Prospectus, 1 November 2007

Prospectus

Norwegian Energy Company ASA

(a public limited liability company organized under the laws of the Kingdom of Norway) Organization number: 987 989 297 www.noreco.com

Listing of the Shares on Oslo Børs

Listing of (FRN) Norwegian Energy Company AS Senior Secured (NOK) Callable Bond Issue 2007/2010 totaling NOK 500,000,000

Listing of (Fixed) Norwegian Energy Company AS Senior Secured (NOK) Callable Bond Issue 2007/2010 totaling NOK 2,300,000,000

THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO BUY, SUBSCRIBE OR SELL THE SECURITIES DESCRIBED HEREIN. THIS PROSPECTUS SERVES AS A LISTING PROSPECTUS AS REQUIRED BY APPLICABLE LAWS AND NO SECURITIES ARE BEING OFFERED OR SOLD PURSUANT TO THIS PROSPECTUS.

Managed by

1 November 2007

Important information

This prospectus (the “Prospectus”) has been prepared in connection with (i) the listing (the “Listing”) of all the issued shares of Norwegian Energy Company ASA (the “Company” or “Noreco”) on Oslo Børs; and (ii) the listing of two callable bond loans totaling NOK 2,800,000,000 (the “Bonds”) on Oslo Børs.

For the definitions and capitalized terms used throughout this Prospectus, see Section 18 “Definitions and Glossary of Terms” of this Prospectus, which also applies to the prevailing pages of this Prospectus. ______The Company has furnished the information in this Prospectus. The Managers make no representation or warranty, whether express or implied, as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by the Managers. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act and related legislation, including the EC Commission Regulation EC/809/2004. Oslo Børs has reviewed and approved this Prospectus in accordance with the Norwegian Securities Trading Act Section 7-7. This Prospectus has been published in an English version only. All inquiries relating to this Prospectus should be directed to the Company or the Managers. No other person has been authorized to give any information, or make any representation on behalf of, the Company in connection with the Listing and, if given or made, such other information or representation must not be relied upon as having been authorized by the Company or the Managers. The information contained herein is as of the date hereof and subject to change, completion or amendment without notice. There may have been changes affecting the Company or its subsidiaries subsequent to the date of this Prospectus. Any new material information and any material inaccuracy that might have an effect on the assessment of the Shares arising after the publication of this Prospectus and before the Shares are listed on Oslo Børs, will be published and announced promptly as a supplement to this Prospectus in accordance with section 7-15 of the Norwegian Securities Trading Act. Neither the delivery of this Prospectus nor the completion of the Listing at any time after the date hereof will, under any circumstances, create any implication that there has been no change in the Company’s affairs since the date hereof or that the information set forth in this Prospectus is correct as of any time since its date. The distribution of this Prospectus may in certain jurisdictions be restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase, any of the Company’s Shares or Bonds. The Company’s Shares and Bonds have not been and will not be registered under the U.S. Securities Act of 1933 as amended, or with any securities authority of any state of the United States. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each reader of this Prospectus should consult with its own legal, business or tax advisor as to legal, business or tax aspects of an investment in the Shares. If you are in any doubt about the contents of this Prospectus you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser. In the ordinary course of their respective businesses, the Managers and certain of their respective affiliates have engaged, and may continue to engage, in investment and commercial banking transactions with the Company and its subsidiaries. Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company’s obligations under applicable law, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system. ______

Investing in the Company’s securities involves risks. See Section 2 “Risk Factors” of this Prospectus.

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TABLE OF CONTENTS 1. SUMMARY...... 2 2. RISK FACTORS ...... 13 3. RESPONSIBILITY FOR THE PROSPECTUS ...... 20 4. NOTICE REGARDING FORWARD-LOOKING STATEMENTS ...... 21 5. THE LISTING AND THE PRIVATE PLACEMENT ...... 22 6. PRESENTATION OF THE COMPANY...... 24 7. THE MARKET...... 45 8. FINANCIAL INFORMATION AND OPERATING REVIEW ...... 52 9. PRO FORMA FINANCIAL INFORMATION ...... 61 10. CAPITAL RESOURCES ...... 78 11. BOARD, ORGANISATION AND MANAGEMENT OF NORECO...... 84 12. SHARE CAPITAL AND SHAREHOLDER INFORMATION...... 93 13. OVERVIEW OF THE SENIOR SECURED CALLABLE BOND LOANS...... 102 14. SECURITIES TRADING IN NORWAY...... 120 15. TAXATION...... 123 16. LEGAL MATTERS...... 126 17. ADDITIONAL INFORMATION...... 127 18. DEFINITIONS AND GLOSSARY OF TERMS...... 128

APPENDICES APPENDIX 1: ARTICLES OF ASSOCIATION OF NORWEGIAN ENERGY COMPANY ASA ...... A 1 APPENDIX 2: STATEMENT FOR THE AUDITOR ON PRO FORMA CONSOLIDATED FINANCIAL STATEMENT FOR NORECO ...... A 3 APPENDIX 3: 2Q REPORT AS OF 30 JUNE 2007 OF NORWEGIAN ENERGY COMPANY ASA ...... A 4 APPENDIX 4: ANNUAL REPORT FOR THE YEAR 2006 OF NORWEGIAN ENERGY COMPANY ASA...A 11 APPENDIX 5: ANNUAL REPORT FOR THE YEAR 2005 OF NORWEGIAN ENERGY COMPANY ASA...A 27 APPENDIX 6: LOAN AGREEMENT FOR FRN SENIOR SECURED CALLABLE BOND NOK 500 MILLION AND THE FRN SENIOR SECURED CALLABLE BOND NOK 2.3 BILLION...... A 35 APPENDIX 7: EXPERT REPORT ON RESERVES AND RESOURCES...... A 51

1. SUMMARY The following summary should be read as an introduction to this Prospectus, and is qualified in its entirety, by the more detailed information and the Appendices appearing elsewhere in this Prospectus. Any decision to invest in the Shares should be based on a consideration of the Prospectus as a whole.

In case a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff Investor might have to bear the cost of translating the Prospectus before legal proceedings are initiated. Civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus. For definitions and capitalized terms used throughout this Prospectus, please refer to Section 18 “Definitions and Glossary of Terms”.

1.1 DESCRIPTION OF NORECO

1.1.1 Introduction Noreco is an independent oil and gas exploration, development and production company whose activities are focused on the North Sea (mainly Norway, Denmark and United Kingdom).

1.1.2 History The Company was founded on 28 January 2005. In October 2005, Lyse Energi, Hitec Vision, 3i and Noreco’s founders agreed to raise up to NOK 550 million in new equity in the Company, and they remained the primary owners of the Company until May 2007 when the Company raised NOK 880 million in new capital from Norwegian and international institutional investors and was transformed to a Norwegian public limited liability company. In May 2007, Noreco started acquiring shares in Altinex ASA (“Altinex”), a Norwegian oil company listed on Oslo Børs. Through acquisitions in the market and a mandatory offer set forth on 23 July 2007 Noreco acquired a total of 192,146,106 shares representing 97.14% of the share capital in Altinex to a price of NOK 22 per share. Due to the high acceptance level, Noreco decided to carry out a compulsory acquisition of the remaining shares in Altinex to the same price as in the mandatory offer. As a consequence, Noreco became the owner of 100% of Altinex on 29 August 2007.

On 13 July 2007 the Company issued a NOK 2,300,000,000 Senior Secured callable bond loan and a NOK 500,000,000 Senior Secured callable bond loan in order to finance the acquisition of Altinex.

On 3 September 2007, the extraordinary general meeting of Altinex resolved to apply for a de-listing from Oslo Børs. The shares were de-listed on 13 October 2007.

On 10 October 2007, the extraordinary general meeting of Noreco resolved, inter alia, to split the face value of the Shares into 4, creating a new face value of NOK 3.10 per Share.

On 19 October, the Company completed a Private Placement of shares totaling approximately NOK 550 million in gross proceeds.

On 26 October 2007 and 31 October 2007, Noreco announced its conditional sales of Altinex Services AS and Altinex Reservoir Technology AS to IKM Testing AS. For a further description, see Sections 6.3.8 and 6.3.9 below.

1.1.3 Business description Following the acquisition of Altinex, the Company employs 94 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. Noreco currently has currently 11 wholly owned (directly or indirectly) subsidiaries (jointly referred to as the “Noreco Group” or the “Group”). Noreco has ownership in a total of 45 licenses, of which 33 are in Norway, 8 are in Denmark, 1 is in UK, 2 is in Germany and 1 in Oman. The licenses are held by Noreco or by subsidiaries of Altinex. In addition, Noreco has 2 licenses recently acquired from Chevron Denmark Inc as announced on 25 October 2007. In addition, Noreco has the option to farm into PL370 from PetroCanada.

The portfolio consists of 7 producing fields, Brage and Enoch in Norway, and South Arne, Siri, Nini, Lulita and Cecilie in Denmark. The net total production from these fields in 3Q 2007 was 10,350 boe/day.

There are a total of 14 discoveries in the portfolio, 8 of which are in Norway, 5 in Denmark and 1 in UK.

1.2 PURPOSE AND BACKGROUND OF THE LISTING The Company has decided to list the Company’s Shares and Bonds on Oslo Børs in order to:

• Strengthen the solvency capital to facilitate further growth and increase premiums retained for own account; • Facilitate the use of capital markets in order to raise further equity or debt should this be required; • Provide a regulated marketplace for the trading of its Shares and Bonds; and • Facilitating a satisfactory liquidity in the Shares and thereby making the Shares more attractive as an investment object for existing and new shareholders.

1.3 THE LISTING The Company’s Shares and Bonds are not currently listed on Oslo Børs or any other regulated market place, but the Shares are listed on the OTC list in Norway.

The Company has applied for listing of the Company’s Shares on Oslo Børs. The board of directors of Oslo Børs approved the Company’s application at its meeting held on 24 October 2007, conditioned upon (i) the Company obtaining a satisfactory number of round lot holders for Oslo Børs, (ii) issuing if an approved listing prospectus by the Company and (iii) the Company raises a minimum of NOK 275 million in new equity. It is expected that the current issued and outstanding Shares will begin trading on Oslo Børs on 9 November 2007, however, there can be no assurance that the listing of the Shares can be achieved by this date.

On 25 October 2007, the Company also applied for its Bonds to be listed on Oslo Børs. It is expected that the Bonds will be listed on or about 2 November 2007.

1.4 SUMMARY OF RISK FACTORS A number of risk factors may adversely affect the Company and the Group as a whole. Below is a brief summary of the most relevant risk factors described in Section 2. Please note that the risks mentioned below are not the only risks that may affect the Company’s business or the value of the Shares. Additional risks not presently known to the Board of Directors of the Company or which are currently considered immaterial may also impair its business operations and prospects.

Operational and industry risk: Market and industry risk include risks related to the Group’s ability to find, acquire, develop and produce from oil and gas reserves that are economically recoverable, risk of inaccurate or incorrect reserves and resource information, risk of required substantial investments in the near future, risk relating to the price of oil and gas, political and regulatory risk, environmental and HSE risk, risk for increased competition, risk for third parties to operate its assets, risk of unexpected shutdowns, risk of future decommissioning liabilities, risk for not attracting and retaining personnel, risk of labor disputes, risk related to legal disputes, and risk associated with damaged equipment and the Group’s insurance policies.

Financial risk: Financial risk include the risk that the Company’s debt arrangements may restrict the Group’s business going forward, the risk of not being able to refinance existing debt, the risk of not being able to comply with covenants of a general, financial and technical nature, and risk associated with exchange rate fluctuation.

Risk factors relating to the Shares: The risks related to the Shares include price volatility of publicly traded securities, difficulties for foreign investors to enforce civil liabilities in Norway, significant restrictions on U.S. investors’ ability to transfer or resell their Shares, and the risk that foreign shareholders may be diluted if they are unable to participate in future offerings.

Risk factors relating to the Bonds: The risks related to the Bonds include liquidity risk, interest rate risk and market risk.

1.5 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

1.5.1 Board of Directors

The Company’s Board of Directors currently consists of five members: Lars Takla (Chairman), Gunnar Halvorsen (member), Tollak Melberg (member), John Hogan (member) and Roger O’Neil (member). As of the first day of trading the Board of Directors will consist of Lars Takla (Chairman), John Hogan (deputy chairman), Roger O’Neil (member), Therese Log Bergjord (member) and Heidi Marie Petersen (member). For more information, please refer to Section 11 below.

1.5.2 Management

The Group’s executive management comprises: Scott Kerr (CEO), Synnøve Røysland (VP, Southern North Sea), Rune Martinsen (VP, Northern North Sea), Thor Arne Olsen (VP, Commercial), Reinert Seland (VP, Exploration), Jan Nagell (CFO), Birte N. Borrevik (VP, Drilling and Projects), Stig Frøysland (VP, HSE/HR) and Einar Gjelsvik (VP, External Relations). For more information, please refer to Section 11 below.

1.5.3 Employees

As of the date of this Prospectus, the Noreco Group employs 94 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. For more information, please refer to Section 11 below.

1.6 ADVISORS AND AUDITORS

1.6.1 Managers

The Managers for the Listing is Pareto Securities ASA, P.O. Box 1411 Vika, 0115 Oslo, Norway and SEB Enskilda ASA, P.O. Box 1363 Vika, 0113 Oslo, Norway.

1.6.2 Advisors The legal advisor to the Company is Arntzen de Besche Advokatfirma AS, P.O. Box 2734 Solli, 0204 Oslo, Norway. Advokatfirmaet Schjødt DA and Ernst & Young AS have been appointed, respectively, as legal and financial advisors to the Managers and have conducted a legal and financial due diligence investigation of the Company in accordance with scope agreements with the Managers.

1.6.3 Independent Auditor

The Company’s independent auditor is Deloitte AS. For further information, please refer to Section 8.5 below.

1.7 SUMMARY OF OPERATING AND FINANCIAL INFORMATION The selected financial information set forth in this Prospectus should be read in conjunction with the financial statements and the notes to those statements set out in Appendices 2, 3 and 4 in addition to section 8, 9 and 10 in this Prospectus.

1.7.1 Consolidated income statements Amounts in NOK As per 30 As per 30 FY ended 31 FY ended 31 June 2007 June 2006 Dec 2006 Dec 2005 (unaudited) (unaudited) (audited) (audited) IFRS IFRS IFRS IFRS

Operating revenues ...... - - - -

Exploration costs ...... 43,182,000 11,451,000 25,734,968 7,809,495 Salaries and other costs...... 18,447,000 11,615,000 31,312,043 3,184,527 Depreciations...... 454,000 338,000 693,749 58,422 Other operating expenses...... 9,065,000 14,406,000 29,493,852 13,850,801 Total operating expenses...... (71,148,000) (37,808,000) 87,234,613 24,903,245

Operating result...... (71,148,000) (37,808,000) (87,234,613) (24,903,245)

Financial income ...... 1,373,944 154,299 Financial expenses...... (2,000,674) (1,107) Other financial expenses/(income) ...... (202,996) (3,077) Net financial result...... (7,450,000) 82,000 (829,726) 150,115

Ordinary profit/loss before tax...... (78,598,000) (37,726,000) (88,064,339) (24,753,130) Tax 57,192,000 29,426,000 68,205,261 19,265,610 Profit/loss for the period ...... (21,406,000) (8,299,000) (19,859,078) (5,487,520)

1.7.2 Consolidated balance sheet Amounts in NOK As per 30 As per 30 FY ended 31 FY ended June 2007 June 2006 Dec 2006 31 Dec 2005 (unaudited) (unaudited) (audited) (audited) IFRS IFRS IFRS IFRS ASSETS Total fixed assets ...... 7,726,892,000 9,235,000 15,832,076 2,675,387 Total receivables...... 352,361,000 51,508,000 82,305,820 21,352,778 Total current assets ...... 772,806,000 64,306,000 94,275,866 62,968,675 TOTAL ASSETS ...... 8,499,699,000 73,541,000 110,107,942 65,644,062

EQUITY AND LIABILITIES Total paid in share capital...... 1,374,107,000 77,481,000 79,682,662 54,039,861 Total retained earnings ...... (31,215,000) (12,400,000 (23,958,9878) (4,099,900) Total equity ...... 1,342,892,000 65,081,000 55,723,684 49,939,961

Minority interest ...... 1,687,408,000 Total liabilities and obligations ...... 4,382,961,000 - 252,179 - Total short term debt...... 1,086,437,000 8,460,000 54,132,079 15,704,101 Total liabilities ...... 5,468,398,000 8,460,000 54,384,258 15,704,101

TOTAL LIABILITIES AND EQUITY ...... 8,499,699,000 73,,541,000 110,107,942 65,644,062

1.7.3 Significant changes in the Company’s financial or trading position since 30 June 2007 In addition to the acquisition of Altinex shares for a total price of NOK 2,033 million (as per 30 June 2007) Noreco has acquired the remaining shares in Altinex subsequent 30 June 2007.

To finance the acquisition of Altinex shares, Noreco disbursed two callable bond loans of NOK 2.8 billion in the third quarter of 2007 as described in section 13 below. In addition, the Company has completed a private placement of approximately NOK 550 million as further described in section 5.4 below The Company is not

aware of any other significant changes in the financial or trading position of the Noreco Group which has occurred since 30 June 2007.

1.8 PRO FORMA FINANCIAL INFORMATION The unaudited pro forma financial information has been compiled in connection with the acquisition of Altinex, to illustrate the main effects the acquisition of Altinex would have had on the consolidated profit and loss statement for 2006 and the unaudited condensed consolidated profit and loss statement for 1H for Noreco, and the unaudited condensed consolidated balance sheet as of 30 June 2007 of Noreco if the acquisition had occurred at an earlier period.

The unaudited pro forma financial information has been prepared in accordance with EU Regulation No 809/2004, as referred to in the Norwegian Securities Trading Act section 5-13 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 pro forma profit and loss and balance sheet information does not have a continuing impact on Noreco. The pro forma financial information is prepared for illustrative purposes only.

1.8.1 Unaudited pro forma consolidated profit and loss information for 2006

Historical figures Pro forma Amounts in NOK Noreco Altinex Adjustments As per 31 (IFRS) (IFRS) (unaudited) December 2006 (unaudited) Revenue ...... - 1,110,002,000 498,998,000 1,609,000,000 Operating profit before depreciation ...... -86,540,864 750,690,000 401,310,000 1,065,459,136

Depreciation and impairment charges...... 693,749 455,472,000 337,105,618 793,271,367 Operating profit...... -87,234,613 295,218,000 64,204,382 272,187,769

Financial items, net...... -829,726 -138,960,000 -479,863,943 -619,653,669 Profit before tax expenses ...... -88,064,339 156,258,000 -415,659,561 -347,465,900

Tax expenses...... 68,205,261 -106,245,000 170,211,309 132,171,570

Net profit before minority interests...... -19,859,078 50,013,000 -245,448,252 -215,294,330 Minority interests...... - - - - Net profit ...... -19,859,078 50,013,000 -245,448,252 -215,294,330

1.8.2 Unaudited pro forma condensed balance sheet information per 31 December 2006

Historical figures Pro forma Amounts in NOK Noreco (IFRS) Altinex (IFRS) Adjustments As per 31 Dec (unaudited) 2006 (unaudited) ASSETS Fixed assets Deferred tax assets...... 5,146,564 50,138,000 95,714,265 150,998,829 Licenses and capitalised exploration costs...... 8,882,000 331,271,000 3,377,700,000 3,717,853,000 Concessions, patents, licenses and similar rights. - 428,000 -428,000 - Goodwill...... - 626,349,000 811,813,353 1,438,162,353 Total intangible assets ...... 14,028,564 1,008,186,000 4,284,799,618 5,307,014,182 Property, plant & equipment...... 2 133 946 000 636,722,382 2,770,668,382 Removal assets ...... 323 616 000 0 323,616,000 Other plant, equipment & operating consumables...... 1,803,512 22 644 000 -16,635,000 7,812,512 Total property, plant & equipment ...... 1,803,512 2 480 206 000 620,087,382 3,102,096 894 Total asset held for sale ...... 45,991,000 45,991,000 Total fixed assets...... 15,832,076 3 488 392 000 4,950,878,000 8,455,102,076

Current assets Inventory...... 9 538 000 -9,539,000 -1,000 Accounts receivable...... 312,154 156 738 000 -9,543,000 147,507,154 Underlift oil/NGL ...... 26 375 000 0 26,375,000 Other short-term receivables...... 4,529,458 48 594 000 -637,000 52,486,458 Tax receivable...... 77,464,207 0 77,464,207 Total receivable...... 82,305,820 241 245 000 -19,719,000 303,831,820 Other financial instruments...... 29,100,000 0 29,100,000 Bank deposits, cash & cash equivalents ...... 11,970,046 332,038,000 -377,000 343,631,046 Total current assets...... 94,275,866 602,383,000 -20,096,000 676,562,866

TOTAL ASSETS ...... 110,107,942 4,090,775,000 4,930,782,000 9,131,664,942

EQUITY & LIABILITIES Equity Share capital ...... 31,422,000 196,448,000 52,779,835 280,649,835 Share premium reserve ...... 48,260,662 663,943,000 340,053,253 1,052,256,915 Other equity ...... -23,958,978 87,320,000 -270,078,746 -206,717,724 Minority interests...... - - - - Total equity ...... 55,723,684 947,711,000 122,754,342 1,126,189,026

Long-term liabilities Pension liabilities...... 252,179 236,000 0 488,179 Deferred tax liabilities ...... - 535,041,000 1,618,939,673 2,153,980,673 License obligations ...... - - - Removal liabilities...... - 374,680,000 - 374,680,000 Total provisions...... 252,179 909,957,000 1,618,939,673 2,529,148,852 Other long-term liabilities...... - - - - Convertible bond loan...... - 226,770,000 137,548,560 364,318,560 Bond loan...... - 986,514,000 2,720,759,908 3 707,273,908 Debt to credit institutions...... - 545,435,000 -15,500,000 529,935,000 Total other long-term liabilities...... - 1,758,719,000 2,842,808,468 4,601,527,468 Current liabilities Other interest-bearing debt ...... 35,000,000 2,768,000 - 37,768,000 Account payable ...... 5,851,535 54,143,000 -697,000 59,297,535 Tax payable...... 208,454,000 - 208,454,000 Public charges payable...... 4,199,746 18,229,000 -629,000 21,799,746 Other current liabilities ...... 9,080,798 167,488,000 302,758,517 479,327,315 Overlift oil/NGL ...... - 23,306,000 - 23,306,000 Total current liabilities...... 54,132,079 474,388,000 301,432,517 829,952,596 Total liabilities associated with asset as held for sale...... - - 44,847,000 44,847,000 Total liabilities...... 54,384,258 3,143,064,000 4,808,027,658 8,005,475,916

TOTAL LIABILITY AND EQUITY ...... 110,107,942 4,090,775,000 4,930,782,000 9,131,664,942

1.8.3 Unaudited pro forma condensed profit and loss information for 1H 2007

Historical figures Pro forma Amounts in NOK Noreco Altinex Adjustments As per 30 June (IFRS) (IFRS) (unaudited) 2007 (unaudited) Revenue ...... - 634,510,000 - 634,510,000 Operating profit before depreciation ...... -70,693,957 416,205,000 - 345,511,043

Depreciation and impairment charges...... 454,000 308,991,000 36 729,507 346,174,507 Operating profit...... -71,147,957 107,214,000 -36 729,507 -663,464

Financial items, net...... -7,450,231 -116,751,000 -184,194,647 -308,395,878 Profit before tax expenses ...... -78,598,188 -9,537,000 -220,924,153 -309,059,342

Tax expenses...... 57,191,471 -82,637,000 60,134,033 34,688,504

Net profit before minority interests...... -21,406,717 -92,174,000 -160,790,120 -274,370,837 Minority interests...... - - - - Net profit ...... -21,406,717 -92,174,000 -160,790,120 -274,370,837

1.8.4 Unaudited pro forma condensed balance sheet information for 1H 2007

Historical figures Pro forma Amounts in NOK Noreco (IFRS) Altinex (IFRS) Adjustments As per 30 June (unaudited) 2007 (unaudited) ASSETS Fixed assets Deferred tax assets...... 5,147,000 50,929,000 49,315,132 105,391,132 Licenses and capitalised exploration costs...... 8,882,040 401,785,000 3,377,700,000 3,788,367,040 Concessions, patents, licenses and similar rights - 356,000 -356,000 - Goodwill...... - 583,817,000 807,821,353 1,391,638,353 Total intangible assets ...... 14,029,040 1,036,887,000 4,234,480,485 5,285,396,525 Property, plant & equipment...... - 2,298,648,000 678,570,493 2,977,218,493 Removal assets ...... - - - - Other plant, equipment & operating consumables...... 1,386,701 21,184,000 -16,724,000 5,846,701 Total property, plant & equipment ...... 1,386,701 2,319,832,000 661,846,493 2,983,065,194 Long term financial assets...... 2,033,819,750 - -2,033,819,750 - Total asset held for sale ...... - - 43,645,000 43,645,000 Total fixed assets...... 2,049,235,491 3,356,719,000 2,906,152,229 8,312,106,720

Current assets Inventory...... 81,306,000 -9,539,000 71,767,000 Accounts receivable...... 4,843,000 130,135,000 -12,962,000 122,016,000 Underlift oil/NGL ...... - - - - Other short-term receivables...... 25,313,047 - -767,000 24,546,047 Tax receivable...... 134,032,187 - - 134,032,187 Total receivable...... 164,188,234 211,441,000 -23,268,000 352,361,234 Other financial instruments...... - - - - Bank deposits, cash & cash equivalents ...... 194,514,000 220,306,000 5,625,000 420,445,000 Total current assets...... 358,702,234 431,747,000 -17,643,000 772,806,234

TOTAL ASSETS ...... 2,407,937,725 3,788,466,000 2,888,509,229 9,084,912,954

EQUITY & LIABILITIES Equity Share capital ...... 33,634,000 197,802,000 49,213,835 280,649,835 Share premium reserve ...... 1,299,272,750 -247,015,835 1,052,256,915 Other equity ...... 9,985,179 631,822,000 -780,061,275 -138,254,097 Minority interests...... - - - - Total equity ...... 1,342,891,929 829,624,000 -977,863,275 1,194,652,653

Long-term liabilities Pension liabilities...... 252,000 - - 252,000 Deferred tax liabilities ...... - 478,400,000 1,614,387,255 2,113,689,914 License obligations ...... - - - - Removal liabilities...... - 362,781,000 - 362,781,000 Total provisions...... 21,154,660 841,181,000 1,614,387,255 2,476,722,914 Other long-term liabilities Convertible bond loan...... 347,647,644 230,762,000 -223,538,764 354,870,880 Bond loan...... 930,931,000 2,310,134,256 3,241,065,256 Debt to credit institutions...... 39,000,000 550,274,000 -23,500,000 565,774,000 Total other long-term liabilities...... 386,647,644 1,711,967,000 2,063,095,491 4,161,710,136 Current liabilities...... Other interest-bearing debt ...... 578,060,000 - - 578,060,000 Account payable ...... - - - - Tax payable...... 3,164,000 216,253,000 - 219,417,000 Public charges payable...... - - - - Other current liabilities ...... 76,019,492 189,441,000 143,822,758 409,283,250 Overlift oil/NGL ...... - - - - Total current liabilities...... 657,243,492 405,694,000 143,822,758 1,206,760,250 Total liabilities associated with asset as held for sale...... - - 45,067,000 45,067,000 Total liabilities...... 1,065,045,796 2,958,842,000 3,866,372,504 7,890,260,300

TOTAL LIABILITY AND EQUITY ...... 2,407,937,725 3,788,466,000 2,888,509,229 9,084,912,954

1.9 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

1.9.1 Major shareholders

As of 30 October 2007 the Company had a total of 839 shareholders divided into 764 Norwegian and 75 foreign owners.

The table below shows the 20 largest shareholders in Noreco as per 30 October 2007:

Shareholder No. of shares % 1 Lyse Energi AS...... 17,355,940 15.58% 2 NEC Invest AS c/o HitecVision Priv ...... 16,725,396 15.01% 3 Nordea Bank Norge AS egenhandelskonto...... 8,170,000 7.33% 4 IKM Gruppen AS...... 7,158,548 5.64% 5 Norwegian Energy Company Founders ...... 5,077,056 4.56% 6 Bank of New York, BR BNY GCM Client account...... 3,903,640 3.50% 7 Morgan Stanley & Co. Client equity account ...... 3,792,000 3.40% 8 Arctic Securities AS meglerkonto...... 3,082,800 2.77% 9 Goldman Sachs International – security client segr...... 2,354,927 2.11% 10 Verdipapirfondet KLP...... 2,200,000 1.97% 11 Varma Mutual Pension Company ...... 2,100,000 1.89% 12 LBPB Nominees Limited ...... 2,082,400 1.87% 13 Bank of New York, BRU SA BNYE-LDN Nom...... 2,013,196 1.81% 14 Morgan Stanley and Co. S/A MSIL IPB Client ...... 1,752,360 1.57% 15 Cheyne Global Catalyst Fund ...... 1,600,996 1.44% 16 Spencer Trading Inc...... 1,515,000 1.36% 17 Credit Suisse Securities (Europe) Ltd/Firms...... 1,504,236 1.35% 18 JP Mirgan Chase Bank Non treaty AC...... 1,502,228 1.35% 19 Bjørn Rygg Investering ...... 1,489,084 1.34% 20 Takla Energy AS ...... 1,421,436 1.28% Total 20 largest...... 86,801,243 77.92% Others...... 24,593,588 22.08% Total ...... 111,394,831 100.0%

1.9.2 Related party transactions

Since its inception, the Company has been party to the following related party transactions1:

In connection with the raising of the initial funding from 3i Companies, Lyse and HVPE, Noreco entered into an agreement with Melberg Partners, a company partly owned by Tollak Melberg, one of the Noreco founders and then board member, to provide economic support, investment advice and financial modeling. The contract was completed in October 2005 when Noreco raised private equity capital. However, the compensation for this work was to be paid as the equity was drawn and this resulted in payments to Melberg Partners being made in 2005, 2006 and 2007. All payments to Melberg Partners have now been completed and there is no contractual relation between Noreco and Melberg Partners at this time.

Also in connection with the private equity fund raising in October 2005, Noreco agreed to pay legal costs and negotiation costs for the capital providers along with an ongoing monitoring fee to 3i, Lyse Energi, HVPE and Founders Holding. In return Noreco had access to the expertise of these companies including advice on financial questions, the raising of new funds and future funding requirements. The fee was paid quarterly through 2005, 2006 and until June of 2007. In June of 2007 Noreco raised additional capital and the monitoring fee is no longer valid. There is no longer any fee agreement between Noreco and the private equity providers. The details for payments made to related parties are outlined under Section 12.6.

1 The companies Lyse Energi AS (Lyse), Energivekst AS/Hitec Private Equity AS (HVPE), 3i Companies (3i Group plc, 3i UK Private Equity 2004/06 LP, 3i Pan European Growth Capital 2005/06 LP) and Norwegian Company Founders DA (Founders Holding) are shareholders in the Company.

1.9.3 Lock-up arrangement The Managers have entered into lock-up agreements with the management and board members of Noreco. Under the lock-up agreement, these shareholders have agreed not to offer, sell, contract or otherwise dispose of shares in the Company for a period of 12 months following the first day of trading of the Shares in Oslo Børs, without the prior written consent of the Managers.

1.9.4 Expenses Transaction costs and all other directly attributable costs in connection with the Listing will be borne by the Company and paid in cash. The total costs incurred by the Company are expected to amount to approximately NOK 2.2 million.

1.10 THE BOND LOANS On 13 July 2007, the Company issued two senior secured callable bond loans (the “Bond Loans”) with a total loan amount of NOK 2.8 billion. The Bond Loans have been issued in accordance with the Norwegian Public Limited Liability Companies Act. The first tranche of the Bond Loans totals NOK 500 million and has a floating rate note of 6 months NIBOR. The remaining Bond Loan of NOK 2.3 billion has a fixed rate of 11% p.a. The Bond Loans were disbursed on 13 July 2007 and will mature on 13 July 2011.

The net proceeds from the Bonds were used for (i) financing the acquisition of shares in Altinex, (ii) finance all accrued and future costs related to the acquisition of shares and convertible bonds in Altinex and financing of the Issuer (included all legal costs and management/advisor costs and fees related thereto) and (iii) repayment of existing Bank Loan (plus accrued interests and fees).

The Bond Loans are described in more detail in section 13 in this Prospectus. The full Loan Agreements are also included as Appendix 6 to this Prospectus.

1.11 ADDITIONAL INFORMATION

1.11.1 Share capital and shareholder matters

Noreco is a Norwegian public limited liability company with registration number 987 989 297.

The Company’s registered share capital is NOK 345,323,976.10 consisting of 111,394,831 Shares each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Liability Companies Act.

All issued Shares in the Company are vested with equal shareholder rights in all respects. There is only one class of shares and all Shares are freely transferable.

The Shares are registered with VPS under the International Securities Identification Number (ISIN) NO 001 0379266. The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

See Section 12 “Share Capital and Shareholder Information” for a further description of the Company’s share capital.

1.11.2 Articles of Association

The Company’s Articles of Association are included as Appendix 1 to this Prospectus.

According to its Articles of Association, “the business of the company is exploration, production and sale related to oil and gas activities. The company will obtain participating interests in production licenses by participating in license rounds and through acquisition of participating interests.”

The Company has only one class of shares.

The Board shall consist of three to eight members.

1.11.3 Documents on display

For the life of this Prospectus the following documents may be inspected at www.noreco.com and at the Company’s offices at Haakon VII’s gate 9, 4005 Stavanger, Norway:

• The Company’ Memorandum of Incorporation • The Articles of Association • The Company’s historical financial information and auditors report for the 2006 and 2005 financial years • The Company’s historical financial information for the six months ended 30 June 2007 • The historical financial information of Altinex for the years 2004-2006 and the quarterly reports (also available on Altinex’ web-page www.altinex.no)

1.11.4 Third party statements

Information contained in this Prospectus which has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading.

2. RISK FACTORS

2.1 GENERAL Investing in Noreco involves inherent risks. Prospective investors should consider, among other things, the risk factors set out in this Prospectus before making an investment decision. The risks described below are not the only risks facing the Company and the Group as a whole. Additional risks not presently known to the Company or currently deemed by the Company to be immaterial to the Group’s business may in future impair the Group’s business operations and adversely affect the price of the Company’s Shares. If any of the following risks actually materialize, Noreco’s business, financial position and operating results could be materially adversely affected. A prospective investor should consider carefully the factors set out below, as well as the information provided elsewhere in the Prospectus, and should consult his or her own expert advisors as to the suitability of an investment in the Shares. An investment in the Shares and the Bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. The information is presented as of the date hereof and is subject to change, completion or amendment without notice. All forward-looking statements included in this Prospectus are based on information available to the Company on the date hereof and reflect the Company’s present best effort opinions only. The Company assumes no obligation to update any such forward-looking statements unless required by applicable law or regulations. Investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those assumed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described below and elsewhere in this Prospectus. Reference is also made to section 4, “Notice regarding forward-looking statements”.

2.2 RISK FACTORS RELATING TO THE GROUP AND THE INDUSTRY IN WHICH IT OPERATES

2.2.1 The Group is dependent on finding, acquiring, developing and producing oil and gas reserves that are economically recoverable The Group is dependent on its ability to appraise, find, acquire, develop and commercially produce oil and gas reserves. The Group must continually locate and develop or acquire new reserves to replace its existing reserves that are being depleted by production. Future increases in the Group's reserves will depend not only on its ability to explore and develop its existing properties but also on its ability to select and acquire suitable additional properties either through awards at licensing rounds or through acquisitions.

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.

There are many reasons why the Group may not be able to find or acquire oil and gas reserves or develop them for commercially viable production. For example, the Group may be unable to negotiate commercially reasonable terms for its acquisition, exploration, development or production activities. Further, the Group is dependent on the competence and judgment of third party operators in relation to the development of reserves where it is not itself the operator. 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. Noreco’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.

Without successful exploration or acquisition activities, the Group's reserves, production and revenues will decline. There is no assurance that the Group will discover, acquire or develop further commercial quantities of oil and gas.

2.2.2 Reserves and resources information represents estimates which may be inaccurate or incorrect The reserves data included in this Prospectus are estimates. In general, estimates of the quantity and value of economically recoverable oil and gas reserves and the possible future net cash flows are based upon a number of variable factors and assumptions, such as historic production rates, ultimate reserves recovery, interpretation of geological and geophysical data, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, continuity of current fiscal policies and regulatory regimes, future oil and gas prices, operating costs, development and production costs and workover and remedial costs, all of which may vary from actual results. Estimates are also to some degree speculative, and classifications of reserves are only attempts to define the degree of speculation involved. Consequently, 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 and may have a material adverse effect on the Company’s valuation, its ability to raise further financing and its financial position in general.

As regards contingent resources, these may not be considered commercially recoverable by the Group for a variety of reasons, including the high costs involved in recovering the contingent resources, the price of oil at the time, the availability of the Group's resources and other development plans that the Group may have. By contrast, prospective resources are those deposits that are estimated, on a given date, to be potentially recoverable from undiscovered accumulations. The Group's estimates of its contingent and prospective resources are uncertain and can change with time and there can be no guarantee that the Group will be able to develop these resources commercially.

2.2.3 Substantial investment will be necessary in the future The Group will be required to make substantial capital expenditure for the acquisition, exploration, development and production of oil and gas reserves in the future. Such capital expenditures could be covered by revenues, new equity or by obtaining new debt. If the Group’s revenues decline, or if the Company is unable to attract investors to increase the Company’s equity, or if new debt arrangements are not accessible, or only on unattractive commercial terms, the Group will experience a limited ability to undertake or complete future exploration programs, development investments and acquisitions. The Group’s inability to access sufficient capital for its operations could lead to licenses being revoked, or could lead to a material adverse effect on the Group’s financial conditions, results of operations or prospects in general.

2.2.4 Risks relating to the price of oil and gas The profitability and cash flow of Noreco’s operations will be dependent upon the market price of oil and gas. This is known to fluctuate. Historically, oil prices have fluctuated widely for many reasons, including global and regional supply and demand, and expectations regarding future supply and demand for oil and petroleum products; geopolitical uncertainty; access to pipelines, tanker ships and other means of transporting oil, gas and petroleum products; prices, availability and government subsidies of alternative fuels; prices and availability of new technologies; the ability of the members of the Organisation of Petroleum Exporting Countries (“OPEC”) and other oil-producing nations to set and maintain specified levels of production and prices; political, economic and military developments in oil producing regions, particularly the Middle East; domestic and foreign governmental regulations and actions, including export restrictions, taxes, repatriations and nationalisations; global and regional economic conditions; and weather conditions and natural disasters.

It is impossible to predict accurately future oil and gas price movements. Accordingly, oil and gas prices may not remain at their current levels. The economics of producing from some of the Group's wells may change as a result of lower prices, which could result in a reduction in the volumes of the Group's reserves if some are no longer economically viable to develop. The Group might also elect not to produce from certain wells at lower prices. All of these factors could result in a material decrease in the Group's net production revenue causing a reduction in its oil and gas acquisition, development and exploration activities and financial condition. In addition, bank borrowings available to the Group currently are and in the future are expected to be in part be determined by the Group's borrowing base. A sustained material decline in prices from historical average prices

could reduce the Group's borrowing base, thereby reducing the bank credit available to the Group which could result in the Group having to repay a portion, or all, of its bank debt.

2.2.5 Political and regulatory 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. Further, the Group is faced with increasingly complex tax laws. The amounts of taxes the Group pays could increase substantially as a result of changes in, or new interpretations of, these laws, which could have a material adverse effect on its liquidity and results of operations. During periods of high profitability, there are often calls for increased or windfall taxes on oil and gas revenue. Taxes have increased or been imposed in the past and may increase or be imposed again in the future. In addition, taxing authorities could review and question the Group's tax returns leading to additional taxes and penalties which could be material. Decommissioning (where relevant) could also have a material tax impact for the Group’s financial position and results of operations.

In order to conduct its operations in compliance with applicable laws and regulations, the Group must obtain licenses and permits from various government authorities. The Group may incur substantial costs in order to maintain compliance with these existing laws and regulations and additional costs if these laws are revised or if new laws affecting the Group's operations are passed. Furthermore, there can be no assurance that the Group will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and production operations on its properties.

2.2.6 Environmental and HSE 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 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.

The Group's operations and assets are affected by numerous international, EU and national laws and regulations concerning health and safety and environmental (“HSE'”) matters including, but not limited to, those relating to the health and safety of employees, discharges of hazardous substances into the environment and the handling and disposal of waste. The technical requirements of these laws and regulations are becoming increasingly complex, stringently enforced and expensive to comply with and this trend is likely to continue. The failure to comply with current HSE laws and regulations has and may in the future result in regulatory action, the imposition of fines or the payment of compensation to third parties which each could in turn have a material adverse effect on the Group's business, financial condition and results of operations.

2.2.7 Competition

The oil and gas industry is highly competitive in all its phases. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. Noreco competes with other exploration and production companies, many of which include major international oil and gas companies which may have greater financial resources, staff and facilities than those of the Group. These companies have strong market power as a result of several factors, including the diversification and reduction of risk, including geological, price and currency risks; increased financial strength facilitating major capital expenditures; greater integration and the exploitation of economies of scale in technology and organization; strong technical experience; increased infrastructure and reserves; and strong brand recognition. Due to this competitive environment, the

Group may be unable to acquire attractive suitable properties or prospects on terms that it considers acceptable. As a result, the Group's revenues may decline over time, thereby materially and adversely affecting its results of operations or financial condition.

2.2.8 The Group’s debt arrangements may restrict the Group’s business in various ways The Group’s debt arrangements contain several restrictive covenants, including but not limited to restrictions on assets sales and acquisitions, investments, the ability to pay dividends or other capital distributions, and the possibility to raise additional financial indebtedness. In addition, several financial covenants are imposed on the Company and the Group. Such covenants restrict the Group in various ways in terms of how the Group conducts its business, and the Group may be restricted in responding to changing market conditions or in pursuing favorable business opportunities. Further, the Group will have to dedicate a substantial portion of its cash flow from operations to service debt, which in turn will reduce the amount of cash flow it will have available for capital investment, working capital and other general corporate purposes.

2.2.9 Current production is concentrated in a few number of fields The Group’s current production of oil and gas is concentrated in a small number of offshore fields. If mechanical problems, storms or other events curtail a substantial portion of the Group's production or if the actual reserves associated with any one of the Group's producing fields are less than the Group's estimated reserves, the Group's results of operations and financial condition could be adversely affected.

2.2.10 The Group relies on third parties to operate some of its assets While the Group operates certain of its assets, it is not the operator of some of its current development and production assets. The operating agreements with third party operators typically provide for a right of consultation or consent in relation to significant matters and generally impose standards and requirements in relation to the operator's activities. Nevertheless, the Group generally has limited control over the day-to-day management or operations of those assets and is therefore dependent upon the activities of the third party operator. A third party operator's mismanagement of an asset may result in delays or increased costs to the Group. While the Group has purposely acquired interests in assets that are operated by operators it believes to be reputable, there can be no assurance that the operator will observe such standards or requirements.

If a party with an interest in the Group's assets elects not to participate in certain activities relating to those assets that require that party's consent, the Group may be unable to undertake such activities alone or together with the other participants at the desired time or at all. Other participants in the Group's assets may default on their obligations to fund capital or other payments in relation to the assets. In such circumstances, the Group may be required under the terms of operating agreements to contribute all or part of any funding shortfall. Any such delay in or inability to undertake activities or fulfill an obligation to provide further funding could adversely affect the Group's business, results of operations or prospects.

2.2.11 The Group holds a number of licenses in their initial terms The Group holds a number of interests in exploration licenses or in other licenses that are in their initial terms. The early stages or exploration period of a license are commonly the most risky. These phases of the term of a license require high levels of relatively speculative capital expenditure without a commensurate degree of certainty of a return on that investment.

2.2.12 Unexpected shutdowns may occur Mechanical problems, accidents, oil leaks or other events at the Group's producing fields or its pipelines or subsea infrastructure may cause an unexpected production shutdown at these field. Any unplanned production shutdown of the Group's facilities could have a material adverse effect on the Group's business, financial condition and results of operations. In June 2006, a pipeline between the Siri and the Nini platform ruptured. Noreco, through its subsidiary Altinex, holds a 30% interest in the Siri and Nini pipelines, the subject of the incident. The conclusion after detailed investigations is that the whole pipeline needs to be replaced. A replacement can probably not be effected before 2009. Dong (the operator) is however working on a solution to maintain production until then. The replacement costs are assessed at DKK 450 mill. In addition the licensees have suffered a loss of production income, not yet determined. The underwriters have been advised of the incident and an insurance claim is under preparation both in respect of the physical damage and the loss of production income.

2.2.13 Risks associated with future decommissioning liabilities The Group, through its license interests, has in the past assumed certain obligations in respect of the decommissioning of its fields and related infrastructure and is expected to assume additional decommissioning liabilities in respect of its future operations. These liabilities are derived from legislative and regulatory requirements concerning the decommissioning of wells and production facilities and require the Group to make provision for and/or underwrite the liabilities relating to such decommissioning. The oil and gas industry currently has little experience of decommissioning petroleum exploration and production infrastructure in the North Sea as few such structures have been removed in this region. It is, therefore, difficult to forecast accurately the costs that the Group will incur in satisfying its decommissioning obligations. When its decommissioning liabilities crystallize, the Group will be jointly and severally liable for them with other former or current partners in the field. In the event that other partners default on their obligations, the Group will remain liable and its decommissioning liabilities could be magnified significantly through such default. Any significant increase in the actual or estimated decommissioning costs that the Group incurs may adversely affect its financial condition.

2.2.14 The Group is dependent on attracting and retaining personnel The Group's success depends, to a large extent, on certain of its key personnel. The loss of the services of any key personnel could have a material adverse affect on the Group. The Group does not maintain, nor does it plan to obtain, key person insurance against the loss of any of its key personnel. In addition, the competition for qualified personnel in the oil and gas industry is intense. There can be no assurance that the Group will be able to continue to attract and retain all personnel necessary for the development and operation of its business.

2.2.15 Risks associated with labor disputes The Group's contractors or service providers may be limited in their flexibility in dealing with their staff due to the presence of trade unions among their staff. If there is a material disagreement between contractors or service providers and their staff belonging to trade unions, the Group's operations could suffer an interruption or shutdown that could have a material adverse effect on its business, results of operations or financial condition.

2.2.16 Risks associated with legal disputes in general The Group currently is currently involved in disputes as described in Section 17.1 of the Prospectus, and may from time to time be involved in other legal disputes related to the Group’s operations or otherwise. The outcome of existing and any future disputes may adversely affect the Group’s business, results of operations or financial condition.

2.2.17 Risk associated with damaged equipment and the Group’s insurance policies The Group’s equipment, including equipment owned by the licenses in which the Group holds interests, may be damaged or in need for replacement. For instance, the pipeline system at the Nini field has been damaged due to corrosion and needs to be replaced and production from the field could be ceased during replacement. Although the Group, or the license in which the Group has an interest, in general will have insurance coverage for the property damage, it is not certain that the sums insured under such coverages will be sufficient to hold the Group harmless from the loss occurred. In addition, any significant loss or liability for which the Company is not insured, an example of which may be the risk of losses due to a reduced or ceased production, could have an adverse effect on the Group’s business, financial condition and results of operation. Further, such damages may lead to the Group’s insurance premiums or the applicable deductibles under the relevant policies being increased.

2.3 RISK FACTORS RELATING TO THE GROUP’S FINANCING

2.3.1 Borrowing and leverage

Borrowings create leverage and the Group is highly leveraged. In addition, the current financing structure is rather complex with several bonds having been issued as well as several bank loan facilities currently being in place. The debt arrangements include several covenants and undertakings of a general, financial and technical nature and several of the debt arrangements contain cross-default provisions. Failure by the borrowers or other obligors to meet any of the covenants or undertakings could result in all outstanding amounts under the different debt arrangements becoming immediately due for payment. In addition, security rights granted to the lenders could be enforced. If outstanding debts were declared due for immediate payment, there would be no assurances that the Group would be able to meet its obligations, and there are no assurances that the Group would be able to

obtain alternative financing, either on a timely basis or at all. Any breach of existing covenants and undertakings with a subsequent claim for repayment of all debts outstanding would thus have a material adverse effect on the Group’s financial position and is likely to have a material adverse effect on the value of the Company’s shares, the Group’s operations and future success.

As for new borrowings, the Group will seek to borrow only when the directors of the Company believe that such borrowings will benefit the Group after taking into account considerations such as the need to refinance existing debt, 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. Further, no assurances can be given that the Group will be able to refinance on economically attractive terms, or at all.

2.3.2 Risk associated with exchange rate fluctuations The Group has operations which generate significant cash flows in a variety of currencies. The Group also comprises businesses with various functional currencies (US$ and NOK). Although the Group may undertake limited hedging activities in an attempt to reduce certain currency fluctuation risks, these activities provide only limited protection against currency-related losses.

2.4 RISK FACTORS RELATING TO THE SHARES IN NORECO

2.4.1 Volatility of share price

There is currently no public trading market for the Shares and there can be no assurance that an active market will emerge or can be sustained after the completion of the Listing. The market price of the Shares could fluctuate widely to a number of factors, some of which are beyond the Company’s control, in response, 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.

2.4.2 Shareholders not participating in future offerings may be diluted and pre-emptive rights may not be available to US holders of the Company’s Shares Shareholders in Norwegian public companies such as the Company have pre-emptive rights to subscribe for new shares proportionate to the aggregate amount of the shares they hold. Such pre-emptive rights may be set aside by the shareholders meeting, which could result in existing shareholders being diluted as a result of the share issue.

The Company is not currently subject to the reporting requirements of the US Securities Exchange Act of 1934, as amended, and has no intention to subject itself to such reporting requirements by filing a registration statement under the US Securities Act to register any rights or new Shares. 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. If US holders of the Shares (or holders of Shares in other jurisdictions) 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.

2.4.3 It may be difficult for investors based in the United States to enforce civil liabilities predicated on U.S. securities laws against the Company, its affiliates, directors and officers The Company is organized under the laws of Norway. The Company’s directors and officers reside outside of the United States, and the Company’s assets are located outside of the United States. As a result, it may be difficult for investors in the United States to effect service of process within the United States upon the Company or the Company’s directors and officers or to enforce judgments obtained in U.S. courts predicated on the civil liability provisions of U.S. Federal securities laws against the Company or the Company’s directors and officers. In addition, punitive damages in actions brought in the United States or elsewhere may be unenforceable in Norway.

2.4.4 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.

2.4.5 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 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.

2.4.6 The ability of shareholders to make claims against the Company following registration of the share capital increase in the Norwegian Register of Business Enterprises is severely limited under Norwegian law Following the registration of the capital increase relating to any Shares of the Company in the Norwegian Register of Business Enterprises, subscribers or purchasers of those Shares have very limited recourse against the Company under Norwegian law.

2.5 RISK FACTORS RELATING TO THE BONDS IN NORECO In addition to the above described risk factors (which also apply for the Bonds), the following risks apply specifically to the Bonds:

2.5.1 Liquidity risk No market-maker agreement has been made in connection with this bond loan, which may represent a liquidity risk for the investor.

2.5.2 Interest rate risk The bond loan carries a floating rate note, with an interest rate period of 3 months, so the rate will be adjusted with the market rates on a quarterly basis.

2.5.3 Market risk The price of the bonds will depend on circumstances related to Noreco, and in the oil and offshore industry in general. The price will also depend on general fluctuation in the industrial bond market.

3. RESPONSIBILITY FOR THE PROSPECTUS The Board of Directors of Norwegian Energy Company ASA accepts responsibility for the information contained in this Prospectus. The Board of Directors hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of our knowledge, in accordance with the facts and contains no omissions likely to affect its import.

Stavanger, 29 October 2007 The Board of Directors of Norwegian Energy Company ASA Lars Takla Chairman

Gunnar Halvorsen Tollak Melberg

John Hogan Roger O'Neil

4. NOTICE REGARDING FORWARD-LOOKING STATEMENTS This Prospectus includes “forward-looking” statements, including, without limitation, projections and expectations regarding the Group’s future financial position, business strategy, plans and objectives. When used in this document, the words “projects”, “forecasts”, “estimates”, “expects”, “anticipates”, “believes”, “plans”, “intends”, “may”, “might”, “will”, “would”, “can”, “could”, “should”, “seek to” or, in each case, their negative, or other variations or similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements 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 and its subsidiaries will operate. Factors that could cause the Group’s actual results, performance or achievements to materially differ from those in the forward-looking statements include but are not limited to: • the competitive nature of the markets in which the Group operates, • global and regional economic conditions, • government regulations, • changes in political events, • force majeure events Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group's actual financial position, operating results and liquidity, and the development of the industry in which it operates may differ materially from those made in or suggested by the forward- looking statements contained in this Prospectus. The Group cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur. These forward-looking statements are subject to risks, uncertainties and assumptions, including those discussed elsewhere in this Prospectus. Forward-looking statements include statements regarding: • oil and gas reserves quantities; • obtaining permits; • retaining licenses and title to assets; • the amount and nature of capital expenditure; • drilling of wells; • the timing and amount of future production and operating costs; • availability of equipment; • business strategies and plans of management; and • prospect development and property acquisitions. Some important factors that could cause actual results to differ materially from those in the forward-looking statements are, in certain instances, included with such forward-looking statements and in Section 2 “Risk Factors” in this Prospectus. The Company undertakes no obligation update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or to persons acting on the Group's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus.

5. THE LISTING AND THE PRIVATE PLACEMENT

5.1 PURPOSE OF THE LISTING The Company decided to apply for the listing of the Company’s Shares and Bonds on Oslo Børs in order to:

• Strengthen solvency capital to facilitate further growth in operations and increase premiums retained for own account; • Improve the Company’s access to capital markets in order to raise further equity or debt should this be required; • Provide a regulated marketplace for the trading of its Shares and Bonds; and • Facilitate a satisfactory liquidity in the Shares and thereby make the Shares a more attractive investment for existing and new shareholders.

5.2 THE SHARES AND SHARE CAPITAL 5.2.1 Share capital The Company’s registered share capital is NOK 345,323,976.10 consisting of 111,394,831 Shares each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Liability Companies Act. All Shares in the Company are vested with equal shareholder rights in all respects. There is only one class of shares issued and all Shares are freely transferable.

5.2.2 VPS registration The Shares are registered with VPS under the International Securities Identification Number (ISIN) NO 001 0379266. The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

5.2.3 Legislation and rights attached to the Shares Reference is made to the review of legislation and rights attached to the Shares in Section 12.8 of the Prospectus.

5.2.4 Mandatory offers Section 14.9 of the Prospectus describes the current and new legislation on mandatory offers applicable to companies listed and incorporated in Norway. The Company or its shareholders have not received any public takeover bids since its inception.

5.2.5 Withholding tax Section 15.2.1 of this Prospectus provides information concerning withholding tax for foreign shareholders.

5.3 THE LISTING ON OSLO BØRS 5.3.1 Listing of the Company’s Shares on Oslo Børs The Company’s Shares are not currently listed on Oslo Børs or any other stock exchange or regulated market. The Company’s Shares has since 16 July 2007 been trading on the OTC list regulated by the Norwegian Securities Dealers Association, with the ticker-code “NORC”.

The board of directors of Oslo Børs ASA approved the Company’s application for listing on Oslo Børs at its meeting held on 24 October 2007, conditioned upon the Company (i) obtaining a satisfactory number of round lot holders; (ii) issuing an approved listing prospectus and (iii) raising a minimum of NOK 275 million in new equity. It is expected that the current issued and outstanding Shares will begin trading on Oslo Børs on 9 November 2007, however, there can be no assurance that the listing of the Shares can be achieved by this date.

As long as the Company’ Shares are listed on Oslo Børs, all ordinary Shares issued by the Company will normally automatically be listed on Oslo Børs as soon as the relevant share capital increase has been registered with the Norwegian Register of Business Enterprises and such Shares have been entered into in the VPS system, and as the case may be when a required listing prospectus or similar document has been issued.

In connection with the admission to listing on Oslo Børs, the trading facility for the Company’s Shares on the OTC market maintained by the Norwegian Securities Dealers Association will be discontinued. The Shares will not be trading in other organized markets and the Company currently does not have any intention to apply for listing or trading of its Shares in other markets.

5.3.2 Listing of the Company’s Bonds on Oslo Børs On 25 October 2007, the Company also applied for its Bonds to be listed on Oslo Børs. It is expected that the Bonds will be listed on or about 2 November 2007.

5.3.3 Expenses in connection with the Listing Transaction costs and all other directly attributable costs in connection with the Listing and the listing of the Bonds in Oslo Børs will be borne by the Company. The total costs incurred by the Company are expected to amount to approximately NOK 2.2 million.

5.4 THE COMPLETED PRIVATE PLACEMENT Prior to the Listing, the Company has completed a Private Placement of 16,666,667 Shares through a directed issue to institutional investors based on an exemption from the Prospectus requirements under the Securities Trading Act Sections 5-2 and 5-4. The Private Placement was conducted as a bookbuilding process with an indicative range of NOK 31.25-NOK 36.25 and fully subscribed on 19 October at NOK 33.00 per Share. Completion of the Private Placement was announced on 22 October 2007 under the Company’s ticker “NOR” on www.newsweb.no. Approximately 130 subscribers participated in the Private Placement. The Shares of the Private Placement have been allocated to the subscribers, and was delivered to the subscribers against payment on 25 October 2007.

5.5 MANAGERS The Managers for the Listing are Pareto Securities ASA and SEB Enskilda ASA.

5.6 LOCK UP AGREEMENTS The Managers have entered into lock-up agreements with the management and board members of Noreco, being Scott Kerr (CEO), Tor Arne Olsen (VP, Commercial), Reinert Seland (VP. Exploration), Einar Gjelsvik (VP, External Relations), Rune Martinsen (VP, Northern North Sea), Birte N. Borrevik (VP, Drilling and Projects) and Lars Takla (Chairman). Under the lock-up agreement, these shareholders have agreed not to offer, sell, contract or otherwise dispose of shares in the Company for a period of 12 months following the first day of trading of the Shares in Oslo Børs, without the prior written consent of the Managers.

5.7 JURISDICTION AND CHOICE OF LAW This Prospectus are subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of Oslo District Court.

6. PRESENTATION OF THE COMPANY Norwegian Energy Company ASA was incorporated on 28 January 2005 and registered in the Norwegian Register of Business Enterprises on 12 March 2005, with registration number 987 989 297. The Company is organized as a public limited liability company in accordance with the Norwegian Public Limited Liability Companies Act. Noreco’s registered address is Haakon VII's gate 9 4005 Stavanger, Norway. The telephone number is + 47 99 28 39 00, and its web address is www.noreco.com.

6.1 HISTORY AND DEVELOPMENT OF THE COMPANY The Company was founded on 28 January 2005 by Takla Energy AS (org.no. 987 756 306), Kongsgårdbakken 1 4001 Stavanger; Melberg Invest AS (org.no 980 109 151) Kongsgårdbakken 1, 4001 Stavanger; IKM Gruppen AS (org. no. 965 138 498) Ljosheimveien 3 4050 Sola and Melberg Partners AS (org. no 989 551 434) Kongsgårdbakken 1 4001 Stavanger.

In October 2005, Lyse Energi, Hitec Vision, 3i and Noreco’s founders agreed to raise up to NOK 550 million in new equity in the Company, and they remained the primary owners of the Company until May 2007, when the Company raised NOK 880 million in new capital from Norwegian and international institutional investors and was transformed to a Norwegian public limited liability company. In May 2007, Noreco started acquiring shares in Altinex, a Norwegian oil company listed on Oslo Børs. Through acquisitions in the market, Noreco held on 19 July 2007 a total of 137,157,331 shares representing 69.34% of the total outstanding shares in Altinex. On 11 May 2007, the Company issued a NOK 440,000,000 Senior Unsecured convertible bond loan, and effective as of 9 July 2007 the Company issued two Senior Secured callable bond loans totaling NOK 2,800,000,000, both in order to finance the acquisition of Altinex.

On 23 July 2007, the Company put forward a mandatory offer for the remaining shares in Altinex ASA to an offer price of NOK 22 per Altinex share, and increased its holdings to a total of 192,146,106 shares representing 97.14% of the share capital in Altinex after the expire of the acceptance period. Due to the high acceptance level, Noreco decided to carry out a compulsory acquisition of the remaining shares in Altinex to the same price as in the mandatory offer. As a consequence, Noreco became the owner of 100% of Altinex on 29 August 2007. The creditor notice period for the compulsory acquisition expires on 29 October 2007. The Board of Directors has not received any substantial objections to the compulsory acquisition as of this date.

On 3 September 2007, the extraordinary general meeting of Altinex resolved to apply for a delisting of its shares from Oslo Børs. The shares were de-listed on 13 October 2007.

On 10 October 2007, the extraordinary general meeting of the Company resolved, inter alia, to split the face value of the Shares into 4, creating a new face value of NOK 3.10 per Share.

On 19 October 2007, the Company completed a Private Placement of shares totaling NOK 550 million in gross proceeds.

On 25 October 2007, Noreco announced that the company has through its 100% owned affiliate Altinex Oil Denmark A/S entered into an agreement with Chevron Denmark Inc to acquire a 12% interest in License 9/06 (Gita) and License 9/95 (Maja) on the Danish Continental Shelf. The two licenses are located west of the Amalie discovery and are both operated by Maersk (31.2%) with Shell (36.8%), DONG (20% in License 9/95) and the Danish Offshore Fund (20% in license 9/06) as the other co-venturers. The two licenses contain prospectivity in Jurassic reservoirs with good follow-up potential. The agreement is conditional upon authority approval and on consent, including waiver of pre- emption rights, by the other co-venturers.

On 26 October 2007 and 31 October 2007, Noreco announced its conditional sale of Altinex Services AS and Altinex Reservoir Technology AS respectively to IKM Testing AS. For a further description, see Sections 6.3.8 and 6.3.9 below.

6.2 LEGAL STRUCTURE Below is the legal structure of Noreco as per the date of the Prospectus.

Norwegian Energy Company ASA

100% 100% Norwegian Energy Company UK Altinex ASA Limited

100% 100% Altinex Reservoir 100% Altinex International AS Technology AS Altinex Oil Norway AS 100% Altinex Services AS 100% Geopard A/S

100% Altinex Oil Denmark A/S

100% 100% Altinex Petroleum Denmark A/S Altinex Oil (UK) Ltd

6.3 DESCRIPTION OF THE COMPANIES IN THE GROUP

6.3.1 Norwegian Energy Company ASA

Noreco is the parent company in the Group. The Company was established in January 2005 and holds the Noreco licenses. The Company is incorporated in Norway.

6.3.2 Norwegian Energy Company UK Limited

Norwegian Energy Company UK Limited was incorporated 23 January 2007. The business address is in Aberdeen, Scotland. The company has no assets or employees.

6.3.3 Altinex ASA

Altinex was acquired by Noreco on 29 August 2007 when Noreco acquired the remaining shares in Altinex not previously owned by Noreco by way of a compulsory acquisition pursuant to the Norwegian Public Limited Liability Companies Act. Altinex was established in 1987 and was listed on Oslo Børs from 1997 until 13 October 2007 when the shares of Altinex were delisted from Oslo Børs. Altinex is the parent company in the Altinex Group of companies. Altinex ASA is incorporated in Norway.

6.3.4 Altinex Oil Norway AS

The company was established in 2004 and is located in Norway and has 14 employees. The company holds the title to a number of producing assets in Norway together with explorations assets in the North Sea.

6.3.5 Altinex International AS

The company was established in 2006 by Altinex ASA with the sole purpose of acquiring and holding the shares of Geopard A/S. The company is located in Norway and has no employees.

6.3.6 Geopard A/S

The company was established in 2006 by Altinex International AS with the sole purpose of acquiring and holding the shares of Altinex Oil Denmark A/S (Former DENERCO OIL A/S). The company is incorporated in Denmark and has no employees.

6.3.7 Altinex Oil Denmark A/S

The company is incorporated in Denmark and holds the title to a number of producing assets in Denmark together with explorations assets in the North Sea as well as in Oman. Altinex Oil Denmark was originally established in 1985 and employed 22 persons as of 30 June 2007.

6.3.8 Altinex Reservoir Technology AS

Altinex Reservoir Technology AS was established in 1993 and is headquartered in Stavanger, Norway. Altinex Reservoir Technology AS employs 12 persons.

Altinex Reservoir Technology AS offers services within collection, laboratory analysis (related to oil & gas industry), renting of equipment (test bottles, pressure sensors and data loggers) and renting of personnel.

Altinex Reservoir Technology AS wholly owns a subsidiary in Malaysia, RT Altinex Asia Sdn. Bhd., a company established on 18 January 2007. As per the date of this Prospectus there is no significant activity in the subsidiary.

On 31 October 2007, Noreco entered into an agreement to sell Altinex Services AS to IKM Testing AS. The completion of the transaction is subject to receipt and fulfillment on customary approvals and conditions. The sale of this non-core business have no significant impact on the financials of the Noreco Group.

6.3.9 Altinex Services AS

Altinex Services AS (formerly known as Altinex Environtech AS) was established in 1998 and is headquartered in Harstad, Norway. The Altinex Services has 16 employees. The company offers environmental services and oil field cleaning systems.

On 26 October 2007, Noreco entered into an agreement to sell Altinex Services AS to IKM Testing AS. The completion of the transaction was subject to receipt and fulfillment on customary approvals and conditions which has now been fulfilled. The sale of this non-core business have no significant impact on the financials of the Noreco Group. 6.4 BUSINESS OBJECTIVES AND STRATEGY Noreco is an independent oil and gas exploration, development and production company whose activities are focused on the North Sea (mainly Norway, Denmark and United Kingdom). Since its formation, Noreco has built a portfolio of exploration, appraisal and development assets in Norway. This portfolio has been based on subsurface expertise and technology, innovative business and business relationships. The acquisition of Altinex will allow the Group to pursue the goal of creating the leading independent oil and gas company based in Norway. Noreco will focus on growing its business through exploiting the existing producing asset base, pursue developments of discoveries and build and mature the exploration portfolio. Noreco has a strong commercial and technical understanding in its core areas on the Norwegian, UK and Danish continental shelves and will actively pursue growth in these core areas through licensing rounds, farm-ins and acquisitions.

Noreco will prioritize recruiting and maintaining a team of first class and highly motivated oil and gas professionals and will let the staff participate in the value creation in the Company.

6.5 OVERVIEW OF THE COMBINED COMPANY Following the acquisition of Altinex, the Noreco Group employs 94 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen and is in addition cooperating with a number of local contractors.

Noreco has ownership in a total of 45 licenses, of which 33 are in Norway, 8 are in Denmark, 1 is in UK, 2 are in Germany and 1 in Oman. The licenses are held by Noreco or by subsidiaries of Altinex. In addition, Noreco

has acquired two of the licenses are recently acquired from Chevron Denmark Inc as announced on 25 October 2007. In addition, Noreco has the option to farm into PL370 from PetroCanada.

There are a total of 14 discoveries in the portfolio, 8 of which are in Norway, 5 in Denmark and 1 in UK.

Noreco Group licenses in Norway, Denmark and UK

6.6 OVERVIEW OF THE NORTH SEA LICENSES Noreco is participating in 47 licenses in Norway, Denmark and UK. Of the 47 licenses, 3 are operated by Noreco. Two of the licenses are recently acquired from Chevron Denmark Inc as announced on 25 October 2007. In addition, Noreco has the option to farm into PL370 from PetroCanada. 6.6.1 Exploration approach Noreco’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. Noreco is a member of the Diskos Group, giving access to all released wells on the NCS.

The Company has from its formation built a framework consisting of Petrel and Eclipse interpretation software, hosted via an ASP to Schlumberger, Stavanger. This system also ensures data management and hosting, minimizing security and retrieval issues.

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 quickly 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 also well balanced with respect to exploration play and basin composition, meaning that the prospects have different type and 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 building up knowledge based on available data, using skilled and experienced personnel using efficient interpretation tools. Through access to data and applying regional and detailed geoscience expertise 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, Noreco has prior to the acquisition of Altinex filed applications in three license award rounds; the Awards in Predefined Areas (“APA”) 2005 (3 licenses), 19th Round (1 license) and APA 2006 (9 licenses, of which 2 operatorships). The remaining 9 licenses have been acquired from other licensees. Noreco has also applied for further exploration licenses in the 2007 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. Noreco and the operators of Noreco acreage 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.

Noreco is presently building its capacity to execute drilling projects, following approval by the authorities as operator late 2006. The process includes building of internal procedures, in-house qualified operational personnel, a drilling management contractor as well as a rig capacity for the operated drilling program. Noreco has employed highly skilled drilling personnel and has also entered into a frame agreement for drilling operations management with Senergy Ltd. Noreco’s first operated drilling operation is planned for mid 2009. The rig for this well is secured. Noreco has also secured rig capacity for own operated exploration drilling through a rig consortium on the Seadrill rig West Alpha, commencing in mid 2009, running for a period of 3 years with an option to extend the contract for another 2 years. Through this contract it is likely that Noreco will have sufficient rig capacity for its own operated exploration drilling to 2012.

The partner licenses are operated by well reputed oil companies, most of whom has secured rig capacity for their exploration programs. All drilling projects in the Noreco portfolio planned for 2007/2008 have secured rig capacity.

6.6.2 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 12 -24 months for a subsea tie-back to 24-36 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.

During its existence, Noreco has built a substantial portfolio of risked resources and some discoveries.

Resources (RC 8) Of which are Comments discoveries (RC 4/5) 2005...... 62.5 0 APA 2005, 19th Round 2006...... 140.4 7.5 APA 2006, Acquisitions 2007 (Mid year) ...... 21.3 7.3 Acquisitions Total...... 223.9 14.8

6.6.3 Drilling program

The main focus for most companies will be to replace and increase the volumes for production, to mature prospects to discoveries and discoveries to development and production. The maturing of the resources starts with exploration and appraisal drilling. Noreco plans to mature and drill approximately 30 exploration/appraisal wells over the next 3-4 years, which is equivalent to drilling approximately 30% of the portfolio per year. This significant exploration drilling activity is turning over the current Noreco portfolio over a 3-4 year period, and exposing the company to a risked exploration resource of more than 300 mmboe. A significant exploration drilling budget is consequently considered essential for the development of the Company.

Licenses Noreco 2007 2008 2009 2010 2011 Equity 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q P1114 Huntington appr. 20,0 % Oilexco Pl 274 Oselvar appr. 15,0 % Dong Rig secured PL148 Nemo appr. 20,0 % Lundin Operator with rig 6/95 Siri West expl. 29,0 % Dong Planned well PL348 expl. 17,5 % StatoilHydro Operator PL271/302 expl. 30,0 % StatoilHydro PL274 Ipswich expl. 15,0 % Dong PL055 Brage Exp expl. 20,0 % StatoilHydro PL006C 2 wells appr./expl. 25,0 % Lundin PL442 appr. 20,0 % Statoil/Hydro PL408 expl. 30,0 % DNO PL385 expl. 20,0 % Statoil/Hydro PL378 expl. 20,0 % Revus PL382 expl. 20,0 % BG PL412 expl. 40,0 % Noreco PL316 expl. 35,0 % Talisman PL347 expl. 17,5 % StatoilHydro PL391 expl. 20,0 % BG PL398 expl. 30,0 % Lundin PL442 expl. 20,0 % Statoil/Hydro PL412 2nd well expl. 40,0 % Noreco PL400 expl. 30,0 % Lundin PL411 expl. 100,0 % Noreco PL414 expl. 20,0 % Petra PL417 expl. 20,0 % Revus PL435 expl. 20,0 % RWE-Dea PL360 expl. 15,0 % Petra PL361 expl. 30,0 % Talisman PL447 expl. 20,0 % Petro-Canada

6.6.4 Overview of producing fields – Norwegian North Sea licenses

Enoch (PL048D) Noreco 4.36% interest in the unitized field (21.8% in PL048D), StatoilHydro (58.9%) operator, Det Norske Oljeselskap (10%) and Dong (9.3%) Altinex purchased this license in October 2005. The Enoch field is located in the central part of the Norwegian North Sea 20 km northwest of the Sleipner West field and came onstream in May 2007.

PL048D covers the Norwegian part of the Enoch field which stretches onto the UKCS. Talisman North Sea Limited is operator for the unitised field. Enoch is developed as a subsea tie-back to the Brae A platform on the UKCS. Produced oil is transported in the Forties pipeline system to Cruden Bay in Scotland, and gas is delivered and sold at the Brae platform.

The Enoch field’s P2 reserves as of 1. January 2007 are estimated to 15.9 mmboe, of which Noreco’s net share is 0.7 mmboe.

There are currently no further plans for development of the Enoch field. Possible reserves and upside value creation potential on Enoch includes lowering the back pressure, late field life production of the gas cap, and possible drilling of a second production well to drain the reserves.

Brage (PL053B, PL055 and PL185) Noreco 12.622% interest, StatoilHydro Petroleum (20%) operator, Talisman (34.3%), Petoro (13.4%), StatoilHydro (12.7%), Endeavour (4.4%) and Revus (2.6%) The Brage field is located in the Norwegian part of the North Sea 120 km west of Bergen in water depths of 130-170 meters. The field was discovered in 1980 and a Plan for Development and Operation (PDO) was approved in 1991. Production from the Brage Field started in 1993 with a maximum production rate of more than 120,000 boe/d in 1996. The Brage production facilities consist of an integrated production, drilling and accommodation platform. The crude is exported to the Sture terminal via the Oseberg Transportation System. Excess gas is exported through the Statpipe system to Kårstø.

The Brage platform has an integrated platform drilling unit allowing for drilling of additional development wells even during periods with a tight rig market. In order to continuously enhance the oil recovery from the field and to tap potential additional resources in adjacent prospects, a new drilling campaign was initiated in the fall of 2006. StatoilHydro Petroleum, the operator for Brage, is planning to continue with drilling of infill producers and injectors to enhance the production and recovery from the field. A 4D seismic survey has recently been acquired over the field and is being interpreted to identify bypassed oil and possible new targets for infill drilling. The operator is also considering various other methodologies to improve recovery and late life field performance.

The Brage field’s P2 reserves as of 1 January 2007 are estimated to 72.9 mmboe of which Noreco’s share is 9.2 mmboe.

6.6.5 Overview of producing fields – Danish North Sea licenses Siri (6/95) Noreco 20% interest, Dong (40%) operator and Talisman (30%) The Siri field is located in the Danish part of the North Sea approximately 245 km north west of Esbjerg. The Siri field comprises three separate reservoirs: Siri, Stine Segment 2 and Stine Segment 1, which came on-stream in March 1999, September 2001 and May 2004 respectively. The Siri platform is an integrated production and accommodation platform placed on top of an oil storage tank resting on the seabed at a water depth of approximately 65 meters. The oil is produced to the seabed storage tank and via a floating loading buoy transported by shuttle tanker to refineries in North West Europe. The reservoir is produced with water injection and limited gas injection to improve oil recovery. The produced gas is mainly being used for power generation at the platform.

The Siri platform is the host for processing and transport of products from the Nini and Cecilie fields. The license for the delineated Siri field expires in 2027.

2 Noreco has an ownership in the Brage unit of 12.2575% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was change in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized.

The Siri field P2 reserves as of 1 January 2007 are estimated to 14.5 mmboe, of which Noreco’s share is 2.9 mmboe.

Rupture of the Siri – Nini water injection pipeline. The Siri host platform receives multiphase production from the satellite fields Nini and Cecile and provides these fields with gas lift and water injection via separate pipelines.

The 10” and 32 km long water injection pipeline to Nini ruptured 3 km from the Siri platform on 9 June 2007. This caused a stop of permanent water injection to Nini as well as the nearby Siri accumulation, Stine Segment 1.

For a month the water injection to Nini was temporarily maintained via a rig drilling on the Nini field. Oil production is ongoing but declining from the affected reservoir zones.

Reparation of the pipeline has commenced with a diver boat on location. Repairs were finalised in October 2007. After the repair, the pipeline pumps at the Siri platform will be modified, leading to an estimated water injection start up medio November 2007. Following this repair, and the appropriate analysis of the measuring results, a decision will be taken on the operational regime and a possible additional repair or maintenance. A possible scenario is a replacement of the whole pipeline. In such a case the replacement costs are estimated at DKK 450 millions. Noreco has insured the platform and the pipeline under an all risk cover insurance program, removal of wreck coverage and business interruption protection. A loss adjuster has been appointed and assessment of the coverage is under evaluation. In case of a replacement of the whole pipeline, and if applying a strict definition of the coverage in the insurance policy, Noreco may be exposed to an under coverage of in the order of DKK 90 million.

The business interruption coverage has a 2 month self insurance period which expired 11 September 2007. Loss of production due to the rupture will be documented in due course and Noreco will receive USD 30/barrel of the volumes. The volumes remain in the reservoir and are expected to be produced.

Syd Arne (7/89) Noreco 6.56% interest, Hess (57.5%) operator, Dong (34.4%) and Danoil (1.6%) Oil production from the field commenced in July 1999 and gas export commenced later in the year. The field is operated by Amerada Hess and is located in the Danish part of the North Sea approximately 250 km west of Esbjerg.

The platform – installed at 60 meters water depth – is an integrated production and accommodation platform, where the oil and gas from the Syd Arne reservoir are separated, processed and exported. The oil is stored in a sub sea storage tank and transferred to shuttle tankers via an offshore loading system for onward transport to refineries in North West Europe.

The field is developed with a total of 19 production/injection wells that are producing from a low permeability chalk reservoir. The last two wells have been drilled in 2007, and are scheduled to be brought on stream in October 2007. Upside potential at Syd Arne includes further infill drilling on the structure as well as development of the northern extension of the field. Development drilling has proved challenging, requiring underbalanced drilling. Acceptable drilling performance will be key to unlocking further upside potential.

The Syd-Arne field P2 reserves as at 1 January 2007 are estimated to 147 mmboe, of which Noreco’s share is 9.7 mmboe. In addition, the field has estimated gas reserves of 35 mmboe, of which Noreco’s share is 2.3 mmboe. The license for the delineated Syd-Arne field expires in 2027.

Cecilie (16/98) Noreco 61% interest, Dong (22%) operator and RWE-DEA (17%) The Cecilie oil field is located in the Danish part of the North Sea approximately 235 km and 250 km northwest of Esbjerg. Cecilie was discovered in 2000 and production commenced in August 2003.

The oil is being produced from two unmanned wellhead platforms and transported through pipelines to the Siri platform situated approximately 13 km north east of Cecilie. The oil is being processed at the Siri platform to a seabed storage tank and transferred to shuttle tankers via an offshore loading system for onward transport to refineries in North West Europe.

No further development activity is planned in the Cecilie field. The possibility of drilling a second production well to the Connie structure is being evaluated but has not yet been decided.

The Cecilie (including Connie) field’s P2 reserves as of 1 January 2007 are estimated to 3.2 mmboe, of which Noreco’s share is 2.0 mmboe. The license for the delineated Cecilie field expires in 2032.

Nini (4/95) Noreco 30% interest, Dong (40%) operator and RWE-DEA (30%) The Nini oilfield is located in license 4/95 awarded in the Danish 4th licensing round and was discovered in 2000. The Nini-field was discovered in 2000, and came on-stream in 2003.

The Nini field is located 32 km northeast of the Siri field. The field is developed with an unmanned wellhead platform and is tied back to the Siri facilities for processing of the oil and gas. The Siri field is also supplying water injection for the Nini field. Production commenced in August 2003.

There is remaining potential for infill drilling on the Nini field, and 2-3 infill/injection wells might be drilled in 2008 with Ensco 70 jackup drilling units. There is also upside potential in improving the water injection into the Nini field to increase the pressure support.

The Nini field’s P2 reserves are estimated to 12.9 mmboe, of which Noreco’s share is 3.9 mmboe. The license for the delineated Nini field expires in 2032.

Lulita (1/90+7/86) Noreco 28.2% interest, Mærsk (19%) operator, Shell (23%), Dong (21.8%) and Chevron (7.5%) The Lulita oil and gas discovery was discovered in 1992. The reservoir is Middle Jurassic sandstone and has been developed with two extended reach wells from the Harald platform. Following processing on Harald, oil is transported together with Harald condensate to Gorm via Tyra East. The gas is exported to Tyra East via a separate pipeline.

There are no further development plans or activities for Lulita at this time.

The Lulita field’s P2 reserves are estimated to 3.3 mmboe, of which Noreco’s share is 9 mmboe. The license for the delineated Lulita field expires in 2026.

6.6.6 Discoveries – Norwegian North Sea licenses

South East Tor (PL006C) Noreco 25% interest, Lundin (75%) operator. Noreco purchased this license from Lundin in 2006 through a farm-in agreement against carrying certain promote costs. The Block 2/5 covers 93,197 Km2. It contains an oil discovery (SE Tor) in the chalk of the Tor and Ekofisk Formations. The license expires 31 December 2028.

The Block is located in the central parts of the Central Trough, where chalk reservoirs are proven in several giant oil fields (Ekofisk and Valhall). The discovery is located in a structural trap, but a major upside may be trapped down-flank in porous chalk analogues to the Danish Halfdan Field.

Two wells are planned for early 2008 in order to appraise the SE Tor discovery in a structural position and to explore the upside of the west flank. The wells will be drilled with the rig Mærsk Gallant.

The appraisal well aims at confirming a minimum volume of oil for a development of the SE Tor discovery. If proven commercial, the field will probably be tied back to the Tor, Valhall or Ekofisk Fields. If the exploration well gives promising results, a larger scale development is anticipated. Assuming a positive appraisal well in second half of 2008, a development should feasible by 2010/2011.

The contingent resources for the SE Tor discovery are estimated to 24 mmboe, of which Noreco’s share is 6.1 mmboe.

Nemo (PL148) Noreco 20% interest, Talisman (30%) and Lundin (50%) operator. Noreco farmed into 20% of PL148 in 2006 from Talisman, against carry of certain appraisal/development cost. The license comprises of parts of Blocks 7/4 and 7/7 and is under an obligation to carry certain promote costs according to the SPA. The acreage of the license is 50,122Km2.

The Nemo discovery well was drilled in 1992 by Statoil, and encountered oil in late Jurassic sandstone. The Nemo discovery is located on the flank of the Central Trough and the prospectivity is in Late Jurassic shallow

marine sandstone deposited in a Triassic “intra- - pod” system. The base case is based on hydrocarbon on the top of the pod down to “oil-down-to” in discovery well. Additional volume upside exists in extending the oil column downdip of the discovery well. This is a recognized upside potential that most likely will be appraised during development drilling.

The work program for the license is completed. An appraisal well to the 7/7-2 discovery will be spudded in 4Q 2007 using the rig Mærsk Giant. The appraisal well is located to prove up the base case hydrocarbon volume to support going into development planning.

Assuming a positive appraisal well, the Nemo discovery could be developed by 2010 as a subsea tieback to Norwegian assets in the area (Ula, Gyda fields) or as a tieback across the Norwegian/UK border to Mungo or ETAP.

The license expires on 8 July 2024.

The Nemo contingent resources are estimated to 22 mmboe, of which Noreco’s share is 4.4 mmboe.

Oselvar (PL274), Noreco 15% interest, Revus (15%), PA Resources (30%) and Dong (40%) operator. The license was recently acquired from Revus through a farm-in agreement under which Noreco is obliged to carry certain promote costs. The license covers 507,527 Km2 in Block 1/3. The license expires 15 March 2009 (initial period), but may be extended.

The license is located centrally in the Central Graben, in-between oil fields like the Ula, Gyda and Blane Fields. The main potential is in the deep marine sandstones of Paleocene age and secondary prospectivity exists in Jurassic highly pressured sandstones.

The Paleocene levels have a gas discovery named Oselvar. Two appraisal wells has been drilled on the structure, one well being dry and one well encountering oil downdip of the gas discovery well. An appraisal well will be drilled in 4Q 2007 using the rig Mærsk Guardian. The appraisal well will aim at confirming the limit between oil and gas, as well as the proving down-flank extension of the oil column. Assuming a successful appraisal well, a development of the Oselvar discovery as a tieback to one of the existing fields in the area (Ula, Gyda) is likely and could be completed by 2010/2011.

A second prospect of similar type is identified in the license and will be drilled by an exploration well in 2008.

Flyndre discovery (PL018C) Noreco 13.34%, Mærsk (60%) operator, Noble (15%), StatoilHydro Petroleum (6.65%) and Petoro (5%) The Flyndre field is a cretaceous chalk discovery that straddles the UK/Norway border. Several production tests with good oil rates have been carried out in the Flyndre field. Further field evaluation and possibly also appraisal drilling will be required prior to making a development decision.

There are also potential reserves in the Paleocene sandstones over the Flyndre chalk discovery.

The contingent resources in the Flyndre discovery are estimated to 35 mmboe, of which Noreco’s share is 4.6 mmboe.

J1 (PL048C) Noreco21.8% interest, StatoilHydro (68.9%) operator and StatoilHydro Petroleum (9.3%) Altinex Oil (Noreco) acquired the license - comprising part of block 15/5 located at the NCS-UKCS boundary – in May 2005 from Total E&P Norge AS. The license covers the Norwegian part of the J1 discovery which straddles the Norwegian/UK boundary.

The J1 find is a gas/condensate discovery located 15 km northwest of the Sleipner West Field. The J1 discovery is being evaluated for further appraisal and development.

The contingent resources in the J1 discovery are estimated to 12.8 mmboe, of which Noreco’s share is 0.70 mmboe. The license expires in 2013.

Gamma (PL442) Noreco 20% interest, StatoilHydro Petroleum (40%) operator, Svenska Petroleum (20%) and Det Norske Oljeselskap (20%) The license was awarded to Altinex Oil (Noreco) on 31 May 2007 and comprises blocks 25/2 (part) and 25/3 (part). Two wells (25/2-10 S and 25/2-11) have been drilled on the Gamma structure with both encountering gas and oil in a 4 way dip closure at Frigg Formation level.

Noreco is planning to perform a full evaluation of the license, aimed at assessing the commercial potential and development solution of the Gamma discovery, as well as identifying additional un-drilled potential in other formations. The license expires in 2011 (relinquishment) unless a decision to pursue development has been made.

There is one commitment well on PL442, and the well is expected to be drilled late 2008.

Brage “flank” (PL055B) Noreco 12.62%3 interest, StatoilHydro Petroleum (20%) operator, Talisman (34.3%), Petoro (13.4%), StatoilHydro (12.7%), Endeavour (4.4%) and Revus (2.6%) Altinex Oil (Noreco) acquired the license - comprising part of block 31/4 – with effect from 1 January 2006 from Eni Norge AS. The license covers the North-Eastern tip of the Brage field as well as potential reserves in the Sognefjord Formation which in case of discovery could be developed through the Brage facilities. The prospectivity of the area is under evaluation and an exploration well is planned for 2008 from the Brage platform. In case of a discovery, the well will be completed as a producer.

6.6.7 Discoveries – Danish North Sea licenses

Rau (7/06) Noreco 40% interest and operator, RWE-DEA (40%) and Norsøfonden (20%) During April and May 2007 the Rau-1 exploration well including three sidetracks was drilled as the first well in the Danish 6th Round. The Rau-1 exploration well encountered movable oil in Paleocene sandstone reservoirs. Additionally, three deviated sidetracks to Rau-1 appraised the lateral extent and size of the Rau oil accumulation. All sidetracks found oil and confirmed the reservoir model and the extent of the Rau oil accumulation.

Noreco is finalizing the development report on the Rau discovery and will follow-up the discovery report with work to estimate the hydrocarbon volume of the discovery as well as the commerciality of the discovery.

Rau is located close to the Cecilie and Siri fields, and the most likely development scenario for a Rau development is a unmanned wellhead platform tied back to the Siri field for processing of the hydrocarbons. The Nini East discovery will be developed within the same timeframe as a possible Rau development, and there could be possible synergies in coordinating the development of the two discoveries.

The Rau contingent resources are estimated to 13.1 mmboe, of which Noreco’s share is 5.2 mmboe. The initial exploration period expires in 2012.

Nini East (4/95) Noreco 30% interest, Dong (40%) operator and RWE-DEA (30%) An appraisal well to the Nini East discovery was drilled in June 2007, resulting in a significantly higher resource estimate for the Nini East field.

The partnership on Nini East has entered into pre-sanction studies to evaluate the best development concepts for the Nini East field. Development sanction is planned for 1Q 2008, followed by development and first oil in the fall of 2009. The estimated total budget for the Nini East development project is DKK 2,104 millions.

The development drilling is planned to be done with Ensco70 currently on contract with Dong.

The Nini East contingent resources are estimated to 16 mmboe, of which Noreco’s share is 4.8 mmboe.

Amalie (7/86) Noreco 29.9% interest, Hess (40.1%) operator and Dong (30%) The license - located 20 km northeast of the Syd Arne field in the Danish part of the North Sea - was awarded in the 2nd Danish Licensing Round in 1986. The Amalie field was discovered in 1991.

3 Noreco has an ownership in the Brage unit of 12.2575% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was change in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized.

Since the Amalie discovery several gas fields have been discovered in the area, forming the basis for a possible area development in the future.

A conditional development plan for the field (PDO) was submitted to the Danish Energy Authority (DEA) in December 2001.

The phased development plan filed with the Danish authorities depends inter alia on a tie-in to infrastructure on favorable terms and on further opening of the gas market. Being a deep gas condensate field the high pressures and temperatures represent technological challenges to a development. Production startup of the Amalie field is not expected until 2012. The license for the Amalie field expires in 2026.

Siri Oil Field (6/95) Noreco 20% interest, Dong (40%) operator and Talisman (30%) In addition to the producing Siri oil field, one marginal oil discovery at Sofie has been made. One prospect and one lead have been identified within the license area. The Paleocene Siri West prospect is located immediately west of the Siri field. The exploration period for the Siri license expires 15 November 2007.

The Siri West prospect is on the preliminary drilling schedule for 2008 with the Ensco 70 rig on contract with Dong.

6.6.8 Discoveries – UK North Sea license Huntington (P1114) Noreco 20% interest, Oilexco (40%) operator, E.ON (25%) and Carrizo (15%) Altinex (Noreco) farmed-in to the license with effect from 15 December 2005 against covering an additional part of the promote costs and a royalty fee on future production revenues. The license is located in the central part of the UK North Sea, close to existing fields and established infrastructure.

The Huntington discovery well (22/14b-5) was drilled in the period from April to June 2007, and resulted in two significant discoveries in reservoir of Paleocene (Forties fm) and Jurassic (Fulmar fm) age. The discovery well was drilled to a total depth of 13,325 feet into the Triassic Skagerrak Formation. Oil bearing reservoir sandstones were encountered in the Paleocene Forties at a depth of 8,960 feet and in the Upper Jurassic Fulmar at a depth of 12,750 feet.

A previous exploration well in the license has discovered oil also in Triassic sandstone reservoirs.

An extensive appraisal of the Forties fm is currently ongoing, and is expected to significantly reduce the uncertainty in the Forties volume estimates. Further appraisal of the Fulmar fm is planned and should be completed early 2008, setting the Huntington field up for a development decision and a fast track development schedule.

The development concept for the Huntington field has not yet been evaluated. The field is located close to existing infrastructure with spare processing capacity, and the field could be developed either as a subsea tieback or with a standalone infrastructure. For a simple subsea tieback, the first oil from Huntington could be achievable by 2010.

The preliminary resource estimate for the Huntington discovery is more than 150 mmboe combined between the Forties fm and the Fulmar fm, with additional potential in the Triassic reservoirs.

6.6.9 Exploration – North Sea licenses

PL378, Noreco 20% interest, Premier Oil (40%) and Revus (40%) operator. The license was awarded in the APA 2005 round and covers parts of Blocks 35/12 and 36/10. The allocated acreage is 625,613 Km2. The license expires 6 January 2012 (initial period), but may be extended.

The license is located in the major hydrocarbon province on the Horda Platform, north of the Troll Field and east of the Fram Field. The prospects are in the shallow marine sandstones of the Middle and Late Jurassic sections, similarly to the fields mentioned.

The license will reach a drill or drop decision this fall and the well will probably be drilled by a rig from the Revus pool.

PL417, Noreco 20% interest, Premier Oil (40%) and Revus (40%) operator. The license borders the PL 378 to the west and was awarded in the APA 2006 to the same license group, making synergies in understanding and work program possible. The license covers parts of the Blocks 31/3, 32/1 and 36/10. The area covered is 768,301 Km2. The license expires 16 February 2012 (initial period), but may be extended.

The license is located at the flank of the North Sea basin, with traps along major boundary faults towards the mainland Norway. The reservoir is of shallow marine to deltaic origin and of Middle Jurassic age. A discovery has been made in the same setting further north.

Acquisition of a dense 2D seismic grid is ongoing and the license will reach drill or drop decision in early 2009.

PL414, Noreco 20% interest, Faroe Petroleum (20%), PA Resources (20%) and Pertra (40%) operator. The license was awarded in APA 2006 and covers parts of Blocks 25/3, 25/5 and 25/6 and covers an area of 571,846 Km2. The license expires 16 February 2012 (initial period), but may be extended.

The license is located on the eastern flank of the very prolific Viking Trough, at the northern end of the Utsira High. There are at least three levels of prospectivity, the deep marine sandstones of Paleocene age and the shallow marine to deltaic sandstone of Middle and Lower Jurassic age. All levels have significant producing oil fields in neighboring licenses.

The work program consisting of reprocessing of 3D seismic has just started and a drill or drop decision is to be made early 2009.

PL412, Noreco 40% interest and operator, Lundin (30%) and Endeavour (30%). The license was awarded in APA 2006 and covers parts of Blocks 25/5, 25/6, 25/8 and 25/9. The areal extent is 1005, 104Km2. The license expires 16 February 2012 (initial period), but may be extended.

The license has prospectivity in mainly two levels. The Paleocene deep marine sandstones form a trap by pinch- out against the Utsira High. This is the same type of trap as in the very prolific Jotun and Ringhorne Fields in the next blocks to the west.

A deeper target, the shallow marine sandstones of Middle Jurassic age is also proven oil-bearing in the region. In fact a small oil discovery (25/6-1) exists on the license. Oil from this discovery is thought to spill into a stratigraphic pinch-out trap updip.

Secondary targets also exist in the shallow marine sandstones of Early Jurassic age.

Reprocessing and merging of 3D seismic data, along with geological studies, are ongoing and a firm well will be drilled first half of 2009. A rig has been contracted for the drilling of the well.

PL411, Noreco 100% interest and operator. The license covers parts of Blocks 17/1, 17/2, 26/10 and 26/11 and has an acreage of 1,776,912 Km2. It was awarded in APA 2006. The license expires 16 February 2013 (initial period), but may be extended.

The license is located in the virgin area of the Stord Basin, with a few wells having discovered minor oil and gas along the basin flanks. The main risk of the basin is linked to presence and maturity of the source rocks of the basin. Reservoir rocks and structural traps are interpreted to be present in the license.

Multiple prospects have been defined in the Middle Jurassic Sandnes Formation and in the Early Jurassic Statfjord Formation

PL271 and PL302, Noreco 30% interest, Talisman (30%) and StatoilHydro Petroleum (40%) operator. The license was awarded in 2001. Noreco acquired a 40% interest in the Blocks 7/1 and 6/10 from DONG and divested 10% to Talisman in connection with another acquisition. The work program for the license will be fulfilled by drilling of a well late 2007 or early 2008. The well will be drilled with the rig Mærsk Giant. The license expires 15 March 2008 (initial period), but may be extended.

The prospectivity is linked to shallow marine Late Jurassic sandstones, deposited in Triassic “intra – pods”. The play model is well known and prolific on the UKCS, but underexplored on the Norwegian side. The main risk for the prospect is considered to be migration of oil from the source area into the prospect. If sufficient oil has migrated into the area, a significant upside may be present by de-risking other prospects in the license.

PL398S, Noreco 30% interest, Endeavour (20%) and Lundin (50%) operator. The license was awarded in APA 2006 and covers 387,758 Km2 of Block 2/8. The license is stratigraphically divided (S), meaning that the license covers the deeper layers of Jurassic and older age, while another license (PL 440S) holds the younger layers. The license expires 16 February 2013 (initial period), but may be extended.

The Block is located in the central portion of the very prolific Central Graben. The prospect is linked to Jurassic and / or Triassic shallow marine sandstone, proven on the other side of the UK/N border (Jade Field). The trap is a structural high, somewhat dependant on closure against a salt diapir. A discovery will most probably consist of gas with high pressure and temperature. In case of a development there is ample infrastructure in the region.

Reprocessing and merging of 3D seismic data is ongoing (and being co-ordinated with the overlying license PL 440) and a drill or drop decision is due early 2009.

PL400, Noreco 30% interest, Petoro (20%) and Lundin (50%) operator. The license was awarded in APA 2006 and covers 322,520 km2 in Blocks 3/5 and 8. The license expires 16 February 2013 (initial period), but may be extended.

The blocks are located on the flank of the Central Trough and have potential prospects and leads in different reservoirs and settings. The youngest reservoir is the deep marine sandstone of Paleocene age. The prospects in this reservoir are analogues to the Siri Field, producing oil on the Danish side of the border. Late Jurassic shallow marine sandstones may be found in salt withdrawal depressions on the highest part of the basin flank and Permian eolian reservoirs may form a tilted fault-block trap along the boundary fault of the basin. The prospects are of moderate size and risk, except for the Permian target which is a high risk high reward prospect.

Acquisition of in-fill 3D seismic is completed and these data will be merged and processed with existing data to give a full 3D seismic coverage. A drill or drop decision is due early 2009.

PL316CS, Noreco 35% interest (subject to approval by authorities), Revus (20%), Pertra (10%) and Talisman (35%) operator. The license was acquired from Talisman in 2007 through a farm-in agreement under which Noreco is obliged to carry certain promote costs. The acreage covers the eastern part of the original license area. The license expires 18 June 2010 (initial period), but may be extended.

The Block 10/4 is located in the Egersund Graben, close to the Yme Field, presently being re-developed with Talisman as operator. The reservoir consists of shallow marine Middle Jurassic sandstones and the trap is classical structural fault blocks. Even though oil has been produced from the region (Yme Field), sourcing of oil to the prospect is the main risk factor. The prospect is consequently to be considered a high risk, high reward project.

Talisman will operate an extensive drilling campaign in the area and a well is tentatively proposed in 2009 using a rig from the Talisman pool.

PL360, Noreco 15% interest, StatoilHydro (50%) operator, Dong (20%) and Revus (15%) The license was awarded to Altinex Oil (Noreco) in the 2005 Norwegian APA (Awards in Predefined Areas) license round and comprises blocks 16/5 (part), 16/6 (part), 16/8 and 16/9.

The primary exploration play in the license is a new Palaeozoic play type in the Ling Graben and is therefore associated with higher exploration risk than normal, but at the same time with a potential for discoveries with very large reserves.

A new, large 3D seismic survey was acquired during the summer 2006. Seismic processing is ongoing, and interpretation and prospect evaluation will be initiated during the summer of 2007. The license expires in 2012.

PL361, Noreco 30% interest, Talisman (40%) operator and Revus (30%) The license was awarded to Altinex Oil (Noreco) in the 2005 Norwegian APA (Awards in Predefined Areas) license round and comprises blocks 17/2 (part), 17/3 (part), 17/5 and 17/6 (part).

The license is located in the Åsta Graben area in the northern part of the Egersund Basin and contains several interesting play types and moderate-risk prospects with attractive reserve potential.

Acquisition of new 3D seismic data is planned for 2007. Prospect evaluation is ongoing. The license has a drill or drop commitment within 2009 and license expires in 2012.

PL408, Noreco 30% interest and Pertra (70%) operator The license was awarded in January 2007 to Altinex Oil in the 2006 Norwegian APA (Awards in Predefined Areas) license round and comprises blocks 15/8 (part) and 15/9 (part).

The license contains two prospects and several leads on Jurassic, Paleocene and Eocene levels. The area is covered by several vintages of 3D seismic data.

The initial work program will comprise seismic reprocessing and geological and geophysical evaluations. The license has a drill or drop commitment within 2009 and it expires in 2012.

PL185 (Brage), Noreco 12.624% interest, StatoilHydro Petroleum (20%) operator, Talisman (34.3%), Petoro (13.4%), StatoilHydro (12.7%), Endeavour (4.4%) and Revus (2.6%) The license covers the southernmost tip of the Brage field as well as one mapped exploration prospect which in case of discovery potentially could be developed as a tie-back to the Brage facilities.

The prospectivety of the area is under evaluation.

2/06 South Tor Pod, Noreco 6.5625% interest, Hess (45%) operator, DONG 26.85%, Danoil 1,58% and Nordsøfonden 20% License 2/06 covers 28 km² of blocks 5604/30 and 5504/2 on the Danish sector and was awarded 22 May 2006. The South Tor Pod is an exploration prospect that is identified based on using 3D seismic data and comprehensive knowledge from the nearby South Arne field. The South Tor Pod prospect is matured and ready for exploration drilling. No rig has yet been allocated to drilling of the prospect. The initial exploration period expires 22 May 2012.

6.7 NORWEGIAN SEA

6.7.1 Discoveries – Norwegian Sea licenses

Tau (PL348) Noreco 17.5% interest, EO.N Ruhrgas (17.5%), Gaz de France (20%, Endeavour (7.5%), Petoro (7.5%) and StatoilHydro Petroleum (30%) operator. The license was purchased from Talisman in 2007 and Noreco is under an obligation to carry certain promote costs according to the SPA. It covers parts of Blocks 6407/8 and has an acreage of 207,727 km2. The license expires 17 December 2009 (initial period), but may be extended.

The Blocks covers the fault-zone between the Halten Terrace and the Trøndelag Platform and has a string of smaller prospects reaching northwards from the Njord Field. The reservoir is of the same type as the Njord field and is considered low risk.

The decision to drill a well in 2008 on the license fulfils the work commitment of the license. A discovery will most likely be chained back to the Njord Field.

Disc (PL256) Noreco 10% interest, RWE-Dea (15%), Petoro (20%) ENI (55%) operator. Noreco recently purchased a 10% share of this license from Dong. It covers 122,170 Km2 of Blocks 6506/10 and 6406/1.

4 Noreco has an ownership in the Brage unit of 12.2575% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was change in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized.

In addition to a gas discovery (6406/1-2) in Cretaceous and Jurassic sediments, the northern part of the license covers the southern part of a possible Cretaceous discovery, mainly located in PL 382 (Noreco 20%).

The activity on the license awaits the results of drilling on nearby prospects and development of gas infrastructure in the region.

6.7.2 Exploration -Norwegian Sea licenses

PL385, Noreco 20% interest, Wintershall (20%) and StatoilHydro Petroleum (60%) operator. The license was allocated in APA 2005. It covers 653,457 km2 in Blocks 6607/11 and 12. The license expires 6 January 2012 (initial period), but may be extended.

The Blocks are located on the western flank of the Nordland Ridge and have reservoirs in Middle Jurassic shallow marine sandstones, Late Cretaceous deep marine sandstones and potentially in deep marine Paleocene sandstones. Producing fields and discoveries are present in the region for the two first levels (Norne Field / Marulk discovery), while the latter is a virgin play.

Reprocessing of a full 3D seismic coverage was prepared last year and the preparations for a drill or drop decision in the fall of 2007 are under way. A well is tentatively planned for 2008.

PL391, Noreco 20% interest, Hess (20%), Idemitsu (20%) and BG (40%) operator. Block 6506/1 was awarded in the 19th Round and covers 424,012 km2. The license expires 28 April 2011 (initial period), but may be extended.

The Block is located in the Rås Basin, in an area of reasonable water depth (400-500m) before entering into the deep waters of the Norwegian Sea. Gas-filled reservoirs are anticipated in Late Cretaceous deep marine sandstones. The block is typically of high risk, high reward type.

New 3D seismic is presently being acquired over the license. Following an interpretation period, a drill or drop decision will be made early 2009.

PL382, Noreco 20% interest, BG (80%) operator. Parts of Blocks 6507/7, 8, 9 and 11 were allocated in APA 2005 and cover 791,338 km2. The license expires 6 January 2013 (initial period), but may be extended.

The Blocks are located on the edge of the Dønna Terrace and has a large prospect in Late Cretaceous deep marine sandstones. A well drilled close to the structural closure showing gas suggests that this prospect may in fact be a gas discovery.

A new 3D seismic survey is presently being acquired over the license and a drill or drop decision will be made in 2008.

PL435, Noreco 20% interest, Revus (20%), Edison Int. (20%) and RWE-Dea (40%) operator. Parts of the Blocks 6507/7 and 8 were awarded in APA 2006 and cover an area of 242,949 km2. The license expires 16 February 2012 (initial period), but may be extended.

The Blocks are located on the flank of the Dønna Terrace, nearby the Åsgard and Heidrun Fields and just south of the Victoria discovery. The main prospect is a large tilted fault-block with Fangst Gr. shallow marine to deltaic reservoirs (same as producing in the Åsgard Field). A well down-flank on this structure is gas bearing, indicating that the prospect in fact represents a gas discovery. The main risk related to the prospect is linked to the production potential of the reservoir since it declines with depth. The prospect is, however, shallower than the Victoria discovery, which is expected to come on stream in the near future.

Additional prospectivity is present in the very complex fault zone of the Dønna Terrace and in Cretaceous, Skarv Field analogue, deep marine sandstones.

Reprocessing of 3D seismic over the entire license acreage is presently ongoing and a drill or drop decision will be made early 2009.

PL347, Noreco 17.5% interest, EO.N Ruhrgas (17.5%), Gaz de France (20%, Endeavour (7.5%), Petoro (7.5%) and StatoilHydro Petroleum (30%) operator. The license was purchased from Talisman in 2007 and Noreco is under an obligation to carry certain promote costs according to the SPA. The license covers 346,301 km2 of Blocks 6407/7, 8, 10 and 11. The license expires 17 December 2010 (initial period), but may be extended.

The blocks are located over the boundary zone between the Halten Terrace and the Frøya High, near the Njord and Draugen oil-fields.

Prospectivity exists in several different settings. Reservoirs of Late Jurassic, Triassic and Permian may be present. The final interpretations are presently underway for a drill or drop decision to be made late 2007.

PL446, Noreco 40% interest, Discover Petroleum (20%) and Petro-Canada (40%) operator. The license was awarded in APA 2006 and covers 169,263 km2 in Block 6305/7. The license expires 15 June 2012 (initial period), but may be extended.

The Block is located near the Ormen Lange Field in the Møre Basin. Prospectivity is in Paleocene sandstones of deep marine origin. The trapping concept is complex and so far only leads are defined on the license.

The ongoing work program consists of reprocessing of 3D seismic and acquisition of an electromagnetic survey. A drill or drop decision is planned in 2009.

PL447, Noreco 20% interest, Pertra (20%), Petro-Canada (30%) and Det norske Oljeselskap ASA(30%) operator. The license was awarded in the APA 2006 and covers 249,049 Km2 in Block 6608/7. The license expires 15 June 2013 (initial period), but may be extended,

The Block is located on the northern flank of the Nordland Ridge, and has a novel play concept of Paleocene deep marine sandstones. The depositional system is influenced by mud volcanism and the trap is formed by late structural movements. Gas is expected to be present in the prospect.

A work program of reprocessing of 3D seismic is underway and a drill or drop decision is to be made in 2009.

6.8 FUTURE LICENSE ACQUISITION ACTIVITY Noreco has been active, and have had success, in all Norwegian licensing rounds since the formation of the Company. The success is considered a result of innovative geological ideas, experienced and knowledgeable subsurface staff, an extensive database and value adding networking and co-operation with competitors as required.

The oil companies operating the majority of Noreco’s portfolio are reputed and competent E&P companies. Noreco has also co-operated successfully with several companies in Areas of Mutual Interest (AMI), which are arrangements to combine strengths with other E&P companies to compete for new licenses.

Noreco will continue to apply this access strategy going forward. Noreco has completed a comprehensive application for the 2007 APA 2007 and will also participate actively in the 20th Round on the NCS in 2008.

Noreco will also pursue further growth through acquisitions of licenses that are more mature or more material than the licenses offered up in the licensing rounds. Such acquisitions can include exploration acreage, discoveries, development and producing fields where Noreco sees value creation potential.

Future awards and acquisition of licenses are important to Noreco’s business model, and the Company will demonstrate its competence and capacity by actively managing and maturing licenses the Company already own.

6.9 RESERVES AND RESOURCES

6.9.1 Overview

The classification of resources used in this Prospectus is consistent with the guidelines set forward by Oslo Børs circular no. 2/2007.

The reserves are also split between P1, P2 and P3 reserves, where P1 are the reserves that with reasonable certainty can be expected to be produced from the field (P90 estimates are often used for this category) while the P2 reserves are the probable reserves expected to be produced from the field (often associated with the P50 estimate), while the P3 reserves include also possible reserves and indicates a upside potential for the field (P10 estimate).

For non-developed reserves, only the probable reserves (P2) and the upside potential is provided (P3).

For contingent resources, the most likely estimate has been used to estimate the contingent resources.

For exploration resources, the unrisked and risked exploration potential have been provided.

The Company's resource figures are normally based on the operators’ calculations

The Noreco reserves and resource estimates have been verified by Macgolyor MacNaugthon and Senergy ltd. Macgolyor MacNaughton has provided verification of the producing fields (with exception of the Brage field) in conjunction with Altinex Oil Norway AS annual reserves report at the end of 2006. These fields are South Arne, Nini, Siri, Lulita, Cecilie on the Danish Continental Shelf, and the Enoch field on the NCS.

Senergy ltd has reviewed and verified the reserves and resource estimates for the combined Noreco and Altinex portfolios, with exception of the fields verified by Macgolyor MacNaugthon mentioned above.

Senergy has reviewed the reserves and resource estimates carried by Noreco in this Prospectus, and has found Noreco methodology and practices to be in accordance with generally accepted industry standards. The estimated reserves and resources in fields and discoveries have been found reasonable based on the input data provided to Senergy.

Senergy has also reviewed the exploration portfolio and confirms that Noreco’s practices and methodology for estimating exploration potential and risk are in accordance with generally accepted industry practices. Senergy has also reviewed the volume estimates for the prospects in the portfolio and has found these to be reasonable. The basis for prospect risking has been discussed, and the general risk level for each prospect has been verified to the extent possible with the data provided to Senergy.

6.9.2 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).

Noreco 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:

Licence Equity Reserves Volumes in net mmboe P1 P2 P3 DK 16/98 ...... Cecilie 61.00% 1.0 2.0 2.0 DK 7/86 ...... Lulita 28.00% 0.2 0.9 1.2 DK 4/95 ...... Nini 30.00% 2.0 3.9 4.7 DK 6/95 ...... Siri 20.00% 1.9 2.9 3.3 DK 7/89 ...... South Arn 6.56% 5.1 9.7 15.5 NOR PL053B, 055, 185 . Brage 12.62%5 5.5 9.2 12.5 NOR PL048D ...... Enoch 4.40% 0.3 0.7 1.0 Total...... 16.0 29.3 40.1

Non-developed reserves:

Licence Equity Reserves Volumes in net mmboe P1 P2 P3 DK4/95 ...... Nini East 30.00% 4.8 6.7 DK 7/86 ...... SANE 6.56% 1.6 2.0 DK 7/06 ...... Rau 40.00% 5.2 9.1 UK P1114 ...... Huntington 20.00% 34.5 55.0 DK 7/86 ...... Amalie 29.92% 10.5 17.7 Total...... 0.0 56.6 90.5

6.9.3 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).

Noreco’s contingent resources are resources in fields and discoveries that require further appraisal before economic viability can be concluded.

Potentially economic resources

Licence Equity Resources Continent Volumes in net mmboe Most Likely UK P1114 ...... Huntington T 20.00% 15.1 DK 6/95 ...... Sofie 20.00% 0.2 DK 16/98 ...... Connie 61.00% 1.1 NOR PL018C ...... Flyndre P 3.34% 1.5 NOR PL018C ...... Flyndre Ch 13.34% 4.7 NOR PL018C ...... J1 5.45% 0.7 NOR PL442...... Gamma 20.00% 4.8 NOR PL055...... Brage Flank 12.62%6 4.9 NOR PL006C ...... SE Tor 25.00% 6.1 NOR PL148...... Nemo 20.00% 4.4 NOR PL274...... Oselvar 15.00% 6.3 NOR PL348...... Tau 17.50% 1.0 NOR PL256...... 10.00% 1.8 Total...... 52.5

5 Noreco has an ownership in the Brage unit of 12.2575% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was change in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized. 6 Noreco has an ownership in the Brage unit of 12.2527% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was change in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized.

6.9.4 Prospective resources

Prospective resources are those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations.

Noreco’s prospective resources reported as unrisked exploration potential and risked exploration potential.

Licence Equity Resources Volumes in net mmboe Unrisked Risk Risked exploration exploration NOR PL360...... 15.00% 113 5% 5.7 NOR PL361...... 30.00% 208 20% 41.6 NOR PL408...... 30.00% 41 33% 13.6 NOR PL185...... 12.62%7 0 0% 0.0 Oman Block 3&4...... 50.00% 212 15% 31.8 DK 7/89 & 6/95...... 6.56-30% 4 34% 1.3 UK P1114 ...... 20.00% 26 31% 8.1 NOR PL271/302...... 30.00% 24 14% 3.4 NOR PL006C ...... 25.00% 6 30% 1.9 NOR PL348...... 17.50% 10 54% 5.4 NOR PL378...... 20.00% 63 16% 9.8 NOR PL385...... 20.00% 69 11% 7.5 NOR PL274...... 15.00% 3 34% 1.1 NOR PL316 CS ...... 35.00% 49 22% 10.9 NOR PL382...... 20.00% 43 30% 12.9 NOR PL414...... 20.00% 22 25% 5.5 NOR PL412...... 40.00% 64 29% 18.3 NOR PL447...... 20.00% 69 18% 12.5 NOR PL391...... 20.00% 41 17% 7.0 NOR PL398S...... 30.00% 186 30% 55.9 NOR PL400...... 30.00% 18 24% 4.3 NOR PL417...... 20.00% 166 11% 18.1 NOR PL435...... 20.00% 16 34% 5.6 NOR PL347...... 17.50% 1 49% 0.5 NOR PL256...... 10.00% 4 30% 1.1 NOR PL411...... 100.00% 585 12% 71.7 NOR PL370...... 20.00% 14 16% 2.2 Total...... 2.058,4 357.5

6.10 RESEARCH AND DEVELOPMENT Noreco is to some extent involved in research and development activities, but the Company has no intention or need to engage in commercialization of these efforts.

6.11 PATENTS AND INTELLECTUAL PROPERTY RIGHTS AND LICENSES The Group is not dependent on any material patents or other intellectual property rights to conduct its business. The Group is dependent on its interests in exploration licenses in order to conduct its business. For details about the licenses, see Section 6.6 above.

7 Noreco has an ownership in the Brage unit of 12.2575% and an ownership of 13.2% in the surrounding licences outside the Brage unit. This ownership was changed in the harmonization process, giving Noreco an ownership of 12.62% in all of the licenses. The change is ownership from 12.2575% to 12.6247% in the harmonization process has not yet been finalized.

6.12 ENVIRONMENTAL ISSUES The Company is not obliged to carry out environmental protection measures that would be significant to the business or financial situation. However, 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.

7. THE MARKET

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 5.2% in 2007 and 2008. Demand for oil is estimated by the Energy Information Administration (EIA) to 85.9Mbd in 2007 (growing 1.3 Mbd in 2007) and growing 1.5 Mbd in 2008 compared to 2007. 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.

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

40 MMBOE/Day 30

0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

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 1997. The financial crisis in Asia and the oil price collapse in 1998/99 led to a weak market in the period from 1998 to 2000. 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 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 2007 and into 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 recent 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 2006. According to Rigzone, overall utilization for the entire competitive worldwide rig fleet is currently 86.9 percent. This is up from 85.9 percent a year ago. Within this average, drill ship utilization is 77.1 percent, semisubmersibles 85.8 percent and jack-ups 88.1 percent. 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 percent since mid-2005.

7.2 THE OIL MARKET

7.2.1 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$ 84.6/Bbl in 2005 dollars. The oil price (Brent December) is currently US$ 77/Bbl.

The Brent Crude-Current Month 18/9/07 80

0 1998 1999 2000 2001 2002 2003 2004 2005 2006 Crude Oil-Brent Cur. Month FOB U$/BBL

HIGH 78.17 7/8/06,LOW 9.81 21/12/98,LAST 77.08 17/9/07 Sour c e: D ATASTREAM

Real and future Oil Price

Real Crude Oil Price

100

0 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

1965-2006 in $2006 (2007: current)

WTI future curve 82 80 78 76 74 72 USD/bbl 70 68 WTI 13/09/07 WTI 20/09/07 66 64 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12

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.

7.2.2 Oil market balance

Oil demand and supply

88.00

87.00

86.00

85.00

84.00

Mbd 83.00

82.00

81.00

80.00

79.00 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07E 3Q07E 4Q07E

Supply Demand

Source: EIA 2007

7.3 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.

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. Former experiences which the Ministry of Petroleum and Energy has had with the certain applicant may also have significance.

Number of production licenses

0 2003 2004 2005 2006

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 2007. 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

0 2003 2004 2005 2006

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 2004.

Areas to be awarded (km2)

25000

20000

15000

10000

5000

0 2003 2004 2005 2006

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:

8. FINANCIAL INFORMATION AND OPERATING REVIEW You should read the following discussion of the financial condition and results of operations in conjunction with the financial statements included in this Prospectus. 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 2 “Risk factors”.

Annual reports including audited historical financial information and audit reports in respect of 2006 and 2005 may be found at the Company’s website at www.noreco.com. The annual reports for Noreco for the years 2006 and 2005 are included in this Prospectus in Appendix 4 and 5 respectively. The annual financial statements have been audited by the Company’s statutory auditor, Deloitte AS. The figures for 1H 2007 as included below have been prepared by the Company and have been subject to a limited audit.

The Company’s financial information for the 1H 2007 is enclosed as Appendix 3 to this Prospectus.

8.1 BASIS FOR PREPARATION In connection with this prospectus, a separate set of the 2006 accounts, with comparable 2005 figures have been prepared based on IFRS accounting standards. These accounts comprise income statement, balance sheet, statement of changes in equity, cash flow statement, accounting principles and notes to the accounts, and are included in Appendix 4 to this Prospectus. These IFRS adjusted accounts have been subject to audit.

8.2 SUMMARY OF SIGNIFICANT POLICIES

8.2.1 Main principles The consolidated accounts of Noreco have been drawn up in accordance with international accounting standards published by the International Accounting Standards Board, as well as additional provisions pursuant to the Norwegian Accounting Act.

8.2.2 Use of estimates Management makes use of estimates based on its professional judgment and assumptions about future developments when it prepares the annual financial statements. Uncertainty is attached to all estimates, since changes in market conditions may lead to changes in estimates. Estimate changes may lead to changes in the book value of the company’s assets, liabilities, equity and profits.

The most important accounting estimates employed by the Company are associated with the following items: - the allocation of fair value to assets and liabilities in the event of acquisitions. - the valuation of goodwill, intangible assets, property, plant and equipment, and future removal liabilities. - depreciation of property, plant and equipment (production equipment).

Use of the acquisition method when recognizing business acquisitions requires that the acquisition cost is allocated to identifiable assets and liabilities in accordance with their fair value. When calculating the fair value of such assets and liabilities, a number of estimates are used to which a great degree of uncertainty is attached. For production facilities, the fair value is calculated by discounting estimated future cash flows from the fields. These estimates are based on uncertain assumptions relating to production profiles, reservoir estimates, hydrocarbon prices, production costs, future investment requirements, future closure and removal costs, and discount factors. Changes in one or more of these assumptions will have an impact on the fair value allocated. The fair value of the exploration and assessment portfolio is estimated using an estimate for risked reserves multiplied by the price per unit. A substantial risk is associated both with the reserve estimates and the price of economically viable future finds. Considerably less uncertainty is associated with the valuation of other assets and liabilities defined as business acquisitions.

this effect. Since allocation of value to assets and liabilities is associated with a high level of uncertainty, cf. the previous paragraph, considerable uncertainty will also be associated with the allocation of goodwill in connection with acquisitions.

The valuation of production assets and intangible assets following an acquisition makes use of the same methods as described above. This means that uncertainty will be associated with the measurement of residual value with respect to book value at the end of each accounting period.

The value of the Group’s capitalized goodwill and intangible assets with an infinite economic life are subject to annual impairment testing. Changes in hydrocarbon prices have a major impact on the Noreco Group’s activities. A drop in the price of oil will have a significant effect on the Group’s cash flows. Expectations regarding future oil prices are also an important factor in determining whether a find is economically viable and should be developed.

Furthermore, the price of oil also affects exploration activity. Production of oil and gas is subject to statutory requirements relating to the closure and removal of production equipment once production has ceased. Provisions to cover these future closure and removal costs must be made in the accounts at the same time as the statutory requirement comes into force.

The costs themselves will often accrue far into the future, and a great deal of uncertainty relates to the scale and complexity of the closure and removal operations involved. Estimated future costs are based on known removal technology, expected future price levels, and the expected future closure and removal date, discounted to net present value using a discount factor. Changes in one or more of these factors could lead to major changes in the size of the Group’s closure and removal liabilities.

8.2.3 Property, plant and equipment Property, plant and equipment includes production facilities, facilities under construction, machinery and equipment, fixtures, etc. Items of property, plant and equipment are valued at cost, less accumulated depreciation and write-downs. Facilities under construction are not depreciated until the asset is put into operation. The cost price comprises the acquisition price plus direct costs associated with the acquisition incurred up until the time the asset is ready to be put into operation. For tangible assets produced in-house, the cost price includes the direct and indirect cost of materials, components, suppliers and salaries. No profit is included when capitalizing tangible assets produced in-house. For tangible assets to which liabilities attach with respect to closure and removal, and this liability is recognized as such, this sum will be added to the acquisition cost of the tangible asset concerned. The cost price of a complex asset is divided into separate parts which are depreciated individually if the economic life of the separate parts varies in length.

Costs accrued after the tangible asset has been put into operation, such as repair and maintenance costs, are normally charged to expenses. If it can be demonstrated that the repair/maintenance has led to increased earnings, the costs associated with this will be capitalized as additions to property, plant and equipment.

When assets are sold, disposed of or replaced, the cost price and accumulated depreciation is written back, and any losses or gains from the disposal taken to income. Production facilities comprise investments in devices, plant and infrastructure which are used in the production of hydrocarbons. The cost price of production facilities, as well as any capitalized amounts resulting from provisions for closure and removal, is depreciated in accordance with the production unit method. Depreciation is carried out in line with the production of hydrocarbons in relation to the estimated producible reserves in each field. Capitalized costs which can be ascribed to and used during the field’s entire lifespan are depreciated in relation to total proven reserves. Costs which can be ascribed to developed reserves are depreciated in relation to total developed reserves.

The cost price for other property, plant and equipment is depreciated on a straight line basis over the economic life of the asset. The depreciation periods used are as follows: - plant and equipment 6-10 years - fixtures and other equipment 3-5 years The depreciation period and method is reviewed annually to ensure that the method and period employed correspond with the asset’s actual economic situation. The same also applies to the asset’s scrap value.

Each year tangible assets are assessed for impairment. Emphasis is placed on factors which are relevant to the individual asset. These include external factors, such as market prices for hydrocarbons and technological developments, as well as internal factors, such as the Group’s intentions for continued use, cost of use, and wear and tear. If the asset is deemed to be impaired, an assessment is made of its residual value. If the book value of an asset exceeds its residual value the impairment is recognized in the accounts.

Write-downs which have been recognized in previous accounting periods are reversed when it becomes apparent that the circumstances prompting the write-down no longer exist or the asset’s estimated loss in value is less than it actually was. The reversal is recorded either in the profit and loss statement or as an increase in other reserves. However, a reversal will not take place if to do so would lead to the book value of the asset exceeding that which it would have been if it had been depreciated in the normal way.

8.2.4 Group Financial Statement The Group’s financial statements comprise Noreco as well as subsidiaries in which Noreco has a controlling influence on the businesses’ finances and operations in order to gain financial or other benefits.

The Group financial statements have been produced by adding together the accounts of the parent company and the individual subsidiaries, which have been drawn up using the same accounting principles. For consolidation purposes, intra-group revenues and costs, shareholdings, outstanding balances, dividends, group contributions, and realized and unrealized gains on transactions between consolidated companies have been eliminated. While any unrealized/realized losses on transactions between consolidated companies are eliminated, they are also considered an indicator that the asset transferred should be written down.

8.2.5 Business combinations Acquired or newly incorporated businesses are included in the Group accounts from the date of acquisition/incorporation. The takeover date is defined as the date on which Noreco achieves control over the target company’s financial and operational assets. This date may diverge from the actual date on which the assets were transferred. Sold or discontinued businesses are included in the Group accounts until control is ceded. Comparable figures are not corrected for acquisitions, sold or discontinued businesses. A separate reference will be made in the Notes in the event that a business is discontinued.

For accounting purposes, the acquisition method is used in connection with the purchase of businesses. Acquisition cost equals the fair value of the assets used as consideration, the equity instruments issued, liabilities assumed in connection with the transfer of control, as well as direct costs associated with the actual purchase. Acquisition cost is measured against the fair value of the newly acquired assets and liabilities. Identifiable intangible assets are included in the value of the acquisition if they are separable from other assets and their value can be reliably measured. When calculating fair value, attention is paid to the tax implications of the reassessments made. If the acquisition cost at the time of the acquisition exceeds the fair value of the net assets acquired, goodwill arises. Goodwill is calculated using the same functional currency which is used in the acquired business. If the fair value of the net assets acquired exceeds the acquisition cost, the excess amount is taken to income on the takeover date.

The purchase of licenses entitling the holder to explore for and extract hydrocarbons requires that for each purchase an assessment is made of whether it shall be classified as an acquisition or the purchase of an asset. As a rule, the purchase of licenses which are being developed or are already in production will be treated as an acquisition. Other license purchases are treated as asset purchases. The allocation of excess value and goodwill may be adjusted up to 12 months after the takeover date, if it should prove that the asset or liability was incorrectly valued at that time. When a subsidiary is sold or discontinued, the gain or loss is the difference between the sales price/liquidation value, less sales/liquidation costs, and the book value of the net assets, including goodwill, on the date of the sale/discontinuation.

8.2.6 Exploration and assessment cost Oil and gas exploration and assessment costs are recognised in accordance with the “successful effort” (“SE”) method. Exploration costs will, for example, include the costs of topographical and geophysical (“G&G”)

studies, costs relating to undeveloped areas, costs relating to the drilling of exploration/outstep wells, assessment costs, etc. The basic rule of SE is that such costs are expensed as they accrue, with the exception of costs incurred during exploratory drilling which results in oil and gas being found. For further details, see the section on the treatment of intangible and tangible assets.

8.2.7 Corporation tax

The total tax expense comprises tax payable and any change in deferred tax. Tax is deducted from the company’s profit, with the exception of tax on items which are reported directly under equity. The tax effect of the latter items is charged directly to equity. Tax for the period comprises the anticipated tax payable on the taxable profit for the year, adjusted for any changes from previous years. Tax is calculated on the basis of the official tax rates available on the balance sheet day. Deferred tax assets/ liabilities are calculated on the differences between the accounting and taxable value of the company’s assets and liabilities, with the exception of deferred tax arising in connection with the initial recognition of goodwill, and deferred tax arising from the initial recognition of purchased oil licenses which are not treated as business acquisitions.

Deferred tax assets are recognised when it is probable that the companies will generate a sufficiently large taxable profit to realise the tax asset. On each balance sheet day the Group reviews its unrecognised tax assets and their book value. The company recognises previously unrecognised deferred tax assets to the extent to which it has become probable that the companies will be able to realise the deferred tax asset. Deferred tax assets are reduced to the extent to which it is no longer probable that the tax asset will be realised. Deferred tax assets and liabilities are measured on the basis of anticipated future tax rates for the companies in which temporary differences have arisen. Deferred tax assets and liabilities are recognised irrespective of when the differences will be reversed. Deferred tax assets are recorded at nominal value and are classified as intangible fixed assets on the balance sheet. Tax payable and deferred tax assets are measured at the tax rate relating to earned, but not allocated equity. The tax effect of dividends is taken into consideration when the company has assumed a liability to distribute a dividend.

8.2.8 Goodwill Goodwill is initially recognised in the balance sheet at cost. Subsequently, goodwill is measured at cost price, less accumulated write-downs. Goodwill is not depreciated. Any write-downs on goodwill cannot be reversed. In connection with each business acquisition, goodwill is allocated to cash-flow generating asset classes at the level which management measures the investment in question.

8.2.9 Cash and cash equivalents Cash includes cash on hand, bank deposits, short-term, easily convertible investments with a term of less than three months, and bank overdraft. Bank overdraft is recorded in the balance sheet under current liabilities.

8.2.10 Debt Debt is recognized at fair value, less transaction costs, 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 between the amount of the loan received and the amount to be repaid is recorded as a financial expense over the estimated term of the loan. When a convertible loan is issued, the fair value of the debt is calculated using the market rate for non-convertible loans with a similar length of term and level of security. The sum is classified as a liability and is recorded at amortized cost until the loan expires, either through its conversion to shares or upon maturity. The remaining consideration is included under equity, less the tax effect, as payment for the issue of options. Debt is classified as a current liability unless an unconditional right exists to postpone repayment of the debt for more than 12 months from the balance sheet day. The first year’s installment of long-term debt is classified as a current liability. Borrowing costs linked to the purchase and in-house manufacture of production assets, etc, are charged to expenses as they accrue.

8.2.11 Provisions A provision is recognized when, and only when, the Company has a valid liability (legal or assumed) resulting from an event which has occurred, and it is probable (more probable than not) that a financial settlement will take place as a result of that liability, and the amount may be reliably measured. Capitalized provisions for removal liabilities reflect the estimated cost of closure and removal of wells and production facilities used for

the production of hydrocarbons. Closure and removal liabilities are valued at the net present value of the expected future cost. The liability is calculated on the basis of today’s removal requirements and is discounted back to present value.

8.3 FINANCIAL INFORMATION

8.3.1 Income statements Amounts in NOK As per 30 As per 30 FY ended 31 FY ended 31 June 2007 June 2006 Dec 2006 Dec 2005 (unaudited) (unaudited) (audited) (audited) IFRS IFRS IFRS IFRS

Operating revenues ...... - - - -

Operating result...... (71,148,000) (37,808,000) (87,234,613) (24,903,245)

8.3.2 Balance sheet

Amounts in NOK As per 30 As per 30 FY ended 31 FY ended June 2007 June 2006 Dec 2006 31 Dec 2005 (unaudited) (unaudited) (audited) (audited) IFRS IFRS IFRS IFRS ASSETS FIXED ASSETS Goodwill...... 813,938,000 Deferred tax asset ...... 47,154,000 1,212,000 5,146,564 1,211,652 License interests, exploration assets ...... 3,788,367,000 5,940,000 8,882,000 - Production facilities...... 3,013,948,000 - - - Other machinery and equipment...... 5,847,000 2,083,000 1,803,512 1,463,735 Long term financial assets ...... 13,994,000 - - - Assets held for sale...... 43,645,000 - - - Total fixed assets...... 7,726,892,000 9,235,000 15,832,076 2,675,387

Inventory, including underlift...... 71,767,000 - - - Accounts rec. and other current receivables ... 146,562,000 2,640,000 4,841,612 1,911,200 Tax receivables...... 134,032,000 48,868,000 77,464,208 19,441,578 Total receivables ...... 352,361,000 51,508,000 82,305,820 21,352,778

Cash at bank and in hand...... 420,445,000 12,798,000 11,970,046 41,615,897 Total current assets ...... 772,806,000 64,306,000 94,275,866 62,968,675

Total assets ...... 8,499,699,000 73,541,000 110,107,942 65,644,062

EQUITY AND LIABILITIES Equity Share capital ...... 33,634,000 30,654,000 31,422,000 2,135,000 Share premium reserve ...... 53,488,000 46,827,000 48,260,662 - Not registered capital from share issue...... 1,286,985,000 - - 51,904,861 Total paid in share capital ...... 1,374,107,000 77,481,000 79,682,662 54,039,861

Retained earnings ...... (31,215,000) (12,400,000) (23,958,978) (4,099,900) Total retained earnings ...... (31,215,000) (12,400,000 (23,958,9878) (4,099,900)

Total equity ...... 1,342,892,000 65,081,000 55,723,684 49,939,961

Minority interest...... 1,687,408,000

Liabilities and obligations Deferred tax liabilities ...... 2,128,138,000 - - - Provisions for other liabilities and charges .... 363,033,000 - 252,179 - Convertible bonds ...... 395,085,000 - - - Bond issue ...... 930,931,000 - - - Other long term liabilities ...... 565,774,000 - - - Total liabilities and obligations...... 4,382,961,000 - 252,179 - Short term liabilities Other current liabilities...... 256,453,000 8,460,000 19,132,079 15,704,101 Current income taxes payable...... 219,417,000 - - - Other short term interest bearing debt ...... 565,500,000 - 35,000,000 - Liabilities held for sale ...... 45,067,000 - - - Total short term debt ...... 1,086,437,000 8,460,000 54,132,079 15,704,101

Total liabilities ...... 5,468,398,000 8,460,000 54,384,258 15,704,101

TOTAL LIABILITIES AND EQUITY ...... 8,499,699,000 73,,541,000 110,107,942 65,644,062

8.3.3 Cash flow statements

Amounts in NOK As per 30 June As per 30 FY ended 31 FY ended 31 2007 June 2006 Dec 2006 Dec 2005 (unaudited) (unaudited) (audited) (audited) IFRS IFRS IFRS IFRS

Cash flow from operating activities Profit/loss before tax...... (78,598,000) (37,726,000) (88,064,339) (24,753,130) Ordinary depreciations ...... 454,000 338,000 693,749 58,422 Received tax (incl. interests) ...... 17,573,024 - Change in accounts payable...... 6,709,000 (6,014,000) (4,569,126) 10,420,661 Change in other current assets, receivables and other liabilities items...... 5,508,000 (11,999,000) (6,258,613) 3,372,240 Net cash flow from operating activities...... (65,928,000) (55,401,000) (80,373,126) (10,901,807)

Cash flow from investing activities Purchase of shares ...... (2,033,820,000) - - - Investment in fixed assets...... (1,486,036,000) - - - Net payments by acquisition of fixed assets... 870,000 (958,000) (9,915,526) (1,522,157) Net cash flow from investing activities...... (3,518,986,000) (958,000) (9,915,526) (1,522,157)

Cash flow from financing activities Raising of short term financing ...... 530,500,000 - 35,000,000 - Raising of long term financing ...... 2,155,914,000 - - - Debit of equity (net after share issue expenses) ...... 1,306,974,000 27,541,000 25,642,801 54,039,861 Net cash flow from financing activities...... 3,993,388,000 27,541,000 60,642,801 54,039,861

Net change in bank, cash etc...... 408,475,000 (28,818,000) (29,645,851) 41,615,897 Cash balance and bank deposits as per 01.01...... 11,970,000 41,616,000 41,615,897 - Cash balance and bank deposits as per 31.12/30.06...... 420,445,000 12,798,000 11,970,046 41,615,897

8.3.4 Statement of Changes in Equity

Amounts in NOK 000’s Share Share Other Paid-in but Total Capital Premium Equity not registered Equity Fund Capital Equity as at 1 Jan 2005

Net income (loss) for the year ...... - - (5,488) - (5,488) Paid in Capital ...... 1,085 2,025 - - 3,110 Capital Increase April 2005...... 700 1,306 - - 2,006 Capital Increase June 2005 ...... 350 653 - - 1,003 Capital Increase December 2005...... - - - 52,153 52,153 Share Issue Cost ...... - -3,984 1,388 (248) (2,844)

Equity as at 31 Dec 2005 ...... 2,135 - (4,100) 51,905 49,940 Equity as at 1 Jan 2006...... 2,135 - (4,100) 51,905 49,940

Net Profit for the year...... - - (19,859) - - Capital Increase February 2006...... 20,341 31,564 - (51,905) - Capital Increase May 2006 ...... 959 1,790 - - 2,749 Capital Increase September 2006 ...... 7,910 14,763 - - 22,673 Capital Increase December 2006...... 77 144 - - 221 Equity as at 31 Dec 2006 ...... 31,422 48,260 (23,959) - 55,723 Equity as per 1 Jan 2007 31,422 48,260 (23,959) - 55,723 Loss for the year ...... - - (22,406) - (22,406) Capital Increase April 2007...... 2,212 5,227 - - 7,439 Capital Increase May/June 2007...... - - - 1,286,986 1,286,986 Financing of Equity raised...... - - (39,600) - - Transfer from Convertible Bond ...... - - 53,750 - -

Equity as per 30 June 2007 ...... 33,634 53,488 (31,215) 1,286,986 1,342,892

8.4 INFORMATION ON FINANCIAL CONDITION AND OPERATING RESULTS

8.4.1 Developments in the first half of 2007 compared to the first half of 2006

Operations and result The 2Q 2007 reflect higher activity than in 2Q 2006 mainly due to an increased number of licenses held by Noreco (17 licenses in the beginning of 2007 compared to 3 licenses in the beginning of 2006). As per 30 June 2007 Noreco was holding 21 licenses in the NCS. This is in addition to the Altinex licenses.

The increased activity and spending reflects the investments in direct exploration. In addition the number of employees has increased as a result of these investments (from 8 employees as of 1 January 2006 to 20 employees in the beginning of 2007).

Balance sheet The balance sheet includes the consolidated balance for the Altinex Group and for Noreco. In the consolidated balance the acquisition price for the shares have been eliminated and value has been allocated to the various assets according to IFRS accounting principles. Reference is made to note 9 referring to the acquisition of Altinex in the 2Q report attached hereto as Appendix 3.

Cash flow Noreco raised NOK 1,195 million in new equity, NOK 440 million in convertible bonds, and NOK 506 million in bank debt during 1H to finance the acquisition of Altinex. Other than this, cash flow has been provided through a credit facility with SR Bank for financing of exploration activity (Facility of NOK 70 + NOK 260 million).

8.4.2 Developments in the years ended December 31 2005 compared to full year 2006

Operations and result The operating loss for 2006 was NOK 87.2 million compared to NOK 25 million in 2005, reflecting the increased activity in exploration investments in 2006.

Balance sheet Limited capital was called during 2006 (NOK 25 million), and exploration investments were financed through existing equity and bank financing.

Cash flow Financing through 2006 was made through equity and bank loan (Exploration financing).

Segment information The Company has not divided its operations in any segment or geographical segments. The Company therefore does not report its segment information.

8.4.3 Significant changes in the Company’s financial or trading position since 30 June 2007 In addition to the acquisition of Altinex shares for a total price of NOK 2,033 million (as per 30 June 2007) Noreco has acquired the remaining shares in Altinex subsequent 30 June 2007.

To finance the acquisition of Altinex, Noreco disbursed two callable bond loans in the third quarter of 2007 of a total of NOK 2,800 million as described in Section 13 below. In addition, the Company has completed a private placement of approximately NOK 550 million as further described in section 5.4 above The Company is not aware of any other significant changes in the financial or trading position of the Group which has occurred since 30 June 2007.

8.5 INDEPENDENT AUDITOR The Company’s auditor since 2005 has been Deloitte AS (org. no 980 211 282). Their address is Karenslyst Alle 20, 0213 Oslo, Norway. The audit partners of Deloitte AS are members of the Norwegian Institute of Public Accountants (DnR).

Deloitte AS has audited the Company’s annual accounts for 2006 and 2005. The auditor’s reports have been issued without qualifications. Deloitte has also issued a statement regarding the pro forma financial figures set out in Appendix 2 to this Prospectus (see also section 9.9 below). Deloitte has not audited or reviewed or produced any other report on other information provided in this Prospectus.

From inception and until new private equity owners were brought into the Company in October 2005, the Company’s auditor was KPMG AS (org. no 935 174 627), Sørkedalsveien 6, 0369 Oslo. The audit partners of KPMG AS are members of the Norwegian Institute of Public Accountants (DnR). The new owners requested an auditor with strong oil and gas experience and based on this the Company’s auditor was changed in November 2005 to Deloitte AS.

9. PRO FORMA FINANCIAL INFORMATION

9.1 DESCRIPTION OF ACQUISITIONS IMPLYING PREPARATION OF PRO FORMA FINANCIAL INFORMATION Pro forma figures should only be prepared if an acquisition/disposal is considered significant for the Group. 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 regarding the historical financial information which must be included in a prospectus of October 2005, and recital (9) of the European Commission Regulation (EC) 809/2004. The transactions mentioned in the next two paragraphs are considered significant in relation to CESR’s definition.

Noreco has from the middle of May 2007 and up to date acquired all of the outstanding shares in Altinex. The pro forma financial information is based on a share of ownership of 100%, corresponding to the share ownership as of the date of this Prospectus.

Altinex signed an agreement of the acquisition of 100% of the shares in Denerco Oil AS on 11 May 2006 and has included in its 2006 consolidated financial statement Denerco Oil AS’s business activity from that date.

9.2 SOURCES OF PRO FORMA INFORMATION The unaudited pro forma financial information has been compiled based on the audited financial statements of Noreco (IFRS) and the audited financial statements of Altinex (IFRS) for the financial year ended 31 December, 2006 and the unaudited interim financial report of Noreco (IFRS) and the unaudited interim consolidated condensed financial information of Altinex (IFRS) for the quarter ended 30 June 2007.

9.3 BASIS FOR PREPARATION OF THE PRO FORMA FIGURES The unaudited pro forma financial information has been compiled in connection with the acquisition of Altinex, to illustrate the main effects the acquisition of Altinex (“the transaction” or “the Altinex acquisition”) would have had on: • the consolidated profit and loss statement for 2006 and the unaudited condensed consolidated profit and loss statement for 1H 2007 for Noreco, and • the unaudited condensed consolidated balance sheet as of 30 June 2007 of Noreco if the transaction had occurred at an earlier period.

The unaudited pro forma condensed profit and loss statements for the six months ended 30 June 2007 and the twelve months ended 31 December 2006 give effect to the acquisition of Altinex as if it had occurred on 1 January 2007 and 1 January 2006 respectively. The unaudited pro forma condensed balance sheet as of 30 June 2007 and 31 December 2006 give effect to the acquisition of Altinex as if it had occurred on 1 January 2007 and 1 January 2006 respectively.

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 5-13 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 pro forma profit and loss and balance sheet information does not have a continuing impact on Noreco. The pro forma financial 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 described in section 9.8 in this Prospectus. These accounting principles are those implemented by Noreco when implementing IFRS.

9.5 PRO FORMA CONSOLIDATED INCOME STATEMENT 2006

9.5.1 Unaudited pro forma consolidated profit and loss information for 2006

Historical figures Pro forma Amounts in NOK Noreco Altinex Adjustments As per 31 (IFRS) (IFRS) (unaudited) December 2006 (unaudited) Revenue ...... 0 1,110,002,000 498,998,000 1,609,000,000 Operating profit before depreciation...... -86,540,864 750,690,000 401,310,000 1,065,459,136

Depreciation and impairment charges ...... 693,749 455,472,000 337,105,618 793,271,367 Operating profit ...... -87,234,613 295,218,000 64,204,382 272,187,769

Financial items, net...... -829,726 -138,960,000 -479,863,943 -619,653,669 Profit before tax expenses ...... -88,064,339 156,258,000 -415,659,561 -347,465,900

Tax expenses ...... 68,205,261 -106,245,000 170,211,309 132,171,570

Net profit before minority interests...... -19,859,078 50,013,000 -245,448,252 -215,294,330 Minority interests ...... 0 Net profit ...... -19,859,078 50,013,000 -245,448,252 -215,294,330

9.5.2 Unaudited pro forma condensed balance sheet information per 31 December 2006

Historical figures Pro forma Amounts in NOK Noreco (IFRS) Altinex (IFRS) Adjustments As per 31 (unaudited) December 2006 (unaudited) ASSETS Fixed assets Deferred tax assets...... 5,146,564 50,138,000 95,714,265 150,998,829 Licenses and capitalised exploration costs .... 8,882,000 331,271,000 3,377,700,000 3,717,853,000 Concessions, patents, licenses and similar rights...... 428,000 -428,000 - Goodwill ...... 626,349,000 811,813,353 1,438,162,353 Total intangible assets ...... 14,028,564 1,008,186,000 4,284,799,618 5,307,014,182 Property, plant & equipment ...... 2,133,946,000 636,722,382 2,770,668,382 Removal assets...... 323,616,000 - 323,616,000 Other plant, equipment & operating consumables ...... 1,803,512 22,644,000 -16,635,000 7,812,512 Total property, plant & equipment...... 1,803,512 2,480,206,000 620,087,382 3,102,096,894 Total asset held for sale ...... 45,991,000 45,991,000 Total fixed assets...... 15,832,076 3,488,392,000 4,950,878,000 8,455,102,076

Current assets Inventory...... 9,538,000 -9,539,000 -1,000 Accounts receivable ...... 312,154 156,738,000 -9,543,000 147,507,154 Underlift oil/NGL...... 26,375,000 - 26,375,000 Other short-term receivables ...... 4,529,458 48,594,000 -637,000 52,486,458 Tax receivable...... 77,464,207 - 77,464,207 Total receivable ...... 82,305,820 241,245,000 -19,719,000 303,831,820 Other financial instruments...... 29,100,000 - 29,100,000 Bank deposits, cash & cash equivalents..... 11,970,046 332,038,000 -377,000 343,631,046 Total current assets ...... 94,275,866 602,383,000 -20,096,000 676,562,866

TOTAL ASSETS ...... 110,107,942 4,090,775,000 4,930,782,000 9,131,664,942

EQUITY & LIABILITIES Equity Share capital ...... 31,422,000 196,448,000 52,779,835 280,649,835 Share premium reserve...... 48,260,662 663,943,000 340,053,253 1,052,256,915 Other equity ...... -23,958,978 87,320,000 -270,078,746 -206,717,724 Minority interests ...... - 0 Total equity ...... 55,723,684 947,711,000 122,754,342 1,126,189,026

Long-term liabilities Pension liabilities ...... 252,179 236,000 - 488,179 Deferred tax liabilities...... - 535,041,000 1,618,939,673 2,153,980,673 License obligations ...... - - - - Removal liabilities...... - 374,680,000 - 374,680,000 Total provisions...... 252,179 909,957,000 1,618,939,673 2,529,148,852 Other long-term liabilities ...... Convertible bond loan...... - 226,770,000 137,548,560 364,318,560 Bond loan ...... - 986,514,000 2,720,759,908 3,707,273,908 Debt to credit institutions...... - 545,435,000 -15,500,000 529,935,000 Total other long-term liabilities ...... - 1,758,719,000 2,842,808,468 4,601,527,468 Current liabilities...... Other interest-bearing debt ...... 35,000,000 2,768,000 - 37,768,000 Account payable ...... 5,851,535 54,143,000 -697,000 59,297,535 Tax payable...... 208,454,000 - 208,454,000 Public charges payable...... 4,199,746 18,229,000 -629,000 21,799,746 Other current liabilities...... 9,080,798 167,488,000 302,758,517 479,327,315 Overlift oil/NGL ...... 23,306,000 - 23,306,000 Total current liabilities...... 54,132,079 474,388,000 301,432,517 829,952,596 Total liabilities associated with asset as held for sale...... - - 44,847,000 44,847,000 Total liabilities ...... 54,384,258 3,143,064,000 4,808,027,658 8,005,475,916

TOTAL LIABILITY AND EQUITY...... 110,107,942 4,090,775,000 4,930,782,000 9,131,664,942

9.6 PRO FORMA CONSOLIDATED INCOME STATEMENT 1H 2007

9.6.1 Unaudited pro forma condensed profit and loss information for 1H 2007

Historical figures Pro forma Amounts in NOK Noreco Altinex (IFRS) Adjustments As per 30 June (IFRS) (unaudited) 2007 (unaudited) Revenue ...... - 634,510,000 - 634,510,000 Operating profit before depreciation...... -70,693,957 416,205,000 - 345,511,043

Depreciation and impairment charges ...... 454,000 308,991,000 36,729,507 346,174,507 Operating profit ...... -71,147,957 107,214,000 -36,729,507 -663,464

Financial items, net...... -7,450,231 -116,751,000 -184,194,647 -308,395,878 Profit before tax expenses ...... -78,598,188 -9,537,000 -220,924,153 -309,059,342

Tax expenses ...... 57,191,471 -82,637,000 60,134,033 34,688,504

Net profit before minority interests...... -21,406,717 -92,174,000 -160,790,120 -274,370,837 Minority interests ...... - Net profit ...... -21,406,717 -92,174,000 -160,790,120 -274,370,837

9.6.2 Unaudited pro forma condensed balance sheet information for 1H 2007

Historical figures Pro forma Amounts in NOK Noreco (IFRS) Altinex (IFRS) Adjustments As per 30 June (unaudited) 2007 (unaudited) ASSETS Fixed assets Deferred tax assets...... 5,147,000 50,929,000 49,315,132 105,391,132 Licenses and capitalised exploration costs .. 8,882,040 401,785,000 3 377,700,000 3,788,367,040 Concessions, patents, licenses and similar rights...... 356,000 -356,000 - Goodwill ...... 583,817,000 807,821,353 1,391,638,353 Total intangible assets ...... 14,029,040 1,036,887,000 4,234,480,485 5,285,396,525 Property, plant & equipment ...... 2,298,648,000 678,570,493 2,977,218,493 Removal assets...... - - - - Other plant, equipment & operating consumables ...... 1,386,701 21,184,000 -16,724,000 5,846,701 Total property, plant & equipment...... 1,386,701 2,319,832,000 661,846,493 2,983,065,194 Long term financial assets ...... 2,033,819,750 - -2,033,819,750 - Total asset held for sale ...... - - 43,645,000 43,645,000 Total fixed assets...... 2,049,235,491 3,356,719,000 2,906,152,229 8,312,106,720

Current assets Inventory...... 81,306,000 -9,539,000 71,767,000 Accounts receivable ...... 4,843,000 130,135,000 -12,962,000 122,016,000 Underlift oil/NGL...... - - - - Other short-term receivables ...... 25,313,047 - -767,000 24,546,047 Tax receivable...... 134,032,187 - - 134,032,187 Total receivable ...... 164,188,234 211,441,000 -23,268,000 352,361,234 Other financial instruments...... - - - - Bank deposits, cash & cash equivalents... 194,514,000 220,306,000 5,625,000 420,445,000 Total current assets ...... 358,702,234 431,747,000 -17,643,000 772,806,234

TOTAL ASSETS ...... 2,407,937,725 3,788,466,000 2,888,509,229 9,084,912,954

EQUITY & LIABILITIES Equity Share capital ...... 33,634,000 197,802,000 49,213,835 280,649,835 Share premium reserve...... 1,299,272,750 -247,015,835 1,052,256,915 Other equity ...... 9,985,179 631,822,000 -780,061,275 -138,254,097 Minority interests ...... - - Total equity ...... 1,342,891,929 829,624,000 -977,863,275 1,194,652,653

Long-term liabilities Pension liabilities ...... 252,000 - - 252,000 Deferred tax liabilities...... - 478,400,000 1,614,387,255 2,113,689,914 License obligations ...... - - - Removal liabilities...... - 362,781,000 - 362,781,000 Total provisions...... 21,154,660 841,181,000 1,614,387,255 2,476,722,914 Other long-term liabilities Convertible bond loan...... 347,647,644 230,762,000 -223,538,764 354,870,880 Bond loan ...... - 930,931,000 2,310,134,256 3,241,065,256 Debt to credit institutions...... 39,000,000 550,274,000 -23,500,000 565,774,000 Total other long-term liabilities ...... 386,647,644 1,711,967,000 2,063,095,491 4,161,710,136 Current liabilities Other interest-bearing debt ...... 578,060,000 - - 578,060,000 Account payable ...... - - - - Tax payable...... 3,164,000 216,253,000 - 219,417,000 Public charges payable...... - - - Other current liabilities...... 76,019,492 189,441,000 143,822,758 409,283,250 Overlift oil/NGL ...... - - - Total current liabilities...... 657,243,492 405,694,000 143,822,758 1,206,760,250 Total liabilities associated with asset as held for sale...... - - 45,067,000 45,067,000 Total liabilities ...... 1,065,045,796 2,958,842,000 3,866,372,504 7,890,260,300

TOTAL LIABILITY AND EQUITY...... 2,407,937,725 3,788,466,000 2,888,509,229 9,084,912,954

9.7 NOTES TO THE PRO FORMA ADJUSTMENTS 9.7.1 Allocation of excess value related to purchase of Altinex ASA The Company has provisionally performed an allocation of the cost of the business combinations to the assets acquired and liabilities and contingent liabilities assumed in accordance with IFRS 3. The Company has provisionally determined that the excess value based on the purchase price compared to book values as of 30 June 2007 primarily relates to offshore producing properties and non-producing discoveries and goodwill.

Provisional allocation of excess value:

Producing properties NOK 715.3 million Non producing discoveries NOK 3,377.7 million Goodwill NOK 788.6 million Deferred tax liability NOK (1,628.8) million

In the unaudited pro forma financial information we have amortised the producing properties based on produced quantities of oil and gas, which resulted in amortization expenses of NOK 78.6 million in 2006 and NOK 36.7 million in Q2 1H 2007, with associated tax benefits of NOK 19.6 million and NOK 9.2 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 condensed profit and loss statements. The majority of Altinex oil and gas properties are located on the Danish continental shelf within a tax regime with an ordinary tax rate of 25%. In addition, a hydrocarbon tax may be added at certain oil price levels. In the preliminary allocation of excess value it is assumed that Altinex’s business will not be charged this additional tax. Altinex also holds oil and gas properties in UK and Norway with a marginal tax rate of 50% and 78% respectively. Consequently, deferred taxes have been recorded based on the individual a 25% tax rate applicable to the relevant location of the various properties.

The split between the various assets may subsequently change after the completion of the purchase price allocation. If more of the cost of the business combination should be allocated to producing properties we would in our unaudited pro forma profit and loss statements have shown higher amortization expenses.

9.7.2 Convertible bond In connection with the purchase of the shares in Altinex a convertible bond with a nominal value of NOK 440 million was approved by Noreco’s general meeting held 8 May 2007. The bonds carry an interest of 6% p.a. and can be converted at any time prior to 11 May 2012 at NOK 89 per share.

In the unaudited pro forma condensed profit and loss statement we have performed an adjustment to reflect the new debt structure as if it had occurred in the beginning of the period (01.01.2006 and 01.01.2007 respectively) as the bond is issued in connection with the acquisition of Altinex.

IAS 32 requires that the convertible bond is split into a liability and equity component. The liability is recorded at fair value and the equity component is determined as the residual amount at inception. Transaction costs are allocated between the two elements and recorded against debt and equity accordingly. The equity instrument is subsequently not revalued unless, it is considered to be a separate derivative. IAS 32 has a number of requirements that must be fulfilled for the derivative to be treated as an equity instrument. Among others, it is required that the financial instrument be settled by the issuer, only with the exchange of a fixed amount of cash or other financial asset for a fixed number of its own equity instruments. The debt element is subsequently accounted for under amortized cost using the effective interest method.

The following adjustments relating to the convertible bond have been made in the unaudited pro forma financial information:

• When adjusting for the bond, the nominal value has been split between equity (NOK 80 million) and long term debt (NOK 360 million) based on discounted net present values of the cash flow relating to the loan. The difference between the bond’s nominal value and the value of the discounted cash flows has been adjusted as equity. The bond and the equity element are recorded as liability and equity respectively, net of transaction cost. The equity element has been amortized, in accordance with the effective interest method, over the bonds life an added to financial expense with NOK 16.0 million in 2006 and NOK 8.0 million in 1H 2007.

• The interest expense on this bond has been added to financial expenses with NOK 26.4 million in 2006 and NOK 13.2 million in 1H 2007. Tax expenses have been adjusted by 28% of this amount. • The bond has a transaction cost of NOK 17.7 million. The cost is divided proportionally between equity and long term debt and amortized over the bond’s life and has been added to financial expense with NOK 2.9 million in 2006 and NOK 1.4 million in 1H 2007 (in accordance with the effective interest method).

9.7.3 Debt In connection with the purchase of shares in Altinex, Noreco has on 9 July 2007 entered into a Senior Secured Callable Bond (the “Bond”) with Norsk Tillitsmann ASA as a loan trustee. The Bond has a limit of NOK 2,800 million. However only the amount effectively used has been considered and included in the pro forma financial information. Fees related to the Bond has been included as financial expenses by NOK 23.2 million in 2006 and NOK 11.6 million in 1H 2007 in the pro forma financial information.

The acquisition term loan facility swill run without instalments and mature in whole in July 2010.

In the unaudited pro forma condensed profit and loss statements we have performed an adjustment to reflect as if the portion of the Bond drawn upon in connection with the acquisition, NOK 2,767.1 million, was drawn at the beginning of the periods presented (01.01.2006 and 01.01.2007 respectively).

In the unaudited pro forma financial information the following adjustments have been made relating to debt (as directly related to the transaction):

• The amount drawn upon of the Bond of NOK 2,767.1 million has been recorded at amortised cost of NOK 2,767.1 million. • Interest and fees related to Bond resulted in additional financial expenses of NOK 23.2 million in 2006 and NOK 11.6 million in 1H 2007 (in accordance with the effective interest method cost.). Adjustments in tax expenses of 28% of these amounts have been included. The interest expenses have been calculated based on the fixed interest rate in the Bond of 11% p.a.

9.7.4 Equity In June 2007 Noreco performed several Private Placements of new shares (including conversion of convertible debt). The gross proceeds from the Private Placement were NOK 1,255 million (inclusive conversion of newly raised debt but excluding exchange of shares) and has been included in the unaudited pro forma financial information. The costs associated with the equity issue was NOK 42.6 million. The associated issue costs have been recorded net of tax against equity and the resulting tax benefit of NOK 11.9 million has been recorded against deferred tax in the unaudited pro forma condensed balance sheet.

9.7.5 Altinex’ acquisition of Denerco Oil AS Altinex signed an agreement to acquire 100% of the shares in Denerco Oil AS on 11 May 2006 and has included in its 2006 consolidated financial statement Denerco Oil AS’s business activity from that date. Revenues, operating expenses, depreciation expense, financial expenses and tax expenses have been included in the condensed pro forma profit and loss statement as if the acquisition was effective 1 January 2006. The original purchase price allocation of the Denerco acquisition performed by Altinex has however not been changed.

In the unaudited pro forma financial information the following adjustments have been made: Revenues NOK 499.0 million Operating expenses NOK 97.6 million Depreciation expenses NOK 258.5 million Financial expenses NOK 107.0 million Tax expenses NOK 46.2 million

9.7.6 Altinex acquisition of Brage Altinex entered into an agreement on 28 October 2005 to acquire a participating interest in the Brage field. The agreement was pending approval from both Ministry of Oil/Energy and Ministry of Finance. Such approvals were received on 12 December 2005 and 27 March 2006 respectively. The deal closed on 31 March 2006. Altinex has included their share of revenues, expenses, assets and liabilities from 1 January 2006. Consequently no adjustment is needed in the pro forma profit and loss statement.

9.8 ACCOUNTING PRINCIPLES – IFRS

9.8.1 Main principle The consolidated accounts of Noreco have been drawn up in accordance with international accounting standards published by the International Accounting Standards Board, as well as additional provisions pursuant to the Norwegian Accounting Act.

The consolidated accounts comprise the parent company Noreco and subsidiaries. Underpinning the Group accounts is the principle of historical cost, with the following modifications: - Derivatives, financial assets and liabilities, and assets held for sale. Financial assets are valued initially at fair value. Financial liabilities are valued initially at amortised cost. - Assets are assessed for any impairment. If the residual value of an asset is less than book value, the asset will be written down to its residual value.

9.8.2 Group financial statements The Group financial statements comprise Noreco as well as subsidiaries in which Noreco has a controlling influence on the businesses’ finances and operations in order to gain financial or other benefits.

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. Noreco owns, directly or indirectly, 100% of the shares in each of the subsidiaries in the Group.

The Group financial statements have been produced by adding together the accounts of Noreco and the individual subsidiaries, which have been drawn up using the same accounting principles. For consolidation purposes, intra-group revenues and costs, shareholdings, outstanding balances, dividends, group contributions, and realized and unrealized gains on transactions between consolidated companies have been eliminated. While any unrealized/realized losses on transactions between consolidated companies are eliminated, they are also considered an indicator that the asset transferred should be written down. 9.8.3 Business combinations Acquired or newly incorporated businesses are included in the Group accounts from the date of acquisition/incorporation. The takeover date is defined as the date on which Noreco achieves control over the target company’s financial and operational assets. This date may diverge from the actual date on which the assets were transferred. Sold or discontinued businesses are included in the Group accounts until control is ceded. Comparable figures are not corrected for acquisitions, sold or discontinued businesses. A separate reference will be made in the notes in the event that a business is discontinued.

9.8.4 Foreign currency The Group financial statements are presented in NOK. This is also the functional currency of the parent company Noreco. A functional currency is specified for each of the Group’s individual businesses. This currency may be different to the functional currency of Noreco. A business’s functional currency will be the currency in which the business normally generates and spends cash.

Transactions in another currency are translated when they are first recognized into the business’s functional currency at the exchange rate applicable on the transaction date. Differences between the exchange rate on the transaction date and the payment date are taken to income as currency exchange loss or gain under financial items. Monetary items (receivables/liabilities) in other currencies are translated into the functional currency at the exchange rate applicable on the translation date. The difference between the exchange rate applicable on the date the monetary item was recognized and the translation date results in a foreign exchange gain/loss.

Foreign exchange gains and losses relating to the hedging of future cash flows are included in the same accounting item and at the same time as the hedged cash flow is recognized. The assets and liabilities of businesses with a functional currency other than the presentation currency are translated into the presentation currency at the exchange rate applicable on the balance sheet day. Revenues and costs for businesses in other functional currencies are translated into the presentation currency at the average exchange rate for that currency, unless to do so would give an incorrect picture of the business concerned. Foreign exchange differences which arise when translating equity from the exchange rate applicable at the start of the year to the rate applicable on the balance sheet day, and translating Income Statement items from average exchange rates to the exchange rates applicable on the balance sheet day are taken directly to equity as a separate item for translation differences. 9.8.5 Financial instruments General Purchases and sales of financial instruments are recorded at fair value on the date the transaction took place. Fair value equals the transaction price. Any changes in fair value occurring before the settlement date are included in the Income Statement and Balance Sheet.

Classification Financial instruments are divided into the following categories at the time of recognition: - Financial assets at fair value with result recognized in the profit and loss statement - Loans and receivables at amortized cost - Investments held until due date at amortized cost - Available for sale at fair value

Financial liabilities are divided into the following categories: - available for sale at fair value - financial liabilities at fair value with recognized in the profit and loss statement - other financial liabilities at amortized cost

Non-recognition of financial assets and liabilities When the Group has transferred the risk of return, control or right to cash flows is terminated, the financial assets cease to be recognized. When the duty to provide resources has been met, cancelled or expires, financial liabilities cease to be recognized.

Hedging The Group employs financial derivatives to hedge material exposure to foreign exchange risks and price risks which occur in the course of its operating, financing and investing activities. Financial derivatives are not purchased or issued for trading purposes. Financial derivatives which are not classified as hedging instruments are accounted for and presented in the profit and loss statement as financial instruments at fair value.

Financial derivatives are recognized initially at cost. In subsequent periods financial derivatives are valued at fair value, if fair value can be reliably measured, and are included in the item “other financial instruments” (positive daily value) or as “other current liabilities” (negative daily value).

Gains and losses are immediately accounted for in the profit and loss statement. If financial derivatives qualify as hedging instruments, gains and losses are recognized in accordance with the type of items being hedged. Adjustments in the value of financial derivatives which have been entered into to hedge future cash flows (oil

price hedging and foreign exchange hedging of monetary items) are accounted for directly to equity. Adjustments in the value of the non-effective part of the financial derivatives are accounted for in the profit and loss statement. As the hedged cash flows are gradually realized, gains or losses on the financial derivatives included in the same accounting item as the hedged cash flows, or items which have been accounted directly to equity, are reversed. If the hedged transaction leads to the recognition of an asset or liability, gains or losses are included in the valuation of the asset or liability when it is first recognized.

Financial derivatives entered into to hedge recognized assets or liabilities are recognised at fair value. Gains/losses are recognized in the profit and loss statement together with any gains/losses on the hedged asset or liability.

9.8.6 Public grants Public grants for investments in fixed assets are set off against the acquisition cost of the investment and reduce the recognised acquisition cost and basis for depreciation. The grants are recognized in the profit and loss statement through lower depreciation of the fixed assets for which they were made.

Other public grants are set off against the costs which the grants are intended to cover.

9.8.7 Segments For management purposes the Group is divided into two units, exploration and production of hydrocarbons, and oil service & environment. Since one of these units accounts for less than 5 per cent of the Group’s revenues and profits, the Group’s business activities are reported as one segment.

9.8.8 Principles for revenue recognition Revenues are recognised when it is probable that transactions will generate future financial benefits to the company, and the size of the amount due can be reliably estimated. Sales revenues are recorded net of VAT and discounts. Revenues from the sale of goods are recognised when delivery has taken place and the risk transferred, and the company has established a receivable with respect to the customer.

Revenues relating to swap agreements in which similar goods and services are exchanged are not recognized in the profit and loss statement. Interest is recognised to the extent that it reflects the effective return on the asset. Royalties are accounted for in the profit and loss statement in accordance with the conditions stipulated in the various royalties agreements. Dividends are recorded in the profit and loss statement when the shareholders’ entitlement to receive dividend has been determined.

Revenues from the production of oil, gas and NGL (hydrocarbons) are recorded in the profit and loss statement in proportion to the Group’s share of the output from the individual license, irrespective of whether the output has been sold (rights method). Over/under-production of hydrocarbons pursuant to the rights method is valued at the estimated sales price, less estimated sales costs on the balance sheet day. Over/under-production occurs when the Group has extracted and sold more or less hydrocarbons from a producing field than the Group was entitled to at the time of extraction.

Gains and losses on financial derivatives which have been entered into to hedge the Group’s net revenues are recognized on the same line as the underlying revenues.

9.8.9 Production costs and other goods costs

Production costs are costs which can be directly ascribed to the production of hydrocarbons. These comprise costs incurred in the operation and maintenance of production facilities and installations, hours worked, insurance premiums, production taxes, environmental taxes, etc. Other goods costs are costs associated with the purchase, processing and in-house production of non-hydrocarbon goods sold. 9.8.10 Exploration and assessment costs

Oil and gas exploration and assessment costs are recognised in accordance with the “successful effort” (“SE”) method. Exploration costs will, for example, include the costs of topographical and geophysical (“G&G”) studies, costs relating to undeveloped areas, costs relating to the drilling of exploration/outstep wells, assessment costs, etc. The basic rule of SE is that such costs are expensed as they accrue, with the exception of costs incurred during exploratory drilling which results in oil and gas being found. For further details, see the section on the treatment of intangible and tangible assets.

9.8.11 Corporation tax

9.8.12 Development costs

Development costs are recognised when they accrue unless the following criteria are met in full: - The products and processes are clearly defined and the cost elements can be identified and reliably measured, - The product’s technical solution has been demonstrated, - The assets will generate future financial benefits, and - Sufficient technical, financial and other resources to complete the project are available. When all the above-mentioned criteria are met, the capitalization of development costs may commence. Costs which have been recognised in previous accounting periods are not capitalised. Capitalised development costs are depreciated on a straight line basis over the estimated life of the asset. The depreciation period will normally not exceed five years. The fair value of development costs will be estimated when an indication of impairment exists or when the need for previous periods’ write-downs no longer exists.

9.8.13 Intangible assets Intangible assets are capitalised if probable future financial benefits can be ascribed to the asset which is owned by the company, and the asset’s cost price can be reliably estimated. Intangible assets are recognised at cost price, less any accumulated depreciation and write-downs.

Intangible assets with an infinite economic life are not depreciated, but are written down if the residual value is less than cost price. The residual value is calculated annually as well as when impairment is indicated. Losses resulting from impairment are recorded as a write-down in the income statement. Intangible assets with a finite economic life are depreciated and the need for a write-down is considered in the event of impairment. The depreciable amount is divided systematically over the asset’s estimated usable (economic) life. Depreciation is recorded in the income statement. The depreciation estimate and depreciation method are subject to annual review, based on the current financial situation.

The residual value is the higher of net sales value and utility value. Utility value is calculated by discounting expected future cash flows to net present value. The discount rate used reflects the market pricing of money and the risk associated with the specific asset. For assets for which it is not possible to estimate independent cash flows, the residual value is determined with respect to the cash-flow generating class to which the asset belongs. Impairment of a cash-flow generating asset class is calculated such that recognised goodwill in the cash-flow generating asset class’ balance sheet is reduced first. Any remaining impairment will then be allocated in accordance with the value of the class’ other assets.

9.8.14 Goodwill Goodwill is initially recognised in the balance sheet at cost. Subsequently, goodwill is measured at cost price, less accumulated write-downs. Goodwill is not depreciated. Any write-downs on goodwill cannot be reversed. In connection with each business acquisition, goodwill is allocated to cash-flow generating asset classes at the level which management measures the investment in question. 9.8.15 Patents and licenses Amounts paid for patents and licenses are capitalised and depreciated on a straight line basis over the expected life of the asset. The expected life of licenses is adjusted with respect to the remaining term of patent rights. Licenses will be fully depreciated when the patent period expires. Oil-related licenses and capitalised exploration and assessment costs are classified as intangible assets until such time as plans for development and operation have been approved. At this time, the capitalised amount will be transferred to tangible assets and will be depreciated in accordance with the production unit method. When oil-related exploration licenses are purchased, the cost price will be capitalised as an intangible asset. After initial recognition they will be treated in accordance with the general principles for intangible assets. Under the “successful effort” method, costs associated with the drilling of exploratory wells and assessment costs are capitalised. Capitalised amounts are classified as intangible assets and are treated according to the general rules of valuation. Exploration and assessment costs not associated with commercially viable finds are charged to expenses. Capitalised exploration and assessment costs are transferred to tangible assets if it is decided to further develop the project.

9.8.16 Software Expenses associated with the purchase of new computer software are recognized in the balance sheet as intangible assets if these expenses are not part of the cost of a hardware purchase. Software is depreciated on a straight line basis over three years. Costs incurred to maintain the software or retain its future utility are charged directly to expenses unless the change in the software increases its future economic utility. 9.8.17 Tangible assets/property, plant & equipment Property, plant and equipment includes production facilities, facilities under construction, machinery and equipment, fixtures, etc. Items of property, plant and equipment are valued at cost, less accumulated depreciation and write-downs. Facilities under construction are not depreciated until the asset is put into operation. The cost price comprises the acquisition price plus direct costs associated with the acquisition incurred up until the time the asset is ready to be put into operation. For tangible assets produced in-house, the cost price includes the direct and indirect cost of materials, components, suppliers and salaries. No profit is included when capitalizing tangible assets produced in-house. For tangible assets to which liabilities attach with respect to closure and removal, and this liability is recognized as such, this sum will be added to the acquisition cost of the tangible asset concerned. The cost price of a complex asset is divided into separate parts which are depreciated individually if the economic life of the separate parts varies in length.

9.8.18 Leasing

Financial leasing agreements Financial leasing agreements are recognized initially as assets and liabilities corresponding to the cost price of the asset. Direct costs associated with the leasing contract are included in the asset’s cost price. Monthly leasing costs are divided into an interest element and a debt repayment element.

The asset which is the subject of a financial leasing agreement is treated as an ordinary tangible asset. The economic life and depreciation period for the Group is determined on the same basis as property, plant and equipment owned directly by the Group. The depreciation period will not exceed the leasing period if there is any uncertainty as to whether the Group will acquire title to the asset at the end of the leasing period.

Operational leasing agreements Leasing agreements in which the bulk of the risk remains with the lessor are classified as operational leases. Leasing costs are classified as operating costs and are charged to expenses for the duration of the leasing period.

9.8.19 Inventory

Inventory, including work in progress, is recognized at the lower of cost price and net sales price after provisions for obsolescence. Net sales price is the market price from normal operations, less completion, marketing and distribution costs. Costs are determined using the FIFO method. Processed inventory includes variable costs and fixed costs which can be allocated to goods based on normal capacity. Obsolete inventory is written down in full. Included in the inventory are demonstration vehicles intended for sale. The vehicles are used operationally by the company and in the sale and marketing of products offered by the company.

It is expected that these vehicles will be sold within a period of one year. The vehicles are financed through established leasing frameworks with finance companies, with monthly repayments over a term of five years, and with the right to terminate the leasing contract when a demonstration vehicle is sold. The vehicles’ financing is classified as debt to credit institutions. 9.8.20 Accounts receivable and other short-term receivables

Accounts receivable and other short-term receivables are recognized initially at fair value. In connection with the sale of goods and services, this will generally coincide with the original invoiced amount. Receivables are subsequently valued at amortised cost, determined using the effective interest rate method, less bad debt provisions. Bad debt provisions are recognised when there are objective indications that the Group will not receive settlement in accordance with the original terms.

9.8.21 Over-/underlift of hydrocarbons

Overlift of hydrocarbons is presented as a current liability, while underlift of hydrocarbons is presented as a short-term receivable. The value of over-/underlift is set at the estimated sales value, less estimated sales costs. Over-/underlift is presented gross. 9.8.22 Cash and cash equivalents

Cash includes cash on hand, bank deposits, short-term, easily convertible investments with a term of less than three months, and bank overdraft. Bank overdraft is recorded in the balance sheet under current liabilities. 9.8.23 Equity

Ordinary shares are classified as equity. Costs which can be ascribed specifically to the issue of new shares or options are charged, less tax, directly to paid-in capital. 9.8.24 Foreign exchange translation fund

The foreign exchange translation fund covers foreign exchange rate adjustments which arise in connection with the translation of business accounts in other functional currencies than the Noreco Group’s presentation currency.

9.8.25 Hedging transaction fund The hedging transaction fund covers the change in value after tax of hedging transactions which meet the criteria for the hedging of future cash flows, and where the hedged transaction has not yet been realized.

9.8.26 Dividend Proposed, but not yet approved dividend is presented as a separate item under equity. Dividend is not recognized as a liability until such time as a resolution to pay dividend has been passed by the Annual General Meeting.

9.8.27 Share-based payments Group management and employees are granted options to purchase shares in a subsidiary. The fair value is charged to expenses as the options accrue and the amount recorded as other paid-in capital in the subsidiary accounts. When the options are exercised the payments from management and employees are recognized as an increase in the subsidiary’s share capital and share premium fund.

9.8.28 Pensions Defined-benefits plan Some of the Group’s employees have pensions which are classified as defined-benefits plans. Pension assets are assessed annually by an actuary. Pension liabilities and pension costs are determined using a linear accrual formula. A linear accrual formula allocates the accrual of future pension benefits in a straight line over the accrual period, and considers the employees’ accrued pension rights during that period as the pension cost for the year. The introduction of a new defined-benefit plan or an improvement of the current defined-benefit plan results in a change in pension liabilities. This is charged to expenses on a straight line basis up until the effect of the change has been accrued. The introduction of new schemes or changes in existing schemes with retroactive effect, such that the employee instantly accrues a paid-up policy (or a change in an existing paid-up policy), are recorded in the profit and loss statement immediately. Gains or losses ascribed to the limitation or termination of pension plans are recognized when they occur. Actuarial gains or losses are amortized over the average expected length of service, to the extent that they exceed 10 per cent of the larger of pension liabilities or pension assets (corridor). In connection with the implementation of IFRS with effect from 1 January 2004, previous years’ estimate deviations were zeroed out.

Pension liabilities are calculated on the basis of the net present value of future cash flows. The discount rate corresponds to the interest rate on 20-year government bonds, plus the difference between the interest rate on government bonds and A-rated bonds for Norwegian companies, and 0.5 percentage points to take into account the length of term. The company’s right to repayment of some or all of previous costs associated with the termination of a defined-benefit plan is recognized when, and only when, repayment is certain. A separate asset is then recorded at fair value.

Defined-contribution plan In addition to the defined-benefit plan described above, the Group offers a defined-contribution pension scheme. Contributions to this pension plan amount to an agreed percentage of the employee’s salary. The company’s contribution is recognized in the year for which the contribution is made. The company has no liability beyond the annual pension contributions.

9.8.29 Debt Debt is recognized at fair value, less transaction costs, 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 between the amount of the loan received and the amount to be repaid is recorded as a financial expense over the estimated term of the loan. When a convertible loan is issued, the fair value of the debt is calculated using the market rate for non-convertible loans with a similar length of term and level of security. The sum is classified as a liability and is recorded at amortized cost until the loan expires, either through its conversion to shares or upon maturity. The remaining consideration is included under equity, less the tax effect, as payment for the issue of options. Debt is classified as a current liability unless an unconditional right exists to postpone repayment of the debt for more than 12 months from the balance sheet day. The first year’s installment of long-term debt is classified as a current liability. Borrowing costs linked to the purchase and in-house manufacture of production assets, etc, are charged to expenses as they accrue. 9.8.30 Provisions A provision is recognized when, and only when, the company has a valid liability (legal or assumed) resulting from an event which has occurred, and it is probable (more probable than not) that a financial settlement will take place as a result of that liability, and the amount may be reliably measured. Capitalized provisions for removal liabilities reflect the estimated cost of closure and removal of wells and production facilities used for the production of hydrocarbons. Closure and removal liabilities are valued at the net present value of the expected future cost. The liability is calculated on the basis of today’s removal requirements and is discounted back to present value.

The discount factor used reflects today’s general level of interest rates. Liabilities are recognized when they arise and are adjusted continually in accordance with changes in requirements, price levels, etc. The counter- value of the provisions is recognized under tangible assets and is depreciated along with the relevant assets. The increase in the liability over time is recorded in the income statement as a financial expense. 9.8.31 Conditional liabilities and assets Conditional liabilities are defined as: - potential liabilities resulting from past events, where the existence of the liability depends on future events, - liabilities which have not been recognized because it is not probable that they will result in a payment, - liabilities which cannot be measured with sufficient reliability. Specific mention is made in the Notes of material conditional liabilities, with the exception of conditional liabilities where the probability of the liability coming into existence is low. Conditional assets are not recorded in the annual accounts, but are specifically mentioned in the Notes if there is a certain probability that a benefit will accrue to the Group.

9.8.32 Events after the balance sheet day New information about the company’s position on the balance sheet day has been taken into account in the annual financial statements. Events after the balance sheet day which do not affect the company’s position on the balance sheet day, but which will affect the company’s position in the future are reported where material.

9.8.33 Financial risk management Financial risk The activities in which the Group is engaged make use of various types of financial instruments which entail various types of financial risk. The Group uses bank loans, bond loans and convertible bond loans to fund the

Company’s operations, as well as to invest in new business activities. Financial instruments, such as bank deposits, receivables, payables and other current liabilities are also used in day-to-day operations. For hedging purposes, for major balance-sheet items or cash flows, certain financial derivates, such as options, swaps and forward contracts, are also used. The most important financial risks incurred by the Group’s activities are: market risk, credit risk, liquidity risk and interest rate risk.

Market risk Foreign exchange risk: The Group has operations which generate significant cash flows in a variety of currencies. The Group also comprises businesses with various functional currencies (US$ and NOK). The Company’s policy is to hedge important items in currencies other than its functional currencies against exchange rate fluctuations. This means that balance-sheet items, such as loans, and important cash flows, such as interest, cash calls, tax, etc, are hedged using forward currency contracts/swap agreements. Noreco’s investments in businesses with a functional currency other than that used by Noreco are not hedged against foreign exchange risk.

Price risk: The most significant risk to the company’s cash inflow comes from the price of oil. To hedge this risk the Group enters into sales options specifying a price floor for the bulk of the company’s oil production. The options grant the right, but not an obligation, to sell oil at a specified minimum price. If the market price of oil exceeds the strike price of the option, the option is not exercised and the Group sells at the market price. This type of hedging is treated as hedging in the accounts.

Credit risk The bulk of the Group’s credit risk is associated with recognized receivables and the fair value of financial derivatives. Credit risk associated with the production and sale of oil, gas and NGL is deemed limited, since sales are made to major oil companies with significant financial resources. This is also reflected in the high proportion of outstanding receivables as of 31 December. The Group’s trading partners in derivatives are major banks, whose credit risk is considered low.

Liquidity risk Prudent management of liquidity risk requires the maintenance of an adequate reserve of cash and easily convertible securities, as well as ready access to funding in the form of drawing rights. The Group’s business activities require unrestricted liquidity for future investment. By means of a reserve-based drawing facility, the Group has ensured it has flexibility with respect to financing. This, together with substantial reserves of unrestricted liquidity and good cash flow from operating activities, means that the Group has secured the financing of its ongoing operations and future investments.

Interest rate risk Loans at floating interest rates incur an interest rate risk with respect to the Group’s future cash flows. Fixed interest exposes the Group to risks (discount/premium) associated with changes in the market rate. The majority of the Group debt financing carries a fixed interest rate. All bank deposits are at floating interest rates.

9.8.34 Uncertain estimates Management makes use of estimates based on its professional judgment and assumptions about future developments when it prepares the annual financial statements. Uncertainty is attached to all estimates, since changes in market conditions may lead to changes in estimates. Estimate changes may lead to changes in the book value of the company’s assets, liabilities, equity and profits.

The most important accounting estimates employed by the company are associated with the following items: - the allocation of fair value to assets and liabilities in the event of acquisitions. - the valuation of goodwill, intangible assets, property, plant and equipment, and future removal liabilities. - depreciation of property, plant and equipment (production equipment).

discount factors. Changes in one or more of these assumptions will have an impact on the fair value allocated. The fair value of the exploration and assessment portfolio is estimated using an estimate for risked reserves multiplied by the price per unit. A substantial risk is associated both with the reserve estimates and the price of economically viable future finds. Considerably less uncertainty is associated with the valuation of other assets and liabilities defined as business acquisitions.

In connection with business acquisitions, assets and liabilities will be revalued without the taxable value of the corresponding items being changed. This change affects capitalized deferred tax, which in turn leads to a change in goodwill. For the Noreco Group, goodwill derived from business acquisitions can be ascribed in its entirety to this effect. Since allocation of value to assets and liabilities is associated with a high level of uncertainty, cf. the previous paragraph, considerable uncertainty will also be associated with the allocation of goodwill in connection with acquisitions.

9.8.35 IFRS 7 IFRS 7 Financial instruments disclosures: The standard has been approved and will be implemented in the annual accounts with effect from 1 January 2007. Noreco has not implemented IFRS 7 in its 2006 financial statements, but follows IAS 32. IFRS 7 will require a change in the information provided about financial instruments.

9.9 AUDITOR’S STATEMENT TO THE PRO FORMA FINANCIAL FIGURES The Company’s auditor Deloitte AS has issued a report to the pro forma adjustments regarding the pro firma consolidation financial statements of Noreco. The report is included in Appendix 2 to this Prospectus.

10. CAPITAL RESOURCES Since its incorporation, the Company has raised NOK 2,036 million through issuing new Shares and NOK 2,800 million in debt, and these funds have financed the Company’s commitments and liabilities.

As of 30 June 2007, the Company had cash, cash equivalents and marketable securities of NOK 420.4 million.

For further reference, see cash flow statements in Appendix 3 Half-year report for 2007 and Appendix 4 Annual report for 2006.

10.1 WORKING CAPITAL STATEMENT In the opinion of the Company, its working capital is sufficient for its present requirements for the next 12 months. The Company’s further investments in exploration and development as described in Section 10.7 for the period beyond 12 months following the Listing, will be funded through external financing and equity raising (see also Section 10.3 below).

10.2 THE PRIMARY SHORT AND LONG TERM SOURCES OF CASH FLOW The net cash flow from operations was -NOK 80.3 million and -NOK 10.9 million in 2006 and 2005 respectively. This reflects the increased investment in exploration activity from 2005 to 2006. The net cash flow from investing activities amounted to -NOK 9.9 million and -NOK 1.5 million in 2006 and 2005 respectively. This reflects investment in office equipment, data etc in 2005 and investment in licenses on the NCS in 2006.

As per 30 June 2007, the net cash from operations was –NOK 65.9 million and –NOK 55.4 in 2007 and 2006 respectively. This reflects the increased investment in exploration activity from 2006 to 2007. The net cash flow (consolidated) from investing activities was – NOK 3,518 million in 2007 mainly consisting of the acquisition of Altinex ASA. Net cash flow from financing activities (consolidated) was NOK 3,993 million reflecting increased lending and new equity raised in connection with the acquisition of Altinex ASA.

The primary short and long term of capital for Noreco consisted of a convertible bond booked at NOK 395 million, a short term loan with SR Bank of NOK 506 million and equity. In addition, the Company has an exploration drawing facility with SR Bank of NOK 260 million to be spent on exploration financing. NOK 39 million was drawn as per 30 June 2007 from the exploration drawing facility. In addition the Noreco Group through Altinex has bonds and RBL (reserve based financing) for the financing of the operation. For further information of these bonds, please refer to section 10.5.

There are no limitations on the transfer of liquid assets from subsidiaries.

10.3 FUNDING STRUCTURE AND RESTRICTIONS OF USE OF CAPITAL RESOURCES As per 30 June 2007 (see section 8.3.2), the Noreco Group was funded by NOK 1,343 million in equity, NOK 395 million in convertible bonds, NOK 1,497 million in various bonds and NOK 565.5 million in a short term loan with SR Bank (including drawdown on exploration drawing facility of NOK 260 million). The NOK 506 million short term loan has since been refinanced in connection with the mandatory offer for the shares in Altinex.

Going forward, any new investments in exploration will be financed partly by equity (25 – 30%) and partly by debt through a bank drawing facility (70 – 75%). Any investment in development is assumed to be financed through reserve based lending (60 – 70%) and through equity (30 – 40%). Any new asset acquisitions will be financed using combinations of the above financing tools depending on the type of investment (Exploration, development or producing assets). For a description of the development in the debt structure after 30 June 2007, please refer to Section 10.5.

As of 30 June 2007, the Company held NOK 1,086 million of current debt (of which NOK 566 million was interest bearing) and NOK 4,383 million non-current debt (of which NOK 1,891 million was interest bearing). Equity as of 30 June 2007 was NOK 1,343 million.

Actual 30 June 2007

Working Capital Ratio 0.71 (Current Assets/Current Liabilities)

Debt to Equity Ratio 4.07

10.4 CAPITALISATION AND INDEBTEDNESS The table below sets forth the Company’s audited and unaudited consolidated cash and equivalents and capitalisation as at 31 December 2006, 30 June 2007 and 30 August 2007 respectively. The table should be read together with the consolidated financial statements and the related notes thereto, as well as the information under Section 8 “Financial Information and operating review”.

All figures in NOK 1,000 30.08.2007 30.06.2007 31.12.2006 Unaudited Unaudited Audited Shareholder’s equity Paid in capital ...... 1,506,829 1,374,107 79,683 Minority interest ...... 400,000 1,687,408 - Retained earnings and other reserves...... -94,215 -31,215 -23,959 Total shareholders equity (including minority interest) (A) ...... 1,812,614 3,030,300 55,723

Current debt Guaranteed...... - - - Secured ...... 59,500 565,500 35,000 Unguaranteed/unsecured...... 489,000 520,937 19,132 Total current debt...... 548,500 1,086,437 54,132

Non-current debt (excluding current portion of long-term debt) Guaranteed...... 1,619,000 1,457,705 - Secured ...... 87,000 39,000 - Unguaranteed/Unsecured...... 4,821,500 2,886,256 252 Total non-current debt ...... 6,527,500 4,382,961 252

Total indebtedness (B) ...... 7,076,000 5,468,398 54,384

Total capitalisation (A + B) ...... 8,888,614 8,499,699 110,108

Cash and cash equivalents ...... 498,000 420,445 11,970 Trading securities...... - - - Liquidity (C) ...... 498,000 420,445 11, 970

Current financial receivables (D) ...... - 13,994 -

Current bank debt ...... - 506,000 - Current portion of non-current debt...... 59,500 59,500 35,000 Other current financial debt ...... - - - Current financial debt (E) ...... 59,500 565,500 35,000

Net current financial indebtedness (E-C-D) (F) ...... (438,500) 131,061 23,030

Non-current financial receivables (G) ...... - - -

Non-current bank loans...... - - - Other non-current loans ...... - - - Non-current financial indebtedness (H) ...... - - -

Net non-current financial indebtedness (H-G) (I) ...... - - -

Net financial indebtedness (F+I) ...... (438,500) 131,061 23,030

In addition to the acquisition of Altinex shares for a total price of NOK 2,033 million (as per 30 June 2007) Noreco has acquired the remaining shares in Altinex subsequent 30 June 2007.

To finance the acquisition of Altinex, Noreco disbursed two callable bond loans in the third quarter of 2007 of a total of NOK 2,800 million as described in Section 13 below. In addition, the Company has completed a private placement of approximately NOK 550 million as further described in section 5.4 above. The Company is not aware of any other significant changes in the financial or trading position of the Group which has occurred since 30 June 2007.

10.5 BORROWINGS

10.5.1 Total borrowings

The Group’s total gross borrowings amounted to NOK 2,457.3 million as of 30 June 2007, of which NOK 565.5 million is current. As per 30 August 2007 the Group’s total gross borrowings amounted to NOK 4,565,500 of which NOK 59.5 million is current

The table below sets out the composition of the borrowings as of 30 June 2007:

Figures in NOK 1.000 Current Non-current Total Bank overdraft...... - - - Borrowings ...... 565,500 1,891,790 2,457,290 Financial leasing...... - - Sum ...... 565,500 1,891,790 2,457,290

NOK 506 million of the current portion of the borrowings has been refinanced in connection with the mandatory offer for the shares in Altinex and has been replaced with a long term bond.

The total long term debt is NOK 1,892 million, consisting of a convertible bond loan, bonds and a reserve based bank loan facility, further described below.

10.5.2 NOK 440 million convertible bond loan issue

On 11 May 2007, the Company took up a NOK 440 million convertible bond loan of which NOK 10 million has been converted to equity before this Prospectus is being issued. The convertible bond loan has an interest rate of 6% and matures in 2012. Interest is to be paid semi annually, with first payment in November 2007. The conversion price is set to NOK 89 per Noreco share (NOK 22.25 after share split, see section 12.4). In connection with the loan, the Company has to comply with certain covenants including but not limited to request of information in the event of any default of payment, preparation of interim reports, not sell or dispose substantial part of its assets or operation and not make any dividend payments.

10.5.3 The Senior Secured Callable Bond Loans

On 9 July 2007, Noreco issued a NOK 2,800 million senior secured callable bond to finance the acquisition of shares in Altinex. The bond matures on 13 July 2010, and consists of a fixed tranche of NOK 2,300 million with an interest of 11% p.a. and a floating tranche of NOK 500 million with an interest of 6 month NIBOR plus 5.25%. Interest payments are made in semi annual arrears. Main covenants under the loan agreement include that no dividends are allowed; an requirement for additional equity in place within six months; a value clause for Noreco’s shares in Altinex; interest bearing debt over EBITDA adjusted for exploration costs of less than 8.0; and certain book equity ratios and market adjusted equity ratios. If Noreco was to breach the covenants, the Company will have to implement measures to comply within a period of 1-2 months. Furthermore, there are certain restrictions on additional debt, sale of assets and the investments on exploration drilling under the bond loan agreement. The Senior Secured Callable Bond is described in more detail in Section 13 in this Prospectus. In addition, both loan agreements are incorporated as Appendix 6 to this Prospectus.

10.5.4 NOK 260 million revolving bridge facility

Borrower: Noreco. Final maturity: 28 December 2008 at the latest.

Covenants Noreco must comply with the following financial covenants: • to maintain a ratio of Book Equity to Total Assets of minimum 20% (the Borrower has waived this requirement for a period of 12 months) • to maintain a minimum of NOK 10 million of cash or cash equivalents.

Other main covenants include: • restrictions on sale of assets, subsidiaries and corporate restructurings • no dividends • no further financial indebtedness unless fully subordinated • negative pledge clause

10.5.5 NOK 70 million revolving bridge facility

Borrower: Noreco. Final maturity: 28 December 2007 at the latest.

Financial covenants: Similar to 260 million facility.

Other main covenants: Similar to 260 million facility

10.5.6 NOK 300 million 9.50% callable bond issue

Issuer: Altinex Oil Norway AS. Final maturity: 9 February 2011.

Financial covenants: • maintain Equity to Capital Employed ratio of at least 0.25.

Other main covenants: • not sell the interest in the Brage field • unless the Equity to Capital Employed ratio is at least 0.35, not pay dividends • restrictions on sale of asset

10.5.7 NOK 250 million subordinated convertible bond

The Subordinated Convertible Bond was issued on 8 August 2006 by Altinex. The Subordinated Convertible Bond Loan has no financial covenants, but there exist restrictions on sale of substantial assets. The Subordinated Convertible Bond Loan matures on 8 August 2009. As of the date of this Prospectus, Noreco holds NOK 215.5 million of the bonds issued. Of the remaining NOK 34.5 million in the Convertible Bond Loan, NOK 31.5 million has already been converted or are currently in the process of being converted into shares in Altinex. Noreco has or will acquire all shares converted into shares at NOK 22 per share.

The conversion price is NOK 16 per share (subject to adjustments in case of corporate or share capital changes in Altinex). The right to convert applies during the term of the loan. The conversion right cannot be separated from the bonds.

The other main terms are similar to the terms described under the Noreco Convertible Bond Loan agreement described in section 10.5.3 above.

10.5.8 NOK 500 million 8.5% open bond issue On 7 June 2005, Altinex Oil Norway AS issued an 8.5% open bond loan of NOK 500 million. As of this date a total of NOK 100 million has been drawn. The Open Bond Loan matures on 7 June 2010.

Covenants • Book Equity to Capital Employed to be at least 0.25 • unless Book Equity to Capital Employed exceeds 0.35, not pay more than 50% of distributable profits as dividends • restrictions on sale of assets

10.5.9 USD 155 million revolving borrowing base facility Borrowers: Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S. Guarantor Geopard A/S. Final maturity 31 December 2011.

Financial covenants: • aggregate current assets to aggregate current liabilities of the Danish companies (excluding the current portion of long term debt under the facility) to be in excess of 1.10x. • maximum total debt under the facility to EBITDA ratio of 3.00x.

Technical covenants: In relation to the total outstanding under the facility:

(i) Field Life Cover Ratio is greater than 1.3:1 (ii) Loan Life Cover Ratio is greater than 1.2:1 and (iii) Debt Service Cover Ration is greater than 1.2:1

Other main covenants: • negative pledge for Geopard A/S, Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S • restrictions on additional financial indebtedness for Geopard A/S, Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S • restrictions on sale of assets (certain exceptions for sale on arm's length basis for cash) • dividends from the Danish companies (maximum 40% of aggregate net income and subject to i.a. the total outstanding amount under the loan not exceeding the borrowing base amount under the facility) • restrictions on acquisitions (certain exceptions for acquisitions of E&P companies and E&P licenses • restrictions on mergers between the Danish companies • no Danish company shall make any payments under a subordinated loan of NOK 335,000,000 (Altinex as lender, Geopard A/S as borrower)

10.5.10 NOK 660 million bond issue On 22 June 2006, Geopard A/S issued a Bond Loan of a total of NOK 660 million. The loan matures on 22 June 2012.

If bank facility with BNP Paribas is refinanced, Field Life Coverage Ratio shall be at least 1.30x times the drawn and outstanding refinanced bank debt.

If bank facility with BNP Paribas is refinanced, Loan Life Coverage Ratio shall be at least 1.20x times the drawn and outstanding refinanced bank debt.

Other main covenants: • restrictions on dividend payments • restrictions on further financial indebtedness (applicable to the Group, i.e. Issuer and subsidiaries) • restrictions on sale of assets (applicable to the Group) • negative pledge applicable to the Group • restrictions on sale of shares in the issuer

10.6 GUARANTEES As of the date of this Prospectus, Noreco has entered into a bank guarantee amounting to US$ 25 million to Seadrill Offshore AS in respect drilling slots. The guarantee is valid until 22 February 2012.

10.7 INVESTMENTS

10.7.1 Completed and ongoing investments

Noreco’s principle investments since start up have been investing in exploration licenses through license rounds and through acquisitions on the NCS. In the start-up year of 2005, the Company invested NOK 25 million in direct and indirect exploration related to prequalification as a licensee and application for licenses on the Norwegian Continental Shelf. During 2006 the Company invested NOK 101 million in direct and indirect exploration of which NOK 87 million has been expensed in the profit and loss account. The Company has invested additional NOK 71 million in 2007 (as per 30 June 2007).

During 2007, Noreco has acquired all shares in Altinex. The acquisition cost for all shares of Altinex will be in the range of NOK 4,300 million. In the consolidated financial statement (ownership 100%) the acquisition thereby will result in an additional booking of goodwill in the range of NOK 800 million.

The financing of these investments has been made through equity and debt through SR Bank. Acquisitions of production licenses have been made net of tax and have been capitalized and the amount has been financed through equity. However, most of the acquisitions of production licenses have been made through carry arrangements where Noreco pays the sellers portion of the exploration expenditures up to a certain limit. Currently Noreco has 4 such arrangements of which 2 agreements have been entered into during 2007.

In the period 2007 up to and including 2011 it is the intention to drill approximately 4 – 8 wells a year and thereby invest some NOK 2,250 million on drilling on the NCS. The current plans are to finance most of these investments in exploration through bank financing. The banks are basically willing to finance approximately 70% of the exploration expenditures. The after tax portion will be financed through equity.

In the period up to 2011 the plans are to invest in development spending currently estimated to be in the range of NOK 1.2 billion starting in 2008. Such investments will be financed through equity and debt through financial institutions.

The Company’s planned investments for the years 2007-2009 in exploration and development are as follows:

NOK million 2007 2008 2009 Exploration Norway...... 393 885 687 Development Norway...... 62 119 192 Denmark...... 210 409 273 UK/Other...... 112 52 66 Total...... 384 580 531

10.7.2 Principal future investments

Noreco has committed to specific work programs on awarded licenses. These programs include acquisition, purchase and reprocessing of seismic data and participation in wells. Noreco’s share of such estimated obligation amounts to approximately NOK 760 million. In addition as mentioned above, Noreco has entered into “carry” arrangements where Noreco pays the sellers portion of the exploration expenditures. Total remaining commitments under such arrangements are approximately NOK 450 million. Investments for all these commitments are included in the estimated exploration and development figures above and will be invested during the period 2008 and 2009.

11. BOARD, ORGANISATION AND MANAGEMENT OF NORECO

11.1 ORGANISATION Below is an overview of the organisation of Noreco:

Scott Kerr Managing Director

Einar Gjelsvik External relations

Reinert Seland Rune Martinsen Synnøve Røysland Birte N. Borrevik Jan Nagell Thor Arne Olsen Stig Frøysland Exploration Northern North Sea Southern North Sea Projects and drilling Finance Commercial (BD) HSE/HR

11.2 THE CURRENT 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 current Board of Directors has 5 voting members, four of which represent a total of approximately 27% of the shares in the Company. Below is an overview of the members of the current Board of Directors: Name Position Has served since Term Expires Shares held8 Lars Takla Chairman January 2005 2009 1,421,568 Gunnar Halvorsen Board member October 2005 November 2007* 0 Tollak Melberg Board member January 2005 November 2007* 722,984 John Hogan Board member November 2005 2009 334,528 Roger O’Neil Board member March 2007 2009 269,444 *Gunnar Halvorsen and Tollak Melberg’s directorships will expire as of the first day of listing.

Lars Takla (63), Chairman. Mr. Takla is one of the founders of Noreco, and the chairman of Noreco’s Board of Directors. He is the former Managing Director for ConocoPhillips in Norway. He is a member of a number of industry forums, and is widely recognized for his long and dedicated effort for the oil and gas industry in Norway. Mr. Takla is a Norwegian citizen and resides in Sandnes, Norway. Gunnar Halvorsen (45), Board member. Mr. Halvorsen is a partner in HitecVision Private Equity and is HitecVision’s representative on Noreco’s Board of Directors. He is a Norwegian citizen and resides in Stavanger, Norway. Tollak Melberg (57), Board member. Mr. Melberg is a local industry leader and investor. He was a part of the initial founder group establishing Noreco. Mr. Melberg is Founders Holding’s representative on Noreco’s Board of Directors. He is a Norwegian citizen and resides in Stavanger, Norway. John Hogan (54), Board member. Mr. Hogan has spent over 30 years in the oil and gas industry and he has extensive international experience at board level. He spent his early career with Shell, Britoil and Elf Aquitaine. He joined LASMO plc in 1981, running their US oil and gas business for 5 years before being made Managing Director of LASMO North Sea plc between 1989 and 1993. Mr. Hogan was appointed to the main board of LASMO plc as Executive Director and Chief Operating Officer between 1993 and 1999. Since then he has worked at board level in a number of companies in the energy sector. Mr. Hogan is a British citizen and resides in Kent, England.

8 Direct or indirect holding of Shares subsequent the share split in October 2007.

Roger O'Neil (69), Board member. Mr. O'Neil has had a career in the oil industry with Mobil Oil and Statoil and has served as a non-executive director on boards of public companies in the UK and Asia. Mr. O’Neil is an American citizen and resides in London, England.

11.2.1 Independence of the current Board of Directors

All members of the Board of Directors are independent of the Company’s major shareholders except for Mr. Halvorsen and Mr. Melberg. Furthermore, in the Company’s opinion, all members of the Board of Directors are independent of the Company’s management and main business relations.

11.3 THE BOARD OF DIRECTORS AS OF LISTING On 10 October 2007, the general meeting of the Company passed a resolution to appoint a new Board of Directors to take effect from the first day of trading of the Company’s shares on Oslo Børs, alternatively Oslo Axess.

The new Board of Directors to take office as of first day of trading consists of the following members:

Name Position Has served since Term Expires Shares held9 Lars Takla Chairman January 2005 2009 1,421,56810 John Hogan Deputy chairman November 2005 2009 334,528 Roger O’Neil Board member March 2007 2009 269,4444 Therese Log Bergjord Board member November 2007* 2009 0 Heidi Marie Petersen Board member November 2007* 2009 1,732 *Therese Log Bergjord and Heidi Marie Petersen’s directorships will take effect from the first day of listing.

Lars Takla (63), Chairman. Please see description above. John Hogan (54), Deputy Chairperson. Please see description above.

Roger O'Neil (69), Board member. Please see description above.

Therese Log Bergjord (42), Board member. Mrs. Log Bergjord is Sales Director in Business Group Salmon Feed, Skretting. From 2004 until 2007, she was Vice President Commercial in the Pan Fish group, after serving as Vice President Finance in the same group since 2003. Mrs. Log Bergjord started her career in ConocoPhillips where she held various leading positions during her 16 years with the company. Mrs. Log Bergjord is a Norwegian citizen and resides in Hafrsfjord, Norway.

Heidi Marie Petersen (49), Board member. From 2003 and until June 2007, Mrs. Petersen was CEO in Rambøll Oil & Gas AS. From 1997 and until 2000, she was vice president in Kværner Oil & Gas AS Sandefjord, and up until 2004 she continued as Managing Director when the company changed name to Future Engineering AS. Mrs. Petersen was also a major owner in Future Engineering AS. Mrs. Petersen is a Norwegian citizen and resides in Sandefjord, Norway.

11.3.1 Independence of the Board of Directors as of Listing

All the members of the Board of Directors as of Listing are independent of the Company’s major shareholders. Furthermore, in the Company’s opinion, all members of the Board of Directors are independent of the Company’s management and main business relations. The Board of Directors as of Listing thus satisfies the requirements for independence set out in the Norwegian Code of Practice for Corporate Governance.

9 Direct or indirect holding of Shares subsequent the share split in October 2007. 10 In addition to these shares, Lars Takla has acquired 2 Bonds, each with a nominal value of 500,000 to a price of NOK 101.50.

11.4 MANAGEMENT The executive management is responsible for the daily management and the operations of the Company.

The table below sets forth the Company’s current executive management.

Name Position Served since Shares held11 Scott Kerr CEO July 2005 1,502,47212 Synnøve Røysland VP, Southern North Sea September 2006 0 Rune Martinsen VP, Northern North Sea December 2005 999,204 Thor Arne Olsen VP, Commercial January 2006 1,036,808 Reinert Seland VP, Exploration September 2005 985,296 Jan Nagell CFO November 2006 0 Birte N. Borrevik VP, Drilling and Projects October 2006 76,080 Stig Frøysland VP, HSE/HR August 2007 0 Einar Gjelsvik VP, External Relations January 2006 50,876

The Company’s business address serves as the c/o address in relation to the management of the Company. The executive management consists of the following persons:

Scott Kerr (50), CEO. Mr. Kerr has been the CEO of Noreco since July 2005. He holds over 27 years of experience from the oil industry and was previously the managing director for BP Norway. He also held the position as Business Unite Leader for Russia and Kazakhstan for Arco, and he has been the president for CIS and North Africa Regions Reservoir Engineering. Mr. Kerr holds a Bachelor of Science degree in Petroleum Engineering from University of Wyoming. Mr. Kerr is an American citizen, and resides in Jørpeland, Norway.

Synnøve Røysland (41), VP, Southern North Sea. Mrs. Røysland joined Altinex in September 2006. She has 18 years' experience in drilling whereas 2 years as field manager. For more than 10 years, she worked as drilling supervisor and superintendent in the North Sea, mainly with Norsk Hydro in Norway and also with DONG in Denmark. She has also been managing drilling projects in Egypt, Namibia and UK. Mrs. Røysland gained an MSc in Petroleum Technology from Stavanger Technical University in 1988. Mrs. Røysland is a Norwegian citizen, and resides in Virum, Denmark.

Rune Martinsen (42), VP, Northern North Sea. Mr. Martinsen took over his current position in September 2007 and was previously the HSE and Engineering Manager for Noreco where he started in December 2005. Mr. Martinsen has more than 15 years of experience in various subsurface, and held previously various leadership positions in subsurface in BP. He also held a leading position in business management in Amoco, and has been the subsurface manager for Valhall and reservoir engineer in Hod fields. Mr. Martinsen holds a Master of Science degree in Petroleum Engineering from Høyskolesenteret in Rogaland. Mr. Martinsen is a Norwegian citizen, and resides in Stavanger, Norway.

Thor Arne Olsen (52), VP, Commercial. Mr. Olsen was previously the business development Manager, a position he has held since January 2006. Mr. Olsen holds over 25 years of commercial experience and his previous positions include business development/A&D manager for BP Norway, commercial manager for Amoco Norway in addition to key positions across the upstream value chain in Norway and internationally. Mr. Olsen holds a Master of Business and Administrations degree from the Norwegian School of Economics and Business Administration. He also holds extensive commercial experience from the Norwegian continental shelf, US and UK continental shelf activities. Mr. Olsen is a Norwegian citizen, and resides in Stavanger, Norway.

Reinert Seland (54), VP, Exploration. Mr. Seland has been employed in Noreco since September 2005. He holds a Master of Science degree in Marine Geology from the University of Bergen and holds over 25 years of exploration experience. He has previously held various exploration positions, including executive Vice President for Business Development in Aker Kværner Geo. Mr. Seland is a Norwegian citizen, and resides in Stavanger, Norway.

11 Direct and indirect holding of Shares subsequent the share split in October 2007. 12 Scott Kerr has subscribed to a convertible bond loan issued by the Company. A conversion of the loan would entitle Mr. Kerr to 44,943 shares in the Company. Please see Section 12.3 for a detailed description of the convertible bond loan.

Jan Nagell (48), CFO. Mr. Nagell joined Altinex in May 2004. He has 25 years’ experience within the Norwegian and international offshore industry, and has worked in all phases of the oil business, from exploration, construction to production. He holds a Master’s Degree in Business and Economics from the Norwegian School of Management (BI) from 1984. Mr. Nagell is a Norwegian citizen, and resides in Bærum, Norway

Birte N. Borrevik (49), VP, Drilling. Mr. Borrevik was employed in Noreco in October 2006. She holds over 13 years of various drilling operations and technology positions, including drilling manager for BP, project general manager Valhall Flank Development for Amoco, chief drilling engineer for Statoil in the North Sea. She holds a Bachelor of Science in Petroleum Engineering from the University of Stavanger. Ms. Borrevik is a Norwegian citizen, and resides in Stavanger, Norway.

Stig Frøysland (age), VP, HSE/HR. Mr. Frøysland joined Altinex Oil in August 2007. He has 20 years’ E&P experience from Norsk Hydro both in Norway and internationally where he held various senior HSE- management positions related to drilling, operations and production. In addition, he has been involved in strategic and tutorial work related to company-culture building and quality. Mr. Frøysland has a Diploma in HSE from Loughborough University, a degree from the Norwegian Police University College and studies in Law from Bergen University. Mr. Frøysland is a Norwegian citizen, and resides in Sandsli, Norway.

Einar Gjelsvik (35), VP, External Relations. Mr. Gjelsvik joined Noreco in January 2006. Prior to joining Noreco, he held various positions in BP, including Business Development Analyst and Business Planning and Performance Management Team Leader for BP Norway. He holds approx 10 years of experience in the oil and gas industry. Mr. Gjelsvik holds a Master's degree in Business Administration, Strategic Management from the Norwegian School of Economics and Business Administration from 2004, as well as a Master's Degree in Science, Chemical Engineering from the Norwegian University of Science and Technology from 1996. Mr. Gjelsvik is a Norwegian citizen, and resides in Stavanger, Norway.

11.5 CONFLICTS OF INTERESTS, ETC. As far as the Company and the Board of Directors 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. The Company or the Board of Directors are further not aware of any such potential conflicts of interest, except for in connection with related party transactions as described in section 12.6 below.

During the last five years preceding the date of this Prospectus, no member of the Board of Directors, and no member of the Board of Directors which will take office as of the Listing, and no member of the executive management has: • been subject to any convictions in relation to indictable offences or convictions in relation to fraudulent offences; • received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or • been declared bankrupt or been associated with any bankruptcy, receivership or liquidiation in his capacity as a founder, director or senior manager of a company, with the exception of Mr. Halvorsen who was a board member of the company Visi World AS when it filed for bankruptcy in November 2002, Mrs. Petersen who was chairman of the board of directors of the company Future Sør when it filed for bankruptcy in March 2004, and Mrs. Log Bergjord who was a board member of the company Pan Fish Denmark AS when it filed for bankruptcy in 2005.

During the five years preceding the date of this Prospectus, the members of the current Board of Directors, the members of the Board of Directors to take office as of the Listing, and the executive management hold or have held the following directorships and/or positions (apart from their directorships and/or positions of the Noreco Group):

Board of directors Current directorships/ positions Previous directorships/ positions Lars Takla Stavanger -regionen Næringsutvikling Stiftelsen Rogalandsforskning (Chairman (Board Member) of the Board) ONS Stiftelsen (Chairman of the Board) Norges Forskningsråd (Board Member) Upstream AS (Board Member) Environment Northern Seas Foundation Norfuel AS (Board Member) (Chairman of the Board) Targa Fashion AS (Board Member) Sense Intellifield (Chairman of the Targa Fashion Shoes AS (Board Member) Board) Targa Holding AS (Board Member) Norpipe AS (Board Member) Targa Kilden AS(Chairman of the Board) Norsea Gas AS (Board Member) Targa Stavanger AS (Chairman of the Norpipe Oil AS (Chairman of the Board) Board) ConocoPhillips Scandinavia AS (Board Takla Energy AS (CEO and Chairman of the Member) Board) ConocoPhillips Norge (Board Member) Norsea Ltd. (Chairman of the Board) Gunnar Halvorsen RigNet Inc. (Board Member) Cascada Eiendom AS (Deputy Board Knowledge System Inc. (Board Member) Member) Fuglaneset Invest AS (Chairman of the Scandpower Petroleum Technology AS Board and CEO) (Board Member) Petroleum Networks Holding AS (Chairman Revus Energy AS (Board Member) of the Board) Sola Golfklubb (Chairman of the Board) Kari Halvorsen AS (Deputy Board Member) Nordic Business Communication AS Manu AS (Deputy Board Member) (Chairman of the Board) Fasett AS (Deputy Board Member) Visi World AS (Board Member) Tollak Melberg Energy Futures AS (Chairman of the Board) Rosenberg Verft AS (Chairman of the BitMap AS (Chairman of the Board) Board) Melberg Partners AS (Chairman of the Simrad Optronics ASA (Chairman of the Board) Board) Melberg Partners Holding AS (Chairman of Haaland AS (Chairman of the Board) the Board and CEO) Stavanger Chamber of Commerce Melberg Holding AS (Board Member (Chairman of the Board) Melberg Holding II AS (Chairman of the EDM (Engineering Drilling Machinery) Board) AS (Chairman of the Board) Noreco Founders DA (Chairman of the Technor France SAS (Chairman of the Board) Board) Kunstskolen i Rogaland (Chairman of the Technor ATEX SAS (Chairman of the Board) Board) IKM Gruppen AS (Board Member) SNRI SAS Ruffec (Chairman of the Energy Ventures AS (Board Member) Board) Energy Ventures II KS (Board Member) Technor Malbranque (Chairman of the Energy Ventures II AS (Board Member) Board) Stiftelsen Stavanger Børs (Board Member) ScanArmatur AS (Board Member) Castillo AS (Board Member) Sense-EDM AS (Board Member) Melberg Investment AS (Board Member and CEO) Kyststamveien Stavanger-Bergen AS (Board Member) Sky Invest AS (Board Member) Stiftelsen Stavanger Forum (Deputy Board Member) Tollak Melberg AS (Chairman of the Board) Norwegian Energy Company Founders DA (Chairman of the Board) John Hogan Velosi Ltd (Chairman of the Board) Acteon Ltd (Chairman of the Board) PanGeo Inc (Chairman of the Board) Caledonia Oil & Gas Ltd (Board Argos Resources Ltd (CEO) Member) Highland Energy Ltd (Board Member) GWE AG (Chairman of the Board)

Roger O’Neil Clearvision International (UK) (Board Pearl Energy Ltd (Board Member) Member) Enterprise Oil PLC (Board Member) Petroleum Geo Services Oslo SE (Chairman Marley PLC (Board Member) of the Nomination Committee) Upstream AS (Board Member) Therese Log Bergjord Skretting AS (Sales Director BG Salmon Marine Harvest AS (VP Commercial) Feed) Eksportutvalget for Fisk AS (Board Næringsforeningen i Stavangerregionen Member) (Board Member) Pan Fish Norway AS (Board Member) NOFIMA AS (Board Member) Pan Fish Canada Ltd (Board Member) Glad Mat AS (Board Member) Pan Fish Sales USA AS (Board Akvaforsk AS (Board Member) Member) Pan Fish France SA (Chairman of the Board) Pan Fish Faroes AS (Chairman of the Board) Pan Fish Denmark AS (Board Member) Heidi Marie Petersen Sandefjord Airport Torp (Chairman of the Ramboll Oil & Gas (CEO) Board) Rambøll Future (CEO) DnBNOR ASA (Board Member) Kværner Oil & Gas (VP) DnBNOR Audit Committee (Member) DnBNOR Bank ASA (Board Member)) Aker Kværner ASA (Board Member) Sparebanken Vestfold (Board Member) Skagerak Energi (Board Member) Goodtech ASA (Board Member) Glamox ASA (Board Member) Ocean Heavylift ASA (Board Member) Scan Geophysical ASA (Board Member) Nortechs FPSO ASA (Board Member) Awilco Offshore (Board Member) Arendal Fossekompani (Board Member)

Management Current directorships/positions Previous directorships/positions Scott Kerr Kerr Energy AS (Chairman of the Board) BP Norge AS (Managing Director) LUKARCO BV (Chairman of the Board) BP Oil Norge AS (Board Member) Synnøve Røysland None Dong (Project Manager) Hydro (Project/Field Manager) Rune Martinsen Rumar Holding AS (Chairman of the Board) None Bedriftsveien 19 AS (Chairman of the Board) Omar Invest AS (Board Member) Omar Consulting AS (Board Member) Thor Arne Olsen TAO Invest AS (CEO and Chairman of the BP Oil Norge AS (Business Board) Development Manager) Reinert Seland Seland Invest AS (CEO and Chairman of the None Board) Jan Nagell None Aker Energy (CFO) Birte N. Borrevik Berentsten legat A, (Board Member) BP Norge AS (Deputy Board Member) Berentsen legat B, (Board Member) Berentsen legat C, (Board Member) Reinert Tørresen's legat (Board Member) BNB Holdings AS (Chairman of the Board) Stig Frøysland Voss Fjellandsby Hytteeigarlag BA Operations, Norsk Hydro (Head of (Chairman of the Board) Health & Working Environment) Partner Follow Up, Norsk Hydro (HSE Manager) Operations, Norsk Hydro (Head of Safety & Emergency Preparedness) Einar Gjelsvik None None

11.6 REMUNERATION AND BENEFITS

11.6.1 Remuneration and benefits to the management

The below table sets out the remuneration and benefits to the management for the year 2006:

Name Position Salary Bonus Pension Other Total premiums13 remun. 14 Scott Kerr Managing Director 2,106,507 1,440,444 127,981 1,164,655 4,839,587 Reinert Seland Exploration Manager 1,372,489 70,722 133,508 529,933 2,106,652 Thor Arne Olsen Business Development Manager 1,758,897 31,529 130,117 617,717 2,538,260 Rune Martinsen Engineering/HSE Manager 1,449,185 51,594 111,240 454,821 2,066,840 Ludvig Høvring CFO 1,095,477 112,140 334,930 1,542,54715 Birte N. Operations Manager Borrevik 352,379 33,192 100,575 486,146

The column “Total” 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. Holiday pay pursuant to the Norwegian Annual Paid Holiday Act is not included in base salary, however included in the total salary.

The other members of the current management were not members of the Company’s management during 2006.

The Company has no outstanding loans or guarantees to any member of the management.

No members of the current administrative, management or supervisory bodies hold any contracts with the Company providing for benefits upon termination of employment.

11.6.2 Remuneration and benefits to the Board of Directors

The remuneration of directors of the Board of Directors shall be determined on an annual basis by the Company’s shareholders in the Company’s annual general meeting. The directors may also be reimbursed for, inter alia, traveling, hotel and other expenses incurred by them in attending meetings of the Board of Directors or in connection with the business of the Company.

For the year 2006, the remuneration for the Board of Directors was NOK 1,668,807, whereof the chairman of the Board of Directors received NOK 957,80716 and each board member received NOK 177,750.

No member of the Board of Directors is party to any contracts with the Company providing for benefits upon termination of service.

11.6.3 Pensions and other obligations The underlying calculations are linked to the Contractual Early Retirement schemes effective for all employees. The Company has not established any separate pension schemes for the management or the members of the Board of Directors. Hence, no obligations in respect of the management or any board members are set aside or accrued in the balance sheet.

The total pension costs for the Company for 2006 was NOK 1,516,901.

13 Covers pension compensation for salaries below 12G, effective for all employees. 14 Covers pension compensation for salaries above 12G, effective for all employees. 15 Reflects salary and compensation for 10 months in 2006. 16 Remuneration to the Chairman of the Board of Directors includes NOK 600,000 as per consultancy agreement between Noreco and Takla Energy AS. This consultancy agreement has been terminated.

11.6.4 Share option program The Company has per this date no share incentive programs for its employees. The Company plans to establish an incentive program, however it is not yet determined what such a program will consist of.

11.6.5 Lock-up agreements The Managers has entered into lock-up agreements with the management and board members of Noreco. Further information is set out in section 5.13 in this Prospectus.

11.7 EMPLOYEES As of the date of the Prospectus, the Group has 94 employees, whereas 28 are employed by Altinex Services AS and Altinex Reservoir Technology AS. Noreco is currently in a process to sell all the shares in Altinex Services AS and Altinex Reservoir Technology AS. The table below illustrates the development in number of employees over the last two years, as per the end of each calendar year.

2006 2005 Number of employees 18 6

11.8 BOARD SUB-COMMITTEES The Board of Directors has decided to implement two sub-committees; one Audit Committee and a Remuneration and Corporate Governance Committee.

11.8.1 The Audit Committee The Audit Committee Charter states, inter alia, that the Audit Committee shall:

• act as preparatory body in connection with the supervisory role of the Board of Directors with respect to financial control and review and external audit of the Company’s financial statements; • consist of at least two members independent of the Company’s management and to be elected by the Board of Directors; • fulfill the requirements as to independency (as set out in the Norwegian Code of Practice for Corporate Governance (the “Code”) issued by the Norwegian Corporate Governance Board on 28 November 2006); and • consider and propose to the Board of Directors, for presentation and election by the annual general meeting, the independent auditors of the Company.

As of the Listing, Lars Takla, Roger O'Neil and Therese Log Bergjord and will be the members of the Audit Committee. CFO Jan Nagell will be attending the meetings of the Audit Committee.

11.8.2 Remuneration and Corporate Governance Committee The Remuneration and Corporate Governance Committee Charter states, inter alia, that the Remuneration and Corporate Governance Committee shall:

• act as preparatory body in connection with the supervisory role of the Board of Directors with respect to remuneration compensation and other benefits of the Company’s CEO and other senior executives; • consist of at least two members independent of the Company’s management and to be elected by the Board of Directors; • fulfill the requirements as to independency as set out in the Code; and • make proposals for long-term incentive schemes applicable to the Company’s CEO and other senior executives.

As of the Listing, Lars Takla, John Hogan and Heidi Petersen will be members of the Remuneration and Corporate Governance Committee.

11.9 NOMINATION COMMITTEE At the general meeting held 10 October 2007, the shareholders of Noreco passed a resolution to amend the Company’s Articles of Association and to establish a nomination committee for the Company. The nomination committee will consist of Lars Takla, Ole Melberg and Eimund Nygaard.

The Articles of Association states, inter alia, that the Nomination Committee shall prepare a motion for the annual general meeting relating to:

• Election of members of the Board of Directors and the chairperson of the Board of Directors; • Election of the members of the Nomination Committee and the chairperson of the Committee; • The remuneration of the Directors and the members of the Nomination Committee; and • Any amendments of the Nomination Committee’s mandate and charter.

11.10 CORPORATE GOVERNANCE The Company endeavors to maintain high standards of corporate governance and is committed to ensure that all shareholders of the Company are treated equally. The Company has adopted and implemented appropriate corporate governance principles. As of the date of this Prospectus, the Company’s Board of Directors does not comply with the recommendations set out in the Code. However, as of the first Listing day (on or about 9 November 2007) the Company will comply with all of the recommendations set out in the Code.

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 Prospectus and a brief description of certain aspects of Norwegian law, including the Norwegian Public Limited Liability 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.

12.1 SHARE CAPITAL AND SHARES Noreco's share capital is, at the date hereof, NOK 345,313,976.10, consisting of 111,394,831 Shares, all fully paid, each with a nominal value of NOK 3.10. Noreco own no own shares.

All Shares are vested with equal shareholder rights in all respects and no shares have different rights. There is only one class of shares and all shares are freely transferable.

The Shares have been created under the Norwegian Private and Public Limited Liability Companies Acts, and registered in book-entry form in the VPS under the international securities identification number (ISIN): NO 001 0379266. The registrar for the shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

Noreco is currently not listed on any stock exchange nor any regulated market. The Noreco Shares are registered on the OTC-list managed by the Norwegian Securities Dealers Association (“Fondsmeglerforbundet”) since 16 July 2007 with the ticker-code “NORC”. The Company has applied for listing of the Company’s Shares on Oslo Børs, alternatively Oslo Axess.

12.1.1 Legislation and rights attached to the Shares Reference is made to the review of legislation and rights attached to the Shares in Section 12.8 of the Prospectus.

12.1.2 Mandatory offers Section 14.9 of the Prospectus describes the current and new legislation on mandatory offers applicable to companies listed and incorporated in Norway. The Company or its shareholders have not received any public takeover bids since its inception.

12.1.3 Withholding tax Section 15.2.1 of this Prospectus provides information concerning withholding tax for foreign shareholders.

12.2 OUTSTANDING AUTHORISATIONS

12.2.1 Authorisation to issue shares At the Extraordinary General Meeting held on 10 October 2007, the Board of Directors of Noreco was given the following authorizations to issue new shares:

Authorization – purchase of shares and redemption of options:

a) The Board of Directors is authorized to increase the Company’s share capital by a total amount of NOK 3,100,000, by issuing up until 1,000,000 shares, through one or more subscriptions, each with a nominal value of NOK 3.1. The subscription price will be NOK 37.50, and the Board of Directors is further authorized to determine terms of such offerings and subscriptions.

b) The authorization includes the right to increase the Company’s share capital in return for non-cash contributions and the right to assume special obligations on behalf of the Company.

c) The Board of Directors is further authorized to waive the preferential rights pursuant to Section 10-4 of the Public Limited Companies Act.

d) The authorization may only be used for issuing of new shares relating to the purchase of shares and redemption of options in Altinex ASA.

e) The authorization shall be effective from the date it is registered in the Norwegian Register of Business Enterprises and shall be valid for a period of one year from its effective date.”

Authorization – raising of equity:

a) The Board of Directors is authorized to increase the Company’s share capital by a total amount of NOK 131,849,999.8, by issuing up until 42,532,258 shares, through one or more subscriptions, each with a nominal value of NOK 3.1. The Board of Directors is further authorized to determine the price and terms of such offerings and subscriptions.

b) The Board of Directors is further authorized to waive the preferential rights pursuant to Section 10-4 of the Public Limited Companies Act.

c) The authorization may only be used for issuing of new shares directed towards existing shareholders in full or in part or in order to bring new investors into the company, in order to fund the Company’s equity plans (other than issuance of shares as part of a share option program for employees).

d) The authorization shall be effective from the date it is registered in the Norwegian Register of Business Enterprises and shall be valid for a period of one year from its effective date.”

The two authorizations described above replace all previously issued authorizations to the Board of Directors to increase the Company’s share capital.

12.2.2 Authorisation to purchase treasury shares

The Board of Directors has not been granted an authorisation to acquire any treasury shares. The Company does currently not own any treasury shares.

12.3 WARRANTS AND OPTIONS ETC. The Company has issued a convertible loan in the amount of NOK 440 million of which NOK 10 million has been converted to equity as per the date of this Prospectus. The loan is convertible into a maximum number of new shares equaling a capital increase of NOK 60,804,017.46. The conversion rate is NOK 22.25 per share after the share split as set out below in Section 12.4). The latest conversion date is 10 business days prior to 11 May 2012 (both days inclusive). Should all the outstanding options in Altinex convert their options into options in Noreco, this would constitute a 5.6% dilution in the registered share capital of the Company For a detailed description of the convertible bond loan, please refer to Section 10.5.2 of this Prospectus.

As per the date of this Prospectus, there are currently approximately 4,000,000 outstanding options in Altinex. Noreco has offered the option holders a compensation for these outstanding options. The details and form of settlement have not yet been determined.

Except for the above, the Company has not issued any options, convertible securities, exchangeable securities or securities with warrants giving any one the right to acquire Shares through utilization of such rights.

12.4 HISTORICAL DEVELOPMENT IN SHARE CAPITAL AND NUMBER OF SHARES Below is a table showing the development of the Company’s share capital since inception to the date of the Prospectus:

Date of resolution Type of change in No. of shares Par value Subscription Share capital after share capital after change (NOK) price change 28 January 2005 Inception 1,085 1,000 n.a. 1,085,000.00 25 April 2005 Capital increase 1,785 1,000 2,866.36 1,785,000.00 13 June 2005 Capital increase 2,135 1,000 2,866.36 2,135,000.00 21 December 2005 Capital increase 22,476 1,000 2,866.36 22,476,000.00 15 February 2006 Capital increase 23,435 1,000 2,866.36 23,435,000.00 23 May 2006 Capital increase 31,345 1,000 2,866.36 31,345,000.00 27 September 2006 Capital increase 31,422 1,000 2,866.36 31,422,000.00 18 April 2007 Capital increase 33,634 1,000 2,866.36/3,363.00 33,634,000.00 16 May 2007 Capital increase17 3,588,667 12.298995 35.26 44,137,000.00 11 June 2007 Capital increase 13,476,307 12.298995 35.26 165,745,032.41 11 June 2007 Capital increase 22,382,807 12.298995 89.00 275,286,033.92 11 June 2007 Capital increase 22,418,419 12.298995 35.26 275,724,025.73 29 June 2007 Capital increase 22,818,924 12.298995 150.00 280,649,834.72 15 August 2007 Capital increase 22,931,283 12.298995 89.00 282.031.737,50 23 August 2007 Capital increase 23,681,175 12.298995 150.00 291,254,655.46 10 October 2007 Share-split 94,724,700 3.10 n.a. 293,646,570.00 19 October 2007 Capital increase 94,728,164 3.10 37.50 293,657,308.40 22 October 2007 Private Placement 111,394,831 3.10 33.00 345,323,976.10

As of 31 December 2005 and as of 1 January 2006, the Company had an issued share capital of NOK 23,435,000, comprised by 23,435 Shares with a par value of NOK 1,000. As of 31 December 2006 and 1 January 2007, the Company had an issued share capital of NOK 31,422,000, comprised by 31,422 Shares with a par value of NOK 1,000.

Approximately 25% of the Company’s share capital is paid through set-off against loans from certain shareholders.

17 Following share split resolved in General Meeting held 8 May 2007

12.5 OWNERSHIP STRUCTURE As of 30 October 2007 the Company had a total of 839 shareholders divided into 764 Norwegian and 75 foreign owners.

The table below shows the 20 largest shareholders in Noreco as per 30 October 2007:

Each Share represents one vote in the Company’s general meetings, and none of the Company’s major shareholders have different voting rights (see section 12.6.5 below for further details). After listing of the shares, shareholders holding 5% or more of the shares in the Company will have an interest in the Company which is notifiable under Norwegian securities law.

The major shareholders of the Company are defined as holding more than 10% of the share capital. The major shareholders are Lyse Energi AS (owning 15.6%) and NEC Invest AS (owning 15.0%). The Company is not aware of any other arrangements that may result in, prevent, or restrict a change of control of the Company.

12.6 TRANSACTIONS WITH RELATED PARTIES Since inception, the Company has been party to the following related party transactions18:

In connection with raising initial funding from 3i Companies, Lyse and HVPE, Noreco entered into an agreement with Melberg Partners, a company partly owned by Tollak Melberg, one of the Noreco founders and a board member, to provide economic support, investment advice and financial modeling. Their contract was completed in October 2005 when Noreco raised private equity capital. However, the compensation for this work was to be paid as the private equity was drawn and this resulted in payments to Melberg Partners in 2005, 2006 and 2007. All payments to Melberg Partners have been made and there is no contractual relation with Melberg Partners at this time.

DThe companies Lyse Energi AS (Lyse), Energivekst AS/Hitec Private Equity AS (HVPE), 3i Companies (3i Group plc, 3i UK Private Equity 2004/06 LP, 3i Pan European Growth Capital 2005/06 LP) and Norwegian Company Founders DA (Founders Holding) are shareholders in the Company.

Also in connection with raising private equity funding in October 2005, Noreco agreed to pay legal costs and negotiating costs for the capital providers along with an ongoing monitoring fee to 3i, Lyse Energi, HVPE and Founders Holding. In return Noreco had access to the expertise of these companies including advice on financial questions, raising of new funds and future funding requirements. The fee was paid quarterly through 2005, 2006 and until June of 2007. In June of 2007 Noreco raised additional capital and the advisory fee is no longer valid. There is no longer any fee agreement between Noreco and the private equity providers.

Below are the details for payments made to the parties outlined above:

Year 2005 Company Scope NOK Melberg Partners AS Work associated with raising private equity funds and prequalification 615,359 Lyse Energi AS Work associated with negotiations on private equity placement 653,323 HVPE Work associated with negotiations on private equity placement 487,798 3i Companies Work associated with negotiations on private equity placement 487,798 Founders Holding Work associated with negotiations on private equity placement 146,347

Year 2006 Company Scope NOK Melberg Partners AS Work associated with raising private equity funds and prequalification 463,582 Lyse Energi AS Advisory fee 200,000 HVPE Advisory fee 200,000 3i Companies Advisory fee 200,000 Founders Holding Advisory fee 60,000

Year 2007 to date Company Scope NOK Melberg Partners AS Work associated with raising private equity funds and prequalification 1,825,054 Lyse Energi AS Advisory fee 89,010 HVPE Advisory fee 89,010 3i Companies Advisory fee 89,101 Founders Holding Advisory fee 48,173

All of the above contracts have been completed and the Company has no further obligations to any of the companies listed above. In addition to these contracts, the Company has had contracts with Lars Takla (Takla Energy AS), John Hogan and Roger O’Neil for Board services. These contracts have now been terminated.

12.7 PRICE TO AFFILIATES The price paid for the Shares in the Private Placement will be higher than the effective cash contribution per Share made by members of the board or the senior management (or related parties of such) for the purchase of Shares during the past year. Specifically, Mr. Takla has acquired 54 shares for NOK 3,363 per Share and 105 Shares at NOK 2,866.36 per Share; Mr. O'Neal has acquired 288 Shares at NOK 2,866.36 per Share; Mr. Hogan has acquired 264 Shares at NOK 2,866.36 per Share and 24 Shares at NOK 2,866.36 per Share (numbers not adjusted for share splits in May and October 2007).

12.8 THE ARTICLES AND CERTAIN ASPECTS OF NORWEGIAN COMPANIES LAW

12.8.1 The Articles of Association The Norwegian Public Limited Liability Companies Act applies to the Company. The Articles of Association of the Company are included as Appendix 1 to this Prospectus.

In accordance with the Articles of Association section 3, the Company’s objectives are ” exploration, production and sale within the oil and natural gas industry. The Company will seek ownership in production licenses through participation in licensing rounds and by acquiring interests in licenses”.

The Board of Directors of the Company shall consist of up to 8 board members, and the Company is represented by the joint signature of the Chief Executive Officer (“CEO”) and the chairman of the Board of Directors, or the joint signature of the chairman of the Board of Directors and one Board member, or by three Board members jointly.

According to the Articles of Association section 10, the annual general meeting of shareholders shall resolve the following issues: 1. Election of Board members and the Chairman of the Board 2. Approval to the Annual Accounts and Annual Report including distribution of dividend 3. Election of the members and the chairperson of the Nomination Committee and amendments of the Nomination Committee’s Mandate and Charter 4. Such other matters as, according to law or the Articles of Association, fall within the duties of the General Meeting.

The annual general meeting shall also deal with the statement from the Board of Directors relating to the determination of salary and other benefits to the leading employees according to Section 6-16 a of the Public Limited Liability Companies Act.

12.8.2 The general meeting of shareholders In accordance with Norwegian law, the annual general meeting of the Company's shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of general meetings be sent to all shareholders whose addresses are known at least two weeks prior to the date of the meeting. A shareholder may vote at the general meeting either in person or by proxy. Although Norwegian law does not require the Company to send proxy forms to its shareholders for general meetings, the Company plans to include a proxy form with notices of general meetings.

In addition to the annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Board of Directors. An extraordinary general meeting must also be convened for the consideration of specific matters at the written request of the Company's auditors or shareholders representing a total of at least 5% of the share capital.

Shareholders who wish to take part in a general meeting must give notice to the Company by the date stated in the calling notice, which date must be at least two working days prior to the general meeting.

12.8.3 The Board of Directors

The administration of the Company pertains to the Board of Directors, which shall oversee the proper organization of the business. The Board shall supervise the administration of the Company, hereunder supervise the CEO.

The members of the Board of Directors are elected by the general meeting by majority vote. The general meeting also resolves the annual remuneration of the Board members. 12.8.4 The management of the Company

The Board of Directors employs the 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 of Directors. The CEO has the right to participate at Board meetings.

The CEO employs the other members of the executive management and resolves 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 Directors of the Company.

12.8.5 Voting rights

Each share in the Company carries one vote and all of the Shares have an equal right to vote at the general meetings.

In general, resolutions that shareholders are entitled to make pursuant to Norwegian law or the Articles Association of the Company, requires approval by a simple majority of the votes cast. However, in the case of election of directors to the Board of Directors, the persons who obtain the most votes are elected. Further, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights in connection with any share issue, to approve a merger or demerger, to amend the Articles of Association, to authorize an increase or reduction in the share capital, to authorize an issuance of convertible loans or warrants or to authorize the Board of Directors 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 the general 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 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 the 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.

12.8.6 No restriction on ownership of the Shares

Neither the Company’s Articles of Association nor the Norwegian Public Limited Liability 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.

12.8.7 Freely transferable shares

There are no limitations on the transferability of the Shares under Norwegian law or according to the Articles of Association.

12.8.8 Additional issuances and preferential rights

All issuances of shares by the Company, including bonus issues, require an amendment to the Articles of Association of the Company, which requires support by at least two-thirds of the votes cast and at least two thirds of the capital represented at the general meeting. Furthermore, under the Norwegian Public Limited Liability 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

casted and at least two thirds of the capital represented at the general meeting. A waiver of the shareholders’ preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class.

The general meeting may, by two-thirds of the votes cast and at least two thirds of the capital represented, authorize the Board of Directors to issue new shares and to waive shareholders' preferential rights in connection with such issuances. Such authorization may be effective for a maximum of two years, and the par value of the shares to be issued may not exceed 50% of the registered nominal share capital when the authorization is registered.

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.

12.8.9 Related Party Transactions Under Norwegian law, an agreement between the Company and a shareholder, the shareholder's parent, a director of the Company or the CEO of the Company, or any connected person to the shareholder or the shareholder's parent, that involves consideration or performance from the Company in excess of one-twentieth of the Company's share capital at the time of such agreement is not binding on the Company unless the agreement has been approved by a general meeting. Certain exemptions may apply, such as for business agreements in the normal course of the Company's business containing pricing and other terms and conditions that are normal for such agreements, as well as the purchase of securities at a price that is in accordance with market quotes. Any performance of an agreement that is not binding on the Company must be reversed.

12.8.10 Minority Rights Norwegian law contains a number of protections for minority shareholders against oppression by the majority, including but not limited to those described in this and preceding paragraphs. Any shareholder may petition the courts to have a decision of its Board of Directors or general meeting declared invalid on the grounds that it unreasonably favors certain shareholders or third parties to the detriment of other shareholders or the company itself. In certain circumstances shareholders may require the courts to dissolve the company as a result of such decisions. Minority shareholders holding 5% or more of the Company's share capital have a right to demand in writing that it hold an extraordinary general meeting to discuss or resolve specific matters. In addition, any shareholder may in writing demand that the Company place an item on the agenda for any shareholders' meeting if it is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if at least two weeks remain before the shareholders' meeting is to be held.

12.8.11 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 of Directors 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 of Directors.

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 Liability Companies Act, (g) any part of the annual profit which, according to law or the Articles of Association, cannot be paid out as dividends, 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

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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.

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 of Directors 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, the financial situation of the Company at the relevant point in time and any restrictive covenants in the Noreco Group’s financing agreements.

12.8.12 Compulsory Acquisition If a shareholder, directly or via subsidiaries, acquires Shares representing more than 90% of the total number of 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. Commencement of a 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, the shareholder 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 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.

12.8.13 Insolvency/Liquidation According to the Norwegian Public Limited Liability 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.

12.9 SHAREHOLDER AND DIVIDEND POLICY

12.9.1 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. 12.9.2 Dividend policy The Company will strive to follow a dividend policy favorable to shareholders. This will be achieved by sound business development and continuous growth. The Company aims over time to give shareholders a competitive return on capital relative to the underlying risk. The Company has not previously paid any dividends.

12.10 SHAREHOLDER’S AGREEMENTS ETC. The Company is not aware of any existing shareholders agreement as regards the Shares.

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13. OVERVIEW OF THE SENIOR SECURED CALLABLE BOND LOANS

13.1 OVERVIEW On 13 July 2007, the Company issued two senior secured callable bond loans (the “Bond Loans”) with a total loan amount of NOK 2.8 billion. The Bond Loans has been issued in accordance with the Norwegian Public Limited Liability Companies Act. The first tranche of the bond loan totals NOK 500 million and has a floating rate note of 6 months NIBOR. The remaining Bond Loan of NOK 2.3 billion has a fixed rate of 11% p.a. The Bond Loans was disbursed on 13 July 2007 and will mature on 13 July 2011. Both Bond Issues have been arranged and placed by Pareto Securities ASA, Dronning Mauds gt. 3, P.O. Box 1411 Vika, NO-0115 Oslo, Norway. The paying agent is DnB NOR Bank ASA, 0021 Oslo, Norway.

13.2 USE OF PROCEEDS The net proceeds from the Bonds was used for (i) financing the acquisition of shares in Altinex, (ii) finance all accrued and future costs related to the acquisition of shares and convertible bonds in Altinex and financing of the Issuer (included all legal costs and management/advisor costs and fees related thereto) and (iii) repayment of existing Bank Loan (plus accrued interests and fees).

13.3 EXPENSES/TRANSACTION COSTS Transaction costs and all other directly attributable costs in connection with the issuance of the Bond Loans and the listing of the Bonds on Oslo Børs will be borne by the Company. The Company shall cover all expenses in connection with the Loans such as preparation of the Loan Agreement (and any security for the Loan), listing of the Loan on Oslo Børs and registration and administration of the Loan in the Security Depository in the accordance with the agreement between the Company and the Securities Depository. Annual listing fee for the Bond Issues are NOK 65,500 in total. The total costs incurred by the Company are expected to amount to approximately NOK 0.1 million.

13.4 THE SENIOR SECURED CALLABLE BOND 2007/2010 TOTALLING NOK 500,000,000 On 13 July 2007, the Board issued the Senior Secured Callable Bond Loan to the subscribers, subject to a board resolution made on 28 June 2008. No market-marker agreement has been made in relation to the Senior Secured Bonds. The full loan agreement for this Senior Secured Callable Bond Loan is set out in Appendix 6 in this Prospectus. 13.4.1 General information of the loan

ISIN Number: ...... NO 001037907.6, electronically registered in the VPS. Security type: ...... Bond loan with floating rate note Currency: ...... NOK Loan Amount: ...... FRN Tranche NOK 500,000,000 Disbursement date: ...... 13 July, 2007 Maturity date: ...... 13 July, 2010 Coupon rate: ...... 6-month NIBOR + Margin, payable in semi-annually arrears Nibor: ...... 6-month Nibor Margin: ...... 5.25 percentage points p.a. Issue price: ...... 100.00 (par) First Interest Payment Date: ...... 13 January, 2008 (6 months after Disbursement Date) Last Interest Payment Date: ...... 13 July, 2010 (3 years after Disbursement Date) # Days first term: ...... 184 days (6 months) Interest bearing from: ...... Disbursement Date Interest bearing to and including: ...... Maturity Date Interest Payments: ...... Interest on the Bonds will commence to accrue on

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Disbursement Date. Interests shall be paid semi-annually in arrears on the Interest Payment Days. The interest rate is set on the first Interest Determination Date. Should NIBOR not be available, the interest rate will be set based on NIBOR Reference Banks plus the Margin Interest Payment Date: ...... 13 January and 13 July each year until and including the Maturity Date. If the Interest Payment Date is not a Banking Day, the Interest Payment Date shall be postponed to the next Banking Day. However, if this day falls in the following calendar month, the Interest Payment Date is moved to the latest Banking Day preceding the original date Late Payment of Interest: ...... In the event that payment of interest or principal is not made on the relevant Interest Payment Date, the amount outstanding shall bear interest from the Interest Payment Date at an interest rate equivalent to the interest rate stated above under “Coupon Rate” plus 5.00 percentage points. The outstanding amounts shall bear interest as mentioned above until payment is made, whether or not the Loan is declared to be in default pursuant to Loan Agreement Clause (hereafter referred to as “Clause”) 15 Interest Determination Date: ...... 11 July 2007 and thereafter 2 Banking Days prior to each Interest Payment Date Interest Determination: ...... The interest rate on the Loan is reset with effect from each Interest Payment Date. The new interest rate is reset on the Interest Determination Date based on NIBOR plus Margin (5.25 percentage points). Should NIBOR not be available, the interest rate will be reset based on NIBOR Reference Banks plus Margin. When the interest is set for the first time and on subsequent interest rate resets, the next Interest Payment Date and the actual number of calendar days up to that date must be notified to the Bondholders in writing via the Securities Depository. This communication must also include the interest rate applicable up to the next Interest Payment Date. The Loan Trustee and, if the Loan is listed, the Exchange shall be notified of the new interest rate immediately. In the event that the interest rate is fixed in accordance with quotes from NIBOR Reference Banks, the Issuer or Bondholders representing at least 1/10th of the Outstanding Loan may appeal against the interest rate fixing. Such an appeal must be presented in writing to the Loan Trustee within 20 Banking Days of the Bondholders being informed of the interest rate fixing. The appeal will be dealt with by a committee comprising three members, of which one representative is nominated by the Issuer, one representative is nominated by the Loan Trustee and a chairman agreed by the representatives of the two parties. If the parties cannot agree on a chairman, this person will be nominated by the Lord Chief Justice of the Oslo District Court. The decision of the committee is final. Bondholders and the Exchange (if applicable) shall receive written notice from the Securities Depository that an appeal has been made against the procedure for fixing the interest rate in accordance with the paragraphs above. The interest is calculated on the basis of the actual number of

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elapsed calendar days from and including the Disbursement Date to the following Interest Payment Date, and subsequently from each interest fixing date to the next or the Maturity Date. The number of days is divided by 360. NIBOR – definition: ...... The interest rate rounded off to two decimal places for a 6 - six - months period that is quoted on Reuters NIBR page at 12.00 noon in Oslo on the Interest Determination Date. Should the contents of the Reuters NIBR page be changed such that, in the opinion of the Loan Trustee and the Issuer, the interest rates shown no longer represent the same kind of interest rates as when the Loan was disbursed, or the relevant page is removed from the Reuters system, another news page shall be used. This page may be another Reuters page or, possibly, that of another electronic news agency, if it, in the opinion of the Loan Trustee, specifies the same kind of interest rates as Reuters NIBR did on the disbursement of the loan. Any disagreement of opinion between the Issuer and the Loan Trustee concerning the use of a new page must be treated as described in “Interest Determination” above. NIBOR –reference banks: ...... The interest rate determined on the basis of the interest on deposits in the inter-bank market in Oslo, quoted by the four largest authorized exchange banks in the Norwegian market at approximately 12.00 noon in Oslo on the Interest Determination in Oslo, for a 6 - six – month period, starting on the Interest Payment Date and applicable to a comparable amount. The Loan Trustee will ask the head office of each of the banks for a quotation on such interest. If two or more quotations are given, the interest rate will be set at the arithmetic mean of the quotations. If less than two quotations are given, the interest rate will be set to the arithmetic mean of the rates that banks selected by the Loan Trustee quote at approximately 12.00 noon in Oslo on the Interest Determination Date for loans in Norwegian krone to leading European banks for a 6 - six - months period starting on the Interest Payment Date and applicable to a comparable amount. An interest rate determined by calculation of the arithmetic mean shall be rounded off to two decimal places Status of the loan: ...... The Loan shall rank at least pari passu with all other senior obligations of the Issuer other than obligations which are mandatory preferred by law. The Loan and shall rank ahead of any subordinated capital.

13.4.2 Special issues

Security: ...... The Loan amount plus accrued interest and expenses shall at all times be secured by: (i) a 1st priority pledge in the Escrow Account, (ii) a 1st priority pledge in all the Issuer’s shares and convertible bonds in Altinex The assets serving as security for the Bonds, as well as the shares in Altinex Oil Norway and Altinex International and any direct owned subsidiary of the Issuer (or, following a Merger; the surviving entity), may not be pledged in favor of any other party. The security under (ii) above will be cancelled if and when a

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Merger takes place, as the Issuer’s shares in Altinex will then cease to exist. The surviving entity in the Merger will be subject to all obligations of the Issuer under the Loan Agreement. Merger: ...... A possible merger of the Issuer and Altinex, regardless of which company is the surviving entity Dividend Clause: ...... During the term of the Bonds, the Issuer shall not make any dividend payment, repurchase of shares or make other similar transactions (included, but not limited to Total Return Swaps) or loans to its shareholder(s).

13.4.3 Financial covenants

The Issuer must comply with the following five financial covenants.

Value Clause: ...... If the market value of the Issuer’s shares in Altinex plus the market value of the Altinex Convertible Bond Loan plus the remaining amount on the Escrow Account at anytime decreases to below 125% of the remaining Loan amount, the Issuer shall within 30 banking days increase this level to minimum 150%. This Value Clause shall no longer be applicable if a Merger occurs. Book Equity Ratio: ...... The Book Equity Ratio in the Group shall be minimum 20%. The Book Equity Ratio shall be calculated quarterly as follows:

If the Group is in breach with the Book Equity Ratio, it will have 2 months to increase the ratio to above 20%. For the avoidance of doubt, figures included in the Book Equity ratio are on a consolidated basis for the Group. Market Adjusted Equity ratio I...... The Group shall at all times maintain a Market Adjusted Equity I ratio of minimum 30%. This ratio shall be calculated as follows:

Market Adjusted Equity ratio II: ...... The Issuer shall at all times maintain a Market Adjusted Equity ratio II of minimum 40%. This ratio shall be calculated as follows:

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The value of the shares of the Issuer shall be documented based on the total OTC or stock exchange market value of the Issuer’s shares (or, following a Merger; the stock exchange market value of the surviving entity’s shares), less the value of shares in the Issuer held by the Issuer (or, following a Merger; the stock exchange market value of the surviving entity’s shares in the surviving entity), calculated as the volume weighted average share price the last 20 trading days before the reporting dates as set out above. The value of the Altinex shares used under Market Adjusted Equity ratio I shall be calculated by using the volume weighted average share price the last 20 trading days before the reporting dates. If the Issuer is in breach with any of the Market Adjusted Equity Ratios, it will have 2 months to increase the ratio to the minimum level. EBITDA Ratio: ...... The Issuer shall at all times maintain:

The EBITDA Ratio shall be calculated quarterly on a rolling six months basis, and if the Issuer is in breach with the EBITDA Ratio, it will have 2 months to decrease the ratio to below the maximum level. For the avoidance of doubt, figures included in the EBITDA Ratio are on a consolidated basis for the Group.

13.4.4 Other clauses and covenants

Other: ...... The Issuer shall not without the prior written approval of the Trustee permit any member of the Group to engage in, directly or indirectly, any transaction with any party, except in the ordinary course of such member of the Group's business and upon fair and reasonable terms that are no less favorable to the member of the Group than those which might be obtained in an arm's length transaction at the time. The Issuer shall not without the approval of the Trustee or, where necessary, the Bondholders' meeting: (a) cease to carry on its business, (b) sell or dispose of all or a substantial part of its assets or operations or change the nature of its business or merge with another company (other than the Merger) in a manner which might jeopardize the Issuer's fulfillment of its obligations under the Loan Agreement, (c) grant any loans or guarantees to any third party not being a member of the Group. If the Issuer sells, dispose of shares or otherwise dilutes its ownership in Altinex or in Altinex Oil, or in Altinex International, the remaining Bonds shall be redeemed according to the Call Option structure described herein.

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Dividend Clause: ...... During the term of the Bonds, the Issuer shall not make any dividend payment, repurchase of shares or make other similar transactions (included, but not limited to Total Return Swaps) or loans to its shareholder(s). Oil Price Hedging: ...... The Issuer shall ensure that the Group hedges, by way of put options, forwards or other derivatives, its future estimated oil production at a minimum as follows: The strike price shall be minimum US$ 50/boe, and the Group shall make sure that hedging is in place for the following rolling 24 months for the following portion of the estimated production: • in Norway for minimum 20% of the estimated production, • in other countries than Norway for minimum 50% of the estimated production The Oil Price Hedging program shall be reported in the beginning of every quarter. Escrow Account: ...... The Issuer shall prior to disbursement establish an Escrow Account (pledged on 1st priority to the Trustee on behalf of the Bondholders) and the net proceeds from the Bonds shall be transferred to the Escrow Account in connection with disbursement of the Bonds. Amounts on the Escrow Account may only be withdrawn in connection with Purpose of the Loan. Security in the current holdings of Altinex shares and convertible bonds shall be established in connection with disbursement from the Escrow Account while new shares acquired shall be included in the Security as soon as practically possible in connection with such share acquisitions. Call options: ...... The Issuer may redeem some of the Bonds (in which case the Issuer shall call Bonds in both Tranches relative to the proportion between the Tranches) or all the Bonds as follows: (i) At any time during the first three months after Disbursement Date at a price equal to 102% of par value (plus accrued interest on redeemed amount). This call option is only applicable for the proceeds from the Bonds remaining on the Escrow Account. If all the amounts on the Escrow Account is utilized and the Additional Equity is in place within these three months, this call option is also applicable for an amount equal to the amount of new equity, maximum NOK 280 million, (ii) At any time at from and including the date 3 months after Disbursement Date at a price equal to 103% of par value (plus accrued interest on redeemed amount). If Bonds are called according to (ii) above during the first year after Disbursement Date, the Bondholders shall in addition to 103% of par value receive interest for a full year, regardless of when Bonds are called according to the structure above. Any remaining amount on the Escrow Account may be used in connection with redemption according to the Call options described herein. Should the Issuer exercise its Call Option, the Loan Trustee and the Bondholders must be informed of this (the Bondholders in writing via VPS) no later than 30 – thirty-

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Banking Days before the date of redemption. Partial redemption of the Loan must be carried out by drawing of lots between the Bonds (by a full repayment of individual Bonds, allocated randomly between the Bonds). Bonds redeemed by the Issuer in accordance with this “Call Option” paragraph shall be discharged against the Remaining Loan Put options: ...... The Bondholders will upon the Put Option Events have the right of prepayment (put option) for Bonds at 101% of par value (plus accrued interests). Each Bondholder may exercise this put option independently of each other however so that the Trustee shall draw lots in the event that the exercise demand is in excess of the amount of Bonds to be redeemed. If an event that trigger the put option takes place within the first calendar year after Disbursement Date, the Bondholders that decide to put their Bonds shall in addition to 101% of par value receive interest for the full first year.

The Put Option must be exercised within twenty Banking Days after the Issuer has given notification as set out in Clause 13.1 (h), always provided that in respect of a Change of Control Event, the Put Option must be exercised within 60 days after the Issuer has given such notice.

The Put Option may be exercised by each Bondholder independently by giving written notice of the request to the Bondholder’s VPS account manager. The Bondholder’s VPS account manager shall notify the paying agent of the Loan of the pre-payment request. The put date shall be the twenty-fifth – 25- Banking Days after the aforesaid notification to the Bondholder by the Issuer, always provided that in respect of a Put Option triggered by a Change of Control Event, the put date shall be fifteen – 15- Banking Days following the date when the Paying Agent received the payment request. Put Option Event: ...... Events that trigger Put options: i) a Debt Restriction Event, ii) an Asset Sale Restriction Event, iii) an Exploration Restriction Event or iv) a Change of Control Event. i) Debt Restrictions...... The Group is not allowed to take up or draw on further financial indebtedness other than: (i) new indebtedness in direct relation to finance acquisitions of discoveries, producing assets or companies (however, always limited to maximum 70% of transaction value), (ii) new indebtedness in direct relation to finance acquisitions of exploration acreages, prospects or discoveries (however, always limited to maximum 70% of transaction value), (iii) new indebtedness in direct relation to finance development of undeveloped assets or development of fields under development (however, always limited to maximum 70% of estimated development costs related thereto),

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(iv) any new indebtedness provided that all Bondholders are offered a right of prepayment (put option) of Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling the amount of new indebtedness (such put option must be declared within 20 banking days after the announcement of the plan to take on new indebtedness). Replacement/refinancing of existing drawn financial indebtedness within the Group shall not be considered as further indebtedness. ii) Asset Sale Restriction ...... Upon sale of assets or companies within the Group with a gross transaction value exceeding NOK 100 million after tax, each Bondholder shall have the right of prepayment (put option) for a fraction of the Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling 75% of the gross transaction value less debt related to such asset or company. iii) Exploration Restrictions: ...... If the Group reports more than NOK 800 million of expensed dry well costs (meaning exploration costs resulting from dry wells) after tax in aggregate for the duration of the Bonds (from and included 3Q 2007 to and included 2Q 2010), the Bondholders shall have the right of prepayment (put option) of the Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling the difference between the actual reported figure and NOK 800 million. iii) Change of Control clause: ...... Upon a Change of Control Event occurring, each Bondholder shall have a right of prepayment (Put Option) of the Bonds at a price of 101% of par value (plus accrued interests) during a period of 60 days following the notice of a Change of Control Event. For the avoidance of doubt, a merger in which the Issuer merges into Altinex shall not be a Change of Control Event. Listing of shares: ...... The Issuer’s shares (or, following a Merger; the surviving entity’s shares) shall be listed on Oslo Børs / Oslo Axess within the end of 2007 and shall be listed at the OTC list in Oslo in the meantime Additional Equity: ...... The Issuer shall, within the end of 2007, be capitalized with further equity for an amount as a minimum equaling 10% of the remaining Bonds at the date three months after Disbursement Date. (Example: If 2800 million of the Bonds are outstanding three months after Disbursement Date, NOK 280 million of additional equity shall be in place within the end of 2007). Default: ...... The Loan may be declared to be in default upon the occurrence of any of the Default Events. See Clause 15 for subsequent consequences. Other Covenants: ...... For full information on covenants, see Clause 13 “Covenants” Bondholders’ meeting: ...... A Bondholders' meeting shall be held at the request of: (a) the Issuer, (b) Bondholders representing at least 1/10 of Outstanding Loan or (c) the Exchange - if the Loan is listed - or (d) the Loan Trustee. A request of a Bondholders' meeting shall be made in writing and clearly state the matters to be discussed and the provisions

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of the Loan Agreement on which the request is based. The request shall be sent to the Loan Trustee. The authority of the Bondholders’ meeting is described in Clause 16. At the Bondholders' meeting each Bondholder has one vote for each Bond he owns. The notification of the number of Bonds in the Loan (print-out) which was sent to each Bondholder through the Securities Depository in the summons to the meeting, see Clause 17.3, serves as proof of ownership of the Bonds and of each owner's right to vote. In the event that Bonds have been transferred after the print-out was made, the new Bondholder must bring to the meeting the original summons and the print-out, endorsed so as to document the transfer. The Issuer’s Bonds do not give the right to vote and are not taken into account when determining the number of voting Bonds. In case of doubt, the Bondholders' meeting decides which Bondholders can vote and how many votes each one has. In order for the Bondholders' meeting to be able to make valid decisions, Bondholders representing at least 5/10 of the Outstanding Loan must be represented, see however Clause18. Valid decisions may be made by a simple majority, see however Clause 17.8. In the event that less than 5/10 of the Outstanding Loan are represented, a valid decision may not be made at the first Bondholders' meeting at which the matter is discussed. After a new meeting has been summoned and the matter discussed a second time, a valid decision may be made pursuant to the voting rules set forth above; this also applies to cases in which less than 5/10 of the Outstanding Loan are represented. Amortization: ...... The Bonds shall be repaid in full at the Maturity Date at price 100% of par (plus accrued interest). Fees / Expenses: ...... The Issuer shall cover all expenses in connection with the Loan (and any security for the Loan), such as preparation of the Loan Agreement (and any security for the Loan), listing of the Loan on the Exchange (if applicable) and registration and administration of the Loan in the Security Depository in the accordance with the agreement between the Issuer and the Securities Depository. The Issuer shall pay any stamp duty and other public fees in connection with the Bonds, but not in respect of trading in the secondary market, except to the extent by reason of operation of applicable laws, and shall deduct at source any applicable withholding tax payable pursuant to law. Loan Agreement: ...... The Loan Agreement has been entered into between the Issuer and the Trustee acting as the Bondholders’ representative. The Loan Agreement regulates the Bondholder’s rights and obligations with respect to the Loan. The Trustee enters into this agreement on behalf of the Bondholders and is granted authority to act on behalf of the Bondholders to the extent provided for in the Loan Agreement. The Loan Agreement is available to anyone and may be obtained from the Loan Trustee or the Issuer. The Issuer shall

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ensure that the Loan Agreement is available to the general public throughout the entire term of the Loan and that such availability is recorded in the VPS particulars relating to the Loan. The Loan Agreement is available to the public through the Manager or on the web sites of www.noreco.com. Subject to: ...... Finalized loan documentation and approval of loan documentation by the Trustee, Norsk Tillitsmann ASA. Nominal Value: ...... The Bonds will have a nominal value of NOK 500,000. The Bonds will be registered in the Norwegian Central Securities Depository (VPS). Yield: ...... Dependent on the market price. Yield for the first interest period will be notified 2 Banking Days prior to Disbursement Date. Yield for the first interest period is 10.32 %. Legislation under which the Securities have Norwegian law. been created...... Approvals: ...... The Bonds have been issued in accordance with the Issuer’s Board approval dated 28 June 2007. Limitation: ...... Claims for interest and principle shall be limited in time pursuant to the Norwegian Act relating to the Limitation Period for Claims of May 18, 1979 nr 18. Registration: ...... The Bonds will be electronically registered in book-entry form in the Norwegian Central Securities Depository (VPS) under the International Securities Identification Number (ISIN): NO 001037907.6. The VPS registrar is DnB NOR Bank ASA, Registrars Department, 0021 Oslo, Norway. Principal and interest accrued will be credited the Bondholders through VPS. Issue date: ...... 13 July 2007. Loan Trustee: ...... Norsk Tillitsmann ASA, PB 1470 Vika, 0116 Oslo, Norway. Calculation Agent: ...... Norsk Tillitsmann ASA, PB 1470 Vika. 0116 Oslo, Norway.

13.5 THE SENIOR SECURED CALLABLE BOND 2007/2010 TOTALLING NOK 2.3 BN 13.5.1 General information The full loan agreement for this Senior Secured Callable Bond Loan is set out in Appendix 6 in this Prospectus

ISIN Number: ...... NO 001037906.8, electronically registered in the VPS. Security type: ...... Bond loan with fixed rate. Currency: ...... NOK. Loan Amount: ...... Fixed Tranche NOK 2,300,000,000. Disbursement date: ...... 13 July 2007. Maturity date: ...... 13 July 2010. Coupon rate: ...... fixed, 11% p.a., payable semi-annually in arrears. Issue price: ...... 100.00 (par). First Interest Payment Date: ...... 13 January, 2008 (6 months after Disbursement Date).

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Last Interest Payment Date: ...... 13 July, 2010 (3 years after Disbursement Date). # Days first term: ...... 184 days (6 months). Interest bearing from: ...... Disbursement Date. Interest bearing to and including: ...... Maturity Date. Interest Payments: ...... Interest on the Bonds will commence to accrue on Disbursement Date. Interests shall be paid semi-annually in arrears on the Interest Payment Days. Interest shall be calculated on the bases of a year of 360 days with twelve 30-day months, unless: (a) the last day of the period is the 31st day of a month but the first day of the period is a day other than the 30th or 31st day of a month, in which case the month that includes that last day shall no be considered to be shortened to a 30-day month, or (b) the last day of the period is the last day of the month of February, in which case the month of February shall not be considered to be lengthened to a 30-day month. Interest Payment Date: ...... 13 January and 13 July each year until and including Maturity Date. No adjustments to the former date shall be made, notwithstanding that the Interest Payment Date occurs on a date that is not a Banking Date. Late Payment of Interest: ...... In the event that payment of interest or principal is not made on the relevant Interest Payment Date, the amount outstanding shall bear interest from the Interest Payment Date at an interest rate equivalent to the interest rate stated above under “Coupon Rate” plus 5.00 percentage points. The outstanding amounts shall bear interest as mentioned above until payment is made, whether or not the Loan is declared to be in default pursuant to Loan Agreement Clause (hereafter referred to as “Clause”) 15. Status of the loan: ...... The Loan shall rank at least pari passu with all other senior obligations of the Issuer other than obligations which are mandatory preferred by law. The Loan and shall rank ahead of any subordinated capital.

13.5.2 Special issues

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subject to all obligations of the Issuer under the Loan Agreement. Merger: ...... A possible merger of the Issuer and Altinex, regardless of which company is the surviving entity.

13.5.3 Financial covenants

The Issuer must comply with the following five financial covenants.

Market Adjusted Equity ratio II: ...... The Issuer shall at all times maintain a Market Adjusted Equity ratio II of minimum 40%. This ratio shall be calculated as follows:

These figures above only include those of the Issuer, and not the Group. Altinex figures are therefore not included here. The Market Adjusted Equity ratio II shall not apply after a Merger has taken place or after the Issuer owns and controls 100% of the shares in Altinex. Both the Market Adjusted Equity ratio I and Market Adjusted Equity ratio II (together the “Marked Adjusted Equity Ratios”) shall be calculated quarterly and reported at the same dates as the Book Equity Ratio. The value of the shares of the Issuer shall be documented based on the total OTC or stock exchange market value of the Issuer’s shares (or, following a Merger; the stock exchange market value of the surviving entity’s shares), less the value of shares in the Issuer held by the Issuer (or, following a Merger; the stock exchange market value of the surviving entity’s

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shares in the surviving entity), calculated as the volume weighted average share price the last 20 trading days before the reporting dates as set out above. The value of the Altinex shares used under Market Adjusted Equity ratio I shall be calculated by using the volume weighted average share price the last 20 trading days before the reporting dates. If the Issuer is in breach with any of the Market Adjusted Equity Ratios, it will have 2 months to increase the ratio to the minimum level. EBITDA Ratio: ...... The Issuer shall at all times maintain:

13.5.4 Other clauses and covenants

Other: ...... The Issuer shall not without the prior written approval of the Trustee permit any member of the Group to engage in, directly or indirectly, any transaction with any party, except in the ordinary course of such member of the Group's business and upon fair and reasonable terms that are no less favorable to the member of the Group than those which might be obtained in an arm's length transaction at the time. The Issuer shall not without the approval of the Trustee or, where necessary, the Bondholders' meeting: (d) cease to carry on its business, (e) sell or dispose of all or a substantial part of its assets or operations or change the nature of its business or merge with another company (other than the Merger) in a manner which might jeopardize the Issuer's fulfillment of its obligations under the Loan Agreement, (f) grant any loans or guarantees to any third party not being a member of the Group. If the Issuer sells, dispose of shares or otherwise dilutes its ownership in Altinex or in Altinex Oil, or in Altinex International, the remaining Bonds shall be redeemed according to the Call Option structure described herein. Dividend Clause: ...... During the term of the Bonds, the Issuer shall not make any dividend payment, repurchase of shares or make other similar transactions (included, but not limited to Total Return Swaps) or loans to its shareholder(s). Oil Price Hedging: ...... The Issuer shall ensure that the Group hedges, by way of put options, forwards or other derivatives, its future estimated oil production at a minimum as follows:

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The strike price shall be minimum US$ 50/boe, and the Group shall make sure that hedging is in place for the following rolling 24 months for the following portion of the estimated production: • in Norway for minimum 20% of the estimated production, • in other countries than Norway for minimum 50% of the estimated production The Oil Price Hedging program shall be reported in the beginning of every quarter. Escrow Account: ...... The Issuer shall prior to disbursement establish an Escrow Account (pledged on 1st priority to the Trustee on behalf of the Bondholders) and the net proceeds from the Bonds shall be transferred to the Escrow Account in connection with disbursement of the Bonds. Amounts on the Escrow Account may only be withdrawn in connection with Purpose of the Loan. Security in the current holdings of Altinex shares and convertible bonds shall be established in connection with disbursement from the Escrow Account while new shares acquired shall be included in the Security as soon as practically possible in connection with such share acquisitions. Call options: ...... The Issuer may redeem some of the Bonds (in which case the Issuer shall call Bonds in both Tranches relative to the proportion between the Tranches) or all the Bonds as follows: (iii) At any time during the first three months after Disbursement Date at a price equal to 102% of par value (plus accrued interest on redeemed amount). This call option is only applicable for the proceeds from the Bonds remaining on the Escrow Account. If all the amounts on the Escrow Account is utilized and the Additional Equity is in place within these three months, this call option is also applicable for an amount equal to the amount of new equity, maximum NOK 280 million, (iv) At any time at from and including the date 3 months after Disbursement Date at a price equal to 103% of par value (plus accrued interest on redeemed amount). If Bonds are called according to (ii) above during the first year after Disbursement Date, the Bondholders shall in addition to 103% of par value receive interest for a full year, regardless of when Bonds are called according to the structure above. Any remaining amount on the Escrow Account may be used in connection with redemption according to the Call options described herein. Should the Issuer exercise its Call Option, the Loan Trustee and the Bondholders must be informed of this (the Bondholders in writing via VPS) no later than 30 – thirty- Banking Days before the date of redemption. Partial redemption of the Loan must be carried out by drawing of lots between the Bonds (by a full repayment of individual Bonds, allocated randomly between the Bonds). Bonds redeemed by the Issuer in accordance with this “Call Option” paragraph shall be discharged against the Remaining Loan

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Put options: ...... The Bondholders will upon the Put Option Events have the right of prepayment (put option) for Bonds at 101% of par value (plus accrued interests). Each Bondholder may exercise this put option independently of each other however so that the Trustee shall draw lots in the event that the exercise demand is in excess of the amount of Bonds to be redeemed. If an event that trigger the put option takes place within the first calendar year after Disbursement Date, the Bondholders that decide to put their Bonds shall in addition to 101% of par value receive interest for the full first year. The Put Option must be exercised within twenty Banking Days after the Issuer has given notification as set out in Clause 13.1 (h), always provided that in respect of a Change of Control Event, the Put Option must be exercised within 60 days after the Issuer has given such notice. The Put Option may be exercised by each Bondholder independently by giving written notice of the request to the Bondholder’s VPS account manager. The Bondholder’s VPS account manager shall notify the paying agent of the Loan of the pre-payment request. The put date shall be the twenty-fifth – 25- Banking Days after the aforesaid notification to the Bondholder by the Issuer, always provided that in respect of a Put Option triggered by a Change of Control Event, the put date shall be fifteen – 15- Banking Days following the date when the Paying Agent received the payment request. Put Option Event: ...... Events that trigger Put options: i) a Debt Restriction Event, ii) an Asset Sale Restriction Event, iii) an Exploration Restriction Event or iv) a Change of Control Event. i) Debt Restrictions...... The Group is not allowed to take up or draw on further financial indebtedness other than: (v) new indebtedness in direct relation to finance acquisitions of discoveries, producing assets or companies (however, always limited to maximum 70% of transaction value), (vi) new indebtedness in direct relation to finance acquisitions of exploration acreages, prospects or discoveries (however, always limited to maximum 70% of transaction value), (vii) new indebtedness in direct relation to finance development of undeveloped assets or development of fields under development (however, always limited to maximum 70% of estimated development costs related thereto), (viii) any new indebtedness provided that all Bondholders are offered a right of prepayment (put option) of Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling the amount of new indebtedness (such put option must be declared within 20 banking days after the announcement of the plan to take on new indebtedness). Replacement/refinancing of existing drawn financial indebtedness within the Group shall not be considered as further indebtedness.

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ii) Asset Sale Restriction ...... Upon sale of assets or companies within the Group with a gross transaction value exceeding NOK 100 million after tax, each Bondholder shall have the right of prepayment (put option) for a fraction of the Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling 75% of the gross transaction value less debt related to such asset or company. iii) Exploration Restrictions: ...... If the Group reports more than NOK 800 million of expensed dry well costs (meaning exploration costs resulting from dry wells) after tax in aggregate for the duration of the Bonds (from and included 3Q 2007 to and included 2Q 2010), the Bondholders shall have the right of prepayment (put option) of the Bonds at 101% of par value (plus accrued interests) for an aggregated amount equaling the difference between the actual reported figure and NOK 800 million. iii) Change of Control clause: ...... Upon a Change of Control Event occurring, each Bondholder shall have a right of prepayment (Put Option) of the Bonds at a price of 101% of par value (plus accrued interests) during a period of 60 days following the notice of a Change of Control Event. For the avoidance of doubt, a merger in which the Issuer merges into Altinex shall not be a Change of Control Event. Listing of shares: ...... The Issuer’s shares (or, following a Merger; the surviving entity’s shares) shall be listed on Oslo Børs / Oslo Axess within the end of 2007 and shall be listed at the OTC list in Oslo in the meantime. Additional Equity: ...... The Issuer shall, within the end of 2007, be capitalized with further equity for an amount as a minimum equaling 10% of the remaining Bonds at the date three months after Disbursement Date. (Example: If 2800 million of the Bonds are outstanding three months after Disbursement Date, NOK 280 million of additional equity shall be in place within the end of 2007). Default: ...... The Loan may be declared to be in default upon the occurrence of any of the Default Events. See Clause 15 for subsequent consequences. Other Covenants: ...... For full information on covenants, see Clause 13 “Covenants” Bondholders’ meeting: ...... A Bondholders' meeting shall be held at the request of: (e) the Issuer, (f) Bondholders representing at least 1/10 of Outstanding Loan or (g) the Exchange - if the Loan is listed - or (h) the Loan Trustee. A request of a Bondholders' meeting shall be made in writing and clearly state the matters to be discussed and the provisions of the Loan Agreement on which the request is based. The request shall be sent to the Loan Trustee. The authority of the Bondholders’ meeting is described in Clause 16. At the Bondholders' meeting each Bondholder has one vote for each Bond he owns. The notification of the number of Bonds in the Loan (print-out) which was sent to each Bondholder through the Securities Depository in the summons to the meeting, see Clause 17.3, serves as proof of ownership of the Bonds and of each owner's right to vote. In the event that

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Bonds have been transferred after the print-out was made, the new Bondholder must bring to the meeting the original summons and the print-out, endorsed so as to document the transfer. The Issuer’s Bonds do not give the right to vote and are not taken into account when determining the number of voting Bonds. In case of doubt, the Bondholders' meeting decides which Bondholders can vote and how many votes each one has. In order for the Bondholders' meeting to be able to make valid decisions, Bondholders representing at least 5/10 of the Outstanding Loan must be represented, see however Clause18. Valid decisions may be made by a simple majority, see however Clause 17.8. In the event that less than 5/10 of the Outstanding Loan are represented, a valid decision may not be made at the first Bondholders' meeting at which the matter is discussed. After a new meeting has been summoned and the matter discussed a second time, a valid decision may be made pursuant to the voting rules set forth above; this also applies to cases in which less than 5/10 of the Outstanding Loan are represented. Amortization: ...... The Bonds shall be repaid in full at the Maturity Date at price 100% of par (plus accrued interest). Fees / Expenses: ...... The Issuer shall cover all expenses in connection with the Loan (and any security for the Loan), such as preparation of the Loan Agreement (and any security for the Loan), listing of the Loan on the Exchange (if applicable) and registration and administration of the Loan in the Security Depository in the accordance with the agreement between the Issuer and the Securities Depository. The Issuer shall pay any stamp duty and other public fees in connection with the Bonds, but not in respect of trading in the secondary market, except to the extent by reason of operation of applicable laws, and shall deduct at source any applicable withholding tax payable pursuant to law. Loan Agreement: ...... The Loan Agreement has been entered into between the Issuer and the Trustee acting as the Bondholders’ representative. The Loan Agreement regulates the Bondholder’s rights and obligations with respect to the Loan. The Trustee enters into this agreement on behalf of the Bondholders and is granted authority to act on behalf of the Bondholders to the extent provided for in the Loan Agreement. The Loan Agreement is available to anyone and may be obtained from the Loan Trustee or the Issuer. The Issuer shall ensure that the Loan Agreement is available to the general public throughout the entire term of the Loan and that such availability is recorded in the VPS particulars relating to the Loan. The Loan Agreement is available to the public through the Manager or on the web sites of www.noreco.com. Subject to: ...... Finalized loan documentation and approval of loan documentation by the Trustee, Norsk Tillitsmann ASA. Nominal Value: ...... The Bonds will have a nominal value of NOK 500,000. The

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Bonds will be registered in the Norwegian Central Securities Depository (VPS). Yield: ...... Current yield is 11 % on Disbursement Date. Legislation under which the Securities have Norwegian law. been created...... Limitation: ...... Claims for interest and principle shall be limited in time pursuant to the Norwegian Act relating to the Limitation Period for Claims of May 18, 1979 nr 18. Registration: ...... The Bonds will be electronically registered in book-entry form in the Norwegian Central Securities Depository (VPS) under the International Securities Identification Number (ISIN): NO 001037907.6. The VPS registrar is DnB NOR Bank ASA, Registrars Department, 0021 Oslo, Norway. Principal and interest accrued will be credited the Bondholders through VPS. Issue date: ...... 13 July 2007. Approvals: ...... The Bonds have been issued in accordance with the Issuer’s Board approval dated 28 June 2007. Loan Trustee: ...... Norsk Tillitsmann ASA, PB 1470 Vika, 0116 Oslo, Norway.

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14. SECURITIES TRADING IN NORWAY The Company has applied for the admission of all the Shares to listing and trading on Oslo Børs. Upon listing and trading of the Shares on Oslo Børs, the Company will be subject to Norwegian securities regulations and supervision by the relevant Norwegian authorities.

14.1 INTRODUCTION Oslo Børs was established in 1819 and is the principal market in which shares, bonds and other financial instruments traded in Norway. In 2000 Oslo Børs was transformed to a public limited liability company. As of 31 December 2006, the total capitalization of companies listed on Oslo Børs amounted to approximately NOK 1.9 billion. Oslo Børs is a part of the NOREX Alliance, whose other members are Stockholmsbörsen (thereunder Københavns Fondsbørs, Helsinki Stock Exchange, and various exchanges in the Baltic countries) and the Iceland Stock Exchange.

14.2 TRADING AND SETTLEMENT Trading on the NOREX exchanges is carried out in the electronic trading system SAXESS. OM Technology, a part of OM AB that owns Stockholmsbörsen, has developed SAXESS. This trading system is in use by all members of the NOREX Alliance, and allows brokers to operate on all such exchanges of which they are members through a single trading system. For the time being, clearing of all trades, however, takes place through different systems for trades affected on the different exchanges. Official trading on Oslo Børs takes place between 9:00 am and 4:30 pm each trading day. Orders may be placed in the system from 8:15 am. The settlement period for trading on Oslo Børs is three days (T+3). The ability of brokerage houses to trade for their own account is restricted to trading that occurs as an integral part of either investment services or general capital management. Trading by individual employees is also restricted. Investment services in Norway may only be provided by Norwegian brokerage houses holding a license under the Securities Trading Act, branches of brokerage houses from an EEA -state or brokerage houses from outside the EEA that have been licensed to operate in Norway. EEA-state brokerage houses may also conduct cross- border investment services in Norway. It is possible for brokerage houses to undertake market-making activities in shares listed in Norway if they have a license to do so under the Securities Trading Act, or in the case of EEA–state brokerage houses, a license to carry out market making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Securities Trading Act covering brokers’ trading for own account. Such market-making activity, however, does not as such require notification to the Financial Supervisory Authority of Norway (Kredittilsynet) or Oslo Børs except for the general obligation on brokerage houses that are members of Oslo Børs to report all trades in the listed securities.

14.3 INFORMATION, CONTROL AND SURVEILLANCE Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of Oslo Børs monitors all market activity on a continuous basis and is responsible for the dissemination of information from listed companies to the market. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments. Oslo Børs controls the issuance of securities in both the equity and bond markets in Norway. Oslo Børs evaluates whether the issuance documentation contains the required information and whether it would otherwise be illegal to carry out the issuance. Each listed company must deliver to Oslo Børs copies of all reports and communications sent to its shareholders. Each company must also promptly, unless there are valid reasons for postponement, release to Oslo Børs any other precise information about the financial instruments, the company or other matters which are suited to influence the price of the financial instruments or related financial instruments noticeably, and which are not publicly available or commonly known in the market. Oslo Børs may levy fines on companies that violate such requirements.

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Companies with their primary listing on Oslo Børs are obligated to release quarterly financial reports within two months of the end of each quarter. Listed companies are also obligated to release the board approved suggested annual accounts within three months of the end of the financial year.

14.4 THE VPS AND TRANSFER OF SHARES The VPS is the Norwegian paperless centralized securities registry. It is a computerized bookkeeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The Company’s share register is operated through the VPS. All transactions relating to securities registered with the VPS are made through computerized book entries. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To effect such entries, the individual shareholder must establish a VPS account with a Norwegian account agent. Norwegian banks, the Bank of Norway, authorized securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents. The entry of a transaction in the VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or a third party claiming an interest in the given security. The VPS is strictly liable for any loss resulting from an error in connection with registering, altering or canceling a right, except in the event of contributory negligence, in which event compensation owed by the VPS may be reduced or withdrawn. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition of shares is not prevented by law, the Articles of Association or otherwise.

14.5 SHARE REGISTER Under Norwegian law shares are registered in the name of the owner of the shares. As a general rule, there are no arrangements for nominee registration. However, shares may be registered in the VPS by a fund manager (bank or other nominee) approved by the Norwegian Ministry of Finance, as the nominee of foreign shareholders. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In the case of registration by nominees, registration with the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions but cannot vote at general meetings on behalf of the beneficial owners. See Section 12.8.5 for details about voting rights for beneficial owners of shares owned through a nominee account.

14.6 FOREIGN INVESTMENT IN NORWEGIAN SHARES Foreign investors may trade shares listed on Oslo Børs through any broker that is a member of Oslo Børs, whether Norwegian or foreign.

14.7 DISCLOSURE OBLIGATIONS A person, entity or group acting in concert that acquires shares, options for shares or other rights to shares resulting in its beneficial ownership, directly or indirectly, in the aggregate meeting or exceeding the respective thresholds of 1/20, 1/10, 1/5, 1/3, 1/2, 2/3 or 9/10 of the share capital or the voting rights in the Company has an obligation under Norwegian law to notify Oslo Børs immediately. The same applies to disposal of shares (but not options or other rights to shares) resulting in a beneficial ownership, directly or indirectly, in the aggregate meeting or falling below said thresholds. As of 1 November 2007, new disclosure obligations for acquisitions or disposals of shares will enter into force. Pursuant to the new regulations, acquisitions of shares or options or other rights to shares bringing the shareholding of the acquirer above 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 and 90% shall be disclosed. The same applies to disposals (including disposals of options and other rights to shares) bringing the remaining shareholding below one of the mentioned thresholds.

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14.8 INSIDER TRADING According to Norwegian law subscription for, purchase, sale or exchange of shares which are quoted, or incitement to such dispositions, must not be undertaken by anyone who has precise information about the financial instruments, the company or other matters which are suited to influence the price of the financial instruments or related financial instruments noticeably, and which are not publicly available or commonly known in the market. The same applies to entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights connected with such shares or incitement to such disposition.

14.9 MANDATORY OFFER REQUIREMENT Current 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 indications of public takeover bids by third parties in respect of the equity during the last financial year and the current financial year.

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15. TAXATION Set out below is a summary of certain Norwegian tax matters related to the purchase, holding and disposal of shares. The summary is based on Norwegian laws, rules and regulations applicable as of the date of this Prospectus, and is subject to any changes in law occurring after such date. Such changes could possibly be made on a retroactive basis. The summary does not address foreign tax laws. The summary is of a general nature and does not purport to be a comprehensive description of all the Norwegian tax considerations that may be relevant to a decision to acquire, own or dispose of the Shares. Shareholders are advised to consult their own tax advisers concerning the overall tax consequences of purchasing, owning or depositing of the Shares under the laws of their country and/or state of citizenship, domicile or residence.

15.1 NORWEGIAN TAXATION OF SHAREHOLDERS TAX RESIDENT IN NORWAY This section summarizes Norwegian tax rules relevant to shareholders that are residents of Norway for Norwegian tax purposes (“Norwegian shareholders”).

15.1.1 Taxation of dividends Individual shareholders For shareholders who are individuals (individual shareholders) tax resident in Norway, dividends exceeding a calculated tax-free allowance are subject to taxation at a rate of 28%. The tax-free allowance is calculated on a share by share basis, on the basis of the tax purchase price of the share (including RISK19-adjustments per 1 January 2006) multiplied with a risk free rate of interest after tax. Any part of the calculated allowance one year exceeding the dividend distributed on the share the same year (“unused allowance”) is added to the tax purchase price of the share and included in the basis for calculating the tax-free allowance the following year. The tax- free allowance will be calculated on each individual share. i.e. not on a portfolio basis.

The tax-free allowance is allocated to the individual shareholders holding shares at the end of each calendar year. Individual shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer.

Corporate shareholders Dividends distributions to Norwegian corporate shareholders (i.e. limited liability companies and similar entities) are exempt from Norwegian taxation.

15.1.2 Taxation on capital gains on disposal of shares Individual shareholders Sale, redemption or other disposal of shares is in principle considered as realization for Norwegian tax purposes. Capital gains are taxable in Norway as ordinary income in the year of disposal, taxed at a rate of 28%. Losses on shares are tax deductible in the shareholders ordinary income in the year of disposal. The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number of shares realized.

The taxable gain/deductible loss on the realization of shares is calculated per share, as the difference between the consideration received and the tax purchase price of the share, including any RISK-adjustments up to 1 January 2006 and costs incurred in relation to the acquisition or realization of the share. Any unused allowance on a share (see above) may be set off against capital gains related to the realization of the same share, but it can not lead to or increase a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realization of a share will be annulled.

If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of (on a first-in first-out principle).

A Norwegian personal shareholder who moves abroad and ceases to be tax resident in Norway as a result of this, will be deemed taxable in Norway for potential gain of NOK 500,000 or more, related to all of the shares held at the time the tax residency ceased, as if the shares were realized at this time (“the exit rules”). The payment may be postponed with adequate security. If the person moves to a jurisdiction within the EEA, there is

19 ”Regulering av aksjens Inngangsverdi med endring i selskapets Skattlagte Kapital”, meaning ”Regulation of the input value of shares with amendments in the company’s taxed capital”.

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no demand for adequate security, if the EEA state and Norway have a mutual agreement of exchange of information and assistance with collection of taxes.

If the shares are realized within five years after the tax residency ceased, the tax assessment might be changed if the actual gain is less than the calculated potential gain. However, the recalculation can not create or increase a deductible loss.

If the person moves to a jurisdiction within the EEA, potential losses of NOK 500,000 or more, on all of the shares held at the time tax residency ceases will be tax deductible. Taxation (loss deduction) will occur at the time the shares are actually sold or otherwise disposed of. If the shares are not realized within five years after the shareholder ceased to be resident in Norway for tax purposes, the tax liability calculated under these provisions will not apply.

Norwegian personal shareholders who move abroad and cease to be resident in Norway for tax purposes as a result of this, are taxable for any capital gain (regardless of the NOK 500,000 threshold as described above) related to shares in Norwegian companies which is realized within five years from the cease of the Norwegian tax residency, unless the shareholder was taxed on the basis of potential gain as described above. Losses related to the realization of shares within five years from the cease of the Norwegian tax residency, is deductible. If both the exit rules and the five year rule are applicable, the exit rules shall prevail. Any double taxation convention concluded by Norway and another state to which the shareholder has moved may influence upon the application of these rules.

Corporate shareholders Norwegian corporate shareholders are exempt from capital gain taxation on realization of shares in limited liability companies and similar entities tax resident in Norway. Losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes.

15.1.3 Net Wealth Tax Norwegian corporate shareholders are exempt from Norwegian net wealth tax.

Individual shareholders are subject to net wealth taxation. Shares will form part of their basis for calculation of Norwegian net wealth tax. Shares listed on Oslo Børs are currently valued at 85% of their quoted value as of 1 January in the assessment year20. In the year of incorporation, the shares are valued at 85% of the share’s nominal value and premium. The current marginal wealth tax rate is 1.1%.

15.2 NORWEGIAN TAXATION OF SHAREHOLDERS RESIDENT IN OTHER JURISDICTIONS This section summarizes Norwegian tax rules relevant to shareholders that are not residents of Norway for Norwegian tax purposes (“foreign shareholders”). The potential tax liabilities for foreign shareholders in the jurisdiction where they are resident for tax purposes or other jurisdictions will depend on tax rules applicable in the relevant jurisdiction.

15.2.1 Taxation of dividends Individual shareholders Individual shareholders resident in other jurisdictions than Norway are subject to withholding tax at a rate of 25 per cent., or a lower rate pursuant to the provisions in an applicable tax treaty. Individual shareholders may, as an alternative, apply to the Norwegian tax authorities for a tax refund calculated in accordance with the principles for calculating the dividends taxation for Norwegian shareholders. Under Norwegian law, the Company is responsible for the withholding of such taxes at the source.

Corporate shareholders According to the tax exemption method, Corporate Shareholders resident within the EU/EEA are not subject to withholding tax on dividend distributions from a Norwegian limited liability company.

According to Norwegian domestic legislation, Corporate Shareholders resident outside the EU/EEA are as a main rule subject to withholding tax at a rate of 25%. Non-EU/EEA shareholders may benefit from a lower

20 As from 2008 shares listed on Oslo Børs are valued at 100% of their market value.

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withholding tax rate according to an applicable tax treaty between the respective state of residency and Norway. Under Norwegian law, the Company is responsible for withholding of such taxes at the source.

Individual and corporate shareholders Non-resident Corporate and/or Individual Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.

Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to withholding tax at a reduced rate.

If a non-resident Corporate or Individual Shareholder is carrying on business activities in Norway and the relevant shares are effectively connected with such activities, the shareholder will be subject to the same taxation as a Norwegian Corporate or Individual shareholder, as described above.

Foreign shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments including the ability to effectively claim refunds withholding tax.

15.2.2 Taxation of capital gains on disposal of shares Individual shareholders Individual Shareholders resident in other jurisdictions are not subject to taxation in Norway on gain from the realisation of shares in a Norwegian limited liability company, unless the shareholder i) holds the shares in connection with the conduct of a trade or business in Norway, or ii) has been a resident in Norway for tax purposes during the five calendar years preceding the realisation, and the gains are not exempted from taxation in Norway according to an applicable tax treaty.

Corporate Shareholders Gains from the realisation of shares in a Norwegian limited liability company by a non-resident Corporate Shareholder are not subject to taxation in Norway.

15.2.3 Net Wealth Tax Non-resident Individual Shareholders are not subject to net wealth taxes on shares in Norwegian limited liability companies, unless the shareholder holds the shares in connection with the conduct of a trade or business in Norway.

Corporate Shareholders are exempt from net wealth tax on shares in Norwegian limited liability companies, unless the shareholder holds the shares in connection with the conduct of a trade or business in Norway.

15.3 DUTIES ON THE TRANSFER OF SHARES No stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares in Norwegian limited liability companies.

15.4 INHERITANCE TAX When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the shares are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance tax, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the decedent’s country of residence.

In the case of listed shares, the basis for the tax calculation is the market value of the shares

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16. LEGAL MATTERS 16.1 DISPUTES Noreco is indirectly involved in two legal proceedings through its participating interest in the Siri and the South Arne licenses. Subsea-7 has filed an arbitration request against the Siri Group regarding the payment of approximately DKK 90 million representing extra costs incurred by Subsea-7 as contractor in connection with various subsea and offshore installation works. The Siri Group claims acquittal and has also filed a counterclaim of approximately DKK 11 million. The forum is Copenhagen arbitration, and a hearing is expected to take place in May 2008. Noreco by its subsidiary holds a 20% interest in the Siri Group and maximum exposure is thus DKK 18 million. After consideration with the operator of the Siri Group, DKK 10 million is accrued in the Noreco subsidiary accounts.

Noreco is indirectly involved in a dispute with Dansk Naturgas A/S regarding the natural gas sale and purchase agreement for the South Arne field. The licensees claim abuse of dominant position, unfair contract price, restriction of competition and discrimination by Dansk Naturgas A/S in connection with the entering into and operation of the depletion gas sales and purchase agreement. The forum is Copenhagen Arbitration, and a final hearing is expected mid 2008. A positive outcome may hold a positive value for Altinex up to DKK 100-150 million. Complaints have also been filed with the Danish Competition Authorities and the EU Competition Authorities.

Altinex, on behalf of the Cecilie licensees, has filed an administrative appeal to the Ministry of Transport and Energy regarding the DEA’s decision not to grant an exemption from the obligation to pay the 5% pipeline duty. A positive outcome may hold a value for Altinex of up to DKK 50-60 million.

In June 2006, a pipeline between the Siri and the Nini platform ruptured. Noreco, through its subsidiary Altinex, holds a 30% interest in the Siri and Nini pipelines, the subject of the incident. For further details, please refer to section 6.6.5 above.

Except for the above, the Company has not in the previous 12 months been involved in or threatened with governmental, legal or arbitration proceedings which may have, or have had significant effects on the Company’s or Group’s financial position or profitability.

16.2 MATERIAL CONTRACTS Noreco has not entered into any agreements of significant importance to the Company with other companies in the same group, and has not entered into any agreements with “close associates” that by their nature or circumstances are unusual for Noreco and/or, as far as Noreco is aware, the close associate in question.

16.3 MATERIAL CONTRACTS OUTSIDE THE ORDINARY COURSE OF BUSINESS The Company does not have any material contracts which have been entered into outside the ordinary course of business.

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17. ADDITIONAL INFORMATION 17.1 DOCUMENTS ON DISPLAY For the life of this Prospectus the following documents may be inspected at www.noreco.com and at the Company’s offices at Haakon VII’s gate 9, 4005 Stavanger, Norway:

17.2 STATEMENT REGARDING SOURCES The Company confirms that when information in this Prospectus 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.

17.3 STATEMENT REGARDING EXPERT OPINIONS The Noreco reserves and resource estimates have been verified by Macgolyor MacNaugthon and Senergy ltd. Macgolyor MacNaughton has provided verification of the producing fields (with exception of the Brage field) in conjunction with Altinex Oil Norway AS annual reserves report at the end of 2006. These fields are South Arne, Nini, Siri, Lulita, Cecilie on the Danish Continental Shelf, and the Enoch field on the NCS.

Senergy Ltd has reviewed and verified the reserves and resource estimates for the combined Noreco and Altinex portfolios, with exception of the fields verified by Macgolyor MacNaugthon mentioned above.

A summary of these reserve reports are set out in Appendix 7 in this Prospectus.

17.4 IDENTIFICATION OF PERSONS RESPONSIBLE The Prospectus has been prepared by the management of the Company under the instruction and supervision of the Company’s Board of Directors. The Board of Directors has assumed the sole responsibility for the information given in the Prospectus and has signed the declaration set out in section 3 in this Prospectus. In the preparation of the Prospectus, the management of the Company has relied on the services of third parties, including Pareto Securities ASA (Oslo, Norway) and SEB Enskilda ASA as Joint Lead Manager, Deloitte AS as statutory auditors, and Arntzen de Besche Advokatfirma AS as the Company’s legal advisors. The mentioning of these companies acting as advisors shall not create any implication that these parties assume responsibility for the information contained in the Prospectus and no representation or warranty, expressed or implied, is made by any Manager or adviser to the Company as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by any Manager or Company adviser as to the past, present or future.

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18. DEFINITIONS AND GLOSSARY OF TERMS

18.1 DEFINITIONS The definitions set out below apply to the whole of this Prospectus and is of general nature. Specific definitions relating to the Bond Loans are set out in section 18.1.2 below.

18.1.1 General definitions

Altinex...... Altinex ASA (Org number 845 278 822), a fully owned subsidiary of Noreco. Altinex Group...... Altinex ASA with all existing and future subsidiaries. Altinex International: ...... The company being the indirect owner of all the non-Norwegian licenses within the Altinex Group, with org number 989 753 673, a wholly owned subsidiary of Noreco. Altinex Oil Norway: ...... The company being the owner of all the Norwegian licenses within the Altinex ASA Group, with org number 987 008 644, a wholly owned subsidiary of Noreco. Noreco Group: ...... Noreco with all existing and future subsidiaries, including Altinex Group ISIN ...... International Securities Identifying Number Listing...... The listing of the Shares and Bonds on Oslo Børs Managers ...... SEB Enskilda ASA and Pareto Securities ASA Noreco Norwegian Energy Company ASA, org. number 987 989 297 Prospectus...... This Prospectus dated 1 November 2007, prepared in connection with the Listing of the Company’s shares and Bonds on Oslo Børs. Securities Depository Act: .... The Norwegian act of 2002 no. 64 regarding securities depository. Securities Depository: ...... Verdipapirregisteret, Verdipapirsentralen (“VPS”) Securities Trading Act...... The Norwegian Securities Trading Act of 19 June 1997 No.79 Shares ...... Ordinary shares in the capital of the Company Bonds or Bond Loan: ...... The bonds issued by Noreco, totaling NOK 2.8 billion, as further described in Section 13 of this Prospectus.

18.1.2 Definitions relating to the bonds

Additional Equity: ...... See Clause 13.2 (h) of the Loan Agreements Altinex Convertible Bond Loan / Altinex Convertible The convertible bond loan issued by Altinex with ISIN: NO 001 032810.7 and Bonds...... ISIN NO 001 032810.8. Asset Sale Restriction Event: Sale or disposal of assets or companies within the Group, either in a single transaction or a series of related transactions, whether voluntary or involuntary, with a gross transaction value exceeding NOK 100 million after tax, except for sale or disposal of such assets or companies within the ordinary, daily course of business of such Group member Bank Loan: ...... The existing bank loan of the Issuer, used to part finance the already acquired Altinex shares. The Bank Loan is provided by SR Bank. Banking Day: ...... Any day when the Norwegian Central Bank’s Settlement System is open and when Norwegian banks can settle foreign currency transactions Bond Issue: ...... The issuance of the Bonds Bondholders: ...... The holders of the Bonds. Book value of Equity: ...... Book value of equity in the Group, including the book value of minority interests, the book value of the Issuer’s Convertible Bond Loan (ISIN NO 001036883.0) and the book value of the Altinex Convertible Bond Loan ( ISIN: NO 001 032810.7) Call option ...... The Issuer’s redemption right as set out in Clause 10.2 Capital Employed: ...... Book value of Equity plus gross financial indebtedness in respect of which interest accrues less cash and cash equivalents (incl. free cash in hand and bank deposits with original maturity of three months or less and tax receivables maturing within 12 months).

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Change of Control Event ...... Change of Control Event means any person or group (as such term is defined in Section 1-4 of the Norwegian Securities Trading Act) becomes the owner, directly or indirectly, of more than 50% of the outstanding shares of the Issuer. The Merger shall not constitute a Change of Control Event Clause ...... Clause in the Loan Agreement. Debt Restriction Event...... Any new indebtedness as defined in Clause 13. 2 (k) other than new indebtedness as provided for in Clause 13.2 (i) to (iii) Default Event...... See Clause 15.1 EBITDA adjusted for Exploration costs ...... Annualized EBITDA before exploration costs in the P&L statement Escrow Account Pledge: ...... The Norwegian law first priority pledge over the Issuer’s claim against the bank for the amount from time to time standing to the credit of the Issuer in the Escrow Account in favor of the Loan Trustee (on behalf of the Bondholders), as security for the Issuer’s fulfillment of its payment obligations (included payment of principal, interest and expenses) under the Loan Agreement, ref Clause 6.8 thereof Escrow Account: ...... A NOK account established with a Norwegian Bank in the name of the Issuer to be blocked and pledged on first priority in favor of the Loan Trustee (on behalf of the Bondholders), in which the bank operating the account has waived any set-off rights. Exchange: ...... Securities exchange or other reputable market place for securities having satisfactory requirements as to listing and trading, where the Loan is listed or applied for listing. Exploration Restriction Event: ...... If the Group reports more than NOK 800 million of expensed dry well costs (meaning exploration costs resulting from dry wells) after tax in aggregate for the duration of the Loan(from and including 3Q 2007 to and including 2Q 2010. Finance documents: ...... (i) Loan Agreement, (ii) the fee agreement Clause 14.1, (iii) any documents executed in relation to the granting of any Loan Security, and (iv) any other document (whether creating a security interest or not ) which is executed at any time by the Issuer in relation to any amount payable under the Loan Agreement of any of the other documents referred to in this definition Fixed Tranche: ...... The fixed tranche of the Complete Loan, NOK 2,300,000,000 (min) ISIN NO 001037906.8 FRN Tranche: ...... The FRN tranche of the Complete Loan, NOK 500,000,000 (max) ISIN NO 001037907.6 Gross interest bearing debt .... Total financial indebtedness of the Group on a consolidated basis less debt financing of tax receivables within the Group. Issuer ...... Noreco, the company which issues the Bonds Issuer’s Convertible Bonds/ Convertible Bond Loan ...... The Issuer’s previously issued convertible bond loan with ISIN: NO 001036883.0 Issuer's Bonds: ...... Bonds in the Remaining Loan, owned by the Issuer or any party over whom the Issuer has decisive influence or any party who has decisive influence over the Issuer. Loan Agreement ...... Loan Agreement for the two Bonds Market value of Equity: ...... Market value of the shares issued by the Issuer and the Issuer’s Convertible Bond Loan (ISIN: NO 001036883.0) plus the market value of any shares issued by Altinex not owned by the Issuer. After a Merger has occurred, the Market value of Equity means the market value of the shares in the surviving entity following the Merger plus the Issuer’s Convertible Bond Loan (ISIN: NO 001036883.0), unless this has been refinanced. Outstanding Loan: ...... Remaining Loan less Issuer’s Bonds. Pledged VPS-Account: ...... An account established with the Securities Depository in the name of the Issuer, to be blocked and pledged on first priority in favor of the Loan Trustee ( on behalf of the Bondholders), in which all the Issuer’s shares and convertible bonds in Altinex are to be registered Put Option...... Each Bondholder’s right of early redemption .

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Put Option Event: ...... i) a Debt Restriction Event, ii) an Asset Sale Restriction Event, iii) an Exploration Restriction Event or iv) a Change of Control Event. See Clause 10.4 Release Notice: ...... Release notice from the Issuer to the Loan Trustee for withdrawal(s) from the Escrow Account in the form and content as set out in Schedule 1 hereto Remaining Loan: ...... The aggregate principal amount of all bonds outstanding in the Loan less the principal amount of the bonds redeemed by the Issuer and discharged through the Securities Depository. Security Assets: ...... All and any assets creating security for the obligations of the Issuer pursuant to any of the Finance Documents Security: ...... The Loan amount plus accrued interest and expenses shall at all times be secured by: (i) a 1st priority pledge in the Escrow Account, (ii) a 1st priority pledge in all the Issuer’s shares and Altinex Convertible Bonds. The Complete Bond Loan...... The complete bond loan issued by Noreco, consisting of the Fixed Tranche and the FRN Tranche Trustee: ...... Norsk Tillitsmann ASA, P.O.Box 1470 Vika, 0116 Oslo

18.2 GLOSSARY OF TERMS The glossary of terms set out below apply to the whole of this Prospectus.

Bbl ...... Barrel HY ...... Half year ended 30 June IFRS...... International Financial Reporting Standards mmboe...... Million barrels of oil equivalents. NCS ...... Norwegian Continental Shelf. NIBOR: ...... The Norwegian Inter-Bank Offer Rate, rounded off to two decimal places for a 6 - six - month period that is quoted on Reuters NIBR page at 12.00 noon in Oslo on the Interest Determination Date. NOK ...... Norwegian Kroner, the lawful currency of Norway OTC...... The over-the-counter market in Oslo, Norway, operated by the Norwegian Securities Dealers Association US$...... United States Dollars, the lawful currency of the United States VPS...... The Norwegian Central Securities Depository, who organises the Norwegian paperless securities registration system (“Verdipapirsentralen” or “VPS”)

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Appendix 1: Articles of Association for Norwegian Energy Company ASA

(last amended 22 October 2007)

§ 1 The Name of the Company

The name of the Company is Norwegian Energy Company ASA.

The Company is a public limited company.

§ 2 Registered Office

The Company has its registered office in the municipality of Stavanger.

§ 3 The Object of the Company

The business of the Company is exploration, production and sale related to oil and gas activities. The Company will obtain participating interests in production licenses by participating in license rounds and through acquisition of participating interests.

§ 4 Share Capital and Share Classes

The Company’s share capital is NOK 345,323,976.10 divided between 111,394,831 shares, each with a face value of NOK 3.10.

The shares shall be registered in the securities register (“verdipapirregisteret”).

No restrictions apply to the transfer of shares.

§ 5 The Board of Directors

The Board of Directors shall have from 3 to 8 members in accordance with a decision by the General Meeting. The Chairman of the Board/Chair of the Meeting shall not have a casting vote.

§ 6 Signature rights

Three members of the Board of Directors jointly, the Chairman of the Board and a member of the Board of Directors jointly or the General Manager and the Chairman of the Board jointly shall have authority to sign for the Company.

§ 7 Nomination Committee

The Nomination Committee shall consist of three members. The term of office shall be two years unless the Annual General Meeting determines that the term shall be shorter.

The Nomination Committee shall prepare a motion for the Annual General Meeting relating to:

a) Election of members of the Board of Directors and the chairperson of the Board of Directors. b) Election of the members of the Nomination Committee and the chairperson of the Committee. c) The remuneration of the Directors and the members of the Nomination Committee. d) Any amendments of the Nomination Committee’s Mandate and Charter.

Sections 6-7 and 6-8 of the Public Limited Companies Act apply correspondingly in relation to the members of the Nomination Committee.

A 1

§ 8 Chief Executive Officer

The Company shall have a Chief Executive Officer.

§ 9 Voting Rights

At the Company's General Meeting each share has one vote. An owner with shares registered through a custodian approved pursuant to Section 4-10 of the Public Limited Companies Act has voting rights equivalent to the number of shares which are covered by the custodian arrangement provided that the owner of the shares shall within two working days before the General Meeting provide the Company with his name and address together with a confirmation from the custodian to the effect that he is the beneficial owner of the shares held in custody, and provided further the Board of Directors shall not disapprove such beneficial ownership after receipt of such notification.

Shareowners who wish to take part in the General Meeting, must give notice to the Company by the date stated in the Calling Notice, which date must be at least two working days before the General Meeting.

§ 10 Annual General Meeting

The Annual General Meeting shall deal with the following:

1. Election of Board members and the Chairman of the Board 2. Approval to the Annual Accounts and Annual Report including distribution of dividend 3. Election of the members and the chairperson of the Nomination Committee and amendments of the Nomination Committee’s Mandate and Charter 4. Such other matters as, according to law or the Articles of Association, fall within the duties of the General Meeting.

The Annual General Meeting shall also deal with the statement from the Board of Directors relating to the determination of salary and other benefits to the leading employees according to Section 6-16 a of the Public Limited Companies Act. There shall be a consultative vote regarding the principles relating to determining the salary of the leading employees set by the Board of Directors. The principles regarding benefits according to Section 6-16 a first paragraph, third period, no 3, shall be approved by the General Meeting.

§ 11 Chairperson

The General Meeting shall be chaired by the Chairperson of the Board of Directors.

A 2 Appendix 2: Statement from the auditor on pro forma consolidated ﬁ nancial statements for Norwegian Energy Company ASA

A 3 Appendix 3: 1H report for 2007 of Norwegian Energy Company ASA

A 4 A 5 A 6 A 7 A 8 A 9 A 10 Appendix 4: Annual report for 2006 of Norwegian Energy Company ASA

A 11 A 12 A 13 A 14 A 15 A 16 A 17 A 18 A 19 A 20 A 21 A 22 A 23 A 24 A 25 A 26 Appendix 5: Annual report for 2005 of Norwegian Energy Company ASA accordingto the systems are established Annual report 2005 cludes Noreco’s handling of EHS. Noreco wants to continuewants to handling of EHS. Noreco cludes Noreco’s Norwegian Energy Company AS PL 378 20 % % % General 20 an 2005 as January in established was AS (Noreco) Energy Company Norwegian 20 in headquarter is situated The company’s oil company. Norwegian independent 20% Stavanger. Norecoshall be the local energy company thatis rooted through the management and ownership.employees’ strongwith company industrial long-term as a Noreco establish to The is ambition ambition. shelf international as basis for the continental onthe Norwegian presence 378 Owner share 382 385 share gotNoreco2005 in following production licenses through awardspredefined inareas (APA): Noreco’s Field PL PL PL and safety) EHS (environment, health control Quality necessary all that covers the company for systems control developed has The company of Noreco’s work.business aspects The control demands that are expected of qualified licensees on the Norwegian continental shelf. shelf. on continental the Norwegian licensees of qualified are expected that demands control systemsNoreco’s in on the an operator qualify as to be to able a preparation as systems its to develop continental shelf. Norwegian work environment Health and system. physician a company establishing is 2005 was 0%. Noreco in Sick leave the of as a part be implemented will environment the work of studies Analytical goingcompany’sroutine and be up in 2006. 2005 Annual Report Norwegian Energy Company AS

A 27 22. March 2006 22. March Stavanger, 31. 2005 December Norwegian Energy Company AS Proposal for treatment of Proposal loss The board proposes thisthat at NOK 5,49 year’smillionloss transfersother to equity. ratio. equity 76 % a equal to is 49,94This million. NOK was 31.12.2005 per Total equity ancial statement isdone accordingancial statement to this. Norwegian Energy Company AS Safety management Internal There were no accidents in the company in 2005. EHS-workhas highpriority in management strategy. Noreco’sNoreco’s or other pollution own hasn’t created activities on the environment. damages Noreco’s licenses in producinghas no shares fields. Noreco Financial statements Key figures revenues. operating no therefore 2005 and in had no production Noreco million. was -5,49 income Net 2005. in million taxes was NOK -24,75 before Income of and result over the development overview true sheet give balance and the income Net 31.12.2005. per situation company’s over the does, and the company the that work activities Exploration each was 20 2005, %. during licenses got 3 exploration Noreco The company’s future on future be depended will revenues company’s still no production. The has Noreco production. of acquisition and/or licenses of new fields, awards of development in 2006through Norway explorationof portfolio licenses in its to expand works Noreco the the company’s award rounds. This will future. secure According to Norwegian Accounting§ Act3-3,it for is confirmed that the assumption presencethat the fin is and business future Gender equality status Per personnel. new hiring Act when Equality Gender Norwegian The companyfollows company. in the and 2 women 4 was men it 31.12.2005

A 28 2005 2005 1.211.652 1.211.652 1.463.735 1.463.735 2.675.387 1.911.200 19.441.578 21.352.778 41.615.897 62.968.675 65.644.062 Norwegian Energy Company AS Balance sheet December 31 ASSETS ASSETS Fixed assets Intangible Assets tax assets Deferred Total intangible fixed expenses Tangible assets fixed machineryPlant, equipment and other Total tangible fixed assets Total fixed assets assets Current Current receivables receivables Other receivables tax Current Total current receivables equivalents bank and Cash Total current assets TOTAL ASSETS NOTE 6 3 6 7 -1.107 -1.107 -3.077 58.422 154.299 154.299 150.115 2005 2005 7.809.495 7.809.495 3.184.527 -5.487.520 -5.487.520 -5.487.520 -5.487.520 13.850.801 24.903.244 19.265.610 -24.903.244 -24.753.130 Income statement Norwegian Energy Company AS OPERATING REVENUES AND EXPENSES expenses Exploration Payroll and related expenses Depreciation, depletion amortization and assets of fixed expenses operating Other Total expenses operating Operating(loss) income FINANCIAL INCOME EXPENSES AND income Interest Interest expenses expenses financial Other Financial items, net taxes before Income (loss) Income taxes Ordinary (loss) income NET INCOME(LOSS) OFNET LOSSALLOCATION AND EQUITY TRANSFERS equity to other Transferred Total allocations andequity transfers NOTE 2 3 2 6

A 29 22. March 2006 22. March Cash flowstatement the end of the yearend ofthe the 41 615 897 Stavanger, 31. 2005 December Norwegian Energy Company AS CASH FLOW FROM OPERATING ACTIVITIES OPERATING FROM CASH FLOW Profit before taxes amortisation Depreciation & payables in account Change accounts in other Change flowNet cash operationsCASHFLOWINVESTING FROM ACTIVITIES equipmentand of plant from purchase Payments 2005 activities investing flowNet cash from ACTIVITIES FINANCING FROM CASH FLOW costs) emision (net after equity from Proceeds flow financingNet cash activities from flowNet cash for the yearCash and cash equivalents at the beginning of the yearequivalents at Cash and cash 157 -1 522 10 420 661 58 422 -24 753 130 372 240 3 807 -10 901 157 -1 522 54 039 861 54 039 861 0 41 615 897 2005 2005 2.135.000 2.135.000 5.283.440 -4.099.900 -4.099.900 51.904.861 54.039.861 49.939.962 10.420.661 15.704.100 15.704.100 65.644.062 Norwegian Energy Company AS Balance sheet December 31 EQUITY AND LIABILITIESEQUITY Capital andreserves Paid-in capital Share capital (2135 shares at NOK 1000) capital increase Not registered Total capital paid-in Retained earnings equity Other Total earnings retained Total equity Liabilities Trade creditors liabilities current Other withinTotal amounts creditors, year onefalling due liabilitiesTotal AND LIABILITIESTOTAL EQUITY NOTE 4,5 4,5 5

A 30 Receivables Receivables provision with reduced value, par recorded at are and other receivables Trade receivables of expected on an individualCalculation losses is based losses. for assessment expected receivables.of thevarious andCash cash equivalents due equivalents cash other deposits and bank cash, includes equivalents and cash Cash acquisition. from within three months Exploration expenses costs, exploration All costs. onexploration applied is The successful efforts-method to exploration related Costs are expensed. drilling, to exploration except costs related and oil the If reserves. and gas possible oil of a discovery pending are capitalized, drilling drilling costs exploration the capitalized recoverable, commercially not are reserves gas are expensed. Taxes before taxes in the financial income(loss) the with matched taxes are The income directly recorded taxes related inequity to the transactionsto are Income statements. income) years taxable (tax on current payable taxes comprise taxes income equity. The ordinary between expense is split The tax asset/liability. and change in deferred tax income and extraordinary income, based on the corresponding splitof taxable income. balance basis in the on a net presented are liabilities tax deferred Deferred tax assets and sheet. the currency rate at the balance sheet date. balance rate at the the currency e are not presented from the operator. Other Other operator. the from not presented are e depreciated usingdepreciation straight-line over r onor the company's fields, the own respective Notes to the financial statements 2005 2005 statements financial to the Notes assets subject to decline in value, are value, in decline to subject assets life. useful expected or Additions operating expense. as classified is assets fixed of Maintenance corresponding with the in line and depreciated cost to initial are added improvements asset. and classification of assets Principle rules debt for assessment and assets ownership assets. Other are classifiednon-current as lasting for determined Assets dueare classified as current assets. Receivables within are classified as current. a year criteria. similar applying classified debt are term and long term Short ordinary accumulated reduced with cost, acquisition at recorded are assets Non-current temporary,not bookthanthis is value and an asset is lower If fair value of depreciation. in decline to assets subject Non-current value. to fair write-down a to subject the asset is life. useful over their economic depreciated are value value. fair cost and of acquisition the lower at recorded are assets Current Other long term debt and short term debt are recorded at face value. and liabilities in foreign currency Assets applying are translated items sheet Balance estimates of proven reserves if such if such estimat reserves proven of estimates Note 1 The statutory accounts are prepared in accordance with the Norwegian Accounting Act of Accounting Principles (N-GAAP). in Norway principles 1998 and generallyaccounting accepted Use of estimates prevailing accounting in accordance with information, Theof accounting preparation the that effect and assumptions estimates applies management that requires legislation, on the effect a significant have estimates Such notes. and liabilities assets, of valuation revenue and costs in theyear. fiscal The actual amounts may differ from the estimates. Fixed assets of Unit to the according are depreciated petroleum, of production for Fixed assets used to according proven reserves are method this in applied reserves The method. Production estimates received from the operato

A 31 % 3 % 2 % 0,5 % 0,5 % 0,5 % 23 % 4 % 12 % 10 % 4 4 % % 1 4 % % 23 % 7 752 552 875 875 875 963 Number Face value Share capital 1 570 A -shares A - B shares Total Share 5 233 2 800 2 290 143 5 233 1 570 193 192 ommon shares C 105 105 105 559 360 (Chairman of the board) (Managing director) Takla Energy AS Takla Energy Rumar Holding ASSeland Invest ASEnergivekst 105 105 5 233 Kerr Energy AS Kerr Energy TAO Invest AS 105 Ordinary sharesOrdinary A-sharesB-sharesSum 700 17269 1 000 4 507 1 000000 700 22 476 1 000000 17 269 4 507 000 22 476 000 3i GroupPLC 2 800 Norwegian Energy Company Energy Norwegian Founders DA Totalnumber ofshares 700 17 269507 4 22 476% 100 3i UK Private Equity Private Equity 3i UK 3i Pan European Growth Capital 143 2 290 IKM GruppenIKM ASGeo Invest AS 875 875 Lyse Energi ASLyse 5 233 Melberg Investment AS 875 Melberg Partners AS 963 Note 4 The share capital inthe company of 31.12.06 as comprisesfollowing the shares: Share capital and Shareholder information structure Ownership 22.476 at 1.000, shares NOK 22.476.000, comprising NOK to amounted share capital The company's comprise shares Common B). class A and class shares, (Common shares of in three classes divided 700NOK 1.000, shares each at A comprises class 17.269 shares, each at NOK 1.000 B class and comprises 4.507 shares each atNOK1.000. were: The share owners as per 31.12.06 2005 13 120

Plant, Plant, and other other and machinery machinery equipment Totals - 1 522 157 1 522 157 58 422 - 58 422 58 422 216 000 216 estate other real real other Buildings, Buildings, - 157 1 306 157 1 306 422 58 422 58 - 422 58 Social security taxSocial security Other benefitsTotal number of Average employees 122 874 182 033 1 3 184 527 Payroll costsPayroll Salaries 2005 2 879620 Audit servicesConsultancy 920 42 Acquisition cost 01.01Acquisition - Additions 000 216 Acquisition cost 31.12. Acquisition 01.01 as per depreciation Accumulated Net depreciation current year 31.12 as per write-offs and depreciation Accumulated per 31.12Book value as for the yearDepreciation - life useful Economic methodDepreciation - - 216 000247 735 1 735 463 1 - 5 years Linear years 3/5 Linear Note 2 Note ofbenefits to employees, costs, number employeesetc. Payroll Salarysecondmanager to general half-year NOK is 1.000.000 company a from rendered services consulting for 1.000.000 NOK of charges incurred The company ownedby the chairman of theboard. Statutory Auditor are: in 2005 expensed services related and services Fees for audit Note 3 assets and Intangible tangible fixed assets

A 32 78 % -19 265 610 -19 265 Reconciliation of effectivetax rate:Reconciliation Income (loss) before taxesExpected tax expense 78%Effect from permanent differencesIncome taxes Income financial taxes in the statements rate tax Effective 2 005 610 -19 265 000 -24 753 340 -19 307 41 730 Note 7 Bank deposits, cash etc. include restricted tax deduction by NOK 252.499,-. 2005 - 53 500 y -225 600 1 211 652 -7 477 148 -19 441 578 -19 265 610 -24 753 000 -13 352 050

-4 099 900 -

Share Not registered Share Not 51 904 861 - Share premium capital Other capital reserve increase Equit - - -3 984 679 -248 494 1 387 620 gnized in the profit and loss statement 2005 as per 31.12.05 as per 2 135 000 y Total equity as per 01.01.05Total as per equity - Changes in the year: in the Changes Incorporation 1 085 000 2 025 001 - Paid-in equity costIssue Profit/loss for the year equit Total 1 050 000 1 959 678 52 153 355 - - -5 487 520 Calculation of deferred tax asset/liability 2005 Taxchangesrelatedto in temporary differences taxesOwing 175 968 Tax expense Fixed assets Loss carry forwary as fromforwary Loss carry 2005Basis for deferred tax calculationDeferred tax asset Basis ofcalculation tax company receivable Totalincome tax receivable (ex interest)Income tax calculation Income (loss)before taxes Permanent differences Tax-deductible costsrelatedto share to equityissue - charged directly Change in temporary differencesTaxable income before loss carryforward Basis ofcalculation tax company Basis ofcalculation petroleum tax tax28% Company Special tax 50% -1779 000 925100 24 779 000 1 1 553 400 441578 19 -26 704 100 -225 600 -26704 100 -26704 100 Sum betalbar skatt/(fordring) i balansenIncome taxes reco -20 829 198 Note 5 Equity Note 6 Income taxes

A 33 A 34 Appendix 6: Loan agreement for FRN senior secured callable bond NOK 500 million and the (Fixed) senior secured callable bond NOK 2.3 billion

A 35 A 36 A 37 A 38 A 39 A 40 A 41 A 42 A 43 A 44 A 45 A 46 A 47 A 48 A 49 A 50 Appendix 7: Expert Report on reserves and resources

A 51 A 52 A 53 A 54 Norwegian Energy Company ASA Haakon VII's gate 9 P.O.Box 550 Sentrum 4003 Stavanger Norway. Telephone: +47 99 28 39 00 Telefax: +47 51 53 33 33 www.noreco.com

Pareto Securities ASA SEB Enskilda ASA Dronning Maudsgate 3 Filipstad brygge 1 P.O.Box 1411 Vika P.O.Box 1363 Vika 0115 Oslo 0103 Oslo Norway Norway Telephone: +47 22 87 87 00 Telephone: +47 21 00 85 00 Telefax: +47 22 87 87 10 Telefax: +47 21 00 89 00 www.pareto.no www.enskilda.no