ANNUAL REPORT

Pandion Energy takes its responsibility as a licensee very seriously and aims to be recognised as an active and responsible partner. The company has established a comprehensive HSE management system which aims to ensure that the company's personnel are qualified and trained, that the operations are planned and executed in accordance with the relevant regulations and best practices, and that the risks are identified and managed effectively.

The company has a team of 25 highly experienced oil and gas professionals with strong and proven track record within technical, financial, and commercial disciplines. It benefits greatly from its borderless interdisciplinary communication and short decision lines, which enable the company to develop a different perspective from

the operator when not focusing on day-to-day execution of operations. As a partner, Pandion Energy is reliant on working closely with the operators on sustainability issues and setting the objectives for HSE, compliance and governance matters within its assets.

Reporting principles and materiality

The sustainability section of this 2023 combined annual report is a voluntary disclosure of Pandion Energy's environmental, social, and governance (ESG) performance in 2023. Where relevant, references is made to the Task Force on Climate-related Financial Disclosures (TCFD) and the company's Transparency Act statement.

The report has been prepared in line with the requirements from the ESG committee, which assists and facilitates the board of directors' responsibilities within sustainability matters. The report is also intended to inform and engage relevant stakeholders.

The topics addressed in this section are based on the material topics identified as having the greatest impact for Pandion Energy's stakeholder groups and have been aligned with Kerogen Capital, its main shareholder. These material topics are expected to be valid in the medium to long term. Significant attention is paid to key energy specific ESG factors where the company has direct influence based on its nonoperator status, such as compliance, environmental impact, and climate change. Also addressed are factors related to human rights and operational health and safety representing higher dependence on cooperation with the operators of the company's production licences.

The company is currently preparing for the Corporate Sustainability Reporting Directive (CSRD) expected to enter into force in the EU and Norway for the 2024 reporting, applicable to Pandion Energy from the 2025 fiscal year. Pandion Energy plans to perform its first double materiality assessment in accordance with European Sustainability Reporting Standards (ESRS) part of the CSRD framework during 2024 and update future sustainability reporting accordingly.

Since 2021, Pandion Energy has strengthened its assessment of human rights issues following the introduction of the Norwegian Transparency Act, issued in a separate report made available on our website by 30 June each year.

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Introduction

Corporate governance and compliance

Pandion Energy believes that effective corporate governance is critical in ensuring accountability, achieving its strategic goals and generating value for its stakeholders. Together with Kerogen Capital, its main shareholder, the company seeks high standards of performance and professionalism based on honesty, integrity and fairness in its business practices. Pandion Energy works together with partners and contractors on the basis of the same principles of integrity and fairness, with zero tolerance for bribery and corruption.

The board believes that good governance is rooted in compliance with legislation and statutory regulations and in ensuring a culture of integrity, accountability and transparency. Corporate governance aims to regulate the division of roles between shareholders, the board and the executive management more comprehensively than is required by legislation.

Pandion Energy has established a comprehensive HSE management system, which facilitates competent personnel to deliver compliant operations through rigorous planning and execution, and is also a system for effective risk management.

A detailed model of governance, risk management and control has been developed and implemented in Pandion Energy through the company's management system. This incorporates activities at shareholder and market level as well as by the board and executive management.

Governance at the shareholder and financial market level occurs through the general meeting, investor relations activities and financial market communications, including financial reporting.
Board-level governance includes setting strategies and objectives for the company, defining instructions, policies and risk limits, and monitoring operations, reporting and compliance.
The board has appointed a chief executive officer (CEO) to act as the company's principal operational manager. The CEO's powers have been specified by the board, and they are required to work within that mandate and report regularly to the board.
A key governance element at the management level is the company's business management system, which includes formalised business processes for all main activities in the value chain, including business planning, implementation and monitoring.

ESG roles and responsibilities

Executive management is responsible for risk and opportunity identification and for ensuring effective processes and mitigation efforts, including ESG matters within their respective areas of responsibility. VP HSE and operations is responsible for ESG reporting and supervising the processes related to risk management, HSE follow up, compliance, and business continuity. The CEO is ultimately responsible for the ESG performance of the company. While the board has an overall leadership and supervisory role in all sustainability matters.

The board has two sub-committees, for ESG and remuneration respectively.

Corporate governance and compliance

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Corporate governance and compliance

The ESG committee comprises one non-executive board member and one representative from Kerogen Capital, supported by CEO and VP HSE and operations. Its primary role is to support the board in:

managing ESG risks (including their impact on the community, climate change and the environment), and ensuring that the company's ESG policies and practices are in alignment with its values, purposes and culture
integrating the management of climate change and other sustainability factors into the company's strategy and business plan, and aligning external reporting with recognised norms.

The remuneration committee ensures that remuneration arrangements support the corporate strategy and performance, including ESG- and climate-related performance targets.

Responsible business

Pandion Energy strives to uphold the highest standards of ethical behaviour in all its operations along the whole value chain. The company's commitments to responsible business conduct are set out in its code of conduct, including its position on anticorruption and human rights.

Code of conduct

Pandion Energy believes strongly that an ethical business culture is the cornerstone of a sustainable company. Its code of conduct includes mandatory requirements for everyone who works for and on behalf of Pandion Energy, serves as the company's guide to ethical business practice, and represents its core values for acting with integrity at all times.

The code of conduct is the company's main governance tool. It provides guidance on how to act in accordance with the company's core values, and includes references to relevant policies, processes, procedures, resources and tools. It sets out Pandion Energy's expectations, commitments and requirements for ethical conduct in its business. The code of conduct applies to directors, executive management and all employees and consultants. Pandion Energy also expects all its business partners and suppliers to act in a manner consistent with the principles of the code of conduct.

Areas covered by the code include the HSE policy and commitment, equality and anti-harassment, labour and working conditions, including human rights, modern slavery and child labour, anti-corruption, anti-money laundering and tax evasion, confidentiality, conflicts of interests, business practices towards suppliers and partners, and guidelines on gifts, hospitality and expenses.

The board of Pandion Energy has established the code of conduct in close cooperation with the management team. The CEO is ultimately responsible for its implementation and for monitoring its operational effectiveness. The code of conduct will be evaluated on a regular basis to reflect Pandion Energy's activities as it develops as a company and as changes are made to laws and regulations.

The company requires all employees and in-house consultants to participate in training in the code of conduct. All employees have a personal responsibility to comply with the requirements set out in the code of conduct as well as applicable

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Social impact

laws and statutory regulations relevant to their work. Managers have an additional responsibility in supporting and promoting compliance with the code of conduct and related policies, standards and procedures. The code of conduct is communicated internally and on the company's website.

Pandion Energy encourages its employees, contractors and any of its affiliates who have concerns about any aspects of its business to raise them and to disclose any information which relates to improper, unethical or illegal conduct in the workplace. The company has set up an independent disclosure service for whistleblowing.

No cases involving breaches of the guidelines in the code of conduct were recorded in 2023.

Anti-corruption

Corruption exposes not only the individual but also the company to penal liability. In addition, it may cause significant losses as well as irreparable and long-term harm to the company and its business. At Pandion Energy, it is wholly unacceptable to engage in any activity regarded as corruption or other illegal practices such as anti-money laundering or tax evasion. The company has zero tolerance for any form of bribery, corruption, fraud, dishonesty or deception, and this stance is endorsed by the board. This means that Pandion Energy has no tolerance for paying, facilitating or receiving any bribes or facilitation payments, for using undue influence, disguising the proceeds of crime or facilitation of tax evasions. The company conducts its business honestly, fairly and transparently.

According to the Transparency International Corruption Perception Index (CPI), corruption risk in Norway is considered to be limited. Still, Pandion Energy is aware that corruption also happens there and is conscious of potential dilemmas and grey areas, such as conflicts of interest, relationships with business partners, gifts and hospitality. The company's goal is to act in an ethical and transparent manner, so that it can be a trusted business partner, employer and corporate citizen.

Pandion Energy seeks to comply with all applicable anti-corruption laws and regulations. The company is backed by Kerogen Capital, an independent private equity fund manager based on London and Hong Kong, and is required to comply with the UK Bribery Act and the US FPCA.

The company's employees must not offer, promise or give, nor request, agree to receive or accept, any bribe of any description or value to reward the improper performance of a person's duties, including public officials. Bribes could be monetary, but can equally take other forms such as the offer of a job, travel, accommodation, use of assets, or a service or loan. No employee should ever engage in, authorise or tolerate corruption for any reason at any time. Furthermore, they should never offer or accept an improper advantage which has no legitimate business purpose and is provided in order to influence the recipient's decision-making.

Employees are obligated to report to their line manager or other senior executive if they witness a bribe or are ever offered or requested to pay a bribe. Payment extorted through a threat to life, health or safety, or of illegal detention, is permissible and will not result in any form of retaliation, but must be reported immediately.

Pandion Energy's anti-corruption and anti-bribery efforts includes necessary controls embedded in the company's financial and procurement procedures, audits, businesspartner due diligence and awareness training, as well as an independent channel for reporting concerns. The company also encourages its business partners and suppliers to make a clear commitment to opposing corruption and bribery.

No cases of corruption were reported in 2023.

Confidentiality, inside information and conflicts of interest

All employees should make sure that they keep confidential information secure, and be aware of their responsibility to not talk about confidential and sensitive information concerning Pandion Energy with outsiders, including family and friends. In addition to confidentiality agreements with partners, counterparties and other stakeholders, the company has a general obligation to maintain confidentiality and protect the business.

Inside information covers details about a listed company that are not publicly available and are likely to have a noticeable effect on the price of securities. While Pandion Energy is not a listed company, its bond loan is listed on the Nordic ABM, an alternative bond marketplace regulated by Oslo Børs ASA. Listing indicates that the bonds are subject to market surveillance by Oslo Børs, which carries out identical market surveillance for both the Oslo Stock Exchange and Nordic ABM. Pandion

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Energy employees may well become aware through their work of inside information concerning vendors, business partners and, particularly, licence partners.

Information concerning specific licences may represent inside information until it is disclosed to the public. In general, the company has an obligation towards its licence partners to maintain the confidentiality of all information related to licences.

More specifically, Pandion Energy employees may not misuse inside information for their own benefit or for the benefit of family members or affiliates. Pursuant to the Norwegian Securities Trading Act, trading in securities while in possession of inside information is subject to strict liability. Pandion Energy will not tolerate any breach of confidentiality in general or any misuse of inside information.

The company respects the privacy of its employees and their right to manage their personal affairs, activities and investments. However, conflicts of interest may arise if personal, social, financial or political activities could influence, or appear to influence,

their ability to make the right decision for Pandion Energy. The company expects all employees to act in its best interest at all times.

Whistleblowing

Pandion Energy believes in openness and transparency. Illegal or unethical matters may have a negative effect on the working environment and the company's business in general. It is important that such matters are dealt with properly.

The company encourage employees, contractors and any of its current and former affiliates who have concerns about any aspect of its business to raise them and to disclose any information which relates to improper, unethical or illegal conduct in the workplace. Pandion Energy employees have a right and an obligation to raise concerns about the business, including matters such as:

illegal conditions and breaches of the law
breach of ethical norms and internal guidelines
harassment or discrimination in the workplace that may endanger life or health.

No whistleblowing reports were received during 2023.

HSE policy

HSE are critical in the oil and gas industry, where operations can affect the environment, communities and the workforce. Devoting attention to HSE and governance issues is strategically important to Pandion Energy. The company integrates technical, economic and HSE considerations in its decision-making and operational processes in order to achieve long-term sustainability of the business and to reduce risk.

Pandion Energy places great emphasis on ensuring that operations it participates in are safe for the people involved, and seeks to minimise their impact on the environment. All personnel, whether employees or contractors, are expected to be aware of their role in managing HSE risks within their area of responsibility and expertise. Employees are encouraged to speak up and to halt any work they feel to be unsafe and, furthermore, to report any instances of unsafe practices and/or any dangerous working conditions. Pandion Energy's HSE policy is included in the Code of Conduct document, available at the company's website.

No cases or activities in violation of the HSE policy guidelines were registered in 2023.

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Risk management

Technical, economic and ESG considerations, including HSE and climate risk, are integrated in Pandion Energy's decision-making and operational processes in order to achieve long-term sustainability of the business and to reduce risk. Pandion Energy strives constantly to manage ESG risks by understanding the exposure to risk, and thereby minimising the possibility of occurrence and reducing the potential consequences. Effective management of ESG risks is about embedding ESG practices in the company's culture and operating procedures.

Business risk is an integral part of Pandion Energy's strategies and goals, and company activities should at all times be based on a balanced and realistic view of risks and opportunities. Responsibility for implementation and accountability for the results rest with the board and executive management, and must be owned and understood at the appropriate level in the organisation.

Pandion Energy manages and reports enterprise-level risks and opportunities through an enterprise risk management process. The purpose of this process is to:

identify, monitor and report potential events that may affect the company
manage risk to keep it within the company's risk appetite
provide reasonable assurance that key objectives will be reached.

Enterprise risks and opportunities are captured across four major business risk categories: strategic, operational, financial and compliance/ESG.

Communicating risk has a high priority in Pandion Energy and the framework is purposely designed to discuss the key issues effectively rather than provide a rigid documentation of all possible risks that any enterprise is exposed to. It enables the board to actively assess the overall risk exposure of the company as required by its governance process.

Reference is also made to the Directors' report statement on risk and risk management on pages 22-24.

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Pandion Energy recognises that climate change is of critical importance to the future of the planet and supports the goal of the Paris Agreement to limit global warming. The company is aligned with the carbon reduction strategy adopted by the Norwegian government and the net zero strategy of Kerogen Capital, its main shareholder.

Since its inception, Pandion Energy has maintained a low carbon footprint – demonstrated by carbon intensity levels per barrel which are amongst the lowest in the Norwegian and global E&P industry, ranging from 1.1 – 3.4 kilograms of CO₂ per barrel of oil equivalent for its net production. In 2021, Pandion Energy launched its strategy to achieve net zero carbon emissions.

A key part of this strategy involved aligning the company's investment criteria to ensure that new growth opportunities are evaluated with regard to GHG aspects and climate related risks in order to sustain a resilient asset portfolio.

As the world population continues to grow, so does the need for affordable, reliable and clean energy while simultaneously addressing environmental and energy security implications. The path to the energy system of the future is uncertain and, as reflected by forecasts and scenarios from the International Energy Agency (IEA), a wide range of different outcomes exists for oil and gas demand. While the world's reliance on fossil fuels will undoubtedly decrease, oil and gas is likely to remain an important commodity even in a fully decarbonised society. The oil and gas industry must thus continue its efforts to reduce its operational emissions to the lowest possible level.

In 2020, Pandion Energy became one of the first E&P companies in the industry to achieve carbon neutrality for CO₂ emissions in scopes 1 and 2. The commitment to carbon neutrality has been achieved through low carbon intensity production and by carbon offset programs aligned with the UN sustainable development goals (SDGs) for the remaining balance of the hard-to-abate emissions. The use of offsets is seen as part of an overall plan to reduce carbon impact of its operations with the continued focus on reducing remaining absolute emissions further towards near zero over time.

To meet stakeholder expectations for transparent and robust disclosures on how risks related to climate change affect the company and its resilience, Pandion Energy has committed to align its disclosures with the recommendations of the task force on climate-related disclosures (TCFD). Reference is made to the TCFD index on page 84.

Scenario analysis and resilience

In line with the best practice recommended by the TCFD, Pandion Energy employs scenario analysis to assess potential impacts of the climate change and energy transition on its business, financial performance, and long-term strategy.

Selected scenarios are evaluated to assess possible shifts in the macroeconomic outlook, technology developments, policy and legal implications, and projected demand for the company's petroleum products (oil, gas and natural gas liquids).

Each energy-transition scenario yields a range of commodity prices for power, gas, oil and so forth, and environmental taxes and fees. These assumptions are applied to refine the understanding of climate-related risks and opportunities and to assess the resilience of the company's portfolio.

Pandion Energy's scenario analysis includes the scenarios from the most recent World Energy Outlook (WEO) published by IEA. These scenarios are commonly used by our industry peers and can help investors and other stakeholders assess portfolio resilience across companies. The IEA 2023 World Energy Outlook describes the following three scenarios:

• Net zero emissions by 2050 scenario (NZE2050) – a pathway for the world's energy sector to achieve global net zero emissions by 2050 to fulfil the Paris agreement and limit global warming to 1.5°C from pre-industrial level by 2100. The scenario aligns with the best practice recommended by the TCFD to assess the company's resilience to a 2°C or lower scenario. NZE2050 is a normative scenario first published by the IEA in 2021, as it has been updated for the 2023 WEO it starts from a higher level of fossil fuel demand and emissions than the previous version, and has a shorter time span to achieve global net zero target by 2050. As a result, reaching this goal requires more extensive efforts than in the previous analysis. In NZE2050, oil demand declines by 75 per cent in 2050 from current level, while natural gas demand is assumed to fall even faster and be almost 80 per cent lower than today by 2050.

Climate change

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Climate change

Announced pledges scenario (APS) which assuming all national energy and climate targets made by governments are met in full and on time. The scenario also includes longer term net zero emissions targets and pledges in Nationally Determined Contributions (NDCs), as well as commitments in related areas such as energy access, irrespective of whether those commitments are underpinned by specific policies to secure their implementation. In the APS, stronger policy action leads global oil demand to peak prior to 2030, marginally down from the current level. Oil demand is then projected to fall by around 40 per cent towards 2050. Global natural gas demand remains at around current levels until 2030, before declining towards 2050 at a pace similar to that of oil.
Stated policies scenario (STEPS) an outlook based on the latest policy settings, including energy, climate and related industrial policies. It reflects a pragmatic exploration of the current policy landscape and gives a view on where the energy system might be heading in the absence of any new initiatives. In STEPS, both global demand for oil and natural gas continues to grow before peaking around 2030 and remaining at this level throughout the forecast period.

Climate risks and opportunities

Climate-related risks and opportunities are captured in line with the recommendations of TCFD and is an iterative process. The executive management team, ESG committee and board all engage in the risk review process for climate-related risks and opportunities. The risks and opportunities are defined in short (zero to three years), medium (three to 10 years), and long-term (10 to 25 years) perspectives, with a focus on transitioning to a low-carbon economy and reducing GHG emissions. The company's approach to energy transition and climate risk is integrated into the company-wide risk management approach, with a focus on financial impact and stakeholder expectations. In line with the TCFD, the climate related risks are grouped into two major categories: (1) Risks related to the transition to a lower carbon economy, and (2) risks related to the physical impacts of climate change.

A summary of key climate-related risks and opportunities is provided at the end of this section.

Transition risk

The top risk for Pandion Energy is the changing long-term demand for oil. As the

world transitions towards a low-carbon economy, there is a potential decrease in the demand for the company's products. This poses a financial risk to the company, as it may experience reduced revenues due to unstable or low commodity prices in the medium to long term. To mitigate this risk, Pandion Energy has focused on building a resilient portfolio of quality assets with cost-efficient production.

Technology and market

Pandion Energy assumes that market considerations should be reflected in technology development trends for renewable energy. The electricity-generation transition from fossil fuels to renewables is expected to accelerate. With a continued decline in the cost of solar, wind and related power technologies and improvements in their efficiency, variable renewable energy sources will gradually but steadily transition from a marginal role to becoming one of the most competitive electricity sources in 2050.

The transition is demonstrated in the growing dominance of electricity in final consumption, which will have increased to 30, 41 and 53 per cent in 2050 in the STEPS, APS and NZE2050 scenarios respectively. The three IEA scenarios show increased renewable deployment and increased share of low-emissions electricity generation, with solar PV and wind expanding fast in the coming years, especially in the power sector. The share of fossil fuels in the energy mix, which has remained steady for more than a decade, is set to change significantly with continuous decarbonisation around the world.

In the NZE2050 the oil and natural gas demand is expected to fall nearly 80 per cent by 2050 with commodity prices following the dramatic decline. In this normative scenario, there are no new oil and gas fields approved for development beyond already committed projects as of 2023.

Sensitivity to commodity prices

Pandion Energy has included a sensitivity analysis to demonstrate the potential influence of oil and gas price assumptions on the net present value (NPV) of its existing portfolio, highlighting the varying impacts across different scenarios compared to the company's planning assumptions in the figure below. For further details please refer to Note 8 to the financial statements. Compared to the management assumptions, the NPV of the portfolio is reduced by 38 per cent in the NZE2050 scenario and increased by 5 per cent and 22 per cent in the APS and STEPS scenarios respectively.

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Though demand for oil will decline towards 2050, there could be an incremental shortor medium-term increase. The net zero carbon strategy implemented by Pandion Energy not only builds a positive corporate image for sustainability, but also involves active steps to address a potentially reduced investor appetite in the long term.

Policy and legal

Pandion Energy also considers potential changes from regulators; In the medium term, it is possible that the government may implement more environmental taxes and modify fiscal conditions, while also increasing requirements or limiting access to frontier oil exploration. Looking ahead to the long term, access to acreage may be restricted and asset valuation could be reduced.

With a view to mitigating the risks outlined above, Pandion Energy has integrated its net zero carbon ambition into its investment strategy by:

establishing an offsetting strategy with different pricing scenarios for neutralisation of the residual hard to abate emissions
actively managing the future portfolio by pursuing exploration and appraisal opportunities only in areas with existing or plausible future access to renewable energy sources for electrification of production
incorporating GHG emissions and the potential for future carbon reductions as a
new investment criterion for development and production assets
incorporating the cost of carbon in evaluating new investments where renewable energy sources are not available

Sensitivity to increased carbon cost

The assumed policy and legislative changes are based on stated policies from the Norwegian government, regulatory changes related to stated commitments, and motivation for the transition to alternative power sources. The carbon cost assumptions, for example, are specific to Norway and are more aggressive than in all the IEA scenarios.

Petroleum operations on the NCS are subject to European Union emission allowances (EUAs) in the EU emission trading system (EU ETS) as well as the specifically Norwegian carbon tax. The combination of a national carbon tax and the EUA means that companies pay a higher price per tonne of CO2 emitted in Norway than in most other countries with petroleum activities.

As part of Norway's climate action plan announced in January 2021, Norway has set a target to gradually increase the total cost per tonne of CO2 from around USD 80 in 2020 to USD 266 in 2030 (real 2023 terms). This target is reflected in the company's

Commodity price assumptions Scenario price assumptions applied in portfolio stress test

Portfolio stress test 2023

Impact on NPV in selected scenarios relative to company's price assumptions

Brent oil price (USD/boe), in real 2023 terms	NZE2050	APS	STEPS
2030	44	78	86
2050	26	63	84
Gas price (USD/mcf)	NZE2050	APS	STEPS
2030	5	7	8

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planning assumptions, which show an increase in both the EUA and national carbon tax over the next 10 years, reaching the targeted level set by the Government for 2030.

Due to the company's low carbon intensity portfolio the NPV of future carbon costs is limited and Pandion Energy's carbon price assumptions significantly exceed prices assumed under the IEA's scenarios as illustrated in the figure on the following page, demonstrating the company's resilience towards higher carbon prices.

Physical risk

Pressure points from the physical risks of climate change arise primarily from a possible increase in the severity of extreme weather and sea level rises, causing potential asset impairment in the long term.

Located in the North Sea, the field centre for the producing Valhall and Hod fields has been subject to subsidence, and rising sea levels and extreme waves may potentially amplify the risk for installations.

Under severe weather conditions, storm waves may reach and affect lower-decks, causing structural forces above design limits. In extreme cases, wave impact can result in collapse of load-bearing elements or impairment of the asset. Less clearance between lower decks and sea water level may force early shutdown of operations. Rising sea levels may also increase the urgency for field modifications to endure extreme weather.

The operator has designed a business continuity plan for extreme weather events to minimise operational downtime. To eliminate this risk and prolong the lifetime of the fields, the most exposed installations have already been phased out and are being decommissioned. Given the very long potential producing life of the fields, a project for building a new central platform has been sanctioned and, amongst other things, will factor these risks into the design.

In addition to the acute physical risk, a change in working environment on the offshore installations from changes in temperature or precipitation pattern are considered chronic physical risk elements related to climate change. Chronic physical risk may force changes in current operating models like reducing acceptable exposure time for offshore work. To mitigate these issues and potential for early asset retirement or other decreases to asset value, risk assessments are systematically performed and updated metocean data collected to form input to infrastructure design of new facilities and working procedures for existing facilities.

Since physical risks from climate change are typically evaluated over a long-term time horizon, the Nova field is considered to have limited exposure to physical risk taken the technical properties and field lifespan into account.

Pandion Energy assesses physical risks from climate change as less material to its business and more manageable, due to the fact that its assets were designed to withstand acute and chronic physical impacts. However, uncertainties and limitations are substantial, and Pandion Energy will continue to expand and evolve its scenario analysis to incorporate future market conditions.

Opportunities

Pandion Energy's low carbon portfolio offers a strong advantage in the ESG-focused investment landscape. With superior carbon efficiency and lower costs, it is well positioned for sustainable divestment and capital raising. Notably, sensitivity analysis shows a positive impact on NPV in the STEPS and APS scenarios, assuming continued reliance on oil and gas in the global energy mix.

Carbon price assumptions

Company carbon price assumptions relative to selected scenarios

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Technological advances driven by the energy transition, such as CCUS or increased electrification, may also positively affect production cost efficiency, prolong asset life or provide new commercial opportunities.

Management of climate risk

Pandion Energy manages climate-related risks through scenario analysis, sensitivity testing, active portfolio management, collaboration as well as compliance and reporting. In order to minimise the exposure to transition risk, Pandion Energy has committed to sustaining its low-carbon-impact position in the industry and to remaining carbon neutral (on scope 1 and scope 2 basis). Pandion Energy's strategy for net zero carbon rests on four key pillars:

Working with industry to meet the GHG emission targets set by national regulators

Committing to net zero carbon operations by offsetting the remaining hard-to-abate CO2 equivalent emissions in Scopes 1 and 2

Aligning investment criteria to maintain a low carbon footprint in its portfolio

Promoting transparency and accountability

Emission reduction

Pandion Energy has been a proponent of electrification since its inception. All of the producing fields in the company's portfolio are already powered by electricity from shore and none have routine flaring. This contributes to keeping the carbon emissions associated with its oil and gas production at an inherently low level, significantly below the NCS GHG intensity average and 90 per cent lower than the global average1 .

Further reductions in its scope 1 and 2 emissions would be considered incremental, nevertheless, Pandion Energy continues working with the operators of its assets to pursue further emission reductions in operations and associated supply chains.

Carbon neutrality

To bring the remaining residual equity share scope 1 and 2 GHG emissions to net zero Pandion Energy sees the use of high-quality carbon removals as part of an overall plan to neutralise the carbon impact of its operations while committing to the target of reducing the remaining balance of Scope 1 and 2 absolute emissions over time further.

To ensure the environmental integrity of offsets, the company will put emphasis on carbon removal offsets which are in-line with the Oxford Principles for Net Zero Aligned Carbon Offsetting.

Investment criteria

Pandion Energy has a target of maintaining its low carbon footprint by actively managing its portfolio. The company has updated its investment criteria to ensure that new growth opportunities are evaluated with regard to GHG and climate related aspects.

This includes:

Focus on renewable energy sources by incorporating potential for future access to renewable energy sources as a key criterion for the company's exploration and appraisal activities
Consideration of GHG emissions by taking into account the future cost of carbon emissions where renewable energy sources are not available and the potential for future emission reductions as a key investment criterion for developments and producing assets

Transparency and reporting

Pandion Energy has committed to align its disclosures with the recommendations presented by the TCFD. The company will advocate for sharing of raw emissions data within licences in order to take responsibility for its net carbon emissions and has developed operational tools to monitor and support the assets' carbon reduction performance. Pandion Energy reports equity-based scopes 1 and 2 and selected scope 3 GHG emissions and works with its joint venture partners, peers, regulators, investors and other stakeholders to promote and accelerate decarbonisation.

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	Risk category	Risk driver	Potential impact	Mitigation
	Market/ Reputational	Change in investor and capital market behaviour	Increased cost of capital; Reduced availability of capital; Penalties for fossil energy sectors; Commodity price fluctuations	Net zero strategy; Active portfolio management; Increased transparency through voluntary reporting
	Regulatory and legal	Increased environmental taxes and carbon cost	Increased operation cost; Reduced investment space; Increased competition on low carbon assets (also opportunity)	Low carbon intensity portfolio; Net zero strategy; Investment criteria and internal carbon price assumptions; Scenario analysis and sensitivity testing; Offsetting strategy; Operator cost reduction and emission reduction initiatives
	Regulatory and legal	Policy and legal changes that may negatively affect framework conditions or reduce access	Viability of exploration & development projects; Increased cost; Reduced access to acreage; Early retirement of access	Net zero strategy; Investment criteria & E&A strategy; Properties of current portfolio
Transitional risks	Reputational	Reputational risk from negative public perception	Increased cost of capital and insurance premiums; Reduced access to capital; Stigmatisation of sector and challenges to retain/attract talent	Net zero strategy; Increased transparency; Size of organisation
	Market	Reduced oil and gas demand and lower commodity prices due to energy transition speed and decarbonization efforts	Reduced revenues; Early asset retirement or devaluation due to declining profitability or competitiveness of oil and gas assets	Investment strategy: near infrastructure, cost efficiency, focus on quality assets; Continued focus on cost, CO₂ footprint and investment strategy; Consider actions based on sensitivities towards scenarios
	Technology	Technology risk from the emergence of disruptive or innovative solutions that may render oil and gas obsolete or unattractive or create comitative market environments	Increased cost; Early asset retirement or devaluation	Investment strategy: near infrastructure, cost efficiency, quality assets; Continued focus on cost, CO₂ footprint and investment strategy
	Chronic	Chronic physical risk from changes in temperature or precipitation patterns that may affect the working environment or operating models	Increased operating cost or modification/investment requirements; Early asset retirement or devaluation due to operational limitations or increased costs	Operator's risk procedures & asset risk assessments; Modernisation of infrastructure (Valhall)
Physikal risks	Acute	Operational downtime and asset impairment from extreme weather events and sea level rise	Increased modification/investment requirements; Potential asset impairment; Early asset retirement or devaluation due to operational limitations, increased operational cost or capex requirements.	Operator's risk and integrity management procedures incl. increased monitoring, updated data and evaluations; Modernisation of infrastructure (Valhall)
	Opportunity category	Opportunity driver	Potential impact	Mitigation
	Technology	Opportunities from technology development such as CCUS, increased use of electricity, repurposing of infrastructure etc.	Increased cost efficiency; New commercial or investment opportunities; Prolonged commercial live; Delayed asset retirement	Monitor market opportunities
	Market competition	Potential opportunity in competitive advantage due to superior carbon efficiency levels and lower costs	Positioned for divestment opportunities and capital raising; Positive NPV effect in higher oil price scenarios; Prolonged asset life	Low carbon intensity portfolio, cost efficiency, Investment strategy, Sensitivity testing
	Resilience	Resilient portfolio with limited impairment under low oil price scenarios and high carbon prices	Remaining profitability under reduced market conditions	Continued focus on asset management and cost efficiency
	Market	Increased demand for oil and gas produced with low carbon intensity Premium commodity prices, Prolonged asset life		Low carbon intensity portfolio, Net zero strategy

Climate risks and opportunities

Sustainability

Introduction

Corporate governance and compliance

Pandion Energy is committed to minimising the environmental impact of its activities. The company's HSE policy sets out the objectives and expectations applicable to the operations which the company participates in as a licensee. Pandion Energy values transparency on risk and how environmental aspects are handled in relation to its assets, including managing and monitoring emissions to the air, minimising discharges to the sea and optimising waste handling. The company is also committed to considering, preserving and safeguarding biodiversity.

Pandion Energy has established an HSE evaluation framework for assessing HSE complexity on the basis of area properties, including (but not limited to) environmental issues such as sensitive habitats, spawning areas, biodiversity priority areas and vulnerable resources. The framework is used as part of its decision-making process before entering new licences and, at a later stage, as input to the company's followup activities with the operators and allows for early risk identification and mitigation related to planning of operational activities.

Environmental management

As part of its "see to it" duty, Pandion Energy confirms that the operator has established an environmental management system which is fit for purpose before commencing petroleum activities in any licence in its portfolio. This is also a requirement in relation to regulatory application processes before commencing operations on the NCS. All responsible parties on the NCS must establish, follow up and further develop a management system designed to ensure compliance with the requirements of Norway's HSE legislation – including the Pollution Control, Working Environment, Petroleum, Product Control and Fire and Explosion Protection Acts. The assets in the company's portfolio are managed in accordance with the guiding principles of the ISO 14001 environmental management and ISO 50001 energy management standards.

All petroleum-related activity on NCS is subject to public consultation and government approval, mostly through a consultative process on environmental permits. Stakeholders, local communities and interested parties are entitled to comment on environmental and social issues and to submit recommendations to the government on planned activities. Pandion Energy follows up operator responses to these recommendations, with attention concentrated on compliance with the government's operational conditions as defined in the management plans.

Discharges to the sea from petroleum activities on the NCS are regulated by the licence discharge permits issued by the NEA. The compliance status of discharges and emissions is reported annually to the government for both producing fields and drilling activities. Annual reports, together with associated feedback from the NEA, provide input for a continuous improvement of environmental performance. he operators of the producing assets in the company's portfolio hold field-specific permits under the EU ETS, and the associated climate accounting for scope 1 emissions is subject to annual third-party verification.

GHG emissions

Pandion Energy has established a GHG accounting system on the basis of the principles set out in the ISO 14064 standard and the GHG protocol. Emission sources subject to reporting have been selected on the basis of materiality and equity approach. The metrics disclosed represent the net equity share of GHG emissions from Pandion Energy's working interest in licences on the NCS where petroleum activities are conducted. GHG emissions for activities controlled by Pandion Energy are relatively immaterial when compared to asset emissions, therefore its GHG emissions for its office activities were not measured.

The company's GHG intensity metric calculates the equity share of Carbon (CO₂) and Methane (CH4) emissions from the company's production assets divided by net company production. Historically the company's GHG intensity level has ranged from 1.1 – 3.4 kg CO₂e per barrel of oil equivalent and has consistently been amongst the lowest in the global E&P industry and Norway. This is mainly attributable to the company's production being fully or partially electrified from shore. Sustaining its low GHG intensity level is an important strategic objective for Pandion Energy. In 2023 the company's equity share GHG intensity was 1.5 kg CO₂e per barrel of oil equivalent.

Environmental impact

Sustainability

Introduction

Corporate governance and compliance

Environmental impact

In 2023, the company's scope 1 emissions included emissions from exploration and appraisal drilling on one well with a side track and development and production activities on Pandion Energy's two producing assets Valhall including Hod, and Nova. While scope 2 emissions were related to purchase of electricity for the production assets only.

Scope 1

The main source of the company's scope 1 emissions is power generation, related to combustion of liquid fuel (diesel, 79%) or fuel gas (21%). The diesel consumption is mainly related to rig activity, while the fuel gas consumption is related to gas export at the Nova host platform. Power generation accounts for about 75 per cent of the company's equity based CO₂e emissions in scope 1.

Most of the remaining scope 1 emissions come from combustion of flare gas, while a small portion come from venting and fugitive emissions (<1.5%). Flaring is generally very limited on NCS and only permitted for safety purposes, such as emergency shutdowns. To reduce emissions to air from flaring, the producing assets in the company's portfolio have closed flares during normal operation. Due to challenges with Oxygen in flare gas on Valhall, the LP flare has been open since February 2022, but is scheduled to be closed again during 2024.

2023 was the first full year of production from the Nova field. Nova is a subsea tieback and has minimal scope 1 emissions when rig activities are not being conducted on the field. A side-track drilling operation was conducted on Nova during the second quarter of 2023 resulting in scope 1 emissions from power generation for

1 Equity share basis 2 Emission factor 29.8, based on IPCC AR6

2023 GHG emissions1

Scopes 1 & 2

GHG intensity of production1

Of production related scopes 1 & 2

Methane share and intensity2

Of production related scopes 1 & 2

72 | Annual report 2023

Sustainability

Introduction

Corporate governance and compliance

the rig. scope 1 emissions from the Nova host platform, Gjøa, are reported by the host operator. In this report, an estimated portion of the host emissions have been allocated to the Nova field.

All reported emissions to air in 2023 were within the relevant permit requirements.

The fluctuations in annual emissions the last three years are mainly attributable to activity level. While the company participated in fewer exploration and appraisal wells in 2023 compared to previous years, it was the first full operational year for Nova.

Scope 2

Pandion Energy's scope 2 emissions are related to purchase of electrical energy supplied to the Valhall and Hod fields and the Nova host. The electricity is acquired from the national power grid in Norway which is principally underpinned by hydropower and other renewable energy sources. As Norway is a historic net exporter of electric power, the associated CO₂ emissions are close to zero. The share of electricity originating from renewable sources was 95 per cent in 20221 .

The scope 2 emissions are mainly dependent on the offshore consumption of power from shore. While the electricity consumption has been stable at both assets in the recent years, the increase in the company's scope 2 emissions in the last two years are mainly attributable to acquisition of the Nova field in 2022 and an increase in national import of electricity during the same year. However, the emission intensity of power supplied from the Norwegian grid remains low at <20 g CO₂e/kWh.

Scope 2 emission replaces offshore sources like gas turbines with significantly higher emissions. When the Valhall field were connected to power from shore in 2012 it originally eliminated annual turbine emissions of approximately 320,000 tonnes of CO₂ (gross).

Methane monitoring

The company's methane emissions originate from cold venting, incomplete combustion and flaring of gas, as well as fugitive emissions from the process infrastructure. The reported methane emissions are quantified in accordance with the national industry standards and submitted annually to the environmental authorities.

The methane intensity on the NCS is considered relatively low due to factors such as extended use of subsea pipelines, a prohibition on routine flaring, high taxation levels, and a strong emphasis on minimizing gas leaks for both climate and safety considerations.

Pandion Energy's methane emission intensity for equity share based production was 0.03 per cent CH4 of saleable gas, which is significantly lower than the industry average of 0.15 per cent1 and accounts for about 3 per cent of the GHG emissions expressed in CO2 equivalents.

Scope 3

In 2022, Pandion Energy expanded its reporting of scope 3 emissions. As a licensee, the company is reliant on working closely with the operators on emission monitoring and reduction and is pleased to see the strategic priority given to mapping and reducing scope 3 emissions related to offshore activities among its operator partners. However, data gathering, quality, methodology and standards are under development and operators and suppliers demonstrate different levels of maturity. The scope 3 emissions in this report include:

1 IOGP Environmental Performance indicators 2022 data, 2023 data not published at the time of this report
2 Offshore Norge, 2022 carbon intensity, 2023 data not published at the time of this report
3 Pandion Energy net equity basis production, scopes 1 and 2 emissions. 2022: 1.7 kg CO₂e/boe; 2023: 1.5 kg CO₂e/boe

GHG intensity

Kg CO₂e per boe produced

Sustainability

Introduction

Corporate governance and compliance

Categories 1 9 from upstream activities as reported by the operators. These categories are under the operators' influence and are deemed addressable and most relevant for reduction potential. Business travel within Pandion Energy has been significantly reduces since the COVID-19 pandemic in 2020 mainly attributed to increased virtual collaboration practices. Though immaterial, it has been included in category 6.
Categories 10 & 11 quantified by Pandion Energy. These categories represent virtually all the downstream emissions (categories 10 – 15). As a pure upstream company with no refining and end use sale, the company has limited insight into the properties of these categories and limited to no ability to alter the impact of these emissions.

Emission reduction measures

Given the properties of the company's portfolio, improvements in operational practices, reductions in energy consumption and pursuing energy efficient solutions through active energy management are important measures in achieving further incremental emission reductions. It is required on NCS by law to conduct energy management in accordance with the principles of the ISO 50001 standard. The continuous work to pursue energy improvement opportunities within each asset is closely monitored and reported to the authorities annually. As a non-operator, Pandion Energy relies on cooperating with the operators on asset specific carbon reduction strategies based on the emissions profiles and the properties of the individual assets.

During 2023 Valhall and Hod reported energy efficiency and emission reduction measures estimated to 2,097 t CO₂ and savings of 14,980 MWh2 . Measures implemented during the Ofelia appraisal campaign were estimated to 16,924 t CO₂e related to optimised well test design and an annual saving of 3,636 MWh, corresponding to 940 t CO₂e at the drilling rig1 .

Further reductions in rig and utility emissions will help reaching the target of near zero scope 1 and 2 GHG emissions by 2050. Emissions from platform supply vessels contributing to scope 3 upstream emissions have also been significantly reduced in the last years across most of the fleet. During 2023 energy and emission reduction measures were implemented at the two supply vessels assisting on the Nova field, with annual emission reductions of 1,601 t CO₂2 , while the mobile rig contracted for

the side track drilling had installed a SCR-unit (selective catalytic reduction) to reduce NOx emissions by 80 per cent.

Biodiversity

As a licensee on NCS, Pandion Energy participates in operations mainly concentrated in marine surroundings. It is therefore important that the licensees are committed to working continuously on protecting and conserving the associated ecosystems and their species in order to safeguard genetic biodiversity.

Norway signed up to the convention on biological diversity in 1993, and the NEA enforces strict regulations with the aim to ensure that water quality in marine areas helps to preserve species and ecosystems. The NCS is among the most extensively mapped, analysed and ecologically managed marine areas in the world. Biodiversity priority areas are identified in the regional management plans applied by the Norwegian government since 2006.

1 Oil and Gas Climate Initiative (OGCI) 2022 performance data 2 Gross emission and power consumption savings pr year.

GHG emissions across value chain

2023 Pandion Energy net equity basis CO₂e emissions

1Outside Pandion Energy's and asset operators' operational control

Sustainability

Introduction

Corporate governance and compliance

Climate change

Social impact

These plans set out the operational conditions for all activities in each area of the NCS, including petroleum operations. They also identify protected areas as specified by the International Union for Conservation of Nature (IUCN), where no or only limited industrial activity is permitted. Furthermore, area sensitivity is weighed against industrial activities, local interests, international treaties and goals to determine the conditions for permitting industrial activities. Operational conditions are defined for each licence, such as drilling restrictions, requirements for extended biological monitoring, and additional oil spill response measures.

Following the adaptation of the "Kunming-Montreal Global Biodiversity Framework" in December 2022, a new marine environmental law is also expected to be introduced by the Norwegian authorities as part of the implementation.

None of Pandion Energy's producing assets are in or near protected areas. Biodiversity protection measures are described and framed in the operator' environment policies and environmental management systems.

As part of activities on Pandion Energy's partner operated licences, various biodiversity assessments are conducted, such as seabed surveys or oil spill impact assessments. The results directly affect the decision-making process and implementation of specific risk reduction measures. These may include direct risk reduction and impact strategies addressing both biodiversity and ecosystem protection, such as avoiding drilling during high breeding or spawning season, monitoring plans, or moving borehole locations.

In order to verify the environmental impact on biodiversity from petroleum activities, the oil and gas industry in Norway performs sediment analyses and water-column monitoring at regular intervals to detect possible negative impacts and to implement new measures as required.

Water and effluents

Pandion Energy's net production is not located in water-stressed environments and water withdrawal and water scarcity are not considered material issues for the operators on the NCS. Fresh water is used for drinking purposes, in accommodation and in some drilling operations. Seawater is used for operations such as cooling, firefighting purposes and pressure support for the reservoir. The main water

management issue is operational discharges to sea. The general approach to generating and handling effluents aims at the lowest possible environmental impact in accordance with environmental strategies set for the field, and the following order of priority applies:

1. preventing occurrence
1. reuse/recycling/reinjection
1. reduction
1. treatment and disposal/discharge.

Minimum standards are set for the quality of effluent discharge. Produced water discharged to sea is regulated by the NEA with a threshold value of 30mg of oil per litre of produced water per month (weighted average). Produced water on Valhall is either reinjected into the reservoir for pressure support or discharged to the sea after sufficient treatment in accordance with the best available techniques and regulatory requirements. In 2023, the average oil concentration was 15,59 mg of oil per litre for the Valhall and Hod fields. Produced water from Nova is managed at the host platform together with several other fields, the weighted average for oil in water from the host platform in 2023 was 27.80 mg of oil pr litre.

Other water management actions include prioritised substitution of chemicals with the most adverse properties to less hazardous substitutes. Use and discharges of chemicals are also regulated by the field specific permits issued by the NEA.

Oil spill preparedness plans are established by the operators for the specific petroleum activities based on environmental risk assessment and regulatory requirements before commencement of operations. The oil spill response measures involve trained personnel who work purposefully to prepare for and mitigate possible discharges. All the operators of the licences where Pandion Energy is licensee participate actively in the Norwegian Clean Seas Association for Operating Companies (NOFO). NOFO is specially trained to manage oil spill response operations and assumes a key role with regard to mitigation measures and oil spill recovery at sea in cases where member companies are responsible for an oil spill.

There were no reportable oil spills from Pandion Energy's assets in 20231 . Two reportable chemical spills have been reported during 20232 .

Sustainability

Introduction

Corporate governance and compliance

¹ No oil spills >0.001 m3

² Chemical spills > 0.01m3 ; 6m3 of chemicals categorised as red 75 | Annual report 2023

Waste

Operational activities in Pandion Energy's assets are based offshore, where all significant production waste, both hazardous and non -hazardous, is generated. The largest fractions of hazardous waste, in terms of weight, come from drilling operations. When wells are drilled, drill cuttings contaminated with drilling fluids are carried back to the surface. All production waste, such as drilling mud and drill cuttings, is dealt with using the same waste -handling hierarchy described for water and effluent.

Oil -based drilling mud is reused for as long as the technical quality of the mud remains intact. In other cases, the mud is sent onshore for treatment and disposal. Such mud contains a water fraction that is treated prior to discharge, and the volumes are controlled under government permits held by the waste disposal contractor. Both hazardous and non -hazardous waste are transported to land. The majority of the waste is handled in Norway and the regulatory rules are followed.

Another source of waste is decommissioned offshore installations. The Valhall and Hod fields are undergoing comprehensive modernisation, including removal of obsolete platforms. During 2022, the DP (Drilling Platform) topsides and jacket and the PCP (Process and Compression Platform) topsides were successfully removed from the Valhall field and shipped to Aker Solutions decommissioning yard at Eldøyane Stord in Norway. The contractual objective for the recycling of the structures was set to 95 per cent or more. The steel will be re -used for a variety of new products.

Disposal work from decommissioning activities completed during 2023 comprised total weight of 9.953 tonnes and recycling factors of 99.6 per cent for the jacket and 97.8 per cent for the topside.

Sustainability

Introduction

Corporate governance and compliance

Climate change1

Scope 1	Note2	2023	2022	2021	Units
Direct GHG emissions	1	5,577	5,666	4,073	tonnes CO₂e
Third party verified direct GHG emissions	2	3,463	3,221	2,906	tonnes CO₂e
CO₂ (Carbon dioxide)		5,398	5,524	4,043	tonnes
CH₄ (Methane)	3	179	142	30	tonnes CO₂e
Methane intensity		0,03	0,04	0,01	% CH4 of saleable gas
Scope 2
Indirect GHG emissions	4	866	740	498	tonnes CO₂e
GHG intensity
Equity share GHG intensity	5	1,5	1,7	1,5	Kg CO₂e/boe
Net production	6	8,304	5,697	5,152	boepd
Scope 3
Scope 3 GHG emissions upstream	7	4,885	7,842	4,729	tonnes CO₂e
Scope 3 GHG emissions midstream	8	100,542	69,995	not reported	tonnes CO₂e
Scope 3 GHG emissions downstream	9	1,110,288	899,073	not reported	tonnes CO₂e

Scope 3

Environmental data

Sustainability

Introduction

Corporate governance and compliance

Social impact

Pandion Energy values the unique contributions of its employees and believes that a diverse and inclusive workforce enhances deliveries and accomplishments. Further, health and safety management are critical in the oil and gas industry and the company places great emphasis on ensuring that operations conducted in its licences are performed without harm to people involved. Regarding human rights a risk-based approach is always considered related to new investment opportunities, for purchases of material goods and services.

Human rights and decent working conditions

Pandion Energy is committed to the protection of internationally recognised human rights and fair and ethical work practices. It has zero tolerance of modern slavery and child labour in any parts of its business and supply chain. All workers must be

ensured safe, secure and healthy working conditions, including working hours, as well as wages and benefits that meet or exceed national legal standards. The workplace must be free from any form of harsh or inhumane treatment. All applicable laws and regulations on the above-mentioned issues must be complied with. The company's position on modern slavery and child labour is covered in the working conditions section of its code of conduct.

Pandion Energy operates in a low-risk environment for human rights abuse, as all of its assets are located in Norway. Furthermore, the majority of the subcontractors and vendors providing goods and services to its assets are also based in Norway or in other low-risk countries. Despite significant Norwegian content in its partner-operated assets, the operational activities are exposed to global suppliers. Pandion Energy is aware of potential human and labour rights risks that may occur in some parts of the industry and further down the supply chains and takes a risk-based approach when considering potential human rights issues related to material contracts under the joint operating agreements.

In response to the introduction of the Transparency Act in 2022, Pandion Energy conducted an overall due diligence assessment in accordance with the principles of the Transparency Act and the OECD Guidelines for Multinational Enterprises. The evaluation incorporated methodology from ISO Standard 31000 for risk management. In the due diligence assessment, the company primarily looked at risks associated with its assets and chose to assess risks at an overall strategic level identifying areas in the value chain with potential risk exposure.

The company seeks to monitor the activities and performance of its licence operators in line with the assessed risk to secure compliance with the company's Code of Conduct and has implemented measures to actively request information and include human rights considerations in the relevant business processes.. A common industry guideline has been developed for this purpose by the NCS industry association, Offshore Norge, to facilitate the process for information exchange as part of the member companies' compliance work with the Transparency Act.

Sourcing of materials and raw materials and fabrication activities abroad related to the development phase were identified as key risk areas with potential of human rights impacts. Currently Pandion Energy is involved in one development project,

Sustainability

Introduction

Corporate governance and compliance

Social impact

PWP at the Valhall field. During 2023 the operator of Valhall conducted audits of all alliance partners to ensure compliance with the Norwegian Transparency Act, and own corporate requirements for human rights and decent working conditions. The operator has also conducted human rights audits in high-risk countries to ensure compliance with international standards and participates in a cross-industry initiative by Offshore Qualific, a collaboration between companies and suppliers in the offshore and energy industry. Through this initiative, all operators gain access to shared supplier data and human rights audits results.

An updated statement in accordance with the Transparency Act will be made available on the company's website by 30 June 2024.

Suppliers and business partners

Pandion Energy's business partners and suppliers are essential to its ability to do business, but can also expose it to reputational, operational and legal risk. The

company expects its business partners and suppliers to comply with applicable laws, respect internationally recognised human rights, and adhere to the ethical standards outlined in its code of conduct when conducting business with or on behalf of Pandion Energy.

Diversity and employment

Each member of the Pandion Energy team is valued, and the company is committed to providing an environment free from any form of discrimination, abuse, harassment or intimidation by or towards its employees or others affected by its operations. The company's values define the way people work in Pandion Energy. Furthermore, the company aims to be recognised for positive energy, equality and professionalism, and will treat everyone with fairness, respect and dignity.

Pandion Energy values the unique contributions of its employees and believes that a diverse and inclusive workforce enhances deliveries and accomplishments. The

Sustainability

Introduction

Corporate governance and compliance

company aims to maintain a working environment with equal opportunities for all, based on performance and irrespective of gender, age, religion, ethnicity, sexual orientation, disability or any other protected status. Its experience is that quality and diversity lead to enhanced decision-making based on a variety of perspectives and understanding of risk.

The E&P industry is traditionally male dominated. Women comprise 30 per cent of the Pandion Energy technical team, whose members also have a wide range of experience – spanning from ten to more than 40 years. Pandion Energy has been able to attract a rich variety of talent, concentrating solely on professional achievements and an explicit culture of equality and diversity. The company does not tolerate any discrimination of colleagues or others affected by its business.

Current organisation consists of 36 per cent female employees. Women make up 50 per cent of the management team, while one of six directors is female.

Harassment and intimidation

Courtesy and respect are important aspects of a healthy working environment and sound business dealings. Pandion Energy expects all employees to treat everyone they come into contact with through work or work-related activities in a respectful manner. It will not tolerate any verbal or physical conduct that harasses others, disrupts others' work performance or creates a hostile work environment.

No cases of harassment or intimidation were reported in 2023.

Health and safety

Health and safety management is critical in the oil and gas industry, where operations can affect communities and the workforce. No one should be harmed or injured while working at or on behalf of Pandion Energy.

As a licensee, the company places great emphasis on ensuring that operations conducted on its licences are performed without harm to people involved. No task is so important that it has to be performed with an unacceptable risk to health and safety. As part of its "see to it" duty, the company reviews the operators' HSE plans, risk assessments and health and safety reporting on a regular basis.

There have been no work-related fatalities on the company's partner operated assets in 2023. However, a total of seven work related injuries were reported during 2023. None of the incidents were classified as serious, two of the incidents were classified as loss time injuries (LTI). All of the injuries were contractor related. In addition, a total of three incidents with no actual harm, but high consequence potential were recorded.

Major accident risk

Pandion Energy recognises the risks associated with the company's operational assets. The risk of major operational incidents is always present, since drilling, production and decommissioning activities will never be completely risk-free. Regulation of activities on the NCS provides a sound framework for handling these risks, and the company takes an active and responsible approach as a partner.

There has been no major accidents involving any of the operating assets in which Pandion Energy participated during 2023.

Sickness absence

Sickness absence among Pandion Energy's employees in 2023 was 2.1 per cent, compared with 1.8 per cent the year before. Since the company has relatively few employees, sickness absence by just one or two people can significantly affect the percentage. Pandion Energy seeks to keep sickness absence low by constantly improving working conditions. No work-related injuries were suffered by its employees in 2023.

Sustainability

Introduction

Corporate governance and compliance

NOTE 1 DIRECT GHG EMISSIONS

Scope 1 emissions include direct emissions from petroleum activities in Pandion Energy's production licences apportioned according to its equity share in those licences. Activities and licences included are listed in the table.

As Pandion is not an operator, it does not have the direct authority to monitor and record the consumption. The reported data is based on the operators' data reported to the Norwegian Environmental Agency (NEA) with a verification statement issued by an independent third party for producing fields Valhall, Hod and Nova1 . Internal quality assessment is applied to ensure the accuracy of the data reported from the operators. Allocations from host platform(s) are calculated based on actual volume allocations in accordance with the tie in agreement(s) where available, otherwise the assets' share of production at the host platform is applied. Scope 1 emissions in 2022 have been restated applying this approach.

NEA conduct verifications of all reported environmental data post publication of this report. This may result in minor variations of the data at a later stage.

NOTE 2 THIRD PARTY VERIFIED DIRECT GHG EMISSIONS

Production assets only; High Assurance to the following standard: European Union Emissions Trading System (EU ETS). Does not apply to allocations from host platform.

NOTE 3 METHANE EMISSIONS

Emission factor for calculating CO₂e from Methane: Global warming potential rate in a 100 year perspective (GWP100) used to calculate CO₂e from CH4 fossil origin is 29.8 based on IPCC Sixth Assessment Report, 2023.

Notes to sustainability data

Year	Assets	Activities	Equity Share	Reporting Source	Assurance report1
2023 2022 2021	Valhall & Hod (PL 006 B, 003 B, 033)	Drilling, production, development, abandonment	10%	Annual field emissions report Annual climate quota report	YES
2023 2022²	Nova (PL 418, 418 B, 378)	Production, development	10%	Annual field emissions report Annual climate quota report Host emissions data apportioned to the Nova production reported within licence	YES
2023	PL 929	Appraisal drilling	20%	Well specific emissions data reported within licence	NO
2022	PL 891, 891 B	Appraisal drilling	20%	Well specific emissions data reported within licence	NO
2022	PL 929	Exploration drilling	20%	Annual exploration emissions report	NO
2022	PL 938	Exploration drilling	20%	Annual exploration emissions report	NO
2021	PL 617	Exploration drilling	20%	Annual exploration emissions report	NO
2021	PL 820 S	Appraisal drilling	12.5%	Annual exploration emissions report	NO

1 3rd party verification report of the Annual climate quota report as required by the NEA, EU ETS verification report, ref. Note 2.

2 Asset aquired as part fo the aquisition of ONE-Dyas Norge AS, completed on 30 June 2023. Only emission data after this date are included. Preliminary reporting of host allocations in 2022 have been updated in this report.

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Introduction

Corporate governance and compliance

Notes to environmental data

NOTE 4 INDIRECT GHG EMISSIONS IN SCOPE 2

Location based indirect GHG emissions calculated on a net equity basis.

Scope 2 emissions include:

Valhall and Hod: Emissions from Valhall and Hod based on annual imported power consumption. Nova: Emissions estimated based on allocated share of imported power consumption at the host platform.

The Valhall field and the Nova host platform receives power from shore from the national grid in Norway which is principally underpinned by hydropower and other renewable energy sources.

Scope 2 emissions reported in 2023 are related to five per cent non-renewable energy sources in the Norwegian power supply market. Climate declaration factor from the Norwegian Water Resources and Energy Directorate (NVE) used to calculate emissions is 19 gCO₂e/kWh (2022 factor is applied, as 2023 factor will not be available until mid-2024).

Scope 2 emissions in 2022 have been updated with factor for 2022 compared to previous report where 2021 factor was applied.

Pandion Energy's scope 2 emissions are relatively immaterial when compared to the overall portfolio, therefore its GHG emissions for its office activities were not measured.

NOTE 5 GHG INTENSITY

CO₂e intensity is calculated on the basis of net equity production and associated scope 1 CO₂e emissions.

NOTE 6 NET PRODUCTION

Redelivery volumes from Nova to Gjøa/Vega included in production, production figures for 2022 have also been restated to include redelivery volumes. Affected metrics have been updated from previous report.

NOTE 7 INDIRECT GHG EMISSIONS IN SCOPE 3 UPSTREAM

Upstream scope 3 emissions include mapped categories 1-8 allocated to the Valhall and Hod on a net equity basis as reported by the operator.

Mapped upstream scope 3 categories include:
	Category 1 Purchased goods and services (cement,
	chemicals)
	Category 2 Capital goods (steel)
	Category 3 Fuel and energy related activities (well-to-tank
	emissions from diesel consumed offshore)
	Category 4 Upstream transportation and distribution
	(platform supply vessels, anchor handling
	vessels, emergency response and rescue
	vessels, intervention / well stimulation, heavylift,
	IMR - inspection, maintenance and repair, other
	activity)
	Category 5 Waste generation in operations (incineration)
	Category 6 Business travel (Pandion Energy only,
	not asset specific)
	Category 7 Employee commuting (helicopter
	transportation)
	Category 8 Upstream leased assets (not material, not
	included)

NOTE 8 INDIRECT GHG EMISSIONS IN SCOPE 3 MIDSTREAM

Midstream scope 3 emissions include estimate of refining of net equity sale of products: Category 10 Processing of sold products

Non-Energy Adjustment 10% for liquids have been applied, ref. Transition Pathway Initiative (TPI) "Carbon Performance assessment of oil & gas producers: note on methodology", 2020.

Estimated shares of different types of final products from crude and carbon factors of refined products are based on IPIECA "Estimating petroleum industry value chain (Scope 3) greenhouse gas emissions".

Midstream scope 3 emissions were reported first time in 2022.

NOTE 9 INDIRECT GHG EMISSIONS IN SCOPE 3 DOWNSTREAM

Downstream scope 3 emissions include estimate of net sale of products:

Category 11 Use of sold products

Non-Energy Adjustment 10% for liquids have been applied, ref. TPI "Carbon Performance assessment of oil & gas producers: note on methodology", 2020.

Applied energy content for oil and gas based on NPD conversion-table and in addition an increase for Valhall gas energy content by four per cent..

Applied effective CO₂ emission factor based on IPCC, 2006. Downstream scope 3 emissions have not been reported in previous reports.

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Introduction

Corporate governance and compliance

UNAUDITED

This section contains non -financial measures that are subject to measurement uncertainties resulting from inherent limitations in the methods used to determine the figures stated. Choosing different but acceptable measurement techniques can lead to significantly different results and precisions. The main period of information disclosure of this report is from 1 January 2023 to 31 December 2023, unless otherwise specified. Pandion Energy reserves the right to update its measurement techniques and methods in the future.

As Pandion Energy is not an operator, it does not have direct authority to monitor and record operational performance data within the production licences. Internal quality assessment is applied to ensure the accuracy of the data reported from the operators.

Certain economic and market information contained in this report have been obtained from published sources and/or prepared by other parties. While such sources are believed to be reliable, such information has not been independently verified by Pandion Energy.

No audit or independent assurance of this section has been conducted.

Sustainability

Introduction

Corporate governance and compliance

Governance

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Strategy

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Risk Management

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	Section in report
Governance
a) Describe the board's oversight of climate-related risks and opportunities.	Page 22, 60-61, 66
b) Describe management's role in assessing and managing climate-related risks and opportunities.	Page 64, 66
Strategy
a) Describe the impact of climate related risks and opportunities on the organization's businesses, strategy, and financial planning.	Page 23, 66-70
b) Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term.	Page 23, 66-70
c) Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.	Page 66-68
Risk Management
a) Describe the organisation's processes for identifying and assessing climate-related risks.	Page 66
b) Describe the organisation's processes for managing climate-related risks.	Page 69-70
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation's overall risk management.	Page 22, 66
Metrics and targets
a) Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process.	Page 67-68, 72-73, 77
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.	Page 77
c) Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.	Page 69, 71, 73

Metrics and targets

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TCFD index

Sustainability

Introduction

Corporate governance and compliance

Climate change

ABM	Alternative Bond Market
APA	Awards in Predefined Areas
APS	Announced Pledges Scenario
boe	Barrels of oil equivalents
boepd	Barrels of oil equivalent per day
CCUS	Carbon Capture, Utilisation and Storage
CEO	Chief Executive Officer
CH4	Methane
CO₂	Carbon Dioxide
CO₂e	Carbon Dioxide equivalents
CPI	Corruption Perception Index
CSRD	Corporate Sustainability Reporting Directive
E&P	Exploration & Production
EFF	Exploration Finance Facility
ESG	Environmental, Social, Governance
ESRS	European Sustainability Reporting Standards
EU ETS	European Union's Energy Trading System
EUA	European Union Allowances
GHG	Greenhouse Gas
gCO₂e	Grams Carbon Dioxide equivalents
GWP	Global Warming Potential
HSE	Health, Safety, Environment
IAS	International Accounting Standards
IEA	International Energy Agency
IFRS	International Financial Reporting Standards
IMR	Inspection, Maintenance, and Repair
IPCC	Intergovernmental Panel on Climate Change
IPIECA	International Petroleum Industry Environmental Conservation Association
IRS	Interest Rate Swaps
ISO	International Organization for Standardization
JOA	Joint Operating Agreement
kg	Kilogram
IUCN	International Union for Conservation of Nature
kWh	Kilowatt-hours
LP	Low Pressure

LTI	Lost Time Injury
mmboe	Million Barrels of Oil Equivalent
MWh	Megawatt-hour
NCP	New Central Platform
NCS	mmboe: Million Barrels of Oil Equivalent
NEA	Norwegian Environmental Agency
NGL	Natural Gas Liquids
NICs	National Insurance Contributions
NOFO	MWh: Megawatt-hour
NOx	Nitrogen Oxides
NPV	Net Present Value
NVE	Norges vassdrags- og energidirektorat (The Norwegian Water Resources and Energy Directorate)
NZE2050	Net Zero by 2050 Scenario
OCI	Other Comprehensive Income
OECD	Organisation for Economic Co-operation and Development
OTC	Over-the-counter
PDO	Plan for Development and Operation
PL	Production Licence
PV	Photovoltaic
PWP	Production and Wellhead Platform
RBL	Reserve-Based Lending
Scope 1	Direct emissions from owned or controlled sources
Scope 2	Indirect emissions from the generation of purchased energy
Scope 3	Indirect emissions that occur in the value chain (up- and downstream
SCR	Selective Catalytic Reduction
STEPS	Stated Policies Scenario
TCFD	Task Force on Climate-Related Financial Disclosure
tCO₂e	Tonnes Carbon Dioxide equivalents
TPI	Transition Pathway Initiative
UN	United Nations
US FPCA	U.S. Foreign Corrupt Practices Act
VP	Vice President
VP BD	Deputy CEO & VP Business Development
WEO	Word Energy Outlook
WI	Working Interest

Abbreviations

Sustainability

Introduction

Corporate governance and compliance