Second Quarter 2020 Oslo, 21 August 2020 Disclaimer THIS - - PowerPoint PPT Presentation

Second Quarter 2020

Oslo, 21 August 2020

THIS PRESENTATION (THE “INFORMATION MATERIAL”) HAS BEEN PRODUCED AND DELIVERED BY NORWEGIAN ENERGY COMPANY ASA (THE “COMPANY”). THIS INFORMATION MATERIAL DOES NOT CONSTITUTE AN OFFER, INVITATION OR SOLICITATION OF AN OFFER TO BUY, SUBSCRIBE OR SELL ANY SHARES IN THE COMPANY. THE COMPANY DOES NOT MAKE ANY UNDERTAKING, REPRESENTATION OR WARRANTY (EXPRESS OR IMPLIED) AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION (WHETHER WRITTEN OR ORAL AND WHETHER INCLUDED IN THIS INFORMATION MATERIAL OR ELSEWHERE) CONCERNING THE COMPANY OR OTHER MATTERS DESCRIBED HEREIN. NEITHER THE COMPANY NOR ANY OF ITS PARENT OR SUBSIDIARY UNDERTAKINGS OR ANY SUCH PERSON’S AFFILIATES, OFFICERS, EMPLOYEES OR ADVISERS ACCEPT ANY LIABILITY WHATSOEVER ARISING DIRECTLY OR INDIRECTLY FROM THE USE OF THIS INFORMATION MATERIAL OR OTHERWISE IN CONNECTION WITH THE MATTERS DESCRIBED HEREIN. THE DISTRIBUTION OF THIS INFORMATION MATERIAL IN CERTAIN JURISDICTIONS IS RESTRICTED BY LAW. THIS INFORMATION MATERIAL IS NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO ANY JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. THIS INFORMATION MATERIAL MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS RELATING TO THE BUSINESS, FINANCIAL PERFORMANCE AND RESULTS OF THE COMPANY AND/OR THE INDUSTRY IN WHICH IT OPERATES. FORWARD-LOOKING STATEMENTS CONCERN FUTURE CIRCUMSTANCES AND RESULTS AND OTHER STATEMENTS THAT ARE NOT HISTORICAL FACTS, SOMETIMES IDENTIFIED BY THE WORDS “BELIEVES”, EXPECTS”, “PREDICTS”, “INTENDS”, “PROJECTS”, “PLANS”, “ESTIMATES”, “AIMS”, “FORESEES”, “ANTICIPATES”, “TARGETS”, AND SIMILAR EXPRESSIONS. THE FORWARD- LOOKING STATEMENTS CONTAINED IN THIS INFORMATION MATERIAL, INCLUDING ASSUMPTIONS, OPINIONS AND VIEWS OF THE COMPANY OR CITED FROM THIRD PARTY SOURCES ARE SOLELY OPINIONS AND FORECASTS WHICH ARE SUBJECT TO RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE ACTUAL EVENTS TO DIFFER MATERIALLY FROM ANY ANTICIPATED DEVELOPMENT. NEITHER THE COMPANY NOR ANY OF ITS SUBSIDIARY UNDERTAKINGS OR ANY SUCH PERSON’S AFFILIATES, OFFICERS OR EMPLOYEES PROVIDES ANY ASSURANCE THAT THE ASSUMPTIONS UNDERLYING SUCH FORWARD-LOOKING STATEMENTS ARE FREE FROM ERRORS, NOR DOES ANY OF THEM ACCEPT ANY RESPONSIBILITY FOR THE FUTURE ACCURACY OF THE OPINIONS EXPRESSED IN THIS INFORMATION MATERIAL OR THE ACTUAL OCCURRENCE OF THE FORECASTED DEVELOPMENTS. THE COMPANY ASSUME NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS OR TO CONFIRM THESE FORWARD-LOOKING STATEMENTS TO OUR ACTUAL RESULTS. BY ATTENDING OR RECEIVING THIS INFORMATION MATERIAL YOU ACKNOWLEDGE THAT YOU WILL BE RESPONSIBLE FOR YOUR OWN ASSESSMENT OF THE MARKET AND THE MARKET POSITION OF THE COMPANY AND THAT YOU WILL CONDUCT YOUR OWN ANALYSIS AND BE SOLELY RESPONSIBLE FOR FORMING YOUR OWN VIEW OF THE POTENTIAL FUTURE PERFORMANCE OF THE COMPANY’S BUSINESS AND A POTENTIAL INVESTMENT IN THE COMPANY. THE CONTENTS OF THIS INFORMATION MATERIAL ARE NOT TO BE CONSTRUED AS FINANCIAL, LEGAL, BUSINESS, INVESTMENT, TAX OR OTHER PROFESSIONAL

• ADVICE. THIS INFORMATION MATERIAL SPEAKS AS OF 21 AUGUST 2020. NEITHER

THE DELIVERY OF THIS INFORMATION MATERIAL NOR ANY FURTHER DISCUSSIONS OF THE COMPANY WITH ANY OF THE RECIPIENTS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE. THIS INFORMATION MATERIAL IS SUBJECT TO NORWEGIAN LAW, AND ANY DISPUTE ARISING IN RESPECT OF THIS INFORMATION MATERIAL IS SUBJECT TO THE EXCLUSIVE JURISDICTION OF NORWEGIAN COURTS WITH OSLO DISTRICT COURT AS EXCLUSIVE LEGAL VENUE

Disclaimer

2

AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS INVESTOR PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY’S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS INVESTOR PRESENTATION. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS INVESTOR PRESENTATION.

Important Information

3

Increase in RBL borrowing base Tyra Decommissioning Adjusted EBITDA1 Strong Operating Cash Flow Reliable production New Chief Executive Officer

1) Adjusted EBITDA, please see Q2 2020 report

Highlights for the Quarter

4

• Successful execution of the Tyra 2020 Offshore Decommissioning Campaign
• Net result of USD 20m
• Strong liquidity position with a cash balance of USD 227m
• Completion of RBL redetermination – Significant increase in borrowing base
• Undrawn borrowing capacity available under the RBL supports liquidity
• Production consistently in line with quarterly guidance
• Appointment of David B. Cook as Chief Executive Officer

96

USDm

78

USDm

188

USDm

27.9

mboepd

✓ ✓

Operational Review

Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Production Tyra Q4 2019 Q1 2020 Q2 2020 Q3 2020 Guiding Range Actual

1) figures do not take into account the volume guarantee

Production consistently delivered in line with guidance

• Stable cash generative production throughout the Tyra Redevelopment period

Production mboepd (net)1

6

Actual 31,7 31,9 27,9 Guiding 31-33 31-33 27-29 27-29

Actual vs Guidance mboepd (net)1

41.6 31.7 31.9 27.9

✓ ✓ ✓

Guiding 27-29

16,2 7,5 4,2 Halfdan Dan Gorm

Since mid-March, COVID-19 actions and precautions were put in place to safeguard people's health and maintain production, whereas non-critical activities were put on hold or re-scheduled. With these precautions in place, outcomes were still strong: ▪ Production delivered in line with guidance ▪ Overall operating efficiency at 81% for the quarter ▪ Successful execution of a five-day full-field shutdown for repair of the Gorm E

• il export facility

▪ COVID-19 measures to protect people and ensure business continuity continued throughout the period Outlook for Q3 ▪ COVID-19 measures continuing ▪ Production guidance maintained at 27-29 mboepd (net)

1) mboepd

7

76% 24%

Liquids Gas

Split by Product Production by Hub1

Efficiency

Operating Efficiency

81%

27.9

Halfdan, Dan & Gorm Maintaining Stable Production

76% Liquids 24% Gas

FID

Tyra Redevelopment Milestone

• Successful Decommissioning Campaign

▪ Safe execution of Offshore Decommissioning Campaign according to plan ▪ Wellhead and riser platforms removed with world’s largest crane vessel, Sleipnir ▪ Tyra East and Tyra West production platform topsides removed by Pioneering Spirit in August ▪ The Tyra Redevelopment project continues underway towards first gas in 2022 Outlook for Q3 ▪ Installation of the two new jackets for the accommodation and process platforms to complete the 2020 Offshore Campaign

2021 2022 2020 2019 2018 2017

• First gas

✓ Removal of TYE and TYW topsides

• Installation of jackets
• Sail-away topsides
• Installation of

topsides 8

✓

More than 95 percent of Tyra topsides to be recycled

• Safety and Sustainability at the core of the Tyra Redevelopment project

▪ Advanced technology and engineering enabled platform topsides removal in one single lift, improving offshore safety ▪ Dismantling work onshore – easier and safer than offshore ▪ Tyra East and Tyra West topsides delivered at recycling yard M.A.R.S. (Modern American Recycling Services) in Frederikshavn ▪ More than 95 percent of the topsides are expected to be recycled ▪ The recycling of Tyra East and Tyra West topsides is to date the largest offshore recycling project carried out in Denmark

9

Photo: Tyra East in Frederikshavn

Financial Review

Stable financial performance despite significantly lower oil prices during the period

Financial Summary: Q2 2020

1) Includes other income attributable to accrued revenue related to the hedge impact of volumes lifted during the period 2) Excludes contribution from liquids protection agreement, which is recognized as a purchase price adjustment 3) Adjusted to include contribution from claims under the volume guarantee in the period and exclude exceptional costs (e.g. transaction, share-based payments)

▪ Robust financial performance during Q2 2020 ▪ Price and volume hedging give strong risk mitigation – Oil realisations significantly above market – Material price hedging in place to the end of 2022 ▪ DUC adapting to current commodity price levels ▪ No asset impairments necessary – Demonstrates remaining value of the DUC portfolio ▪ Liquidity position remains robust – Cash and cash equivalents: USD 227 million – No debt maturities until post Tyra project completion

Hydrocarbon Production 27.9 mboe/d Realised Liquids Price(1) USD 66.5 per bbl Unit Field Opex USD 22.9 per boe Liquids Protection Contribution USD 24 million Cashflow from Operations USD 73 million Total Revenue(1,2) USD 135 million Reported EBITDA USD 69 million Adjusted EBITDA(3) USD 96 million Cash & Cash Equivalents USD 227 million 11

72,0 66,5 Q1 2020 Q2 2020 28,8 28,2 Q1 2020 Q2 2020 148 135 Q1 2020 Q2 2020 31,9 27,9 Q1 2020 Q2 2020

Oil & Gas Production and Sales: Q2 2020

(mboepd) (mboepd) (USD/bbl) (USD million)

1) Production figures do not take account of the volume guarantee

Reflects

• verlift in the

period of 0.3mboepd Average Dated Brent in Q2 2020 of USD 31.4/bbl 12

Production1 Sales Realised Liquids Price Revenue

Average Dated Brent in Q1 2020 of USD 50.3/bbl

Overview of Hedging Arrangements: Q2 2020

31,4 66,5 Market Price Realized Price ▪ Noreco benefited from the liquids protection agreement with Shell during Q2 2020 – The Company recognized a contribution of USD 24 million during the period from this agreement – Noreco expects to continue to benefit from this agreement in future periods until the end of the protection period in Dec 2020 69,4 58,8 56,2 55,7 Q3 2020 Q4 2020 2021 2022

Average Hedged Price (USD/bbl) Liquid Volumes Hedged (mmbbl)

2.5 2.5 4.3 5.9

13

Price Hedging: Result in Q2 2020

(USD / bbl)

Price Hedging: Forward Portfolio

(USD / bbl)

Volume Hedging: Liquids Protection Agreement

69 24 2 96 Reported EBITDA Volume Guarantee Other Adjusted EBITDA

Financial Statements: Q2 2020

Operational Q2 2020 Q1 2020 Production (mboepd) 27.9 31.9 Unit Field Opex (USD/boe)1 22.9 22.7 Profit & Loss (USD million) Revenue 135 148 Production Expense (65) (60) EBITDA 69 82

• Adj. EBITDA

96 105 EBIT 45 48 Net Result 20 (14) Cashflow (USD million) Operating Cashflow 73 62 Cashflow from Investing (92) (33) Cashflow from Financing (27) (41) Net Change in Cash (45) (13) Balance Sheet (USD million) Cash & Cash Equivalents 227 273 Bank Debt2 751 746 Net Interest Bearing Debt: Accounting 888 837 Net Interest Bearing Debt(3) 724 673

1) Production expense in the period adjusted to exclude impact of over-lift and crude oil inventory movements and exceptional items 2) Reflects total principal outstanding; balance sheet values based on amortised cost 3) Excludes outstanding convertible bond (mandatory conversion to equity)

135 4 (5) 1 135 Sale of Oil Sale of Gas & NGLs Accrued Hedge Benefit Other Income Total Revenue

14

Revenue: Q2 2020

(USD million)

Adjusted EBITDA: Q2 2020

(USD million)

15

In a challenging oil and gas market, the positive outcome from Noreco’s RBL redetermination is a testament to the Company’s long-term value proposition ▪ RBL redetermination completed in June 2020 – Led by Joint Technical Banks (BMO, Lloyds and Natixis) on a semi-annual basis – Increase in borrowing base of USD 188 million ▪ Increase supported by price and volume hedges ▪ Increase reflects strong 2019 performance, incl. reserves replacement ratio of 177% ▪ Capex add-back provides further investment flexibility ▪ Borrowing capacity constrained only by facility size – Borrowing base expected to remain above maximum Noreco can draw for the entire life of the loan

751 939 Borrowing Base @ Dec 19 Borrowing Base @ June 20

Increase of USD 188 million from Dec-2019 to Jun-2020 redeterminations

Significant increase in borrowing capacity, demonstrating underlying value of Noreco

RBL Redetermination Successfully Completed

Borrowing Base Evolution

(USD million)

Capital Structure: Q2 2020

▪ Reserve Based Lending Facility – USD 751 million drawn end Jun-20 – Semi-Annual redetermination successfully completed Jun-2020 – Borrowing base increased from USD 751 million to USD 939 million – Amortization post-Tyra restart ▪ NOR13 Convertible Bond – Subordinated bond with mandatory conversion to equity after five years – NOR14 Unsecured Bond – USD 175 million bond due 2026 ▪ Other Non-Current Liabilities – Deferred consideration of USD 25 million ▪ Net Interest-Bearing Debt – Convertible bond excluded from the RBL and NOR14 net debt to EBITDAX covenant 751 164 175 25 1 115 227 888 164 724 RBL NOR13 NOR14 Other Non- Current Liabilities Total IBD Cash Net IBD (Accounting) Convertible Bond Net IBD

1 2 3 5 1 2 3 5 4 4

1) Figures reflect drawn amount for debt instruments; balance sheet values based on amortised cost

16

Net Debt Overview: 30 June 2020

(USD million)

Closing Reflections

Broad Spectrum of Growth Opportunities Material Reserves & Resources Base Substantial Production Near-Term Growth Through Tyra Cashflow Secured Through Hedging Strong Financial Position

Noreco: Attractive Long-Term Value Proposition

18

✓ ✓ ✓ ✓ ✓ ✓

• 2P reserves of 209 mmboe with 177% reserves replacement ratio during 2019
• 2C resources of approx. 200 mmboe with additional projects being progressed
• Consistent production providing significant operational cashflow
• Low decline rates with opportunities to offset through investment
• Noreco expected to produce circa 50 mboe/d following Tyra restart
• Project forecast on time and on budget
• Low risk organic growth identified in high value, low capex projects within the DUC
• Advantageous tax balances support potential inorganic value-additive growth
• Liquids production fully price hedged in 2020 at prices significantly above market
• Material volumes already hedged for 2021 and 2022 at approx. USD 56 per boe
• Guaranteed production levels with Shell underpin 2020 cashflow
• Substantial liquidity supported by upward RBL borrowing base re-determination
• No debt maturities or capital repayments until the completion of the Tyra project

Q&A

19