PANORO ENERGY - 2020 ANNUAL REPORT | Page: 1 PANOROPANORO ENERGY ENERGY - -2020 2020 ANNUAL ANNUAL REPORT REPORT | | Page: Page: 2 INTRODUCTION Panoro Energy ASA is an independent exploration and production (E&P) company headquartered in London and listed on the Oslo Stock Exchange with ticker PEN. The Company holds production, development, and exploration assets in West and North Africa. Operations in West Africa include the Dussafu License offshore southern Gabon and OML 113 offshore western Nigeria, which is classified as held for sale. The North African portfolio comprises a participating interest in five producing oil field concessions (TPS), the Sfax Offshore Exploration Permit (SOEP), and the Ras El Besh concession, all in the region of the city of Sfax, Tunisia. Subsequent to year-end, the Company acquired a working interest in Block G, offshore Equatorial Guinea that comprises two producing oil assets. Additionally, a farm-in to Block 2B, offshore South Africa, completed in April 2021. TABLE OF CONTENTS Introduction .....................................................................................2 Financial and Operational Highlights...............................................3 Company Summary .........................................................................4 CEO letter ........................................................................................5 Directors’ Report 2020 ....................................................................7 Annual Statement of Reserves 2020 ............................................ 21 Annex Reserves Statement........................................................... 23 Corporate Governance ................................................................. 25 Consolidated Statement of Comprehensive Income ................... 28 Consolidated Statement of Financial Position ............................. 29 Consolidated Statement of Changes in Equity ............................. 31 Consolidated Cash Flow Statement.............................................. 32 Notes to the Consolidated Financial Statements ......................... 33 Panoro Energy ASA Parent Company Income Statement ............ 69 Panoro Energy ASA Parent Company Balance Sheet ................... 70 Panoro Energy ASA Parent Company Statement Of Cash Flow ... 71 Panoro Energy ASA Notes to the Financial Statements .............. 72 Declaration from the Board of Directors of Panoro Energy ASA on Executive Remuneration Policies ................................................ 80 Statement of Directors’ Responsibility ......................................... 82 Auditor’s Report ........................................................................... 83 Statement on Corporate Governance in Panoro Energy ASA ..... 87 Corporate Social Responsibility/ Ethical Code of Conduct ........... 92 Glossary and Definition ................................................................ 94 PANORO ENERGY - 2020 ANNUAL REPORT | Page: 3 FINANCIAL AND OPERATIONAL HIGHLIGHTS Financial highlights - continuing operations (in USD 000) 2020 2019 Oil Revenue 24,167 42,968 Underlying operating profit/(loss) before tax 1,470 14,698 EBITDA 6,042 24,611 EBIT (1,818) 24,722 Net Profit/(Loss) (2,195) 5,368 Operational metrics - continuing operations 2020 2019 Oil sales (bbls) net 622,638 691,044 Average production - working interest (bopd) 2,440 2,069 2P Reserves (MMbbls) net working interest 12.3 13.4 2C Contingent Resources (MMbbls) net working interest 4.3 4.3 OPERATIONAL AND BUSINESS DEVELOPMENT HIGHLGHTS Completion of DTM-5H well and Recommencement of Hibiscus/Ruche startup of phase 2 production at development project in Gabon Tortue Field in Gabon Drilling and completion of GUE-10AST production well TPS assets in Tunisia achieved at Guebiba field in TPS assets 5,000 bopd gross production in Tunisia Farm-in to 12.5% interest in All operational metrics improved Block 2B offshore South Africa following a challenging year Negotiated acquisition of interests in Block G, Equatorial Guinea which completed in March 2021, and additional 10% interest in Dussafu (subject to completion) PANORO ENERGY - 2020 ANNUAL REPORT | Page: 4 COMPANY SUMMARY ASSETS Equatorial Guinea: Interest in Block G, offshore 14.25% Gabon: Interest in Dussafu Marin permit, offshore 7.4997% Tunisia: Interest in TPS assets 29.4% Interest in the Sfax Offshore Exploration Permit (“SOEP”) – Operator 52.5% Non-operated interest in the Hammamet Offshore Exploration Permit (under relinquishment) 27.6% Participating interest (12.1913% revenue interest and 16.255% Nigeria: paying interest) in OML 113 Aje field, offshore 6.502% Detailed information on all the assets is included in the Operations section of the Directors report on page 7. PANORO OFFICES The Company maintains its registered address in Oslo with offices in London (headquarter) and Tunis. PANORO ENERGY - 2020 ANNUAL REPORT | Page: 5 CEO LETTER Dear Fellow Shareholders: deals which firmly establish Panoro as a leading Africa focussed independent listed E&P. The company size increased 3-4x, with 2020 was certainly a year few of us will ever forget. The global the acquisitions adding in excess of 6,500 bopd net production loss of life, widespread health crisis, and economic strain created (estimated 2021) and 25 MMbbls net WI 2P reserves. by the COVID-19 pandemic touched everyone’s lives. The effects are still very much with us, with continuing risks and uncertainties The transactions were financed with the key support of existing as we learn to live with the virus. We welcome the confidence and new shareholders who supported a USD 80 million equity that the vaccines have provided; yet it is inevitable that there will private placement, and an up to USD 90 million underwritten debt be continued disruption to our old ways of living and working. facility by a company within the Trafigura group of companies. For Panoro specifically, 2020 held the full spectrum of Importantly, Panoro is expected to be fully financed for all experiences. Huge decreases in oil prices, incredibly strained foreseeable capex and net production ramp-up to ~12,000 logistics chains, and the fear of widespread infection amongst bopd over the coming two years, following which cash balances staff dominated our concerns and attention. Once the worst of should be able to provide for material dividends and shareholder the price drop and stock market volatility was over by May, we returns. entered into a period of positive assessment of our oil price Panoro had previously announced the conditional sale of its hedges, conservative balance sheet, low operating cost assets, interests in Nigeria and signed a farm in agreement for a modest and resilient safety protocols. Panoro was materially affected by financial exposure to an exciting exploration well in Block 2B, events but could see a way forward. The support of our key South Africa. shareholders encouraged us to evaluate market opportunities despite the low oil price. In early 2021, we announced the outcome of eight months of work to acquire production assets Operations from Tullow Oil. The Tullow transactions have significantly Despite the delayed activity, Panoro was able to continue to changed Panoro and will provide stability and growth for many produce and lift during the crisis, which allowed our business to years to come. be partially insulated from the global logistical disruptions. Again, health and safety protocols proved to be robust. Along with our joint venture partners, we are particularly pleased to have had an exceptional health, safety and environmental Annual group production net to Panoro of approximately 2,200 performance during these unusually difficult times. The resilience bopd was a modest increase on comparative 2019 net of our systems was proven and strengthened where necessary. production. Production operations were negatively impacted by This performance allowed us to continue operations during the the pandemic. In Gabon, while two new wells were brought year and in fact even grow our production. onstream, an additional two were deferred until 2021. In Tunisia, a number of work-over operations were postponed until later in In line with our growth-oriented business model, we are firmly the year, where we have now seen the impact of higher committed to embracing our social and environmental production in Q4 and into 2021. responsibilities. We believe that this is the right approach for all our stakeholders, including but not limited to host countries, local Development projects and capital expenditure were put on hold. communities, our shareholders and business partners. In Gabon, the final two Tortue Phase 2 wells were postponed, resulting in less capital expenditure in 2020 against forecasts. The Financials and Corporate Activity start of the Hibiscus Ruche Phase 1 development was also postponed for a year. This development has now recommenced The macro events of the year materially impacted the financial with first oil expected in early 2023, which should see production statements across the industry. For Panoro, revenue and EBITDA reach 40,000 bopd gross. In Tunisia, capital expenditure was were materially lower than the previous year. Production growth principally on budget as development operations, while delayed was truncated due to postponed activity; operating costs by a number of months, were undertaken. These Tunisian increased due to lower production volumes. Capital expenditure activities were a success, with increases in production was held