATION IS GIVEN BY THE COMPANY OR ANY OF ITS REPRESENTATIVES AS TO THE REASONABLENESS OF THESE ASSUMPTIONS. FURTHER, CERTAIN FORWARD-LOOKING STATEMENTS ARE BASED UPON ASSUMPTIONS OF FUTURE EVENTS THAT MAY NOT PROVE TO BE ACCURATE. THE FORWARD-LOOKING STATEMENTS IN THE FINANCIAL INFORMATION SPEAK ONLY AS AT THE DATE OF THE FINANCIAL INFORMATION AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE OR PROVIDE ANY ADDITIONAL INFORMATION IN RELATION TO SUCH FORWARD-LOOKING STATEMENTS. NOTHING IN THIS REPORT IS, OR SHOULD BE CONSTRUED AS, A PROFIT FORECAST. BY ATTENDING OR RECEIVING THIS REPORT, YOU ACKNOWLEDGE THAT YOU WILL BE SOLELY RESPONSIBLE FOR FORMING YOUR OWN VIEW OF THE POTENTIAL FUTURE PERFORMANCE OF THE COMPANY. 2

3 HIGHLIGHTS IN H CONTENTS Q10A Project on track Key events in H Summary of financial results 5 Summary of the first half year 6 Financial review 8 Financial statements with notes 10 62mln in available cash and cash equivalents Income statement 11 Statement of financial position 12,13 Statement of changes in equity 14 Statement of cash flow 15 Notes to the financial statements 16 Appendix 1 Risk Factors mln drawn down from the bond All figures are presented in unless otherwise stated, and figures in brackets apply to the first half year period in 2017 (H1 2017). 3

4 KEY EVENTS IN H January April 2018 April 2018 April 2018 May 2018 May June June 2018 Q Q10A Final Investment Decision (FID) First Steel has been cut for the Q10A offshore platform Line Pipe produced and delivered Board of Tulip Oil Holdings B.V. augmented with an Audit Committee Dredging and rock removal for the pipelay completed on seabed Donkerbroek Hemrik gas production ceases in line with expectations Rig contract signed with Borr (Prospector 1) Lorelay completed pipe laying Project engineering design work finalised All long leads ordered for platform and pipeline which are being delivered as per plan. Construction work for the platform and jacket on schedule. KEY EVENTS OUTLOOK Q Listing of Bond on the Oslo Bors - August 2nd Trenching of pipeline Installation of the spool pieces near P15-D Closing weather deck and start assembling and hook-up equipment Q Commencement of Installation of jacket and topside operation 4

5 SUMMARY OF FINANCIAL RESULTS 2017 Audited FY 2016 Audited FY m H H Operating profit/(loss) (2,929.3) (12,539.3) (29,034.3) (22,282.0) EBITDA (1,750.9) (2,218.1) (5,152.1) (7,787.3) Net profit/(loss) for the period (801.1) (8,862.4) (17,819.1) (7,869.4) Cash flow from operations (5,581.6) (2,814.1) (4,806.1) (12,824.0) Cash flow from investments (14,459.4) (127.1) (585.5) (9,194.0) Total assets 178, , , ,476.5 Net interest-bearing debt 85, , Cash and cash equivalents 61, , ,907.8 SUMMARY OF PRODUCTION Operated/ non-operated Unit H H FY 2016 FY Q10A (60%) Operated boepd DKK (60%) Operated boepd Lauben (50%) Non-operated boepd Schwarzbach (100%) Operated boepd Allseas Lorelay pipelaying vessel & Fortitude arriving at P15D 5

6 SUMMARY OF THE FIRST HALF YEAR 2018 Tulip Oil Holding BV ( TOH ), hereinafter referred to as the company, is the ultimate parent of the entire group of companies. With its subsidiaries, 100% owned Tulip Oil Netherlands BV ( TON ), 100% owned Tulip Oil Netherlands Offshore BV ( TONO ) and 90% owned Rhein Petroleum GmbH ( RP ) it forms the Group. The Company employs the Tulip Oil Holding staff and contractors who in turn provide services to different subsidiaries in the Netherlands and Germany. The main activity in the Group has been within TONO where following Final Investment Decision on 11 January 2018, the Q10A development project is on track with some 50% of the pre drilling scope completed by mid TONO envisages completing the installation of the jacket and topside before the end of this year, following which the company will undertake drilling activities for 4 new wells and the conversion of the existing exploration well into a production well. 3D design view of the proposed Q10A platform In June 2018, the company has contracted the Borr Prospector 1 offshore rig to be used in the 2019 drilling programme. Activity within TON has been limited in the first half of the year. Production from Donkerbroek Hemrik has ceased in May 2018 in line with expectations and the clean up of the facilities has commenced. Pipelaying near P15-D to target box 6

7 Rhein Petroleum holds several exploration and production licences in two core areas of the operations: The Upper Rhein Graben running from Frankfurt to the Swiss/French Border and the Molasse Basin to the West of Munich. Most of the licences contain mature oil fields along with new exploration and appraisal prospects targeting mostly oil opportunities but also with some gas opportunities in deeper intervals. Schwarzbach operating facility Production for Schwarzbach and Lauben has been steadily increasing over time helping to bolster cash generation in Rhein Petroleum. During H Schwarzbach encountered mechanical surface issues which caused some production deferment. This has been now been fixed. Group EBITDA for H (H1 2017) amounted to a loss of 1,750.9 (loss of 2,218.1) thousand and EBIT was a loss of 2,929.3 (loss of 12,539.3) thousand. Net loss for the period was (loss of 8,862.4) thousand. Interest bearing debt amounted to 85,501.3 ( 7.6) thousand mainly comprising of the bond. On the 2 August 2018, the Tulip Oil Netherlands Offshore B.V. FRN 8.50% Senior Secured 87 million Callable Bond Issue 2017/2022 ISIN was listed on the Oslo Bors. Allseas Lorelay pipelaying vessel & Fortitude arriving at P15D 7

8 FINANCIAL REVIEW INCOME STATEMENT ( 1000) H H Total income 1, ,114.3 EBITDA (1,750.9) (2,218.1) EBIT (2,929.3) (12,539.3) Net financial items (1,726.7) (110.4) Profit/(loss) before (4,656.0) (12,649.7) taxes Taxes 3, ,787.3 Net profit/(loss) for the period (801.1) (8,862.4) STATEMENT OF FINANCIAL POSITION ( 1000) H H Deferred tax assets 52, ,959.9 PPE 49, ,597.0 Cash and cash 61, equivalents Net working capital (6,663.8) Total assets 178, ,521.7 Equity 77, ,619.6 Interest bearing debt 85, Total income in the first half was 1,253.8 ( 1,114.3) thousand. Other operating expenses amounted to 1,399.2 ( 2,361.9) thousand. The decrease arises from cost savings and also the capitalisation of the share of costs related to the Q10A development project. Depreciation for the period amounted to ( 10,260.1) thousand. The previous period includes the accelerated depreciation on Donkerbroek Hemrik following the change in reserves estimates. Impairments for the period are higher at ( 61.1) thousand mainly as a result of an adjustment related to previously impaired assets following the change in discount rate for the abandonment provision. The company recorded a lower loss EBITDA of 1,750.9 (loss 2,218.1) thousand in the first half period following the capitalisation of costs directly related to the Q10A development project within TONO. The net loss for the period was ( 8,862.4) thousand after net financial items of -1,726.7 ( 110.4) thousand and a tax credit of 3,854.9 ( 3,787.3) thousand. Deferred tax assets were 52,945.6 ( 39,959.9) thousand at the end of the half year period. The increase arises primarily from the 2017 net impact of impairments in goodwill and licences related to Donkerbroek Hemrik assets net off an increase in recognized tax losses in the Group. Property, plant and equipment increased to 49,229.3 ( 37,597.0) thousand, reflecting investments in the Q10A project in the first half of The group s cash and cash equivalents were 61,616.8 ( 687.5) thousand as of the half year period. With the Q10A pre-drilling project some 50% progressed, excluding drilling scope, there is sufficient cash to meet the needs of the Group going forward. Equity amounted to 77,411.8 ( 86,619.6) thousand at the end of the year, corresponding to an equity ratio of 43.4% (94.6%). The decrease follows the bond issue by TONO resulting in an increase in cash and cash equivalents. Interest-bearing debt increased to 85,501.3 ( 7.6) thousand, consisting primarily of the TONO bond of par value 87 million. 8

9 CASHFLOW STATEMENT ( 1000) H H Cash flow from operations Cash flow from investing Cash flow from financing Net change in cash and cash eq. Cash and cash eq. EOP (5,581.6) (2,814.1) (14,459.4) (127.1) (19,922.2) (2,220.3) 61, Net cash outflow from operating activities was higher at 5,581.6 ( 2,814.1) thousand mainly as a result of bond interest being paid during the first six months and working capital movements. Net cash outflow from investment activities was 14,459.4 ( 127.1) thousand. Investments in fixed assets mainly reflecting capital expenditures on the Q10A development. Funding At the end of the period, the company had total available liquidity of 61,616.8 ( 687.5) thousand, comprising of cash and cash equivalents of 52,202.9 ( 627.5) million and restricted cash and cash equivalents of 9,413.9 ( 60.0) thousand. The restricted cash and cash equivalents mainly relates to the payment of the next four quarters of interest payable on the bond and the minimum liquidity balance held. In October 2017, the company priced senior secured notes offering of 87 million aggregate principal amount due in 2022 at par in a bullet manner. The coupon rate on the bond amounts to 3 month EURIBOR + 8.5% p.a. with interest payable quarterly. The offering was closed on 25 October On the 2 August 2018, Tulip Oil Netherlands Offshore B.V. FRN 8.50% Senior Secured 87 million Callable Bond Issue 2017/2022 ISIN was listed on the Oslo Bors. 9

10 FINANCIAL STATEMENTS WITH NOTES 10

11 INCOME STATEMENT H1 H ( 1000) Note Petroleum revenues 2 1, , ,249.6 Other revenue Total Income 1, , ,249.6 Purchases (521.3) (28.3) (505.9) Exploration expenses (33.4) (12.7) (29.6) Production costs (1,050.8) (929.5) (1,499.4) Depreciation 7,8 (622.5) (10,260.1) (13,140.4) Impairments 3,8 (555.9) (61.1) (10,741.8) Other operating expenses 4 (1,399.2) (2,361.9) (5,366.8) Total operating expenses (4,183.1) (13,653.6) (31,283.9) Operating profit/(loss) (2,929.3) (12,539.3) (29,034.3) Interest income Other financial income Interest expenses 5 (1,386.5) (0.2) (1,335.8) Other financial expenses 5 (340.4) (110.2) (372.7) Net financial items 5 (1,726.7) (110.4) (1,702.9) Profit/(loss) before taxes (4,656.0) (12,649.7) (30,737.2) Taxes (+)/ tax income (-) 6 3, , ,918.1 Net profit/(loss) for the period (801.1) (8,862.4) (17,819.1) Net profit/(loss) for the period is attributable to: Owners of Tulip Oil Holding B. V. (634.1) (8,643.4) (17,216.9) Non-controlling interests (167.0) (219.0) (602.2) STATEMENT OF COMPREHENSIVE INCOME H1 H ( 1000) Net profit/(loss) for the period (801.1) (8,862.4) (17,819.1) Total comprehensive income in period (801.1) (8,862.4) (17,819.1) 11

12 STATEMENT OF FINANCIAL POSITION H1 H1 H2 ( 1000) Note (restated note 1) (restated note 1) ASSETS Intangible assets Goodwill 7 3, , ,259.7 Other intangible assets 7 1, , ,804.3 Deferred tax assets 6 52, , ,090.7 Tangible fixed assets Property, plant and equipment 3,8 49, , ,162.7 Financial assets Long-term other loans 3, , ,147.5 Total non-current assets 110, , ,464.9 Inventories Inventories Receivables Accounts receivable 3, Other short-term receivables 9 2, Cash and cash equivalents Cash and cash equivalents * 10 61, ,539.0 Total current assets 68, , ,776.8 TOTAL ASSETS 178, , ,241.7 *Includes restricted cash and cash equivalents 12

13 STATEMENT OF FINANCIAL POSITION H1 H1 H2 ( 1000) Note (restated note 1) (restated note 1) EQUITY AND LIABILITIES Equity Share capital Share premium 144, , ,131.3 Retained earnings (68,059.0) (58,851.4) (67,424.9) Minority interest 1, , ,488.3 Total equity 77, , ,212.9 Non-current liabilities Long-term abandonment provision 12 2, , ,420.9 Long-term bond payable 13 83, ,904.6 Other non-current financial liabilities Other non-current liabilities 2, ,320.2 Current liabilities Trade creditors 7, ,500.0 Accrued expenses 3, Other current liabilities Other current financial liabilities 1, ,335.2 Total liabilities 101, , ,028.8 TOTAL EQUITY AND LIABILITIES 178, , ,

14 STATEMENT OF CHANGES IN EQUITY (Unaudited) ( 1000) Share capital Share premium Retained earnings Minority interest Total equity Equity as of restated ,101.3 (50,208.0) 2, ,002.0 Share premium injection - 1, ,480.0 Net profit/(loss) for the period - - (8,643.4) - (8,643.4) Minority interest share of the net profit/(loss) for the period (219.0) (219.0) Equity as of ,581.3 (58,851.4) 1, ,619.6 Share premium injection Net profit/(loss) for the period - - (8,573.5) - (8,573.5) Minority interest share of the net profit/(loss) for the period (383.2) (383.2) Equity as of ,131.3 (67,424.9) 1, ,212.9 Share capital/premium adjustments 0.2 (0.2) Net profit/(loss) for the period - - (634.1) - (634.1) Minority interest share of the net profit/(loss) for the period (167.0) (167.0) Equity as of ,131.1 (68,059.0) 1, ,

15 STATEMENT OF CASH FLOW H1 H ( 1000) Note CASH FLOW FROM OPERATING ACTIVITIES Profit/(loss) before taxes (4,656.0) (12,649.7) (30,737.2) Taxes paid during the period Net financial items 5 1, ,702.9 Depreciation 7, , ,140.4 Net impairment losses 3, ,741.8 Interest paid: Net financial items 5 (1,726.7) (110.4) (1,702.9) Accretion interest on abandonment liabilities 5 (84.5) Amortisation of bond legal costs Unwinding of discount on bond Increase/(decrease) in other current financial liabilities (796.8) - 1,335.2 Change in long term receivable - (13.8) 4.9 Decrease/(increase) in trade and other receivables (3,607.6) 1, Decrease/(increase) in trade and other payables 2,131.9 (1,959.9) (507.3) (Increase)/decrease in inventories (14.8) - - Decrease/(increase) in other non current liabilities (157.1) - - NET CASH FLOW FROM OPERATING ACTIVITIES (5,581.6) (2,814.1) (4,806.1) CASH FLOW FROM INVESTMENT ACTIVITIES Payments to acquire tangible fixed assets (12,927.2) (127.1) (585.5) Interest paid on project capital expenditure (1,532.2) - - NET CASH FLOW FROM INVESTMENT ACTIVITIES (14,459.4) (127.1) (585.5) CASH FLOW FROM FINANCING ACTIVITIES Repayment of BNP and other loans (1.2) (759.1) (759.6) Proceeds from additional share premium - 1, ,030.0 Proceeds received from participation certificates Repayment on long term receivables Net proceeds from issuance of bond ,260.0 Bond setup and legal costs paid (24.5) - (2,507.6) NET CASH FLOW FROM FINANCING ACTIVITIES ,022.8 Net change in cash and cash equivalents (19,922.2) (2,220.3) 78,631.2 Cash and cash equivalents at start of period 81, , ,907.8 CASH AND CASH EQUIVALENTS AT END OF PERIOD 10 61, ,

16 NOTES TO THE FINANCIAL STATEMENTS (Unaudited) (All figures in 1000 unless otherwise stated) These interim financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the EU ("IFRS") IAS 34 "Interim Financial Reporting". Thus the interim financial statements do not include all information required by IFRS and should be read in conjunction with the group's annual financial statements as at 31 December The interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the financial position, results of operations and cash flows for the dates and interim periods presented. Interim period results are not necessarily indicative of results of operations or cash flows for an annual period. These interim financial statements have not been subject to review or audit by independent auditors. These interim financial statements were authorized for issue by the Company s Board of Directors on 29 August Note 1 Accounting principles The accounting principles used for this interim report are consistent with the principles used in the Group's annual financial statements as at 31 December There are no new standards effective from 1 January In preparing these interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. The significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual financial statements as at 31 December The prior year financial statements have been restated for an error in the deferred tax asset balance in Tulip Oil Netherlands Offshore B.V. arising from the non-recognition of some temporary differences. This restatement results in an adjustment to the opening retained earnings at of 3,254.9 thousand. For full details please see the financial statements for the year ended 31 December Note 2 Income H1 H ( 1000) Recognized income liquids 1, ,500.3 Recognized income gas Total petroleum revenues 1, , ,249.6 Breakdown of produced volumes (thousand barrels of oil equivalent) Liquids Gas Total produced volumes

17 Note 3 Impairments Impairment tests of individual cash-generating units are performed when impairment triggers are identified. During the first half year period no new impairment triggers have been identified. The impairments recorded reflects an adjustment to bring the asset values of those assets previously impaired to zero following the change in discount rate related to the abandonment provision. Note 4 Other operating expenses H1 H ( 1000) Salary and contractors 2, , ,148.1 Other headcount related Travel and travel related costs IT and communication Office rent Professional services ,036.5 Other (including recovery of cost) (1,630.6) (322.8) (710.9) Total other operating expenses 1, , ,366.8 Note 5 Financial items H1 H ( 1000) Interest income Other income (0.2) - - Change in fair value of derivatives - - (5.6) Total other financial income (0.2) (150.0) (5.6) Interest expenses 3, ,335.8 Capitalized interest cost, development projects (2,349.5) - - Total interest expenses 1, ,335.8 Unwinding of bond discount Accretion expenses (84.5) Amortised loan costs Total other financial expenses Net financial items 1, ,

18 Note 6 Taxes H1 H ( 1000) Change in deferred taxes 3, , ,918.1 Tax (charge)/credit 3, , ,918.1 The income tax credit for the year can be reconciled to the accounting profit as follows: H1 H Profit/(loss) before taxes (4,656.0) (12,649.7) (30,737.2) Combined tax rate of corporate income tax and State 2, , ,455.1 Profit Share Fluctuations from statutory rate: Tax deduction not expensed 2, Other movements (1,118.1) (1,894.4) (857.6) Tax (charge)/credit 3, , ,918.1 Deferred tax assets ( 1000) Tax losses Provisions Other Total At 31 December restated 38, (2,154.1) 36,172.6 (Charged)/credited to: Profit and loss account 4,403.5 (9.0) (607.2) 3,787.3 At 30 June , (2,761.3) 39,959.9 (Charged)/credited to: Profit and loss account 9,507.2 (18.9) (357.5) 9,130.8 At 31 December , (3,118.8) 49,090.7 (Charged)/credited to: Profit and loss account 3, (17.1) 3,854.9 At 30 June , (3,135.9) 52,945.6 Management has continued to recognise an asset related to Corporate lncome Tax and State Profit Share losses in TON. This recognition is based on management's intent to mature its key remaining assets into profit making assets: M10-M11, Schagen and DKK-HRK. ln the short term the well intervention on HRK-1 well in the AKK 11 field is the most straightforward way to access the remaining gas reserves behind the pipe which have been proven by existing wells. ln addition, management is also continuing its work to mature the fields related to Schagen and M10-M11. Management has also continued to recognise an asset related to the Corporate lncome Tax losses in its German subsidiary Rhein Petroleum GmbH. This recognition is based principally on future developments within Untergrombach, Bedernau, Lauben, Weinheim and Schwarzbach. Currently management has given priority to the Q10 field in TONO in order to realize first gas in 20l9, for which final investment decision and financing has been secured. Once this development is on stream, management can focus on development of the other fields. lf for any reason these plans for TON are not undertaken and the other development opportunities in Schagen and M10/M1 1 are also not successful, then a write down of upto 3.9 million of the currently recognised deferred tax asset will be needed. The remaining post fiscal unity losses in TON can be utilised and recovered through TONO's taxable profits. In the adverse scenario that none of the developments in Germany were to be successful, management has contemplated a restructuring related to its German subsidiary to allow the utilisation of these losses within the Dutch fiscal union. 18

19 Note 7 Intangible assets ( 1000) Licences Goodwill Acquisition cost , ,059.3 Additions - - Disposals - - Reclassification - - Acquisition cost , ,059.3 Accumulated depreciation and impairments (17,622.9) - Depreciation (284.0) - Impairment - - Accumulated depreciation and impairments (17,906.9) - Book value , ,059.3 Acquisition cost , ,059.3 Additions 1, Disposals (3.5) - Reclassification - - Acquisition cost , ,059.3 Accumulated depreciation and impairments (17,906.9) - Depreciation (277.0) - Impairment (4,066.7) (1,799.6) Accumulated depreciation and impairments (22,250.6) (1,799.6) Book value , ,259.7 Acquisition cost , ,059.3 Additions - - Disposals (1.1) - Reclassification - - Acquisition cost , ,059.3 Accumulated depreciation and impairments (22,250.6) (1,799.6) Depreciation (36.4) - Impairment - - Accumulated depreciation and impairments (22,287.0) (1,799.6) Book value , ,259.7 Goodwill is not depreciated within the books but tested regularly for impairment. The remaining licences are depreciated over a term period of 24 years. 19

20 Note 8 Tangible fixed assets Production facilities including wells Fixtures and fittings, office equipment ( 1000) Assets under construction Total Acquisition cost , , ,778.9 Additions Other movements - (3.4) - (3.4) Acquisition cost , , ,906.0 Accumulated depreciation and (14,963.7) (14,744.4) (563.7) (30,271.8) impairments Depreciation - (9,888.9) (87.2) (9,976.1) Impairment (61.1) - - (61.1) Accumulated depreciation and impairments (15,024.8) (24,633.3) (650.9) (40,309.0) Book value , , ,597.0 Acquisition cost , , ,906.0 Additions Other movements (86.2) (2,366.2) - (2,452.4) Acquisition cost , , ,889.4 Accumulated depreciation and impairments (15,024.8) (24,633.3) (650.9) (40,309.0) Depreciation - (2,509.3) (94.0) (2,603.3) Impairment (0.6) (4,813.8) - (4,814.4) Accumulated depreciation and impairments (15,025.4) (31,956.4) (744.9) (47,726.7) Book value , , ,162.7 Acquisition cost , , ,889.4 Additions 21, ,259.4 Other movements Disposals - (695.0) - (695.0) Reclassification 7,429.4 (7,429.0) (0.4) - Acquisition cost , , ,403.0 Accumulated depreciation and impairments (15,025.4) (31,956.4) (744.9) (47,726.7) Depreciation - (503.3) (82.8) (586.1) Impairment - (555.9) - (555.9) Disposals Reclassification (7,527.4) 7, Accumulated depreciation and impairments (22,552.8) (24,793.6) (827.3) (48,173.7) Book value , , ,

21 Note 8 Tangible fixed assets (cont d) H1 H Depreciation in the Income statement ( 1000) Depreciation of tangible fixed assets , ,579.4 Depreciation of intangible assets Total depreciation in the Income statement , ,140.4 Impairment in the Income statement ( 1000) Impairment/(reversal) of tangible fixed assets ,875.5 Impairment/(reversal) of intangible assets - - 4,066.7 Impairment of goodwill - - 1,799.6 Total impairment in the Income statement ,

22 Note 9 Other short-term receivables ( 1000) Project invoices in advance of work done 2, VAT receivable Other receivables Total other short-term receivables 2, Note 10 Cash and cash equivalents The item 'Cash and cash equivalents' consists of bank accounts. The restricted funds mainly relate to six quarters of interest payments on the bond and the minimal cash balance required to be held in accordance with the Bond terms. ( 1000) Cash in hand Bank accounts 52, ,605.2 Restricted funds 9, ,933.5 Cash and cash equivalents 61, ,539.0 Note 11 Other current liabilities ( 1000) Other current liabilities Total other current liabilities

23 Note 12 Provision for abandonment liabilities ( 1000) H H Provisions as of beginning of period 1, , ,679.4 Accretion expense - present value calculation (84.5) Change in estimates and incurred liabilities** (2,479.0) Total provision for abandonment liabilities at the end of period 2, , ,420.9 Break down of the provision to short-term and longterm liabilities Short-term Long-term 2, , ,420.9 Total provision for abandonment liabilities 2, , ,420.9 ** The change in estimates are mainly related to a re-assessment by management of the cost to abandon its assets based on actual experience. During 2018, the discount rate on the abandonment liabilities has been changed to 5.3% (2016: 8.5%) which allows for a net discount of 3% (2017: net 6.2%), after inflation 2.3% (2017: 2.3%), in line with practice in the industry. The underlying cost of abandonment in real terms has not changed since 31 December Note 13 Bonds ( 1000) TULIP Senior secured bond 1) 85, ,322.2 Bond setup costs (2,189.7) - (2,417.6) Long-term bonds 83, , ) The loan of 87 million (face value) is denominated in and runs from October 2017 to September 2022 and carries an interest rate of 3 month EURIBOR + 8.5%. The principal falls due on September 2022 and interest is paid on a quarterly basis. Tulip Oil Netherlands Offshore B.V. is the issuer of the Bond and Tulip Oil Netherlands B.V. and Tulip Oil Holding B.V. are Guarantors. 23

24 Note 13 Bonds (cont d) ln respect of the bond the following pledges are required: Tulip Oil Holding B.V. lntra-group Loan Pledge over all intra-group loans made by the Ultimate Parent to the Parent, granted by the Ultimate Parent in favour of the Bond Trustee on first priority, as security for the obligations and liabilities; Tulip Oil Netherlands B.V. Share Pledge over all of the shares in the Parent, granted by the Ultimate Parent in favour of the Bond Trustee on first priority, as security for the obligations and liabilities; Tulip Oil Netherlands B.V. Subordinated Loans Pledge over all Subordinated Loans made by the Parent to the lssuer, granted by the Parent in favour of the Bond Trustee on first priority, as security for the obligations and liabilities; A Dutch law governed omnibus pledge granted by Tulip Oil Netherlands Offshore B.V. in favour of the bond holders on first priority, as security for the obligations and liabilities comprising: (a) a receivables pledge of all of Tulip Oil Netherlands Offshore B.V.'s monetary claims under or with respect to any insurances required to be taken out; (b) a receivables pledge over each of Tulip Oil Netherlands Offshore B.V.'s existing bank accounts held with Dutch banks (except for the Escrow Account and the Debt Service Retention Account related to the bond); (c) a receivables pledge over the earnings from the sale of hydrocarbons; and (d) a receivables pledge over monetary claims under or with respect to any loans granted by the Tulip Oil Netherlands Offshore B.V. to another Group Company. A voluntary repayment option exists to redeem the outstanding bonds at set prices at specified periods upto April Note 14 Contingent liabilities ln January 2015 TON purchased 30% of the license of Q7-Q10A from PA Resources Ltd. ln this contract there is a contingent liability to pay PA Resources GBP 1,600,000 following and provided that TON shall have fully recovered all of its Qualifying Cost and Expenses up to the Point of Break Even, in respect of that development. On 17 July 2015 Tulip Oil Netherlands B.V. entered into a sale and purchase agreement with Tulip Oil Netherlands Offshore B.V. to transfer the license of Q7-Q10A. This transaction was completed on 13 August 2015 and hence this contingent liability has been transferred to Tulip Oil Netherlands Offshore B.V. ln 2017 this amount has been recorded within other non-current liabilities given approval of the Q10A project in January Note 15 Guarantees On 25 October 2017 Tulip Oil Netherlands Offshore B.V. has entered into a Senior Secured Callable Bond Issue (hereafter Bond ) agreement for the amount of 87,000,000. Tulip Oil Netherlands Offshore B.V. is the issuer of the Bond and Tulip Oil Netherlands B.V. is a Guarantor. For the first Escrow Account Release are the following securities are given by Tulip Oil Netherlands B.V.: - A Dutch law pledge over the entire share capital of Tulip Oil Netherlands Offshore B.V. (which, i.a., will contain an undertaking to pledge future shares); - A Dutch law receivables pledge over all Subordinated Loans to Tulip Oil Netherlands Offshore B.V. (which, i.a., will contain an undertaking to pledge future Subordinated Loans); - A Norwegian law personal guarantee. 24

25 Appendix 1 - Risk Factors The Group s activities expose it to a variety of operational and financial risks, including without limitation, general oil and gas industry risks, specific risks related to the business, credit risk, currency risk, interest risk and liquidity risk. The half year financial do not include all financial risk management information and disclosures required in the annual financial statements; they should be read in conjunction with the Group s audited annual financial statements as at 31 December There have been no significant changes in any risk management policies since year end. 25