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North Energy Q3 2011

North Energy Q3 2011. 9 November 2011. Important information.

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North Energy Q3 2011

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  1. North Energy Q3 2011 9 November 2011

  2. Important information This presentation and its appendices (together the “Presentation”) have been prepared and delivered by North Energy ASA (“North Energy” or the “Company”). The Presentation is prepared for information purposes only, and is not to be used for any other purpose. The Presentation does not constitute and does and will not form part of, and should not be construed as, any offer or invitation or recommendation to buy or sell any security, commodity or instrument or related derivative. The Presentation contains information sourced from third parties believed to be reliable, but without independent verification. The Presentation contains certain forward-looking statements relating to the business, financial performance and results of the relevant issuers and/or industries and markets. Any forward-looking statements and other information and assumptions included in this Presentation are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Any investment involves risks, and several factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by information in this Presentation. Past performance of a company or financial instrument is not necessarily a guide to future performance. This Presentation has not been reviewed or registered with any public authority or other regulator. The distribution of this Presentation and the offering, subscription, purchase or sale of securities issued by the Company is in certain jurisdictions restricted by law. Persons into whose possession this Presentation may come are required to inform themselves about and to comply with all applicable laws and regulations in force in any jurisdiction in or from which it invests or receives or possesses this Presentation and must obtain any consent, approval or permission required under the laws and regulations in force in such jurisdiction. The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities laws, and may not be offered or sold within the United States, or to the account or benefit of U.S. Persons, unless pursuant to a relevant and available exemption. By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of any relevant investments. Neither the Company nor its advisors makes any undertaking, representation or warranty (express or implied) as to the accuracy or completeness of the information herein, and can accept no liability whatsoever as to any errors, omissions or misstatements contained herein or otherwise from the use of this Presentation. The Presentation speaks and reflects prevailing conditions and views as of the date hereof. It may be subject to corrections and change at any time without notice. The Company does not intend to update or correct the information herein and the delivery of this Presentation shall not create any implication that any such obligation is assumed. The Presentation may not be reproduced or redistributed, in whole or in part, without the prior approval of the Company.

  3. Agenda • Highlights Q3 • Financial update • Exploration update • Outlook & Summary

  4. Highlights Q3 • Disappointing wildcat well in the Barents Sea • The Heilo reservoir proved better than expected, however water filled • Increased volume estimate on Fogelberg • Conceptual studies ongoing • Promising results from internal Norvarg study • Expecting appraisal well Q4 next year • APA 2011 application • Selective application targeting attractive opportunities in core areas • Strong financial position • Net cash of NOK 238 million

  5. Agenda • Highlights Q3 • Financial update • Exploration update • Outlook & Summary

  6. North Energy ASA – Profit & Loss • Exploration expenses NOK 85 million higher than Q3 2010 • Financial expenses up NOK 10 million from Q2 2011 due to increased activity

  7. High activity level driving exploration costs • Drill decisions moving closer – increased need for seismic and data processing • Dry well at Heilo *) PL 503 Valberget, PL 595 Jaktfalk, PL 587 Grenoble and PL 526 Karl

  8. North Energy ASA - Balance sheet • Fixed assets up NOK 260 million from year-end 2010 • Capitalized drilling costs on Fogelberg and Norvarg • Tax refund December 2011 of NOK 350 million • 33% equity ratio

  9. Net cash according to plan Net cash position as of Q3 2011 • Net cash position of NOK 238 million • NOK 310 million undrawn of NOK 760 million exploration financing facility • Developing in line with funding plans at the IPO 31 363 350 Cash 2011 Tax refund 2012 Tax refund Net working capital Interest-bearing debt Net cash

  10. Next 4 wildcat wells financed NOK million • NOK 670 million raised before and in the IPO • NOK 270 million raised from investors in Northern Norway • NOK 432 million invested since start up in 2007: • Organization, systems and network • 4 wells, incl. one production test • 4 years running expenses • Next 4 wildcat wells financed by remaining funds and the exploration financing facility 700 Acc. capital injection 650 Acc. expenses 600 550 500 450 400 350 300 250 200 150 100 50 0 Q4 07 Q4 08 Q4 09 Q4 10 Q3 11

  11. Agenda • Highlights Q3 • Financial update • Exploration update • Outlook & Summary

  12. Strong track record and exciting outlook PROSPECTS PRE-DRILL ESTIMATES POST-DRILL ESTIMATES 50% success rate DRILLED WELLS • Five firm wells next 12 months – all close to infrastructure • Targeting 172 million boe of net resources (unrisked) – 81% oil prone FIRM WELLS All volumes in million barrels of oil equivalents (mmboe) *) Fogelberg volumes updated with operator’s latest estimate **) Norvarg volumes updated with results from internal study ***) Storebjørn volumes harmonized with operator’s estimate

  13. Drawing lessons from dry Heilo well • Better reservoir quality than expected, however water filled • No oil shows in cuttings • Oil still believed to have passed through the Heilo area and into Nucula (geochem correlation) • Migration routes and uplift model to be revisited • Still possible to find oil in Heilo Head and North • However, increased risk due to the dry well in Heilo South Heilo Head (prospect) Heilo North (prospect) Heilo South (dry) 7124/4-1S Dry

  14. Increased volume estimate on Fogelberg 09.11.11 Feasibility Studies Conceptual Studies Pre-engineering Detailed Engineering, Construction, Start-up Production Production • Resource estimates recently updated by the operator • Centrica increased the P50 estimate with 45% at BOK (“Beslutning Om Konkretisering”) • Continuing towards PDO without appraisal well • Evaluating bringing gas through TTS/Nyhamna alongside Zidane BOK BOV PDO Operator’s first estimate North Energys GeoX estimate Operator’s updated estimate P90 (low) P50 (base) P10 (high)

  15. Increased expectations to Norvarg 09.11.11 Appraisal Feasibility Studies Conceptual Studies Pre-engineering Detailed Eng, Construction Production • Increased expectations to Norvarg volumes • Results from internal Norvarg study suggest a P50 estimate of 260 mmboe recoverable gas • Expecting appraisal well in Q4 2011 • The operator is currently preparing basis for appraisal program BOK BOV PDO Operator’s first estimate North Energys GeoX estimate Operator’s updated estimate N/A N/A N/A N/A P90 (low) P50 (base) P10 (high)

  16. Positive regional effects of Norvarg • Break through gas production test from the Kobbe formation • Has lifted the potential in large areas towards the north and east • Future exploration success depends on differentiating between good and bad Triassic targets • Additional discoveries in the Triassic will support a new trunk line to the North Sea gas grid Short term investment return Good Medium Poor Possible new trunk line Risk of non-producing reservoir reduced by the Norvarg well

  17. PL 518 Zapffe – drilling ongoing • Located close to the Goliat field (under development) • The license contains the Zapffe prospect (combination of Tau East and Ypsilon) as well as many leads • In case of discovery a sidestep is planned to appraise the find

  18. PL 450 Storebjørn – high PoS oil prospect • Located 8 km south west of the Ula field and 6 km north west of the Gyda field • Spudding of well expected in Q1 2012 • Fast track PDO possible in case of discovery • Upside in other prospects

  19. PL 370 / PL 370 B Kakelborg – drilling in Q1 2012 • Located north west of Statfjord and Snorre • Kakelborg in Paleocene is the main prospect – additional lead in Jurassic • Oil development as standalone FPSO in the high case and subsea development with tie-back to Snorre in the low case

  20. PL 385 Jette – drilling expected mid 2012 • Located on the Halten Terrace within 20 km of the Norne FPSO • Spare capacity for possible tie-in at Norne in 2014

  21. PL 498 Skagen – drilling in 2012 • Located in an oil producing area close to the Ula and Gyda fields • A discovery on Skagen is assumed developed with an unmanned wellhead platform as a satellite to the Ula field • Skagen is expected to be spudded in Q3 (Maersk Guardian)

  22. Exploration track record and outlook mmboe 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Fogelberg*  Stirby Norvarg** Heilo Zapffe Storebjørn*** Kakelborg Jette Skagen Scarecrow**** Net unrisked pre-drill volume (completed wells) Accumulated, net pre-drill volume (risked) Net unrisked pre-drill volume (upcoming wells) Accumulated, net post-drill volume *) Fogelberg post drill volumes updated with operator’s latest estimate, **) Norvarg post drill volumes updated with results from internal study, ***) Storebjørn pre drill volumes harmonized with operator’s estimate, ****) The drill decision on Scarecrow has yet not been taken

  23. Drilling program with timing uncertainties in 2012 Zapffe Storebjørn Kakelborg Skagen Jette Norvarg, appraisal Scarecrow 2011 I 2012 I 2013 Possible appraisal oil Oil Gas-Condensate

  24. Agenda • Highlights Q3 • Financial update • Exploration update • Outlook & Summary

  25. Outlook • 6 months outlook • Result from the Zapffe exploration well in the Barents Sea (ongoing) • Storebjørn exploration well in North Sea • Kakelborg exploration well in the North Sea • Decision on appraisal program for Norvarg • Drill or drop decision on PL 510 Scarecrow • APA 2011 award • 12 months outlook • Drilling of Jette in the Norwegian Sea and Skagen in the North Sea • Drill or drop decision on operated licenses 526 and 590 in the Norwegian Sea • Drill or drop decision on PL 536 and PL 564 in the Barents Sea • APA 2012 application • 18 months outlook • Drilling of at least eight wildcat wells • Drill or drop decision on PL 503 • 22nd round application

  26. Summary • Disappointing wildcat well in the Barents Sea • Increased volume estimate on Fogelberg • Promising results from internal Norvarg study • Strong track record after 4 wells • 5 firm wells planned for the next 12 months • Selective application in the APA 2011 round • Strong financial position

  27. Thank you for your attention!

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