Annual Report • Apr 29, 2022
Annual Report
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PetroNor E&P ASA A nnual repor t 2 0 2 1 Cont ent s PetroNor E&P in brief .......................................................... 4 CEO let t er .............................................................................. 8 Por t f olio ............................................................................... 10 Reserves .............................................................................. 16 ES G repo r t .......................................................................... 23 Corpo rate governa nce ...................................................... 30 Board of Direc tor s ............................................................. 36 Management ...................................................................... 38 Board of Direc tor s’ rep or t ............................................... 43 Financial st ateme nts ......................................................... 62 Cont ac t .............................................................................. 117 Business Model OUR MISSI ON Ou r mis sio n is to ge ner at e shareholder value by leveraging the technical and commercial sk ill se t of th e Com pa ny to enhanc e its reserve base, pro du c ti on an d ca sh o w. Pet ro Nor E & P is com mi t te d to t he hi ghe s t s t an dar ds of corporate governance, to sa fe ly a nd e ci en tl y de li ver operational exc ellence. OUR VISIO N Ou r st ra te gic v i sion i s to s te adi ly bui ld t he co mp any i nto a f ul l c ycle, Africa -focused exploration an d pro duc t io n com pan y wi th an emphasi s on producing and de vel op ing as s et s w it h ups ide pot en tia l. T o re e c t gro w t h amb it io ns , th e Bo ard h as s et a re vi se d t arg et of a chi ev in g 2P res er ve s in e xce ss of 10 0 MMb bl an d net p ro duc tio n in e xces s of 30 ,0 0 0 b ar re ls of o il eq ui va le nt pe r day ( bo ep d) by t he e nd o f 2024 . In ad di ti on , the go al is t o dr ill t wo hig h imp ac t ex pl ora ti on we lls by t he en d of 202 3 . OUR WORK We are a n ind ep end en t oil a nd gas exploration and produc tion com pan y wi t h mul ti ple li cen ce s in co unt r ies i n Wes t A fr ic a – Republic of Congo, Guinea- Bis s au , Se neg al , Th e Gam bia an d Niger ia . Th e Com pan y has ama ss ed a d iv er s e and h igh - qualit y por t folio comprising economically -robus t product ion, development upside, and high -impac t ex p lo ra t io n in t he M SG BC bas in . P e tr oN or E &P i n br i ef PetroNor E&P A SA , lis ted on the Oslo Stock E xchange (P NOR) , is an independ ent oil and gas company led by an experienced b oard and management team, with subs tantial exp erience in oil and gas exploration, appraisal , development an d produc tion . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 4 About PetroNor E&P EBI TDA (USD million) 61 . 9 2020: 3 4.0 2P Reserves (MMbbl) 2 0.6 2020: 20. 2 EBI T (USD million) 5 7. 3 2020: 29. 3 2C Contingent Resources (MMb bl) 12 . 3 2020: 1 4 .1 Ne t pro t (US D mill ion) 2 1 .1 2020: 11. 2 Th e pro ce ss to redomicile from Aus t ra lia to N or way was co mp let ed success full y and Pet ro Nor E & P A S A lis t ed on O sl o Sto ck E xcha nge o n 28 Fe br ua r y 202 2 . PNGF Sud commenced the 1 7 we ll in ll pr og ram me in No ve mbe r 2021 wi t h four i n ll wel ls on L it an zi. N et PetroNor production fr om PN GF Su d dur in g the y ear w as 3,70 5 bop d. PNG F Su d res ou rce to reser ves conversion for development de cis ion of T c hib eli N E. Aje trans ac tion recei ved regulato r y approval in Ni geria, completion expec ted to t ake pl ace i n Q2 2022 . Cur ren t ph ase o f Ga mbi a A 4 lice nce ex ten de d to 1 8 Oc tob er 202 2. Gross proce eds of NOK 391 million wer e rai se d thr oug h th e Mar ch sh are placement and sub se que nt o er in g in September 2021. F ol low in g the capit al raise and sub se que nt o er in g , PetroNor ’s issued and outs tanding sha re c api t al wa s 1, 3 2 6 , 9 91, 0 0 6 ordinar y shares of no par value. PetroNor ha s increased i ts indirec t ow ne rs hip in P NGF Sud f ro m 1 0. 5 pe r ce n t to 1 6 . 8 3 p e r ce n t through increasing it s shareholding in He mla E& P Co ngo and Hemla Africa Holding. PetroNor completed th e acq uis it ion o f the h ighly attractive exploration por t folio in t he Wes t A f ri ca n margin thro ugh th e ent r y in t he Esperança and Sinap a licences in Guinea- Bis sau fol lo wi ng th e acquisit ion of SPE G uin ea - Bis s au A B f rom Svenska Petroleum Explora tion AB. Hig h lig h t s 2 0 2 1 an d su bse quent e vent s PETRONOR E&P ASA AN NUA L R EP OR T 20 21 5 About PetroNor E&P O ver v iew of our bus ines s 1 Repu blic of Congo ( Brazzaville ) In 2020 P et roN or he ld a 10.5 p er cen t ind ire c t pa r t ici pa ti on in ter es t in t he l ice nce g rou p of PNG F Sud ( T chi bo uel a II , T che ndo I I and T ch ibe li - Li t an zi II) t hr oug h Hem la E& P Con go S A . On 2 5 Jan uar y 20 21 , th e ind ire c t p ar t ic ip at ion int ere s t in th e ven tu re in cre ase d to 1 1 .9 per cen t af ter 9,9 0 0 s hare s in H eml a E& P Con go awa rd ed by t he co ur t in Co ngo w ere re gi s tere d for t he b ene t of th e Comp an y. On 1 2 Ma rch 2 021 , a t ran sa c t ion t o inc rea se t he indirec t par t icipatio n interest in the vent ure to 1 6 .8 3 pe r cen t by acq uis it io n of th e non - controlling interes t shares in Hemla Afr ica Ho ldi ng A S . Th e tr ans ac ti on was a ppr ove d by an E x tr ao rdi nar y Ge ne ral M ee tin g he ld 4 May 20 21 . Th e Gr oup h old s a rig ht t o nego tia te , in goo d fai t h, al on g wi th t he co nt rac tor g rou p of PNG F Sud , t he te rm s of th e ad jace nt l ice nce of P NGF Bis . If t he G rou p is ab le to se cu re en tr y in to a pro du c ti on sh ar ing c ont ra c t , th e Gr oup ex pe c t s to b e gra nte d a 23 .6 p er cen t ind ire c t int ere s t in PNG F Bi s. 2 Nigeria In 2019, Pe tr oNo r acq uir ed a 1 3. 1 pe r cen t eco no mic in ter es t in A je F ie ld t hro ugh t wo tr ans ac ti ons w it h Pan oro En er g y A S A an d Y ink a Fo la wi yo Pe tr ol eum . In Jan uar y 202 2 , th e acq uis it ion w as gr ant ed fo r mal go ver nm en ta l con sen t , wh ich h as al low ed Pe tr oNo r to re - en gag e nan cia l and i ndu s tr ia l par tn er s w it h a ta rg et to ma tu re th e pro jec t tow ard s a nal inv es t me nt de cis ion ( FI D). 3 The MSGBC Basin GUINE A- BI SS AU 78 .5 7 per ce nt in ter es t of t he Si nap a (B lo ck 2) an d Esp er anç a ( Blo ck s 4 A a nd 5 A) is h el d by the Group throug h the purchase of PetroNor E& P A B (pr ev io us ly S PE Gu ine a Bis s au A B) fr om Svenska Petroleum Explorat ion AB in November 2020 . Th e tra ns ac tio n was f or mal ly a ppr ove d by Gu ine a- B is sa u in A pr il 2021. THE GAMB IA In S ept emb er 202 0, un de r the t er ms of t he se t t lem en t agr ee men t , a new A 4 l icen ce wa s awa rd ed pr ov idi ng a 9 0 per ce nt in te res t a nd op era tor s hip of t he A 4 li cen ce to th e Gro up. T he rem ai nin g 1 0 pe r cen t in ter es t o f the new l ice nce is he ld by t he gov er nm ent o f Th e Gam bia . Th is ‘ f ar m - ou t ’ phas e of t he li cen ce was ex ten de d by th e gove rn me nt of T he G amb ia unt il 18 Oc tob er 20 22 . Con tin uat io n pas t t his dat e req uir es a r m we ll com mi tme nt a nd bonus payment. SENEG AL In S ene gal , Af r ic an Pe tro le um Se ne gal L td. res er ve i t s r ig ht s to a 9 0 p er cen t op er ate d int ere s t in th e ROP a nd SO SP li cen ces w it h th e Nat io nal O il Co mpa ny, Pet ro sen , ho ld ing th e rem aini ng 10 per cen t . Th e Comp an y is in ar bi tr at ion w i th th e gov er nme nt of S en ega l to pro tec t it s in ter es t s in t he li cen ces . PRODUCTION DEVELOPMENT EX PLORATION PETRONOR E&P ASA AN NUA L R EP OR T 20 21 6 About PetroNor E&P 20 .6 mmbbl Ne t 2P reserves ~3 .7k b op d Ne t oil product ion 31.3 MMbbl Ne t 2C resources (of which Aje represen ts 19 . 0 ) > 2 . 3 bnbbl Ne t un r is ked prospec tive resource Key metrics 2 1 3 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 7 About PetroNor E&P Ch ief ex ecutive oce r : St ep ping up 2021 was the year when a global pandemic and a severe drop in oil price were replace d by increased geopolitic al tension, a global e nerg y crisis and a sharp increase in the oil price. For PetroNor , 2 021 w as a year marked by strong ope rational per formance and preparations for be coming a listed company on the main list of the Os lo Stock E xch ang e. B y the e nd of 20 21 , th e wor ld e con omy h ad ex pe ri en ced a s har p in cre ase i n th e dem an d for en er g y, as mo re an d mo re cou nt ri es re du ced th e s tr ic t in fe c t ion co nt rol m eas ure s th at we re int ro duc ed to li mi t Cov id - 1 9. T his f ue lle d th e wor ld eco no my wi t h opt imi sm as t he pa nd emi c gra dua ll y be gan to l et go. At t he b eg inn ing of 20 22 , th e ene rg y cr isi s bec a me ev en wo r se du e to Rus sia ’ s ag g res si ve inv asi on in Uk r ain e. Fo r Pe tro No r , the c omb ina ti on of s t ro ng ma rke ts , or gan ic gr ow th an d so lid o per at ion al pe r f or man ce res ul ted i n st ro ng re ven ue g row th a nd so lid ear ni ng s in 2021. FO CUSI NG ON SAFETY AND C OMP LIAN CE On 16 Dece mbe r , th e boa rd as ked me to a ssu me th e CEO r ole o f Pet ro Nor o n an in te ri m bas is to mai nt ai n cont in ui t y of t he bu sin es s wh ile m y pre de ces s or is un der i nve s ti gat io n in No r wa y for all ege d cor r upt io n. I was , un ti l the n, a n on - e xecu t iv e me mbe r of t he bo ar d, a nd ha d pre v iou sl y be en th e CEO f or A fr ic an P et rol eum a nd Pe tr oN or un til Fe br ua r y 202 0. Økok r im , the N at ion al Au th or it y fo r Inv es t iga ti on and Prosecution of Economic and Environment al Cr ime in N or way, has co n rm ed t hat t he invest igation is current ly focused on individuals and th at ne it he r Pet ro No r nor a ny co mpa ny is u nde r inves tigation. Th e Com pan y t akes an ti - co r ru pti on an d th e mat ter at ha nd ve r y s er io usl y. A s a nat ura l ear l y st ep, a Com plia nce A c t ion P lan t o fu r t her i mpl em ent o ur compliance program has been developed and app rov ed b y th e bo ard i n 202 2, b uil din g on t he wor k t hat t he co mpa ny ha s pre v iou sl y und er t aken in pr ep ara ti on fo r th e suc ces s f ul re dom ic ile o f th e com pan y to No r wa y. This e o r t ha s inv ol ve d an up dat e of ou r Code o f Con duc t and r ela te d po lic ies con sis te nt w it h th e Nor we gi an le gis la tio n, b es t pra c t ice an d gov er nan ce mo del . Th e ac t io n pla n includes provision for dedicated resources for compliance, increased focus on governance, and ind ep en den t aud it of co mp lia nce goi ng fo r w ard . I wou ld li ke to ex t end m y tha nk s to t he Pet ro No r tea m for t he wa y th ey ha ve ha ndl ed t his si t uat ion . I am gr ate f ul fo r the s upp or t and p rofe s sio nal ism wh ich t he y hav e all sh ow n in th is ch all eng in g tim e for t he co mp any. PRODU C TI ON W IT H HIG H MA RGI NS A ND HIGH POTENTIAL Th e key s tr at eg y of Pet ro Nor is , in a ddi t ion to de vel op ing e xis t in g ass et s a nd or ga nic g row th , to acq uir e add it io nal o il an d gas l ice nce s and p ur su e acq uis it ion o pp or t un it ie s. T he co mp any ho ld s ex pl ora ti on an d pro du c ti on as se t s o sh ore We s t Afr ica. Pet ro Nor ’s in dir ec t o wn er sh ip in ter es t in t he o sh ore PN GF S ud pr odu c t ion li cen ces i n Congo is th e Com pan y ’ s core p rod uc t io n lice nce . Th e op era tor o f the l ice nce s is Pere nco , a wor ld - c las s op era tor o f ma tur e as se t s in em er gin g mar ket s , wh ich h ol ds a 4 0 per c ent in te res t i n the PN GF Su d licence s. In F ebr ua r y 2 021 , Pet ro Nor i ncr eas ed i t s ind ire c t ow ne rs hip in P NGF S ud f rom 10.5 u p to 1 6. 8 3 pe r cent . We su cce ss f ull y co mpl et ed a c api t al rai se of N OK 3 4 0 m ill ion t o fu nd t he ac qui sit io n of ad di ti ona l ow ner sh ip in PN GF Su d and t o fun d th e Pet ro Nor s har e of cos t s f or t he n ex t p has e of dr ill ing . In ad dit io n, w e rais ed N OK 51 mi lli on in a sub se que nt sh are o er in g in Q3 2021 . S TRO NG E SG PROF ILE W IT H A JE In Oc tob er 2019, Petr oNo r ent ere d in to an ag ree me nt w it h Pano ro Ene rg y fo r the a cqu isi ti on of 45 p er cen t ho ldi ng in tere s t s in O sh ore Mi nin g Lea se n o. 1 1 3 o s hor e Nige ri a, co nt ai nin g the A je oil a nd ga s el d. Af te r mor e tha n t wo y ear s of wa it ing , w e na ll y, in Janu ar y 202 2, re cei v ed consent from the Nigerian go vernment for the transaction. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 8 CEO letter Th e A je e ld ha s a st ron g ES G pro le . It is fo cu se d on pr od uci ng an d com mer cia lis ing g as , and h as th e pot ent ia l to pro vi de lo w emi ss ion en er g y cor re spo nd ing to ve p er ce nt of t he tot a l po wer pro du c ti on of Ni ger ia . A je wi ll at r e- de vel opm en t be com e a sign i c ant con tr ib uto r to t he CO 2 emission reduction for Nige ria . OU TLOO K In F ebr ua r y 2 022 , th e wo rl d was sh oc ked an d sa dd ene d by t he ac t s of war t ak in g pla ce in Uk ra ine . Wh ile t he hu man s u er ing i s cle ar ly o ur mai n con cer n, w e mus t al so a ck no wl edg e tha t eco nom ic sa nc t io ns to war ds Rus si a and t he ec ono mic unc er t a int y ma y hav e an im pa c t on o ur b usin es s an d our ma rke t s going f or war d. T his i n spi te of t he imm ed iat e ee c t s in i ncr eas ing oi l and ga s pr ice s. We hav e se ver al on goin g and i den ti e d M& A ini ti at i ves . We are a c ti v el y lo ok ing fo r va lue a ccre ti v e tr ans ac ti ons t o mee t ou r pro du c ti on t ar get g oal of 3 0, 0 0 0 boe pd b y end 20 24. T h e comp any h as a sup po r t iv e s tr ate gi c shar eho ld er in Pe tr oma l, w hic h ow ns a 36 p erc e nt sh are of t he Co mpa ny , an d is pa r t of Na ti ona l Hol din g in A bu D hab i. Pet ro mal w il l sup po r t in pr ov id ing ac ces s to f ur th er gr ow th c api t al if t he r igh t acc re ti ve o ppo r t uni t ies a re id ent i e d. A n imp or t a nt mi le st on e for Pe tr oNo r was t he re dom ici le f rom A us tr ali a to Nor wa y and t he lis t ing o n th e mai n lis t o f Osl o Sto ck E xc han ge on 28 F eb ru ar y 202 2. I be lie ve t hat t his w il l enha nce th e Comp an y ’ s pro le w it h inv es t or s , busi ne ss par tner s, suppliers and cus tomers, facilit ate a mo re di ver s i ed sh are ho lde r bas e an d all ow fo r a mor e liqu id ma rke t for t he sh are s. T he se a re all imp or t ant f ac t or s for Pe t roN or ’s fu t ure g row th a nd va lue cr ea tio n. Sincerely , Jens P ace Int eri m CEO P et roN or E & P – The key strateg y of PetroNor is, in addi tion to developing exi sting a sset s and or ganic grow th , to acquire additi onal oil and gas licences and pur sue acquisition oppor tunities . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 9 CEO letter Produc tion: C ong o - B raz z av il le The Republic of Congo ( Congo Brazzav ille ) is a leading producer of cru de oil, repres enting around 9 0 per cent of the expor ts of the countr y . The majorit y of the produc tion in Cong o is located oshore, approximately half of which t aking place in deep wat er . Con go Br az za v ill e is an e s t abl ish ed o il pr odu cin g cou nt r y a nd a co re cou nt r y f or Pe tr oNo r , bo th fo r pro du c ti on an d for re gi ona l de vel op men t . PN G F S ud is op e r a te d by Pe r e nc o , a wo r l d le a d in g specialis t in low- cost optimisa tion of mature p ro d u c t i o n as s e t s li ke PN G F S ud . Th e re ser v es ha ve in cre ase d yea r - o n- ye ar an d th e pro duc ti on has c ont in ued t o gro w and t he op era ti ng cos t h as be en si gni ca nt ly r edu ce d, al l achieve d through improving mainte nance routines an d el d inte gr i t y in a s te pw is e and p ru den t m a n n e r. The licence partner ship has now embarked on a grow th p l a n to d r i l l m o r e t h a n 17 ne w w e l l s w i t h a th r e e - y e a r i n v e s t m e n t pr o g r a m of so m e U S D 3 5 0 mi l l i o n . PNGF S UD Licence overview S i n c e t h e e n t r y of t h e n e w co n t r a c t o r g r o u p in 20 17 , low- cost incremental improvements via workovers, sur face pr oduc tion process im provements , struc tural int eg ri t y, and HS E imp rov eme nt s h ave r esu lt ed i n yea r b y y e a r gr o w t h in b o t h p r o d u c t i o n a n d re s e r ve s . Licence ac tivit y T h e a v e r a g e g r o s s PN G F p r o d u c t i o n w a s 20 , 6 3 6 b o p d i n 2 0 21 w i t h a co n t i n u e d l o w li f t i n g co s t o f $ 10 . 4 / b b l . The continuous and low cost workover programme con ti nue d su cce ss f ull y i n 2021 , a lbe it h amp er ed by Tchendo Litanzi Tchibouela Tchibouela east Louissima Lusom Suem Tchibeli Tchibeli NE Net in terest: 1 6.8% Producing wells: 67 2P R eserves (net ) (MMbbl): 20 .6 2C Resources (net ) (MMbbl): 12 . 3 Accumulated produced 1 January 20 22 (MMbbl): Gross 468 Numbers above are 2 0. 6 mmb bl and 1 2. 3 (without Aj e , and 31.3 including Aje). PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 Port folio Covid- 1 9 and logistic al issues arising from dicult ies get ting sur face and subsur face produc tion equipmen t i n t o t h e c o u n t r y in Q2 an d in p a r t o f Q 3 . T h e l o g i s t i c s i m p r o v e d t h r o u g h Q3 a n d we r e f u l l y n o r m a l i s e d i n Q 4 . A t th e e n d o f 2 0 2 1, t h e n u m b e r o f a c t i v e p r o d u c e r s increased to 67 . The debot tlenecking programme with i t s f o c u s o n t o t a l li q u i d s w i l l c o n t i n u e i n 2 0 2 2 a n d wi l l b e streng thened b y fur ther initiati ves on power generation a n d i n t r a - e l d p o w e r h a n d l i n g . In November 20 21 , the l icence par tners st ar ted drilling the previously announced but six-month delayed (due to Covid- 1 9) inll drilling programme, s tar ting wi th t h e fo u r w e l l s o n Li t a n z i . T h e d r i l l i n g p r o g r a m m e h a s be en e xp an de d to in clu de ja ck- up in s t alla t ion a nd development drilling of t wo producers on T chibeli NE t o f o l l o w t h e L i t a n z i we l l s . T c h i b e l i r e s o u r c e s fo r t h i s development will b e converted to reser ves, accelerating the PNGF produc tion prole. Inll and development d r i l l i n g n o w co m p r i s e s 17 s a n c t i o n e d w e l l s . T h e g r o s s development programme i ncluding new platfor ms and intra-eld pipelines, produc tion debott lenecking and p o w e r h a n d l i n g i s e x p e c te d t o a m o u n t t o a p p r ox i m a t e l y U S D 3 5 0 mi l l i o n ( g r o s s ) a n d w i l l re s u l t in a s i g n i c a n t product ion increase for the PNGF Sud licence. These reser ves and resources are results of a suc cessful workover and in ll dr illing pla nning prog ramme in all the P N G F e l d s . T h e r e m a i n i n g 2 P r e s e r v e s h a v e m o r e t h a n d o u b l e d s i n c e 1 J a n u a r y 20 17 . Ta k i n g a c c o u n t o f t h e 6 0 pe r cen t inc rea se in P et roN or e qui t y a nd p rod uc t io n in t h e p e r i o d , t h e r e s e r v e s h a v e i n c r e a s e d b y a f a c t o r o f 3 . 8 . Res er ve s grow th throu gh inl l dri lling 20 21 -2 3 Litanzi ■ Jac ku p acq uire d an d mod i ed w it h sim pl e pro ce ssi ng – oil a nd wa ter t o T che ndo. ■ T wo in l l pro duc er s and t wo in ll i nje c to rs t ar get ing u ps we pt fa ul t ter ra ces . ■ Es t ima te d res er ve s of 7 . 5 MM bb l. ■ T ot al es t im ate d C A PE X of U SD 1 0 5 mill ion g ros s (1 4 USD / bbl ) y iel din g at t ra c ti v e eco nom ic s. T chibeli NE ■ Jac ku p acq uire d. ■ A t wo w ell d eve lo pme nt p rog ram me is p lan ne d. ■ Es t ima te d res er ve s of 9.6 mm bo. ■ T ot al in ves t me nt p rog ram me ~ USD 9 0 mi lli on or le ss t han 10 USD/b bl . T chendo ■ Well hea d pla t f or m ins t al le d wi th 14 avai lab le slo t s for in l l dri lli ng of w hic h se ven h ave b ee n sa nc t io ne d, fo llo w ing dr il lin g of T chib el i in 202 3 ■ Ini t iall y s eve n wel ls w it h pro ba ble s ev en to fo llo w. ■ Es t ima te d res er ve s of ~8 .8 m mb o ■ T ot al co s t of USD 9 6 mill ion i ncl udi ng inf ra s tr uc tu re an d well s. T he t ot al co s t for inf ra s tr uc tu re an d 1 4 wel ls is 9 USD/ bb l. T chibeli ■ A fou r wel l in ll pro gr amm e has b ee n sa nc t ion ed an d wil l fol low s om e tim e af ter t he T ch ibe li NE drilling 2022. ■ T wo in l l pro duc er s and t wo in jec tor s ar e planned. ■ Es t ima te d res er ve s of ~ 7 m mbo ■ De vel op men t C A PE X of U SD 53 mi llio n or ~ 7 . 5 USD/bbl. PNGF B I S Licence overview Lo ca te d Nor t h- Wes t o f PNG F Su d, PN GF B is li cen ce contains two discover ies, Louissima a nd Loussima S W . T h e t w o d i s c o v e r i e s a r e pr o v e n b y t h r e e w e l l s d r i l l e d be t w een 1 98 5 an d 1 9 91 . T he par tn er shi p ha s a r igh t to negotiat e the licence on gi ven ter ms, which would e n a b l e P e t r o N o r to r e c e i v e a 2 3 . 6 p e r ce n t i n d i r e c t p a r t i c i p a t i o n in PN G F B i s . T h e t h r e e di s c o v e r y we l l s t e s t e d f r o m 1 ,15 0 to 4 ,7 0 0 b o p d of li g h t , g o o d qu a l i t y oi l . P e r e n c o ha s re c e n t l y m a d e a d e t a i l e d re i n t e r p r e t a t i o n , 3D mo d e l l i n g an d facilit ies stu dy for the Loussima SW discover y, yie lding > 1 0 0 MM bbl o f in - pla ce re so urc es an d a po ss ibl e ti e - back to PNGF Sud via pipeline. A G R P e t r o l e u m S e r v i c e s wa r r a n t s 2C r e s o u r c e s of 29 MMbbl includin g veric ation of t he tie-b ack s cenario given above. 0 5 10 15 20 25 30 35 ■ Tchibouela ■ Tchibouela East ■ Tchendo ■ Tchibeli Albien ■ Tchi NE ■ Litanzi Albien Jan 2020 Mar 2020 May 2020 Jul 2020 Sep 2020 Nov 2020 Jan 2021 Mar 2021 May 2021 Jul 2021 Sep 2021 Nov 2021 Jan 2022 Mar 2022 May 2022 Jul 2022 Sep 2022 Nov 2022 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 11 Port folio West African Gas Pipeline Lagos O M L -11 3 Ogo Aje Seme 50 km Nigeria Gameroon Benin Togo Development : Niger ia Nigeria is one of the most p etroleum rich nations in the world. Near ly all of the coutr y ’s pr imar y res er ves are concentrated in and around the Niger De lta . Nigeria is one of the few major oil produc ting nations s till capable of increasing its oil outpu t. A je Pro duc ti on wa s crea te d as a joi nt ve nt ure be t we en Pe t roN or an d the o pe rat or Y in ka F ola wi y o Pet ro leu m (“ Y F P ” ), an d wi ll le ad t he te chn ic al an d man age men t e or t s i n the n ex t pha se of t he A je eld development. Th e A je Pro jec t t ar get s pr odu c t ion of g as , con den s ate , LPG , a nd el ec tr ic it y wh ich w ill r epl ace app rox ima tel y 5 0 0 MW c ur ren tl y gen er ate d by d ies el po wer a nd al so pr ov id e 1 0 pe r cen t of th e coun tr y ’s coo ki ng ga s. A s su ch , it ha s an at tr ac t i ve E SG pr ol e con sis te nt w it h Pet ro Nor ’s v alu es an d lon ger-te rm goal s. OML- 1 1 3 (AJE FIELD ) In Ja nua r y 202 2 , Pet ro Nor r ece iv ed f ro m th e Nige ri a Ups t re am Pe tro le um Re gul at or y Com mis sio n (NU PRC re pl aci ng th e DPR ) the app rov al f or th e tr ans ac tio n be t w een Pa nor o Ene rg y an d Pet ro Nor r ela te d to th e acq uis it io n of a 1 3. 1 pe r cen t inte re s t in th e Aj e Fie ld . Th is tr ans ac ti on is t hus o n sc he dul e to be c omp le ted wi t h Pano ro wi t hin t he se con d qua r te r of th is yea r . A n SPV h as be en s et up w it h th e ope ra tor Y in ka Fo la wi yo Pe tr ol eum w he re Pet ro Nor i s tec hni ca ll y responsible for the upcoming development of the A je gas d isco ve r y. Licence overview Th e A je F iel d was di sco ver ed a f te r dr illi ng of t he A je - 1 we ll in 1 9 96 . T he OM L -1 1 3 bl ock c ove rs 8 35 k m ² wi t h wat er de pt hs ran gi ng fr om 100 m to 1,5 0 0 m. Fi v e wel ls hav e be en dr il led ; oil pr odu c t ion is f ro m T uro nia n and Ce nom ani an age re se r v oir s . O ver l y ing 2P Economic interes t: 1 3 .1 % 2C Economic interes t: 1 7. 4 % PETRONOR E&P ASA AN NUA L R EP OR T 20 21 12 Port folio th e T uron ian o il ri m is a sig ni c an t gas - con de ns ate dis cov er y wh ich h as no t bee n de vel op ed . For ward plan Th e A je e ld is lo c ate d cl ose t o the L a gos sh ore s of Ni ger ia , a pop ula te d are a in di re ne ed o f a ord abl e el ec t r ic al po wer. I t is es t ima te d tha t Nige ri a pro duc es el ec tr ic al p owe r fr om so me 20 -3 0 mil lio n die se l gen era tor s a rou nd t he co unt r y and th e L ago s area a lo ne ha s a po pul at ion e xce edi ng 27 mil lio n pe opl e. T he A je e ld co ns ti t ute s a sig ni c an t gas di sco ver y w hic h has t he p oten ti al of sup pl y ing c lea ne r , relia bl e and m ore a o rdab le ga s to po we r to thi s reg ion o f the co un tr y. Addi ti ona l LP G pro du c t s ex tr ac t ed f rom t he g as y iel ds co ok in g gas f or th e loc a l area r epl aci ng wo od b ur ning f or cooking. Acc ord ing to t he U N su st a ina bil it y goa ls , ga s is an im por t an t tra nsi t ion f ue l for A fr ic a . Th us , in ad dit io n to cl osin g dow n e xis t in g gas a ri ng in t he el d an d pip ing ad di ti ona l gas to s hor e, th is is in sum a p ar ti cul ar ly E S G fr ie ndl y p roje c t i n the s e pa r t s of t he wo rl d. De vel op men t pla ns fo r th e Aj e gas co nde ns ate an d add it ion al oi l hav e prog re ss ed s ign i ca nt l y an d gi ven p rop er e ngag eme nt w it h th e lice nce pa r t ner s , th e pla n is to pr oce ed to wa rd an F ID involv ing changeou t of the exist ing FPSO, drilling fu r t he r gas an d oil de ve lo pme nt we lls , an d bu ild ing a 30 k m p ipe lin e to sh ore t o a rec ei v ing L PG p lan t cl ose t o th e ex po r t co mpr es so r s t at ion o f th e Wes t Af r ic an Ga s Pip eli ne ( WAG P). Co nde ns at e and oi l wi ll be p rod uce d and o o ade d o s hor e whi le o t ake ag ree me nt s wi ll in clu de ga s sa les a nd s wap a rr ange me nt s fo r gas an d LP G pro duc t s. T he ex is t ing F PS O wi ll be re mo ve d fro m th e el d as it has r eac he d the e nd of e con omi c el d li fe an d doe s not h ave t he pr op er ra ti ng s for ga s dev el opm en t. A je de vel op men t pla ns ar e bei ng na lis ed a nd wi ll be p res en te d to the j oin t ven tu re pa r t ner s fol lo wi ng th e Nige ri an gov er nme nt ’s a ppr ova l of the transactions. Th e de vel op men t pla ns w ill t ar get t he ga s , con den s ate an d oil i n a low - ri sk de vel op men t pla n. We t gas w ill b e brou gh t to sho re fo r fu r t her pro ce ssi ng an d ex t ra c t ion of L PG G as . Th e con se nt fr om t he Nig er ian Up s tr eam Pet ro leu m Reg ula to r y co mmi ssi on ha s all owe d Pet ro Nor t o re - en gage n an cia l and in dus t r ial pa r t ner s w it h a t ar get to ma t ure t he pro je c t tow ard s and F ID la ter i n 202 2. T he Ni ger ian gov er nme nt en cou rage s s top -a ri ng pr og ram s and th e coun tr y is in d ire ne ed o f ele c t ri ca l po wer . The landmark La gos b ri dge i n Nigeria. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 13 Port folio 50 km SOSP A4 Block 2 (Sinapa) Block 4A (Esperança) Shelf edge Shelf edge Block 5A (Esperança) ROP Guinea - Bis s au Net working interest : 78 .6% Ar ea i n km 2 : 4,9 6 3 Operator: PetroNor E&P AB Ne t unr is ke d mea n case prospective resources (bbl): 0. 3 Bn The Gambia Net working interest : 9 0.0 % Ar ea i n km 2 : 1, 3 7 6 Operator: PetroNor E&P Gambia Ltd Net unr isked prospective resources (bbl): 2 .0 Bn PETRONOR E&P ASA AN NUA L R EP OR T 20 21 14 Por tfo lio E xp loration: The M SG BC Ba s i n PetroNor has amasse d a highly at trac tive expl oration por t folio across the MS GBC (Maurit ania- Senegal -The Gambia- Guinea - Bis sau - Conakr y) basins . Fo ll ow ing a cqui si tio n of th e Sin ap a (Bl oc k 2) and Es per an ça ( Bl ock s 4 A an d 5A ) lic enc es o s hor e Gu ine a Bis s au in M ay 2021, thr oug h th e pur cha se of SPE G ui nea B is sa u A B fro m Sve nsk a Pet ro leu m Explora tion. PetroNor assumed operatorship an d an int ere s t of 78 .5 7 per ce nt of t he t w o lic enc es w it h 78 .57 p er ce nt in ea ch . In tot al , th ey cov er an ar ea of 4 ,96 3 k m² , and , are l oc ate d on a hig hl y pr osp ec t i ve t ren d in th e MS GBC . T he t w o prospec ts , Atum and Anchova are commerci ally at tra c t i ve lo w ris k pro spe c t s w it h ne t unr iske d, combined sum med mean recoverable prospec tive res ou rce s of 30 6 M Mbb l for U ppe r and L ow er A lbia n t ar get s (P et roN or es t im ate). Pet ro Nor h as com pl ete d int er pre t at io n of 3D se ism ic dat a a nd is s eek in g Par t ne r s wi th a v ie w of pa r t ici pa ti ng in a com bin ed G uin ea - Bi ss au – T he Ga mbi a dri lli ng ca mp aig n in 202 3 . Th e pur cha se of S PE Gui ne a Bis sa u A B fro m Svenska Petroleum Explorat ion AB rec ei ved for ma l gove rn me nt al a ppr ova l in la te A pr il 2021. Sub se qu ent l y, in May 2021, Pet roN or as su me d op era tor s hip of t he S ina pa ( Bl ock 2) a nd E spe ra nç a (B lo ck s 4 A an d 5A ) lic enc es t hro ug h th e ren ame d Sven sk a subs idi ar y acq uire d , Pet roN or E& P A B. T he cur re nt E x pl ora ti on ph as es of t he G uin ea - Bi ss au lic enc es we re ex ten de d for t hre e yea r s in Oc t ob er 2020 a nd are v ali d unt il O c to ber 2 023 . Pet ro Nor i nte nds t o buil d on t he wo rk of t he pre v iou s op era tor, and re - in it iat e pla nni ng for d ri llin g of th e At um - 1X well , to tes t a hi gh ly at tra c t i ve an d mat er ial p ros pe c t on t he S ina pa lic enc e cal le d At um /Anc ho va in 202 3 . Th es e pro sp ec t s a re ana log ous to t he S an goma r el d in Se ne gal . Lon g lea d it ems re qu ire d for dr il lin g op era ti ons h ave b ee n se cu red a nd a n umb er of pre - d ri ll s tu die s com pl ete d. Wel l pla nni ng c an be re comm en ced a t sho r t no ti ce. Recently reprocessed seismic h as been interpreted as pa r t of t he o ngoi ng ev alu at ion o f bot h lice nce s . Th e wh ol e por t f oli o wil l be re - e va lua te d acr os s bot h li cen ces in cl udi ng th e Sin apa -2 dis cov er y. THE GAMB IA Licence overview In S ept emb er 202 0, t he Com pa ny was a war de d a ne w 30 -ye ar le as e for t he A 4 lic enc e wi th ter ms b as ed on t he n ew l y dev elo pe d Pet ro leu m, Explora tion and Produc tion Licence A greement – PEPL A mo de l. Pr ior S unk co s t s ass oc iat ed w it h A 4 wi ll be c ar ri ed in to t he ne w ag ree me nt fo r ta x bre ak s an d an en han ced co mm erc ial mo de l. T he Go ver nm en t of Th e Ga mbi a ex t end ed t he lo ng s top dat e of th e A 4 lice nce un ti l 1 8 Oc tob er 202 2 . Pet ro Nor h as com pl ete d int er pre t at io n of 3D se ism ic PS DM da ta ( TGS J aan 3 D) and is se ek in g a pa r t ner t o joi n th e Comp an y in dr ill ing o ne ex pl ora ti on we ll in t his hi gh ly a t t rac ti ve a cre age th at is on t re nd w it h th e Sa ngom ar e ld , 4 0 km to th e Nor th i n Sen eg al. Pe tr oN or aim s to pa r t ici pa te in an y fu tu re we ll at an e qui t y lev el of 3 0 - 50 pe r cen t and h op es to d ri ll in 20 23 a s pa r t of a com bin ed dr il lin g ca mpa ig n wi th G uin ea - Bi ss au . SENEG AL Licence overview Th e Se ne gal O sh ore S ud Pro fo nd an d Ru sq ue O sho re Pro fon d lic enc es we re aw ard ed to t he Com pan y in 201 1 . In Ju ly 2 01 8 , the Co mp any re gi s ter ed ar bi t rat io n pro ce edi ng s wi th t he In te rn at ion al Cen tr e for Se t t le men t of In ves t me nt Di spu te s (I CS ID) (cas e AR B /1 8 / 24) to pr ote c t it s i nte res t s in t he li cen ce s. Th e ar bi tr at ion p roc ee din gs w ere ha lt ed b et w ee n May 20 20 an d Ap ri l 2021 to all ow di sc uss ion s be t we en t he p ar t ie s to tr y an d rea ch a mu tu all y be ne ci al so lu ti on , dis app oi nt ing l y to no av ail . Th e Com pan y rem ain s con de nt in i t s leg al po si ti on an d awai t s a na l ar bi tr at ion d eci sio n. Se negal Net working interest : 9 0.0 % Ar ea i n km 2 : 15 ,7 9 6 Operator: African Petroleum Senegal Ltd Net unrisk ed prospective resources (bbl): 1. 8 B n PETRONOR E&P ASA AN NUA L R EP OR T 20 21 15 Port folio A nnual s t a t ement of r es er v es PetroNor ’s cla ssi cation of reser ves and resources complies with the guideline s es tablishe d by the Osl o Stock E xchang e and are ba sed on the d enitions set by the Petroleum Reso urces Management Syste m (PRMS -200 7 ), spon sored by the Societ y of Petroleum Engineer s/ World Petroleum Council/ A merican A s sociation of Petroleum Geolog ist s/ S ociet y of Petroleum Evaluation Enginee rs (SPE/ PRMS ) from 20 07 and 201 1 . Re ser v es ar e th e vol ume o f hy dro ca rb on s tha t ar e ex p ec te d to b e pro d uce d f ro m kn ow n a cc umu la t io ns: ■ On Pr od uc t ion ■ Approved for Development ■ Justi ed for Development Res er ve s are a ls o clas si e d acc ord ing to t he as so cia te d ris k s an d pro bab ili t y th at t he re se r v es wi ll be p rod uce d. 1P Pro ved r es er ve s rep res en t vol ume s th at w ill be re cov ere d wi t h 90 p er ce nt pr ob abi lit y. 2P Pro ved + Probable reser ves represent volumes t ha t w il l be re co ve re d wi t h 50 pe r ce nt probabili t y . 3P Pro ved + Pr ob abl e + Pos sib le vo lum es w ill b e re cove re d wi th 10 per ce nt pr oba bil it y. Con tin gen t Res ou rce s are t he v olu me s of hyd roc a rb ons e x pe c te d to be p rod uce d f rom know n accumulations: ■ In pl ann ing p has e ■ Where development is likely ■ Wh ere d ev elo pm ent i s unli kel y wi th p res en t basic assumpt ions ■ Under evaluation Con tin gen t Res ou rce s are r epo r t ed as 1C, 2C , an d 3C , re ec ti ng sim ila r pro bab ili t ies a s res er ve s. DISCL A IMER Th e inf or ma ti on pro v ide d in th is re por t re e c t s res er vo ir as se s sme nt s , wh ich i n gene ral m us t be recogn ised as subjective pro cesses of estimating hyd roc a rb on vo lum es t ha t ca nn ot be m eas ure d in an ex ac t w ay. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 16 Annual st atement of reser ves It sh ou ld al so be r eco gni se d tha t re sul t s of re cen t an d fu tu re dr ill ing , te s ti ng , pr odu c t ion , an d new technolog y applications may jus tif y revisions th at co uld b e mat er ial . Cer t a in as sum pt ion s on th e fu t ure b eyo nd Pe t roN or ’ s con tr ol ha ve b ee n mad e. T he se in clu de as su mpt io ns ma de re gard ing mar ket v ar iat io ns a ec tin g bot h pr odu c t pr ice s an d inv es t me nt le ve ls. A s a resu lt , a c tu al de ve lop me nt s may d ev ia te ma ter ia ll y fro m wh at is s t a ted in t his repor t. Th e es t ima te s in th is rep or t are b as ed on t hir d pa r t y as se ss men t s pre pa red b y AGR P et rol eum Se r v i ces A S (“AG R ” ) i n Ap ri l 202 2 fo r PNG F Sud a nd PNG F Bis . PETRONOR AS SE TS PORTFOLIO Th e Gr oup h old s ex pl ora ti on an d pro duc ti on as se t s in A fr ic a t hro ugh s ubs idi ar ies a nd j oin t ven tu res , nam el y th e o sh ore PN G F Sud p rod uc t io n lic enc es in t he R epu bli c of Co ngo, t he Si nap a (B lo ck 2) an d Esp er anç a ( Bl ock s 4 A a nd 5 A) l ice nce s o sh ore G uin ea - Bi ss au , th e A 4 lice nce o sho re Th e Ga mbi a. T he G rou p res er ve s it s r igh t s to th e Ru s que O sh ore P rofo nd a nd Se ne gal O s hor e Sud P rof ond l icen ce s o sho re S ene ga l, w hic h are cur re nt l y in ar bi tr at ion . Fur th er , fo llo w ing re cei pt of in- countr y government al approval from the Nigeria Ups tream Petroleum Regula tor y Commission (N UPRC r epl aci ng t he DPR ) for t he A je T ra ns ac t io n, th e Gro up w ill h old i ndi rec t int ere s t s in th e OML - 1 13 w hi ch inc lu de s the A je F ie ld o s hor e Nige ri a. T his t ra ns ac t io n is no t yet comp le te d an d is not p ar t of th is A nnu al St a tem ent o f Res er ve s (“A SR ” ) . Th e ex pl ora ti on as s et s in G uin ea - Bis s au , Th e Gambia and Senegal only constit ute prospecti ve res ou rce s, a nd a re th er efo re no t con sid ere d pa r t of th is A SR . PNGF Sud: O sho re Cong o Braz zav ill e, op erat or Pere nco , Pet ro Nor 16 . 8 3 p er ce nt PNG F Su d is a de vel op men t an d ex pl oi t at ion l icen ce comprising three (3) production licence agreement s ( T ch ib oue la II , T che nd o II an d T c hib el i- L i ta nz i II) , w hic h con t ain ve oi l el ds : T c hib ou ela M ain , T chi bou el a Eas t , T ch en do, T ch ibe li an d Li t an zi. PetroNor E& P ’s indirec t subsidiar y, HEPCO , holds a 20 pe r cent (1 6 .8 3 pe r cen t ne t to Pet roN or) non - o pe ra ted i nte re st i n th e PNG F Su d lice nce s o sh ore Co ngo. T he o pe rat or of t he lic enc es is Per enc o whi ch ho ld s a 40 p er ce nt in ter es t in t he PNG F Sud l icen ce s. Ee c t i ve sin ce 1 Jan uar y 201 7 , the o wn er sh ip of th e lic ence s ha s an e xp ir y dat e af ter 2 0 yea rs p lu s a 5 -y ear e x te nsi on pe ri od . Sin ce gr ant in g of th e lice nce s , Pere nco w it h pa r t ner s upp or t has b ee n com mi t te d to s t ri c t HS E com pli anc e whi le gr ow ing p rod uc t io n, im pro v ing mai nte nan ce ro ut ine s an d el d int eg ri t y i n a s tep wi se an d pr ud ent m ann er . In No vem be r 2021 , t he 1 7 wel l in ll pr og ram me com men ce d on PNG F Sud w i th fo ur in ll w ell s on L it an zi. P rod uc t io n is ex pe c te d to ra mp up sig ni c an tl y in 202 2 in r esp ons e to t he dr ill ing programme. In Ma rch an d A pr il 202 2 , AGR pe r f or me d a ful l Competent P er sons Report (CPR) covering the Res er ve s (1 P , 2P an d 3P) a nd Re so urce s (1 C, 2C a nd 3C ) in b ot h PNG F Sud an d PNG F Bis . T he ab ove g ure s wer e eva lua te d at 31 De cem be r 2021 . Gr os s pro duc tio n dur in g 2021 was 7 .5 3 MMb bls of oi l and 1.0 Bc f of ga s. T hi s cor res po nds to a n ave ra ge of 20, 63 6 bo pd a nd 2.7 mms c f d. A s pe r th e PRM S/ SPE g uid eli ne s, o nl y th e por ti on of gas i s cont r ibu t ing to p owe r gen era ti on (on T chi bou el a onl y) a nd is in clu de d in th e ove ral l res er ve s in t he AGR C PR . T he gas i s bei ng us ed cen tr all y in t he e ld co mpl ex a s fu el fo r pow er gen era ti ng tu rb ine s w hic h is sub se que nt l y tr ans mit te d to th e ind iv i dual el d pla t fo rm s vi a el ec t r ic al po wer c ab le s. F or t he p urp os e of th is rep or t , th e numb er s qu ote d be low a s MMb bls d o not i ncl ud e th e oil e qui v ale nt ga s bu t are i nc lud ed in th e app en di x res er ve s and r es our ce t abl es . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 17 Annual state ment of reser ves Th is Pe tro No r A SR us es a s the b asi s the R es er ve s an d Res our ces f ro m th e 202 2 AG R CPR y ie ldi ng Res er ve s an d Res ou rce s as per 31 D ece mb er 2021. A s th e onl y pr od uc t s old is o il, t he te x t b elo w wi ll mai nl y ref er to o il an d ter m th es e wi th t he un it MMbbls. At 31 De cem be r 2021 , AGR e va lua te d tha t gro ss 1 P Pro ved R es er ve s yi eld 8 4 .9 MMb bl s in all of th e PNG F Sud e ld s in th e Ceno ma nian , T uro nia n, Se no nian a nd A lb ian re se r v oir s . Gr os s 2P Prov ed plu s Pro ba ble R es er ve s at PN GF S ud am oun te d to 1 2 2. 2 MMb bl s in th e sa me re se r v oir s . Gro ss 3 P Pro ved p lu s Pro bab le p lus Po ss ibl e Re se r v es a t PNG F Sud a mou nte d to 1 5 4 .8 M Mbb ls . Gr os s 1 C Res our ces y ie ld 20 .6 MMb bl s in all of th e PNG F Sud e ld s in th e Ceno ma nian , T uro nia n, Se no nian a nd A lb ian re se r v oir s . Gr os s 2C Res ou rce s at PNG F Su d amo unt ed to 32 .7 MMbb ls in th e sa me re se r v oir s . Gr os s 3C Re sou rce s at PNG F Sud a mou nte d to 5 8. 4 MMb bl s. Th es e ev alu at ion s yi el d 1 P Prov ed Re se r v es n et to Pet ro Nor o f 1 4. 3 M Mbb ls , 2P Pro ve d plu s Prob ab le Res er ve s ne t to Pet ro Nor o f 20.6 M Mbb ls an d 3P Pro ved p lu s Pro bab le p lus Po ss ibl e Re se r v es ne t to Pet ro Nor o f 26.6 M Mbb ls . Additional potentially recoverable resources net to Pet ro No r are ap prox ima te ly 3 . 5 MMbb ls 1C, 5. 5 MMb bl s 2C and 9. 8 MMb bls 3 C. Th es e Re ser v es an d Con tin gen t Res our ces a re Pet ro Nor ’s n et v olu mes b ef ore d ed uc t io ns fo r roy al ti es an d oth er t a xes , re e c ti ng th e pro du c ti on an d cos t sh ar ing a gre em en t s tha t gov er n th e assets. PNGF Bis: O sho re Cong o Braz zav ill e, op erat or Pere nco , Pet ro Nor 2 3. 6 pe r ce nt Lo ca te d Nor th - Wes t o f PNG F Sud , PNG F Bi s lic enc e cont a ins t w o dis cov er ie s, L oui ssi ma an d Lo uss ima S W. Th e t wo d isc ove ri es ar e pro ven b y th ree w ell s inc lud ing D S T ’s dr il led f ro m 1 98 5 - 1 9 91 . Th e pr ima r y p ote nt ial is i den ti ed in t he pr e -s al t Vanji f or mat io n wi th p rom isi ng DS T ra te s, b ut t he ex pl ora ti on an d app ra is al we lls al so in cl ude a n oil col umn in t he p os t-s al t Se nji f m (not te s te d). Th e con tr ac t or gr oup of P NGF S ud ha s not ye t se cur ed t he r ig ht s to c ar r y ou t pe tr ole um a c ti v i tie s on PN GF Bi s how ev er a like ly s cen ar io com pr is es a lon g- ter m te s t pro duc tio n pe ri od w it h a ren ted jac k-u p wi th a pu rch as e opt ion a nd an 1 1 km pip el ine t ie - ba ck to o ne of t he ex is t ing T c hib oue la pro ce ss pl at for ms is a l ikel y sce nar io . Thi s wou ld all ow co s t reco ver y of t he in ve s tm ent s d uri ng th e tes t p rod uc t io n and al lo ws up sc al ing t he pro du c ti on le ve ls w it h add it io nal p rod uce rs a s res ou rce s are ma tu red t o res er ve s. Ne t to Pe tro No r 1 C Con tin gen t Re sou rce s yi el d 5. 3 MM bb ls in th e Lo uss ima S W Van ji and S en ji f m. Ne t 2C at PNG F Bis L ous si ma S W amo unt s t o 6. 8 MMb bl s in th e sa me re se r v oir s . Net 3 C amo unt s t o 8. 4 MM bbl s. MANAG EME NT D ISCU SSION AND ANAL YSIS Pet ro Nor u se s th e se r v i ces of A GR Pe tr ole um Se r v i ces fo r th ird p ar t y ve ri c a ti ons of i t s res er ve s an d res our ces . A ll ev al uat io ns are b as ed o n s t and ard i ndu s tr y prac tice and methodolog y for production decline anal ysis and reser voir modelling base d on ge olo gi ca l and ge op hy sic al a nal y si s. T he fol lo wi ng dis cu ss ions a re a com pa ris on of t he vol um es re por te d in pre v io us rep or t s , alo ng wi t h a dis cu ssi on of t he c ons eq uen ce s for t he y ear-e nd 2021 A SR : PNG F Sud Du rin g all t he ye ar s fr om 201 7 to 202 0, pr od uc t ion le vel s hav e gro wn f ro m the i ni tia l c. 1 5 ,0 0 0 b opd wh en Pe ren co an d par tn er s to ok ov er . Th is has materialized through revit alizing existing producers via replacements or upsizing of Elec trical Submer sible Pumps (ESP ’s), acidising , clean up or re pe r fo ra tin g wel ls or co nve r t in g well s fr om th e Ceno ma nian t o the Turonia n (l es s dep le ted ) for ma ti ons . Si gni c a nt sur fa ce de bot tl en eck in g is also tak ing place, projec t s ranging from improved power generation, gas-li f t compr ess or u pgrades , pump repl acements and other s ur face process imp rov em ent s . Pro duc ti on f rom T ch ibe li ha s be en PETRONOR E&P ASA AN NUA L R EP OR T 20 21 18 Annual st atement of reser ves rou te d to T che nd o by ins t a llin g a new p ip eli ne to av oid t hir d par t y pro ces sin g t ar i s p rev io us ly pa id to th e Nkos s a FP SO. T he se br ic k-b y- br ic k improvements have yielded a product ion level dur in g 2021 of 20, 63 6 bo pd , sli gh tl y do wn f rom 2020 du e to Cov id - re la ted d ela ys . T he pr odu c t ion improvements alone have yielded more than a 1 0 0 p er ce nt re se r v es r epl ace me nt ea ch ye ar at a cos t o f les s th an 1 USD/ bb l. In a dd it ion t o th is , sig ni c an t in ll dr ill ing p oten ti al ha s bee n ide nt i ed i n all e ld s and ju s ti e d for i nve s tm en t , so f ar in th re e of th es e, th e Li t an zi, T ch en do an d T chi bel i. T he s t ar t of in ll dr il lin g has in 20 21 also be en de la yed b y Cov id -1 9 t o a dr illi ng s t ar t in Nov em ber, howe ver, si gn i ca nt in ve s tm ent s w ere mad e in 2020 -2021 for i n ll dr ill ing in fr as t ru c t ure to acc omm od ate o t ake , pro ces s an d wel l slot s . A n in ll dr il ling p rog ra m was de ci de d for t he L it an zi el d in 2019 an d in 202 0 for T ch en do an d T c hib el i. De vel op men t dr ill ing of t he T ch ibe li NE d isc ove r y was f ur th er s an c ti one d in 2021. Conse qu ent l y th e 2C res ou rce s in th es e el ds ha ve be en co nve r t ed to 2P res er ve s . Dev el opm en t of 3D s t at ic a nd d yn ami c mo del s has b ee n and w ill co nt inu e to for m t he ba sis of f ur th er in ll d ril lin g pro gra mm es on PN GF Sud . A s pa r t of t he co mmi tm en t to in ll dr il ling , sig ni c an t 2C res our ces h ave b ee n tra ns fe rr ed to 2P res er ve s on L it a nzi , (i n 201 9), T ch en do, T ch ibe li an d fur th er in T c hib eli N E. T he in ll p ote nt ial in T chi bou el a has be en m ain t ain ed w it h a sig ni c an t 2C pot ent ia l as wel l as a sli gh t inc rea se in t he 2C res ou rce s in T chi bou el a Eas t . In su mma r y fo r all eld s , the co nv er sio n of 2C to 2P an d inc rea se in 2P re se r v es b et we en 2020 an d 2021 cons t it u tes c a 9. 5 MMb bls . W it h gro ss pro du ced v olu mes d ur ing 2021 of 7 .5 3 MMb bl s, t his rep re sen t s a re se r v e rep lac eme nt r at io of 1 26 100 pe r cent . PNGF Bis On ce inv es t me nt de ci sio ns ar e mad e on t he Loussi ma SW pro jec t these reser ves may bec ome res er ve s ap pro ve d for de ve lop me nt . Th e 2C res ou rce s in PNG F Bis h ave b ee n rea r me d by AGR as p ar t o f th is ye ar s ’ res er ve s an d re sou rce a udi t wi t hou t ch ange to t he n umb er s. I t is e xp ec t ed t hat th es e dis cov er ies w il l have p ri or it y fo llo wi ng th e in ll dr il ling p rog ra mme s in PNG F Su d. Gi ve n a suc ces s f ul Lo us sim a S W, a simil ar de vel op men t po ten tia l is al so l ikel y fo r th e Loussima Discover y . A SSUMP TION S (MMbbls) 2 02 1 – 2P R es er v es Ba lan ce ( g ros s AG R , PNG F Sud – 31. 1 2. 2 021 ) 12 2 . 2 Ba lan ce 31. 1 2. 20 21 – 2P net , PN GF Su d 20.6 2P a nd 2 C Res er ve s and Re s our ces S ta tus Ba lan ce 31. 1 2. 20 21 – 2P / 2C gr os s, P NGF S ud 15 4 . 9 Ba lan ce 31. 1 2. 20 21 – 2P / 2C ne t , PNG F Sud 2 6 .1 Ba lan ce 31. 1 2. 20 21 – 2P / 2C gr os s, S ud+ Bis 1 83.8 Ba lan ce 31. 1 2. 20 21 – 2P / 2C ne t , Sud +Bi s 32 .9 Pet ro Nor ’s to t al 1 P Re se r ves a t th e en d of 2021 amo un ted t o 1 4. 3 M Mbb ls . Pet roN or ’s 2P Re se r v es amo un t to 20.6 M Mbb ls an d Pet ro Nor ’s 3 P Res er ve s am oun t to 26. 6 1 MMb bl s. T his re e c t s th e 6 A pr il 202 2 re se r v e rep or t fo r the P NG F Sud el d, co nd uc t ed by AG R Pet ro leu m Ser v ic es A S an d pro du c ti on si nce t he e ld s t ar t-up . PetroNor ’s Contingent Resource base include s dis cov er ie s of var y in g deg re es of ma tu ri t y towa rd s de vel op men t de cisi ons . B y th e end o f 2021 , Pet ro Nor ’s a ss et s co nt ai n a tot al 2C v ol ume o f app rox ima tel y 1 2. 3 M Mbb l. 29 A pri l 2022 JEN S PACE Interim CEO PETRONOR E&P ASA AN NUA L R EP OR T 20 21 19 Annual statement of reser ves RE S ERV E S A ND R ES OURC ES PE R 31 DE CEM BE R 20 21 ( AGR CPR DATED 6 A PR IL 2 02 2) Gross Reser ves ( developed or under dev elopment) 1P 2P 3P Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe 10 0 % PN GF S ud T chibouela 45. 2 8 1 1 . 32 47 . 3 0 57 . 3 0 16.72 60 .2 8 69.2 3 24.76 7 3. 6 4 T chi bo uel a Ea st 1. 4 0 1. 4 0 1. 8 7 - 1. 8 7 2. 35 2. 35 T chendo 19 .19 - 19 .19 26. 42 - 26 .4 2 34 .0 6 - 3 4 .0 6 T chibeli 7. 0 0 - 7 . 0 0 1 7 .0 0 - 1 7 .0 0 25 .6 3 - 25 .6 3 T chi be li NE 4 .9 4 - 4 .9 4 9. 57 - 9. 57 14 . 6 2 - 14 . 6 2 Litanzi 7 .0 8 - 7 .0 8 1 0.01 - 1 0 .01 1 2 . 1 6 - 1 2 . 1 6 Subtotal 8 4. 89 1 1.3 2 8 5. 5 0 12 2 .17 16.72 12 3 . 2 8 1 58.06 24 .76 1 6 0 .12 10 0 % PN GF B is Loussima (Bis) - - - - - - - - - To t a l 84.89 1 1.32 85.50 12 2 .1 7 16.72 12 3 . 2 8 1 58.06 24 .76 1 6 0 .12 Gross Contin gent Resources ( undevelope d ) 1P 2P 3P Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe 10. 50 % P NG F Su d T chibouela 1 3.6 0 8.9 0 15 .19 21 .2 0 1 3. 8 0 2 3.6 6 34 . 10 2 2. 3 0 38 .07 T chi bo uel a Ea st 1 . 61 - 1. 61 2. 3 4 - 2. 3 4 5.06 - 5.06 T chendo 5.4 0 - 5. 4 0 9. 14 - 9. 14 1 9.2 0 - 19.20 T chibeli - - - - - - - - - T chi be li NE - - - - - - - - - Litanzi - - - - - - - - - Subtotal 20.61 8.9 0 22. 2 0 32 .6 8 1 3. 8 0 35. 1 3 5 8. 3 6 2 2. 3 0 62. 3 4 14.7 0 % PN GF B is Loussima (Bis) 22 .4 0 - 2 2. 4 0 28 .90 - 28 .9 0 35 . 80 - 35 .8 0 To t a l 43 .01 8.9 0 4 4 .6 0 6 1.5 8 1 3. 8 0 64 .0 3 9 4 .1 6 22 . 30 9 8 .14 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 20 Annual state ment of reser ves Net PetroNor Reser ves ( developed or under development) 1P 2P 3P Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe 16 .8 3 % P NGF S ud T chibouela 7 . 62 1 .90 7 .9 6 9.6 4 2. 81 10. 15 1 1.65 4. 1 7 1 2 . 39 T chi bo uel a Ea st 0. 24 - 0. 24 0. 32 - 0. 32 0. 40 - 0.40 T chendo 3. 2 3 - 3. 2 3 4. 45 - 4. 45 5.7 3 - 5.73 T chibeli 1 . 18 - 1 . 1 8 2. 86 - 2 . 8 6 4. 31 - 4. 31 T chi bo uel a Ea st 0.83 - 0.83 1. 61 - 1. 61 2.46 - 2.46 Litanzi 1 . 19 - 1 . 19 1 .69 - 1 .69 2.0 5 - 2.0 5 Subtotal 1 4. 2 9 1 .9 0 1 4 .6 3 20. 56 2. 81 21 .0 6 26 .6 0 4. 1 7 27 . 3 4 16 .8 3 % P NGF S ud Loussima (Bis) - - - - - - - - - To t a l 9.0 5 1 .9 0 1 4 .6 3 20. 56 2. 81 21 .0 6 26.6 0 4. 17 27 . 3 4 Net PetroNor Contingent Resources ( undeveloped) 1P 2P 3P Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe Oil mmbo Gas bcf Boe mmboe 16 .8 3 % P NGF S ud T chibouela 2. 29 1 .5 2. 5 6 3.57 2. 32 3 .9 8 5.74 3.75 6 .41 T chi bo uel a Ea st 0. 27 - 0.27 0. 39 - 0.39 0.85 - 0.85 T chendo 0.91 - 0.91 1 . 5 4 - 1 . 5 4 3. 2 3 - 3. 23 T chibeli - - - - - - - - - T chi bo uel a Ea st - - - - - - - - - Litanzi - - - - - - - - - Subtotal 3. 47 1 .5 3.74 5. 5 0 2. 32 5.91 9.82 3.75 1 0. 49 14.70% P NGF Bis Loussima (Bis) 5. 28 - 5. 28 6. 81 - 6.81 8 .4 4 - 8. 4 4 To t a l 8 .75 1 . 5 9.01 1 2 . 31 2. 3 2 1 2 .72 18. 26 3.75 1 8.93 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 21 Annual statement of reser ves PETRONOR E&P ASA AN NUA L R EP OR T 20 21 22 ESG report ESG r epor t 202 1 : Cr eat ing v al ue in a sus t ainabl e manner PetroNor s trongly believes that the abilit y to create long- term, la sting value re st s on maintaining high st andards of governance, sust ainable busine ss prac tices and operations . The Company is committed to ac ting re sponsibl y , and endeavours to enrich the local communities in which it op erates. Par t of Pe tro No r s v isi on is t o cre ate v al ue fo r th e sha reh old er s in a su s ta ina bl e mann er w he re due r ega rd is g i ven t o eco no mic al , so cia l an d env i ron men t al is sue s . Th e Comp an y val ues o f hon es t y, inte gr i t y a nd t ran spa ren c y a re le adi ng th e Comp an y as it is w or ki ng to war ds a v isio n of imp rov in g th e f ut ure a nd t he ai m of su s ta ina bl e res ou rce de ve lop me nt in al l op era ti ons . AN O UT LOOK O N TH E OIL A ND G A S INDUS TRY Th e th em e of th e ene rg y tr ansi t ion h as gai ne d mo men tu m thr oug h th e las t ye ar . Fur t her c lim ate cha nge p os es t an gi ble r is k s to th e pla ne t an d hum ani t y. Pet ro Nor i s emb rac ing t he to pic , bu t als o se es t ha t th e tr ans it ion p os es i t s ve r y ow n imm ed iat e ris k to th e env ir onm en ta l and socioeconomic development of the countries and pe op le in A fr ic a. It is w ell k no wn t ha t hun dre ds of mi lli ons of A fr ic a ns do no t hav e acc es s to re lia ble e le c t ri ci t y a nd t he con ti nen t wi ll not b e tr ans it ion ing to a g ree ne r eco no my at t he s am e pa ce as m ore d ev elo pe d nat io ns . A s suc h, t he Com pa ny be lie ve s th at cr edi ble op era tor s s uch a s Pet ro Nor h ave a ke y rol e to p lay in en abl ing a s mo oth a nd s te ad y t ran sit io n th at ena bl es t he con ti nen t to con ti nue t o ben e t fr om i t s nat ur al re so urc es un ti l a mor e vi abl e an d sus t a ina ble so lu tio n is rea d y. G iv en ou r s tro ng ne t w or k and gr ow ing re pu t at ion a s a resp on sib le op era to r , we are po sit io nin g our s el ve s as a par t ner o f cho ice, a nd w ill be en gag in g wi th go ver nm en t s and In ter na ti ona l Oil Com pan ie s to se e how w e can h elp t he m del iv er on th eir re sp ec ti ve a gend as . Acc ord ing to t he U N su st a ina bil it y goa ls , ga s is an imp or t ant t ra nsi ti on f uel f or Af r ic a. Pe tr oNo r ’ s Aj e tr ans ac ti on se ek s to c los e do wn e xi s tin g gas a ri ng in th e el d an d pip e gas to sh ore c rea ti ng a lo wer ca rb on s olu t ion f or th e reg io n. ST AK EHOLD ER ENGAGEMEN T AND MA TERIALITY Th e int eg ri t y of th e ca pi ta l mar ket s is b as ed on f ul l an d fair d isc lo sure o f inf or mat io n. T he Co mpa ny treats all shareholders equally and seeks to provide consisten t and transparent infor mation to ensure fai r tre at me nt of al l s ta keho ld er s . Environment al impact A s an op er ato r of o sh or e conc es sio ns , it is t he du t y of Pe tr oNo r to mi nimi se a ny ad v er se i mpa c t o n the env i ron men t . It is t he Com pa ny s pol ic y t o mana ge all a c t iv i ti es in a r es pon sib le ma nn er , in a ccor dan ce wi t h the p ri nci pl es of su s t ain abl e dev el opm en t. T he env i ron men t al po lic y pro v ide s a fr ame wo rk f or de cis ion ma ki ng an d pro jec t imp lem en t at ion . In th at reg ard , Pe tro No r s tr i ves t o con duc t all o pe rat io ns in an en vi ron me nt al ly r esp ons ibl e man ne r . Th e s y ner g ies b et we en th e Com pan y s b usi nes s mo del a nd t he la te s t tec hn olo gi es de ve lo pe d in th e o sh ore of t he N or w eg ian Co nt ine nt a l She lf all ow fo r th e max im um com mer cia l ou tco me wi t h the l eas t e nv iro nme nt a l imp ac t . Handling climate change Pet ro Nor r eco gn ise s th at c lim ate c han ge is of increasing political impor t ance, and through reg ul at ion co ul d hav e a mat er ial i mp ac t o n th e Gr oup ’s b usi ne ss . Th e Comp an y al way s ai ms to min imi se an y ad ver s e imp ac t o n th e env ir onm en t. Fur t her, risin g cl ima te ch ange c onc er ns ha ve le d an d coul d lea d to ad dit io nal l ega l and /or re gul at or y mea sur es w hic h cou ld re sul t in pr oje c t de lay s or c an cell at ion s , a dec rea se i n dem and f or f os sil fuels, and additional compliance obligations, each of w hic h coul d mat er ial ly a nd ad v er se l y imp ac t t he Com pan y ’ s cos t s an d/or r eve nu es . Fo r ex amp le, sus t a ine d low er oi l and g as pr ice s or pr ic e dec lin es may i nte r ali a lea d to a ma te ria l de cre as e in ne t produc tion revenues. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 23 ESG repor t Cl ima te ri sk w ill be a n imp or ta nt as pe c t of n an cia l an d inte rn al co ntr ol goi ng fo r w ard , as we ll as sh or t- an d lon g- ter m s tr ate gi c pla nn ing an d bu sin es s de vel op men t . In 202 2, Pe tr oN or wi ll in teg ra te cli mat e ri sk to it s r is k mana gem ent s y s te m. Reducing enviro nmental impac t Pet ro Nor s ee k s to mi nim ize an y ad ve rs e im pa c t on t he en vi ron men t . Env iro nm ent a l So cia l Imp ac t A s se ssm en t s (E SI A) ar e ca rr ie d ou t pr ior to a ll maj or ac ti v i tie s an d th e Comp an y com mun ic ate s th e res ul t s to al l gove rn me nt age nc ies a nd ot he r rel ev an t st a keho lde r s. F ur t he r , Pet roN or w ill ensure that enviro nment al management plans are in pl ace a nd t hat t he ir im pl eme nt a tio n is re gu lar l y monitored. Th e Com pan y wi ll con ti nua ll y rev ie w an d update procedures regardin g protec tion of th e env i ron men t to en sur e th ey ar e val id an d app ro pr iat e. Fur th er , co nt inge nc y plan s are in p lac e to s w if tl y mi ti gat e any p ote nt ial da mage t o the environment. T o the b es t of t he Co mpa ny ' s kno w le dge, al l op era ti ons h ave b ee n cond uc t ed w it hi n the limit s set by approved enviro nment al regulator y au th or it ie s. T he Co mp any is a war e of it s env i ron men t al ob lig at ion s wi th re ga rds to i t s ex pl ora ti on a c ti v i tie s an d ens ure s th at i t com pli es wi t h the r ele va nt en v iro nme nt al re g ula tio ns w hen ca rr y in g out a ny e xpl or at ion w or k. Du rin g 2021, t he re hav e be en no si gn i ca nt k no wn breaches of the env ironment al regulati ons in place for t he Co mp any ’s e xp lor at io n lice nce s. SO CI AL I MPACT Protec ting Human Ri ghts Pet ro Nor i s com mi t te d to con du c ti ng b usin es s in a man ner w hi ch re spe c t s hu man r ig ht s as s et ou t in th e UN Un iv er s al De cl ara ti on of H uman R ig ht s an d se ek s bu sin es s pa r t ne rs a nd co nt rac tor s wh o fol lo w equ iv al ent s t an dar ds . Th e Com pan y has a zero- tolerance approach to modern slavery an d chi ld la bou r in an y pa r t of t he o rg ani za ti on an d supp l y cha ins . Al l wor ker s sh all b e ensu re d sa fe , se cur e and h eal th y wor k ing co ndi t ion s. T he wor k pl ace sh all b e fre e fr om an y for m of ha rs h or inh uma ne tr ea tm ent . PetroNor ’s customers , contractors , sub con tr ac t or s an d sup pli er s sha ll n ot en gage i n or us e chi ld la bo ur . Ap pli ca bl e nat io nal la w s shal l be co mpl ie d wi th , and o nl y wo rker s w ho me et t he applic able minimum legal age requirement shall be employed. Pet ro Nor m ana gem ent m us t e nsur e th at al l Pet ro Nor R epr es ent a ti v es ar e tre ate d fai rl y. It is th e res po nsib ili t y of t he ma nage me nt to m oni to r pra c t ice s an d at t i tu des t ha t may l ea d to ac t s of har as sme nt in t he wo r kp lace . We ex pe c t o ur bu sin es s pa r t ner s a nd su ppl ier s t o com pl y wi t h app lic ab le la ws , re sp ec t i nte rn at ion all y re cog nize d hum an r ig ht s an d adh ere t o our e t hic al s t and ard s wh en con du c ti ng bu sin es s wi th o r on be hal f of Pe tro No r . The Co mp any s s t an dar d ser v ices agreement obliges the c ontrac tor to com pl y wi t h the Co mp any s Cod e of Con du c t wh ere s t a nda rds re ga rdin g hum an ri gh t s are declared. In No vem be r 2021 , t he Com pa ny up dat ed i ts K n ow Y ou r Sup pli er Po lic y to h elp m ake sur e tha t i t onl y do es bu sin es s wi t h rm s and i ndi v id ual s tha t sha re it s s t an dar ds fo r comp lia nce a nd in teg r it y. Pet ro Nor m us t re fu se to d o busi ne ss w it h an d pro v ide n o ass is t an ce to th os e wh o enga ge in ill ega l con duc t rela te d to Pet ro Nor ’s b usin es s . Du rin g th e yea r , the re we re no c as es id en ti e d in th e com pan y nor i t s sup pl y ch ain s tha t wer e in v iol at ion of h uma n rig ht s . A hea lthy an d saf e work e nvir onm ent Hea lt h an d S afe t y p ol ici es a re es se nt ial f or Pet ro Nor . T he Co mpa ny s obj ec t i ve fo r hea lt h , env i ron men t , s afe t y, an d qua li t y (H SEQ ) is zer o acc ide nt s an d zer o unwa nte d in cid ent s i n all activ ities. Th e oil a nd ga s ass et s l oc at ed in We s t Af ri ca i mpl y fr eq uen t tr ave l, a nd t he Co mpa ny s ee k s to ens ure ad equ ate s af et y le vel s for e mpl oye e s tra vel lin g. Wi t h it s n on - op er ate d lic enc es , Pe tro No r is dep en de nt on t he e or t s of th e op era tor s w it h res pe c t to ac hie v ing p hy sic a l res ult s i n the eld . Ho wev er , Pe tro No r has ch os en to t ake an a c t iv e rol e in al l lice nce co mmi t t ee s wi th t he co nv ic t io n tha t hig h s afe t y s t a nda rds a re t he b es t me ans t o ach ie ve suc ces s f ul op era ti ons . T hro ug h thi s invo l vem en t , Pet ro Nor c an i nu en ce th e cho ice of te ch nic a l so lu tio ns , ve ndo r s and q ual it y of a ppl ied p ro ced ure s an d pra c ti ces . Th e Gr oup ’s o pe rat io ns ha ve be en co ndu c te d by th e operators on behalf of the licencees, at acc ept able HSE s t a nda rds a nd t he op er ato r of PN GF S ud is rep or ti ng re gul ar ly o n all key H SE in dic at or s. No a cci den t s th at re sul te d in lo ss o f hum an li v es or serious damage to people or proper t y have been rep or te d in 2021 . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 24 ESG report T ime l os t due t o emp loy ee il lne ss o r acc ide nt s wa s ne gli gib le. E mpl oye e sa fe t y is o f the h igh es t p ri or it y, an d the Co mp any is co nt inu ou sl y wor k ing to wa rds identif ying and employing administrati ve and te chn ic al so lu ti ons t hat e nsu re a sa fe an d e cie nt workplace. Investing in loc al communities Th e Com pan y has a s t ron g foc us on C SR as w ell a s an et hi ca l cod e of con duc t. T he Co mp any f oun de rs hav e es t ab lis he d a sep ara te C SR pr oje c t , Pow er to Edu ca te, a nd i s sup por t ing t he C SR pr oje c t s in t he sub sid iar y in t he Re pub lic of Co ngo as w ell a s the pro je c t s or gan ize d by th e Op er ato r in t he PN GF Sud l ice nce g rou p. Dur in g 2020 , the Co mp any reg is te re d as a sup por t ing co mpa ny w it h th e E x tr ac t i ve In du st r ie s T r ans pa ren c y In it ia ti ve , EIT I . Pet ro Nor a ims to w or k clo se ly a lon g sid e loc al pa r t ner s t o imp rov e th e li ves o f th e com mun it ie s in wh ich i t op era te s. T o en sure t he Co mp any s e or t s are sustainable, corporate social investmen ts are pr ima ri ly f oc use d on p roje c t wo r k in th e foll ow in g key areas: ■ Powe r to E duc ate : A pro gr am an d pla t f or m th at aim s at su bs ti t ut ing rew oo d wi t h LPG , S ol ar an d Win d so lu tio ns fo r dom es t ic p owe r us age. ■ Human capacit y developme nt: Te r t i a r y T ech ni ca l Cap ac it y De ve lop me nt . Pr ima r y & Se con dar y S cho ol Ed uc at io n Sc hol ar shi ps . ■ Access to qualit y health: T r ain ing L oc al H eal th an d Med ic al Pro fe ssi ona ls . Inv es t me nt s in Me dic al E quip me nt an d Hea lt h Fac ili ti es . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 25 ES G report Equalit y and diversit y Pet ro Nor v al ues e ac h mem be r of th e tea m an d is com mi t te d to pr ov idi ng an e nv ir onm en t rec ogn ise d for i t s po si ti ve e ne rg y, equa li t y a nd pr ofe ss ion ali sm , an d wil l tre at e ver yo ne w it h fa irn es s , res pe c t an d dign it y. Fur th er , Pet ro Nor a ims to m ain ta in a wor k en v iro nme nt w it h eq ual op po r t uni t ies f or all ba se d on pe r fo rm an ce; ir re spe c t i ve of gen de r , age, rel ig ion , et hni ci t y, se x ual p ref ere nce , po lit ic al b el ief, dis ab ili t y, or any ot her p rote c t ed s t at us . Th e Com pan y is an e qual o pp or t un it y emp lo yer, wi t h an eq uali t y conc ept i nte gr ate d in it s h uma n res ou rce s pol ici es . A di ver s i ed wo rk e nv ir onm ent is em bra ce d, an d th e Gr oup ’ s per s onn el p ol ici es pro mot e eq ual o ppo r t uni t ies a nd r ig ht s an d prevent discrimination based on gender , ethnicit y, col our, la ng uage , rel igi on or b eli ef. A ll emp lo yee s are go ve rn ed by P et roN or ’s Co de of Co nd uc t , to en sure a nt i- d is cr imi nat io n and a go od wo rk env i ron men t acr os s a wor k f orce r epr es ent in g a mul t it ude o f nat io nal it ies . Pet ro Nor i s a kno wl ed ge - bas ed G ro up in w hic h a maj or it y of th e wor k f orc e has ea rn ed co lle ge or un iv er si t y l ev el ed uc at ion s; or h as ob ta in ed ind us t r y - re cog nize d sk ill s and qu ali c a tio ns spe ci c to the ir jo b req uir eme nt s . Emp loy ee s are rem une ra ted e xcl usi v el y ba se d upo n sk ill l ev el , pe r fo rm an ce and p osi t ion . Du rin g 2021, t he mo nt hl y av era ge num ber o f emp lo yee s an d lon g- ter m con sul t ant s w as 35 . Proportion of local West African emplo yees: Actual Objec tive St a 61% 50% Board Nil +2 0 % Propor tion of women Actual Objec tive Sta 36% +2 0 % Executi ve management team Nil +2 0 % Board 1) 50% +4 0 % 1) Prior t o th e red om ici le o f Pe tro No r to N or w ay t he p erc ent ag e of t he bo ar d th at w er e fem al e wa s 29 p er cen t . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 26 ESG repor t Harassme nt and intimidation Cou r te s y an d res pe c t ar e imp or t ant a sp ec t s o f a so und w or k env ir onm en t and b usin es s de ali ng s. Pet ro Nor d oe s not t ol era te di scr im ina ti on of col lea gu es or o the r s a ec t ed by i t s bus ine s s and wi ll no t tole ra te any v er ba l or phy s ic al con du c t th at may l ea d to th e har as sme nt o f oth er s , dis ru pt s ot her s wo rk p er for ma nce o r cre ate s a hos t il e wor k env i ron men t . Th e Comp an y ex pe c t all e mpl oye es to tr eat e ve r y one t he y com e into co nt a c t wi t h th rou gh wo rk o r wor k-r ela te d ac t i vi t ies i n a res pe c t f ul m ann er . Th er e were n o rep or ted i ns t an ces of h ara ss men t or int im ida ti on dur in g 2021 . C ORPORA TE GO VERNANC E Th e mai n obj ec t i ve fo r Pet roN or ’s co rp ora te governance is to develop a strong, sus tainable an d comp et i ti ve co mp any i n th e be s t int ere s t of th e sha reh ol der s , em plo ye es a nd so ci et y at l arg e, wi t hin t he la ws a nd re gul at ion s of th e res pe c t iv e c o un t r y. Th e Com pan y has im pl eme nt ed cor p ora te values, ethic al guidelines and guidelines for cor po ra te so cia l res po nsib ili t y. T he se v alu es an d guideline s are describe d in P et roNor ’s Code of Con duc t wi th f ur th er de t ail s in in ter na l pol ici es . In ac cord anc e wi th t he No r w eg ian A ccou nt ing Ac t , t he Co mp any a nnu all y re po r t s on m at ter s rel at ing t o env ir onm en t al an d so cia l is sue s , lab our environment, equalit y and non- discrimination, the com pli anc e wi th hu man r ig ht s , an d the co mb at of corruption and briber y . Th e Bo ar d of Dir ec t or s and m ana gem ent a im fo r a con tr oll ed an d pro t a ble d ev elo pm ent a nd lo ng- ter m cr eat io n of gro w t h th rou gh we ll -f oun de d gov er nan ce pr inc ip les a nd r isk ma nag eme nt . Th e Bo ar d wil l gi ve hi gh pr io ri t y to nd ing t he mo st a ppr op ria te wo rk in g pro ce dure s to ac hie ve , int er al ia , th e aim s cove re d by t hes e Cor p ora te Go ver na nce g uid eli ne s and p ri nci ple s . Pet ro Nor ’s B oa rd of Di rec tor s ar e res po nsib le fo r es t ab lis hin g th e Cor por ate G ov er nan ce fr am ew or k of th e Com pan y. Fur t he r , Pet roN or Co de of Pr ac t ice for Co rp or ate G ov er nan ce (th e “ Cod e ” ). HS E management T o avo id ne gat i ve im pa c t on th e en vi ron men t , lo ca l comm uni t ies a nd th e wo rk f orc e. T he Company integrates technical, economic and HSE considerations into decision mak ing and operational processes to achieve long- term sus t a ina bil it y of th e bus ine ss a nd to re du ce ri sk . Th e Com pan y s tr i ves f or co nt inu ous im pro ve men t as lessons learned from past operations a re inc or por at ed in to bu sin es s pra c ti ce s going f or war d. Th e Com pan y end ea vou r s to comp l y wi th int er na tio nal a nd lo c al HSE s t a nda rds . T he he al th , sa fe t y a nd we lf are o f all pe r so nne l inv ol ve d and of th e gene ra l pub lic is t he hi gh es t pr io ri t y. A ll em plo ye es an d bu sin es s pa r t ner s a re en cour age d to spe ak up a nd s top a ny wo rk i f th ey fe el i t is or co ul d be un sa fe f or li fe , hea lt h, o r th e env i ron men t . Th ey ar e als o enc our age d to rep or t any i ns t anc es of un s afe p rac ti ces a nd /or any dan gero us wo rk in g si tua ti ons . In 2021, ther e wer e no ma t te rs i den ti ed in th e Comp an y tha t wer e in v iol at ion of H SE management. Cod e of Con duc t Pet ro Nor s hal l cond uc t b usi nes s w it h int eg ri t y, res pe c t ing t he c ul tur es , di gni t y and r ig ht s o f ind i vi dua ls ev er y wh ere i t op era te s. T he Co mpa ny sha ll al wa ys s t ri v e to mai nt ai n hig h eth ic al s t and ard s and co nd uc t i t s bus ine ss in a w ay th at make s pe opl e pro ud to w or k for Pe tr oNo r . Fur th er , Pet ro Nor s hal l s tr i ve to e nsu re th at a c ti v i tie s al so cre ate l oc al g row th i n a sus t ai nab le ma nne r in eac h of th e cou nt ri es in w hic h it o per at es , bot h th rou gh lo ca l par tn er sh ips a nd co mpe te nce t ran s fer . Th e Cod e of Con duc t is ba se d on Pet ro Nor ’s fu nda me nt al p rin ci ple s of bu sin es s et hic s . It summarizes the c ompany s values and st andards an d fur th er d es cr ibe s wh at is e xp ec te d of bot h th e comp an y and i t s emp loy ee s. T h e Comp any ex pe c t s al l rep res en t at iv es to co mp ly w i th t he Cod e of Con duc t. Pe tr oN or al so ex p ec t s a ll bus ine s s par t ner s , jo int v ent ur e par t ner s a nd sup pli er s to a c t in a ma nn er t hat i s cons is te nt wi t h the p ri nci pl es of t he Cod e of Con du c t . Fur t her, co mpl ian ce wi t h nat io nal , reg io nal , and int er na tio nal l aw s and r eg ula tio ns is ma nd ato r y f or all o ur ac t i v it ie s. Th e Cod e of Con duc t is pa r t of t he ov era ll fr ame wo rk o f env ir onm en ta l, s oc ial an d gov er nan ce (E SG ) an d is of s t ra teg ic im po r t an ce to th e bus ine ss . It h as be en ap pr ove d by th e Bo ard o f Dir ec tor s an d is to be re v is ed f rom t ime t o tim e to re e c t th e ac t i vi ti es a s the Co mp any d eve lo ps an d as la ws a nd re gul at ion s may c han ge. T he Cod e of Con duc t is av aila bl e on th e Comp an y s we bs ite . Anti - corruption It is Pe tr oN or ’ s po lic y to con duc t all of i t s bus ine ss in an ho ne s t and e th ic al ma nne r . Th e Comp any takes a z ero- tolerance appr oach to briber y PETRONOR E&P ASA AN NUA L R EP OR T 20 21 27 ES G report an d cor ru pt ion a nd is c omm it ted t o ac t in g pro fe ssi ona ll y, fair l y and w i th in teg r it y in all i t s bus ine s s deal ing s an d rel at ion shi ps T he Com pa ny com pli es w it h all a ppl ic ab le an ti - co rr up tio n law s and regulatio ns. It is s t ri c t ly i lle gal to e nga ge in any a c t iv i t y con sid ere d as br ib er y or cor r upt io n. Pe tr oNo r and it s d ire c to rs h ave z ero to le ran ce fo r any f or m of br ib er y, corr up tio n, f ra ud , dish on es t y or de cep tio n. PetroNor ’s representative s must not accept, make, se ek or o er b ri be s or mo net a r y a d van t age s of any ki nd . Thi s inc lud es m one y, ben e t s , ente r t a inm ent or se r vi ces o r any ma te ria l be ne t to o r fro m pub lic oc ial s or ot he r bus ine ss p ar tn er s , whi ch ar e gi ve n wi t h the i nte nt of ga ini ng imp ro per b usi ne ss or pe rs on al gai n. Th e cu rre nt sh are ho lde r s and al l of Pet ro No r ’s rep re sen t at i ves a re re qui red t o comp ly w i th Nor we gi an la ws , t he UK B ri ber y Ac t and t he US FP C A an d loc a l law s in th e jur is dic ti ons w he re we con duc t bus ine ss . Pet ro Nor s A nt i - Br ib er y an d Cor ru pt ion p ol ic y c an be fo un d on th e Comp an y ` s we bsi te . Th e Com pan y is aw are of a n ongo ing in ve s tig at ion by Ø kokr im , t he Na ti ona l Au th or it y fo r Inv es t iga ti on an d Pro se cu ti on of Eco no mic an d Env ir onm en ta l Cr ime in N or way, regarding alle ged cor r upt io n. T he in ves t ig at ion is f oc use d on ind i vi dua ls , an d nei t her Pe t roN or no r any c omp an y has b ee n cha rge d wi t h lega l oe ns e. Whistle blo wer mech anism Pet ro Nor b el iev es i n ope nn es s an d tra nsp ar enc y for a ll it s b usi ne ss de ali ng s and a c ti v i ti es . Ill ega l or un et hi ca l mat ter s m ay ne ga ti ve l y imp ac t t he wor k en v iro nme nt an d th e bus ine ss i n gene ral . It is imp or t ant t ha t the Co mp any d eal s wi th s uch m at t er s properly, and all PetroNor r epresent ative s, current Ci t y of B a nju l in The Gambia. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 28 ESG report an d for me r , who h ave co nce rn s abo ut a ny as pe c t of our b usi ne ss a re en cou rage d to ra is e th em an d to dis cl ose a ny in for ma ti on w hic h rel ate s to imp ro per, une th ic al or i lle gal co nd uc t in t he wo r kp lac e. Ev er y Pet ro Nor r epr es en ta ti v e has a r ig ht a nd an ob lig at ion t o rai se t he ir con cer ns a bo ut o ur bus ine s s inc lud ing ma t t er s suc h as: ■ Pote nt ial b rea che s of la w ■ Br eac h of et hi ca l no rm s and i nte rn al g uid eli ne s ■ Har as sme nt or d isc ri min at ion i n the w or kp lac e ■ Con di tio ns t hat m ay e nda nger l if e or he al th Wh is t leb lo wer s mu s t not su er any d et ri me nt al treatment from either the Com pany or colleagues as a re sul t of rai sin g a genu ine co nce rn . A n ind ep en den t dis clo sur e se r v ic e is ava ila bl e at : ht tps:// petronor .integrit y. comply log.com /. No c as es we re re por te d dur in g the y ear . Res pon sib ilit y f or E SG Th e Bo ar d wil l eva lua te t he Gr oup' s v isio n and s tr ate g y a t lea s t on a yea rl y ba sis . Th e Bo ar d has th e ove ra ll res po nsi bil it y for t he man age men t an d sup er v isio n of t he ac ti v i tie s in gen era l. T he CE O is re spo nsi ble f or th e Com pan y ’ s dai ly o pe rat io ns an d en sure s th at a ll ne ce ss ar y inf or ma tio n is pr es ent ed to t he B oar d. Th e Bo ar d dec ide s th e s tra te g y of t he Co mpa ny an d is the nal d ec isio n in ne w pro jec t s and /or invest ments . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 29 ES G report St a te m e n t o n co r p o r a te go v e r na n ce i n Pe t ro N o r E& P PetroNor E&P A SA ( “ PetroNor ” o r “ the Company ” , and with its sub sidiaries; the “Group ” ) asp ires to ensure conden ce in the Company and the greatest pos sible value creation over time through e cient decision making , clear div ision of roles bet we en the sharehold ers , the management and the B oard of Direc tor s (“ the Boar d ” ) as we ll as adequate communication . Pet ro Nor s ee k s to com pl y wi t h all th e re quir em ent s cov ere d in T he No r w eg ian Co de of Pr ac t ice f or Cor po ra te Go ver na nce (t he “ Co de ” ) . Th e lat es t ver s ion o f th e Code o f 1 4 O c tob er 2 021 is av ail abl e on t he we bsi te of t he No r w eg ian Co rp or ate Governance Board, w w w.nues.no . Th e Cod e is ba se d on t he “co mp ly o r ex pl ain ” pr in ci ple , in t hat companies should explain alternative approaches to an y spe ci c re com me nda ti on. T h e Comp any a lso se ek s to co mpl y w it h th e Os lo Sto ck E xch ange Co de of Pra c t ice fo r Inv es to r Rel at ion ( IR) o f 1 Jul y 201 9. 1 : IMPLEMENT A TION AND REPORTING ON C ORPORA TE GO VERNANC E Th e mai n obj ec t i ve fo r Pet roN or ’s Cor p ora te Governance is to develop a strong , sust ainable an d comp et i ti ve co mp any i n th e be s t int ere s t of th e sha reh ol der s , em plo ye es a nd so ci et y at l arg e, wi t hin t he la ws a nd re gul at ion s of th e res pe c t iv e cou nt r y. Th e Bo ard of D ire c to r s (th e Bo ard ) and man age men t aim fo r a con tro ll ed an d pro t a ble de vel op men t and l ong -t er m cre at ion of g ro w t h th rou gh we ll -f oun de d gove rn an ce pr inc ipl es a nd risk management. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 30 Corporate governance Th e Bo ar d wil l gi ve hi gh pr io ri t y to nd ing t he mo st a ppr op ria te wo rk in g pro ce dure s to ac hie ve , int er al ia , th e aim s cove re d by t hes e Cor p ora te Go ver na nce g uid eli ne s and p ri nci ple s . Th e Cod e comp r ise s 1 5 poi nt s . Th e Cor po rat e Go ver na nce r epo r t i s ava ila bl e on t he Com pa ny ’s website ww w.petronorep .com . 2: BUSINES S Pet ro Nor i s a fu ll c y cl e oil a nd ga s ex pl ora ti on an d pro duc ti on com pa ny li s ted o n th e Os lo Sto ck E xcha nge w it h th e tic ker PN OR . Pe tro No r hol ds ex pl ora ti on an d pro du c ti on as se t s in Af r ic a. Th e Com pan y ’ s bus ine ss i s de ne d in th e Ar t icl es of A s soc ia tio n §3 , wh ic h st a te s: “ T he co mpa ny ’ s b usin es s is to i nve s t in com pan ie s and entities tha t are involved in the energ y indust r y and t he o il an d ga s indu s tr y wor ldw ide , a s wel l as investmen t acti vities and other related ac tivi ties” Th e Com pan y is fo cus ed o n gro wi ng pr odu c t ion an d res er ve s by l eve ra gin g ex is t ing a ss et s to ca pi t ali se on n ew ve nt ure o pp or t un it ie s comb ine d wi t h ta rge te d hig h imp ac t e xp lo rat io n. W it h st rategic and long-term large shareholders fr om A bu D hab i and N or way, Pet ro Nor w ill l oo k to c api t al ise o n th e ind us t r y e x per ie nce a nd gov er nme nt re lat io ns in t he se jur is di c ti ons . Pet ro Nor ’s v isi on is to: ■ Be com e a lea din g ful l - c yc le E& P co mp any. ■ Use o ur e xp er ie nce a nd co mpe te nce in enh an cin g val ue in p roj ec t s i n Af r ic a to th e be ne t of t he co unt r ies w e ope ra te in an d th e sha reh ol der s of t he Co mpa ny. ■ Crea te v alu es f or t he sh are hol de rs i n a sus t a ina ble m ann er w her e due re gar ds ar e given to economical, social and environmental is sue s. T he B oa rd w ill e val uat e th e Gro up's v isio n an d s tra te g y a t lea s t on a ye ar l y bas is , also includ ing input from shareholders not dir ec t l y rep res en te d in th e Boa rd of D ire c to rs . T he o il an d ga s e xp l or at i on an d p ro du c t io n in du s t r y is a hig h -r is k-hi gh - re war d ind us t r y w he re Pet ro No r is ex po se d to th e u c tu at ion s in th e oil pr ic e, ri sk s inv ol ve d in pe tr ole um pr odu c t ion a s wel l as dr illi ng of pr odu c t ion , app ra is al an d ex plo ra tio n we lls . Th e Com pan y wi ll se ek op po r t uni t ies a cro ss i t s core reg io n bu t may o pp or t un is ti c all y in ves t o ut s ide o f it s co re are a. Pet ro Nor w il l aim to s te adi ly b uil d and i ncr eas e it s re se r ve ba se w hil e usi ng fr ee c ash ow to pur s ue de n ed e xp lor at ion t ar ge t s in se le c te d and hig hl y pr osp ec t i ve b asi ns wi t h a vie w to de li ve rin g sig ni c an t val ue to i t s sha reh old er s f rom hi gh imp ac t wel ls wh ils t b ein g a goo d cor por at e cit ize n and promoting excellence i n operations and innovation. PetroNor has implemented corporate values, ethical guidelines and guidelines for c orp orate so cia l res po nsib ili t y. T he se v alu es an d gu ide lin es are d es cr ib ed in P et roN or ’s Cod e of Co ndu c t wi t h fur t her d et ai ls in in ter na l pol ic ies . In acc orda nce w i th t he No r w eg ian Ac cou nt ing Ac t , t he Co mp any a nnu all y re po r t s on m at ter s rel at ing t o env ir onm en t al an d so cia l is sue s , lab our environment, equalit y and non- discrimination, the com pli anc e wi th hu man r ig ht s , an d the co mb at of corruption and briber y . Th e Bo ar d of Dir ec t or s ev alu ate s th e Comp an y ’ s obj ec ti ve s , st ra teg ie s and r is k pro le s yea rl y. 3: EQUIT Y AND DIV IDENDS Th e oil a nd ga s E& P busi ne ss is h igh l y cap it a l dep en de nt , re qui rin g Pet ro Nor t o be su c ien tl y ca pi t ali se d. Pe tro No r ’s B oa rd of D ire c to rs w ill ens ure t ha t th e Comp an y at al l ti me s has a n equ it y ca pi t al a t a lev el a ppr opr ia te to i t s ob jec ti ve s , s tr ate g y a nd r isk pr ol e. T he Bo ar d nee ds to b e pro ac ti ve i n ord er fo r Pe tro No r to be p rep are d fo r cha nge s in th e mar ket . Man da tes g ra nte d to t he Bo ar d to in cre as e the Com pan y ’ s sha re ca pi t al or to p urc has e ow n sha res wi ll no rm all y be r es t ri c te d to de ne d pur p ose s an d are no rm all y li mit ed in t im e to th e foll ow in g yea r ’ s annu al gen er al me et ing . A ny acq uis it io n of Pe tro No r -s har es w ill b e ca rr ie d ou t thr oug h a reg ul ate d ma rket pl ace a t ma rket p r ice, a nd th e Comp an y wil l not d ev ia te fr om th e pr inc ip le of eq ual t rea tm en t of all sh are ho lde r s. I f th ere is li mit ed l iqu idi t y i n th e Comp an y ’ s sha res a t th e tim e of su ch tr ans a c ti on , the Co mp any w ill con sid er ot her w ay s to en sure e qua l tre at me nt of all s hare ho lde r s. Ma nd ate s gra nt ed to t he Bo ar d for i ssu e of sh are s for di ere nt pu rp os es w ill e ach be co nsi der ed se pa ra tel y by t he gen er al me et ing . Pay me nt of di v id en ds w ill be co nsi de red i n the fu t ure , bas ed o n th e Com pa ny ’s c api t al s t ru c t ure an d div i den d ca pa ci t y a s well a s th e ava ila bil it y of alternati ve investment s. 4: EQU AL TRE A TMENT OF SHAREHOLDERS Pet ro Nor h as on e cl ass o f sha re s rep res en ti ng on e vot e at th e ann ual ge ner al me et in g. T he A r t ic le s of A s soc ia tio n con t ain s no re s tr ic ti on re gar din g th e ri gh t to vote . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 31 Corporate governance A ny de cis ion t o de vi ate f ro m th e pr inc ip le of e qua l tr eat me nt by w ai v ing t he pr e - emp ti on r igh t s of ex is t ing s har eho ld er s to su bs cr ibe f or sh are s in t he ev ent o f an inc rea se in s har e cap it a l wi ll be ju s ti e d and disclosed in the stock exchange announcement of th e inc rea se in s har e ca pi ta l. Su ch de v iat io n wi ll be m ade o nl y in th e com mon in te res t of t he sha reh ol der s of t he Co mpa ny. T ran sa c t ion s in Pet roN or sh are s wi ll be m ade o ver th e s toc k exc han ge or b y oth er m ean s at ma rke t pr ice s. I f th ere is a li mi te d liqu idi t y i n the P et roN or sha res , t he Bo ar d wi ll con sid er ot her w ay s of dea lin g wi th e qua l tre at me nt of sh are ho lde r s wh en mak in g tr ans ac ti ons i n th e Pet roN or s hare s 5: S HARES AN D N EGO TIABI LITY Th e sha re s of Pet roN or ar e lis te d on t he Os lo St ock E xcha nge. T he re ar e no res t r ic t ion s on ow ne r shi p, tr adi ng or v ot ing o f shar es i n Pet roN or ’s A r t ic le s of As sociation. 6: GENER AL MEETINGS Pet ro Nor ’s a nnu al gen er al me et in g is to b e hel d by th e end o f Jun e eac h year. Th e Bo ar d wil l ta ke nec es sa r y s t eps t o ensu re th at as many shareholders as possible may exercise th eir r ig ht s b y par t ici pa tin g in ge ner al me et in gs of t he Com pa ny, and t o ens ure t hat g ene ral me et ing s ar e an e ec t i ve fo ru m for t he v ie ws of sha re hol de rs a nd th e Bo ard . T he com pa ny sha ll ar ra nge t he ge ner al me et in gs s o th at t he shareholders can at tend by elect ronic means, unl es s th ere is a r eas on to re f use . A n inv i ta ti on an d age nda ( inc lud ing p rox y ) wi ll be se nt ou t no l ate r th an 21 da ys p ri or to t he m ee ti ng to all s har eho ld er s in th e Com pan y. The in vi t at io n wi ll al so be d is tr ib ut ed as a s to ck e xcha nge notica tion. The i nv itat ion and suppor t information on t he re so lu ti ons to b e co nsid ere d at t he g ene ral me et ing w ill f ur th er mo re no rm all y be p os te d on th e Comp an y ’ s web si te w w w.petronorep.c om no lat er t han 21 da y s pr ior t o th e dat e of th e gen era l meet ing. Th e re comm en dat io n of th e Nom ina ti on Com mit te e wi ll nor ma ll y be a vai lab le on t he Com pan y ’ s web si te at t he s am e tim e as th e not ice . Pet ro Nor w il l ensu re th at t he re so lu tio ns an d sup po r t ing in fo rm at ion di s tr ib ute d ar e su ci ent l y de ta il ed an d comp re hen si ve to al lo w shar eho ld er s to fo rm a v ie w on all m at t er s to be co nsi der ed a t th e mee t ing . Acc ord ing to A r ti cl e 7 of th e Com pa ny ’s A r t ic les o f A s soc ia tio n, r eg is tr at io ns fo r th e Comp an y ’ s ann ual gen era l mee t ing mu s t be re cei ve d at l eas t ve ca le nda r day s be fo re th e mee t ing is h eld . Th e Ch air pe r son o f the B oa rd , as wel l as th e Com pan y au dit or an d CE O of th e Com pa ny, shal l be p res en t at t he ge ner al m ee tin gs , u nle ss t he cir cum s t anc es pr ec lud e suc h. T he ch air p er so n of th e Nom ina ti on Co mmi t te e as we ll as ot he r dir ec t or s sho ul d at t end t he ge ner al me et in gs . A n independent person to chai r the general meet ing wi ll, t o the e x te nt p os sib le, b e app oin te d. No rm all y th e gene ra l mee ti ng s wi ll be c hair ed by t he Com pan y ’ s ex t er nal co r por ate l aw ye r . Sha reh ol der s w ho ar e una ble to a t te nd in p er s on wi ll be g i ven t he op po r t uni t y t o vote b y prox y. Th e Com pan y wi ll no min ate a pe r so n wh o wil l be a vai lab le to v ote o n be hal f of sh are ho lde r s as th ei r prox y. Inf or ma ti on on t he pr oce dur e for rep re sen t at io n at th e me et ing t hro ug h prox y w il l be s et ou t in t he no tic e for t he gen er al me et ing . A for m fo r th e app oin tm ent o f a prox y, wh ic h allo w s se par at e vot ing i ns t ru c ti ons f or ea ch m at t er to be co nsi der ed b y th e mee t ing a nd fo r eac h of th e ca ndi dat es n omi nat ed fo r ele c t ion s wi ll be pre pa red . Di v ide nd , rem une ra tio n to th e Bo ard a nd th e ele c t io n of th e au dit or , ar e amo ng t he ma t t er s th at w ill b e dec ide d at t he an nua l gene ra l mee ti ng. Af te r the m ee ti ng , t he mi nu te s are re le ase d on t he Company ’s website . 7: NOMINA TION COMMIT TEE Acc ord ing to A r ti cl e 8 of th e Com pa ny ’s A r t ic les o f A ssociat ion, the company shall have a nominat ion com mi t te e of up t o thr ee m emb er s , to b e ele c t ed by t he gen era l me et ing . Th e nom ina ti on co mmi t te e shall pr esent proposals to the g eneral meeting reg ard ing ( i) e le c t ion o f th e cha ir of t he B oa rd, dir ec t or s an d any d ep ut y me mbe r s, a nd ( ii ) ele c t ion of me mb er s of th e nom ina ti on com mi t te e. T he nomination committee shall also present proposals to t he gen er al me et in g for r emu ner at ion o f th e Bo ard a nd t he no min at ion co mmi t t ee, w hi ch is to be d ete rm ine d by t he gen era l me et ing . Th e gen era l me et ing s hal l ado pt in s tr uc ti ons f or t he nom ina ti on co mmi t te e. D ue to t he Com pa ny 's current shareholder composition, the Nomination Com mit te e wi ll not n ece ss a ri ly b e ind ep end en t of th e maj or sh are hol de rs a nd th e com pa ny wi ll con ti nuo usl y co nsid er t his ma t t er an d wh et her t o later propose a more independent appoi ntment of th e Nom ina ti on Com mi t te e. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 32 Corporate governance 8: BOAR D OF D IR EC T OR S – COM POS IT ION AND INDEPENDENCE Th e com po sit io n of th e Bo ard e nsur es t hat t he Bo ard r ep res en t s th e comm on i nte res t s o f all sha reh ol der s a nd me et s t he Co mp any ’s n ee d fo r ex pe r t is e, c apa ci t y a nd di ve r sit y. Th e mem ber s of th e Bo ard re pre s ent a w ide r ange o f ex pe ri enc e including upstream E&P indus tr y, oil ser vice, en er g y po li ti cs a nd n anc e. Th e com pos it io n of th e Bo ard e nsu re s tha t i t ca n ope ra te in dep en de nt ly of an y spe cia l int ere s t s. M emb er s of t he Bo ar d are n or mal ly e le c te d for a pe r iod of t wo ye ar s . Re cr ui tm ent o f mem be rs o f th e Bo ar d may b e pha se d so t ha t th e ent ir e Bo ard i s not r epl ace d at t he s ame t im e. Th e Ge ner al Me et in g ele c t s the Chairperson and deput y chairperson (if any ). T he Co mpa ny ’s we bs ite a nd an nua l rep or t pro v ide d et ai led i nfo rm at io n abo ut t he di rec tor s' ex pe r t is e and in de pe nde nce . Th e Comp any h as a pol ic y wh ere by th e mem be r s of th e Boa rd ar e en cour age d to ow n sha res i n the Co mp any, bu t to dis su ade f ro m a shor t-t er m app roa ch w hic h is not i n th e be s t int ere s t s of t he Com pa ny an d it s sha reh ol der s ov er t he lo nger t er m. Th e Bo ar d is to be co mpo se d of at l eas t 2 me mbe r s wh o are in dep en den t of t he Com pa ny 's maj or sh are hol de r s, a nd mo re t han h al f of t he me mbe r s are to b e ind epe nd ent o f the Co mp any ' s man age men t and m ate ri al bu sin es s rel at ion s. Th e Bo ar d hel d a tot al of e igh t me et ing s in 2021. Th e at ten dan ce ra te for t he M emb er s of t he Bo ar d ca n be fo un d in th e Boa rd of D ire c to rs ’ r epo r t o n pa ge 62. 9: THE WO RK O F THE B OAR D A ND SUB - COMMIT TEE S Th e Bo ar d has th e ove ra ll res po nsi bil it y for t he man age men t an d sup er v isio n of t he ac ti v i tie s in gen era l. T he CE O is re spo nsi ble f or th e Com pan y ’ s dai ly o pe rat io ns an d en sure s th at a ll ne ce ss ar y inf or ma tio n is pr es ent ed to t he B oar d. Th e Bo ar d dec ide s th e s tra te g y of t he Co mpa ny an d is the nal d ec isio n in ne w pro jec t s and /or inv es t me nt s . Th e Bo ard ’ s ins t ru c t ion s for i t s ow n wor k as w ell a s for t he exe cu ti v e mana gem en t hav e par ticular emphasis on clear int ernal allocation of re spo nsi bil it ie s and d ut ie s. T he C hai rp er so n of t he B oar d ens ure s th at t he B oa rd ’s d ut ie s are un de r t ake n in e cie nt an d cor re c t ma nne r . Th e Bo ar d has es t a bli she d se pa rat e rul es o f pro ce dure s fo r it s wo rk . Su ch r ule s of pr oce dur e als o ad dre ss h ow th e Bo ard a nd ma nage me nt sh all dea l wi th a gre em en t s wi th re la ted p ar ti es , an d in pa r t icu lar w he th er in de pen de nt va lua ti ons o f such ag ree me nt s sh oul d be ob t ain ed. I n add it io n, t he Bo ard w il l rep or t o n suc h agr ee men t s in it s a nnu al repor t. Th e Bo ar d shal l st a y inf or me d of th e Comp an y ’ s na nc ial p osi ti on an d ens ure ad eq uat e con tro l of ac ti v it ie s, a cco unt s an d as se t man agem en t. Th e dir ec t or ’s ex pe ri en ce and s ki lls ar e cr uci al to th e Comp an y bot h fr om a na nc ial as w ell a s an operational perspec tive. A n ann ual s ch edu le fo r th e Bo ar d mee t ing s is pre pa red a nd di sc uss e d toge th er w it h a year l y pla n for t he w or k of th e Bo ard . Th e Bo ard w ill co nsi de r ev alu at ing i t s per fo rm anc e and e xp er ti se an nua ll y. Th e Com pan y has g uid el ine s to ens ure t ha t me mbe r s of th e Bo ar d and e xec ut i ve p er so nn el not i f y t he B oa rd i f th ey ha ve a ny ma ter ia l dire c t o r ind ire c t in ter es t i n any t ran s ac t ion e nt ere d int o by th e Comp an y. Sh ou ld th e Bo ard n ee d to ad dre ss ma t te rs o f a mate ri al ch ara c te r in wh ich t he Ch air pe r son i s or ha s be en p er so nal ly i nv ol ve d, t he ma t te r wil l be ch air ed by a n inde pe nd ent m emb er of t he B oar d to en sur e a mor e ind ep end en t consideration. Th e Bo ar d has es t a bli she d an Au di t & Ris k Com mit te e and a R em une rat io n Com mit te e as A s soc ia tio n, o f the B oa rd. Th e Au di t & Risk Co mm it t ee sh all co nsi s t of at lea s t th ree m em ber s a pp oin ted b y an d amo ng t he Bo ard . A ll me mbe r s of th e Aud it & R isk Co mmi t t ee mus t b e no n - exe cu ti ve d ire c to r s, a m ajo ri t y of t he me mb er s sh oul d be in de pe nde nt of t he man age men t an d th e Comp an y, and th ere m us t be a deq uat e acco un tin g and nan ce com pe ten ce amo ng t he me mb er s of th e com mit te e. T he Au di t & Ri sk Com mit te e's ro le is to s upe r vi se t he Gr oup' s acc oun ti ng an d nan cia l pe r fo rm an ce, as w ell as en sur in g th at ad eq uat e int er nal c ont ro l and rep or ti ng re qui rem ent s e xi s t. T he r ole i s fur t her de ta il ed in a s ep ara te A udi t & R isk Co mmi t t ee C h a r t e r. Th e Rem une ra ti on Com mi t te e sha ll con sis t of up t o th ree m emb er s ap po int ed by a nd am ong t he B oar d. A ll me mb er s sha ll be i nd epe nd en t of th e man age men t . Th e Remu ne rat io n Comm it tee ’ s rol e is to a ss is t an d ad v ise t he B oa rd on m at ter s rel at ing t o th e rem une ra tio n of t he B oar d an d man age men t , as we ll as s ala r y, bo nus a nd be ne t po lic ies f or t he em plo ye es in ge ner al. T he r ole is f ur t he r de t ail ed in a s ep ar ate R emu ner at io n Com mit te e Cha r te r . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 33 Corporate governance 1 0: RISK MANAG EME NT AN D I NTERNAL CONTROL Fi nan cia l and i nte rn al con tr ol , as we ll as sh or t- an d lon g- ter m s tr ate gi c pla nn ing an d bu sin es s development, all acc ording to PetroNor ’s busi ness ide a and v is ion a nd ap pli ca bl e law s an d reg ula ti ons , are t he B oa rd ’ s res pon sib ili t ies a nd t he e ss en ce of it s w or k. T hi s emp has ise s th e foc us on e nsu ri ng pro pe r na nci al an d inte r nal co nt rol , inc lu ding r is k con tr ol s y s tem s. Th e Bo ar d app rov es th e Com pan y ’ s s tra te g y an d lev el of a cce pt ab le r isk , a s do cum en ted i n th e gu idin g to ol “ R isk M ana gem ent ” d es cr ibe d in th e rel ev an t note i n the co ns oli dat ed n anc ial s t ate me nt s in t he A nnu al Rep or t . Th e Bo ar d car r ie s out a n ann ual re v ie w of th e Com pan y ’ s mo st i mp or t a nt a reas o f ex po sur e to ri sk an d it s in ter na l cont ro l ar ran gem ent s . Fo r fu r t he r det a ils on t he u se of n an cia l ins t r ume nt s , re fer t o rel ev ant n ote i n th e con sol ida te d na nci al s t ate me nt s in t he A nnu al Rep or t an d th e Comp an y ’ s gui din g too l “ F ina nci al Ri sk Ma nage me nt ” de sc ri be d in re le van t not e in th e cons ol ida ted nan cia l s t ate men t s in th e A nnu al Repor t. 1 1: RE MU NER ATIO N OF TH E BOA RD O F DIREC TOR S Th e rem une ra ti on to th e Bo ar d wil l be de ci ded b y th e An nua l Ge ner al Me et in g eac h year. Pet ro Nor i s a div er si e d com pan y, and th e rem une ra ti on wi ll re e c t th e Bo ard ’s re spo nsi bil it y, ex pe r t is e, th e com ple x it y and s cop e of wo rk as w ell as ti me co mmi tm en t. Th e rem une ra ti on to th e Bo ar d is not li nked to the Company ’s performance and share options sha ll no t be gr ant ed to di re c tor s . Rem une ra ti on in ad dit io n to no rma l dir ec t or ’s fe e wil l be sp ec i ca ll y ide nt i ed i n the A nn ual R epo r t . Me mbe r s of th e Bo ar d nor ma ll y do n ot t ake on sp ec i c a ss ig nm en t s fo r th e Co mp an y in ad di t io n to th eir a ppo in tme nt a s a memb er of t he B oa rd. A ny exe mpt io ns sha ll be c lar i ed w i th t he f ull b oar d. 1 2: R EMUNER A TION OF THE E XECUTIVE PERSONNEL Th e Bo ar d has es t a bli she d gu ide lin es fo r th e rem une ra ti on of th e exe cu ti v e per s onn el . Th e gu ide lin es w ill b e pre se nte d to th e A nnu al Ge ne ral Me et ing e ach y ea r and s hal l se t ou t th e mai n princip les applied in determining th e salar y and ot her re mu ner at ion o f the e xec ut i ve pe r so nne l. Th e gu ide lin es e nsur e conv er gen ce of t he na nc ial int ere s t s of t he e xec ut iv e pe r son ne l and t he sha reh ol der s . Th e gu ide lin es sh all b e cle ar an d tr ans par en t and co nt ri bu te to th e Com pan y 's s tr ate g y, lon g ter m in ter es t s an d na nci al v iab ili t y. Th e rem une ra ti on sha ll , bot h wi th r esp ec t to th e ch ose n ki nd o f rem une rat io n an d the a mo unt , en cour age a ddi ti on of v al ues t o th e Com pan y an d con tr ib ute t o th e Com pan y ’ s com mon i nte re s t s – bot h fo r the m ana gem ent a s wel l as th e ow ner s . Rem une ra ti on ba se d on pe r f or man ce wi ll no rm all y be c ap pe d upwa rd s. 1 3: INFORM A TION AND COMMUNICATIONS Th e Com pan y has e s t abl ish ed g uid eli ne s for th e Comp an y ’ s rep or t in g of na nc ial an d oth er inf or ma tio n. T he C hai rp er s on an d CEO ar e au th or ise d by t he B oa rd to s pea k to, o r be in con t ac t w it h th e pre ss . Th e Com pan y pub lis he s an ann ual nan cia l ca le nda r inc lud ing t he d ate s th e Com pa ny pl ans to pub lis h th e qua r te rl y a nd in ter im u pda te s and t he dat e for t he an nua l gene ra l mee ti ng. T h e cal en dar ca n be fo un d on th e Comp an y ’s w eb sit e and w il l als o be di s tr ib ute d as a s to ck e xcha nge no ti c at io n an d upda te d on Os lo Sto ck E xc han ge ’s we bsi te. Th e ca le nda r is pub lis he d at th e en d of th e sc al yea r , acco rdi ng to t he co nt in uing o bl iga tio ns fo r com pan ie s lis te d on th e Os lo Sto ck E xch ang e. All information to shareholders is published sim ul ta ne ous l y on th e Comp an y ’ s web si te and t o app ro pr iat e nan ci al ne ws m ed ia. Pet ro Nor n or ma ll y make s fou r qua r te rl y presentat ions per year to s hareholders , potential inv es to r s and a nal y s t s in con ne c ti on w it h qua r te rl y ea rn ing s re por t s or t rad ing u pda te s. Th e qua r te rl y p res en t at ion s are he ld t hro ug h web ina r s to fa cil it at e pa r t ici pa tio n by al l inte re s ted shareholders , analys ts , potential investors and me mbe r s of th e nan ci al com mun it y. A ques t ion - an d- an s wer s es sio n is he ld at t he e nd of ea ch pre se nt a tio n to all ow ma nag eme nt to a ns we r the que s ti ons o f at t end ee s. A re co rdin g of th e web ina r pre se nt a tio n is re t ain ed on t he Co mpa ny ’s we bsi te w w w.petronorep.c om for a li mi ted n umb er of da y s. Th e Com pan y als o make s inv es to r pre se nt a tio ns at co nfe ren ce s in Nor wa y and i nte rn at ion all y. The information packages presented at such meetings are published simult aneousl y on the Company ’s website. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 34 Corporate go vernance 1 4: T AKE- OVERS Pet ro Nor h as es t a bli she d th e fol low in g gui din g pr inc ip les f or ho w th e Bo ard w ill a c t in th e ev ent of a t ake - ov er bi d. In a bi d sit ua ti on , the B oa rd sha ll he lp to e nsu re th at s har eho ld er s are t re ate d eq uall y, an d tha t th e com pa ny ’s bu sin es s ac t i v it ie s are n ot dis ru pte d unn ece s sa ri ly. Th e Bo ard s hal l ens ure t hat s har eho ld er s are g i ven su cie nt inf or ma tio n an d tim e to for m a v iew o f rel ev ant oers. T oda y, the Bo ar d doe s not h old a ny au th or is at io ns as se t fo r t h in Se c t ion 6 - 1 7 of th e Se cur i ti es T ra din g Ac t , to e e c t uat e def en ce mea sur es i f a ta keov er bid i s laun ch ed on Pe tr oN or . Th e Bo ar d may be a ut ho ri se d by th e gene ra l me et ing to a cqu ire i t s ow n shar es b ut w ill n ot be abl e to u ti lis e th is in o rde r to ob s tr uc t a ta keo ver bid, unless approved by the general meeting fol lo wi ng th e ann oun cem en t of a ta keov er bi d. A s a ru le, t he Co mpa ny w ill n ot en ter in to ag ree me nt s wi t h th e pur po se to li mi t the Com pan y ’ s abi li t y to a rr an ge oth er b ids f or t he Com pan y ’ s sha res u nl es s it i s cle ar t hat s uch an ag re em ent i s in th e com mo n int ere s t of t he Com pan y and i t s sha reh ol der s . A s a s t ar t in g poi nt , th e sa me a ppl ies t o any a gr eem en t on t he p ay me nt of n anc ial co mp ens at io n to th e bid der i f th e bid do es no t pro cee d. A ny nan cia l comp en sa ti on wi ll as a r ule b e limi te d to th e cos t s t he bi dde r has i ncu rr ed in ma k ing t he bi d. T he Com pa ny w ill generally seek to disclose agreements entered into wi t h the b idd er t hat a re ma ter ial t o the m ar ket ’s ev alu at ion o f th e bid n o la ter t han t he t im e of th e pub lis hin g of th e ann oun cem en t tha t th e bid w ill be ma de. In th e ev ent o f a ta ke- ove r bid fo r th e Comp an y ’ s sha res , t he Bo ar d wil l not e xerc is e mand ate s or p as s any r es olu ti ons w i th t he in ten ti on of ob s tr uc ti ng th e take- over bid unless this i s approved by the g eneral me et ing f oll ow ing a nno unc eme nt of t he b id. If an o e r is mad e for t he Com pa ny ’s sh are s, t he Bo ard w il l iss ue a s t ate me nt ev al uat ing t he o er an d mak ing a re com me nda ti on as to w he th er shareholders should or should not accept the oe r . Th e Bo ard w ill a lso a rr ange a v alu at ion w it h an e xp lana t ion f rom a n ind epe nd en t ex per t . Th e va lua tio n wi ll be m ade p ubl ic no la te r tha n at th e ti me of t he p ubl ic di scl os ure of t he B oa rd ’ s s t ate me nt . An y tr ans ac ti ons t hat a re in e ec t a dis pos a l of th e Comp any ’s a c t iv i ti es w ill b e dec id ed by a gen era l me et ing . 15: AUDITOR Th e au dit or w ill b e app oin te d by th e gene ral m ee ti ng. Th e Bo ar d has ap poi nte d an A udi t & Ri sk Com mit te e as a sub - c omm it tee o f the B oa rd , whi ch wi ll me et w it h th e aud it or re gul ar l y. T he a udi tor sha ll on a n ann ual b asi s sub mi t an a ddi ti ona l rep or t to th e aud it co mmi t t ee in w hi ch it d ec lar es it s i nde pe nde nce a nd e xp lai ns t he re sul t s of t he s t at uto r y aud it c ar r ie d ou t by pr ov idi ng a ra nge of inf or ma tio n ab ou t the a udi t . Th e au dit or w ill s end a co mp let e Man agem en t Le t te r/Rep or t to th e Bo ard – w hic h is a sum mar y rep or t of ri sk s fa ced b y the b usi ne ss . Th e au dit or pa r t ici pa tes i n mee ti ng s of th e Bo ard t ha t dea l wi th th e ann ual ac cou nt s , wh ere t he au di tor r ev ie ws any m ate ri al c han ges in t he Co mp any ’s a cco unt in g principles, comments on any mat erial es timated acc oun ti ng g ure s and r epo r t s al l mat er ial m at t er s on w hic h th ere ha s be en dis a gre em ent b et we en th e aud it or an d th e exe cu ti v e man agem en t of th e Company . In v ie w of th e audi to r ’ s ind epe nd enc e of th e Com pan y ’ s exe cu ti v e mana gem en t , the a ud ito r is als o pr es ent i n at l eas t o ne B oar d me et ing e ac h yea r at w hic h nei t her t he CE O nor o th er me mbe r s of th e exe cu ti ve m ana gem ent a re pre se nt . T he Bo ard s hal l on an an nua l bas is re vi ew t he in ter na l con tr ol pro ce dur es jo int l y wi th t he au di tor, inc lu ding w eak n es se s ide nt i ed by t he a udi tor a nd assess proposals for i mprovement. PetroNor places impor t ance on independence and has est ablishe d guidelines in respec t of ret aining th e Com pan y ’ s ex ter na l aud it or by t he Co mp any ’s exe cu ti ve m ana gem en t for s er v ice s ot her t ha n th e audit . Th e Bo ar d rep or t s t he re mun er at ion p aid to t he aud it or a t the A n nua l Ge ner al M ee tin g , in clu din g de ta ils o f the f ee p aid f or au dit w or k and a ny fe es pa id fo r oth er sp ec i c as sig nme nt s . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 35 Corporate governance E Y AS ALHOMOUZ Chai rman of t he Bo ard Qualic ations: Mr A lh omo uz g rad uat ed f ro m Br ig ham Young Uni v er si t y in Pr ovo , UT w i th a de gre e in Ch em ic al Eng ine er in g and f ro m th e Col ora do S ch oo l of Min es , in Go ld en , CO wit h a mas t er 's de gr ee in M ine ral an d Ener g y E con omi cs . Exp erience: Mr A lh omo uz ha s a s tr ong e xp er ie nce f ro m th e oil an d gas s ec t or co ver in g th e US , Nor t h Af ri c a, an d th e GCC. H e beg an his c ar ee r wi th S ch lum ber ger Oil eld S er v ice a s a wir eli ne en gin ee r in Mid lan d, T ex as . Fro m the re he w ent o n to wor k fo r Crom we ll Ene rg y in De nve r , Col ora do, a s inte rn at ion al bus ine s s dev elo pm en t mana ger . T hen , as a COO an d nan cia l dir ec t or of Pr ism S ei smi c, h e ove rs a w th e gro w t h of th e Col ora do b ase d con sul ti ng an d oil a nd gas s of t wa re de ve lop me nt r m an d late r th e acq uis it ion o f th e com pan y by Si gm a Cube d, wh ere , po s t-acq uis it io n of Pri sm S eism ic , he we nt on to s er ve a s a dir ec t or of b usi ne ss de ve lo pme nt , Mid dle E as t . Mr . A lho mo uz' s ca ree r th en to ok hi m to Qa t ar as a ge ne ral m ana ger of J ai dah En er g y, an Om ani - Qa t ar i ow ne d com pan y se r v ic ing t he oi l an d gas se c to r in Qa t ar . Mr . Al hom ouz i s cur re nt ly th e CEO o f Pet ro mal S ol e Pro pr iet or sh ip LLC , a sub sid iar y of Na ti ona l Hol din g in A bu Dh ab i. Mr Alhomouz is not independent of the main shareholding. JOSEPH ISK ANDER Direc tor Qualic ations: Mr Is kan de r hol ds a De gr ee in A ccou nt ing a nd Fi nan ce w it h hig h dis t inc ti on fr om He lw an Uni v er si t y, Eg yp t . Exp erience: Mr Is kan de r br ing s ov er 20 ye ar s of ex pe ri en ce in th e na nc ial s er vi ce s indu s tr y, cove ri ng as se t man agem en t , pr i vat e eq uit y, por t f oli o man age men t , na nci al re s tr uc tur in g , res ea rch , ba nk ing , a nd au di t. H e beg an his c ar ee r at De loi t t e & T ouc he (E g y p t) as an A udi to r . M r . Iska nd er se r ved as No n -E xe cu ti v e Dir ec t or on t he bo ar ds of EF G He rm es in E g y p t , Oas is Ca pi t al B ank i n Ba hra in , Sun H ung K ai & C o in Ho ng Kon g , Qal aa Ho ld ing s in Eg y pt , Emi rat es Re t ak af ul in UA E , Mar n L ai ki B ank in Cypr us an d Mar n I nve s tm en t Gro up in G ree ce. Mr . Isk an der h ead ed t he re se arc h tea m at Eg y pt ’s Pr ime I nve s tm en ts a nd wa s ear lie r an in ve st me nt ad v is or at Co mme rci al In ter na ti ona l Ba nk (CIB) . He t hen w ent o n and j oin ed Du ba i Gro up as a n inv es t me nt ma nage r in 20 0 4 an d has w or ked on a ran ge of M& A t ra ns ac t io ns , ad v is or y se r v ic es , as se t man agem en t , and p r iv at e equ it y tr ans a c ti ons wi t h a coll ec t i ve va lue i n exce ss of U SD 8 bil lio n. Mr . Isk an der w as ma nag ing d ire c to r of ass et man age men t at Du ba i Gro up an d th e for me r hea d of re sea rc h at Du bai C ap it a l Gro up un til 2 0 09. He joi ne d Emir ate s Int er na tio nal I nve s tm en t Comp an y in Ju l y of 201 7 as t he d ire c to r of pr i va te eq ui t y spe ar he adi ng an d mana gi ng EII C ’s in ve st me nt s . EII C is a sub sid iar y of Na ti ona l Hol din g in A bu Dhabi. Mr Iskander is not independent of the main shareholding. Bo a r d o f D i r ec t ors PETRONOR E&P ASA AN NUA L R EP OR T 20 21 36 Board of Director s INGV IL SMINES T YB RING - GJEDDE Direc tor Qualic ations: Ms Sm ine s T y br in g- G jed de gr ad uat ed f rom B I Nor we gi an Bu sin es s Sc ho ol w it h a Mas te r s deg re e in Ma nage men t Pro gr ams , w it h s tro ng fo cu s on int era c t ion , an d lea der s hip, a nd s tr ate g y. Exp erience: E xp er ien ce d for me r Nor we gia n min is te r of nat io nal pub lic s ec ur it y w it h ove ral l res po nsib ili t y of pub lic sa fe t y, eme rg enc y pla nni ng , an d c y be r se cur i t y. Mr s T y br in g Gje dde w as al so mi nis te r of Sva lba rd an d the N or weg ia n pol ar re gio ns . Be for e her po sit io n as mi nis te r , she s er ve d as d ep ut y min is te r in th e Min is t r y o f Pet rol eu m and En er g y for 4 y ear s , wi t h a por t fo lio o f ex plo ra tio n po lic y, development, operations , exploration acti vit y , th e Min is tr y 's co nt a c t wi t h oth er pe t rol eum - producing countr ies and internat ional forums , in ad dit io n to th e gove rn me nt 's na t ion al cli ma te polic y, global environment al issues, and the gov er nme nt 's CC s fu ll -s ca le pr oje c t . Mr s T y br in g Gje dd e has a de mo ns tr at ed hi st or y of wo rk in g in th e O& G , ene rg y, and ren ew ab le in dus t r y i n pr iv at e an d st a te - ow n ed co mpa nie s in va ri ous l ead ing po sit io ns fo r mor e tha n 20 yea rs . Ms Smines T ybing- Gjedde is an independent dir ec tor . GRO KIELL AND Direc tor Qualic ations: Mr s K iel lan d ho lds a n MS c in M ech ani c al Eng ine er in g fro m th e Nor we gi an Uni v er si t y of Sc ien ce an d T ech no log y (N T NU) . Exp erience: Mr s K iel lan d has o ve r 30 y ear s of e x per ie nce h av in g he ld a nu mbe r of l ead ing p osi t ion s in th e oil a nd gas in du s tr y bot h in No r w ay an d abr oa d, am on g ot her s as C EO of B P Nor wa y . He r pro fe ssi ona l ex pe ri en ce inc lud es w or k rela te d to bot h op era ti ons a nd e ld de ve lop me nt , as we ll as H SE. Mrs Kielland is an independent director . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 37 Board of Director s JEN S PACE Inte rim Chie f E xec uti ve O c er Qualic ations: Mr Pac e hol ds a B Sc i n Ge ol og y a nd O cea nog ra phy fr om t he Un iv er si t y o f Wale s an d an MS c in Ge op hy sic s f rom Im pe ri al Col leg e, Lo ndo n, U K . Exp erience: Mr Pac e is a hig hl y reg ard ed ge osc ie nt is t , wh o has had a s ucc es s fu l ca re er at B P E xp lo rat io n Op era t ing Com pan y Li mi ted ( “ B P ” ), a nd i t s he ri t age co mp any Amoco (UK ) Explorat ion C ompany, spanning over 30 y ear s . Mr Pace h as he ld se nio r po si tio ns at B P for o ve r 1 0 ye ar s , gai ning s ub st a nt ial e xp lo rat io n an d pro duc ti on e xp er ien ce in A fr ic a , nam el y A lger ia , A ngo la, C ongo , Gab on a nd L iby a, h av ing als o e x ten de d ex pe ri en ce in Eur op e, Ru ssi a and T ri nida d. H e has co ntr ib ut ed to a nu mb er of B P ’s ex pl ora ti on di sco ve rie s ov er hi s ca re er , an d has man age d a ver y la rge a nd a c ti v e ex pl ora ti on po r t f oli o for B P in Af r ic a. A ddi ti ona ll y, Mr Pace ha s gai ne d hig hl y so ug ht-a f t er e xp er ien ce in t he a rea s of e ld de ve lop me nt an d as a com mer cia l man ager, dea lin g wi th n at ion al oil c omp ani es a nd Af r ic an governments . Fo ll ow ing t he me rge r wi t h Pet roN or E& P Lt d (C y pr us) on 3 0 Au gu s t 201 9, Mr Pa ce re sig ne d as Ch ief E xe cu ti ve O cer of Pe tr oN or E& P Li mi ted (A us t ral ia) on 29 F eb ru ar y 2020 , bu t re mai ns on th e Bo ard o f th e Aus t ra lia n comp an y as a No n - E xec ut iv e Dir ec tor . E x e c u t i v e Manag em ent PETRONOR E&P ASA AN NUA L R EP OR T 20 21 38 Executive Manageme nt CLAU S F RIMANN-D AHL Chie f T e chnic al O cer Qualic ations: Mr Fr im ann - Da hl ho ld s a a BSc in Pe t rol eum Eng ine er in g fro m T ex as A &M U ni ver s it y and a n MSc fr om th e Uni v er si t y of T ro nd hei m (N TH ). Exp erience: Mr . Fr ima nn - Dah l has 3 0 yea r s ’ ex pe ri enc e fro m th e oil an d gas in du s tr y, wi th ma nage ri al an d te chn ic al ro les . Hi s ex per ie nce co ve rs o pe rat io nal rol es w it h Phi lli ps Pe tro le um, N or sk H yd ro and He ss in t he N or t h Se a Nor wa y and D en mar k , Rus sia , Eg y pt an d th e US. H e was t he co - fo und er of Ene r Pet rol eu m whi ch wa s lat er ac quir ed by D ana Pet ro leu m and K NO C . MI CHAEL BARRETT Ex ploration Direc tor Qualic ations: Mr . Ba rr et t h as a BS c in Ge ol og y & Ge oph y sic s fr om Du rh am Un iv er si t y a nd a MS c in Pe tro le um Ge ol og y & Geo ph ys ic s fr om Imp er ia l Coll ege , Roya l Sc ho ol of Mi ne s. Exp erience: Mr . Ba rr et t h as ov er 3 0 year s g lob al e xp lo rat io n experience from his career at Chev ron C orporat ion, an d more r ece nt ly a t Ad dax / Sin ope c In ter na ti ona l an d Af ri ca n Pet rol eu m. Mr . Bar re t t ha s he ld a va rie t y of te chn ic al ro le s cov er ing e xp lo rat io n an d ne w ven tu res , an d was p ar t of Ch ev ro n’ s glo ba l E xp lor at ion R ev ie w T eam , spe ci ali sing i n Play a nd Pro spe c t r isk a ss es sm en t, v ol ume tr ic a nal y si s, com mer cia l ev alua t ion an d po r t f ol io man age men t . Mr . Ba rr et t a ls o bri ng s add ed s t ren g t h to th e tea m wi t h his ba ck g rou nd in q uan ti t at iv e geo phy s ic s, s tr at igr ap hic in ter pr et a ti on wo rk ow s an d 3D visualis atio n. Con tin ue s on ne x t p age PETRONOR E&P ASA AN NUA L R EP OR T 20 21 39 Executi ve Management EMAD SUL T AN Strat eg y a nd Con trac t s Mana ger Qualic ations: Mr . Sul t an ho ld s a BSc M ec han ic al Eng in ee ri ng de gre e fr om th e Uni v er si t y of Was hin g to n. Exp erience: Mr . Sul t an ha s 20 yea rs o f int er nat io nal e xp lor at io n an d pro duc t io n ex pe ri enc e. He ha s hel d mul ti pl e operation and mark eting management posit ions wi t h inte rn at io nal oi l el d se r v ic es co mpa nie s. He ha s als o wor ked i n a numb er of te ch nic al , con tr ac t ing a nd s t rat eg y man agem en t rol es w it h maj or oi l and ga s ope ra tor s . CHRI STOPHE R BUTLER Group Financial Contro ller Qualic ations: Mr . Bu tl er is a F ell ow of t he In s ti tu te o f Cha r te re d Acc oun t ant s i n Eng lan d and Wa le s and h as a B Sc in Phy si cs f ro m War w ic k Uni ve r sit y. Exp erience: Mr . Bu tl er ha s ove r 1 6 yea rs o f na nci al an d corporate experience from positions i n public pra c t ice , oil & ga s an d min ing sp rea d ov er A fr ic a , A sia a nd Eur ope , wi t h role s th at in cl ude d na nc ial rep or ti ng , co nt rac t neg oti at ion s, M & A , d ue dil igen ce, t rea sur y an d s y st em im ple me nt at io ns . E x e c u t i v e manag ement PETRONOR E&P ASA AN NUA L R EP OR T 20 21 40 Executive Management PETRONOR E&P ASA AN NUA L R EP OR T 20 21 41 Executi ve Management PETRONOR E&P ASA AN NUA L R EP OR T 20 21 42 Board of direc tors’ repor t Bo a r d o f D i r ec t ors ’ r e po r t PetroNor ex ited the year having at t ained soli d revenue grow th dri ven by strong market conditions with produc tion improving as fore cas ted. The s hare placement and subsequent o ering streng the ned the Group's balance sheet . PetroNor success fully redomiciled to Nor way and up- lis ted to the main list of the O slo Stock exchange, giving shareholder s access to a more liquid mark et for shares. W ith the se lf-funde d In ll drilling programme in Congo progres sing as planned and the recent approval of the Aje trans ac tion, PetroNor is well positione d to f ull it s amb itious grow th s trateg y from both its e xis ting por t folio and new opp or tunities. Th e bo ard o f dire c to r s' rep or t is pre se nt ed fo r Pet ro Nor E & P A S A (“ P et roN or ” or t he “ Com pa ny ” ) for t he ye ar en de d 31 Dec emb er 2021. DI RECTORS & C OM P ANY S ECRET ARY th e nam es of D ire c to rs o f the u lt ima te p are nt en ti t y of th e Gr oup in o ce du ri ng th e na nc ial ye ar an d unt il t he da te of t his re po r t ar e as fol low s . Dir ec tor s we re in o ce for t hi s en ti re pe r io d unl e ss ot h er w is e s ta ted. PetroNor E&P Limited Role App ointed Resigne d E Alhomouz N on- Exec Ch air - - J Isk an der No n - E xec Di rec tor - - J Pace No n- E xe c Dir ec t or 1 Mar ch 20 20 - I Smi ne s T y br ing - Gj ed de Non - E xe c Dir ec t or 29 Ma y 2020 - G Kielland No n- E xe c Dir ec t or 1 Fe br ua r y 2 021 - A Neuling No n- E xe c Dir ec t or 6 A p ri l 2020 R Steinepr eis No n- E xe c Dir ec t or 6 A p ri l 2020 G Ludvig sen E xec ut i ve Di rec tor 2 9 May 2 020 3 1 Januar y 202 1 A Hicks Company Secret ar y - - Th e nam es o f the d ire c to r s of Pet ro Nor E &P A SA , sin ce in cor po ra tio n to th e en d of th e na nci al ye ar 2021, are as fo llo w s: PetroNor E&P A SA Role Appointed Resigned E Alhomouz Ch air o f th e Bo ard 1 Oc tob er 20 21 - J Isk an der Direc to r 8 Oc tob er 20 21 - J Pace Direc tor 1 Oc t ob er 2021 9 Fe br ua r y 2 022 I T y br ing - G jed de Direc tor 1 Oc t ob er 2021 - G Kielland Direc tor 1 Oc t ob er 2021 - OVE RV IE W O F THE B US INE S S Th e bo ard o f dire c to r s ’ rep or t for t he Pe tro No r gro up com pr ise s Pe tro No r E& P A S A ( “ th e par en t comp an y “ ) an d all s ubs idia ri es an d as so cia te d comp an ies . Pet ro Nor E &P A SA , is a No r w egi an pu bli cl y lis t ed lia bil it y com pa ny w it h it s he ad o ce in Os lo, No r w ay. We are an in dep en de nt oil a nd gas e xp lo rat io n and p rod uc t io n comp an y wi th our p or t fo lio o f ass et s i n coun tr ie s o sh ore We s t Af r ic a (Re pub lic o f Congo , Th e Gam bia , Gu ine a - Bis s au , Se neg al an d Nige ri a). Th e Com pan y hol ds , th rou gh i t s Cong o subs idi ar y, 2P res er ve s of 20 .6 MMb bl s and a pr odu c t ion PETRONOR E&P ASA AN NUA L R EP OR T 20 21 43 Board of di rec tors ’ report ave ra gin g aro und 3 , 47 3 bop d as o f yea r - en d 2021.In ad dit io n, Pe tr oNo r ho lds a p or t fo lio of ex pl or at ion li cen ce s in Gui nea - B is sa u, T he Ga mbi a and S ene ga l wi th n et un ris ked pr osp ec ti ve resources of approximatel y 4 billion barrels of oil (f ro m mul t ipl e pro sp ec t s , b ase d up on ER C Equipoise C ompetent Persons Repor t Letter March 201 5 an d mana gem en t upda te s). Th e as se t por t f oli o as de sc ri be d in th e Por t fo lio se c t ion is s upp or ted b y s ta in No r w ay, the U K , th e UAE a nd mu lt ipl e lo ca ti ons in A f ri ca . Th e man age men t tea m at Pe tr oNo r ha s in - de pt h ind us t r y e x per ie nce f ro m th e oil a nd ga s ups t re am ind us t r y. T oget he r th ey ha ve bu il t a broa d ne t w or k of in dus t r y con t ac t s , an d de vel op ed s t ron g rel at ion shi ps w it h gove rn me nt s , ins t it u tio ns an d trus ted par tner s fostered over many years of valued collaboration. Strategic Platform Pet ro Nor i s a fu ll c y cl e, Su b -Sa har an o rie nt ed E& P com pan y fo cus ed o n gro wi ng pr odu c t ion an d reserves by lev eraging existing assets t o capitalise on ne w ve nt ure op po r t uni ti es co mbi ne d wi th t ar gete d hig h imp ac t ex pl ora ti on. With s trategic and long-term s hareholders from A bu Dh abi a nd No r w ay, Pet roN or w ill lo ok to capit alise on industr y exper ience and government rel at ion s in th es e jur is dic tio ns . Business Model Pet ro Nor w il l aim to s te adi ly b uil d and i ncr eas e it s re se r ve ba se w hil e usi ng fr ee c ash ow to pur s ue de n ed e xp lor at ion t ar ge t s in se le c te d and hig hl y pr osp ec t i ve b asi ns wi t h a vie w to de li ve rin g sig ni c an t val ue to i t s sha reh old er s f rom hi gh imp ac t wel ls wh ils t b ein g a goo d cor por at e cit ize n and promoting excellence i n operations and innovation. Th e Bo ar d aims to b uil d a sub s ta nt ial o il an d gas com pan y wi t hin t hre e yea rs w i th a t ar get re s er ve s ba se of 3 0 0 mm bo e an d pro duc ti on of 3 0 ,0 0 0 ba rr els of o il eq ui va len t pe r day. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 44 Bo ard of director s’ repor t Th e s y ner g ies b et we en Pe tro No r ’s b usi nes s mo del a nd t he la te s t tec hn olo gi es de ve lo pe d in th e o sh ore of t he N or w eg ian Co nt ine nt a l She lf all ow fo r th e max im um com mer cia l ou tco me wi t h the l eas t e nv iro nme nt a l imp ac t . T he tr ans f er of te ch nol og y an d exce lle nce t o th e Comp an y ’ s par tner s or hos t countries ens ures long term collaborations and development. Pet ro Nor l oo k s at c rea tin g va lue t hro ug h app li ca ti on of c ut ti ng ed ge an d sma r t te ch no log y bu t al way s ai ms to s t rike t he r igh t ba lan ce be t w een inn ov at ion s and pr ove n te chn ol og y. Pet ro Nor E &P gi ve s sp eci al in ter es t to I OR (i mpr ove d oil r eco ver y ) for i mpr ove d an d ec ie nt op era ti ons . Th e Com pan y ’ s are a of foc us is o n Sub -S ah ara n Af r ic a and , mo re spe ci c a ll y, prove n and p rod uc ing as se t s in th e reg ion w i th de ve lop me nt an d IO R pote ntia l. We le ver age on o ur b ac k gro un d and e xp er ie nce fr om A bu D hab i, as w ell a s fro m th e oil an d gas ind us t r y i n Nor way, th e cou nt r y w it h th e hig he s t oil re co ver y ra te in t he wo rl d, in o ur op era ti ons . Th e Pet ro Nor t eam ha s a pro ven t ra ck re cord f ro m bot h IO R in th e Nor t h Sea , as we ll as f ro m dire c t , day - to - da y, on the g rou nd op er at ion s in Af ri c a. T he Com pan y ’ s at s t ru c t ure an d as sum ed s t ri c t fo cus on e xec ut ion a nd d eli ve r y ena ble i t to m ove r ap idl y to t ake ad va nt a ge of opp or tu ni tie s . Wi t h man y year s of e xp er ie nce w or ki ng on t he Nor we gi an con ti ne nt al sh el f, the m ana gem ent a nd te chn ic al s t a a re abl e to ap pl y and u t ilis e cu t t ing ed ge ind us t r y i nno va tio ns an d te chn ol og ies t o Pet ro Nor ' s pro jec t s glo ba ll y in ord er to m ax imi se th eir p ote nt ial v alu e. Wi t h acce ss t o the N or we gia n eq uit y ma rke t wi th s oph is t ic ate d inv es t or s in th e en er g y se c to r cou ple d wi t h a st ro ng cor ne r s ton e inv es to r fr om A bu D hab i, t he Com pa ny is we ll po sit io ne d to ac ces s c api t al b ot h for s mal ler a nd larger transaction oppor tunities . IMPORT AN T EV ENT S ■ PNG F Sud co mm enc ed t he 1 7 wel l in ll pro gr amm e in No vem ber 2 021 wi th f our in l l we lls on L it a nzi . Ne t Pet roN or pr odu c t ion f ro m PNG F Sud d ur ing t he fo ur t h qua r t er was 3 ,705 bopd. ■ PNG F Su d res ou rce to r es er ve s conv er si on fo r de vel op men t de cisi on of T ch ib eli NE . ■ A je tr ans a c ti on re cei v ed re gu lat or y ap pro val i n Nige ri a, co mp le tio n ex pe c te d to t a ke plac e in Q2 2022 . ■ Ga mbi a A4 l ice nce wa s ex t en ded t o 1 8 Oc t obe r 2022 . ■ Gr os s pro cee ds of N OK 391 mi lli on we re ra ise d th rou gh t he Ma rch s har e pla cem en t and sub se que nt o er in g in Se pte mb er 2021. ■ Pet ro Nor h as inc re ase d it s in di rec t ow ner s hip in PNG F Sud u p to 1 6. 8 3 pe r cent t hro ug h inc rea sin g is sh are hol din g in H eml a E& P Cong o and H em la Afric a Holdi ng. ■ Pet ro Nor c omp le ted t he a cqu isi ti on of t he h igh l y at tra c t i ve ex pl or at ion p or t fo lio i n th e Wes t Af r ic an ma rg in t hro ug h th e ent r y in th e Es pe ran ça an d Sina pa li cen ces i n Gui nea - B iss a u foll ow in g th e acq uis it ion o f SPE G uin ea - Bi ss au A B f rom Sven sk a Pet rol eum E x pl ora ti on A B. PRI NCI P AL ACTIVITY Th e Com pan y ’ s pr inc ip al ac t i v it y dur in g the y ear was o il an d gas e xp lor at ion a nd pr odu c t ion . RE VIE W OF OPER A TION S Corporate Økokrim charge s On 1 5 D ece mbe r 2021, the Nat io nal A ut ho ri t y f or Inv es t iga ti on an d Pro se cu ti on of Eco no mic an d Env ir onm en ta l Cr ime ( Nw.: Øko kr im) in No r w ay ann ou nce d in a pr es s rel eas e t hat t he y ha d ent ere d th e Comp an y 's pr emi se s in Osl o in re lat io n to sus pic io n of a cri min al o enc e comm it te d by ind i vi dua ls re lat ed to t he G ro up, in cl udi ng i t s pre v iou s CEO a nd his b usi ne ss p ar t ne r wh o toge th er h old s har es in t he Com pa ny. On th e sam e day, th e Gr oup a nno un ced t ha t it h ad no r eas on to be lie ve t hat t he re wer e any su sp ici ons ag ain s t it s el f. Hangar previously built by C omapny in Banjul, The Gambia. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 45 Board of directors ’ report On t he su bs eq uen t day, Øko kr im a nno unc ed th at th e inv es t iga ti ons w ere re la ted t o the individuals in question on sus picion of corruption concerning u ndisclosed projec ts in Africa , in ad dit io n to con r min g tha t no c har ges h ad be en bro ug ht ag ains t t he G rou p or ot her co mp ani es . Th e Com pan y t akes an ti - co r ru ti on an d th e ma t te r at ha nd s er iou sl y an d ad opt ed a s er ies of re med iat io n s tep s. T he in di v idu als c har ge s by Oko kr im in D ece mb er we re re mov ed f rom busines s operations. On 16 Dece mbe r 2021, J ens Pa ce was a ppo int ed int er im CE O of Pet ro Nor E &P L td. a nd on 9 F eb ru ar y 202 2, M r . Pace s tep pe d dow n f rom hi s pos it io n as Dir ec tor of Pe tr oN or E& P A S A fol lo wi ng his e le c ti on as in ter im C EO of th e Nor we gi an com pa ny. Th e Board engaged independent legal cou nsel to support th eir go ve rn ance a nd co mp lian ce s te ps , ini t iat in g an in dep en de nt fa c t n din g pro ces s , to ide nt if y an y mis con du c t , to an al y se t he c au se s of th e un der l y ing con duc t , and s et ti ng up a s ep er ate b oa rd su b - com mi t te e to sup po r t th e Bo ar d wi th t he ma t te r at ha nd . Th es e mea sure s are d es ign ed to a ss ure th e fu r t her i mpl em ent a ti on of an e e c t iv e ant i - corruption and compliance programme, founded on it s e xi s ti ng co de of co nd uc t , go ver ni ng do cum en t s an d rela te d pol ici es . Th e Bo ar d wil l ins t iga te an y ot her r eme di al ac tio n de em ed re le van t to t he si tua ti on . Th e mea sure s t aken b y the co mp any a re le d by th e Bo ard s ub - co mmi t te e w hic h doe s not com pr ise a ny p er so ns su bje c t to t he c har ge s or an y inves tigati ons. Corporate res truc turing On 7 O c to be r 2021 , Pe tr oNo r E& P L imi te d and Pet ro Nor E & P A S A ent ere d in to an a gre em en t wh ere by sh are s in Pe tro No r E& P Lim it ed (p rev i ous ly l is te d on Euro ne x t E xp an d) we re s wap pe d for s har es in Pe tr oNo r E& P A S A as pa r t of t he pr oce ss t o red om ici le t he Com pa ny f rom Aus t ra lia to N or way. Sub se que nt l y, Petro No r E& P A S A sub mi t te d i ts a pp lic at io n for i t s sh are s to b e lis t ed on O slo S toc k Exc ha nge. On 2 9 Nov emb er 20 21 , an e x t rao rdi nar y ge ner al me et ing w as he ld in Pe tr oNo r E& P Ltd b y ord er of th e Sup rem e Cour t of Wes t er n Aus t ra lia w her e th e sha reh ol der s of t he C omp any a pp rov ed t he proposed Scheme of Ar rangement. Following the shareholders ’ appr oval, PetroNor E&P Lt d rece i ved t he n al ap pro va l fro m th e sup rem e cou r t of We s ter n A us tr ali a on 1 7 F eb ru ar y 202 2, fol lo wed b y del is ti ng of i t s sha res f ro m Euron ex t E xp an d on 24 F ebr ua r y 20 22 in co nju nc t io n wi th th e lis t ing of Pe t roN or E& P A S A . Fo ll ow ing t he 1 to 1 sha re s wa p, Pet ro Nor E &P A SA be gan t ra din g on Os lo St oc k E xcha nge 28 F e br uar y 2022 . F ol lo w in g t he s uc ce s s f ul re d om ic i le o f th e Co mp an y, th e t wo A us t ral ian Di re c tor s a nd th e Comp an y se cre t ar y we re not r eap poi nte d to Pe tro No r E& P A S A to s t rea mlin e th e Bo ar d and m ana gem ent struc ture . Fo ll ow ing t he se ch ang es , th e Bo ard co nsi st s o f fou r Dir ec t or s , t wo o f whi ch ar e cons ide re d to be independent. Th e key s tr at eg y of th e Gro up is , in ad di ti on to de vel op ing e xis t in g ass et s a nd or ga nic g row th , to acq uir e add it io nal o il an d gas l ice nce s and p ur su e acq uis it ion o pp or t un it ie s. T he G rou p con tin uou sl y considers such oppor tunities . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 46 Board of directors ’ report A sset overv iew Rep ubl ic of C on go – PNG F Su d Th e Com pan y has t hre e pro du c ti on li cen ce ag ree me nt s ( Tchbo uel a II , T c he ndo I I, a nd T chi be li - Li t an zi II ), w hic h cov er ve oi l el ds lo ca te d in 8 0 -1 0 0 m wa te r de pt hs ap p rox im at el y 2 5 km o th e coa s t of Poi nte - N oire : TM , TE , T , TL . T he co mpl ex oil eld w as dis cov ere d in 1 97 9, comm en ced pro du c ti on in 1987 , and is c all ed PN GF Su d. Sin ce gr an tin g of t he li cen ces i n Jan uar y 2017 , Per enc o, wi th p ar tn er su ppo r t ha s be en co mmi t te d to s tr ic t HSE co mpl ian ce wh ile g row in g pro du c ti on , imp rov in g mai nte nan ce ro ut ine s an d el d int eg ri t y in a s tep wi se an d pr ud ent m ann er . T his le d to an inc rea se in g ros s pr odu c t ion f ro m c. 1 5, 0 0 0 bo pd in Ja nua r y 2 01 7 to an a ver age pr od uc t ion i n 2021 of 20, 63 6 bo pd . Pro duc ti on is e xp ec te d to fu r t he r ram p up sig ni c an tl y in 202 2 in r esp ons e to t he 1 7 we ll in ll pro gr amm e com men ce d on PNG F Su d in No ve mbe r 2021 wi t h fou r in ll we lls on L i ta nzi . Th e PNG F Sud el ds are d eve lo pe d wi th e igh t we llhe ad p lat for ms a nd cu rr en tl y pro du ce fr om 67 ac t i ve pr odu c t ion w ell s, w i th oi l ex po r te d vi a th e ons hor e Dje no te rm ina l. W it h it s lo ng pr od uc t ion his t or y, subs t an tia l wel l cou nt an d ex t ens iv e inf ra s tr uc tu re, PN GF Su d oe r s wel l di ver si e d an d lo w ris k pro duc tio n an d res er ve s wi th l ow br eak- ev en cos t . In Ma rch an d A pr il 202 2 , AGR Pe tro le um pre pa re d a Comp et ent P er so n’ s Rep or t (“ C PR ” ) w he reb y th e res er ve s we re c alc ula te d as at 31 De cem be r 2021 . Con go - PNG F Sud . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 47 Board of di rec tors ’ report Usi ng th e CPR a nd a dju s tin g fo r 2021 pro du c ti on , as we ll as t ran s fer r ing T ch ib eli NE f ro m res ou rces to re se r v es (as ann ou nce d on 7 De cem ber 2 022) a s at 31 De cem be r 2021 : Part icipation Inter es t 1 6.83 % 1 P reser ves (M Mbbls ) 14 . 3 2P reser ves (M Mbbls ) 20.6 PetroNor ’s contingent resource base include s dis cov er ie s of va r y in g de gre es o f mat ur i t y tow ard s de vel opm en t dec isi ons . At t he en d of th e yea r , PNG F Sud c ont a ins a to t al 2C vo lum e of app rox ima tel y 1 5 .5 M Mbb ls as sum ing a 16.8 3 pe r cen t par t ici pa tio n int ere s t . PNG F Sud e nde d th e yea r wi th a Q 4 pr odu c t ion of 2 2, 01 6 b opd (ne t 3 ,705) , con s ti tu t ing t he hig he s t qua r te rl y pr odu c t ion o f the y ear . Q2 an d Q3 were a e c te d by COVI D - 19 an d lo gis t ic al cha lle nge s get ti ng wo rkov er an d pro duc ti on eq uip men t int o the c oun tr y. The a ver age pro du c ti on fo r th e year w as 20 ,6 36 b opd (ne t 3, 47 3). Pr odu c t ion is e xp ec ted t o ram p up sig ni c an tl y in 202 2 in r esp ons e to t he ag re ed 1 7-we ll in ll dr il lin g pro gra mm e st a r te d in Nov em ber 2 021 wi th fo ur we lls o n the L i ta nzi eld. Th e cu rre nt in dir ec t par ti cip at io n int ere s t is 1 6 .8 3 pe r cent f oll ow ing t ra ns ac t io ns dur in g 2021 . Rep ubl ic of C on go – PNG F Bi s PNG F Bi s is lo ca te d ne x t to PN GF S ud an d con t ain s t w o disc ove ri es f rom 1985 -1 9 91 (L ou ssi ma S W an d Lo uss ima). T he Co mp any a nd it s PN GF S ud pa r t ne rs hav e a rig ht t o nego tia te t he li cen ce agr ee men t . Th e th ree d isc ove r y w ell s tes t ed f rom 1, 150 to 4 ,700 b op d of lig ht , go od qu ali t y o il. Pe ren co ha s mad e a det a ile d rei nte rp re t at ion , 3D mo de lli ng an d fac ili t ies s t ud y fo r th e Lo us sima S W d isc ove r y, yi el din g > 10 0 MMb bl of i n -p la ce re sou rce s an d a po ssi bl e tie - b ack t o T c hib ou ela . AGR Pe tr ole um S er v ice s war ra nt s 2C res ou rce s of 28 .9 MMb bl in clu din g ver i c at io n of th e tie ba ck scenario given above. Ni ger ia – Om l - 113 / The A je Fi el d A s an nou nce d on 27 J anu ar y 202 2 , th e Nige ri a Ups tream Petroleum Regula tor y Commission (fo rm er ly t he N iger ia n Dep ar tm en t of Pet rol eu m Resources) provide d its consent to PetroNor ’s acq uis it ion o f Pano ro ’s ow ne r ship i nte res t i n Oil M ini ng Le ase n o. 1 13 ( “ OM L 1 1 3 ” ) o sh ore Nige ri a, co nt ai nin g the A j e oil an d gas e ld , and for t he t ra ns fe r of OM L 1 13 to Aj e Pro duc tio n A S ( “Aje Pr od uc t ion ” ). T he o wn er shi p of A je Pro duc ti on is to b e shar ed b et wee n th e OML 1 1 3 op era tor, Yink a F ola wi y o Pet rol eum ( “ Y FP ” ) a nd Pet ro Nor o n th e ba sis of a 5 5 pe r cen t and 4 5 pe r cen t sha reh old ing r esp ec ti ve l y, wit h Pet ro Nor as sum ing t he ro le of t he te chn ic al op er ato r . A s pre v iou sl y an nou nce d, fo ll ow ing co mpl et io n of th e tr ans ac ti on, Pa no ro ’s in ten ti on is t o dec la re a spe ci al di v id end a nd d is tr ib ut e to it s s har eho ld er s USD 10 milli on eq ui va len t in Pe tro No r shar es in ord er f or Pan oro s har eho ld er s to re t ain a d ire c t lis t ed e xp osu re to A je / OM L 1 1 3 . A lso i n 201 9, Pe tr oNo r en tere d in to s epa ra te ag ree me nt s wi t h th e OML 1 1 3 ope rat or to cr ea te a ho ldi ng com pa ny to e xp lo it t he su bs t an ti al ga s and liq uid s res er ve s at A je. T he r eg ula tor y pr oce ss f or th is ag ree me nt wa s alig ne d wi t h the t ra ns ac t ion an d was ap pro ve d conc ur ren tl y. Pet ro Nor a nd Pa nor o hav e als o t aken t he opp or tu ni t y to re v ie w the d ef er red co nt ing ent el eme nt of t he t ran sa c t ion , re ec ti ng th e cha nge d macro - economic back groun d since the original ann ou nce men t in 201 9. Und er t he a men de d ter ms , o nce Pe tr oNo r re cov er s all o f it s co s t s rel ate d to f u tur e inv es t me nt s to b rin g A je gas i nto p ro duc tio n, t he Co mp any i s to pa y to Pano ro an a ddi t ion al con sid era ti on USD 0 . 10 per 1 , 0 0 0 cub ic fe e t, USD 0.0 5 pe r 1 , 0 0 0 cub ic fe et l ow er th an un der t he or ig ina l ag ree me nt . Th e ad dit io nal con sid era ti on , ini tia ll y c app ed a t USD 25 m illi on , is ca pp ed a t USD 1 6 .67 mi llio n und er t he am en ded terms . Th e con se nt fr om t he Nig er ia Ups t re am Pe tro le um Reg ul ato r y Co mmi ss ion ha s all owe d Pe tro No r to re - en gag e nan cia l and i ndu s tr ia l par tn er s w it h a t ar get to ma t ure t he pro je c t tow ard s an FI D. Pet ro Nor co nt inu es w or k to upd ate t he eld de vel op men t pla n (“ F DP ” ) t o ex pe di te gas de vel op men t and e nga ged w it h po ten ti al o t aker s an d par tn er s . Pet roN or is n ow en gag ing w it h th e J V pa r t ner s in t he se e o r t s to pr og res s th e ven tu re. E xpl orati on th e MS GB C Bas in Th e Gam bia – A 4 In S ept emb er 202 0, Pe tr oNo r E& P Gam bia L td wa s awa rd ed a ne w 30 -y ear l eas e for t he A 4 li cen ce. T he awa rd wa s par t of a se t t le men t ag ree me nt w it h th e gove rn me nt of T he G amb ia con ne c te d to th e ar bi tr at ion o f th e A 1 and A 4 l ice nce s pre v iou sl y is sue d in 20 0 6 . Th e ter ms o f the n ew li cen ce are b as ed on t he n ew l y developed Petroleum, Exploration and Production Li cen ce A gr ee men t (PE PL A ). Pe tr oN or E& P Ga mbi a PETRONOR E&P ASA AN NUA L R EP OR T 20 21 48 Board of directors ’ report Lt d wil l be ab le to c ar r y a ppr ove d pr io r sunk co s t s as so cia te d wi th A 4 in to th e ne w agr ee men t . Th e PEPL A is a roy al t y p lus t a x s y s tem v ali d for 30 y ear s w it h an op ti on of a 10 -ye ar e x ten sio n. Th e ini t ial si x yea r s ex plo ra tio n pe ri od is di v id ed int o thr ee p er iod s of t w o yea rs d uri ng w hic h ex pl ora ti on ac ti v it ie s are to b e com ple te d. Po s t dis cov er y, the li cen ce mov es in to an e xp lo rat io n/ app ra is al pha se w he re th e com mer cia l pot ent ia l of t he di sco ver y is a sce r t ai ne d an d a dev el opm en t de cis ion t ake n, fo llo we d by a de vel op men t and sub se que nt p rod uc t io n phas e. Th e gov er nme nt of T he G amb ia e x ten de d th e lon g st op da te of t he ‘ f ar m - ou t ’ p has e of t he A 4 lic enc e unt il 1 8 O c tob er 20 22 . Th e A 4 lice nce i s loc a ted o sho re wi t hin t he Maurit ania-Senegal- Gambia -Bis sau- Conakr y Ba sin . Hy dro c ar bon s are pr ove n th rou gh ou t the ba sin , th e mos t l oc al a nd n ot ab le is t he 4 6 0 Mmb bl Sa ngo mar eld , 3 0 km to t he No r t h in Se ne gal . Pet ro Nor c ont in ues t o se ek p ar tn er s to dr il l one ex pl ora ti on we ll in t his hi gh ly a t t rac ti ve a cre age an d aims to p ar ti cip at e in any f u tur e wel l at an eq uit y le ve l of 30 -5 0 pe r cent . Gui nea - Bi ss au – 2 an d 4 A & 5A In ea rl y Ma y 2021 , th e Com pan y com ple te d th e pur cha se o f SPE G uin ea Bi ss au A B f rom Sv en ska Pet ro leu m E xpl or at ion A B . Th e lice nce s hav e be en re cen tl y e x te nd ed fo r th re e yea rs a nd a re va lid un ti l 2 Oc tob er 202 3 m ain t aini ng t he s am e at tra c t i ve s ca l ter ms . Sven sk a Pet rol eum E x pl ora ti on A B was in t he adv anced st ages of planning for the drilling of th e At um - 1X w ell to t es t th e At um pr osp ec t p ri or to de lay s i n gain ing p ar tn er ap pr ova ls du e to th e dis pu ted p re sid ent ia l ele c t ion s in la te 2019 ear l y 2020 . Lon g lea d ite ms re qui re d for dr il ling op era ti ons h ave b ee n se cu red a nd a n umb er of pre - d ri ll s tu die s com pl ete d. Wel l pla nni ng c an be re comm en ced a t sho r t no ti ce. Th e At um - 1x we ll w ill te s t a hig hl y at tr ac t i ve an d ma ter ial p ros pe c t on t he Sin ap a lice nce . Rece nt l y rep ro ces se d se ism ic da t a has b ee n int er pre te d as pa r t of t he o ngoi ng e val ua tio n of b oth l ice nce s and as pr ep ara ti on to dr ill ing . Se ne gal – Ro p & So sp In Ju ly 2 01 8 , the Co mp any ’s s ubs idia r y A f ri ca n Petrole um Senegal Limi ted regis tered ar bitra tion pro ce edi ng s wi th t he In te rn at ion al Cen tr e for Se t t le men t of In ves t me nt Di spu te s (I CS ID) (cas e AR B /1 8 / 24) to pr ote c t it s i nte res t s in t he S en ega l O sho re Su d Prof on d and Ru s qu e O s ho re Pro fon d blo ck s . On 5 A pr il 2021, the Co mpa ny ann ou nce d th at t he ar bi t rat io n pro cee di ng s for th e Gro up ’s in te res t s in S en ega l wer e to res ume de spi te nu mer ou s prog re ss iv e me et ing s w it h th e rel ev an t aut ho ri t ies t o reac h a mut ua ll y be ne ci al so lu tio n dur in g th e hal t in p roc ee din gs d ur ing 20 20 an d Q1 2021 . FI NANCIAL REVIEW Th e Bo ar d of Dir ec t or s (th e “ Bo ar d ” ) co nr ms t ha t th e ann ual n anc ial s t a tem en t s hav e bee n pre - pa red p ur sua nt t o the g oin g con cer n as sum pt ion , an d tha t thi s as sum pti on wa s rea lis t ic at t he ba lan ce she et d ate. T h e going c once r n ass ump ti on is ba se d upo n th e na nci al po si tio n of th e Gr oup an d the d eve lo pme nt p lan s cur ren tl y in p lac e. Th e Gr oup r eco gni se s th at in o rde r to f un d on - goin g operations and pursue organic and inorganic gr ow t h op por t uni ti es i t wi ll req uir e add it io nal fu ndi ng . Th is fu ndi ng ma y be so urc ed th ro ugh joi nt ve nt ure e qu it y or sh are i ss ues o r th rou gh deb t na nce . Per th e de ta ile d dis cl osu re in Not e 2 to the c ons oli dat ed nan cia l st a tem en t s con di tio ns e xis t w hi ch in dic a te a mat er ial un ce r t a in t y t ha t ma y ca s t a si gn i c an t do ub t ab ou t th e ent i t y ’s a bil it y to co nt inu e as a goi ng co nce rn an d, t her ef ore , tha t it m ay b e una ble t o rea lis e it s as se t s and d isc ha rge i t s lia bil it ie s in t he no rm al cou rs e of bu sin es s. T hi s na nci al rep or t has be en pr ep are d on th e goin g con cer n ba sis w hic h as sum es t he co nt inu it y of n or mal b usi nes s a c ti v i t y an d the r eal is at ion o f as se t s and t he s et tl em ent of lia bil it ie s in th e nor ma l cour s e of bu sin es s. T he und er l yi ng bu sin es s of t he G rou p cre at ed a ne t pro t a f t er t ax o f USD $ 21 . 1 mill ion fo r th e yea r en ded 31 D ece mbe r 2021, wit h s tro ng pr od uc t ion fr om t he Con go as se t s gen era t ing 3 ,61 4bo pd i n r s t qua r te r of 202 2. A s a t 31 Dec emb er 2021 t he Gr oup ha d a ca sh ba lan ce of US D 31 .8 mi lli on (20 20 USD 14. 1 milli on). T he Com pa ny ha s ent ere d int o a new o t ake ag re em ent w i th a ne w pa r t ner, lis t ed t he Com pa ny on t he m ain O sl o Bø rs a nd con ti nue d to ho s t da ta r oo ms fo r pot en tia l pa r t ner s t o join t he C omp any o n it s e x plo ra tio n po r t f oli o, de mo ns tr at ing t ha t th e bu sine s s has con ti nue d to op era te e e c ti ve l y, and bu sine s se s are w ill ing t o enga ge wi t h the Co mp any. Th is ha s ena ble d th e dire c to r s to for m t he op inio n th at th e Com pan y wi ll be in a p osi t ion to co nt inu e to me et i t s lia bi lit ie s an d obl iga ti ons f or a p er iod o f at le as t t w el ve m ont hs f rom t he da te of si gn ing t his repor t. Th is n anc ial r epo r t do es n ot in clu de an y adj us t men t s re lat ing t o th e re cove rab ili t y and cla ss i ca ti on of re co rde d as se t amo unt s o r to th e amo un t s and cl as si c at io n of liab ili t ies t ha t mig ht PETRONOR E&P ASA AN NUA L R EP OR T 20 21 49 Board of di rec tors ’ report be n ece ss a r y s hou ld t he G rou p not co nt inu e as a goin g con cer n. Th e fo llo wi ng na nc ial re v ie w is bas ed o n th e na n cial s t at em ent s of Pe t roN or E& P Li mi ted an d it s sub sid iar ie s. T he s t a tem ent s h ave b ee n pre pa red i n acco rda nce w it h In ter na ti ona l Fin an cia l Rep or ti ng St an dar ds (I FR S ) as a dop ted b y th e EU as we ll as No r w eg ian ac cou nt ing le gi sla ti on . In th e v iew o f the B oa rd, t he St a tem en t of Com pre - he nsi ve In com e, St a tem en t of Cha nge s in Equ it y , s t ate me nt of F ina nci al Pos it io n and C ash o w pro - vide satis fac tor y information about the operations, na nc ial re sul t s an d pos it io n of th e Gro up an d the Pare nt co mpa ny at 31 D ece mb er 2021. Th e con so lida te d na nci al s t ate me nt s ar e pre se nte d in US d oll ar s. Consolidated statement of comprehensive income Key cons oli dat ed inco me st ate me nt gur es Fo r th e yea r end ed 31 De cem be r Amount s in USD million 2021 2020 Revenue from sales of petroleum pr oduc t s 5 7. 6 40 .6 A s sig nme nt o f t ax o il 3 3 .1 1 7.1 A ssignmen t of royalties 15. 8 9.8 Revenue 10 6 . 5 6 7. 5 EBI TDA 61. 9 34.4 Ne t pro t /(l os s) 11. 0 11 . 2 Qu ant i t y of o il li f t ed ( ba rr els) 831,089 9 9 3 , 5 74 Ave rag e sel lin g pr ice ( USD p er ba rr el ) 69. 3 1 4 0.9 0 Qu ant i t y of n et o il pr od uce d af ter r oya lt y, cos t oi l an d t ax o il (b ar re ls) 8 21, 5 3 6 999,5 22 Th e Dir ec tor s ar e ple ase d to re por t th at f avo ura bl e mar ket c ond it io ns an d th e on - goin g cor po ra te fo cus o n cos t con tr ol ha ve re sul te d in EBI T DA of USD 3 4 .4 m ill ion fo r th e yea r . Th e Gr oup ge ner at ed a ne t pro t f or th e yea r of USD 21. 1 mil lio n (2020 : USD 1 1 . 2 mil lio n). Th es e g ure s are du e to an im pro vi ng g lob al ma rke t pr ice for o il an d to s te ad y pr odu c t ion f ro m PNG F Sud Th es e g ure s are du e to th e s tea d y oil pr odu c t ion of t he PN GF Su d dur in g th e qua r te r an d thr oug ho ut th e yea r tha t hav e com e abo ut f ro m the w or kove r pro gr am. I n fac t , sinc e the G ro up r s t en ter ed t he lic enc es in 2 01 6 , it ha s se en a 3 7 per c ent i nc reas e in th e gro ss el d pro duc tio n an d the O PE X re duc ed by 5 6 per ce nt f rom 2 5.0 U SD/ bbl t o les s th an 1 1 USD/ bb l in th e sa me t ime fr am e. Du rin g 2021, t he re wer e onl y 7 li f t ing s of o il, w it h a 1 6 .4 p er cen t de cre ase o n th e 993 , 57 4 ba rr els li f ted in 2020 . Inc rea se d oil p ri ces du ri ng 2021 re sul te d in th e Gr oup a chi ev in g hig her re ve nue s ov er lo wer vol um es . Th e Gro up ac hie ve d an av era ge se llin g pr ice of U SD 69. 31 / bb l for t he ye ar , com pa red to th e 4 1.0 USD/ bbl i n 2020. A s a co ns equ en ce, t he gr oup re po r t s USD 106 . 5 mil lio n in rev enu e, a 57 . 6 pe r cent i ncr eas e on 202 0 USD 67 .5 mi llio n. Wi t h th e acq uisi t ion o f th e lice nce s in ter es t s in Gu ine a- B is sa u an d the e x te nsi on of T he G amb ia lic enc e, ex pl ora ti on e xp ens es f or th e yea r wer e USD 2 . 3 mill ion . Und er Pe tr oNo r ’ s acco unt in g po lic y, seis mic d at a co st s a re e xp ens ed a nd n ot ca pi t ali se d to int a ngi bl e ass et s . Th ro ugh ou t th e yea r , the G rou p main t ain ed co s t dis cip lin ed . Th e adm ini s tr at iv e ex pe nse i n 2021 of USD 1 3 . 1 m illi on we re hi gh er th an in 202 0 (US D 1 2, 4 mil lio n), how ev er t his in clu de d thi rd p ar t y cos t s of USD 1.4 mil lio n in bus ine s s dev elo pm en t cos t s (US D 0.7milli on 202 0). T his y ear , t he Gr oup i ncu rr ed non- recur ring third -pa r t y cost s of approximately USD 0. 4 mi llio n rel at ing to t he re do mic ile p roj ec t . Th e Com pan y be lie ve s tha t th e red omi cil e wi ll st reamline the Group ’s corporate s tru ct ure and re duce co rp or ate o ver he ad s. L is ti ng on t he O slo Sto ck E xch ange w ill e nha nce t he G rou p's pr ol e wi t h inve s to rs , bu sin es s pa r t ner s , su ppl ier s an d cu st om er s; g iv in g th e Gro up be t t er acc es s to ca pi t al ma rke t s. T he mo ve g iv es sh are ho lde r s acc es s to a mor e liqu id ma rke t for sh are s an d wil l fa cil it a te a mor e di ver si e d sh are hol de r bas e and additio nal investor s. Finan cial pos itio n, nan cing and equit y Th e Gr oup co nt inu es to b uil d th e st re ng t h of th e bal anc e she et w it h con de nse d s t ate me nt of nancial position below. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 50 Board of di rec tors ’ report Condens ed consolidated balance she et At 31 De cem be r Amount s in USD million 2021 2020 Cur re nt as se t s 51. 8 2 7. 1 Non- current asset s 73.4 51. 9 T ot al as s et s 12 5 . 2 79.0 Current liabilit ies 39. 2 26.4 Non- cur rent liabilitie s 20. 2 30. 3 T otal liabilities 59. 4 5 6.7 Net assets 65.8 2 2.3 Ca pi t al an d res er ve s at tr ib ut a ble t o ow ner s of t he p are nt 59. 3 7. 9 Non- cont rolling interes ts 6.5 14 . 4 T otal equit y 65.8 2 2.3 Wi t h the e x te nsi on of t he A 4 li cen ce in T he Ga mbi a dur in g the y ear, t he G rou p ret ai ne d USD 3. 5 mi lli on of in ta ng ibl e lic ence c os t s on t he ba lan ce she e t. Th e pa s t cos t s of t he fo rm er A 4 lic enc e are al low ed to be c ar r ied o ver to t he n ew li cen ce, t he pa s t cos t po ol is f ar in e xce ss o f th e ca rr y ing v al ue of t he as se t as at 31 De cem be r 2021 . Hi st or ic e xp end it ur e on t he G uin ea - Bis s au li cen ce s had b ee n imp ai red pr ior t o acq uis it ion b y Pet ro Nor, in acco rda nce wi t h Pet roN or ac cou nti ng po li cie s onl y t hos e cos t s re la tin g dir ec t l y to t he li cen ces h ave b ee n ca pi t ali se d to int a ngi bl e ass et s . Th e le vel o f mat er ial in ven to rie s ha s incr eas ed to USD 5 .7 milli on in 2021 ve r sus U SD 2.9 mil lio n las t y ear . T his re e c t s th e acq uis it ion o f mat er ial s wi t h the G uin ea - Bi ss au l ice nce w it h th e ven tu re pla nni ng to pr og res s to dr il ling . T he le ve l of ma ter ial s ca rr ie d in Co ngo h as al so in cre as ed b y USD 0.9 mi lli on du e to th e in ll dr ill ing pr og ram me in pr ogr es s at ye ar-e nd. Th e le vel o f tra de re cei v abl es is h igh w he n com pa red to th e 2020 c los ing p osi ti on . Th is is du e to a lif ti ng on th e PNF G Sud a ss et s o ccu rr ing l ate i n the y ear . Th e ca pi t al pr og ram me on - goi ng at ye ar-e nd on th e Cong o as se t s has l ed to a h igh l ev el of t ra de pa yab le s of USD 2 2. 0 mill ion 20 21 (USD 5 . 2 mill ion 2020) . Th e le vel o f liab ili t ies to r ela te d par ti es ha s be en su bs t an tia ll y re duce d in 2021 w it h USD 3 .4 mil lio n at yea r - e nd (U SD 1 1.7 mi lli on 202 0) Th is is th e res ul t of th e unw ind ing f or th e MG I rel ate d pa r t y loa n. Th e A s se t Ret ire me nt Ob lig at ion ( “AR O ” ) , a pro v isio n of USD 26 .8 m ill ion c ash i s pre se nte d as a Non - Cur ren t A s se t in a ch ange t o th e pre se nt a tio n sin ce 2020 . Al t hou gh in 2019, the co nt rac tor g rou p ag ree d to re f und p re vi ous s ur plu s c ash s et a sid e for t he A RO b ack i nto t he op er at ing c as h poo l. T he cur re nt c as h pro jec ti on do es n ot an ti cip at e th e sa me si t uat io n in th e shor t te rm . Funding On 1 1 Mar ch 2021, Petr oN or su cce ss f ull y r ais ed NO K 34 0 mill ion o f new e qui t y t hr oug h a pr iv at e pla cem en t of 30 9, 09 0 ,90 9 ne w sha re s in th e Com pan y (Pe tr oNo r E& P Lim it ed ). T he pl ace me nt gen era te d NOK 187 . 4 mil lion ( USD 2 2. 1 mi llio n) in ca sh an d NO K 1 52.6 m illi on (US D 1 8 .0 mil lio n) as in- k in d cons ide ra tio n for con ti ngen t acq uis it ion o f all of Sy me ro Li mi ted 's (“ Sy mer o” ) sh are s in He mla A f ri ca H ol din g A S (“ HA H ” ) (th e “ Sy me ro T ran sa c t ion ” ). T he pr i va te pla cem en t was di v id ed in to t w o tr anc he s: T ran ch e 1 ( " T ran che 1") co nsi st in g of oe r sha res w or th N OK 92. 8 mil lio n hav e bee n all oc at ed to e xi s tin g and n ew inv es to r s, i ncl udi ng Pe tro ma l. T he re main ing o er sha res h av e be en su bsc r ibe d by a nd al lo ca te d to Sym er o (for an a mo unt e qua l to NOK 152.6 mi llio n (US D 1 8 mil lio n) (" T ra nch e 2a" ) an d Pet ro mal (f or an amo un t equ al to NO K 9 4. 6 mill ion) in or der to r et ai n it s ~38 . 28 p er ce nt ow ne r shi p (" Tranch e 2b" ). Th e ne t ca sh pro ce ed s fro m th e pri v ate p lac eme nt are b ein g use d to n anc e dri lli ng of in ll w ell s and ot her i ncr eas ed o il re cov er y ini t iat i ve s on PN GF Su d an d gene ral co rp or ate p ur pos e s. Du rin g th e yea r , the Co mpa ny re pa id USD 5 .8 mil lio n of th e sho r t-t er m deb t fac ili t y of USD 1 5. 0 mil lio n fro m Ra sma la (L ond on an d Dub ai b as ed inves tor group). In Q3 2020 , th e sub sidi ar y com pan y Hem la A fr ic a Ho ldi ng A S pa id a USD 3 .9 mill ion d iv i den d to min or it y in ter es t an d re lat ed p ar t y Sy me ro Lt d (“ Sy mer o” ). A n am oun t eq ual to t he di v id end w as imm ed iat el y lo ane d to th e Com pan y by Sy mer o wi th int ere s t ra tes m at chi ng th os e alr ead y p rov id ed b y th e ex t er nal nan cin g fr om Ra sma la , and n o sec ur it y was p rov id ed f or th e lo an. T he m at ur it y dat e is ma tch ed to t he US D 1 5 mill ion f aci li t y f rom R asm ala . Th e Gr oup e xi t s th e yea r wi th a re du c ti on in t he le vel o f deb t on th e bal anc e she et of U SD 5. 8 mil lio n. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 51 Board of directors ’ report Th es e de bt s ma tur e tow ard s the e nd of 20 22 a nd are acc ord ing ly c las si e d as cu rr ent l iab ili ti es . Ca sh Flow Ne t ca sh o w gene ra ted f ro m the f un din g ac t i vi t ies described in the precedi ng para graph g enerated USD 20 .4 mi lli on . Th e ad jus te d ne t ca sh o ws f ro m ope ra tio ns we re USD 2 3. 4 mi llio n (202 0 neg at i ve USD 2 .9 milli on) Inv es t ing a c t iv i ti es co nsum ed U SD 20.6 m ill ion ( 2020 USD 7 .6 mill ion) wi t h inc rem en ta l con tr ib ut ion s to th e AR O bei ng USD 5 .6 mil lio n (202 0 6.6 m illi on) Th e Gr oup e xi t s th e acco un tin g pe rio d wi t h a cas h ba lan ce of USD 31.8 mil lio n. Parent company results At t he pre se nt a ti on da te of th e na nc ial s t at eme nt s , th e par en t ent it y of t he Gr oup w as Pet ro No r E& P A S A , a co mpa ny do mic il ed in No r w ay. Th e Com pan y rep or te d a los s for t he pe ri od of U SD si x tho us an d to be t ran s fer re d fr om ot her e qu it y. Th e com pa ny was i nco rp ora te d on 1Oc tob er 2021 an d so has h ad lim it ed ac ti v i t y ov er t he pe ri od . Th e com pa ny ’s na nc ial ac ti v i tie s we re pur el y cor po ra te. G oin g for war d, i t cor po rat e cos t s re lat ed to t he re mun era ti on fo r th e bo ar d and l ega l an d pro fe ssi ona l se r v ic es w ill in cu r . Dividends paid or recommended Du rin g th e yea r , no di vi de nd wa s pai d or recommended. RI S K FAC TOR S Op erati onal R is k Fac tor s Th e Gr oup p ar tic ip ate s in oi l and ga s pro jec t s in cou nt ri es in We st A f ri ca w it h em er gi ng eco no mie s , suc h as Con go Br az za v ill e, Ni ger ia, T h e Gam bia , Se ne gal an d Gu ine a- B is s au. Oil and gas exploration, development and pro du c ti on ac ti v i tie s in s uch e me rg ing m ar ket s are s ubje c t to si gn i ca nt p oli ti c al an d eco nom ic unc er t a int ie s th at ma y in clu de, b ut a re no t lim it ed to, t he r isk of wa r , ter ro ri sm, e xp rop r iat ion , nat io nal is at ion , re neg oti at ion o r null i ca t ion of ex is t ing o r fu t ure li cen ces a nd co nt rac t s , cha nges i n cr ud e oil o r nat ur al ga s pr ici ng po li cie s , cha nge s in t ax at ion a nd s c al po lic ie s, im po si tio n of cu rr enc y con tr ols a nd imp os it ion o f inte r nat io nal s an c ti ons . T rav el b ans , as se t fr ee zes or ot he r sa nc t io ns ma y be im po se d an d hav e his to ri c all y be en i mp ose d on cou nt ri es in w hic h th e Gro up op er ate s. Th e jur is dic ti ons in w hi ch th e Gr oup o per at es may a ls o hav e le ss d eve lo pe d le gal s y s te ms t han mo re es t ab lis he d eco nom ies w hi ch co uld re su lt in r isk s su ch as ( i) e e c ti v e leg al re dre ss in t he cou r t s of su ch ju ri sdi c t ions , w he th er in re sp ec t o f a bre ach o f law or re gu la tio n, o r in an ow ne r ship dis pu te, b ein g mor e di cu lt to o bt ain ; (ii ) a hig he r de gre e of di sc ret io n on t he p ar t o f gove rn me nt al au th or it ie s; (i ii ) th e lack o f jud ici al or ad min is tr at i ve guidance on interpret ing applicable rules and reg ul at ion s; (i v ) inco nsi s ten cie s or con i c t s be t we en a nd w it hin v ar iou s law s , reg ul at ion s, de cre es , or der s a nd re so lut io ns; o r (v) re la ti ve ine x per ie nce o f th e jud ici ar y an d cour t s in s uch ma t te rs . In ce r t ai n jur is dic t io ns th e com mi tm ent of lo ca l bus ine s s- pe op le , gove rn men t oc ial s and age nci es a nd t he ju dic ial s y s te m to ab id e by le gal re quir em ent s a nd ne got ia ted a gr eem en t s may b e mo re unc er t a in , crea ti ng pa r t ic ula r conc er ns wi t h PETRONOR E&P ASA AN NUA L R EP OR T 20 21 52 Board of directors ’ report res pe c t to t he Co mp any ’s l ice nce s and a gr ee men t s for b usi ne ss . Th es e may b e sus cep ti ble t o rev is ion or c an cell at ion a nd l ega l re dre ss m ay be u nce r t ai n or de lay ed . Th ere c an b e no as sur anc e tha t joi nt ventures, licences, licenc e applications or other le gal ar ra nge men t s wi ll not b e ad ve rs el y a e c te d by t he ac ti ons o f gove rn me nt au t hor i tie s or o th er s an d the e e c t iv en es s of and e nf orce me nt of su ch ar ran gem ent s i n th es e jur is dic ti ons c an not b e assured Th e jur is dic ti ons in w hi ch th e Gr oup h as op era ti ons hav e a low s cor e on th e T rans pa ren c y In ter na ti ona l' s Cor r upt ion P erce pt ion I nde x , w hic h imp lie s tha t th es e coun tr ie s are p erc ei ve d as jur is dic ti ons w he re th ere is a h igh er r isk of co rr up ti on . Th e Gro up' s cur re nt a ss et s ar e lo ca te d in Con go, t he Ga mb ia, Se ne gal an d Gu ine a- B is s au. In a dd it ion , th e Gr oup has e nte re d into a de n it i ve ag re eme nt to a cqu ire as se t s in Nige ri a (wh ic h is subj ec t to com ple ti on). Th e Gr oup ma y als o t ar get a cqui si tio ns in ot he r cou nt ri es in A fr ic a . Th e pro duc tio n sha ri ng or ot he r licencing contrac ts in such jurisdictions may provide for p ay me nt s to t he gov er nm ent s a nd /or nat io nal oil compani es (fa rm -in fees, signatur e bonuses, ta xes, training budgets, equipment budget s, carr y of cer t ai n ex pen di tu res e tc .). Fur th er mo re, t he Gr oup ha s a num ber o f cons ult a nt s wo rk in g for it in t he a rea . Al t hou gh t he Gr oup b el iev es al l it s consultanc y agreements are entered into on clear an d tra nsp ar ent t er ms , th ere i s a ri sk th at a gent s or ot he r pe rs on s ac t ing o n be hal f of t he G ro up ma y eng age in co rr up t ac t i vi t ies w i th ou t the k no wl ed ge of th e Gr oup. U nde r app lic a ble l aw s rel at ing to th e Gro up' s ass et s , lo c al pa r t ic ipa ti on is or m ay be re quir ed i n the o il an d ga s se c tor, but i t may p rov e di c ult t o alw ay s re cei ve nal co n rm at ion a s to wh o th e ult im ate o wn er s an d al iat io ns of su ch lo ca l par tn er s ar e. Th ro ugh t he G rou p's in ves t ig at ion , it h as no t be en p os sib le to su bs t an ti ate u lt ima te ow ne rs hip a nd a lia ti ons o f all , cur ren t lo ca l pa r t ner s i n Congo a nd t he re c an be n o as sur an ce th at th er e are no go ver nm en t al iat io ns w it hin th e ul tim ate s har eh old er s of t he l oc al p ar tn er s in Con go. Cor ru pt pr ac t ice s of t hir d par ti es or a nyo ne wor k ing f or th e Gr oup o r any of i t s a lia ted p ar tie s , or al le gat io ns of su ch p rac ti ces , ma y ha ve a ma ter ia l ad ve r se e ec t on th e rep ut a ti on , per fo rm anc e, na nc ial co ndi ti on , ca sh o w, pro spe c t s an d/or res ul t s of th e Gro up. Wh ile t he Ø kok ri m pe rs on al in ve st ig at ion i nto ind i vi dua ls as so cia te d wi th t he Co mpa ny co nt inu es wi t hou t re so lut io n, b usi nes s pa r t ne rs m ay be re quir ed to p er fo rm e nha nce d K YC pro ced ure s on Pet ro Nor b ef ore t he y ca n enga ge wi t h the G ro up. Th is ma y ca use d ela y s to ne w ope rat io ns or e ven stop possible relationships depending on the risk pro l es of in di v idu al bu sin es se s. Bu sine s s ris k fac tor s Th e Gr oup' s bus ine s s, re su lt s of o per at ion s , val ue of as se t s , res er ve s, c as h ow s , n anc ial co ndi t ion an d acce ss to c ap it a l dep en d sig ni c an tl y up on, an d may be a d ver s el y a ec t ed b y, t he le ve l of oil an d gas pr ice s , wh ich a re hig hl y vo lat il e. Th e Gr oup' s rev en ues , c ash ow, re se r v e es t ima te s, p ro t ab ili t y a nd ra te of g row th d epe nd sub s t ant ia ll y on pr ev ail ing i nte rn at ion al an d lo ca l pr ice s of oil a nd ga s. Pr ic es fo r oil an d gas ma y uc tu ate s ubs t an ti all y b ase d on fa c to r s bey on d th e Gro up' s cont ro l. Con se que nt l y, it is imp os sib le to ac cur ate l y pre di c t f ut ure o il an d gas p ri ce mov em ent s . Oi l and ga s pr ice s are vo la til e an d hav e wi t nes s ed si gni c a nt ch ange s in re cen t yea rs , for m any r eas on s inc lud ing , b ut n ot li mi ted t o, PETRONOR E&P ASA AN NUA L R EP OR T 20 21 53 Board of d irec tors ’ report cha nge s in g lob al a nd re gi ona l sup pl y an d dem and , geopolit ical uncer t aint y, availabilit y of equipment an d new te ch no log ie s, w eat he r con di tio ns an d nat ur al di sa s ter s , ter ro ri sm as we ll as g lob al a nd regional econom ic conditions. Sustained lower oil a nd ga s pr ice s or p ri ce de cli ne s may i nte r ali a lea d to a ma ter ial d ec rea se in t he G rou p's ne t produc tion revenues. Currentl y, all of the Group ’s produc tion comes fr om e lds i n the P NGF S ud as se t in Con go Br az z av ill e. T he A je T ran sa c t ion , if c omp le ted , wi ll ad d a pro duc ing a ss et in N iger ia . Und er an y circums tan ce, the Group’s opera tions and cash o w wil l be re s tr ic t ed to a ve r y limi te d num be r of el ds . If m ec hani c al or te ch nic al p rob lem s , st or ms , shu td ow ns or ot he r ev ent s o r pro ble ms a ec t th e cur re nt o r fu tu re pr od uc t ion o f th e cur re nt pro du cin g ass et s o f the G ro up, or ne w e lds com ing i nto p rod uc t io n, i t may h av e dire c t a nd sig ni c an t imp ac t o n a subs t a nt ial p or t io n of th e Group ’s produc tion and hence the Group ’s revenue, pro t s a nd n anc ial p osi t ion as a w ho le. Ri sin g cli mat e cha nge co nce rn s hav e le d and c oul d lea d to ad di ti ona l leg al an d/or re gu lat or y mea sur es wh ich co ul d res ult i n pro jec t del ay s or c anc ell at ion s, a de cre ase i n de man d for f os sil f ue ls a nd ad di ti ona l com pli anc e obli ga tio ns , eac h of w hic h coul d ma ter ial ly a nd ad v er se l y imp ac t t he G rou p's cos t s and/or revenues . In gen er al, t he G rou p's op er at ion s are su bje c t to ri sk s wh ic h are t y p ic al fo r th e o sho re oi l and ga s ind us t r y, all o f whi ch ma y hav e a mate r ial ad v er se e ec t o n th e Gro up's o pe rat io ns , ca sh o w and na nc ial p osi ti on , inc lud ing b ut no t limi te d to r isk s rel at ing to: ■ E x te nsio n of e xi s tin g lic enc es an d pe rm it s , inc lu ding w he t her a ny ex ten sio ns wi ll be s ubje c t to on ero us con di ti ons ; ■ del ay s , cos t in a tio n, p ote nt ial p ena lt ie s an d reg ula tor y re qui rem en t s wi th re sp ec t to exploration, development project s and pro du c ti on of hy dro c ar bon s , whi ch ma y lea d to hydr oc arbon production being restr icted, del aye d or t er min ate d du e to a nu mbe r of int er nal o r ex t er nal f ac t or s; ■ decommissioning obligations and ac ti vi ties wh ich w il l inc ur cos t s t hat m ay be i n exce ss of ex pe c t a tio ns an d bud get s ; ■ th ird - pa r t y ope ra tor s an d pa r t ner s a nd con i c t s wi t hin a li cen ce gro up, su ch as t he p ubl icl y k now dis pu tes w i thi n th e Aj e gro up; ■ ca pa ci t y co ns t rai nt s an d cos t in at io n in th e se r v ic e se c to r and l ack o f av ail abi li t y of r equ ire d se r v ic es an d eq uip men t ; ■ le gal di spu te s an d le gal p roce e ding s t he G rou p may b e in vol ve d in i n ord er to d ef end o r en for ce any o f it s r ig ht s or o bl iga tio ns un de r it s l icen ce s, ag ree me nt s or ot he r w is e, w hic h may b e cos t ly an d tim e cons umi ng ; ■ le gal ch ar ges a gain s t ind iv i dual s wh o are re la ted to th e Com pan y, i.e. the o ngo ing pr os ec ut ion aga ins t p er so ns w ho are m ajo r shar eh old er s of- an d rela te d to th e Comp an y, whic h may l ead to re pu t at ion al da mage a nd as a r es ult o f suc h com pli ca ti ons r ela te d to the G ro up's d eal ing wi t h thi rd pa r t ie s and t he au th or i tie s an d it s rai sin g of deb t and e qui t y na nci ng ; ■ restric ted or lim ited acc ess to necessar y inf ra s tr uc tu re or c ap ac it y bo ok in g for t he tr ans por t at io n of oil an d gas ; ■ res t r ic t io ns wi t h resp e c t to o t ake of oi l and gas, including cur renc y exchange regulations del ay in g or pre ve nt ing t ime l y se t tl em ent , o t aker cr ed it r isk s as w ell a s hos t ili t ies o r ac t s of ter ro ri sm or wa r pre ve nt ing o t ake or i mpe di ng o t ake and f ur th er p rod uc t ion o f cr ude ; ■ res t r ic t io ns in t he ab ili t y to se ll or t ra ns fe r lic enc e int ere s t s due t o reg ula to r y co ns ent requirement s , provisions in it s joint operating agreements including pre-empt ion rights, if any , or applicable legislation; ■ ex tremely complex and stringent regulations concerning he alt h, safet y and environment issues; and ■ ca psi zin g , en vi ron me nt al p oll ut io n to se a and a ir an d oth er ma ri ti me di sa s ter s . Financial risk fac tors Th e ove ra ll ri sk man age men t pro gr am se ek s to min imi se t he po ten ti al ad ve r se e ec t s of unp re dic t a bl e uc t ua ti ons in nan cia l mar ket s on na nc ial p er f or man ce, i .e., r isk s a ss oc iat ed w it h cur re nc y ex po sure s an d deb t ser v ic ing . Fi nan cia l ins t r ume nt s su ch as de ri v at i ves , fo r w ard co nt ra c t s an d cur ren c y s wa ps ar e con tin uo usl y be ing ev alu ate d for t he h edg in g of suc h ri sk ex po sur es . Du e to th e inte rn at io nal na tu re of i t s ope ra tio ns , th e Gr oup is e x po se d to ri sk ar is ing f ro m cur re nc y ex po sur e, pr im ar il y wi th re sp ec t to th e Nor we gia n K ron er (N OK ), a nd t he Gr eat B ri t ish Po und (G BP) . Th e Gr oup' s ac t i vi t ies a re an d wil l con tin ue to be c ap it al i nte nsi ve . Th e Gro up e xp ec t s f u tur e inv es t me nt s in to ex is t ing an d ne w hyd roc ar b on as se t s to be se r ved b y ca sh - ow f rom o ngoi ng op era ti ons . Ho we ver, i t is als o ex pe c te d th at th e Gro up w ill l ook to r ais e deb t to pa r t-f un d fu t ure g row th . Suc h deb t may n ot be t ime l y av ail abl e, or o nl y be av ail abl e at te rm s wh ich a re una t t rac ti ve o r make s inve s t men t s les s pr o t abl e th an r s t ex pe c t ed. R es t ri c ti ons i n rais ing , o r th e PETRONOR E&P ASA AN NUA L R EP OR T 20 21 54 Board of directors ’ report una va ilab ili t y of, de bt ma y pre ve nt t he Gr oup f ro m gr ow ing as p lan ne d and ma y make t he G rou p to for ego o r los e at t ra c t iv e opp or tu ni tie s , wh ich in tu rn co uld h ave a ne ga ti ve i mpa c t on t he G rou p's na nc ial p osi ti on an d fu tu re pr osp ec t s. SHARE CAPIT AL Pet ro Nor E & P A S A is lis t ed o n th e Osl o Sto ck E xcha nge w her e it t rad es un de r th e tic ker s y mb ol PNO R . At 31 De cem ber 2 021 , th e Comp an y ’ s sha re ca pi t al co nsis t ed of 1, 326 ,991,0 0 6 ord ina r y s har es , wi t h 99.7 per ce nt of t he Co mp any ’s or din ar y sha res a dm it ted f or t rad ing o n Os lo Eur one x t E xp an d (No r w ay) . At an e x t rao rdi nar y gen era l me et ing o n 23 F e br uar y 202 2 , Pet ro No r E& P A S A is sue d ne w shar es in a ra t io of 1 :1 to the e xi s tin g sha reh ol der s of Pe tr oN or E& P Li mi ted . Th e Com pan y has o ne cl ass o f shar es in i ssu e, an d in acco rda nce w it h th e Nor we gi an Pu bli c Li mi ted Co mp ani es A c t , all s har es i n tha t cl as s pro v ide e qua l rig ht s in t he Co mp any. Eac h of th e sha res c ar r ie s one vo te. T he sh are s are f re el y tr ans f er rab le. T he A r ti cle s of A s so cia ti on do n ot pro v ide f or an y res t r ic t ion s on t he t ran s fer o f sha res , or a r ig ht of r s t re f us al fo r th e shar es . Sha re t ran s fer s ar e not s ubj ec t t o app rov al b y th e Bo ard o f Dir ec t or s. T he s har es ar e reg is te red i n bo ok- en tr y fo rm w it h th e VP S an d hav e ISI N NO 0 01 115 7 2 3 2 . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 55 Board of directors ’ report At 26 A pr il 2 022 , t he Co mpa ny ha d 4 ,0 32 sha reh ol der s an d 1 , 326 ,9 91 , 0 06 s har es . Th e t abl e be low s how s t he 20 la rge s t sha reh ol der s in t he Company: # Shareholder Number of shares Per c ent 1 Pet rom al L LC 1 4 81, 4 8 1, 6 6 6 36.28% 2 Sy mer o Lt d 1 38 , 763, 636 10 . 4 6 % 3 N OR En er g y A S 2 13 5 , 0 7 0 , 6 2 3 1 0 .1 8 % 4 A mb ol t Inv es t A S 87 ,583,283 6.60 % 5 Gu lsh age n III A S 3 45 ,000 ,000 3.39% 6 Gu lsh agen I V A S 3 45 ,000 ,000 3.39% 7 En er gi e A S 2 7 ,000 ,6 50 2 .03% 8 Nordnet Li vs for sikr ing AS 2 2 ,76 0, 4 9 4 1.7 2 % 9 Eng a Inv es t A S 1 5 ,7 7 2 ,7 75 1.1 9 % 10 No rdn et B an k AB 1 5 , 0 2 7, 9 5 3 1.1 3 % 11 ENG G ro up So pa r S . A . 1 0,000 ,000 0.7 5% 12 Pus t F o r Li ve t A S 8,697 ,609 0.66% 13 O mar Al- Qat t an 7 ,6 45,45 4 0. 58% 14 Leena A l- Qat t an 7 ,6 45,45 4 0. 58% 15 UB S Swi t ze rl and AG 6 , 4 6 2 ,99 3 0. 49% 16 Da nske B an k A / S 5 , 9 74 , 0 2 6 0 .4 5% 17 Sa ndb er g JH A S 5 , 6 5 3 , 9 51 0.43% 18 Avan z a Ba nk A B 3 ,96 0 , 24 4 0. 3 0% 19 G eir H åkon Da hl e 3,8 03, 877 0.29% 20 K nu t sha ug In ves t A S 3 , 3 8 6 ,161 0. 26% Subtotal 1 , 0 7 6 , 8 6 2 , 113 8 1.1 5 % Other s 2 5 0 ,12 8 , 7 9 3 18 . 8 5 % To t a l 1, 3 2 6 ,9 9 1, 0 0 6 1 00 .00% 1 No n- E xe cu ti ve Ch ai r, Mr . A lho mo uz is t he C EO of P et ro mal L LC. 2 NOR E ner g y A S i s a comp an y con tro ll ed jo int l y by Mr. Sø vol d an d Mr. L ud vi gs en t hro ug h ind ire c t ben e ci al i nte re st s . 3 Gul sha ga n II I AS a nd Gu ls ha gan I V A S are co mp an ie s cont ro lle d by M r . Sø vo ld t hro ug h an in dir ec t be ne c ia l in tere s t. Options Uni ss ue d Sha re s und er O pti on At t he da te of t he p ubl ish ing o f thi s rep or t th ere a re 1 , 1 76, 070 un iss ue d ord ina r y sh are s wi t h an exe rci se pr ice of N OK 7 .75 each an d an ex pi r y d ate of 31 May 20 22 . In th e cur re nt ye ar , no o rdin ar y sha re s were i ss ued on t he exe rci se of o pt ions ( 2020 : nil ). Inte re st s in Sh are s & Opt ion s A s at th e dat e of th is re p or t: ■ Int er im CE O Mr Pace h old s 1 , 4 65 , 524 sh are s. ■ Bo ard C ha ir Mr A lh om ouz h as no p er s ona l int ere s t s in sh are s an d opt io ns , bu t has in ue nce ov er 4 81,4 81,66 6 sh are s as th e CEO of sig ni c an t sha reh old er Pe tr oma l LLC . No ot he r cur re nt dir ec tor s ho ld sh are s or op ti ons . Position at resignation date: On 31 Ja nua r y 2 021 , NO R Ene rg y A S h el d 23 3 ,5 55, 8 57 sha re s wh en Mr Lu d vi g sen r esi gn ed as a Di rec tor . Fu r t her m ore , Mr Lu dv ig s en he ld 45 ,0 0 0 ,0 0 0 sh are s th rou gh an i ndi rec t ben e ci al int ere s t in Ne di Ha gan A S . In a ddi ti on , 1 5, 0 0 0, 0 0 0 sha res w ere h el d by Pus t F or L i vet A S, a co mp any con tr oll ed by i mme dia te fa mil y of M r Lud v ig se n. On 16 Dece mbe r 2021, N OR Ene rg y A S he ld 1 39, 555 , 857 s har es an d Sy mer o Lt d hel d 1 38 ,763 ,6 36 s har es w hen M r Sø vo ld w as rep lac ed as CE O. Fur th er mor e, Mr S ø vo ld he ld 9 0, 0 0 0, 0 0 0 sha res t hr oug h an in dire c t b ene c ial i nte res t i n Gu lsha gen I II A S an d Gul sha gen I V A S . Meetin gs of direc tors Th e num be r of dir ec t or s' me et in gs ( inc lu ding com mi t te es) of Pe tr oNo r E& P L imi te d, h eld d ur ing th e per io d wh ere e ach d ire c to r hel d oc e dur ing th e na nci al ye ar an d the n umb er of m ee tin gs at ten de d by eac h dir ec t or is as f oll ow s: PETRONOR E&P ASA AN NUA L R EP OR T 20 21 56 Board of d irec tors ’ report Audit Committe e Meetings Direc tors ’ Meeting s Eligible to atte nd At tended Eligible to atte nd At tended Current E Alhomouz - - 8 8 J Pace 1 1 8 8 J Isk an der 1 - 8 3 A Neuling 1 1 8 8 R Steinepr eis - - 8 8 I Smi ne s T y br ing - Gj ed de - - 8 7 G Kielland - - 8 8 In ad di ti on to me et in gs of d ire c to rs h el d dur ing t he yea r , due to t he nu mbe r an d di ver si e d lo ca ti on of th e dir ec t or s , a num ber o f ma t te rs a re au t hor is ed by t he bo ard o f dire c to r s vi a circ ula ti ng re so lu tio ns . Du rin g th e cur re nt ye ar , 1 7 cir cul at ing re so lu ti ons wer e au th or ise d by t he bo ar d of dire c t or s. T he re wer e no Re mun era ti on Com mi t te e or Co nti nu ous Dis cl osu re Com mi t te e me et ing s du rin g th e yea r , as an y rel ev ant ma t t er s we re dis cu ss ed du ri ng th e Dir ec tor s ’ Me et in gs . Th e num be r of dir ec t or s' me et in gs of Pe tr oN or E& P A S A hel d dur in g th e per io d wh ere e ach d ire c to r he ld o ce dur in g the nan cia l yea r and t he num be r of me et ing s at ten de d by ea ch dir ec t or wa s as fo llo w s: Direc tors ’ Meeting s Eligible to atte nd At tended Current E Alhomouz 2 1 J Pace 2 2 J Isk an der 2 1 I Smi ne s T y br ing - Gj ed de 2 1 G Kielland 2 2 Indemnif y ing dire ctor s and o cers Th e Gr oup ha s t aken ou t an in sur anc e pol ic y t o ind em nif y t he di rec tor s an d oc er s of th e Gr oup aga ins t li abi li t y w hen a c t ing fo r th e Gro up. ESG Pet ro Nor i s req uir ed to r ep or t o n it s c or por at e responsibili t y and selec ted relate d issues under §3 -3 a an d §3 -3 c of th e Nor we gi an Acc oun ti ng Ac t . Th e de t ail ed re por t ing on a ll re lev an t top ic s ca n be fou nd in t he s ep ara te ES G rep or t , wh ich i s inc lud ed in th is A nnu al Re por t on p age 2 3. C ORPORA TE GO VERNANC E Good corporate governance provides the foundation for long-term value creation, to the be ne t of s har eho ld er s , emp loy ee s and ot he r s t akeh old er s . Th e bo ard of d ire c to rs o f Pet roN or has e s t ab lish ed a s et o f gove rn an ce pr inc ip le s in ord er to e nsur e a cle ar di v isi on of ro le s bet we en th e bo ard o f dir ec t or s , th e exe cu ti ve m ana gem ent an d the s hare ho lde r s. T he p ri nci ple s are b as ed on t he No r w egi an Co de of Pr ac t ice f or Cor po ra te Governance. Pet ro Nor E P& A S A is sub je c t to an nua l cor po ra te governance repor ting requirements under se c t ion 3 -3 b of th e Nor we gi an Acc oun ti ng Ac t a nd th e Nor we gi an Cod e of Pra c t ice fo r Cor po rat e Go ver na nce , c f. sec tio n 7 on th e con ti nuin g ob liga ti ons o f st oc k exch ange l is te d comp an ies . Th e Acc oun ti ng Ac t m ay be f oun d (in N or we gia n) at w w w.lovdata.no . The N or weg ia n Code o f Prac ti ce for Co rp or ate G ov er nan ce, w hic h was l as t re vi se d on 14 Oc to ber 2 021 , ma y be f oun d at w w w.nues.no . Pet ro Nor r ev is ed i t s Cod e of Co ndu c t du e to t he cha nge in l eg al le gi sla ti on as a co ns eq uen ce of ins t a llin g a Nor we gia n ent i t y as t he n ew pa ren t Com pan y of th e Gro up. T he f ull p ol ic y is a va ilab le on t he Com pa ny web si te. T he a nnua l s t ate me nt on corporate governance for 2021 has been approved by t he b oar d an d ca n be fo un d on p age 3 0 in t his annual report . RESEARC H AN D D EVELO PME NT Th e Gr oup ma de n o inve s t men t s in re sea rch a nd de vel op men t in 2020 o r 2021 . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 57 B oard of director s’ repor t PETRONOR E&P ASA AN NUA L R EP OR T 20 21 58 Board of d irec tors ’ report P A YMEN TS TO GOVERNMEN TS Th is co unt r y - by - co unt r y r ep or t h as be en de vel op ed to co mpl y w it h th e le gal re qui rem en t s in th e Nor we gi an S ec uri t y T radi ng Ac t ( " Verd ipa pir ha nd ell ove n" ) § 5 -5 a. T he de t ail ed reg ul at ion c an b e fo und i n th e reg ula t ion " F or sk ri f t om land-for -land rapportering". In 2021, the Com pa ny wa s enga ged i n ex t ra c ti ng ac t i v it ie s enco mp as se d by t he le gi sla ti on ab ov e in th e fol low in g coun tr ie s: Re pub li c of Cong o, Nige ri a, Th e Ga mbi a, G uin ea - Bis s au an d Se ne gal . Th is repor t discloses relevant pay ments to governments for e x t ra c ti v e ac t i vi t ies i n th e cou nt rie s ab ov e, in ad di ti on to s om e con tex tu al in for ma ti on as re quir ed b y th e reg ula ti on in t he " F or sk r if t om land-for - land rapportering " . Ba sis f or p rep aratio n Th e rep or t inc lu des d ire c t pa ym en t s to governments from subsidiaries, joint operations an d join t ven tu res . In s ome c as es , ho we ver, cer t ai n pa ym en t s to gov er nme nt s m ay be m ad e by an op era tor o n beh al f of a pa r t ner sh ip. T his i s of t en th e ca se fo r are a fee s. I n suc h ca se s, t he Co mpa ny wi ll re por t th eir p ay in g inte re s t shar e of th e pa ym en t mad e by th e ope ra tor . Denition s Go ver nm en t - In th e cont ex t of thi s rep or t , a government means any national, regional or local au th or it y of a cou nt r y. It in clu de s a dep ar tm ent , age nc y o r und er t a ki ng con tr oll ed b y tha t au th or it y. Pro je c t - Fo r th is rep or ti ng a pr oje c t is d en ed as an inv es t me nt in a con ce ssi on ag re eme nt . Li cen ce fe es - T y pi ca ll y le vi ed o n the r ig ht to us e a geographical ar ea for exploration, development an d pro duc ti on, a nd i ncl ude r en ta l fe es , ar ea fees, entry fees, sever ance tax, co ncession fees an d oth er con sid era t ions f or li cen ces a nd /or con ces si ons . Adm ini s tr at iv e gove rn me nt fe es t hat are n ot sp eci ca ll y rel ate d to th e ex tr ac t i ve se c to r , or to ac ces s e x tr ac t i ve re so urce s , are e xclu de d. Mat er ial it y - A s p er t he " Fo r sk ri f t o m lan d -fo r - lan d rappor tering" payment s made as a single payment, or as a s er ie s of co nne c te d p ay men t s th at e qua l or exce e d Nor we gia n Kr on er (N OK ) 80 0 .0 0 0 dur in g th e yea r are di scl os ed . Repor ting currenc y - Payment s to governments are c onv er t ed f ro m th e fu nc t io nal c ur ren c y of e ac h le gal e nt it y int o th e pre se nt a tio n cu rr enc y, Uni ted St at es Do lla r s (US D). Th e pa ym en t s for en ti t ies wh os e fu nc t io nal c urr en cie s are ot he r th an USD are co nve r t ed in to USD a t th e fore ig n exch ang e ra te at t he av era ge ann ual r ate. Payments to governments and contex tual information Th e con so lida te d ove r v ie w be lo w disc lo se s th e sum of th e Com pan y 's p ay me nt s to gov er nme nt s in eac h ind i vi dua l coun tr y w her e ex t ra c t iv e ac t i vi t ies are p er for me d, p er co unt r y/pro jec t. Payments per project In US D tho usa nd Royalties Oi l ta x Othe r amounts To t a l PNGF Sud 15 , 7 6 0 3 3 ,1 0 2 1, 2 2 7 50,0 89 T otal Congo 15 , 7 6 0 3 3 ,1 0 2 1, 2 2 7 50,0 89 A4 Nil Nil 500 500 T ot al T he Ga mbi a Nil Nil 521 500 Sinapa Nil Nil 299 299 Esperanc a Nil Nil 291 291 T otal Guinea - Biss au Nil Nil 590 59 0 Other amounts includes’ payroll and other local taxes A s th e Comp an y is wai t ing fo r Go ver nm en t app rov al of t he A je t ran sa c t ion , no p ay me nt s we re mad e in re lat io n to thi s pro jec t dur ing 2 021 . Du e to th e arb it ra ti on s t at us of t he RO P an d SOSP lic enc es in S ene ga l, no p ay me nt s we re ma de in rel at ion t o the se p roj ec t s d uri ng 2021. Legal entit ies by countr y A s per the "F orskri f t om la nd -for -land rapporter ing" it i s req uir ed t hat t he C omp any r ep or t o n cer t ai n con te x tu al in for ma ti on at a co rp or ate l eve l. T his includes infor mation on loc alisat ion of subsidiar y, emp lo yee s pe r sub sid iar y an d in ter es t s p aid o r pa yab le to ot he r le gal en ti t ies w i thi n th e Gro up. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 59 Board of directors ’ report Ac t i ve le ga l cor po rat e s tr uc tu re of t he G rou p dur in g 2021 is se t ou t bel ow : In US D tho usa nd Main country of operations EEs 1) Int er es t pa id or p ay abl e to a gr ou p ent it y Aust ralia Pet ro No r E& P Lt d United Kingdom 2 - Cyprus Pet ro No r E& P Lt d Cy p r u s 1 1, 5 6 3 Nor w ay Pet ro No r E& P A S A N or way - - Pet ro No r E& P A S Nor way 3 - He mla A fr i ca H ol din g A S Nor way - - Republic of Congo He mla E &P C ongo S A Rep ublic of Congo 3 1,18 2 United Kingdom Pet ro No r E& P Se r v i ces L td United K ingdom 4 - Nigeria Pet ro No r E& P Lt d Niger ia 4 - Cayman Island s Pet ro leu m E& P Ga mb ia Lt d T he G amb ia 3 - Afric an Petroleum Senegal Ltd Sene gal - - Sene gal Afric an Petroleum Senegal SAU Se negal 2 - Swede n Pet ro No r E& P AB G uinea- Bis sau 1 - 1 ) Average number of employees’ during the year SIGNIFIC ANT CHA NGES IN THE S TAT E O F A F F A I R S Ju st b ef ore t he y ear- end , th e Com pa ny re fr esh ed it s Co de o f Cond uc t a nd a ss oc iat ed p oli cie s in ant ic ip at ion o f bec omi ng sub je c t to th e law s an d reg ul at ion s of Nor wa y wi th t he re do mic ile p roj ec t an d inte nt io n to mo ve th e lis t in g to th e ma in Os lo Sto ck E xch ange . SIGNIF ICA NT EVENT S AFTER THE BALANCE DA TE On 2 3 Fe br ua r y 20 22 : Pet roN or E& P A S A ann ou nce d th at at a n ex tr aor din ar y gen era l me et ing o f th e Comp an y, the Pe tr oNo r E& P A S A had i ss ued 1,3 26 ,991.00 6 or din ar y sha res a s pa r t of t he i mpl em ent a ti on of t he S ch em e of A rr ange me nt an d lis t in g of it s s har es o n the O sl o Sto ck E xch ange m ain li s t. Pe tr oN or E& P A S A’s is sue d ca pi t al is 1,32 6,9 91 , 0 06 s har es . On 2 5 Fe br ua r y 20 22 , Pe tro No r E& P A S A an nou nce d th at t he F ina nc ial Su pe r v is or y Au t hor i t y o f Nor wa y (N w. Fin ans t ils yn et ) had ap pr ove d a pro sp ec t us p rep are d by t he Co mp any f or li s ti ng of al l it s o ut s t an din g sha re s on Os lo St oc k E xcha nge. O n 28 F ebr ua r y 2 022 Pe t roN or E& P A S A’s sha res w ere li s ted a nd b ega n tra din g on Os lo Sto ck E xch ange . In Ja nua r y 202 2 , Pet ro Nor r ece iv ed t he co nse nt fr om t he Ni ger ia Up s tr eam Pe tr ol eum R eg ula tor y Com mis sio n (for me r ly t he Ni ger ian D ep ar tm ent of Petroleum Resources) for the transa c tions sig ne d in 201 9. T hro ugh t he t wo tr ans a c ti ons sig ne d in 201 9, t he Com pa ny acq uir ed a 1 3. 1 pe r cen t eco no mic i nte res t i n th e A je F iel d th rou gh t w o tra ns ac t io ns wi t h Pano ro an d YF P . Th is con sen t has a llo we d Pet roN or to re en gage na nc ial an d ind us t ri al pa r t ner s w it h a t ar get to ma tur e the p roj ec t t owa rds a n FID. I t is ex pe c te d th at th is w ill co mpl et e in Ap r il 202 2. A CPR u pda te p rep are d by AG R Pet ro le um Se r vi ces A S on t he Com pa ny ’s PNG F Su d ass et i n Congo w as rel eas e d on 6 Ap ri l 202 2. T he up da te rep re sen te d an in cre as e of ap prox ima te ly 2 p er ce nt a nd 4 p er cen t for 2P a nd 2C re spe c t iv el y on a g ros s ba sis . On 1 1 Ap r il 202 2 Pe tro No r ann oun ce d tha t th ey had signed a pre- payment sales agreement wi t h AD NO C T r ad ing du ri ng th e qua r te r and has i nvo ice d agai ns t en ti tl em ent p ro duc t io n. Fur thermore, PetroNor announced that it had re cei ve d a not i c at ion f ro m Økok ri m tha t th e Com pan y 's C hair ma n of th e Bo ard , Mr . Ey as A lho mou z (U S ci tize n), ha d be en m ade s ubj ec t t o PETRONOR E&P ASA AN NUA L R EP OR T 20 21 60 Board of director s’ repor t th e ongo ing i nve s t iga tio ns c ar ri ed o ut b y Økok r im an d be en gi v en t he s t at us a s sus pe c t , an d tha t th e U. S. D epa r t me nt of J us ti ce ha d ope ne d a sep ar ate investigatio n into these al legations, based on inf or ma tio n fr om Øko kr im . At the beginning of 2022, Russia ’s invasion of Uk rai ne de ep en ed t he e ner g y cr isis a nd l ed to a n imm ed iat e ee c t in i ncr eas ing oi l and g as pr ice s. Eco nom ic s anc ti ons to war ds Ru ssi a and t he eco no mic u nce r t ai nt y may h ave a n imp ac t on ou r bus ine s s and o ur mar ket s go ing fo r w ard . E xcep t for t he a bov e, t he Co mp any h as no t ide nt i ed a ny ev en ts w i th si gni ca nt ac coun ti ng imp ac t s tha t hav e occ ur red b et we en t he en d of th e rep or ti ng pe ri od a nd t he da te of t he p ubl ish ing o f th is rep or t . LIKEL Y DEV ELOP MENTS AND EXPECTED R E S U LT S A s th e in ll dr ill ing p rog ra m for L it an zi an d T che nd o gai ns mo men tu m, t he Com pa ny lo ok s fo r w ard to se ei ng th e imp ac t o f thi s sig ni c an t thr ee ye ar C A PE X in ve s tme nt p rog ram o n th e pro duc tio n le vel s of th e PNG F Sud li cen ce as t he se ne w we lls com e int o ope rat io n. Th e Com pan y wi ll con ti nue to s ee k pa r t ner s fo r it s hig h eq ui t y e xp lo rat io n por t f oli o to sh are i n the va lue cr ea tio n th rou gh t he dr ill b it . Af te r the r ece nt h ear in g in Par is f or t he ar bi t rat io n ma t te r ass oc iat ed w it h th e Se ne gal es e lice nce s , a de cis ion is e xp ec te d fro m th e T r ib una l in th e lat er hal f of t he ye ar . Unl es s th e mat ter is r es ol ve d by th e par t ies in de pe nde nt l y of IC SID b ef ore t hen . Th e Bo ar d wis he s to tha nk t he s t a, con sul t an t s, ser v ices providers and shareholders for their con ti nue d com mit me nt to t he Co mpa ny. DECL A R A T ION BY T HE BOA R D OF DIR EC TOR S A ND C EO We her eby co n rm t ha t, t o the b es t of o ur kn ow le dge , the co ns oli dat ed an nua l na nci al s t ate me nt s fo r 1 Janu ar y to 31 Dec emb er 2021 hav e be en pr ep are d in acc ord ance w i th ap pl ic abl e acc oun ti ng s t an dard s an d tha t t he in for ma ti on in th e na nci al s t ate me nt s gi v e a tr ue an d fai r vi ew of th e ass e ts , li abi li tie s , na nci al po si ti on an d pro t or los s of t he co mpa ny. We con rm t hat t he n an cia l s t ate me nt s gi ve a n acc ura te an d fai r vi ew of t he de vel op men t , pro t a nd po si tio n of th e com pa ny, as we ll as a de sc ri pt ion o f the p ri nci pa l ris k s and unc er t a int ie s it is f ac ing . Os lo, No r w ay, 29 A pr il 202 2 Th e bo ard o f dire c to r s and C EO – Pet roN or A S A Eyas Alhomouz G ro Kiellan d Joseph Iskander Ing vil Smine s T ybring- Gjedde Jens P ace Chair D irec tor Direc to r Direc tor In teri m CEO PETRONOR E&P ASA AN NUA L R EP OR T 20 21 61 Board of directors ’ report Consolidated statement of comprehensive i ncome ...................................................................... 64 Cons olid ated s t atem ent of nan cial pos itio n ................................................................................. 65 Cons olid ated s t ate ment o f change s in eq uit y ................................................................................. 66 Cons olid ated s t atem ent of cas h ow s ............................................................................................... 67 Note s to the cons olida ted na ncial s ta teme nt s ............................................................................ 68 No te 01 Corporate information ......................................................................................................................................... 68 No te 02 B asis o f preparation ............................................................................................................................................. 68 No te 03 S ign i c ant a cco unt in g jud geme nt s , es t im ate s an d ass ump ti on s ............................................................... 69 No te 0 4 Revenue ................................................................................................................................................................. 70 No te 0 5 Cos t of s al es ........................................................................................................................................................... 70 No te 0 6 Other operating income ...................................................................................................................................... 70 No te 07 E xploration expenses .......................................................................................................................................... 70 No te 0 8 Administr ativ e expense s ..................................................................................................................................... 71 No te 0 9 Finance expens e ................................................................................................................................................... 72 No te 10 T a x ex pe nse ........................................................................................................................................................... 72 No te 11 E arnings per share ................................................................................................................................................ 72 No te 12 Inventorie s ............................................................................................................................................................. 73 No te 13 T r ade a nd ot he r rec ei va ble s ............................................................................................................................... 73 No te 14 C as h and c a sh eq ui va le nt s .................................................................................................................................. 74 No te 15 S egment information ........................................................................................................................................... 74 No te 16 Proper t y, plant, and equipment ......................................................................................................................... 74 No te 17 Int angible asset s ................................................................................................................................................... 75 No te 18 Leases ..................................................................................................................................................................... 76 No te 19 T r ade a nd ot he r pay ab le s.................................................................................................................................... 76 No te 2 0 Loa ns an d bor ro wi ng s ......................................................................................................................................... 77 No te 21 Prov isions ............................................................................................................................................................... 77 No te 2 2 Share capi tal .......................................................................................................................................................... 78 No te 2 3 Reserves ................................................................................................................................................................. 79 No te 2 4 Related par t y trans ac tions ................................................................................................................................. 80 No te 2 5 Acquisition of subsidiaries ................................................................................................................................. 85 No te 26 R isk management ................................................................................................................................................. 86 No te 2 7 Fin an cia l ins t ru me nt s – Fai r val ue s ................................................................................................................... 89 No te 2 8 Commitments and c ontingencies ...................................................................................................................... 89 No te 2 9 Eve nt s su bs equ en t to re po r t ing d ate ............................................................................................................... 89 No te 3 0 Summar y of accounting policies ........................................................................................................................ 90 Financial s t atem ent s Pe t ro N o r E& P L im i te d PETRONOR E&P ASA AN NUA L R EP OR T 20 21 62 Financial state ments Compa ny st ate men t of comp rehe nsi ve inc ome – Pet rono r E& P A S A ....................................... 10 0 Compa ny st atem ent of nan cial po siti on – PetroN or E& PA S A ................................................. 101 Compa ny st atem ent of chan ges in equi t y – Petro Nor E& PA S A .................................................. 101 Compa ny st atem ent of ca sh ow – Petr oNor E& P A S A ................................................................ 102 Note s to the nanc ial st ate ment s – Petro Nor E& P A S A .............................................................. 10 3 No te 01 Corporate information ....................................................................................................................................... 10 3 No te 02 B asis o f preparation ........................................................................................................................................... 10 3 No te 03 Em pl oye e be ne t e xp en se s .............................................................................................................................. 10 3 No te 0 4 Auditors’ remuneration ..................................................................................................................................... 10 4 No te 0 5 Cas h and c a sh eq ui va le nt s ............................................................................................................................... 10 4 No te 0 6 Equit y .................................................................................................................................................................... 10 4 No te 07 R isk management ............................................................................................................................................... 10 4 No te 0 8 Fin an cia l ins t ru me nt s – Fai r val ue s ................................................................................................................. 10 5 No te 0 9 Commitments and conting encies .................................................................................................................... 10 5 No te 10 G roup a rrangement s and redomicile process ............................................................................................. 10 5 No te 11 S umm ar y of sig ni c an t acc oun ti ng po li cie s .................................................................................................. 10 9 No te 12 F inancial inst rumen ts ........................................................................................................................................ 10 9 No te 13 Event s af ter the r epor ting period .................................................................................................................... 110 Stateme nt of Director s ’ responsibili t y ............................................................................................. 111 Auditor ’s rep or t .................................................................................................................................... 111 Glo ss ar y an d den ition s ..................................................................................................................... 11 4 Corporate d irec tor y ............................................................................................................................. 11 5 Financial s t atem ent s Pe t ro N o r E& P A S A Disclosure of results for PetroNor E& P Limited Fo ll ow ing t he co mp let io n of a sc hem e of ar ran gem en t on 24 F eb r uar y 202 2 , Pet ro No r E& P A S A re pla ced P et roN or E &P L td a s th e par en t com pa ny of t he Gr oup . Th is ar ra ngem en t wil l be tr eat ed a s a con ti nua ti on of t he o ri gin al G rou p for a cco unt in g pur po se s. Pe tr oN or E& P A S A ha ve ch ose n to v olu nt ar il y in cl ude i n th eir a nn ual re po r t th e Con sol ida te d Fi nan ci al St a tem en t s, f or t he ye ar en ded 31 D ece mb er 2021, of Pet roN or E &P L imi te d for c omp le ten es s of in fo rma t ion . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 63 Financial stateme nts Con solidated s t atement of compr ehensi ve income For th e year en ded 31 De cemb er Am oun t s in USD t ho usa nd Note 2021 2020 Revenue 4 10 6 , 4 6 3 6 7, 5 4 3 Cos t o f sa le s 5 (3 4, 58 5) (25,8 85) Gr os s pro t 71 ,878 41, 6 5 8 Other operating income 6 866 45 Explorat ion expense 7 ( 2 , 27 0) - Adminis trati ve expens es 8 (13 , 13 1) (12 , 3 7 6 ) Prot from opera tions 5 7, 3 4 3 29, 327 Finance ex pense 9 ( 3 ,0 41) (2 ,60 6) Foreign exchang e gain/(loss) (56) 1, 5 0 7 Pro t b ef or e ta x 54,246 28,2 28 T ax e xp ens e 10 ( 3 3 ,1 0 2 ) ( 17, 0 7 8 ) Pro t /(l os s) for th e yea r 2 1 ,1 4 4 11 , 15 0 Other Comprehensive income: Exchange losses arisi ng on translation of foreign operations (3 6 4) (1, 0 5 0 ) T otal comprehensive inc ome/(loss) 2 0,7 8 0 10 ,10 0 Pro t /(L os s) for t he yea r at tri but ab le to : Ow n er s of th e pa ren t 12 , 3 14 2, 373 Non- cont rolling interes t 8,830 8, 777 To t a l 2 1 ,1 4 4 11 , 15 0 T otal comprehens ive income/(loss) attribut able to: Ow n er s of th e pa ren t 12 , 2 0 8 1, 4 17 Non- cont rolling interes t 8,572 8,68 3 To t a l 2 0,7 8 0 10 ,10 0 Ear nin g s pe r sha re at tr ib uta bl e to me mb er s: Ba sic p ro t /(l os s) per sh are ( U SD ce n t s) 11 1.0 6 0.24 Dil ut ed p ro t / (l os s) per sh are ( US D ce nt s) 11 1.0 6 0.24 Th e accom pa nyi ng no tes f orm p ar t o f the se con soli da ted nan cia l s tat eme nt s . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 64 Financial stateme nts – PetroNor E&P Limited C onso lid at ed s t ate ment of nan cia l pos ition At 31 Dece mber Am oun t s in USD t ho usa nd Note 2021 2020 ASSETS Current asse ts Inventories 12 6,227 3, 578 T rad e an d oth er re cei v ab les 13 13,820 9,397 Ca sh an d c ash e qui v al ent s 14 3 1,7 55 14 ,11 3 To t a l 51, 8 02 27 ,088 Non - current ass ets Proper t y , plant and equipment 16 39 ,397 23,483 Intang ible assets 17 7,1 7 2 6 ,9 35 Right - of -use assets 18 44 2 12 Other receivables 12 26,837 21, 2 6 0 To t a l 73,450 51, 8 9 0 T otal assets 1 25,252 78 ,978 LIA BILITIES Current liabilities T rad e an d oth er p aya bl es 19 29,9 9 6 22,238 Lease liabilit y 18 58 17 0 Lo ans a nd bo rr ow in gs 20 1 3,079 4,000 To t a l 4 3 ,1 3 3 26,408 Non - current liabilitie s Lo ans a nd bo rr ow in gs 20 - 1 4 , 9 12 Lease liabilit y 18 - 55 Provisions 21 16 , 3 0 2 15 , 3 0 7 To t a l 16, 3 02 3 0 , 2 74 T otal liabilities 59, 4 35 56,682 NET ASSETS 6 5 , 8 17 2 2, 296 Is su ed c api ta l and r es er ves a tt ri but ab le to o wne r s of th e par ent Share capital 22 6 2 ,1 1 5 17, 7 3 5 Reserves 23 (1 , 4 2 1) (956) Retaine d earnings 23 (1,3 9 0) (8,853) To t a l 5 9, 30 4 7, 9 2 6 Non- cont rolling interes ts 24 a 6 , 513 14 , 3 7 0 TOT AL EQUIT Y 6 5 , 8 17 2 2, 296 Th e accom pa nyi ng no tes f orm p ar t o f the se con soli da ted nan cia l s tat eme nt s . Th e con so lid ate d na nc ial s t a tem en ts w ere a pp rov ed an d au th or is ed fo r iss ue by t he B oa rd of D ire c to rs o n 29 A pr il 202 2 . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 65 Financial stateme nts – PetroNor E&P Limited C onso lid at ed s t atem ent o f cha ng es in eq uit y Am oun t s in USD t ho usa nd Note Share capit al Foreign cur ren c y translat ion reserve Ret ain ed earnings Non- controlling interes t To t a l For t he ye ar e nde d 31 D ec em be r 20 2 1 Ba lan ce at 1 J anua r y 2 02 1 17, 7 3 5 (956) (8,853) 14 , 3 7 0 22,296 Pro t f or th e yea r - - 12 , 3 14 8,830 2 1 ,1 4 4 Other comprehensive income - (10 6 ) - (2 58) (36 4) T ot al co mpr eh en si ve lo ss f or t he ye ar - (10 6 ) 12 , 3 14 8,572 20 ,7 8 0 Is sue o f ca pi t al 22 45 ,9 4 3 - - - 45,94 3 Share issue cos ts 22 (1, 5 6 3) - - - (1, 5 6 3 ) Acq uis it io n of eq uit y in ter es t f rom N CI - (359) ( 4,85 1 ) (16 , 4 2 9 ) (21,639) Ba lan ce at 3 1 De ce mbe r 2 02 1 6 2 , 115 (1 , 4 2 1) (1, 3 9 0 ) 6 , 5 13 6 5 , 8 17 For t he ye ar e nde d 31 D ec em be r 20 2 0 Ba lan ce at 1 J anua r y 2 02 0 17, 7 3 5 - ( 11 , 2 2 6 ) 14 , 74 9 21, 2 5 8 Pro t /( los s) for t he ye ar - - 2 ,37 3 8, 777 1 1 ,1 5 0 Other comprehensive income - (956) - (9 4) (1,0 5 0 ) T ot al co mpr eh ens iv e los s fo r th e yea r - (956) 2, 373 8,683 10, 10 0 T ran sa c tio ns w ith o wn er s in th ei r cap ac it y as owners: Is sue o f ca pi t al 22 - - - - - Di v id end s pa id dur in g th e yea r 23 , 24 a - - - (9, 0 62) (9, 0 62) Ba lan ce at 3 1 De ce mbe r 2 02 0 17, 7 3 5 (956) (8,853) 14 , 3 7 0 22,296 Th e accom pa nyi ng no tes f orm p ar t o f the se con soli da ted nan cia l s tat eme nt s . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 66 Financial st atements – PetroNor E& P Limited C onso lid at ed s t ate ment of cas h ows For th e year en ded 31 De cemb er Am oun t s in USD t ho usa nd Note 2021 2020 Ca sh ows f rom o pe rati ng ac t iv iti es Pro t f or th e yea r 54,246 28,2 28 Adjustments for: Depreciation and amor tisa tion 4,422 4 , 475 A mor ti za t ion o f ri gh t-o f-u se a ss et 16 8 16 9 Unw in di ng of di sco unt o n de com mis sio nin g lia bil it y 995 93 4 Ne t for eig n exc han ge di e ren ces (36 4) (1, 0 5 0 ) To t a l 59,4 6 7 3 2 ,75 6 (I ncr es e)/ De cr eas e in tr ad e and o th er re cei v abl es (8, 0 62) 7 29 Inc re ase i n ad va nce ag ain s t dec omm is sio nin g cos t 13 (5,57 7 ) ( 6 , 614 ) Inc re ase i n inv ent or ie s 12 (2,6 4 9) (3 45) (D ec rea se) /i nc rea se in t ra de an d oth er p ay abl es 7, 7 5 8 ( 1 2,363) Cash ( used in )/gen erated fro m operati ons 50,937 (1 8,59 3 ) Inc ome t a xes p aid 10 ( 3 3 ,1 0 2 ) ( 1 7, 0 7 8 ) Ne t cas h o ws fr om op er ati ng ac ti v iti es 1 7, 8 3 5 ( 2 , 9 15 ) Investing acti vities Purchases of proper t y , plant and equipmen t 16 (1 9,7 5 9) ( 4 , 615 ) Purchases of inta ngible asse ts 17 ( 8 14) (3,007) Ne t cas h o ws fr om inv es ti ng ac ti v iti es ( 20 , 57 3) ( 7, 6 2 2 ) Financing activitie s Is sue o f ord ina r y sh are s 22 2 7, 9 4 3 - Pro ce eds f ro m loa ns an d bo rr ow ing s 20 (1, 5 6 3) 18 , 9 12 Rep ay m ent o f loa ns an d bo rr ow ing s 20 (5 ,8 3 3) ( 12 , 9 4 1) Repayment of principal portion of lease liabilit y 18 (159 ) ( 13 1) Repayment of interest port ion of lease liability 18 (8) ( 19 ) Di v id end s pa id to no n - con tr oll ing i nte res t - (9, 0 62) Ne t cas h (use d in) /f rom nan cin g ac ti vi tie s 2 0,3 80 (3,24 1 ) Ne t inc rea se /(de cre as e) in cas h and c as h eq ui val en t s 1 7, 6 4 2 (13 , 7 7 8 ) Ca sh an d c ash e qui v al ent s a t be gi nni ng of y ear 1 4 ,11 3 2 7, 8 9 1 Ca sh an d ca sh e qui va le nts a t en d of ye ar 14 3 1,7 55 14 ,11 3 Th e accom pa nyi ng no tes f orm p ar t o f the se con soli da ted nan cia l s tat eme nt s . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 67 Financial st atements – PetroNor E& P Limited No tes t o the c on sol ida ted nan cia l s t at ements Note 01 C orp orate information T he co nso li da te d na nc ial s t a te men t s of Pe tr oN or E &P L im it ed an d it s su bsi dia ri es ( toge th er t he “ G rou p” ) fo r th e yea r en de d 31 De cem ber 2 021 was au t hor is ed f or is su e in acc ord anc e wi th a res ol ut io n of th e Dir ec t or s on 29 A p ri l 202 2. Pet ro No r E& P Lim it ed is a ‘ f or pr o t en ti t y ’ an d is a com pan y lim it ed by s har es in cor po ra te d in Aus t ra lia . Dur in g 2021 it s sha re s wer e pub lic ly t ra de d on th e Os lo Eur one x t E x pa nd und er t ic ker PN OR , a re g ula ted m ar ket pla ce of t he O sl o Sto ck E xcha nge , Nor wa y, and sub se qu ent l y de lis te d on 24 F eb r uar y 202 2. O n 28 F eb ru ar y 202 2, un de r a sch em e of ar ran gem en t , Pet ro No r E& P A S A rep la ced P et roN or E &P L td a s th e top com pa ny of t he Gr oup . A s at th e da te of th is re po r t Pe tro No r E& P A S A is no w th e ult im ate p are nt e nt it y for t he G rou p. T he con so lida te d na nc ial s t at em ent s o f Pet roN or E &P A S A w ill be a ccou nte d as a co nt inu it y of th e Gr oup. T he c ons oli da ted na nc ial s t at em ent s o f Pet roN or E &P L imi te d ha ve be en pre pa re d for i ncl usi on i n th e ann ual r epo r t o f Pet ro Nor E & P A S A . T he sh are s of Pe tr oNo r E& P A S A are n ow t rad ed o n the mai n lis t of O sl o Stoc k E xcha nge , whi ch is t he m ain re gu lat ed mar ket pl ace i n Nor wa y. T he p ri nci pa l ac t i vi t ies o f the G ro up are t he e xp lo rat io n and p rod uc t io n of cr ud e oil . Note 02 Basis of preparation CHANG E IN ACCOUNTING POLIC Y Pet ro nor E & P Lim it ed ’ s cons ol ida te d na nci al s t at eme nt s hav e be en pr ep are d in ac cor dan ce wi t h Int er nat io nal F in anc ia l Rep or ti ng St an da rds ( IF R S) w hi ch ha ve be en a dop te d by th e EU. Th e con so lid ate d na nc ial s t a tem en ts h ave b ee n pre pa re d on a his t or ic al co s t ba sis , an d on t he b asi s of un if or m acc oun ti ng pr in cip le s for si mil ar tr an sa c t ion s and e ven t s un der ot he r w is e sim ila r cir cum s t anc es . Th e acc oun t s of Pet ro No r E& P Lim it ed we re his t or ic all y pr ep are d in ac cor dan ce wi t h the r eq uire me nt s of t he Au s tr ali an Co rp ora t ion s Ac t o f 20 01, Aus tr ali an Accounting Standards and o ther authorit ative pronouncements of th e Au s tra lia n Acc oun ti ng St an dar ds B oa rd, w hi ch al so com pli es w it h In ter na ti ona l Fi nan cia l Rep or ti ng St an da rds (I FR S ). T he re is n o req uir eme nt fo r com pa rat i ve re s t at eme nt . It is im por t an t to not e tha t In t he pr ev io us ye ar th e con so lid ate d na nc ial s t at em ent s co mp lie d wi t h IFR S as is sue d by t he Int er na ti ona l Acco un tin g St an dar ds B oar d. Th e con so lid ate d na nc ial s t a tem en ts a re pr es ent ed in U ni te d St at es D oll ar s , whi ch is a ls o the f un c t ion al cu rr enc y for t he Company and all material subsidiaries, and all values are rou nd ed to t he t hou s and d oll ar s unl es s ot he r w is e st a te d. GOING CONCERN Th e con so lid ate d na nc ial s t a tem en ts h ave b ee n pre pa re d on a goin g con cer n ba sis . Un der t he go ing co nce rn a ss ump ti on , an en ti t y is ord ina ri ly v ie we d as co nt inu ing i n busi ne ss f or th e for es ee ab le f ut ure . Th e Gro up re cog ni se s tha t in or der t o fu nd on - goi ng op era ti on s and p ur sue o rg ani c and i nor ga nic g row t h op por t uni ti es i t wi ll ne ed a ddi t ion al f und ing . Th is f und ing m ay be s our ced t hr ou gh jo int v en tu re eq ui t y o r sha re is su es or th rou gh de bt nan ce. A s at t he s ig nin g dat e of th is re po r t , t he p oo ling a gr ee men t be t w een t wo t hir d par t ies n ece s sa r y to e nab le t he ne w o t aker to l if t r s t qua r te r 202 2 oil p ro duc t io n is be lie ve d to be c los e to co mpl et io n. T he G rou p is cur re nt l y ad va nci ng po ten tia l con ti nge nc y a rr ange me nt s to im pro ve w or ki ng c api t al sho ul d fu r t her s ign i c ant d ela y s to com ple t ion of t he p oo lin g ag ree me nt an d li f t ing s ch ed ule e ven tu ate . A s at t he da te of t his rep or t it is n ot ye t cle ar w he th er an y suc h ar ran gem en t wi ll be n ece s sa r y a nd no n ew bi nd ing ar ra nge me nt s ha ve be en en ter ed in to. G lob al m acr oe con omi c fa c tor s a re con sid ere d to be s t ron gl y in t he Co mp any ’s f avo ur at p re se nt w it h hig h de man d lea din g to hig h oi l pri ce s, a nd th e Bo ar d is con d ent a so lut io n to an y sho r t-t er m wor k ing c ap it a l req uir em ent s w il l be im pl eme nt a ble a s nec es s ar y. Th er e are ou t s t an din g amo un ts d ue to re la ted p ar t y sha reh ol de rs P et rom al an d NO R Ene rg y fo r th e rem ain ing c a sh con sid era ti on of t he 2019 reve r se t ake ove r tr ans ac ti on of US D 1 . 3 mi lli on an d USD 2. 1 mi lli on re sp ec t i vel y. Plu s, t he G rou p has a USD 3 .9 mill ion d ebt f ac ili t y w it h re lat ed p ar t y sh are ho lde r Sym er o tha t is du e to be re pa id in No ve mbe r 202 2 , and a US D 5.6 m ill ion d ebt f ac ili t y w it h R asm ala t ha t wil l be re pa id in e qual ins t a lme nt s up to N ove mb er 202 2 ( Not e 20). In a dd it ion t he Gr oup h as ma te ria l po ten ti al c ap it al c omm it me nt s as s oc iat ed wi t h it s e xp lor at ion p or t f oli o as de ta il ed in N ote 2 8 Se t tl em en t of th e bo rr ow ing s de t ail ed a bo ve wo uld l eav e th e Gro up de bt fr ee . Ho we ve r , the G ro up pla ns to re n an ce and c ons oli da te it s v ar io us de bt p osi ti on s be for e th e yea r - en d, t o pro v ide ad di tio na l wor k ing c ap it a l and s t ren g t hen i t s ba lan ce sh ee t. Wh ile i t is ac k now le dge d th at t he re cen t Øko kr im in ve s ti gat io n as de t ai led i n No te 28 Co mm it me nt s an d Con ti nge nci es m ay com pli c ate re n an cin g ini ti at iv es a nd e x te nd ti me t abl es , t he Bo ar d is con de nt t ha t re nan ci ng me asu res w il l be ab le to b e com pl ete d as ne ce ss ar y. Th es e con di ti ons i ndi ca te a ma te ria l unc er ta in t y t hat m ay ca us e sig ni c an t dou bt ab ou t th e en ti t y ’s a bil it y to con ti nue as a go ing co nce rn a nd , th er efo re, t ha t i t may b e una bl e to rea lis e it s a ss et s a nd d isc har ge i t s lia bil it ie s in t he no r mal cou rs e of bu sin es s . Th es e con sol ida te d na nc ial s t at em ent s hav e be en pr ep are d on t he goi ng co nce rn b asi s whi ch as su me s th e con ti nui t y o f no rm al bu sin es s ac ti v it y, th e rea lis at io n of as se t s, a nd t he s et tl em ent o f lia bil it ie s in t he no rm al co ur se o f busines s. Th e un der l y ing b usi nes s of t he G rou p cre ate d a ne t pro t a f te r t ax of U SD 21 . 1 mil lio n for t he ye ar en de d 31 Dec emb er 20 21 , wi t h st ro ng pr odu c t ion f ro m th e Congo a ss et s ge ner at in g 3, 6 14 bopd i n the r s t quar te r of 202 2. A t 31 Dece mb er 2021, PETRONOR E&P ASA AN NUA L R EP OR T 20 21 68 Financial st atements – PetroNor E& P Limited th e Gro up ha d a ca sh ba lan ce of US 31.8 mi lli on. T he Co mp any has e nte re d int o a new o t ake ag re em en t wi th a ne w pa r t ne r , lis t ed t he Co mp any o n th e mai n of O slo S toc k E xcha nge , con ti nue d to h os t da t a roo ms f or po ten ti al p ar t ne r s to jo in the Company on its explorat ion port folio, demonstrating that th e bus ine s s has co nt inu ed to o pe rat e e ec t i ve ly, an d tha t bu sin es se s are w ill ing t o eng age w it h th e Comp an y. Th is ha s ena ble d th e dir ec t or s to fo rm t he o pin ion t ha t the Com pa ny wi ll be i n a pos it ion t o con tin ue to m ee t it s li abi li tie s an d obl iga ti ons f or a pe ri od of a t lea s t t we lv e mo nt hs fr om t he dat e of sig ni ng th is re por t . Th es e con so lid ate d n anc ial s t a tem en t s do not i ncl ud e any ad jus t me nt s re lat in g to th e rec ove rab ili t y and c las si c a tio n of re cord ed a ss et a mou nt s or t o the a mou nt s an d cla ss i c at ion of li abi li ti es t hat m ig ht b e ne ces s ar y sho ul d th e Gro up n ot con ti nue a s a going c onc er n. Note 03 Signif icant a ccounting judg ement s , es timates and as sumptions Th e Di rec tor s e val ua te es t ima te s and j udge me nt s inc or po rat ed in t he co ns oli dat ed nan cia l s ta te men t s ba se d on his t or ic al k no wl ed ge and b es t- av aila bl e cur re nt inf or ma ti on . Es ti ma tes a ss ume a re as ona bl e ex pe c t at io n of fu t ure e ve nt s an d are b as ed o n cu rr ent t re nds a nd e con om ic dat a , ob t ain ed b oth e x te rn all y a nd w it hin t he G rou p. Th e man age me nt ha s ide nt i ed t he fo llo w ing c ri ti ca l ac co un t in g po l ic ie s fo r w hi c h sig n i c a nt jud ge m en t s , e s ti m at es an d ass ump ti ons a re ma de. A c tu al re sul t s ma y di er f ro m th es e es t ima te s und er di e re nt as sum pt io ns an d cond it io ns an d may ma te ria ll y a ec t na nci al re sul t s or t he n anc ia l po si tio n rep or te d in fu t ure p er iod s. Fu r t her d et a ils o f th e nat ur e of th es e as sum pt io ns an d con di ti ons m ay be f oun d in th e rel ev an t note s to t he n anc ial st atements . HYDR OCARBON RESER VE AN D RESO URC E ESTI MA TES Hy dro c ar bo n res er ve s ar e es t ima te s of t he am oun t of hyd ro ca rb on s tha t c an b e eco no mic al ly a nd l ega ll y e x tr ac t ed fr om t he Gr oup ’ s oil an d gas p rop er ti es . Th e Gr oup e s ti mat es its comme rcial reser ves an d resour ces based on i nformation com pil ed b y app rop ri ate l y- q ual i ed p er so ns re la tin g to th e geo lo gic a l and t ec hni ca l da ta o n th e siz e, de pt h, s hap e an d gr ade o f th e hyd ro ca rb on b od y an d su it ab le p rod uc t io n te chn iqu es a nd re cov er y rat es . Com mer cia l re ser v es ar e de ter mi ne d usi ng es t im ate s of o il an d gas i n pla ce, r eco ve r y fa c tor s a nd f u tur e com mo di t y pr ic es , t he la t te r ha vi ng an imp ac t on t he to t al am oun t of re co ver ab le re se r v es a nd t he pro po r t ion o f th e gro ss re se r ves w hi ch ar e at t r ibu t ab le to t he ho st g ove rn me nt un de r th e ter ms o f th e Pro duc ti on -Sh ar ing A gr ee me nt s . Fu tur e dev el op men t cos t s ar e es t ima te d usin g as sum pt ion s as to t he num be r of we lls re qu ire d to pr odu ce th e com mer cia l res er ve s , th e cos t of su ch w ell s and a ss oc iat ed pro du c ti on f aci li tie s , an d oth er c api t al co s t s. T he c ur ren t lo ng- ter m B ren t oil p r ice as su mpt io n us ed in t he e s t ima ti on of com me rcia l re ser v es is US D 70/ bb l. T he c ar r y i ng am oun t of oi l an d gas pr op er t ie s an d lice nce s at 31 De ce mbe r 2021 ar e sho wn in No te 1 6 an d 1 7 . Th e Gr oup e s ti mat es a nd re por t s hy dro ca rb on re s er ve s in lin e wi th t he p ri nci pl es co nt ai ne d in th e So cie t y o f Pet rol eu m Engineer s (SPE) Petroleum Resource s Management Repor ting Sys t em (P RM S) f ra me wor k . A s th e ec ono mic a ss ump ti ons u se d may c ha nge an d as a ddi t ion al ge ol ogi c al in for ma t ion i s obt a ine d dur in g th e ope ra tio n of a e ld , es t ima tes o f rec ove rab le re ser v es ma y cha nge. S uch c han ges m ay im pa c t th e Gro up ’s rep or te d na nci al po si ti on an d res ul t s, w hi ch in clu de: ■ Th e c ar r y in g val ue of o il an d gas pr op er t ie s a ec ted b y cha nge s in es t im ate d f ut ure c as h ow s , No te 1 6; ■ De pre ci at ion a nd am or tis a ti on ch ar ges in t he s t a tem en t of pro t o r los s an d ot her co mp reh ens i ve inc om e whe re su ch cha rg es ar e de ter mi ne d usi ng t he Un it o f Pro duc ti on me th od , or w her e th e use f ul li fe of t he re la ted a ss et s c han ge, No te 16); ■ Pro vi sio ns fo r de comm is sio nin g wh ere c han ges t o res er ve s es t ima te s a ec t e xp ec t at ion s ab ou t wh en su ch ac ti v it ie s wi ll occ ur an d wh at t he as s oci ate d co st s o f the s e ac t iv i ti es w ill b e, Not e 21 . TA X E S Th e Gr oup o pe rat es in s ev er al t ax ju ri sd ic t io ns , and con se que nt l y, it s inc ome i s sub je c t to v ar iou s ra tes a nd r ul es of t ax at io n. A s a re sul t , th e Com pa ny ’s e ec ti ve t a x ra te may v ar y sig ni c an tl y d epe nd ing up on t he p ro t ab ili t y o f op era ti ons i n th e di er ent j ur isd ic t io ns . Th e Gr oup r eco gn ise s th e ne t fu tu re t ax b en e t rel at ed to de fer re d in com e t ax a ss et s to t he e x t ent t ha t it i s pro ba bl e th at t he de du c ti ble t emp or ar y di er en ces w il l rev er se i n the for es ee ab le f ut ure . A ss es si ng th e rec ove ra bil it y of de fer re d inc ome t a x as se t s req uir es t he G rou p to make si gni ca nt es t ima te s rel ate d to e xp ec t a ti ons o f fu tu re t ax ab le in com e. Es t ima te s of f ut ur e t ax abl e in com e are b as ed o n for ec as t c as h o ws f ro m ope ra ti ons a nd th e app li ca ti on of e xi s ti ng t ax la w s in ea ch ju ri sdi c t ion , to th e ex ten t th at f ut ure c as h o ws a nd t ax ab le in com e di er si gn i c ant l y fr om es t im ate s. T h e abil it y of t he G rou p to re ali se t he ne t de fe rr ed t a x as se t s rec ord ed at t he da te of t he s t at eme nt of nan cia l po si tio n cou ld be impacted. Ad di tio na ll y, fut ur e cha nge s in t ax la w s in th e jur is dic tio ns in wh ic h the G ro up op era te s cou ld lim it t he a bil it y of th e Gr oup to ob t ain t a x ded uc t io ns in f ut ur e per io ds . Ad di tio na l inf or ma tio n on t he a cco unt in g pol ic y for t a xes i s ex pl ain ed f ur th er in N ote 10 and 3 0M . DECOMMISSIONING COST S De com mis si oni ng cos t s w il l be in cur re d by th e Gr oup a t th e en d of th e op er at ing l if e of so me o f th e Gro up ’s f ac ili ti es a nd pro pe r t ie s. T he G rou p as se ss es i t s ret ir eme nt o bli gat io n at eac h rep or ti ng da te. T he u lt ima te de co mmi ssi oni ng co s t s are unc er ta in a nd co s t es t ima te s ca n va r y in r es po nse t o man y fa c tor s , in cl udi ng ch an ges to r el ev ant l eg al re qui rem en t s, t he PETRONOR E&P ASA AN NUA L R EP OR T 20 21 69 Financial stat ements – PetroNor E& P Limited em er genc e of ne w res t ora ti on te ch niq ue s or ex pe r ien ce at ot her p rod uc t io n si tes . T he e xp ec t ed t imi ng , e x te nt an d amo unt of e xp en di tur e ca n al so ch an ge, fo r ex am ple i n re spo ns e to cha nge s in re se r v es or c han ges i n law s an d reg ul at ion s or th eir interpretat ion. Therefore, signicant es timates and assumptions are m ad e in de ter mi nin g th e pro v isi on fo r de com mis sio ni ng cos t s . A s a res ul t , th ere co uld b e sig ni c an t ad jus t me nt s to th e pro v isi ons e s ta bl ish ed w hic h wo uld a e c t f ut ure na nc ial re su lt s . Th e pro v isi on at re po r t ing d ate r epr es en t s th e man agem en t 's be s t es t im ate o f the p re sen t va lue o f the fu t ure d eco mmi ss ion ing co s t s req uir ed . Add it io nal in fo rm at ion is pr ov id ed in N ote 21. A ll hy dr oc ar bo n rel ate d ac t i v it ie s are rel at ed to in ve s tm ent s i n join tl y co nt rol le d ar ran gem en ts . Ev en if t he i nve s tm en t s are n ot jo int l y con tr ol led t he y ar e acco un ted for i n th e sa me wa y. Pl ea se se e de t ail ed di sc lo sure i n Not e 30 de sc ri bin g the t re at men t of jo int o pe rat io ns . Note 0 4 Revenue Am oun t s in USD t ho usa nd 2021 2020 Revenue from contracts from customers Revenue from sales of petroleum pr oduc t s 1 5 7, 6 0 1 4 0,6 35 Other Revenue A s sig nme nt o f t ax o il 3 3 ,1 0 2 17, 0 7 8 A ssignmen t of royalties 15,7 6 0 9, 8 30 To t a l R e v e n u e 10 6 ,4 6 3 6 7, 5 4 3 Qu ant i t y of o il li f t ed ( ba rr els) 831,089 9 9 3 , 5 74 Ave rag e sel lin g pr ice ( USD p er ba rr el ) 69. 3 1 4 0.9 0 Qu ant i t y of n et o il pr od uce d af ter r oya lt y, cos t oi l an d t ax o il (b ar re ls) 8 21, 5 3 6 999,5 22 1 A l l rev enu e fr om t he sa le s of p et ro leu m pro du c t s in 2021 i s gen er ate d fr om a si ng le cu st om er an d re cog nis ed a nd t ran s fer red a t a po in t in t ime . I nvo ice s ar e due f or s et t le me nt t hir t y da y s fr om t he B il l of La di ng , t he p oin t a t whi ch c rud e oi l ha d bee n lo ad ed o nto v es sel f or sh ip me nt . Al l Gr oup r eve nu e is de ri ve d fro m pr odu c ti on i n the R ep ubl ic of Co ng o fro m the P NGF Su d o s hor e as se t. Note 05 C os t of sal es Am oun t s in USD t ho usa nd 2021 2020 Operating expenses 4,385 11 , 3 5 7 Royalt y 15,7 6 0 9, 8 30 De pre ci at ion a nd am or tis a ti on of oi l and g as pr ope r t ie s 14 , 3 0 2 4, 429 Closing oil inventor y 13 7 269 To t a l 34,585 25,8 85 Note 06 Other operat ing income Am oun t s in USD t ho usa nd 2021 2020 Other 865 45 To t a l 865 45 Note 07 Explorat ion expenses Am oun t s in USD t ho usa nd 2021 2020 Seismic dat a acquisit ion 2, 270 - To t a l 2, 270 - PETRONOR E&P ASA AN NUA L R EP OR T 20 21 70 Financial st atements – PetroNor E& P Limited Note 08 Ad mini strative expense s Am oun t s in USD t ho usa nd N ote 2021 2020 Emp loy ee b en e t ex pe ns es 8A 5,4 35 5 ,1 0 8 T e rmination bene ts - 795 Legal and professiona l expense s 3 ,1 0 6 3 ,12 1 Corporate social responsibilit y 1, 5 0 0 900 Pro vi sio n for d iv er si e d in ves t me nt 1 ,0 51 662 T ravelling expense s 218 282 O ce re nt 36 87 Depreciation and amor tisa tion 36 46 A mor ti s at ion o n ri gh t-o f- use a ss e ts 16 8 16 9 Other expense s 1, 5 81 1 ,2 06 To t a l 13 , 131 12 , 3 7 6 8A . EMP LO YEE BENEFIT EX PENSES Am oun t s in USD t ho usa nd 2021 2020 Salaries 4 ,7 92 4,4 86 Shor t-term non -monet ar y benets 304 3 19 De n ed co nt ri bu ti on pe nsi on co st 41 10 4 Social -se curit y contribu tions and similar taxes 297 19 9 To t a l 5,43 4 5 ,1 0 8 Pet ro No r is re qui red t o hav e an o ccu pa ti ona l pe nsi on sc hem e in ac cor dan ce wi t h the N or we gia n law o n req uir ed occupational pension (“ Lov om obligatorisk tjenestepensjon” ). Th e No r w eg ian su bsi dia r y t ha t emp loy s s t a Pet roN or E &P Se r v i ces A S cont r ibu te s to an e x te rn al de n ed co nt ri bu ti on sc hem e an d th ere fo re no p en sio n lia bil it y is re co gni se d in t he s t ate me nt of n an cia l pos it io n. Un der t he Pe ns ion s Ac t 2 0 08 , e ver y e mpl oye r in t he U K mus t p ut ce r t a in s t a in to a wo rk pl ace p ens ion s ch em e and con tr ib ut e tow ard s it . Pe tro No r E& P Se r v ic es L imi te d, t he sub sid iar y t hat e mpl oy s s t a i n the U K , con tr ib ut es to a n ex ter na ll y de ne d con tr ib ut io n sc hem e. A s su ch , no pe nsi on lia bil it y is re cog nis e d in th e st a te men t of n anc ial p osi t ion i n rel at io n to th e Comp an y ’ s UK ba se d emp loy ee s . Th er e are cu rr en tl y no sh are - b as ed p ay me nt in cen ti ve sc hem es i n pla ce for e mp loy ee s. Th e cos t o f non - c as h ben e t s to em pl oye es i s dis clo se d as sho r t te r m non - mo ne t ar y ben e t s ab ov e. Th e av era ge num be r of emp lo ye e man - yea rs f or t he ye ar is ninetee n. 8B. AUDITORS ’ REMUNER ATION Am oun t s in USD t ho usa nd 2021 2020 Paid o r pay abl e to B DO Au di t rev ie w of n anc ial r ep or t s BD O Aud it ( WA) P t y Ltd 40 90 BD O Ne t wo rk rm s 90 76 To t a l 13 0 16 6 Other non- assurance serv ices BD O rel ate d pr ac t ice s 12 40 To t a l 12 206 Paid o r pa yab le to o th er au di t rm s Au di t or rev i ew of nan cia l rep or t s 13 8 40 Other non- assurance serv ices 141 12 0 To t a l 279 16 0 Fe e s, e xcl udi ng VA T , to t he au di tor s ar e inc lu ded i n adm ini s tra t ion e xp en se s. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 71 Financial stateme nts – PetroNor E&P Limited Note 09 Finance e xpens e Am oun t s in USD t ho usa nd Note 2021 2020 Unw in di ng of di sco unt o n de com mis sio nin g lia bil it y 21 9 95 93 4 Lo an s t ru c tu ri ng fe e - 15 0 Fi nan ce co s t on le as e lia bil it ie s 17 8 19 Int ere s t on l oan 19 2 ,03 8 1, 4 93 Ot her interes t - 10 To t a l 3 , 0 41 2,6 06 Note 1 0 T a x expens e Am oun t s in USD t ho usa nd 2021 2020 Petroleum revenue tax expense Cur re nt in com e t ax c har ge 3 3 ,1 0 2 17, 0 7 8 T ot al t ax e xp en se r ep or te d in t he co ns oli dat ed s t ate me nt of co mp reh en si ve in com e 3 3 ,1 0 2 17, 0 7 8 Th e inc om e ta x ex p ens e is on ly r ela te d to th e sub sid iar y in Con go an d rep res en t s th e as sig nm en t of t ax o il on t he r ev enu e fr om s ale s of p et rol eu m pro duc t s, N ote 4 . Th er e was no inc ome t a x e xp ens e in t he o th er su bsi dia ri es ’ ju ri sd ic t io ns no r in t he p are nt ’s j uri sd ic t io n as th es e co mpa nie s ar e in t a xab le lo ss p osi ti on in b ot h 2021 and 2 020. Av er age e ec ti ve t a x ra te for t he y ear w as 31 per c ent ( 2020 : 25 p er ce nt) b as ed on g ro ss re ven ue of t he G rou p. De fe rre d t ax a ss et s ha ve n ot be en br ou ght t o acco un t in re spe c t of t a x los s es an d unr eco gn ise d c api t al al lo wan ce s be ca us e at 31 De cem be r 2021, it was un cer t ain w he n fu t ure t ax ab le am oun t s wou ld b e ava ila bl e to ut ili se t hos e te mpo ra r y di e ren ces a nd lo ss es . At 31 D ece mb er 2021, the c ar ri ed for wa rd g ros s t ax l os s is USD 1 1 6 mil lio n (20 20: US D 1 10 million). Note 1 1 Ear nings per share Am oun t s in USD t ho usa nd 2021 2020 Pro t / ( los s) at tri but ab le to o rdi nar y s har eh old er s Pro t / ( los s) fr om con ti nui ng op er at ion s at tr ib ut ab le to t he o rdi nar y eq ui t y ho lde r s use d in c al cul at ing b asi c / dilu te d pr o t per s har e 12 , 31 4 2 ,37 3 Pro t / ( los s) at tri but ab le to t he or din ar y e qui t y hol de rs u se d in cal cul ati ng ba si c / dilu te d pro t p er s har e 12 , 3 14 2, 373 Wei ght ed av era ge num be r of o rdi nar y s har es o ut st an din g dur ing t he pe rio d us ed i n the c alc ula tio n of pro t / (lo ss) pe r sha re Basic 1, 161, 8 2 7 ,7 2 3 9 7 1, 6 6 5 , 2 8 8 Dilute d 1 ,1 6 0 , 4 3 8 , 2 5 3 974 , 2 2 9 ,9 6 8 Op ti ons o n is sue a re co nsid er ed to b e po ten ti al or din ar y sha re s an d hav e be en in cl ude d in t he d ete r mina t ion o f dil ut ed lo ss pe r sha re onl y to t he e x te nt to w hi ch th ey a re dil ut i ve. T he re are 1,3 8 9,47 0 opt io ns at 31 De ce mbe r 2021 (2 020: 1, 38 9, 470). Th e imp le me nt at io n of th e red om ici le sc he me of a rr ange me nt wh er eby Pe tr oN or E& P A S A be c ame t he p are nt e nt it y for t he Gr oup re su lt ed in a on e for o ne sh are s w ap, ac cor din gl y, thi s cha nge d oe s not a e c t th e ear nin g s per s har e cal cu lat io n. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 72 Financial st atements – PetroNor E& P Limited Note 1 2 Inventor ies Am oun t s in USD t ho usa nd 2021 2020 Crude oil inventory 554 6 89 Materials and supplie s 5,673 2, 889 To t a l 6,227 3, 578 Cr ude o il in ven tor y is v alu ed a t cos t of US D 22 .8 4 per b bl ( 2020 : USD 1 7 .79 bbl ). Th e cr ud e oil in ve nto r y a nd t he ma ter ia l and s upp lie s inv en tor y ar e val ue d at th e low er of c os t an d net r eal is abl e va lue . Cos t is de te rm ine d usi ng th e we igh te d ave rag e met ho d. Ne t rea lis ab le v alu e is t he e s tim at ed s ell ing p ri ce, l es s app li ca bl e sel lin g ex pe nse s . Th e cos t of i nve nto r y i ncl ud es al l cos t s r ela te d to br in gin g th e inv en tor y to i t s cu rr ent c on dit io n, including proces sing cost s, labour cos ts , supplies, direc t and allocated indirect operating overhead and depreciation ex pe ns e, w her e app lic a ble , inc lu din g all oc at io n of xe d and va ria bl e cos t s to in ve nto r y. Note 1 3 T rade and other recei vables Am oun t s in USD t ho usa nd Note 2021 2020 Recoverabilit y less than one year T rad e re cei va bl es 13 , 4 3 1 5,408 Du e fro m rel at ed pa r t ie s 24 d - 3 ,639 Other receivables 3 89 35 0 To t a l 1 3,820 9, 3 97 Recoverabilit y more than one y ear Advance against decommissioning cost 1 26,837 21, 2 6 0 To t a l 26,837 21, 2 6 0 1 In addition to the booking of decommissioning cost asset and liabilit y, the contractor s group and the Congolese Government have decided to set up funds for t he d eco mm is sio nin g co st i n an e scr ow a cco unt w hi ch is m an ag ed by t he o pe ra tor. The a d van ce s of th e fu nd s for t he y ea r are m ad e on t he b asi s of a n av era ge ra te o f US D 3.6 8 pe r ba rre l pro du ced ( 202 0: US D 3.70 pe r ba rre l) . Al t hou gh t he J V p ar t ne rs hip i n 2019 agre ed to r ef un d pre vi ou s sur pl us ca sh se t as ide f or t he d ecom mi ss ion in g cos t ba ck i nt o the o pe ra ti ng ca sh p oo l, t he cu rre nt ca sh p roj ec t io n do es no t an ti ci pa te t he sa me s it ua ti on i n the n e x t 1 2 months. Refer to Note 21 for fur ther details on the decommissioning liabilit y. Th e Gr oup m eas ure s th e pro vi sio n for i mpa ir me nt fo r tra de re cei va bl es an d am oun t s du e fr om re lat ed p ar ti es a t an amo un t equ al to li fe ti me EC L . Th e ECL o n tra de re cei v ab les an d amo unt s d ue f ro m rel ate d pa r t ie s are e s ti ma ted u sin g a pro v isio n ma tr ix b y re fer en ce to p as t de fa ul t ex pe ri enc e of th e deb tor a nd an a nal y sis o f th e deb tor ’s cu rr en t nan ci al po si tio n, a dju s te d for fa c to r s tha t are s pe ci c to t he de bt or ’ s gen era l eco no mic co nd it ion s and f or war d lo ok ing e lem en t s of th e ind us t r y in w hi ch t he de bto r s ope ra te an d an as se ss men t of bo th t he cu rr en t as wel l as th e fo rec as t d ire c t ion of con di ti ons a t th e rep or t in g dat e. Th e tr ade r ece i vab le s of USD 1 3. 4 mil lio n is du e fro m one c us to me r onl y w hic h is not p as t due y et . T he Gr oup c ons ide re d whe t her t he re ha d be en a sig ni c an t inc rea se i n cre di t ris k on it s t ra de re cei v abl es a nd amo un t s due f ro m rel at ed p ar t ie s an d es t ima te s th at no E CL is re qui red a s at 31 De cem be r 2021 . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 73 Financial statements – PetroNo r E&P Limited Note 1 4 Cash and c ash equiv alent s Am oun t s in USD t ho usa nd 2021 2020 Cash in bank 31,7 5 5 14 ,11 3 To t a l 31,7 5 5 1 4 ,11 3 Note 1 5 Segment infor mation Fo r ma nage me nt pu rp os es , t he G rou p is or ga nis ed i nto o ne mai n ope ra ti ng se gm en t , whi ch in vo lv es e xp lo rat io n and pro du c ti on of h ydr oc ar bo ns . Al l of th e Gro up' s ac t i vi t ies a re int er re lat ed , and d isc re te na nc ial in fo rm at ion i s rep or t ed to th e chi ef o per at in g dec isi on ma ker as a sin gl e se gm ent . Acc ord ing l y, all sig ni c an t ope ra ti ng de cis ion s are b as ed up on ana l ys is of t he Gr oup a s one s eg me nt . Th e na nc ial re su lt s fr om t his s eg men t are e qui v ale nt to t he nan cia l s ta te men t s of th e Gr oup a s a who le. Th e Gr oup o nl y has o ne op er at ing s eg me nt , be ing e xp lo rat io n an d pro duc ti on of hy dro c ar bon s. T he an al y sis of th e lo ca t ion o f non - c ur re nt a ss et s i s as fo llo w s: Am oun t s in USD t ho usa nd 2021 2020 Congo 6 9, 56 4 4 8 ,677 Gambia 3,507 3 ,0 07 Niger ia 3 1 Nor way 62 20 5 Senega l - - Guinea- Biss au 314 - To t a l 73,450 51, 8 9 0 Note 1 6 Proper t y , plant , and equipment Am oun t s in USD t ho usa nd 2021 2020 Pro du ct ion a s set s an d eq uip me nt Cos t At 1 Janu ar y 33,4 45 28,8 30 Additio ns 19,7 59 4 , 615 Dispos als - - At 31 December 53,204 33,4 45 Depreciation At 1 Janu ar y 9,9 6 2 6, 243 Ch ar ge for t he y ea r 3,84 5 3 , 7 19 Depreciation on disposals - - At 31 December 1 3,807 9,9 62 Net carr ying amount At 31 December 39,397 2 3,483 Pro du ct ion a s set s an d eq uip me nt co st i ncl ud es t he fo ll owi ng : Decommissioning cost s 11, 8 9 9 11 , 8 9 9 Oil & g as C A PE X 4 1,305 2 1, 5 4 6 To t a l 53,20 4 33 ,4 45 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 74 Financial statem ents – PetroNor E&P Limited Note 1 7 Int angible ass et s LICENCES AND APPROVALS Am oun t s in USD t ho usa nd 2021 2020 Cost At 1 Janu ar y 10, 3 9 6 7, 3 8 9 Additio n 814 3, 0 07 At 31 December 11, 2 1 0 10, 3 9 6 Accumulated amor tisat ion and impairment At 1 Janu ar y 3 , 4 61 2, 698 Amor tis ation 577 76 3 Impairment - - At 31 December 4,03 8 3 , 4 61 Net carr ying value At 1 Janu ar y 6,935 4 ,691 At 31 December 7,1 7 2 6 ,9 35 LICENCE OVERVIE W Congo In 2017 , s ubs idi ar y com pa ny He mla E& P Co ngo S A acq uir ed interest in three development and production permit s ( T c hen do: 20 p er ce nt ; T chi bo ue la: 20 pe r cen t and Tchib eli - Li t an zi: 20 pe r cen t) w hic h wi ll re spe c t i vel y e nd in D ece mb er 203 7 for ea ch o f the m wi t h pos si ble e x te nsi on fo r 5 yea rs . A ll th es e th re e lice nce s ar e col lec ti v el y c all ed “ PN GF S ud ” a nd co ve r an ar ea of 4 8 2. 2 8k m 2 . Th e op era tor o f th e lice nce s is Per en co, an d the c ar r y ing v alu e at 31 De cem be r 2021 was U SD 3. 3 million. Th er e wer e no in dic at or s of im pa ir men t ide nt i ed u nd er I A S 36 a nd I A S 3 8 at 31 De cem ber 2 021 for t he li cen ce cos t a nd pro pe r t y pla nt an d eq uip me nt . The Gambia In S ept emb er 20 20, u nde r th e ter ms o f the s et tl eme nt ag ree me nt , a ne w A 4 lice nce w as aw ard ed . T he A 4 li cen ce are a is of 1, 376k m 2 an d is op era te d by Co mp any s ubs idi ar y Pet ro No r E& P Gam bia L td. A t 31 Dec emb er 20 21 , th e ca rr y in g va lue of t he A 4 li cen ce wa s USD 3. 5 mi lli on . In 2021, the Go ver nm en t of T he Ga mb ia ex ten de d th e 'f ar m - ou t ' pha se of th e A 4 lice nce u nt il 1 8 O c tob er 2 022 . Con ti nua ti on pa s t th is dat e req uir es a r m we ll co mmi tm en t and b on us pa y men t . Th er e wer e no in dic at or s of im pa ir men t ide nt i ed u nd er I A S 38 a t 31 Dec emb er 20 21 for t he li cen ce cos t . Guinea - Biss au 78 .5 7 per ce nt i nte res t o f the S ina pa an d Es pe ran ça l ice nce s are h el d by t he G rou p th rou gh t he p urc has e of SP E Gu ine a Bis s au A B f rom Sv en ska P et rol eu m Ex pl or at ion A B o n 4 May 2 021 . T he li cen ces a re op era te d by Pe tro No r , and t he rem ain ing e qu it y is h eld b y FA R Lt d Sene gal At t he si gn ing d ate o f th is re por t , th e Com pa ny ’s su bsi dia r y Af r ic an Pe tr ol eum S en ega l Li mi te d had r eg is te red a r eq ues t for a rb it ra ti on pr oce ed ing s w it h th e Int er na ti ona l Cen tre f or th e Se t t lem en t of In ves t me nt D isp ut es (I C SID) to pr ote c t i t s int ere s t s in t he Se ne gal O s hor e Sud Pr ofo nd a nd Ru s qu e O sho re Pr ofo nd bl oc k s in Se ne gal ( IC SI D cas e A RB /18/ 24). Th e com bin ed l ice nce s cov er an ar ea of 15,796 k m 2 and due to t he ar bi t rat io n pro ce ss t he y ha ve ni l ca rr y in g val ue in t he na nc ial s t at em ent s a t 31 De cemb er 2 021 . RESERVES Th e Gr oup h as ad opt ed a p oli c y of re gi ona l re ser v e rep or t in g usi ng e x ter na l th ird - pa r t y com pa nie s to au di t it s wo rk a nd cer ti f y res er ve s an d res ou rce s. Re se r ve an d con tin gen t re sou rce e s ti mat es co mpl y w it h th e de ni t ion s se t by th e Pet ro leu m Re so urce s Ma nage me nt Sy s te m (“ P RM S” ) iss ue d by t he S oc iet y of P et rol eum E ng ine er s ( “ SP E” ), t he A m er ic an A s so cia ti on of Pe t rol eum G e olo gi s ts ( “A A PG ” ) , th e Wor ld Pet ro leu m Cou nc il ( “ W PC ” ) an d th e So ci et y of Pe tr ole um Ev alu at ion E ngi ne er s ( “ SPE E” ) in Mar ch 20 0 7 . T he G rou p use s th e se r v ic es o f AGR Pe tr ol eum S er v ice s A S f or t hir d pa r t y ver i c a tio ns of i t s res er ve s . Th e fo llo wi ng is a su mma r y o f key res ul t s fr om th e res er ve rep or t s (net of t he G rou p ’s sha re): Asse t 1 P reserves 2P r eser ves 3P r eser ves MMbbls MMbbls MMbbls PNGF Sud 14 . 3 20.6 26.6 Denition s: 1 P) Proved Reser ve s Pro ve d Res er ve s are t ho se qu ant i ti es of p et rol eu m, w hic h by ana l ys is of ge os ci enc e and e ng ine er in g da ta , c an b e es t ima te d wi t h reas on ab le cer t ain t y t o be com me rci all y re cov er abl e, fr om a gi v en da te for wa rd , fr om k now n re se r v oir s an d und er d en ed e con om ic con di ti ons , o per at in g met ho ds , an d governmen t regulations. 2P ) Prov ed plus Probable Reserves Pro ba ble R es er ve s are t hos e ad di ti ona l res er ve s wh ic h ana l ys is of ge os ci enc e and e ng ine er in g da ta i nd ic ate a re le s s like ly t o be re co ver ed t han P rov ed R es er ve s bu t mo re cer t ai n to be r eco ver ed t han Po ss ibl e Re se r v es . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 75 Financial st atements – PetroNor E& P Limited 3P) P roved plus Probable plus P os sible Reserves Pos si ble R es er ve s are t hos e ad di ti ona l res er ve s wh ic h anal y si s of ge os cie nce a nd e ngi ne er ing d at a in di ca te a re le ss l ikel y to be re cov er ed t han Pr ob abl e Re ser v es . Note 1 8 L eases Am oun t s in USD t ho usa nd Right - of -use assets O ce bu il din g Lease liabilities At 1 Janu ar y 2021 2 12 225 Additio ns - - Amor tiz ation expense (16 8 ) - Int ere s t ex p ens e - 8 Payments made - ( 17 5 ) At 31 D ec em be r 20 2 1 44 58 A geing of lease liabilities Curre nt 58 Non- current - Am ou nts r eco gn is ed in p ro t an d los s Am oun t s in USD t ho usa nd 31 De cem ber 2 021 A mor ti za t ion e xp en se o n ri gh t-o f- use a ss et s 16 8 Int ere s t ex p ens e on le as e liab ili t ies 8 E xp ens e re la tin g to sh or t-te rm l eas e - To t a l 17 6 Th e tot a l ca sh ou t ow fo r lea se s am oun t to USD 175,0 0 0 fo r th e yea r . Note 1 9 T rade and other payab les Am oun t s in USD t ho usa nd Note 2 021 2020 T ra de payables 2 2 , 0 14 5 , 226 Du e to rel ate d pa r t ie s 24D 3,4 49 11, 6 9 4 T axe s and s t a te pa yab le s 12 0 348 Other payable s and accrue d liabil it ies 4, 472 4 ,970 To t a l 30,055 22,238 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 76 Financial state ments – PetroNor E& P Limited Note 20 Loans and borrowing s Am oun t s in USD t ho usa nd 2021 2020 At 1 Janu ar y 18 , 9 12 12 , 9 41 Received - 18 , 9 12 Principal repayment (5 ,8 3 3) ( 12 , 9 4 1) Int ere s t on l oan a ccr u ed 1, 5 3 9 1, 4 93 Int ere s t on l oan p ai d (1, 5 3 9) (1, 4 9 3) At 31 December 1 3,079 18 , 9 12 A geing o f loans pay able Curre nt 1 3,079 4,000 Non- current - 1 4 , 9 12 To t a l 13, 079 18 , 9 12 In 202 0, t he sh or t- te rm de bt f aci li t y of U SD 1 2.9 mi llio n fr om Ra sma la (L on don a nd D uba i bas e d inve s to r gro up) was re pl ace d wi t h a USD 1 5 mil lio n fa cil it y wi t h 1 2 mon ths g ra ce pe ri od an d na l mat ur i t y da te in N ove mb er 202 2 . Th e loa n is rep ai d in mo nt hl y ins t a lme nt s a f te r th e ini t ial g ra ce pe ri od a nd c ar ri es an in ter es t ra te of 9 p er ce nt pl us on e -m on th L IB OR pa ya ble mo nt hl y if t he oi l pr ice is b el ow USD 4 0 p er bb l and 12.5 p er ce nt if t he oi l pr ice is a bo ve $ 4 0 pe r bbl . Th e lo an is se c ure d aga ins t : ■ Th e as sig nm en t of rec ei va ble s by su bs idia r y comp an y He mla E& P Co ngo S A (HE PCO); ■ Ple dge o ve r one o f th e ba nk ac cou nt s of s ubs idi ar y com pa ny He mla A fr ic a Ho ld ing A S ( H AH ); ■ Ple dge o ve r one o f th e ba nk ac cou nt s of s ubs idi ar y com pa ny HE P CO; ■ Ple dge o ve r sha res i n sub sid iar y co mp ani es , H A H and HE P CO; ■ A s sig nme nt of i nte r - co mp any l oa n agr ee men t be t w ee n HA H an d HEP CO; and ■ Cor po ra te g uar ant ee s by t he p are nt co mp any a nd i t s sub sid iar ie s Pet ro No r E& P Ltd . C y pr us a nd HE PCO. On 2 8 Sep te mbe r 2020 , sub si dia r y co mp any H A H pa id a USD 3.9 Mi lli on di v id end t o min or it y int ere s t an d rela te d pa r t y Sym er o Ltd . An a mo unt e qua l to th e di v ide nd wa s imm ed iat el y lo ane d to t he Pe tro No r E& P Lim it ed b y Sym ero L td w it h int ere s t ra te s mat ch ing t ho se al rea d y pro v ide d by e x te rn al na nc ing a nd no s ec ur it y was p rov i de d for t he lo an . Th e ma tur i t y da te is m atc he d to th e USD 15 mi lli on fa ci lit y f rom Rasmala. Th e Ra sma la lo an ha s th e fol low in g cov ena nt s an d under t aking s: ■ Ca sh e qua l to th re e mon th l y ins t al me nt s mu s t be mai nt ai ne d on t he b ank a cco unt s o f HA H o n a rec ur r ing basis; ■ At le as t US D 6.0 m illi on f rom H EPCO oi l sa le s mus t b e pai d int o th e coll ec ti on acc oun t on a 3 - mo nt h roll ing b as is; ■ Pet ro No r to mai nt a in sha re hol din g le ve l in e xces s of 70 p er cen t in sub si dia r y co mp any H A H; ■ H AH to m ain t ain s har eho ld ing l eve l in e xces s of 7 4 . 25 f pe r cen t in sub si dia r y co mp any H EPCO; ■ H AH s har eho ld er e qui t y r at io s hal l not b e le ss t ha n 30 p er cen t ; HA H du t y to rep or t on n anc ial s t a tem en t s, p le dge d ba nk ac coun t ac t i v it y an d oil in ven to r y ; ■ Re st r ic t io ns on d is tr ib u tio ns to H A H sh are ho lde r s, u nle s s su c ien t liq uid it y wi t h ca sh ba lan ce s exce ed ing US D 1 0. 0 million immediately before any such distr ibution , and dis t r ibu ti on d oe s not e xce ed 75 p er ce nt co ns oli da ted H A H ne t pro t in a ny ye ar . A ll cov ena nt s we re co mpl ie d wi th a nd t her e wer e no bre ac he s dur in g th e yea r for b oth l oa ns pa ya ble t o Ras mal a and Sy me ro. Note 21 Provisions DECOMMISSIONING LIA BILIT Y In ac cor dan ce wi t h the a gre em en t s and l eg isl at ion , th e we llh ead s , pro duc ti on as se t s , pip eli ne s and o th er ins t a lla ti ons may h av e to be d ism ant le d an d rem ov ed f ro m oil a nd na tu ra l gas eld s wh en t he pr od uc t ion c eas es . T he ex ac t tim ing o f the ob liga t ion s is unc er t a in an d dep en ds on t he ra te w it h w hic h th e res er ve s of t he e ld ar e dep le te d. Ho we ver, base d on t he ex is t ing p rod uc t io n pro l e of th e PNG F Sud e ld a nd t he size of t he re se r v es , i t is e xp ec t ed t ha t ex pe nd it ure o n re tir em ent is like l y to be af te r mor e tha n ten y ear s . Th e cu rr ent b as es fo r th e pro vi sio n are a di sco un t rat e of 6. 5 pe r cen t (20 20: 6 .0 pe r cen t) an d an in a tio n ra te of 1.6 per ce nt (2 020: 1.6 per c ent ). Th e ini t ial d eco mmi ss ion ing li abi li t y ( A RO) s tu dy w as pre pa re d int er na ll y by th e op era tor P ere nco an d wa s pre se nte d to A RO Com mi t te e in 2018. Th e Com pa ny rea ss es s ed t he ap pli ca bl e dis cou nt r ate d ur ing 2 021 ba se d on t he ra te s of gov er nm en t bo nds i ss ued i n th e Congo d ur ing t he ye ar . T he imp ac t of th e cha nge in d isc oun t fa c to r was no t cons id ere d mat er ial . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 77 Financial st atements – PetroNor E& P Limited Th e fo llo wi ng t ab le pr es en ts a r eco nci lia ti on of t he b eg inn ing an d end ing a g g reg ate a mo unt s o f th e obl iga ti ons a ss oc ia ted wi t h the r et ire me nt of oi l and n at ura l gas p rop er ti es: Am oun t s in USD t ho usa nd Note 2 021 2020 At 1 Janu ar y 15, 3 0 7 14 , 3 7 3 Ar ising during the year - - Unw in di ng of di sco unt o n de com mis sio nin g 9 9 95 93 4 At 31 December 16 , 3 0 2 15 , 3 0 7 Note 22 Share capit al Ordinar y shares part icipate in div idends and the proceeds on wi ndi ng up o f the Co mp any i n pro por t ion to t he n umb er of sha re s hel d an d in pr op or t io n to t he am ou nt p aid u p on t he sha re s hel d. At sh are ho ld er s ’ me et in gs , ea ch o rdi nar y sh are e nt it le s th e ho lde r to on e vo te in p rop or ti on to t he p ai d- up a mo unt o f th e sha re w hen a p oll i s ca lle d, ot he r w is e ea ch sh are hol de r has on e vote o n a sho w of han ds . R ECON CI LI ATIO N OF M OV E ME NT I N SH A R ES O N I SS UE Num ber o f fu ll y pa id ord ina r y sh are s 2021 2020 Ba lan ce a t th e be gin nin g of t he ye ar 97 1 ,665 ,288 9 7 1, 6 6 5 , 2 8 8 Is sue o f sha res 3 55 , 3 2 5 ,718 - Ba lan ce at e nd of t he ye ar 1, 3 2 6, 9 9 1, 0 0 6 - Reconciliation of movements in issue d capital Am oun t s in USD t ho usa nd 2021 2020 Ba lan ce a t be gin nin g of t he ye ar 1 7, 7 3 5 1 7, 7 3 5 Is sue o f sha res 45,94 3 - Share issue cos ts (1, 5 6 3 ) - Sha re c api tal a t en d of th e yea r 6 2 ,1 1 5 1 7, 7 3 5 In Ma rch 20 21 , th e Pet ro No r E& P Ltd co mpl et ed a Pr i va te Pla cem en t di vi de d int o t wo t ran ch es . F or T ran ch e 1 , 8 4 , 36 3 ,6 36 o rdi nar y sha re s wer e iss ue d for n o par v alu e an d a sub sc ri pt ion p ri ce of NO K 1 . 10 to exi s tin g and n ew in ve s tor s . Fo r T ran ch e 2a an d 2b 2 24 ,727 , 27 3 ne w ord ina r y sh are s ha ve be en is su ed in Q3 20 21 . A fu r t her 4 6 , 2 3 4 , 80 9 ne w ord ina r y sha re s for no p ar v alu e and a s ubs cr ip tio n pr ice o f NOK 1. 10 we re is sue d pur s uan t to th e sub se que nt o er in g in Se pt emb er 2021. Foll ow in g th e subs e que nt o er in g , Pet roN or ha d an is sue d an d ou t s t and ing s har e ca pi t al of 1, 326 ,991,0 0 6 sh are s of no par value CAPIT AL MANA GEMEN T Th e man age me nt con tr ol s the c ap it a l of th e Com pan y in or der to ma x imis e t he re tu rn t o sha reh ol der s a nd e nsur e th at t he Com pa ny c an f und i t s op er at io ns an d con ti nue a s a goin g con cer n. C ap it a l is de ne d as is su ed sh are c ap it a l. Th e man age me nt e ec ti ve l y man age s the Co mp any ’ s cap i ta l by as se s sin g the Co mp any ’s nan ci al ri sk s an d adj us t ing i t s ca pi t al s t ru c t ure i n res po nse t o cha nge s in t he se r isk s a nd in th e mar ket . T he se r esp on se s inc lud e th e man age men t of ex pe nd it ure a nd d ebt l ev el s, d is tr ib ut io ns to s har eh old er s an d sha re an d opt io n iss ue s. T he re ha ve be en n o cha nge s in th e s tr ate g y a do pte d by t he m ana gem ent t o con tr ol t he c ap it al o f th e Comp an y sin ce th e pr ior r epo r t in g per io d. Th e man age me nt mo ni tor s c ap it al r equ ire me nt s th ro ugh c as h o w for ec as t ing . Th e man age me nt ma y se ek f ur t he r ca pi t al if r eq uire d t hro ug h th e iss ue of c a pi ta l or c han ges i n th e ca pi t al s t ru c tu re. T he G ro up has n o ex t er na ll y imp os ed c ap it al requireme nts . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 78 Financial state ments – PetroNor E& P Limited Note 23 R eser ves Th e mo vem en t in res er v es ar e re ec ted i n the s t a tem en t of cha nge s in eq ui t y. Foreign currenc y translation reser ve Th e fo rei gn cu rr en c y tr ans la tio n re ser v e is use d to re cog ni se for eig n cu rr enc y exc han ge di e ren ce s ari sin g on tr ans la ti on of fu nc t io nal c ur ren c y to p re sen t at io n cur re nc y. Retaine d earnings A ll ot her n et ga ins a nd lo ss es a nd t ran sa c t ion s wi th o wn er s not recogni sed elsewher e. Dividends No di v id en ds we re de cla re d dur ing t he y ear b y the Pe t roN or E& P Li mi ted . 23 A . OPTIONS Ho lde r s of op ti ons d o not h av e any v ot ing o r di v ide nd r ig ht s in re lat io n to th e opt io ns . Sha re op tio ns ar e val ue d usi ng th e s toc has t ic B lac k-Sc ho les m od el. T h e inp ut s to t he mo de l are t he w eig hte d av era ge sha re pr ic e, th e ex pe c t ed av er age exe rci se p ri ce, e xp ec te d lif e, t he r isk f re e ra te of r et ur n an d th e ex pe c te d vo lat il it y. T e n yea r Aus t ra lia n gove rn me nt bo nd ra te s we re us ed as a n equ iv al en t to ri sk fr ee ra te a nd th e ex pe c te d vo lat il it y was d ete rm ine d w it h ref er enc e to th e Comp an y ’ s sha re pr ic e. A ll op tio ns ar e fu ll y ves t ed an d so n o cos t s we re cha rg ed in t he cu rr en t acco un tin g pe ri od (2 020 ni l) . Th e fo llo wi ng re con ci les t he o ut s t an di ng sha re op ti ons g ran te d, e xerc is ed an d for fe it ed du ri ng th e yea r : 2021 2020 Number of options Weig hte d averag e exercise price equival ent USD 1 Number of options 1 Weig ht ed a ver age exercise price eq ui va len t USD 1 Ba lan ce a t be gin nin g of t he p er iod 1, 3 8 9, 4 7 0 0.81 3, 26 6 , 470 0.53 Awarded - - - - Lapsed - - ( 1 ,877 ,000 ) 0. 3 4 For fei ted during the year - - - - Ba lan ce at e nd of t he ye ar 1, 3 8 9, 47 0 0.7 9 1, 3 8 9 , 47 0 0. 81 E xer cis ab le at e nd o f th e year 1, 3 8 9, 4 70 0 .7 9 1, 3 8 9 , 4 7 0 0.81 1 T he USD equivalent weighted average exercise pric e at31 December 2 021 Gra nt Date E xpir y date Number of Options Expec ted life of Options ( Ye a r s ) R a te ( %) Volatilit y (%) Div idend Y ie l d ( %) Exercise price Nok Exercise pr ice equivalent USD Fair v al ue at g ra nt date NOK Fair v al ue at g ra nt date USD 03 J ul 2 0 17 1 1 Jan 2022 213 , 4 0 0 5 2 .97 12 5 – 2.50 0.28 2.82 0. 34 03 J ul 2 0 17 31 Ma y 2022 1,17 6 , 0 7 0 5 2.97 12 5 – 7. 7 5 0.88 2.82 0. 34 Th e va lue o f opt io ns ca pi t ali se d dur in g the y ear w as ni l (20 20: n il) . Th e sha re op ti ons o ut s t an di ng at t he en d of t he ye ar ha d a we igh te d ave rag e rema ini ng co nt rac tu al li fe of 1 29 d ay s (20 20: 49 4 day s). PETRONOR E&P ASA AN NUA L R EP OR T 20 21 79 Financial stateme nts – PetroNor E&P Limited Note 24 Related par t y trans ac tions 24 A . SUBSIDI AR IES Th e pr in cip al su bsi dia ri es of t he Pe tr oN or E& P L imi te d gro up, all o f whi ch ha ve b ee n inc lud ed in t he se co ns oli da ted nan cia l s t ate me nt s , are a s fol low s: Pro po r t ion o f ee c t i ve ow ne r shi p int ere s t at 31 De ce mbe r Name Count r y o f incorporation Principa l place of business 2021 2020 Pet ro No r E& P A S A Nor way Norway 10 0 % - Pet ro No r E& P Lt d Cy p r u s Cy p r u s 10 0 % 10 0 % Pet ro No r E& P Se r v i ces A S Nor way Nor way 100 % 10 0 % Pet ro No r E& P Se r v i ces L td United Kingdom United Kingdom 10 0 % 10 0 % Pet ro No r E& P AB Sweden Guinea - Biss au 10 0 % - Pet ro No r E& P Nige r ia Lt d Niger ia Niger ia 10 0 % 10 0 % A JE Pr odu c t ion A S Nor way Nor way 100 % 10 0 % He mla A fr i ca H ol din g A S Nor way Nor way 100 % 70. 707% He mla E &P C ongo S A Co ngo Congo 8 4 .1 5 % 52 .5% Afric an Petroleum C orp oration Ltd Cayman Islands United Kingdom 10 0 % 10 0 % Pet ro No r E& P Ga mbi a Ltd Cayman Islands T he Ga mbi a 100 % 10 0 % Afric an Petroleum Senegal Ltd Cay man Isl ands S enegal 90% 90% Afric an Petroleum Senegal SAU Senegal Senegal 10 0 % 10 0 % AP CL G am bia B V Netherlands T he G am bia 10 0 % 10 0 % Material non- controlling interes ts Se t ou t be low i s summ ar is ed n an cia l inf or mat io n for e ach sub sid iar y t ha t has n on - co nt rol lin g int ere s t s th at a re ma ter ia l to th e gr oup. T he a mo unt s di sc lo se d for ea ch su bs idia r y are before inter - company eliminatio ns. Sum mar is ed s ta tem en t of n anc ial p osi tio n He mla E &P C ongo S A He mla A f ri ca H ol din g A S Am oun t s in USD t ho usa nd 2021 2020 2021 2020 Cur re nt as se t 3 7, 9 3 6 4 2 , 0 19 19, 6 4 4 3 0 , 514 Current liabilit ies 3 1 ,1 3 0 19 , 0 5 4 9 ,1 8 7 4,0 26 Cur rent net assets 6,806 2 2,9 6 5 10, 4 57 26,488 Non- current asset s 69, 57 7 2 7, 41 7 4,827 1,18 8 Non- cur rent liabilitie s 16, 3 02 2 1 ,986 - 1 1 ,000 Non - current net as sets /(liabilities) 53, 275 5 , 4 31 4,827 (9 , 8 12 ) Net assets 6 0,081 28 ,396 1 5,284 16 , 6 7 6 Accumulated NCI 9 ,523 7, 3 12 - 4,885 Summarised statement of comprehensive i ncome He mla E &P C ongo S A He mla A f ri ca H ol din g A S Am oun t s in USD t ho usa nd 2021 2020 2021 2020 Revenue 10 6 ,4 6 4 6 7, 5 4 3 - 15 0 Pro t f or th e pe rio d 31, 6 8 5 18 , 0 3 4 ( 36) 15 , 9 5 7 Other comprehensive income - - (1, 3 5 6 ) ( 3 16 ) T otal comprehensive inc ome for the y ear 31, 6 8 5 18 , 0 3 4 (1, 3 92 ) 15 , 6 41 Pro t a llo c ate d to NC I 8 ,714 8,556 ( 3 12) 4 , 6 74 Di v id end s pa id to NC I - 5 ,15 0 - 3 , 9 12 Sum mar is ed c ash ow s PETRONOR E&P ASA AN NUA L R EP OR T 20 21 80 Financial st atements – PetroNor E& P Limited He mla E &P C ongo S A He mla A f ri ca H ol din g A S Am oun t s in USD t ho usa nd 2021 2020 2021 2020 Ca sh o w s fro m op era ti ng ac ti v it ie s 3 9, 3 60 8, 245 6, 505 2,877 Ca sh o w s fro m inv es t ing a c t iv i ti es (25 ,331 ) (4 , 60 6) - - Ca sh o w s fro m na nc ing a c ti v i ti es (6 ,0 47 ) (8 ,0 47 ) (5, 8 3 3) ( 11 , 2 9 5 ) Ne t (dec rea se) / inc re as e in ca sh a nd ca sh equival ents 8, 3 12 (4, 4 0 8 ) 672 (8,4 1 8 ) On 18 Feb r uar y 2021 Pe t roN or E& P L td an no unc ed t ha t the Com pa ny ’s ow ne rs hip i nte res t i n Hel ma Af r ic a Ho ldi ng s Lt d (“ HA H ” ) ha d inc rea se d to 1 0 0 p er cen t fo llo wi ng t he ac quis it io n of th e sha re in ter es t of Sy me ro L imi te d in H AH . 24 B. KE Y MANAGEMENT PER SONNEL REMUNER ATION Key man agement personnel are those persons having autho rit y and respo nsibilit y for planning , direc ting and con tr oll ing t he ac ti v i tie s of t he G rou p, inc lu din g the D ire c to r s lis t ed on p age 9, an d th e fol lo wi ng ot he r key pe rs on nel : Jens P ace In ter im C hie f E xec ut i ve O ce r Claus Frimann- Dahl C hi ef T e chn ic al O c er Emad Sultan St ra teg y an d Con tr ac t s M ana ger Michael Barrett E xploration Manager Chris Butler Group Financ ial Controller Post year- e nd remuneration At t he ap pro va l date o f thi s rep or t th e bas e sa la r y an d fe es fo r th e fol lo wi ng me mbe r s of key ma nage me nt is a s fol low s: Indiv idual T itle Group Entit y Ba se s al ar y an d fe es /pe r ann um T ot al b ase s al ar y an d fe es US D equ iv al en t E Alhomouz C hair 1 Pet ro No r E& P Se r v i ces A S USD 1 74,0 0 0 360, 000 No n- E xe cu ti v e Dir ec t or He mla E &P C ongo S A USD 120,0 0 0 J Pace In ter im C hie f E xec ut i ve O c er Pet ro No r E& P Lt d GBP 41 2 ,500 4 1 2,50 0 J Isk an der Non - E xe cu ti ve D ire c to r Nil Nil A Neuling Non - E xec ut i ve Di re c tor Pe tr oN or E& P L td AUD 4 8 ,0 0 0 3 7 ,300 R Steinepr eis No n - E xec ut i ve Di rec tor Pe tr oN or E& P L td A UD 4 8 ,0 0 0 37 ,300 I T y br ing - G jed de No n - E xecu t iv e Dir ec tor Pe tr oNo r E& P S er v ice s A S NOK 250,0 00 28 ,75 0 G Kielland N on - E xec u ti ve D ire c to r Pet roN or E &P S er v ic es A S NOK 250,0 0 0 2 8 ,75 0 E Sultan St ra te g y & Co nt rac t s Man age r 1 Pet ro No r E& P Se r v i ces A S U SD 20 4 ,0 0 0 204, 000 C Frimann-Dahl Chi ef T e chn ic al O c er Pe tro No r E& P Se r v i ces A S NO K 2 ,500 ,000 2 8 7, 5 0 0 M Ba rr et t E xploration Director Pe tr oN or E& P S er v ice s Lt d GBP 21 5,00 0 283 ,80 0 C Butler Group Financial Controller Petr oN or E& P S er v ice s Lt d GBP 1 40,00 0 1 84,800 A Hicks Company Secret ar y Pe tro No r E& P Lt d AU D 24 ,0 0 0 18 , 6 5 0 1 F ee s ar e cha rg ed by r ela te d pa r t y Pe t rom al L LC and a re no t pa id to t he in di vi dua l; a bo ve g ure s rep re sen t th e comp an y ’ s fa ir va lu e es ti ma te of a s soc ia te d cos t s fo r th e in di vi dua l ’ s ser vi ces F X rat es u se d: NO K 1 .0 0 : US D 0. 1 15 GB P 1 .0 0 : US D 1 . 32 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 81 Finan cial statement s – Petro Nor E&P Limited Remuneration of key management perso nnel 202 1 Amount s in USD D esignation Salar y and fees O th er c ash benet s Po s t- employment benet s T e rmination fees To t a l Management K Sø v ol d E xe c Dir ec tor & CE O 2 8 8 ,11 8 8 21 21,721 - 310,659 J Pace 1 E xec Di re c to r & CEO 2 1, 2 8 1 - - 21 ,28 1 G Ludvig sen 4 Business Development Man ager 3 5 7, 7 1 0 11 0 - - 357 ,820 C Frimann-Dahl C hie f T ech ni ca l O ce r 2 2 1, 6 4 8 780 2 0 ,7 32 - 2 4 3 ,1 6 0 M Ba rr et t Explorat ion Dir ec tor 29 6 , 475 2 , 598 - - 2 9 9,0 7 3 C Butler G roup Financial Controller 1 7 4,825 3,72 4 17, 4 8 3 - 196,032 E Sultan St rat eg y & Con tr ac t s M ana ger Relat ed part y fees 3 1 68,000 - - - 16 8,000 A Hicks Company Secretar y 2 7, 0 3 5 - - - 2 7, 0 3 5 Sum 1,555,0 93 8,03 3 59,9 35 - 1 ,623,061 Direc tors ’ remuneration E Alhomouz C hair 3 1 7 4,000 - - - 17 4, 000 J Isk an der No n -E xe c Di rec tor - - - - - Je ns Pac e 1 No n- E xe c Dir ec t or 26, 62 8 - - - 26,628 A Neuling No n - E xec Di rec tor 26 ,7 87 - - - 26,787 R Steinepr eis N on - E xec D ire c to r 32,5 4 6 - - - 3 2,546 I Smi ne s T y br ing G je dde Non - E xe c Dir ec t or 3 8 ,0 01 - - - 3 8,0 01 G Kielland 2 No n- E xe c Dir ec t or 25 ,99 4 - - - 2 5,99 4 Sum 2 9 7,1 6 9 - - - 2 9 7,1 6 9 Direc tors ’ remuneratio n for subsidiarie s Amount s in USD D esignation Salar y and fees O th er c ash benet s Po s t- employment benet s T e rmination fees To t a l E Alhomouz N on - E xec f or H EPCO 1 2 0, 000 - - - 1 20, 000 K Sø v ol d N on - E xec f or H EPCO 66, 000 - - - 66, 000 G Ludvig sen No n- E xe c fo r HEP CO 2 7, 5 0 0 2 7, 5 0 0 Sum 2 13 , 5 0 0 - - - 2 13 , 5 0 0 TOT AL 2,065 ,7 62 8 ,033 59 ,935 2, 1 33,730 1 On 16 Dec emb er 2 021, Mr Pac e wa s app oi nte d as i nt eri m CEO a nd su bs equ en tl y re sig ne d as a N on - E xec D ire c to r . 2 Ap po int ed 1 F eb rua r y 2 021 . 3 Rem un era t ion i s no t pa id to t he i nd iv id ua l, a s fee s ch ar ge d on a n arm s- le ng th b as is a re in clu de d in a mo nt hl y lu mp su m ch ar ged b y rel a ted p ar t y Pe tr oma l LLC , ab ove gu res r epr ese nt t he co mp any ’ s fai r val ue e st im at e of a ss oc ia ted co s ts f or t he in di vi dua l ’ s ser vi ces . 4 Fo llo wi ng h is re si gna t io n as a d ire c tor G L ud vi g sen c ont in ued t o pro v ide s er v ice s ch ar ged o n an a rm s- le ng th b y a rel at ed p ar t y Ha gan A S . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 82 Financial stateme nts – PetroNor E&P Limited Remuneration of key management perso nnel 202 0 Amount s in USD D esignation Salar y and fees O th er c ash benet s Po s t- employment benet s T e rmination fees To t a l Management K Sø v ol d E xe c Dir ec tor & CE O 2 5 4 ,10 7 832 2 2 ,11 4 - 2 7 7, 0 5 3 J Pace 1 E xec Di re c to r & CEO 83,039 1, 3 18 - 4 4 8 , 618 532 ,975 S Wes t 2 E xec Di re c to r & CFO 58,88 4 2,03 0 5,888 3 4 6 ,077 4 1 2,879 G Ludvig sen E xec D ire c to r & Bus ine ss Development Manag er 2 5 4 ,10 7 8 32 2 3 , 471 - 2 78 , 410 C Frimann-Dahl C hie f T ech ni ca l O ce r 20 0, 432 74 7 18 ,9 6 2 - 2 2 0 ,1 4 1 M Ba rr et t Explorat ion Dir ec tor 24 6 , 595 2 ,13 1 - - 2 4 8 ,7 2 6 C Butler G roup Financial Controller 1 4 7, 7 6 6 5 ,76 6 1 4,777 - 16 8 , 3 0 9 E Sultan St rat eg y & Con tr ac t s M ana ger Relat ed part y fees 3 232,500 - - - 232,500 A Hicks Company Secretar y 23 ,9 95 - - - 23,9 95 Sum 1, 5 0 1, 4 2 5 13 , 6 5 6 8 5 , 2 12 7 94 ,69 5 2 ,39 4,9 88 Directors ’ remuneration for PetroNor E& P Ltd Australia Amount s in USD D esignation Salar y and fees O th er c ash benet s Po s t- employment benet s T e rmination fees To t a l E Alhomouz Non- Exec Cha ir Relat ed part y fees 3 25 5, 000 - - - 255, 000 J Isk an der No n -E xe c Di rec tor - - - - - Je ns Pac e 1 No n- E xe c Dir ec t or - - - - - A Neuling 4 No n- E xe c Dir ec t or 24, 4 03 - - - 2 4,4 03 R Steinepr eis 4 No n- E xe c Dir ec t or 22,60 0 - - - 22,600 I Smi ne s T y br ing G je dde 5 No n- E xe c Dir ec t or 17, 5 6 5 - - - 1 7, 5 6 5 T T ur ner 6 No n- E xe c Dir ec t or 1,7 6 0 - - - 1,76 0 D Ki ng 7 No n- E xe c Dir ec t or (3, 00 0) - - - (3 ,000 ) Sum 3 18 , 3 2 8 - - - 3 18 , 3 2 8 Direc tors ’ remuneratio n for subsidiarie s Amount s in USD D esignation Salar y and fees O th er c ash benet s Po s t- employment benet s T e rmination fees To t a l E Alhomouz N on - E xec f or H EPCO 1 20 ,000 - - - 1 20, 000 K Sø v ol d N on - E xec f or H EPCO 66,000 - - - 66, 000 G Ludvig sen No n- E xe c fo r HEP CO 66, 000 - - - 66, 000 Sum 2 52 ,000 - - - 252, 000 TOT AL 2 , 0 7 1, 7 5 3 13 , 6 5 6 8 5 , 2 12 79 4, 695 2 ,965, 316 1 O n 29 F e bru ar y 2020 M r Pa ce re sig ne d as CE O bu t rem ai ne d on t he bo ar d as a N on - e xec D ir ec to r . M r . Pa ce a gre ed to w ai ve h is N on - Ex ec D ire c tor rem un era ti on f or o ne ye ar in r eco gn it io n of t he te rmi na ti on f ee s ag ree d for r esi gn ing a s CE O. 2 R esigned 29 Februa ry 2020. 3 R em une ra ti on i s not p ai d to th e ind iv id ua l, a s fee s ar e inc lu ded i n a mon th ly l ump su m ch ar ged b y rel at ed pa r t y P et ro ma l LLC, a bo ve gur es re pre se nt th e com pa ny ’ s f air v al ue e st im at e of a ss oc ia ted c os t s fo r the i nd iv id ua l ’ s ser v ic es . 4 A p po int ed 6 A pr il 202 0. 5 A p po int ed 29 M a y 2020 . 6 R esigned 8 Februa ry 2020. 7 R esigned 1 Februa ry 2020. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 83 Financial statement s – Petro Nor E&P Limited Share holdings by Director s and other Key Management Personnel Balance 1 January 2021 Shares purchased Granted as remuneration Ne t cha nge other Balance 31 De cem ber 2 021 K Sø v old j oin tl y w it h G Lu dv ig s en 1 23 3,555 ,8 57 - - 4 4,7 63,636 27 8,31 9,49 3 K Sø v ol d 2 45 ,000 ,000 - - 45, 000,000 90, 000, 000 G Ludvig sen 3 60 ,000, 000 - - 50,439 ,4 1 8 9,560,5 82 J Pace 1 ,4 98, 938 - - 80 1 ,498,85 8 M Ba rr et t 1,1 51, 6 6 7 20 - - 1,151,6 8 7 C Butler 23 4, 296 20 - - 234 ,31 6 C Frimann-Dahl 4 50 ,000 5 54,54 5 - - 60 4, 545 To t a l 3 4 1,49 0,758 55 4, 585 - 14 0 , 2 0 3 ,13 4 3 81 , 3 69, 4 81 1 S ha res a re he ld by N OR En er g y A S , a com pa ny con tr ol led j oin tl y by K S øv ol d and G L ud vi gs en t hro ug h an in dir ec t be ne c ia l in tere s t , and S yme ro Lt d, a com pa ny he ld 10 0 per c ent b y NO R Ene rg y A S . 2 S ha res a re he ld by G uls ha gen I II A S an d Gul sh age n IV A S , a co mpa ny co nt rol le d by K Sø vo ld t hro ug h an in dir ec t be ne c ia l int ere s t al ong w it h a cl ose as so ci at e of K S øv old . 3 S ha res a re h eld b y Pu st f or L iv et A S , a co mp an y con tr oll ed b y a clo se a s soc ia te o f G Lud v ig se n. 4 Sha re s are h eld b y Sn ake O il A S , a co mp an y con tro ll ed b y C Fri ma nn - Da hl At 31 D ece mbe r 2021, Eya s Al ho mo uz hel d no sh are s pe r son al ly bu t ho ld s in ue nce o ver 4 81,4 81,6 66 sh are s (2 020: 371,961,24 6 sha re s) as th e CEO o f sig ni c an t sha reh old er Pe t rom al L LC. Other members of key management not included in the above table held no shares during the c urrent year No warrants or options were held by Directors and other Key Management Personnel during the c urrent year . 24 C. SIGNI FICANT SHAREHOLDERS Shareholder Place of incorporation Ownersh ip 31 Decem ber 2021 Ow nership 31 De cem ber 2 020 Pet ro mal L LC – S ole P rop ri et or shi p LLC UA E 36.28% 38. 28% NO R Ene rg y A S Nor way 1 0 .1 4 % 24 .03% Sy mer o Lt d Cy p r u s 10. 4 6 % - On 18 Fe br ua r y 2021 Pe t ro No r ann o un ce d th at t he Co mp a ny ' s ne t ind ire c t in te res t i n PNG F Su d, Pe tr oN or ’ s cor e as se t , had inc rea se d fr om 10.5 p er ce nt to 16. 83 p er ce nt fo llo wi ng a USD 1 8 mi lli on con ti nge nt ac qui sit io n of al l of Sym ero L im it ed' s (“ Sy mer o ” ) sh are s in H eml a Af r ic a Ho ldi ng A S ( “ H A H ” ) ( th e “ Sy me ro T ran s ac t io n” ), a nd a co ur t r ul ing in Co ngo re la ted t o pa r t s of M GI In ter na ti on al S. A .’ s (“ M GI ” ) in dire c t sh are i n PNG F Sud ( th e “ MGI R uli ng ” ). Sy me ro' s shar es in H A H re pre se nte d 29. 293 p er ce nt of a ll is sue d an d out s t a ndi ng sh are s in H AH , an d fol low in g com ple ti on of t he Sy me ro T ra ns ac t io n, t he Com pa ny ow ns 100 p er ce nt of al l is sue d and o ut s t a ndi ng sha re s in HA H . Sym er o is a comp an y ow ne d by NO R Ene rg y A S , wh ic h in tur n is co nt rol le d by fo rm er CE O of Pe tro No r , Kn ut Sø v ol d, an d for m er Di rec tor o f Pet roN or, G er har d Lu dv i gs en , an d the re for e th e Sym ero T ra ns ac ti on wa s cons ide re d a rel at ed p ar t y t ran sa c t ion a t th e ti me of c omp le ti on , and as su ch wa s sub jec t to th e app rov al b y the s har eho ld er s of th e Com pa ny by o rdi nar y re so lu ti on a t an E x t ra ord ina r y Ge ne ral M ee ti ng of t he Com pa ny ha vi ng ha d th e ben e t of a n independent valuation repor t. 2 4 D. TR A N SA C TI ON S A ND P ER I OD - EN D BA L AN CE S W IT H R EL ATE D PAR TI ES T ran sa c t ion s wi th r ela te d par t ies i ncl ud ed in t he co nso li dat ed st atement of comprehensive inc ome: Am oun t s in USD t ho usa nd 2021 2020 Pet ro mal – S ol e Pro pr ie tor s hip L LC 55 4 5 87 Adminis trative expen ses 554 587 Pet ro mal L LC is t he la rg es t sh are ho lde r in t he Co mp any a nd sin ce 2017 has had a n ag re eme nt t o pro vi de te ch nic a l and pro je c t man age me nt se r v i ces to t he Pe tr oN or Gr ou p. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 84 Financial stateme nts – PetroNor E&P Limited Ba lan ce s due fr om an d due t o rel ate d par t ie s dis cl os ed in t he con so li date d s ta tem ent o f na nci al po si tio n: Am oun t s in USD t ho usa nd 2021 2020 Lo an re cei v abl e fr om MG I In ter na ti ona l S. A . 1 - 3 ,639 T ot al re ce iv abl es f ro m rel ate d pa r tie s (N ot e 13) - 3,6 39 O th er p aya bl e to No r Ene rg y A S 2 ,1 3 6 3 ,378 O th er p aya bl e to Pe tro ma l – So le Pr opr ie to rs hip L LC 1 ,281 2 ,030 O th er pa ya ble t o Sym ero L td. 32 10 8 O th er pa ya ble t o MGI I nte rn at io nal S . A . - 6 ,1 7 8 T ot al p ayab le s to re lat ed p ar ti es ( No te 19) 3, 44 8 11, 6 9 4 Loan payable Symero Ltd 3, 9 12 3 , 9 12 Lo an pay abl e to re la te d par ti es ( No te 2 0) 3 , 9 12 3 , 9 12 1 Dur in g 2018, He ml a Af ric a Ho ldi ng A S ( HA H A S ) pro vi ded a l oa n of U SD 7 mi lli on t o MGI I nte rn at io na l S A , (mi no ri t y sha re hol de r in H eml a E&P Co ng o SA (H EPCO ). Th e lo an re pa id di rec t l y by HE PCO to H AH A S f rom i t s yea rl y di vi de nds b ei ng 25 p er cen t of MG I ’s s ha re of di v ide nd in t he rs t ye ar a nd 4 0 pe r cen t th ere af ter. Th e lo an di d no t car r y a ny in ter es t . A mou nt s du e fr om / to re lat ed p ar t ie s in clu de d in th e con so lida te d s t ate me nt of n an cia l pos it io n (othe r th an th e lo ans to r ela te d par t ies) ar e int ere s t-f ree a nd ha ve no xed repayment terms. On 2 8 Se pte mb er 20 20, s ubs idi ar y com pa ny He mla A f ri c a Ho ldi ng A S p aid a US D 3.9 mil lio n di v ide nd to m ino ri t y i nte re s t an d rela te d pa r t y Sym ero L td. A n am ou nt eq ual t o the d iv i den d was i mme di ate l y loa ne d to Pet ro No r E& P Lim it ed by Sy me ro Lt d wi t h inte re s t rat es ma tc hin g th ose a lre ad y pr ov ide d by e x te rn al na nc ing a nd no s ec ur it y was p rov i de d for t he lo an . Note 25 Acquisition of subsidiar ies On 2 8 A pr il 2021 Pe t roN or co mpl et ed t he a cqu isi ti on of t he en tir e is sue d sh are c ap it a l of SPE G ui nea - B is sa u AB f ro m Sve nsk a Pet ro leu m E xp lor at ion A B . Th e tr ans ac ti on al low ed Pet ro No r to as sum e the o pe rat or sh ip an d 78 .57 p er ce nt int ere s t in b ot h th e Sin apa ( Bl oc k 2) an d Esp er anc a ( Bl oc k s 4 A an d 5A ) lice nce s in Gu in ea - Bis s au . Th is s t rat eg ic ac qui sit io n bro ad ens Pe t roN or ’s po r t fol io in t he MS GB C bas in , an d we are c ur ren tl y co mpl et in g int er pre t at io n of da t a wi th a v ie w to pa r t ici pa ti ng in a co mbi ne d Gui nea - Bis s au - T he G amb ia dr ill ing c am pa ign i n 202 3. In for ma ti on is re sp ec t of th e ass et s a nd li abi li ti es ac qui red a nd th e fai r val ue al lo ca ti ons t o the a ss et s in a cco rda nce w it h th e pro v isio ns of “ I FR S 3 – Bu sin es s Com bin at io ns “ is as fo llo w s: Am oun t s in USD t ho usa nd Inventories 1, 6 6 5 T rad e an d Ot he r Rec ei va bl es 14 Cash and bank balanc es 534 Sum 2 , 2 13 No n curr en t as se ts Intang ible assets 15 7 Sum 15 7 T otal assets 2, 370 Current liabilit ies T rad e an d oth er p aya bl es 2, 320 T otal Liabilities 2, 320 Net Assets 50 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 85 Financial stateme nts – PetroNor E&P Limited Consideration ( cash): US D’000 50 Th e SEK 4 3 4 , 23 8 co nsi der at ion p ai d for t he t ran sa c t ion w as ca lc ula te d to be S EK 1 gr ea ter t ha n th e SEK bo ok v al ue of t he ne t ass e ts o f SPE Gu ine a - Bis s au on co mp le tio n. A s t he f air va lue o f th e ne t ass e ts a cq uire d e qua lle d to t he co nsi der at io n pa id no go od w ill wa s re cog nis ed . Note 26 Risk management Th e Gr oup ’ s pr inc ipa l na nc ial li ab ili ti es co mpr is e acc oun t s pa yab le a nd am oun t s due t o rela te d pa r t ies . T he ma in pur p os e of th es e na nci al in s tr um ent s i s to man age sh or t- ter m c ash ow an d rai se n an ce for t he G rou p ’s c api t al ex pe nd it ure p rog ra m. T he G rou p has v ar iou s na nc ial as s et s suc h as ac cou nt s re cei v abl e and c as h. It is , an d has b ee n th rou gh ou t th e year e nd ed 31 De cem be r 2021, the G rou p ’s po li c y t hat n o sp ec ula ti ve t ra din g in de ri va ti v es sh all b e und er t aken . Th e mai n ri sk s th at co uld a d ver s el y a ec t the G ro up ’s na nc ial as s et s , lia bil it ie s or f ut ure c as h o ws a re cre di t ri sk , liq uid it y ri sk , in ter es t ra te r isk a nd fo rei gn c ur ren c y r isk . T he man age men t re vi ew s an d ag ree s po lic ie s for ma na gin g eac h of th es e ri sk s wh ic h are su mma ri zed b elo w. Th e fo llo wi ng di sc us sio n als o inc lud es a s ens it i vi t y ana ly si s th at is i nte nd ed to i llu s tr at e th e sen si ti v it y to c han ges i n th e mar ket v ar iab le s on t he Gr oup ’ s na nci al in s tr um ent s a nd sho w s th e imp ac t o n pro t or l os s and s har eh old er s ’ eq ui t y, wh er e app lic ab le. F in an cia l ins t ru men t s a ec ted b y mar ket risk include accounts receivable, accounts payable and acc r ued l iab ili ti es . Th e se nsi t iv i t y ha s be en pr ep are d fo r per io ds en de d 31 De cem be r 2021 usi ng th e am oun t s of de bt an d oth er n an cia l as se t s and l iab ili ti es h eld a t th os e rep or tin g dat es . CREDIT RISK Cre di t ris k re fer s to t he r isk t ha t a coun ter p ar t y w ill de fa ul t on i t s cont ra c t ual o bli gat io ns re sul t ing in nan cia l lo ss to t he Gr oup. A t 31 Dec emb er 20 20, t he G rou p ’s ma xi mum e xp os ure to cr edi t r isk – w it ho ut t ak in g int o acco un t any co lla ter al h eld or ot he r cre di t enh an cem ent s , w hic h wi ll c aus e a na nc ial lo ss to t he G ro up du e to fa il ure to d is cha rge a n ob liga t ion by t he cou nte r par t ies a nd n anc ia l gua ran te es pr ov id ed by th e Gr oup a ri se s fr om t he c ar r yi ng am ou nt of t he r esp ec ti v e re cog nis ed nan cia l as se t s as s t ate d in th e s t ate me nt of nancial position. T o mini mis e cr edi t r isk , t he G rou p has t as ked it s m ana gem en t to de ve lo p and m ain t ain t he G ro up ’s c red it r is k gr adi ng s to ca te gor is e ex po sur es ac cor din g to th eir d eg ree o f ris k of de fa ult . Th e cre di t ra ti ng in for ma ti on is su pp lie d by in dep en de nt ra ti ng age nci es w he re av ail ab le an d, i f not a vai lab le , the m ana gem en t us es ot he r pub lic l y ava ila bl e na nci al in for ma t ion an d th e Gr oup ’s o wn t ra din g rec ord s to ra te it s m ajo r cus t ome r s and ot her d ebt or s . Th e Gro up ’s e xp os ure an d th e cre di t ra tin g s of it s counterp ar tie s are continuousl y monitored , and the ag gregate value of transact ions c oncluded is spread amongst approved count erpar ties. Th e Com pa ny ’s cu rr ent c re dit r is k gra din g fr am ewo r k com pr is es t he fo llo wi ng c ate gor ie s: Ca tegor y D escription Basi s for recogni sing expected c redit losses Per forming T he co unt er pa r t y has a l ow ri sk of d efa ul t and d oe s not h av e any p as t- du e amo un t s 1 2-month ECL Doubt f ul A mo un t is >30 da y s pas t d ue o r th ere h as be en a sig ni c an t inc re ase i n cre di t ris k sin ce ini t ial re co gni t ion Life time ECL – not credit-impaired In de fa ul t A mou nt is > 9 0 da ys p as t d ue or t he re is e v ide nce ind ic at in g th e as se t is cr edi t- imp air ed Life time ECL – credit-impaired Wri te- o T he re is e vi de nce in di ca ti ng t hat t he de bt or is in s ev ere na nc ial di cul t y and t he Co mpa ny ha s no re ali st ic prospec t of recover y A mou nt is w r it ten o PETRONOR E&P ASA AN NUA L R EP OR T 20 21 86 Financ ial statements – PetroNo r E&P Limited Th e t abl es b el ow de t ail t he c red it q ual it y of th e Com pan y ’ s na nc ial as s et s as w ell a s the Co mp any ’s m ax im um ex po su re to cr edi t r isk by c re dit r is k rat in g gra de s. Am oun t s in USD t ho usa nd N otes E x ter nal cre dit rating Inte rna l cre dit rating 1 2-mont h or lifet ime ECL Gro ss ca rr yi ng amount Loss allowance Net ca rr yi ng amount 31 De cem ber 2 021 T rad e re cei va bl es 13 N /a (i) Lifet ime ECL 1 3,431 - 1 3,431 Du e fro m rel at ed p ar t ie s 13 , 2 4 d N /a - Life time ECL - - - Adv ance against decommissio ning cost 13 N /a - L ifet ime ECL 26 ,8 37 - 26 , 8 37 Ca sh an d c ash e qui v al ent s 14 Aa3/B N /a 1 2 -month ECL 3 1, 7 5 5 - 3 1, 7 5 5 31 De cem ber 2 020 T rad e re cei va bl es 13 N /a (i) Lifet ime ECL 5,408 - 5,40 8 Du e fro m rel at ed p ar t ie s 13 , 2 4 d N /a - Life time ECL 3,639 - 3,6 39 Adv ance against decommissio ning cost 13 N /a - L ifet ime ECL 2 1, 2 6 0 - 2 1, 2 6 0 Ca sh an d c ash e qui v al ent s 14 A a3/B N /a 1 2-month ECL 1 4 ,113 - 14 ,11 3 (i ) F or t ra de re cei va ble s an d am oun t s due f rom r ela te d pa r ti es , t he Gr ou p has a pp li ed th e sim pli ed ap pr oa ch in I FR S 9 to me asu re t he lo ss a ll ow an ce at li fe ti me EC L. T he e x pe c ted c red it l os se s are e s ti ma te d usi ng a p rov is ion m a tri x by r ef ere nce to p a st d ef au lt e xp er ien ce of t he d eb tor a nd a n an al y sis o f th e de bto r ’ s curr en t na nc ia l pos it io n, a dj us ted f or fa c to rs t ha t ar e spe ci c to t he d ebt or s , gen er al eco no mi c cond it io ns o f the i ndu s tr y in wh ich t he d eb tor s op era te a nd a n as se s sme nt of b ot h t he cu rre nt a s wel l as t he f ore ca s t dir ec t ion o f con di ti on s at t he r epo r t ing d a te. LIQUIDIT Y RIS K Th e Gr oup s ee k s to lim it i t s liq uid it y ri sk by e nsu rin g na nc ial sup po r t is a vai lab le f ro m the s har eho ld er s . Th e Gro up ’s te rm s of s ale s re qui res a mo unt s to b e pa id wi t hin 4 5 to 60 da y s of th e dat e of app ro val o f pro gre ss b ill ing s . T rad e pa yab le s are no rm all y se t t le d wi t hin 9 0 to 1 20 da y s of th e dat e of rec eip t of invoice. Th e t abl e be lo w summ ar is es t he ma tu ri t y p ro le of t he Gr oup ’s nan ci al lia bil it ie s at 31 De ce mbe r 2020 b as ed on con tr ac t ua l und isc oun te d pay m ent s . Am oun t s in USD t ho usa nd No te On demand Le ss t ha n 1 mo nt h Bet ween 1 an d 3 months Bet ween 3 mo nt hs an d 1 yea r Mo re th an 1 year To t a l 31 De cem ber 2 021 T rad e acc oun t s pa yab le 19 2 1,9 4 4 - 5 65 2 2 ,0 14 A mou nt s du e to re la ted p ar ti es 24d 3 ,4 49 - - - - 3 , 9 12 Loan payable 20 - - 2,500 10 , 5 7 9 - 13, 079 To t a l 3, 4 49 2 1, 9 4 4 2,500 10 , 5 7 9 65 38,542 Am oun t s in USD t ho usa nd No te On demand Le ss t ha n 1 mo nt h Bet ween 1 an d 3 months Bet ween 3 mo nt hs an d 1 yea r Mo re th an 1 year To t a l 31 De cem ber 2 020 T rad e acc oun t s pa yab le 19 544 479 4 ,203 - - 5, 226 A mou nt s du e to re la ted p ar ti es 24d 1 1 ,986 - - - - 11 , 9 8 6 Loan payable 20 - - - 4, 000 14 , 9 12 18 , 9 12 To t a l 12 , 5 3 0 479 4 ,203 4,000 14 , 9 12 3 6 ,1 2 4 Th e Com pa ny ha d USD 31 . 8 mil lio n (20 20: 14. 1 mill ion) in unr es t ri c te d ca sh at 31 D ece mb er 2021. Shou ld a ddi ti on al fu nd ing b e re qui red i n th e fu t ure f or ad di ti ona l c api t al ex pe nd it ure f or ne w de vel op me nt ph ase s or w or ki ng c api t al re qui rem ent s , t he Co mp any h as v ar iou s al ter na ti v es a vai lab le wh ic h it c an ex pl or e to fu l l suc h ad dit io nal r equ ire me nt s . Th e op tio ns in cl ude , amo ng s t ot her s , de bt n anc in g , o t a ke pre pa y men t s tr uc tu res . A s a re sul t , th e na nci al s t at eme nt s hav e be en p rep ar ed un de r th e as sum pt ion o f goin g con cer n an d rea lis at io n of as se t s an d se t t le men t of d ebt i n nor ma l operations. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 87 Financial stateme nts – PetroNor E&P Limited INTERES T RATE RISK Th e Gr oup i s ex po se d to int ere s t ra te ri sk on i t s int ere s t- be ar ing a ss et s a nd li abi li ti es an d se ek s t o lim it t his r is k by obt a ini ng fa vo ura bl e inte re s t rat es . 31 Decem ber 2021 31 Dec emb er 20 20 Am oun t s in USD t ho usa nd +15 0 bp -1 5 0 b p +15 0 b p -15 0 b p Loans payable (19 6 ) 19 6 (284) 284 CURRE NCY RISK Th e Gr oup o pe rat es in te rn at ion all y an d is e xp os ed to r isk ar isi ng f rom v ar iou s cur re nc y ex po sur es , pr ima ri l y wi th re spe c t to t he No r w eg ian K ro ne r (NO K ) , an d th e Gre at B ri t ish Po und (GB P). T h e Gr oup has t ra ns a c t ion al c ur re nc y e xp os ur es . Suc h e xp osu re ar is es f ro m sa le s or p urc has es i n cur re nc ies ot her t ha n the r esp ec ti v e fun c t ion al cu rr en c y. Th e Gr oup r epo r t s i t s con sol ida te d res ul t s in USD ; any cha nge in e xch ang e rat es be t w ee n it s op er at ing s ubs idi ar ie s ’ fu nc t io nal c ur ren ci es an d th e USD a e c t s it s co nso li dat ed st atement of comprehensive income and st atement of na nc ial p osi t ion w he n th e res ult s o f tho se o pe rat in g sub sid iar ie s are t ra nsl ate d in to USD fo r rep or ti ng pu rp os es . Gr oup c omp an ies a re re qu ire d to ma nage t he ir f ore ign exc han ge ri sk ag ain s t the ir f unc ti ona l cur re nc y. A 20 pe r cen t st re ng t he nin g or we aken ing o f the U SD aga ins t th e fol low in g cu rre nc ie s at 31 De cem be r 2021 wou ld ha ve inc rea se d / (dec rea se d) e qui t y a nd pr o t or lo ss b y the am oun t s sho wn b el ow. Th e Gr oup ’ s ass es sm en t of wh at a re aso na ble p ote nt ial cha nge i n for eig n cu rr enc ie s th at i t is c urr en tl y e xp os ed to hav e be en c han ged a s a re sul t of t he c han ges o bs er ve d in t he wo rl d na nci al ma rke t s. T hi s hy pot he ti ca l ana l ys is as su mes th at al l ot her v ar ia ble s , inc lu din g int ere s t ra te s and c omm od it y pr ice s , rem ain co ns t an t. 31 Dece mb er 2021 31 De ce mbe r 2020 Am oun t s in USD t ho usa nd +20 % -20 % +2 0 % -20 % US D vs N OK Cas h 1 ,040 (1, 0 4 4) 58 (5 8) Receivables - - 61 ( 61) Payables (92) 92 (25) 25 To t a l 948 (9 52) 94 (9 4) US D vs G BP Cas h 3 ( 3) 4 (4) Receivables 8 (8) 2 (2) Payables (6) 6 (42) 42 To t a l 5 5 (3 6) 36 CAPIT AL RISK Th e pr ima r y obj ec t i ve of t he G rou p’ s ca pi t al ma nage me nt is to co nt in uou sl y ev al uat e mea sur es t o st re ng t he n it s na nc ial b asi s and to e nsu re th at t he G rou p is fu ll y fu nd ed for i t s com mi t te d 202 2 ac t i v it ie s. T he G ro up man age s it s ca pi t al s t ru c t ure a nd ma kes a dju s tm ent s t o it i n lig ht of cha nge s in ec ono mi c cond it io ns . In ord er to m ain t ain o r cha nge t he c ap it a l s tr uc tu re, t he G rou p ma y adj us t t he amount of d i vidend payment s to shar eholder s, return capi tal to sh are hol de r s or is sue n ew sh are s. T h e Gro up ha s no sig ni c an t de bt ar ra ngem en t s in pla ce an d has t he ex ibi li t y to so urce c onv en tio na l deb t ca pi t al fr om t he ma rke t s. Th e Gr oup i s cont in uo usl y ev al uat in g th e cap i ta l s tr uc tur e, wi t h the a im of ha v ing a n opt ima l mi x of eq uit y an d deb t ca pi t al to r ed uce t he G rou p ’s co s t of c api t al a nd lo ok in g at av enu es to p roc ure c ap i ta l in th e for t hco min g yea r . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 88 Financial st atements – PetroNor E& P Limited Note 27 Financial instr ument s – Fair values Fi nan ci al ins t r ume nt s co mpr is e n anc ial a ss et s an d na nc ial liabilitie s. Fi nan ci al as se t s con sis t o f ba nk ba lan ce s and c a sh, a mo unt s due f ro m re lat ed p ar tie s an d tr ad e and s om e ot he r re cei va bl es . Fi nan cia l lia bil it ie s con sis t of a mou nt s du e to related par ties, loans payable, trade account payable s and so me ot he r liab ili t ie s. Fair value through pro t o r los s Amor tised cos t Fair Va lue t hr oug h ot her comprehensive inc ome Am oun t s in USD t ho usa nd 2021 2020 202 1 2020 2 021 2020 Financial As sets Ca sh an d c ash e qui v al ent s - - 3 1,75 5 1 4 , 113 - - T rad e an d oth er re cei v ab les - - 13,820 9,397 - - Other Receivables 26,837 21, 2 6 0 To t a l - - 7 2 , 412 4 4 ,7 70 - - Financial Liabilities T rad e an d oth er p aya bl es - - 30,055 22,238 - - Lo ans a nd bo rr ow in gs - - 1 3,079 18 , 9 12 - - To t a l - - 4 3 ,1 3 4 4 1 ,15 0 - - Th e fa ir va lue s of th e Gr oup' s n anc ial i ns tr um en t s are no t mat er ial l y di er ent f ro m th eir c ar r yi ng am ou nt s at t he re po r t ing da te lar ge ly d ue to t he sh or t t er m mat ur i tie s of t he se in s tr um ent s . Note 28 C ommit ment s and contingencies COMM ITMENTS Production asset commitments A s at 31 De ce mbe r 2021, the G rou p had a ppr ove d th e bu dget for P NG F Sud o pe ra tio ns in C ongo t ha t in clu de d pla nn ed c ap ex ex pe nd it ure f or com in g year o f USD 5 0.6 mi lli on (2 020 US D 33 . 8 mill ion) re pre se nt ing H EPCO 's eq ui t y in te res t f un din g com mi tm ent i n th e lice nce . Expl oration commitments Th e Com pa ny has e nt ere d int o obl iga ti ons i n res pe c t of it s e xp lo rat io n pro je c t s. O ut li ne d bel ow ar e th e mini mum ex pe nd it ure s re qui red a t 31 Dec emb er Am oun t s in USD t ho usa nd 20 21 2020 Wi t hin o ne ye ar 1 40, 000, 000 40, 000, 000 1 Th e com mi tm ent i n Se ne gal i nc lud es U SD 4 0 mi lli on f or an e x pl ora t ion we ll in e ac h lic enc e, h ow ev er t his a s sum es t ha t t he Com pa ny i s succ es sf ul in re ta in ing t he l eg al t it le f or t he se li cen ces a nd t ha t th e Com pa ny t hen dri ll s th ese w el ls wi t h 90 p er ce nt e qui t y. CONTINGENCIES In De ce mbe r 2021 th e Na tio na l Au tho r it y for I nve s ti ga tio n an d Pro se cu ti on of Ec ono mi c and En v iro nme nt al C ri me in No r w ay (Økok r im) op ene d in ve s tig at ion s in to cr im ina l cha rge s an d allegatio ns of c or ruption broug ht against indi viduals related to th e Comp an y. At t he sig ni ng da te of t his re po r t , Øko ki rm h as con r me d th at n ei th er Pe tr oNo r no r any o f it s s ubs idi ar ies i s und er inv es t iga t ion . A s ou tl ine d in th e dir ec t or s ’ re por t th e bo ard has t a ken a se r ies o f rem ed iat io n s tep s to as su re t he f ur th er imp le men t at io n of ant i - cor r up tio n me asu res . W hil e the Com pa ny has co nt in ued t o ope ra te e ec ti ve l y sin ce th e inv es t iga t ion s st a r te d, i t ha s use d sig ni c an t re sou rce s to ad dre ss t his m at t er a t a cos t to th e bu sin es s. F ur t he rm or e, it is un cer t ain h ow lo ng th e inv es t ig at ion s int o the i ndi v id ual s may c ont in ue an d how t he o ut com e of th os e inve s t iga tio ns may i ndi re c tl y im pa c t th e bus ine s s. A t thi s st a ge, t he on ly cer t ain t y i s tha t wh ile t he in ve s ti gat io ns con ti nu e, it m ay ra ise th e per cei v ed r isk p ro le of t he Com pa ny t hus , po ten ti all y imp ac ti ng th e Gr oup' s ca pa ci t y to t ra ns ac t w i th ne w an d ex is t ing p ar tn er s . Whi ls t t he re pu ta t ion al cos t c an not b e qua nt i ed , th is ma y inc rea se wo rk r equ ire d by p ar t ne r s to mi ti gat e con cer ns ab ou t th e ri sk pro l e. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 89 Financial statem ents – PetroNor E&P Limited Note 29 Events subs equent to repor t ing date On 27 J an uar y 202 2 , th e Nig er ia Up s tre am Pe tr ol eum Reg ul ato r y Co mm iss io n (for me rl y t he Ni ger ian D ep ar tm en t of Petroleum Resources) provide d its consent to PetroNor ’s acq uis it io n of Pano ro ’s o wn er sh ip in tere s t in O il Min ing L eas e no. 1 1 3 (“ O ML 1 1 3 ” ) o s ho re Nige r ia, co nt a ini ng th e Aj e oil a nd gas eld , an d for t he t ran s fer o f OML 1 1 3 to A je Pro du c t ion A S ( “Aje P rod uc t io n ” ). A s p re vi ous l y ann oun ce d, fo llo w ing com pl et ion o f the T r ans ac ti on , Pano ro ’s in ten ti on is to d ec lar e a spe ci al di v id end a nd di s tr ib ute t o it s sh are hol de r s USD$ 10 milli on eq ui va le nt in P et roN or s har es in o rde r fo r Pan oro sha reh ol de rs t o ret ai n a dire c t li s ted e x pos ure t o Aj e/ OML 1 1 3. It is e xp e c te d tha t th e tr ans ac ti on w ill co mpl et e in Q2 2022 . Th e Gr oup s ucce s s fu ll y com ple te d th e red omi ci le pr oce ss in F ebr ua r y 202 2. T he im ple me nt a tio n of t he sc he me of ar ran gem en t on 24 F eb r uar y 202 2 re su lte d in Pe t roN or E& P A S A re pla cin g Pet ro No r E& P Lt d as th e to p com pan y of t he Gr oup. P et roN or E& P Lt d was d eli s te d fro m th e Osl o Euro ne x t E xp an d on t he s am e day a nd on 2 8 F eb rua r y 202 2 th e sha re s of Pet ro No r E& P A S A were l is te d and b eg an tr ad ing on t he m ain Os lo Sto ck E xc han ge. T he n anc ial s t a tem en t s are pr es en ted a s a con tin uan ce of t he bu sin es s of Pe tr oNo r E& P Lt d. Du ri ng Mar ch 202 2 , th e 1 , 3 66 , 56 4 sha res t ha t had n ot be en tr ans f er re d to th e VP S in No r w ay pr io r to th e sc hem e of ar ran gem en t wer e sol d ba ck in to th e mar ket a nd t he s ale s pro ce ed s wer e dis t ri bu ted t o the f or me r pre dom ina nt l y Aust ralian inves tors. A CPR u pda te p rep ar ed by A GR Pe tr ol eum S er v ice s A S o n th e Com pa ny ’s PNG F Su d ass et i n Congo w as re lea se d on 6 A pr il 202 2. T he u pda te re pre se nt ed an i ncr eas e of ap pr oxim ate l y 2 pe r cen t for 2 P and a n in cre ase o f 4 pe r cen t fo r 2C on a gr os s basis. On 1 1 A pr il 202 2 Pe tr oN or an no unce d t hat t he y ha d sig ne d a pre - p ay me nt s al es ag re em ent w i th A DN OC T ra din g dur in g th e qua r te r an d has in voi ce d agai ns t en ti tl em en t pro duc ti on. O n th e sa me da te i t was an no unc ed t hat Pe tr oN or ha d rec ei ve d a not i c at io n fr om Øko kr im t hat t he Co mp any ' s Ch air ma n of th e Bo ar d, Mr . Ey as A lh omo uz ( US ci ti zen), h ad be en m ade s ubj ec t to t he on goi ng in ves t ig at ion s ca rr ie d ou t by Ø kok r im an d be en gi ve n th e s ta tu s as su spe c t , an d th at t he U. S . Dep ar tm en t of Ju s ti ce ha d op en ed a s ep ara te in ve s tig at io n int o th es e all eg at ion s, b as ed o n inf or mat io n fr om Øko kr im . At the beginning of 2022, Russia ’s invasion of Ukraine de ep ene d th e ene rg y cr is is an d led t o an imm ed iat e e ec t in in cre asi ng oi l and ga s pr ice s. E con omi c sa nc t io ns to war ds Rus si a and t he e co nom ic un cer t ain t y m ay h ave a n imp ac t on our b usi ne ss a nd ou r mar ket s goi ng fo r w ard . E xcep t for t he ab ov e, th e Com pa ny has n ot id en ti e d any e ve nt s wi t h sig ni c an t acco un tin g imp ac t s tha t hav e occ ur re d be t we en th e end o f the r ep or t in g per io d an d the d ate o f thi s rep or t. Note 30 Summar y of accounting policies Acc oun ti ng po lic ie s are s el ec t ed an d ap pli ed in a ma nn er w hic h ens ure s th at t he re sul t ing n an cia l inf or ma tio n sa t is e s th e con cep t s of re le va nce a nd re lia bil it y, the re by en sur in g tha t t he sub s t anc e of t he un de rl y ing t ra ns ac t io ns or o th er e ve nt s is repor ted. Th e fo llo wi ng is a su mma r y o f the m ate ri al ac cou nt ing p oli cie s ad opt ed b y th e Gro up in t he p re pa rat io n of t he co nso lid at ed na nc ial s t at em ent s . T he ac cou nt ing p oli cie s ha ve be en con sis te nt l y app lie d, u nle s s oth er wi se s t at ed . 3 0A . AD OP T I ON OF N E W A ND R E V I S ED ACCO UN T ING ST AND ARDS No ch ang e in IF R S e ec t i ve fo r th e 2021 na nc ial s t at em ent s are r ele va nt t his nan cia l yea r Am en dme nt s to I FR S 9, I A S 3 9, I FR S 7 , IF R S 4 and I FR S 16 - Int er es t Ra te B enc hma rk Re fo rm - Ph as e 2 In Au gu s t 2020 , th e IA SB is sue d Pha se 2 of i t s pro je c t wh ich am end s IF R S 9 Fin an cia l Ins t ru me nt s , IA S 39 F ina nci al Ins t r ume nt s : Reco gn it io n and M eas ure men t , IF R S 7 Fi nan cia l Ins t r ume nt s : Dis cl osu res , IF R S 4 Ins ura nce Co nt ra c t s an d IF R S 1 6 Le ase s . Phas e 2 na lis es t he B oa rd ’ s res pon se to t he ong oin g ref or m of in ter ba nk o er ra te s (IB OR ) and o th er int ere s t ra te be nc hma rk s . Th e am end me nt s com pl eme nt Ph as e 1 iss ue d in 201 9 an d fo cus o n th e ee c t s of nan cia l s t ate me nt s w hen a co mp any rep la ces t he ol d in ter es t ra te be nc hma rk w i th an a lt er nat i ve be nch ma rk ra te as a re su lt of t he re fo rm . The Phase 2 amendments mainly consist of the following : ■ Pract ical expedient for par ticular changes t o contrac tual ca sh o w s ■ Rel ie f fro m sp ec i c hed ge acc oun ti ng re qui rem en t s ■ Disclosure r equirements Th e ame ndm ent s ha ve h ad t he fol lo win g e ec t s: Am en dme nt to I FR S 16 - C ovi d -1 9 - Re lat ed Re nt Concessions In Ma rch 20 21 , th e IA SB is su ed Co vi d-1 9 - rel ate d re nt con ces si ons b ey on d 30 J un e 2021 to e x te nd t he re li ef p er iod by an ot her y ear. T he In te rn at ion al Ac cou nt ing St a nda rd s Bo ar d ame nde d IF R S 1 6 Le as es to p rov id e rel ie f to le ss ee s fr om ap pl y ing t he I FR S 16 guid anc e on lea se m odi ca ti ons t o ren t con ce ssi on s ar isin g as a di re c t con se qu enc e of th e Cov i d- 1 9 pa nde mi c. T he am en dme nt d oe s not a e c t le ss or s . Th e am end me nt e xemp t s les se e s fro m hav i ng to co nsi der ind i vi dua l lea se co nt ra c t s to de ter mi ne w he th er re nt con ces si ons o cc ur ri ng as a d ire c t co nse qu en ce of t he Co vi d- 1 9 pa nde mi c are le as e mod i c at ion s and a llo w s les s ee s to acc oun t for s uch r ent co nc es sio ns as i f th ey we re no t lea se mo di c at io ns . It ap pli es to Co v id - 1 9 - re la ted r ent c onc es sio ns th at re du ce lea se p ay me nt s du e on or b ef ore 3 0 Jun e 202 2. Le ss ee s mu s t app l y th e pra c t ic al am en dme nt r et ros pe c t iv el y, re cog niz ing t he c umul at i ve e ec t of ini t ial ly a ppl y in g th e PETRONOR E&P ASA AN NUA L R EP OR T 20 21 90 Financial state ments – PetroNor E& P Limited am end me nt as a n ad jus t me nt to t he o pe nin g ba lan ce of re t ain ed e ar nin gs (or o th er co mp one nt o f equ it y, as app ro pr iat e) at th e be gi nni ng of t he a nnu al re po r t ing p er io d in wh ic h the a men dm en t is r s t app lie d. Th e ex ten sio n of th e ame nd men t is e ec ti v e for an nua l pe ri ods b eg in nin g on or a f t er 3 0 Ju ne 2021, bu t ear li er app li ca ti on is p er mi t te d. Th is am en dme nt ha d no e e c t on th e Gr oup . Amen dments to stan dards and interpret ations with a fu ture e ec t ive da te St an dar ds an d in ter pr et a tio ns t ha t are i ssu ed u p to t he da te of is sua nce of t he co ns oli dat ed n an cia l st a te men t s , bu t not ye t e ec ti ve a re dis cl os ed b elo w. Th e Gro up ’s in te nt ion i s to ado pt th e rel ev an t new a nd am en de d st a nda rds a nd in te rp ret a ti ons wh en t he y bec om e ee c t i ve, s ubje c t to EU a pp rov al be fo re th e con so lida te d na nc ial s t at em ent s a re is sue d. At t he da te of au t hor is a tio n of th es e n anc ial s t a tem en t s, th e Gro up ha s not a ppl ie d the f oll ow in g new a nd re v ie d IFR S s t and ard s th at ha ve be en i ssu ed a re no t yet e e c t iv e : A men dm ent t o IA S 1 Cla ss i c at ion of l iab ili t ies a s current or non-current A men dm ent s t o IA S 1 6 P roceeds before intended use A men dm ent s t o IA S 37 On ero us co nt ra c t s , cos t s o f fu l lli ng a con tr ac t A men dm ent s t o IA S 8 De n it ion o f acco un t es ti ma tes A men dm ent s t o IA S 1 and I FR S p rac ti se st atement 2 Dis cl os ure of a cco unt in g pol ici es A men dm ent s t o IA S 1 2 De fe rre d t ax r ela te d to as se t s and liabilitie s arising from a single trans ac tion Annual improvements 201 8-2020 c ycle A men dm ent s t o IFR S 1 rs t- time adoption of international nancial reporting st andards, IF R S 9 na nci al in s tr um ent s , IF R S 1 6 le as es , an d IA S 4 1 ag r icu lt ure 30B . C ONSOLIDA TION Th e con so lid ate d na nc ial s t a tem en ts c omp ri se t he n anc ial s t ate me nt s of Pe t roN or E& P L im ite d ( “ t he Co mp any ” ) a nd it s s ubs idi ar ies ( toge t her " t he G ro up" ) fo r th e yea r en de d 31 De cem be r 2021 . A n ent i t y ha s be en a ss es se d as b ei ng co nt rol le d by th e Gr oup wh en t he G rou p is ex p os ed , or ha s th e rig ht s , to v ar ia ble r et ur ns fr om i t s invo l vem en t wi t h the e nt it y an d has t he ab ili t y t o ae c t th os e ret ur ns t hro ug h it s po we r ove r th e ent it y. Spe ci c al ly, th e Gr oup co nt ro ls an en ti t y if an d onl y i f th e Gro up ha s: ■ Pow er ov er t he en ti t y ( i.e ., e xis t in g rig ht s t ha t gi ve i t th e cur re nt a bil it y to di re c t th e re le van t ac ti v it ie s of t he en t it y) ■ E xp osu re, o r r igh t s , to va ri abl e re tur ns f ro m it s i nvo l vem en t wi t h the e nt it y, and ■ Th e ab ili t y to u se i t s pow er o ver t he en ti t y to a ec t i t s re tu rns Wh en t he G ro up ha s le ss t han a m ajo ri t y of t he vo ti ng or sim ila r ri gh t s of an e nt it y, the G ro up co nsi der s a ll re le van t fa c t s and c irc um st a nce s in as se s sin g wh et her i t ha s pow er ove r an en ti t y, inclu di ng : ■ Th e con tr ac t ua l ar ran gem ent w i th t he ot he r vote h ol der s of the e ntit y ■ Ri gh t s ar isi ng f rom o th er co nt rac tu al ar ra nge men t s ■ Th e Gr oup ’ s vot ing r ig ht s an d pot en tia l vot in g rig ht s Th e Gr oup r eas se s se s wh et her o r not i t con tr ols a n ent i t y i f fa c t s an d cir cum s t anc es in di ca te t ha t th ere a re ch ang es to on e or mo re of th e th ree e le men t s of con t rol . Cons ol ida ti on of a sub sid iar y b eg ins w he n the G ro up ob ta ins c ont ro l ove r th e sub sid iar y an d ceas e s whe n th e Gr oup l ose s con tr ol of th e sub sid iar y. Busi ne ss co mb ina ti ons a re acc oun te d for by usi ng th e acq uis it io n met ho d. A s s et s , lia bil it ie s, i nco me an d ex pe ns es of a s ub sid iar y ac qui red o r dis po se d of du ri ng t he yea r are i nc lud ed i n th e s ta te men t of co mp reh ens i ve in com e fr om t he da te t he G rou p gai ns co nt rol u nt il t he da te t he G rou p cea se s to con tr ol th e sub sid iar y. Pro t o r los s an d eac h com pon en t of ot her c omp reh en si ve inc ome (O CI ) are a t tr ib ut ed to t he e qui t y hol de rs o f the p ar ent of t he G rou p and t o th e no n- con tro ll ing in te res t s , e ven i f t his re sul t s in th e non - c ont ro lli ng in ter es t s ha v ing a de c it b al anc e. Wh en n ece ss a r y, adj us t men t s are m ade t o th e nan ci al st atemen ts of subsidiaries to bring the ir accounting policies int o lin e wi th t he G rou p ’s acc oun ti ng po li cie s. A ll i nt ra - gro up as se t s and l iab ili ti es , eq ui t y, inc ome , ex pe ns es an d ca sh o w s rel at ing t o tra ns ac tio ns b et w ee n me mbe r s of th e Gro up ar e eli min at ed in f ull o n con sol ida ti on . A cha nge in t he o wn er sh ip int ere s t of a su bsi dia r y, wi t hou t a lo ss of co nt ro l, is ac cou nte d fo r as an eq ui t y t ran s ac t ion . If t he G rou p los es co nt ro l ove r a subs idi ar y, it : ■ De rec og nis es t he as se t s (i nc lud ing go od w ill ) and l iab ili t ies o f the subsidiar y ■ De rec og nis es t he c ar r y in g am oun t of any n on - co nt rol lin g interes t s ■ De rec og nis es t he cu mul at i ve tr ans la tio n di e ren ces recor ded in equit y ■ Re cog nis es t he f air v al ue of t he co nsi de ra tio n re cei ve d ■ Re cog nis es t he f air v al ue of a ny in ve s tm ent r et ai ne d ■ Re cog nis es a ny sur p lus o r de ci t in pr o t or lo ss ■ Re cla ss i es t he pa ren t ’s sh are of c omp on ent s p re vi ous l y re cog nis ed in O CI to p ro t or l os s or re t ain ed ea rn ing s , as app ro pr iat e, as w oul d be re qu ire d if t he Gr ou p had di re c tl y dis po se d of th e rel ate d as se t s or lia bi lit ie s. Joint Operations A joi nt ar ra nge men t is a joi nt op er at ion w he re by th e Gr oup a nd th e ot her p ar ti es t ha t hav e joi nt co nt ro l ove r th e ar ran gem en t hav e con tr ac t ua l ri gh t s to th e as se t s an d obl iga ti on f or t he lia bil it ie s rel at ing t o the a rr ange me nt . A ll de ci sio ns ab ou t the rel ev an t ac t i vi t ies r equ ire u nan imo us co nse nt . Wh en a ss es sin g if a j oin t ar ra nge men t is a jo in t ope ra ti on , th e Gr oup a ss es se s t he s t ru c tu re of t he a rr an geme nt , t he le gal f or m, t he co nt ra c tu al ag re em en t and o th er fa c t s an d circums tance s. Th e Gr oup r eco gn ise s it s a ss et s , lia bil it ie s , rev enu e an d ex pe ns es a nd i t s rel at iv e sha re of a ss et s , l iab ili ti es , re ve nue an d ex pe nse s of th e joi nt op er at io n. Wh en t he G rou p ent er s int o tr ans ac ti ons w i th a jo int o per at io n in w hic h it is a jo in t ope ra tor, t he G rou p reco gn ise s ga ins an d PETRONOR E&P ASA AN NUA L R EP OR T 20 21 91 Financial st atements – PetroNor E& P Limited lo ss es re su lt ing f ro m su ch a t ran sa c t ion o nl y to t he e x te nt o f th e oth er p ar tie s ’ in ter es t s in t he jo int o pe rat io n. 30C . SEG MENT REPORTING A n ope ra ti ng s eg men t is a co mp one nt o f an en ti t y t ha t en gage s in bu sin es s ac t i v it ie s fro m wh ic h it ma y ear n re ven ue s and incur expe nses (including reve nues and expens es relating to tr ans a c ti ons w i th ot he r com pon en t s of th e sa me en ti t y) , wh os e op era ti ng re sul t s ar e reg ula rl y re v ie wed b y th e ent i t y ’s ch ie f operating decision-makers to m ake decision s about resources to be a ll oc at ed to t he s eg me nt s a nd as se s s th eir p er for ma nce for w hi ch di sc ret e na nci al in fo rm at ion is a va ila ble . Th is inc lu de s st a r t- up op er at ion s wh ich a re ye t to ear n re ven ue s. Op era t ing s eg men t s hav e be en id en ti e d ba se d on th e information available t o chief operating decis ion- makers – be ing t he B oar d an d the e xec ut i ve ma nag eme nt te am . In for ma ti on ab ou t ot her b usi ne ss a c ti v i tie s an d op era ti ng se gm ent s t ha t are b elo w th e qua nt it a ti ve c ri te ri a are com bin ed a nd di sc lo se d in a se pa ra te c ate gor y c al led “a ll ot he r segments ” . 30D. FOREIGN CURRENC Y TR ANS L A TION Func tional and presentation currency Th e Com pa ny has d ec ide d to us e Uni te d St at es D oll ar s as it s p re sen t at io n cur re nc y, bein g th e fu nc t io nal c ur re nc y o f all m ajo r sub sid iar ie s in th e Gr oup. W he re t he f unc ti ona l cur re nc ie s of ent i ti es w it hin t he co ns oli dat ed g rou p di er fr om Un it ed St a tes D ol lar s , th ey ha ve b ee n tra nsl ate d in to Uni te d St at es D oll ar s. T he f un c t ion al cu rr enc y of Pe tr oNo r E& P Li mi ted i s Uni te d St ate s Do lla r s. T ransactions and balances T ran sa c t ion s in fo rei gn cu rr en cie s are i nit ia ll y rec ord ed i n the fu nc t io nal c ur re nc y b y ap pl y ing t he e xch ange r at es r uli ng a t th e dat e of th e tra ns ac ti on. M on et ar y as se t s an d liab ili t ies de nom ina te d in fo rei gn c ur ren ci es ar e re tra ns lat ed a t th e ra te of e xch ange r ul ing a t th e re por t ing da te a nd an y gai ns or lo ss es ar e rec og nis ed in t he in com e s t ate me nt . No n- m one t ar y i tem s th at ar e mea sur ed i n ter ms o f his to r ic al cos t i n th e for eig n cu rr enc y ar e tra ns lat ed u sing t he e xch an ge ra te at t he da te of t he in it ial t ra ns ac t io n. No n -m on et ar y i tem s mea sur ed a t fa ir va lue i n a fo rei gn c ur ren c y ar e tr ans lat ed usi ng th e exc ha nge ra te s at th e dat e wh en th e fa ir va lue w as determined. T ranslation of Group Companies’ functiona l cur renc y to presen tati on currenc y On co ns oli dat io n, t he a ss et s a nd li ab ili ti es o f for eig n op era ti ons a re tr an sla ted i nto U ni ted S ta te s Do lla rs a t th e rat e of e xcha nge p rev ai lin g at t he re po r t ing d ate a nd t he ir in com e an d ex pe ndi t ure a re tr an sla ted a t e xcha nge r ate s pr ev ail ing at t he da te s of th e tra ns ac t io ns . Th e exc han ge di e ren ces ar isi ng on t ra nsl at ion f or co ns oli da tio n are r eco gn is ed in o th er com pre he nsi ve i nco me. O n disp os al o f a fore ig n ope ra ti on , the component of other comprehensive i ncome relating t o that pa r t icu lar f ore ig n ope ra ti on is re cog ni se d in pro t o r los s . 3 0E . C A S H AN D C A S H EQ UI VAL EN T S Ca sh an d c ash e qu iv al en t s inc lu de c ash o n ha nd, dep os it s h eld a t c al l w i th ba nk s , ot h er sho r t- te r m hi g hl y liq u id i nv e s t me n t s w i t h or i g in al ma t ur i t ie s o f th re e m on t hs or l es s , a nd ba nk ove r dr a f t s . B an k ov e rd r af t s are sho w n w i t hi n sh o r t- t er m bo rr o w in g s in current liabilities in the st atemen t of nancial posi tion. 30F . TRADE RE CEIV ABL ES T rad e re cei va bl es ar e amo un t s due f rom c us to me rs f or go ods so ld or s er v ice s pe r fo rm ed i n the o rdi nar y co ur se o f busi ne ss . Th ey a re gen er all y du e for s et t le me nt w it hi n 30 to 9 0 da ys an d are t her ef ore al l cla ss i ed as c ur re nt . T rad e rec ei va bl es are r eco gn ise d in it ial l y at t he am ou nt of c ons ide ra tio n th at is un con di tio na l unl es s th ey co nt ai n sig ni c an t na nci ng com po nen t s , wh en th ey a re re cog nis ed a t fai r val ue. T he Gr oup h old s th e tr ade r ece iv ab le s wi th t he o bje c t iv e to col le c t th e con tr ac t ual c as h ow s a nd th er efo re me asu re s the m sub se qu ent l y at am or ti se d cos t us ing t he e e c ti v e int ere s t method. T rad e re cei va bl es ar e wr i t te n o wh en t he re is no re as ona bl e ex pe c t a tio n of re cov er y. Indi ca to rs t ha t the re is n o rea son ab le ex pe c t a tio n of re co ver y in cl ude , am ong s t ot he r s, t he f ail ure o f a deb tor t o eng age in a re pa ym en t pla n wi th t he G rou p, an d a fa ilur e to ma ke con tr ac t ual p ay m ent s f or a p er io d of gr ea ter th an 1 20 da ys p as t du e. Imp ai rm en t los se s on t rad e re cei va bl es an d con tr ac t a ss et s are p res en te d as ne t imp air m ent l os se s wi th in op er at ing pro t . S ubs eq uen t re cov er ies o f amo unt s p re vi ous l y wr it te n o ar e cre di te d agai ns t th e sa me li ne i tem . 30G. I NVENTO RY Th e cr ud e oil in ve nto r y a nd t he ma ter ia l and s upp lie s inv en tor y ar e val ue d at th e low er of c os t an d net r eal is abl e va lue . Cos t is de te rm ine d usi ng th e we igh te d ave rag e met ho d. Ne t rea lis ab le v alu e is t he e s tim at ed s ell ing p ri ce, l es s app li ca bl e sel lin g ex pe nse s . Th e cos t of i nve nto r y i ncl ud es al l cos t s r ela te d to br in gin g th e inv en tor y to i t s cu rr ent c on dit io n, including proces sing cost s, labour cos ts , supplies, direc t and allocated indirect operating overhead and depreciation ex pe ns es , w her e app lic a ble , inc lu din g allo c at ion o f xe d and va ria bl e cos t s to in ve nto r y. 30H. T AN GIB LE ASSETS Proper t y plant and equipment Oi l & gas p rod uc t ion a s se ts Oil a nd g as pr od uc t ion a ss et s a re ag gr ega te d ex pl ora ti on a nd evaluation tangible assets and development expenditures as so cia te d wi th t he p rod uc t io n of pro ve d res er ve s . Th e cos t o f dev el opm en t and p rod uc t io n as se t s als o inc lud es th e cos t o f acq uis it ion s an d pur cha se s of su ch a ss et s , di rec tl y at tr ib ut ab le o ver h ead s an d th e cos t of r eco gn isi ng pr ov isi ons for f u tu re re s tor at ion a nd de com mis si oni ng . Wh er e majo r an d ide nt i abl e pa r t s of t he pr odu c t ion a ss et s hav e di e ren t use f ul li ve s , th ey ar e acco un ted f or as s ep ara te it ems o f pro per t y, plant a nd e qui pme nt . Cos t s o f mino r rep ai r s an d main te nan ce are e xp en se d as in cur re d. O il an d gas pro du c ti on as s et s ha ve a ni te l if e. Depreciation Oil a nd g as pr op er t ie s ar e dep re cia te d usi ng th e un it- of- pro du c ti on me t hod . Uni t- of- pr od uc t ion r ate s ar e bas ed o n 1 P pro ve d res er ve s , wh ich a re oil , gas a nd ot he r min era l re ser v es es t ima te d to b e rec ove re d fro m e xis t in g fac ili t ie s usi ng cu rr ent op era ti ng me th od s. O il an d gas v olu me s are co nsi der ed pro du ced o nce t he y ha ve b een m ea sur ed t hro ug h me ter s a t cu s tod y t ran s fer o r s ale s tr an sa c t ion p oin t s at t he o ut le t va lv e on t he e ld s to rage t a nk . Fi el d inf ra s tr uc tur e exce e din g bey on d the l if e of th e el d is PETRONOR E&P ASA AN NUA L R EP OR T 20 21 92 Finan cial statement s – Petr oNor E&P Limited de pre cia te d ove r th e us ef ul l if e of t he in fr as t ru c t ure u sin g a straight-line method. Proper t y , plant a nd equipment not associated with exploration an d pro duc ti on ac ti v i tie s ar e ca rr ie d at c os t le s s acc umu lat ed de pre cia ti on . Th es e as se t s are al so e va lua ted f or im pa ir men t . De pre ci at ion o f oth er as se t s is c alc ul ate d on a s tr aig ht- li ne ba sis as f oll ow s: Computer equipment 20 – 33 . 33 % Fu rni t ure , x t ur es & t ti ng s 10 – 33 . 33 % Motor vehicles 20% 30 I. INT ANGIBLE A SSE TS E xp lor at io n and e va lua t ion a c t iv i t y i nvo l ves t he s ea rch f or hydroca rbon resource s, the determ ination of technical fea sib ili t y and t he a ss es sm en t of co mme rci al v ia bil it y of an ide nt i e d res our ce. F or ea ch a rea of i nte re st , e xp en di tu re inc ur re d in t he ac qui si tio n of r ig ht s to e x plo re an d al l cos t s di re c tl y as s oci ate d w it h hol di ng th e lic enc e suc h as ren t al , tr ain ing a nd co rp or ate a nd s oc ial r esp on sib ili t y a re ca pi t ali se d as e xp lor at ion a nd e val ua tio n int a ng ibl e as se t s. Signatu re bonu ses requi red by licen ce agr eements are ca pi t ali se d as e xp lor at ion a nd e val ua tio n int a ng ibl e as se t s. O th er cos t s d ire c t ly a ss oc iat ed w it h th e lic enc e are e xp ens ed as in cur re d. Explorat ion, evaluation and development expenditure is re cord ed a t hi st or ic al c os t an d all oc a ted t o cos t p oo ls on an ar ea of in ter es t . E xp en di tu re on an a rea o f inte re s t is ca pi t ali se d and c ar r ie d for wa rd w her e ri ght s t o tenu re of t he are a of in ter es t ar e cur re nt an d: ■ it i s ex pe c te d to b e re coup ed t hr oug h su cce ss f ul de vel op me nt an d ex pl oi t at ion o f th e are a of in te res t o r al ter na ti v el y by i t s sa le; or ■ ex pl or at ion a nd e va lua ti on ac ti v it ie s ar e con tin uin g in an ar ea of i nte re s t bu t at re po r t ing d at e hav e not y et rea ch ed a s t age w hic h pe rm it s a re as ona ble a ss es sm en t of th e ex is te nc e or ot her w ise o f eco nom ic al ly r eco ver ab le reserves. Acc um ula ted c os t s in re sp ec t o f area s of in ter es t w hic h are ab and on ed ar e wr i t te n o in f ull a gain s t pro t i n the p er io d in wh ic h the d ec isio n to ab an don t he a rea is m ade . Pro jec t s are a dv an ced t o dev el opm en t st a tu s wh en i t is ex pe c te d t hat f ur t her e x pen di tu re c an b e rec oup ed t hr oug h sa le o r suc ces s f ul de ve lo pme nt a nd e xp loi t at io n of t he ar ea of interes t. A ll c api t al ise d co s ts a re su bje c t t o comm er cia l an d man age men t re vi ew, as w ell a s rev i ew fo r ind ic at or s of imp ai rm en t at le as t on ce a yea r . Thi s is to con r m th e con ti nue d in ten t to de vel op o r oth er wi se e x tr ac t val ue f rom th e dis cov er y. Whe n thi s is no lo nge r th e ca se, t he co s t s are wr i t te n o th ro ugh t he s t at em ent o f pro t o r los s an d oth er comprehensive i ncome. Wh en p rov ed re se r v es of o il an d nat ur al ga s are id en ti e d an d development is sanctioned by the manag ement , the r elevant ca pi t ali se d ex pe nd it ure is r s t ass es s ed fo r imp ai rm ent a nd (i f re qui re d) an y imp ai rm en t los s is r eco gn ise d, t he n th e rem ain ing b ala nce i s tra ns fe r red t o oil an d gas p rop er ti es . Pro ce eds f ro m dis po sa l or f ar m - ou t tr ans ac ti ons o f int a ng ibl e ex pl or at ion a ss et s a re us ed t o red uce t he c a rr y ing a mo unt o f th e as se t s. W he n pro cee ds e xce ed t he c ar r y in g amo un t , the di e ren ce is re cog nis e d as a gain . W hen t he G rou p dis pos es o f it s f ul l int ere s t s , gai ns or l os se s are r eco gn ise d in a cco rda nce wi t h the p ol ic y f or re cog nis ing ga ins o r los s es on s al e of pl ant , proper t y and equipment. Ge ne ral ly I nt an gi ble a ss et s c an b e vi ew ed in de ni te a s th ey w ill b e ret a ine d on t he ba la nce sh ee t unt il i mpa ire d or tr ans f er re d to oil an d gas p rop er ti es . Cer t ain l ice nce re la ted cos t s c ap it a lis ed a s int a ng ibl e as se t s are d ee me d to ha ve a ni te l ife a nd ar e acc re ted o ver t he li fe o f the l ice nce ar ea . Depreciation Li cen ce re lat ed co s t s ca pi ta lis ed a s Int a ng ibl e as se t s are de pre cia te d usi ng th e uni t- of- pr odu c t ion m et ho d. Un it- of pro du c ti on ra te s are b as ed on 1P prove d re se r v es , w hic h are oil , ga s and o th er mi ne ral r es er ve s es t ima te d to be r eco ve red fr om e xis t in g fac ili t ies u sin g cur re nt op er at ing m et ho ds . Oil an d gas v olu me s are co nsi de red p ro duc ed o nce t he y hav e be en m eas ure d th rou gh m et er s at c us to d y tr ans f er or s a les tr ans a c ti on po in ts a t th e ou tl et va l ve on t he e ld s to ra ge ta nk . 3 0J . B OR ROW I NG CO S T S Bo rr ow ing co s t s th at ar e dire c t l y at t ri bu t ab le to t he acq uis it io n, co ns t ru c t ion o r pro du c ti on of a q ual if y in g non - cur re nt a ss et a re ad de d to t he co s t of th e as se t du ri ng th e pe ri od of t im e th at is r eq uire d to co mp le te an d pre pa re t he as se t for i t s int en de d use . Bor ro wi ng co s ts a re c api t al ise d to th e ex ten t th at f un ds ar e bor ro we d spe ci ca ll y fo r th e pur po se of ob t ain ing a qu ali f yi ng as se t . T o the e x te nt t ha t fu nds a re bo rr owe d gen er all y an d use d fo r th e pur po se of o bt ai nin g a qua li f y in g as se t , the a mo unt o f bor ro wi ng co st s e lig ib le fo r ca pi t ali sa t ion i s det er min ed b y ap pl y ing a c ap it a lis a tio n ra te to th e ex pe ndi t ure s on th at a ss et . A ll ot he r bor ro wi ng co s t s are ex pe ns ed as i ncu rr ed . 30 K. RE VENUE (i) Revenue from petroleum produc ts Re ven ue f rom t he s al e of cr ud e oil is re co gni se d wh en a cus t ome r ob ta ins c ont ro l (“ s al es ” or “ li f t in g ” me t hod ). No rm all y th is is w he n ti tl e pas s es at p oin t of de li ve r y. Re ven ue s fr om pr od uc t ion o f oil p ro per t ies a re re cog ni se d ba se d on ac tu al vo lum es l if te d an d so ld to c us to me rs d ur ing th e per io d. (ii) Oth er revenue Un der a pr od uc t io n shar in g con tr ac t , w he re th e Gr oup is re qui red to p ay p ro t oil t a x an d roy al tie s on p rod uc t io n of cr ud e oil , suc h pa ym en t s are s et tl ed in k in d (wh er e the gov er nme nt li f t the c r ude i t is en ti tl ed t o). Th e Gro up pr es en t s a gro ss - up of t he p ro t oil t a x as an i nco me t ax e xp en se w it h a cor re sp ond ing i nc rea se in o il an d ga s rev en ues a nd a ny as so cia te d roy al ti es ar e inc lud ed in t he co s t of s ale s . Th e Gr oup a ss es se s w het he r it a c t s as a pr in cip al o r agen t in eac h of i t s rev enu e ar ran gem en t s. T he G rou p has co nc lud ed th at in a ll sa le s tr ans ac ti ons i t ac t s a s a pri nc ipa l. (iii) Variable consideration If t he co nsi der at io n in a cont ra c t in clu de s a var ia bl e amo unt , th e Gr oup r eco gn ise s th is am ou nt as r ev enu e on ly t o th e PETRONOR E&P ASA AN NUA L R EP OR T 20 21 93 Financial st atements – PetroNor E& P Limited ex ten t th at i t is hig hl y pro ba bl e tha t a sig ni c an t re ver s al w ill not o cc ur in th e fu t ure . (i v) I nte res t Int ere s t re ven ue is r eco gni se d on a ti me - pr op or t io nal ba sis us ing t he e e c t iv e int ere s t me th od. T hi s is a me th od of c alc ula t ing t he am or ti se d cos t of a n anc ia l ass et a nd all oc a tin g th e in tere s t in com e ove r th e re le van t pe ri od u sin g th e e ec t i ve in ter es t ra te , wh ich is t he r ate t ha t ex ac t l y dis cou nt s t he e s ti mat ed f u tur e ca sh re ce ipt s t hro ug h th e ex pe c te d us ef ul l if e of th e na nci al as se t to th e ne t ca rr y in g am oun t of th e na nc ial as s et . 3 0L . LE A SE S The Group as lessee Th e Gr oup a ss es se s w het he r con tr ac t i s or con t ain s a leas e, at in cep ti on of t he co nt rac t. T h e Gro up re cog nis e s a rig ht- of- us e ass et a nd a co rre sp on din g lea se li abi li t y w it h re spe c t to a ll lea se a rr ange me nt s in w hi ch it i s the l es se e, e xcep t for s hor t- ter m le as es (de ne d as le as es w it h a lea se te r m of 1 2 mon th s or le s s) and le ase s of lo w va lue a ss et s . Fo r th es e lea se s , the Gr oup r eco gn ise s th e le as e pay m en t s as an o pe rat in g ex pe ns e on a s t rai gh t-li ne b asi s ove r th e ter m of t he l ea se un le ss ano th er s y s te ma ti c bas is is m ore r ep res en t at i ve of t he t ime pa t te rn i n wh ich e con omi c be ne t s f ro m the l eas ed a ss et s a re consumed. Th e le ase l iab ili t y i s ini ti all y me asu re d at th e pre se nt v alu e of th e lea se p ay me nt s t ha t are n ot p aid a t th e com me nce me nt dat e, di sco unt ed b y usin g th e rat e imp lic it i n the l eas e. I f th is ra te c an not b e rea dil y d ete r min ed , th e Gr oup u se s it s incremental borrowing rate. Lea se p ay m ent s i ncl ud ed in t he m ea sur eme nt o f th e lea se liabilit y c omprise: ■ Fi xed l eas e pa y men t s (i ncl udi ng in - sub s t an ce xe d pa ym en t s), le ss a ny le as e ince nt i ves ; ■ Var iab le le as e pa ym en t s th at de pe nd o n an in de x or ra te, i nit ia ll y me asu red u sin g th e ind ex o r ra te a t th e commencement date; ■ Th e am oun t ex pe c te d to be p ay ab le by t he le ss e e und er residual value guarantees; ■ Th e exe rci se p ri ce of pu rch ase o pt ion s , if t he le ss ee i s rea so nab l y cer ta in to e xerc is e the o pt ion s; an d ■ Pay me nt s of p en al ti es fo r te rm ina ti ng t he le as e, i f th e lea se ter m re e c t s th e exe rci se of a n opt io n to ter mi nat e th e lea se. Th e le ase l iab ili t y i s pre se nte d as a se pa ra te lin e it em in t he s t ate me nt of n an cia l pos it io n. Th e le ase l iab ili t y i s sub se que nt l y mea sure d by in cr eas ing th e ca rr y in g amo unt t o re ec t inte re s t on th e lea se li ab ili t y (usin g e ec t i ve in ter es t me t hod ) an d by re duc ing t he c ar r yi ng am oun t to re e c t th e lea se p ay me nt s ma de. Th e Gr oup r eme asu re s the l eas e lia bil it y (and ma kes a cor re sp ond ing a dj us tm en t to t he re la ted r ig ht- of- u se a ss et) whenever: ■ th e lea se t er m has c ha nge d or t her e is a ch ange i n th e as se ss men t of e xerc ise o f a purc ha se op ti on , in wh ich c as e th e lea se l iab ili t y i s rem ea sur ed by d is cou nt ing t he re v is ed lea se p ay me nt s us ing a re v is ed di sco unt r at e. ■ th e lea se p ay me nt s c han ge du e to ch ange s in a n ind ex o r ra te or a c han ge in e xp ec ted p ay m ent u nd er a g uar ant ee d re sid ual v alu e, in w hic h ca se s th e lea se li abi li t y is remea sured b y disc ounting the revised lease payments usi ng t he in it ia l dis cou nt ra te (unl es s t he le as e pa ym en t s cha nge is d ue to a ch ang e in a oa t ing in te res t r ate , in wh ic h ca se a re v is e dis coun t ra te is us ed ). ■ a lea se co nt rac t is mo di e d, an d th e lea se m odi ca ti on is not a cco unt ed fo r as a se pa rat e lea se , in wh ic h cas e th e lea se l iab ili t y i s rem ea sur ed by d is cou nt ing t he re v is ed l eas e pa ym en t s usi ng a rev i se d dis cou nt ra te. Th e Gr oup d id no t make an y suc h adj us t men t s dur in g the periods presented. Ri ght o f use a s se ts Th e Gr oup m eas ure s th e ri gh t-o f use a ss et a t cos t , le ss a ny accumulated depr eciation and impairment losses, adjusted for any r eme asu rem en t of le ase l iab ili t ies . T he co st o f th e rig ht- of- us e ass et c omp ri se: ■ Th e am oun t of th e ini t ial me asu rem en t of th e lea se l iab ili t y recogn ised ■ A ny le as e pay m en t s mad e at o r be for e th e com men ce men t dat e, l es s any i nce nt i ves r ece i ve d ■ A ny ini t ial di re c t cos t s in cu rr ed by t he G rou p. A n es t ima te of t he co s t s to be i nc urr ed b y th e Gr oup i n dis man tl ing a nd rem ov in g th e und er ly i ng as se t , res t or ing t he si te o n wh ich i t is lo c ate d or r es to ri ng t he un de rl y in g as se t to th e con di ti on re qui red b y th e ter ms a nd co nd it io ns of t he l eas e, un le ss th os e cos t s ar e inc ur red t o pro duc e inv ent or ie s. Th e Gr oup a ppl ie s th e dep rec ia tio n re qui rem en t s in IA S 1 6 Pro pe r t y, Plan t and E qui pme nt i n dep re cia ti ng t he r ig ht- of- us e as se t , exce pt t ha t th e ri gh t-o f- use a ss et i s de pre cia te d fr om th e com men ce men t da te to t he ea r lie r of th e le ase t er m an d th e rem ain ing u se fu l lif e of th e ri gh t-o f- us e ass et . Th e Gr oup a ppl ie s IA S 36 Im pa ir men t of A s se t s to de ter mi ne wh et he r th e rig ht- of- u se as s et is im pa ire d an d to acco un t for any i mp air me nt lo ss i den ti ed. Var iab le re nt s t hat d o no t dep en d on a n ind ex o r ra te ar e not inc lu de d in th e me asu rem en t of th e le as e lia bil it y an d th e ri gh t-o f- use a ss et . T he re la ted p ay me nt s a re re cog nis ed a s an e xp ens e in t he pe ri od in w hi ch th e ev en t or con di ti on th at tr ig g er s th os e pa ym en t s occ ur s an d ar e inc lu ded i n th e lin e ‘Admi nis t ra ti ve e x pen se s ’ in th e s t ate me nt of p ro t or lo ss . 30M. T A XES Th e inc om e ta x ex p ens e or be ne t for t he pe ri od co nsi s t s of t w o comp on en ts : cur re nt a nd de fe rre d t ax . Th e cu rr ent i nco me t ax p ay abl e or re cov er abl e is c alc ula te d usi ng t he t a x rat es a nd le gi sla ti on t ha t hav e be en e nac ted o r sub s t ant i ve ly e na c te d at y ear-e nd i n eac h of t he ju ri sdi c t ion s an d inc lud es a ny a dju s tm ent s f or t a xes p aya bl e or re cov er y in re spe c t of p ri or pe ri od s. De fe rre d t ax a ss et s an d lia bil it ie s are d ete r min ed us ing t he ba lan ce sh ee t liab ili t y met ho d ba se d on te mpo ra r y di ere nce s be t w een t he c ar r yi ng va lu e of as se t s and l iab ili ti es fo r na nc ial rep or ti ng pu rp os es a nd th ei r ta x ba se s. I n ca lc ula tin g th e de fer re d t ax a ss et s a nd l iab ili ti es , t he t a x rat es u se d are t ho se th at ha ve b ee n ena c te d or s ubs t a nt iv el y en ac t ed b y yea r - e nd in ea ch o f th e jur is dic tio ns a nd t hat a re e xp ec ted t o ap pl y wh en t he as se t s are r eco ver ed , or t he lia bi lit ie s are s et tl ed . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 94 Financial stat ements – PetroNor E& P Limited Revenue- based taxes In ad di ti on to co rp or ate i nco me t axe s , the G ro up ’s con so lida te d na nc ial s t at em ent s a ls o inc lud e and r eco gn ise as in com e t axe s , oth er t y pe s of t a xes on n et i nco me su ch a s cert ain revenu e -based tax es. Production -sharing arrangements According to the produc tion -sharing arrangement (PS A) in ce r t ai n lice nce s , th e shar e of th e pro t o il to w hic h th e Go ver nm en t is en ti t le d in an y ca le nda r yea r in ac cor dan ce wi t h the P S A is de em ed to in cl ude a p or tio n rep re se nt ing t he cor po ra te in com e ta x im pos e d upo n and d ue by t he G rou p. Th is am ou nt w ill b e pai d dire c t l y by th e gove r nme nt on b eh al f of th e Gr oup t o the a ppr op ria te t a x au th or it ie s. The income tax exp ense Th e cu rr ent i nco me t ax i s ca lcu la ted u sin g the P S A , p aid i n ba rr els a nd bo oke d as in com e ta x an d als o sho w n as rev en ue. Sa les t ax Revenu es, expenses a nd assets ar e reco gnised net of the am oun t of sa le s t ax e xcep t wh ere t he s al es t a x inc ur red o n a pur ch ase o f as se t s or s er v ice s is no t rec ove ra ble f ro m th e t ax at ion a ut ho ri t y, in whi ch c as e the s al es t a x is re cog nis ed as p ar t o f th e cos t o f acq uis it ion o f th e as se t or a s par t of t he ex pe ns e ite m as ap pli c abl e. Re cei va bl es an d pa yab le s th at ar e s ta te d wi th t he a mou nt of sa le s t ax in cl ude d in to ta l amo un t rep or ted . Th e ne t amo un t of sa le s ta x re cov era bl e fr om , or pa yab le to , th e t ax at ion a ut ho r it y is in cl ude d as p ar t of re cei v abl es o r pa yab le s in th e s t ate me nt of nan cia l pos it io n. Cur re nt an d de fer re d t a x bal an ces a t t ri bu t abl e to am ou nt s recogn ised di rec tly in equity are a lso rec ognised d irectl y i n e q u i t y. 30N. EMPL OYEE BEN EFITS Pro vi sio n is ma de fo r ben e t s ac cr uin g to em plo ye es in re spe c t of w age s and s al ar ies , an nua l lea ve an d lo ng se r v i ce lea ve w he n it is p rob ab le th at s et tl eme nt w ill b e re qui red , an d th ey ar e ca pa ble o f bei ng me asu re d reli ab ly. Pro vi sio ns ma de in re sp ec t of e mp loy ee b ene t s ex pe c te d to be s et tl ed w it hi n 1 2 mo nt hs ar e mea sur ed a t th eir n om ina l val ue s usi ng t he rem un era ti on ra te e xp ec t ed to a pp ly a t th e tim e of se t t le men t . Pro vi sio ns ma de in re sp ec t of emp lo ye e ben e t s , wh ich a re not d ue to b e set tl ed w i thi n 1 2 mon th s are de te rm ine d usi ng th e pro jec te d uni t cre di t me th od . 3 0O. D EF IN ED CO NT R IB UT IO N PE NS I ON PL A N Th e Gr oup p ay s con tr ib u tio ns in to de n ed co nt ri bu ti on pl ans . Ob lig at ion s for co nt ri bu ti ons t o de ne d con tr ib ut io n pen sio n pla ns ar e re cog nis ed a s an e xp en se in t he i nco me s t at em ent i n th e per io ds d ur ing w hic h se r v i ces ar e ren de red b y emp lo yee s . 3 0p . T ra de an d oth er p ayab le s T rad e an d oth er p aya bl es ar e ca rr ie d at am or ti se d cos t an d due t o the ir sh or t-te rm n at ure , the y ar e not di sco unt ed . 30Q. PR OVISIONS (i) General Pro vi sio ns ar e rec ogn is ed w hen t he G ro up has a p res en t ob liga t ion ( le gal or c ons t ru c t i ve) as a res ul t of a pas t e ve nt . It is pr ob abl e th at an o ut o w of res ou rce s emb od y in g eco nom ic be ne t s w ill b e re qui red to s et tl e th e obl iga ti on an d a rel iab le es t ima te c an b e mad e of th e amo un t of th e obl iga ti on. Wh er e th e Gro up e xp ec t s so me or a ll of t he p rov i sio n to be rei mb ur se d, f or e xam pl e und er a n ins ura nce co nt ra c t , th e rei mb ur se men t is re co gni se d as a s ep ara te as s et b ut o nl y wh en t he re imb ur se me nt is v ir tu all y ce r t ai n. T he e xp ens e rel at ing t o any pr ov is ion is r eco gn ise d th rou gh p ro t an d los s ne t of any r eim bur s em ent . I f th e ee c t of t he t ime v al ue of mo ney i s ma ter ia l, pr ov is ion s are d isc oun te d usi ng a cu rr ent pre - t a x rat e tha t re e c t s , wh ere a ppr op ria te , the r is k s spe ci c to th e lia bil it y. Whe re di sco unt in g is us ed , the i nc rea se in t he pro v isio n du e to th e pa ss a ge of t ime i s rec ogn is ed a s int ere s t ex pe ns e. T he pr es ent o bli ga tio n und er o ner ous c ont ra c t s is re cog nis ed a s a prov is ion . (ii) Decommissioning liabili t y A de comm is sio nin g lia bil it y is re cog nis ed w he n th e Gro up has a p re se nt le ga l or co ns tr uc ti v e obl iga ti on as a r es ult of pa s t ev ent s , an d it is p rob ab le t hat a n ou t ow of re sou rce s wi ll be r equ ire d to se t t le t he ob lig at io n, an d a rel iab le e s tim at e of th e amo unt o f obl iga ti on c an be m ad e. A cor re sp ond ing a mo unt e qu iv al en t to th e ob lig at ion is al so r eco gni se d as p ar t of t he co st o f th e re lat ed pro du c ti on pl an t and e qui pm ent . T he am ou nt re cog nis e d in t he e st im ate d co s t of de com mis si oni ng , di sco un ted to it s p re sen t va lue . Cha nge s in th e es t ima te d tim ing o f decommissioning or decommissioning cost es timates are dea lt w i th pr os pe c ti v el y by re cor din g an ad jus t me nt to t he provision, and a corresponding adjustment to production pla nt an d eq uip me nt . Th e unw in di ng of t he dis co unt o n the de com mis sio nin g lia bil it y is in clu de d as a na nce c os t . A n es cro w acco un t is mai nt ai ne d by th e ope ra tor o f the l ice nce an d is gov er ne d by a jo in t ope ra ti ng ag re eme nt a nd t he Con gol es e Gov er nm en t rul es . T he Gr ou p’ s sha re, p aid a gai ns t th e de com mis sio nin g lia bi lit y un ti l th e ba lan ce sh ee t dat e, is cla ss i ed a s an ad va nce a gai ns t de com mis sio ni ng lia bil it y in cur re nt a ss et s . 30R. SHARE CAPIT AL Con tr ib ut ed e qui t y i s re cog nis ed a t th e fa ir va lu e of th e con sid era ti on r ece iv ed b y th e Gr oup , les s an y c api t al r ais ing cos t s in r ela ti on to t he is su e. Inc re men t al co s t s dire c t ly a t t ri bu t ab le to t he is sue o f new sha re s or op tio ns ar e sho wn i n equ it y as a de duc ti on , net o f t ax , f rom t he p roc ee ds . 30 S. DIVIDE ND DISTR IBUTION Di v id end d is tr ib ut io n to th e Com pan y ’ s sha reh ol der s is re cog nis ed a s a liab ili t y i n the G ro up ’s n an cia l st a te men t s in th e pe ri od in w hi ch th e di v ide nd s are de cl are d an d appropriately authorised or approved by the Company ’s sha reh ol de rs ' gene ra l mee t ing .. In ter im di v id en ds pr op ose d by t he Bo ar d of Dir ec tor s ar e rec ogn is ed as l iab ili ti es up on declaration. 30T . FI NANCIAL INSTR UMENTS A na nc ial in s tr um ent i s any co nt rac t th at gi v es r ise t o a na nc ial as s et of a ny on e ent i t y an d a na nci al li abi li t y or eq ui t y in s tr um ent o f ano th er en ti t y. (i) Financial asse ts Fi nan ci al as se t s are c las si e d, a t ini ti al re cog ni ti on , as sub se qu ent l y me asu red a t am or tis e d cos t , fa ir v alu e th rou gh PETRONOR E&P ASA AN NUA L R EP OR T 20 21 95 Financial stateme nts – PetroNor E&P Limited ot her co mp reh ens i ve in com e (OCI ), a nd fa ir va lu e thr oug h pro t o r los s , as ap pro pr ia te. Th e cla ss i c at ion o f na nci al as se t s at in it ia l reco gn it io n de pen ds o n the nan cia l as se t ’ s con tr ac t ua l ca sh o w cha ra c te ri st ic s a nd t he G rou p’ s bu sin es s mo del f or m ana gin g th em . Wi th t he e xcep ti on of t ra de re cei v abl es t ha t do not con t ain a si gn i ca nt n an cin g com pon en t or fo r whi ch t he Gr oup h as ap pl ied t he p ra c ti c al e xp edi en t , th e Gro up i nit ia ll y mea sur es a n an cia l ass et a t it s f air v alu e plu s , in th e ca se of n anc ial a ss et s n ot sub se qu ent l y mea sur ed a t fai r val ue th rou gh p ro t or lo ss , t ran sa c t ion c os t s th at ar e at t r ibu t ab le to th e acq uis it io n of th e na nci al as se t . In or der f or a n anc ial a ss et to b e cla ss i ed a nd me asu re d at am or t is ed co s t or fa ir va lue t hr oug h OC I, i t ne ed s to gi ve r is e to c ash ow s th at ar e sol el y pa y me nt s of pr in cip al a nd in ter es t (SPPI ) on t he pr in cip al a mou nt o ut s t an din g. T hi s ass es sm en t is re fer re d to as t he SPP I tes t an d is pe r f or me d at an in s tr um en t level. Th e Gr oup ’ s bus ine ss m od el fo r man agi ng n an cia l ass et s re fer s to h ow it m ana ges i t s na nc ial a ss et s in o rde r to gen era te c ash ow s . Th e bus ine s s mod el de te rm ine s wh et he r ca sh o w s wi ll re sul t fr om co lle c t ing co nt ra c tu al c ash ow s , se lli ng th e na nc ial as s et s , or b oth . Pur cha se s or s ale s of n an cia l ass e ts t ha t req uir e del i ver y of as se t s wi t hin a t ime f ra me es t a bli she d by re gu la tio n or co nve nt ion i n th e mar ket pla ce (reg ula r way t ra de s) are re cog nis ed o n the t ra de da te, i .e. th e dat e tha t th e Gr oup com mi t s to pur cha se o r sel l th e ass et . Fi nan ci al as se t s ar e rec ogn is ed in it ia ll y at f air v al ue, n or mal l y be ing t he t ran sa c t ion p ri ce. In t he c as e of na nc ial a ss et s no t at fa ir va lue t hro ug h pro t o r los s , dire c t l y at t r ibu t ab le t ran sa c t ion cos t s ar e als o inc lu de d. T he su bs equ en t mea sur eme nt of na nc ial as s et s de pe nd s on th eir c las si c a tio n, a s se t ou t be low. T he G ro up der ec ogn is es n anc ia l ass et s w he n th e con tr ac t ua l rig ht s to t he c as h ow s e xp ire o r the nan cia l as se t is tr ans f er re d to a th ird p ar t y. Thi s inc lud es t he d ere cog ni ti on of re cei v abl es f or w hic h dis cou nt ing a rr ange me nt s ar e ent ere d int o. T he cl ass i c at ion d ep end s on t he bu sin es s mo del f or man ag ing t he n an cia l ass et s a nd t he con tr ac tua l ca sh o w cha ra c te ri st ic s of t he n an cia l ass et . Subsequent measurement F or pu rp os e s of sub se qu en t me asu re me nt , n an cia l as se t s ar e cla ss i ed in 4 c at ego ri es : ■ Fi nan ci al as se t s at a mo r t ise d co s t (debt i ns tr u men t s) ■ Fi nan ci al as se t s at fa ir va lu e thr oug h OC I wi t h rec ycl ing o f cumulati ve gains and losses (debt instr ument s) ■ Fi nan ci al as se t s de sig na ted a t fai r val ue t hro ug h OCI w i th no rec ycling of cumulati ve gains and losses upon derecogni tion (equit y instr ument s) ■ Fi nan ci al as se t s at fa ir va lu e thr oug h pr o t or lo ss ■ Th e Gr oup h as no t des ign at ed an y na nc ial as s et s at f air va lue t hro ug h pro t o r los s . ■ Fi nan ci al as se t s at a mo r t ise d co s t (debt i ns tr u men t s) ■ Th e Gr oup m eas ure s na nc ial a ss et s at a mo r t ise d cos t i f bo th of t he fo ll ow ing co nd it ion s are m et : ■ Th e na nc ial a ss et is h el d wi th in a bus in es s mod el w it h th e obj ec t i ve to h old nan ci al as se t s in or der t o coll ec t con tr ac t ua l ca sh o ws ; And ■ Th e con tr ac t ua l ter ms of t he nan cia l as se t gi ve r ise t o sp eci ed da te s to ca sh o w s tha t are s ol el y pa ym en t s of pr in cip al an d int ere s t on t he pr in cip al a mou nt o ut s t an din g. Fi nan ci al as se t s at a mo r t ise d co s t are s ubs eq uen tl y m eas ure d usi ng th e e ec ti ve i nte re st ( EIR ) me th od an d are s ubj ec t to imp ai rm en t. G ain s and l os se s are re cog ni se d in pro t or los s wh en t he as se t is de re cog nis ed , mo di e d or imp ai re d. Cash equivalents Cash equivalent s are shor t-term, highly -liquid investment s th at ar e rea dil y co nve r t ibl e to k now n am ou nt s of c ash , ar e sub je c t to ins ig ni c an t ris k of ch ange s in va lu e and ge ner al ly hav e a ma tu ri t y o f th ree m on th s or le s s fr om t he da te of acq uis it io n. C ash e qui v ale nt s ar e cla ss i ed as nan cia l as se t s mea sur ed a t amo r t is ed co s t. Loans granted Lo ans g ran te d th at ha ve xed or de te rm ina bl e pay m ent s t ha t are n ot qu ote d in an ac ti ve m ar ket ar e cla ssi ed as nan cia l as se t s at a mor ti se d cos t a nd a re me asu red a t am or ti se d cos t usi ng th e e ec ti ve i nte re st m et ho d, l es s any im pa ir me nt . Int ere s t in com e is rec og nis ed by a pp ly in g th e e ec t i ve in ter es t rate. Derecognition A na nc ial as s et (or , wh er e app lic ab le , a par t of a na nc ial as se t or pa r t of a g rou p of sim ila r na nc ial as s et s) is pr ima ri l y de rec ogn is ed ( i.e. re mo ve d fro m th e Gro up ’s co ns oli dat ed s t ate me nt of n an cia l pos it io n) whe n: ■ Th e ri gh t s to re cei ve c as h ow s f rom t he as s et ha ve e xp ire d or t he Gr oup h as tr an s fer re d it s r ig ht s to re cei v e ca sh o ws fr om t he as s et or h as a ssu me d an o bli gat io n to pa y th e re cei ve d ca sh o w s in fu ll w it ho ut ma te ri al de lay t o a thir d pa r t y und er a ‘p as s- t hro ug h’ a rr ang eme nt ; an d ei th er (a) the Gr oup h as tr ans f er re d sub s ta nt ial l y all t he r isk s an d re war ds of t he as s et , or ( b) th e Gro up ha s ne it he r tr ans f er re d nor re ta ine d su bs t an ti all y al l the r is k s and re wa rds o f the a ss et , bu t has t ra ns fe rr ed co nt rol of t he a ss et . ■ Th e Gr oup h as tr ans f er re d it s r igh t s to re cei v e cas h o ws f ro m an as se t or ha s ent ere d int o a pas s -t hro ug h ar ran gem en t , it ev al uat es i f, and to w ha t ex ten t , it ha s re ta ine d th e ri sk s an d rew ar ds of ow ne r shi p. Wh en i t has ne it he r tra ns f er red n or r et ai ne d sub s ta nt ia ll y all o f th e ri sk s an d rew ard s of th e as se t , nor t ra ns fe rr ed co nt rol o f th e as se t , th e Gr oup co nt in ues t o re cog nis e th e tr ans f er re d as se t to th e ex t en t of it s co nt inu ing i nvo l vem en t. I n tha t ca se , th e Gro up al so re cog ni se s an as so cia te d lia bil it y. The tr ans f er re d as se t and t he a ss oc ia ted l iab ili t y a re m eas ure d on a ba sis t ha t re ec t s the r ig ht s an d ob lig at ion s tha t th e Gr oup h as re ta in ed . Imp ai rme nt of n an cia l as se t s Th e Gr oup r eco gn ise s an al low an ce fo r ex pe c te d cre di t los s es (EC L s) for a ll de bt i ns tr um en t s not h el d at f air v alu e th ro ugh pro t o r los s . ECL s a re ba se d on th e di e ren ce be t w ee n the con tr ac t ua l ca sh o ws d ue in ac cor dan ce w it h th e cont ra c t an d all t he c ash ow s th at th e Gr oup e xp e c t s to re cei ve , dis cou nte d at a n app rox ima ti on of t he or ig ina l e ec t i ve int ere s t ra te. T he e xp ec ted c as h o ws w ill i ncl ud e ca sh o ws fr om t he s al e of co lla ter al he ld o r ot her c re di t enh an cem ent s th at ar e int eg ral to t he co nt ra c tu al te rm s. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 96 Financial st atements – PetroNor E& P Limited ECL s a re re cog nis ed i n t wo s t ag es . Fo r cre di t ex po sur es fo r wh ic h the re ha s not b ee n a sign i c ant i ncr eas e in cr ed it r isk sin ce in it ial r eco gn it io n, EC L s ar e pro vi de d fo r cre di t lo ss es th at re sul t f rom d ef aul t ev ent s t ha t are p os sib le w it hin t he ne x t 1 2 mo nt hs (a 1 2- m ont h EC L). F or t ho se cr ed it e xp os ure s for w hi ch t her e has b ee n a sign i c an t inc rea se in c red it r isk sin ce ini t ial re co gni t ion , a los s al low an ce is re qui red f or cr ed it lo ss es e xp ec te d ove r th e rem ain ing l if e of t he e xp osu re, ir res pe c t iv e of th e ti min g of th e def au lt (a lif et im e ECL ). Fo r tr ad e rec ei va bl es an d co nt rac t as se t s, t he G ro up ap pl ies a sim pli ed ap pro ac h in c alc ula t ing EC L s. T he re for e, t he Gr oup do es n ot tr ac k cha nge s in cr ed it r isk , bu t ins t ead r eco gn ise s a lo ss al lo wan ce ba se d on li fe ti me EC L s at ea ch re po r t ing da te. Th e Gr oup h as es t a bli she d a pro v isio n ma tr ix t ha t is ba se d on i t s his to ri ca l cre di t-l os s ex pe ri en ce, ad ju st ed f or fo r w ard - lo ok ing f ac t or s sp ec i c to th e deb tor s an d th e eco no mic environment. Th e Gr oup co nsi de rs a nan cia l as se t in de fau lt w he n con tr ac t ua l pay m ent s a re 9 0 day s pa s t due . How ev er , in ce r t ai n ca se s, t he G rou p may a lso co nsi de r a nan ci al as se t to be in d ef aul t w hen i nte rn al or e x te rn al in for ma t ion ind ic at es t ha t th e Gro up i s unli kel y to re ce iv e th e ou t s t and ing con tr ac t ua l amo un ts i n f ull b ef ore t a ki ng in to ac cou nt an y cre di t en han cem en t s hel d by th e Gr oup. A nan cia l as se t is w ri t te n o w he n the re is n o reas on abl e ex pe c t a ti on of re cove r ing t he co nt rac tua l ca sh o w s. (ii) Financial liabilities Initial recognition and measurement Fi nan ci al lia bil it ie s are c las si e d, a t ini ti al re cog ni ti on , as na nc ial li abi li ti es a t fai r val ue th rou gh p ro t or l os s, nan cia l lia bil it ie s at a mor t ise d cos t , p ay ab le s, o r as de ri v at i ve s de sig na ted a s hed gi ng in st r ume nt s in a n e ec t i ve he dge , as appropriate. A ll na nc ial l iab ili ti es ar e rec og nis ed in it ia ll y at fa ir va lue a nd , in th e ca se o f loa ns an d bo rro w ing s an d pay ab le s, n et of dir ec t l y at tr ib ut ab le t ran s ac t ion c os t s. Th e Gr oup ’ s na nci al lia bi lit ie s inc lu de t rad e and o th er pa yab le s , loa ns an d bo rr ow ing s in clu din g ba nk ov erd ra f t s , and deriv ative nancial instrument s. Subsequent measurement Af te r ini ti al re cog ni ti on , inte re s t-b ear in g loa ns an d bo rr ow ing s are s ubs eq ue nt ly m eas ure d at am or ti se d cos t us ing t he EI R me th od . Gai ns an d los se s are r eco gn ise d in pr o t or lo ss wh en t he li abi li tie s ar e dere co gni se d as we ll as t hro ug h th e EIR amor tisation process. A mor ti se d cos t i s ca lc ula te d by t ak in g int o acc oun t any dis cou nt o r pre miu m on a cqui si ti on an d fe es o r cos t s t ha t are an in teg ra l par t of t he EI R . Th e EIR am or ti sa ti on is in cl ude d as na nce co s t s in th e s t ate me nt of p ro t or lo ss . Th is c ate gor y ge ner all y ap pl ies t o int ere s t-b ear in g lo ans a nd bo rr ow ing s . Fo r mor e inf or ma tio n, r ef er to No te 20. Pay abl es a re me asu red a t th eir n omi nal a mou nt w he n the e ec t of dis cou nt ing i s not ma te ria l. Foreign exchange g ains and losses Fo r na nc ial li ab ili ti es t hat a re de no mina te d in a fo rei gn cur re nc y an d are m eas ure d at a mo r t ise d cos t a t t he en d of ea ch re po r t in g per io d, t he f ore ig n exc han ge ga ins a nd lo ss es a re de ter mi ne d ba se d on t he am or ti se d cos t o f th e ins t r ume nt s . Th es e for ei gn e xcha nge ga ins an d lo ss es a re re cog nis ed in t he ‘ for eig n exc ha nge ga in / (l os s)’ l ine i tem in pr o t or lo ss fo r na nc ial li ab ili ti es t hat a re no t par t of a des ig nat ed h edg in g rel at ion shi p. Fo r th os e whi ch a re de sig na ted a s a he dg ing i ns tr um en t fo r a hed ge of f ore ig n cur re nc y ri sk , fo re ign e xch ang e gai ns an d los s es a re recognise d in other comprehensive income and accumulated in a se pa rat e com pon en t of eq ui t y. Th e fa ir va lue o f nan ci al lia bil it ie s de nom ina te d in a for eig n cur re nc y is de te rm ine d in t ha t for eig n cu rr enc y an d tr ans lat ed at t he sp ot ra te at t he e nd of t he re po r t ing p er io d. F or n anc ial lia bil it ie s th at ar e mea sure d as a t Fair Val ue th rou gh p ro t an d los s , t he fo rei gn e xch ange c omp on en t for ms p ar t of t he fa ir va lue ga ins o r los s es an d is re cog nis ed i n pro t or l os s for na nc ial li abi li ti es t hat a re no t par t of a de sig na ted h ed gin g relationship. Derecognition of nancial liabilities Th e Gr oup d ere cog ni se s na nci al li abi li tie s w hen , an d onl y wh en , th e Gro up ’s o bli gat io ns ar e dis cha rge d, c an ce lle d or hav e ex pi red . T he di e ren ce be t w ee n the c ar r y ing a mou nt of th e na nci al li abi li t y de re cog nis ed a nd t he con sid er at ion p ai d an d pay ab le is re cog ni se d in pro t o r los s . Wh en t he G rou p exc han ges – w it h th e ex is t ing l end er – on e de bt ins t r ume nt in to an ot her o ne w it h sub s t an tia ll y di e ren t ter ms , t he e xch ange i s acc oun te d for a s an e x ti ng uis hme nt of th e or ig ina l na nci al li abi li t y an d th e rec ogn it io n of a ne w na nc ial li abi li t y. Sim ila rl y, the G ro up acc oun t s for s ubs t a nt ial mo di c at io n of ter ms o f an ex is t ing l iab ili t y o r par t of i t as an e x ti ng uis hme nt of t he o ri gin al n anc ial l iab ili t y a nd t he re cog ni tio n of a ne w lia bil it y. It is as sum ed t ha t the t er ms ar e sub s t ant ia ll y di e ren t if t he di sco unt ed p res en t val ue of t he ca sh o w s und er t he ne w ter ms , in cl udi ng an y fee s pa id ne t of any f ee s rec ei ve d and d isc oun te d usin g th e or igi na l ee c t i ve ra te is at l eas t 10 per ce nt di e re nt f rom t he di sco un ted pre se nt v alu e of th e rem ain ing c as h ow s of t he o ri gin al na nc ial li abi li t y. If t he mo di c at io n is no t subs t a nt ial , th e di e ren ce be t w ee n (1 ) t he c ar r yi ng am ou nt of t he lia bi li t y be for e th e mod i c at ion ; and ( 2) th e pre se nt va lue o f the c as h o ws a f t er mo di c at io n is re cog nis ed i n pro t or l os s as th e mo di c at io n gain o r los s w it hin o th er gai ns an d lo ss es . (iii) Fair value meas urement Th e Gr oup m eas ure s de ri va t iv es a t fai r val ue at e ach b al anc e she et d at e and , fo r th e pur p ose s of i mp air me nt te s ti ng , us es fa ir va lu e les s cos t s t o sel l (F V LCD) to de ter mi ne t he re cove ra ble a mo unt of s om e of it s n on - na nci al as se t s. Fair v alu e is th e pr ice t ha t wou ld be r ece i ved t o sel l an as se t or p aid to t ra ns fe r a liab ili t y in an or der l y tr ans a c ti on be t w ee n mar ket p ar ti cip an t s at t he me asu rem en t date . Th e fai r val ue mea sur em ent i s ba se d on t he p res ump ti on t hat t he t ra ns ac t io n to se ll t he as se t or t ran s fer t he li abi li t y t ake s pla ce ei th er : ■ In t he pr in cip al ma rke t for t he a ss et o r liab ili t y Or ■ In t he ab se nce of a pr in ci pa l mar ket , in t he mo s t ad va nt a geo us ma rke t for t he a ss et o r lia bi lit y PETRONOR E&P ASA AN NUA L R EP OR T 20 21 97 Financial statem ents – PetroNor E&P Limited Th e pr in cip al or t he m os t ad v ant a geo us ma rke t mus t b e acc es sib le by t he G rou p. Th e fa ir va lue o f an as se t or a lia bil it y is me asu red u sin g th e as sum pt ion s tha t ma rke t par ti ci pan t s wo uld u se w hen p ri cin g th e as se t or li abi li t y, as sum ing t ha t ma rke t par t ici pa nt s ac t in th eir e con om ic be s t int ere s t . A fai r val ue me asu rem en t of a no n- n anc ia l ass et t a kes in to acc oun t a mar ket p ar t ic ip an t' s ab ili t y to ge ne ra te eco no mic be ne t s b y usin g th e ass et i n it s hi gh es t an d be s t use o r by se lli ng it t o ano th er ma rke t par ti ci pan t th at wo ul d use t he as se t in it s h igh es t a nd be s t us e. Th e Gr oup u se s val ua tio n te chn iqu es t ha t are ap pro pr ia te in th e ci rcu ms t a nce s an d for w hi ch s u ci en t dat a a re av ai lab le to mea sur e fa ir va lue , ma xi mis ing t he u se of r el ev ant o bs er va bl e inp ut s a nd mi nim isin g th e use o f uno bs er va ble i npu t s . A ll as se t s and l iab ili ti es f or w hic h fai r val ue is m eas ure d or dis cl os ed in t he n an cia l st a te men t s are c at ego ri se d wi th in th e fai r val ue hi era rc hy, des cr ib ed as f oll ow s , and b as ed on t he lo we s t-le ve l inp ut t ha t is sig ni c an t to th e fa ir va lue mea sur em ent a s a wh ole: Level 1 – Quo te d (unad jus t ed ) mar ket p ri ces i n ac t i ve m ar ket s for identical asset s or liabilities Level 2 – Valuat io n tec hn iqu es fo r wh ic h the l ow es t- lev el in pu t th at is si gn i ca nt to t he f air v alu e mea sur em ent i s dire c t ly o r indirectl y obser vable Level 3 – Valuat io n tec hn iqu es fo r wh ic h the l ow es t- lev el inp ut t ha t is sig ni c an t to th e fa ir va lue m eas ure me nt is unobser vable (i v) O se t tin g of na nc ial in st ru men ts Fi nan ci al as se t s and nan ci al lia bil it ie s are o se t , and t he ne t am oun t is rep or te d in th e cons ol ida te d s ta te men t of n anc ial po si tio n if t he re is a cu rr ent l y enf or ceab le l ega l ri gh t to o se t th e re cog nis ed a mo unt s a nd t her e is an i nte nt io n to se t t le on a n et b asi s, t o rea lis e th e as se t s and s e t tl e th e lia bi lit ie s simult aneousl y. 30U. JO INT ARR ANGEM ENTS Jo int a rr ange me nt s ar e ar ran gem ent s o f whi ch t w o or mo re pa r t ie s hav e join t con tr ol. J oin t con tr ol is t he co nt rac tu al ag ree d sha r ing of co nt ro l of th e ar ran gem ent w hi ch e xis t s onl y w he n dec isi ons a bo ut t he re le va nt ac ti v it ie s req uir e una nim ou s cons en t of th e pa r t ies s har in g con tro l. J oin t ar ran gem en t s are cl as si e d as ei th er a jo int o per at io n or joi nt ve nt ur e, ba se d on t he r ig ht s a nd ob lig at io ns ar isi ng fr om t he con tr ac t ua l obl iga ti ons b et we en t he pa r t ie s to th e arrangement. T o the e x t ent t he jo in t arr an geme nt p rov id es t he Co mp any wi t h rig ht s to t he i ndi v id ual a ss et s an d ob liga t ion s ari sin g fr om th e joi nt ar ra nge men t , th e ar ran gem ent i s cla ssi ed as a jo int op era ti on an d as su ch , th e Comp an y reco gn is es i t s: ■ A s se t s, in cl udi ng i t s shar e of an y ass et s h el d join tl y ; ■ Liabilit ies, inclu ding its share of any liabilities incur red jointl y; ■ Re ven ue f rom t he s a le of i t s sh are of t he o u tp ut a ris ing f ro m th e joi nt op er at ion ; ■ Sha re of r ev enu e fr om t he s al e of t he ou t pu t by t he jo int operation; and ■ E xp ens e s, i ncl ud ing i t s sha re of a ny e xp en se s inc ur re d j o in t l y. T o the e x t ent t he jo in t arr an geme nt p rov id es t he Co mp any wi t h rig ht s to t he n et as s et s of t he ar ra nge men t , th e inv es t me nt is c las si e d as a joi nt ve nt ure a nd ac cou nte d fo r usi ng th e eq ui t y me t hod . Un der t he e qui t y m et ho d, t he co s t of th e inv es t me nt is a dj us te d by t he p os t-a cqu isi ti on c han ges i n th e Comp an y ’ s sha re of t he ne t as se t s of th e ven tu re. 30V. CURRE NT VERSUS NON - CURRENT CL A SSIFIC A TION Th e Gr oup p res en t s as se t s and l iab ili ti es in t he s t a tem en t of na nc ial p osi t ion b as ed on c ur ren t /n on - c ur ren t cla ss i ca t ion . A n ass et i s cur re nt w hen i t is ei t her : ■ E xp ec ted t o be re ali se d or i nte nd ed to b e so ld o r con sum ed in th e no rm al op era t ing c y cl e; ■ He ld pr im ar il y for t he p ur pos e of t rad ing ; ■ E xp ec ted t o be rea lis ed w i th in 1 2 mon th s af ter t he re po r t ing per iod; ■ Ca sh or c a sh eq ui va le nt un le ss re s t ri c te d fr om b ein g exc han ged o r us ed t o se t t le a li abi li t y fo r at l eas t 12 mont hs af ter t he re po r t in g per io d. A ll ot her a ss et s a re cla ss i ed a s non - c ur ren t . A lia bil it y is cu rr ent w he n ei th er : ■ It is e xp e c te d to be s et t le d in t he no rm al op er at ing c ycl e ■ It is h el d pr ima ri ly f or th e pur p os e of tr adi ng ■ It is d ue to b e set tl ed w i thi n 1 2 mon th s af ter t he re po r t ing period ■ T her e is no u nco nd it io na l ri gh t to de fe r the se t t lem en t of t he lia bil it y fo r at l eas t 12 mont hs a f te r th e re por t ing p er io d Th e Gr oup c las si e s all o th er lia bi lit ie s as no n - cu rr ent . De fe rre d t ax a ss et s an d lia bil it ie s are c las si e d as no n - cu rre nt as se t s and l iab ili ti es . 3 0W. B US IN E SS C OMB IN ATI ON S A ND G OO DW IL L In or der t o cons ide r an ac qui si tio n as a bu sin es s com bin at ion , th e acq uir ed a ss et o r gro up s of as se t s mu s t cons t i tu te a bu sin es s (an int eg rat ed s et o f op era ti ons a nd a ss et s co nd uc t ed an d man age d for t he p ur po se of p ro vi din g a re tur n to t he inv es t or s). T he com bi nat io n cons is t s of in pu t s and p roc es se s app li ed to t he se in pu t s tha t ha ve th e ab ili t y to c rea te ou t pu t. Acq uir ed b usi nes s es ar e inc lud ed i n the nan cia l s t ate me nt s fr om t he tr ans a c ti on da te. T he t ra ns ac t io n dat e is de ne d as th e dat e on wh ic h the co mp an y gain s con tro l ove r th e na nc ial an d ope ra tin g as se t s. T hi s date m ay di e r fr om th e ac t ua l dat e on w hic h th e ass et s a re tr ans f er re d. Com pa ra ti ve gu res are n ot ad jus t ed fo r acq uir ed , sol d or li qui da ted b usi ne ss es . On a cqu isi ti on of a l ice nce t ha t inv ol ve s th e r igh t to e xp lo re for a nd p ro duce p et ro le um re so urce s , it i s con sid ere d in e ach ca se w he th er t he ac qui si tio n sho ul d be tr ea ted a s a busi ne ss com bin at io n or an as se t pu rch ase . Ge ner all y, pur cha se s of li cen ces i n a dev elo pm ent o r pro du c ti on ph as e wi ll be reg ard ed a s a busi ne ss co mb ina ti on. B us ine ss co mb ina ti ons are a cco unt ed fo r usi ng th e acq uis it io n met ho d. T he co s t of an a cqu isi t ion i s mea sur ed a s th e ag g reg ate o f th e consideration transfer red, measured at acquisition date fair va lue a nd th e am oun t of any n on - co nt rol lin g int ere s t (N CI ) in th e acq uir ee. F o r eac h bus ine ss c omb ina ti on , th e Gro up el ec t s w he th er to m eas ure N CI in t he ac qui ree a t fai r va lue o r PETRONOR E&P ASA AN NUA L R EP OR T 20 21 98 Financial stateme nts – PetroNor E&P Limited at t he pr op or t io na te sha re of t he ac qui ree ’ s ide nt i ab le ne t as se t s. A cqu isi ti on - rel at ed co st s a re ex p ens ed a s inc ur red a nd inc lu de d in adm ini s tr at iv e ex pe ns es . Th e ini t ial a ccou nt ing f or a bu sin es s com bin at ion c an b e cha nge d if n ew in fo rm at ion a bo ut t he fa ir va lue a t th e acq uis it io n date i s pre se nt . T he al loc a ti on c an be a men de d wi t hin 1 2 mo nt hs of t he ac qui si ti on da te [p rov i de d tha t th e ini t ial ac cou nt ing a t th e acqu isi t ion da te wa s de ter mi ne d pro v isio na ll y]. T he no n - con tr oll ing i nte re st i s se t to th e non - con tr oll ing i nte res t ’ s shar e of id ent i ab le as s et s an d lia bil it ie s [alte rn at i ve fa ir va lue]. T he m eas ure me nt pr in cip le is d one for e ac h bus ine ss co mb ina ti on se pa ra tel y. Wh en th e Gr oup acq uir es a b usi ne ss , i t as se ss es t he a ss et s a nd li abi li ti es as sum ed f or ap pro pr ia te cla ss i c at ion a nd de sig na ti on in ac cor dan ce wi t h the co nt ra c t ual te rm s , eco nom ic cir cu ms t an ces a nd p er t in en t con di ti ons a s at t he a cqui si ti on dat e. T his in cl ude s th e se pa rat io n of em be dde d de ri va t iv es in ho s t con tr ac t s by t he a cqu ire e. T hos e acq uir ed p et rol eu m re ser v es an d re so urce s t hat c a n be re lia bl y me asu re d are recogn ised separ ately in the assessme nt of fair v alues on acq uis it io n. O th er p ote nt ial re se r ves , re so urc es , an d ri ght s for w hi ch fa ir va lu es c ann ot b e reli ab ly m eas ure d are n ot re cog nis ed s ep ara te ly, bu t ins t ead a re sub su me d in goo dw il l. Go od w ill is r eco gn ise d as t he ag g re ga te of th e con sid era t ion trans ferred and the amoun t of any non - controlling interes t an d ded uc t ed b y th e ne t of th e ac qui sit io n - dat e am oun t s of th e ide nt i ab le as se t s acq uir ed an d th e lia bil it ie s as sum ed . Go od w ill is n ot de pre ci ate d bu t is te s ted a t lea s t ann ual l y for imp ai rm en t. I n conn ec tio n wi t h thi s, go od w ill i s all oc at ed to ca sh - gen era t ing un it s o r gr oup s of c as h- ge ner at in g uni t s th at are e xp ec te d to be ne t f rom s y n er gi es f rom t he bu sin es s combination. If t he fa ir va lu e of th e equ it y exc ee ds th e acq uis it io n cos t in a bu sin es s comb in at ion , th e di e ren ce is re cog nis ed a s inc ome imm ed iat el y up on th e acq uis it io n dat e. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 99 Financial statements – PetroNor E& P Limited Company s t atement of compr ehensi ve income – P etron or E&P A SA Am oun t s in USD t ho usa nd Note For the period end ed 31 Decem ber 2021 Other operating income Adminis trati ve expens es (6) Prot from opera tions (6) Finance ex pense - Lo ss b ef or e ta x (6) T ax e xp ens e - Pro t /(L os s) for t he yea r (6) Other Comprehensive income: - T otal comprehensive inc ome/(loss) (6) (L os s) for t he ye ar at tr ibu ta bl e to: Ow n er s of th e pa ren t (6) To t a l (6) T otal comprehensive income /(loss) att ributable to: Ow n er s of th e pa ren t - - Loss per share a t tributable to members: Ba sic ( lo ss) p er sh are - Dil ut ed ( lo ss) pe r sha re - Th e accom pa nyi ng no tes f orm p ar t o f the se n anc ia l sta te men ts . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 0 Fin an cia l st at em en ts – P et ro Nor E & P A S A C ompa ny st atem ent o f n anci al positi on – P etroN or E&P A SA Am oun t s in USD t ho usa nd N ote At 31 D ec 2 0 21 ASSETS Current asse ts T rad e an d oth er re cei v ab les - Ca sh an d c ash e qui v al ent s 5 114 To t a l 114 Non- current asset s Invest ments - To t a l - T otal assets 114 LIA BILITIES Current liabilities T rad e an d oth er p aya bl es 6 To t a l 6 T otal liabilities 6 NET ASSETS 108 Is su ed c api ta l and r es er ves a tt ri but ab le to o wne r s of th e par ent Share capital 6 114 Reserves - Retaine d earnings (6) TOT AL EQUIT Y 10 8 Th e accom pa nyi ng no tes f orm p ar t o f the se n anc ia l sta te men ts . Th e na nc ial s t a tem en ts w ere a pp rov ed an d au th or is ed fo r is sue by t he B oa rd of D ire c to rs o n 29 A pr il 202 2 . C ompa ny st atem ent of c han g es in eq uit y – Petr oNo r E&P A SA Am oun t s in USD t ho usa nd Note Share capit al O th er p aid in capital Ret ain ed earnings To t a l Fo r th e pe ri od en de d 31 Dec emb er 20 21 Ba lan ce at 1 O c tob er 2 0 21 11 4 - - 114 Lo ss fo r th e ye ar (6) (6 ) Other comprehensive income - - - - T ot al co mpr eh en si ve lo ss f or t he ye ar - - (6 ) (6) BA L AN CE AT 31 D ECE MB E R 20 2 1 11 4 - (6) 108 Th e accom pa nyi ng no tes f orm p ar t o f the se n anc ia l sta te men ts . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 1 Fin an cia l st at em en ts – P et ro Nor E & P A S A C ompa ny st atem ent o f cash ow – P etr oNor E&P A SA (A mo unt s i n USD t hou san d) Note For the period ended 31 Decem ber 2021 Ca sh ows f rom o pe rati ng ac t iv iti es Lo ss fo r th e ye ar (6) To t a l (6) (I ncr es e)/ De cr eas e in tr ad e and o th er re cei v abl es - (D ec rea se) /i nc rea se in t ra de an d oth er p ay abl es 6 Cash ( used in )/gen erated fro m operati ons - Inc ome t a xes p aid - Ne t cas h o ws fr om op er ati ng ac ti v iti es - Financing activitie s Is sue o f ord ina r y sh are s 114 Pro ce eds f ro m loa ns an d bo rr ow ing s - Ne t cas h (use d in) /f rom nan cin g ac ti vi tie s 11 4 Ne t inc re ase /(de cr ea se) in c ash a nd c as h equ iv ale nt s Ca sh an d c ash e qui v al ent s a t be gi nni ng of y ear 5 - Ca sh an d ca sh e qui va le nts a t en d of ye ar 114 Th e accom pa nyi ng no tes f orm p ar t o f the se n anc ia l sta te men ts . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 102 Fi nan cia l s ta tem en ts – P et ro No r E& P A S A No tes t o the na nci al st ateme nt s – P etr oNor E&P A SA Note 01 C orp orate information Pet ro nor E & P A S A is a pu bl ic lim it ed co mp any, in cor po ra te d in Nor way. Reg is te re d O c e: Frø y as ga te 13 024 3 Os lo Nor way T el + 47 22 55 4 6 07 DIREC TOR S Th e nam es o f Dir ec t or s in o ce dur in g th e na nci al pe r iod an d unt il th e da te of ap pro va l of th es e na nci al s t at eme nt s a re as fo llo w s. D ire c to r s were i n oc e for t his e nt ire p er iod u nle s s ot her w ise s t a te d. Curr ent members: Role A ppoin ted E Alhomouz Non-E x ec Chair 1 Oc to ber 2 021 I T y br ing - G jed de No n- E xe c Dir ec t or 1 Oc to be r 2021 G Kielland Non - E xe c Dire c t or 1 O c to be r 2021 J Isk an der Non - E xec D ire c to r 8 O c to be r 2021 Pace w as ap poi nt ed to t he B oar d 1 Oc t ob er 2021 an d res ig ne d 9 Fe br ua r y 202 2 . Th e Com pa ny wa s es t ab lis hed o n 1 Oc t obe r 2021, and th es e na nc ial s t at em ent s p rep ar ed fo r Pet ro nor E &P A SA a nd co ver th e per io d en de d 31 Dec emb er 20 21 . Th e na nc ial s t at em ent s we re app ro ved b y res ol ut io n of th e Bo ard o n 29 A pr il 202 2. Th e Com pa ny an d Pet roN or E &P L imi te d ( "Pe t roN or Au s tr ali a" ) en ter ed in to a Sc he me Im ple me nt a tio n A gr ee me nt on 7 Oc tob er 2021. Unde r th e Sc he me, a ll of Pe tro No r Aus t ra lia sha re s hel d by Pe tro No r Aus t ra lia sh are ho lde r s wer e tr ans f er re d to th e Comp an y. I n exch ang e Pet roN or A us tr al ia sha reh ol de rs r ece iv ed o ne ne w Com pa ny sha re fo r ev er y on e Pet roN or A us tr ali a sha re he ld . On 29 No ve mbe r 2021, an E x tr ao rdi nar y G ene ra l Mee ti ng wa s hel d in Pe tr oNo r E& P Lt d by or de r of th e Sup rem e Cour t of Wes t er n Aus t ra lia w he re th e shareholders of the Company approved the proposed Scheme of A rr an geme nt . T his a rr ange me nt w ill b e acco un ted a s a con ti nua nce of t he b usi ne ss of Pe tr oN or E& P L imi te d . Plea se se e not e 1 0 fo r an ex ten de d dis cl osu re. Fo ll ow ing t he sh are ho ld er s ’ app ro val , Pet ro No r E& P Ltd re cei ve d th e na l app rov al f ro m the S upr eme Co ur t of Wes te r n Aus t ral ia on 17 F eb ru ar y 202 2, f oll ow ed by d eli s ti ng of i t s sha res f ro m Eur one x t E x pa nd o n 24 F ebr ua r y 2 02 2 in con jun c t ion w it h th e lis t in g of Pet ro Nor E &P A SA . Fo ll ow ing t he 1 to 1 sh are s w ap, Pe tr oNo r E& P A S A be gan tr adi ng on O sl o Stoc k E xcha nge 2 8 Fe br uar y 202 2 . Note 02 Basis of preparation Pet ro No r E& P A S A’s nan ci al s t ate me nt s ha ve b een p rep ar ed in ac cor dan ce wi t h Inte r nat io nal F in anc ial R ep or t in g St an dar ds (I FR S ) as ad op ted b y th e EU and a re man da tor y fo r na nc ial yea r s beg in nin g on or a f te r 1 Jan uar y 2021. Addi t ion al dis cl osu re s req uir ed by t he No r w eg ian A cco unt in g Ac t ar e als o provided. Th e pre pa ra ti on of n an cia l st a tem en t s in con fo rm it y wi t h IF R Ss re qu ire s th e use o f cer ta in cr i ti ca l acco un ti ng es t ima te s. It a lso r equ ire s th e man age men t to exe rci se i t s jud gm en ts i n app l y ing t he Com pa ny 's a cco unt in g pol ic ies . Th er e are no a rea s inv ol v ing a hi gh de gr ee of j udg me nt o r complexit y. Going Concern Th e Fi na nci al St at em ent s h ave b ee n pre pa red o n a Goi ng Con cer n ba sis , un de r th e goi ng con ce rn a ssu mp tio n an e nt it y is ord ina ri l y vi ew ed as co nt inu ing i n bus ine ss f or t he fo res ee ab le fu t ure. T h e Comp an y reco gn is es th at in o rd er to f und on - goi ng op era ti on s and p ur sue o rg ani c and i nor ga nic g row t h op por t uni ti es fo r th e wi der Pe t roN or G rou p it w ill re qu ire ad di tio na l fun di ng. T hi s fu ndi ng ma y be so urc ed t hro ug h join t ven t ure e qui t y o r sha re is sue s or t hro ug h deb t na nce. A s at t he s ig nin g dat e of th is re po r t , t he p oo ling a gr ee men t be t w een t wo t hir d par t ies n ece s sa r y to e nab le t he ne w o t aker to l if t r s t qua r te r 202 2 oil p ro duc t io n is be lie ve d to be c los e to co mpl et io n. T he Gr ou p is cur re nt l y ad van ci ng po ten tia l con ti nge nc y a rr ange me nt s to im pro ve w or ki ng ca pi t al sh oul d f ur t he r sig ni c an t del ay s to co mpl et io n of th e po oli ng ag re eme nt an d li f t in g sch ed ule e ve nt uat e. A s at t he da te of t his re po r t , i t is not y et cl ea r wh et her a ny suc h ar ran gem en t s wil l be ne ce ss ar y an d no ne w bi ndi ng arrangements have been entered into. Global macro- economic fa c tor s a re co nsi der ed to b e s t ron gl y in t he Co mp any ’s f av our at pr es en t wi th h igh d ema nd l ead ing t o hig h oil pr ic es an d th e Bo ar d is con de nt a s olu t ion to a ny sh or t-te rm w or ki ng c api t al re qui rem ent s w il l be im ple me nt ab le as n ece s sa r y. Th er e are G rou p ou ts t a nd ing am ou nt s du e to rel ate d pa r t y sha reh ol de rs P et rom al an d NO R Ene rg y fo r th e rem ain ing ca sh co nsi der at io n of t he 2019 reve r se t ake ove r tr ans a c t ion of USD 1.3 m ill ion a nd USD 2 . 1 mill ion r esp ec ti ve l y. Plus , th e Gr oup h as a USD 3 .9 mill ion d ebt f ac ili t y w i th re lat ed p ar t y sha reh ol de r Sym ero t ha t is du e to b e rep ai d in No vem be r 202 2 , and a US D $5.6 mi lli on de bt fa cil it y w it h Ra sma la th at w ill b e rep aid i n equ al in s ta lm ent s u p to Nov emb er 202 2. I n add it io n the G ro up has m ate r ial p ote nt ial c ap it al PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 3 Fin an cia l st at em en ts – P et ro Nor E & P A S A com mi tm ent s a ss oc iat ed w it h i ts e x plo ra ti on po r t fol io. Se t t le men t of t he bo rr ow ing s de t ai led a bo ve wo uld l eav e th e Gro up de bt f re e. How ev er , t he Gr ou p plan s to re na nce an d cons ol ida te i t s ’ va ri ous d ebt p os it io ns be fo re t he ye ar en d, to p rov id e ad dit io nal w or ki ng c ap it al a nd s t ren g t hen it s b ala nce s he et , . Wh il e it is ac k now l edg ed th at t he re cen t Økok r im in ve s ti gat io n as de t ail ed i n Not e 9 Com mi tm ent s an d Cont in gen cie s may co mp lic a te re na nc ing in it ia ti ve s an d ex ten d ti met a bl es , th e Bo ard i s con de nt t ha t re nan ci ng mea sur es w ill b e ab le to be c omp le ted a s ne ces s ar y. Th es e con di ti ons i ndi ca te a ma te ria l unc er ta in t y t hat m ay c as t a sig ni c an t dou bt ab ou t th e ent i t y ’s ab il it y to con ti nue a s a goin g con cer n a nd, t he re for e, t ha t it ma y be u nab le t o rea lis e it s a ss et s a nd di sc har ge i t s lia bil it ie s in t he no rm al co ur se of bu sin es s. T hi s na nc ial s t at me nt s ha ve b ee n pre par ed on t he goi ng con cer n b asis w hi ch as su me s the c ont in ui t y of no rm al bu sin es s ac ti v it y an d th e rea lis a ti on of a ss et s a nd t he se t t lem en t of lia bil it ie s in th e no rm al cou r se of b usi ne ss . Th e un der l y ing b usi nes s of t he Pe tr oNo r Gr oup c rea te d a con so ldi dat ed n et pr o t af ter t a x of USD 21. 1 mi lli on fo r the yea r en ded 31 D ece mb er 2021, wi th s t ron g pro duc ti on f rom th e Cong o ass et s ge ne rat in g 3, 6 14 b op d in r s t qua r te r of 202 2. A s a t 31 Dec emb er 20 21 the G ro up ha d a cas h ba lan ce of US 31.8 mil lio n. T he G rou p has e nte red i nto a n ew o t ake ag ree me nt w it h a ne w par tn er, li s ted t he Co mp any o n th e mai n Os lo B ør s an d con ti nue d to h os t da t a roo ms f or po ten ti al pa r t ner s to j oin w i th t he Gr oup o n it s e xp lor at io n por t f oli o, de mon s tr at ing t ha t th e bus ine s s has c ont in ue d to op era te e ec ti ve l y, and bus ine s se s rem ain w ill ing t o enga ge w it h th e Group. Th is ha s ena ble d th e dir ec t or s to fo rm t he o pin ion t ha t the Com pa ny wi ll be i n a pos it ion t o con tin ue to m ee t it s li abi li tie s an d obl iga ti ons f or a pe ri od of a t lea s t t we lv e mo nt hs fr om t he dat e of sig ni ng th is re por t . Th is n anc ia l rep or t d oe s not i ncl ud e any ad jus t me nt s re la ti ng to th e re cove ra bil it y an d cla ssi ca ti on of re co rde d as se t am oun t s or to t he am oun t s and c las si c a ti on of li abi li ti es th at mig ht b e ne ce ss ar y sh oul d th e Com pa ny no t con ti nue a s a goin g con cer n. Th e na nc ial s t a tem en ts h av e bee n pre pa re d on th e bas is of unifor m accounting principle s for similar transac tions and ev ent s u nde r ot her w is e simi lar c irc ums t a nce s. Th e na nc ial re po r t is p re sen te d in Uni te d St at es D oll ar s. Note 03 E mployee bene f it ex penses Th e Com pa ny has n o emp lo yee s Note 0 4 Auditors ’ remuneration No au di t fe es ha ve be en i ncu rr ed fo r th e pe ri od. Note 05 Cash and cash equi valent s (A mo unt s i n USD t hou san d) At 31 De cem be r 2021 Ca sh in b an k 11 4 Note 06 Equit y SHARE CAPIT AL All shares have equal right s and are freel y transferable Share capital Number of fully paid ordinar y share s: At 31 De cem be r 2021 Is sue o f sha res 1 11 4 Ba lan ce at e nd of t he p er iod 11 4 1 On 1 O c to ber 2 021, the Co mp any i s sue d 100 ,0 0 0 sha re s at N OK 10 ea ch . Al l th e sha re s are o w ned b y Pe tr oNo r E& P Ltd , th e im med ia te p are nt co mp an y re gis te re d in A us tr al ia an d li st ed o n Osl o Eu ron ex t Ex pa nd . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 4 Fin an cia l st at em en ts – P et ro Nor E & P A S A Note 07 Risk management Th e ri sk ma nage me nt di sc los ure s re e c t th e s ta tu s of t he Com pa ny as at t he b ala nce s he et da te. A s t he ul t ima te pa ren t of t he Pe t ro No r Gr oup in 202 2 , ri sk p ol ic ie s an d dis cl o sur es w il l re e c t th e ri sk pro l e of th e ex t en ded G ro up. Pl eas e re fer to Not e 26 to th e Cons ol ida te d na nci al s t at eme nt s of Pe tr oN or E& P Li mi ted a s inc lud ed i n thi s ann ual re po r t . CREDIT RISK Cre di t ris k re fer s to t he r isk t ha t a coun ter p ar t y w ill de fa ul t on i t s cont ra c t ual o bli gat io ns re sul t ing in nan cia l lo ss to th e Comp an y. As a t 31 Dec emb er 2021, the Co mp any ’s ma xi mum e xp os ure to c red it r is k wi th ou t ta k ing in to ac cou nt any co ll ate ral h el d or ot her c re di t enh anc eme nt s – w hic h wi ll ca us e a na nci al lo ss to t he G ro up due t o fai lur e to dis cha rg e an ob lig at ion b y th e coun te rp ar ti es an d na nc ial g uar ant ee s pro v ide d by t he Co mp any – a ri se s fr om t he c ar r yi ng am ou nt of th e re spe c t i ve re cog nis ed nan cia l as se t s as s t ate d in t he s t ate me nt of n an cia l pos it io n. T o mini mis e cr edi t r isk , t he Com pa ny ha s ta ske d it s man age men t to d eve lo p an d mai nt ai n th e Gro up ’s c re di t ri sk gr ad ing s to c a tego ri se e xp os ure s ac cord ing t o th eir de gre e of r isk of d ef aul t . Th e cre di t ra tin g inf or ma ti on is sup pl ied b y ind ep end en t rat in g agen ci es w her e av aila bl e an d, i f not a va ila ble , th e ma nage me nt us es o th er p ubl icl y av ail abl e na nc ial in fo rm at ion a nd t he Com pa ny ’s ow n tr adi ng re co rds t o rat e it s m ajo r cus t om er s an d ot her de bto rs . T he Com pa ny ’s e xp osu re an d th e cre di t rat in gs o f it s counterp ar tie s are continuousl y monitored , and the ag gregate value of transact ions c oncluded is spread amongst approved count erpar ties. Th e Com pa ny ’s cu rr ent c re dit r is k gra din g fr am ewo r k com pr is es t he fo llo wi ng c ate gor ie s: Ca tegor y D escription Basis for r ecognisi ng expected cr edit losses Per forming T he co unt er pa r t y has a l ow ri sk of d efa ul t and d oe s not h ave a ny past- due amounts 1 2-month ECL Doubt f ul A mo un t is >30 day s p as t du e or th ere h as be en a si gni ca nt inc rea se i n cre di t r isk si nce i ni tia l re cog ni ti on Life time ECL – not credit-impaired In de fa ul t A mou nt is > 9 0 da ys p as t d ue or t he re is e v ide nce i nd ic at ing t he asset i s credit -impai red Life time ECL – credit-impaired Wri te- o T he re is e vi de nce in di ca ti ng t hat t he de bt or is in s ev ere nan cia l di c ul t y an d th e Comp an y has n o real is t ic pr osp ec t of rec ove r y A mou nt is w r it ten o Th e t abl e be lo w det a ils t he cr ed it qu ali t y o f th e Comp an y ’ s na nc ial as s et s as w ell a s the Co mp any ’s m ax im um ex po su re to cr edi t r isk by c re dit r is k rat in g gra de s. A s at 3 1 De cem be r 2 02 1: Other receivables E x te rn al cr ed it r at ing n /a Int er na l cre di t rat in g - 1 2 mo nt h or li fe ti me EC L Life time ECL Gr os s ca rr y ing a mo unt US D ’ 0 0 0 ’s 11 4 Loss allowance - Net carr ying amount 11 4 Fo r ot her r ece i vab le s , the Co mp any h as ap pli ed t he si mpl i ed app ro ac h in IF R S 9 to mea sur e the l os s all ow anc e at li fe tim e ECL . T he e xp ec te d cre di t los se s ar e es ti ma ted u sin g a pro v isio n ma tr i x by re fer en ce to p as t de fa ul t ex pe ri en ce of th e deb tor a nd an a nal y si s of th e deb tor ’s c urr en t na nci al po si tio n, a dju s te d for f ac to r s tha t ar e spe ci c to t he d ebt or s , gen era l eco no mic co nd it ion s of th e ind us t r y i n whi ch t he de bto rs o pe ra te, a nd an a ss es sm en t of bo th t he c ur ren t as we ll as t he fo rec a st d ire c t ion o f cond it io ns at t he re po r t ing date. LIQUIDIT Y RIS K Th e Com pa ny se ek s to l imi t it s li qu idi t y r is k by ens ur ing na nc ial su pp or t is av ail abl e fr om th e sha reh ol de rs . T ra de pa yab le s are n or mal l y set tl ed w i thi n 9 0 to 1 20 day s of t he da te of re cei pt of in vo ice. Th e t abl e be lo w summ ar is es t he ma tu ri t y p ro le of t he Gr oup ’s nan ci al lia bil it ie s at 31 Oc tob er 20 21 bas ed o n con tr ac t ua l und isc oun te d pay m ent s . (A mo unt s i n USD t hou san d) On demand Be t w ee n 1 and 3 mo nt hs Be t w ee n 3 mon ths an d 1 yea r To t a l 31 Decem ber 2021 Other payable s - - - 6 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 5 Fin an cia l st at em en ts – P et ro Nor E & P A S A Note 08 Financial instr ument s – Fair values Fi nan ci al ins t r ume nt s co mpr is e n anc ial a ss et s an d na nc ial liabilitie s. Fi nan ci al as se t s con sis t of b ank b ala nce s an d ca sh. F in an cia l lia bil it ie s con sis t of ot he r lia bil it ie s. Th e fa ir va lue s of th e Gr oup ’ s na nci al ins t r ume nt s a re not m ate ri all y di ere nt f rom t he ir c ar r y in g amo un t s at th e rep or ti ng da te la rge l y due t o th e sho r t- ter m ma tu ri t ies o f thes e instrum ents . Note 09 C ommit ment s and contingencies In De ce mbe r 2021 th e Na tio na l Au tho r it y for I nve s ti ga tio n an d Pro se cu ti on of Ec ono mi c and En v iro nme nt al C ri me in No r w ay (Økok r im) op ene d in ve s tig at ion s in to cr im ina l cha rge s an d allegatio ns of c or ruption broug ht against indi viduals related to th e Comp an y. At t he sig ni ng da te of t his re po r t , Øko ki rm h as con r me d th at n ei th er Pe tr oNo r no r any o f it s s ubs idi ar ies i s und er inv es t iga t ion . A s ou tl ine d in th e dir ec t or s ’ re por t th e bo ard has t a ken a se r ies o f rem ed iat io n s tep s to as su re t he f ur th er imp le men t at io n of ant i - cor r up tio n me asu res . W hil e the Com pa ny has co nt in ued t o ope ra te e ec ti ve l y sin ce th e inv es t iga t ion s st a r te d, i t ha s use d sig ni c an t re sou rce s to ad dre ss t his m at t er a t a cos t to th e bu sin es s. F ur t he rm or e, it is un cer t ain h ow lo ng th e inv es t ig at ion s int o the i ndi v id ual s may c ont in ue an d how t he o ut com e of th os e inve s t iga tio ns may i ndi re c tl y im pa c t th e bus ine s s. A t thi s st a ge, t he on ly cer t ain t y i s tha t wh ile t he in ve s ti gat io ns con ti nu e, it m ay ra ise th e per cei v ed r isk p ro le of t he Com pa ny t hus , po ten ti all y imp ac ti ng th e Gr oup' s ca pa ci t y to t ra ns ac t w i th ne w an d ex is t ing p ar tn er s . Whi ls t t he re pu ta t ion al cos t c an not b e qua nt i ed , th is ma y inc rea se wo rk r equ ire A s o f the p er io d en ded 31 O c t obe r 2021 t he Co mp any h ad no c omm it me nt s o r contingencies. Note 1 0 G roup arrangement s and redomicile process On 24 F e br uar y 20 22 , th e Com pa ny an no unc ed t ha t it h ad is sue d 1,32 6,9 91 .0 06 o rdi nar y sh are s as p ar t o f the implementation of the Scheme of Arrangement and re - do mi cil e fr om Au s tr ali a to Nor wa y. The S ch eme o f A rr ange me nt in vol v ed e s ta bl ish ing a ne w en ti t y ( be ing t he Com pa ny) fo r th e pur p ose s of c ar r y i ng ou t th e Sha re Swa p wh er eby sh are s in Pe tr oNo r E& P Lt d. ( "P et roN or A us tr al ia" ) we re to be s w app ed f or sh are s in th e Com pan y. The s har es in Pet ro No r Aus t ral ia we re to b e del is te d in con jun c ti on w it h th e lis t in g of th e Comp an y Pet roN or E &P A S A . Pet ro Nor E &P A SA sub mi t te d i ts a pp lic a tio n fo r it s s har es to b e lis t ed o n Os lo Sto ck E xch ang e 27 Oc t obe r 2021. On 29 November 2021 , an ex traordinar y general meeting was he ld in Pe tr oN or E& P L td by o rde r of t he su pre me co ur t of Western Australia where the shar eholder s of the C ompany approved the pr oposed Scheme of A rrangement. Following the shareholders’ approval, PetroNor E&P Ltd received the nal approval from the supreme c our t of W es tern Australia on 1 7 F e br ua r y 202 2 , fo l lo w e d by de l is t in g of it s sh a r e s fr o m Eu r on e x t E x p a n d on 24 F eb r u a r y 20 2 2 i n co n ju n c t i o n w i t h t he li s t i ng of Pe t r o N or E& P A S A . F ol l o w i ng th e 1 to 1 s h ar e s w a p, Pe t ro N o r E& P A S A be g a n tr a d in g on O sl o Sto c k E x ch a n ge 28 F e br ua r y 202 2 . Un der t he A us t ral ian s ch em e, al l of th e sh are s he ld by Pet ro No r E& P Ltd . (A us tr al ia) shar eho ld er s we re tr ans f er re d to Pe tro No r E& P A S A . T he sh are ho lde r s are t hus , in a ll ma ter ia l res pe c t s , ide nt ic al be fo re an d af ter t he t ran sa c t ion . Th er efo re , thi s wil l be t rea te d as a con tin uan ce of b usi ne ss und er t he Co mpa ny ( bei ng t he ne w lis t in g ent it y) . Th e na nc ial s t ate me nt s fo r th e Comp an y goin g for wa rd wi ll be p re sen te d as a co nt inu anc e of th e ac ti v it ie s of t he A us t ral ian co mp any Pet ro No r Aus t ral ia . Th e na nci al s t at eme nt s of Pe t roN or Au st ra lia h av e be en pr ep are d on t he a ssu mp tio n th at t he Gr oup w il l cont in ue as a go ing co nce rn w i th t he rea lis a ti on of as se t s and s et tl eme nt o f deb t in nor ma l op era ti ons . Ac cou nt s wi ll be p rep ar ed in co mp lia nce w it h In ter na ti ona l Fi nan cia l Rep or ti ng St an da rds ( IF R S) a s iss ue d by th e Acco un ti ng St an dar ds Bo ar d and i n acco rda nce w i th t he re qui rem en t s of applicable Norwe gian l aws . A s th e na nc ial s t at em ent s o f the Co mp any go ing f or war d wi ll be t rea te d as a co nt inu anc e of t he bu sin es s of Pe tr oN or E& P Li mi ted , t he re sul t s pr es en ted b el ow wo uld r epr es en t the gr oup co ns oli da ted r es ult s o f Pet ro No r E& P A S A fo r th e yea r en ded 31 D ece mb er 2021. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 6 Fin an cia l st at em en ts – P et ro Nor E & P A S A CONSOLIDA T ED ST A TEMENT OF COMP RE HENSIV E INC OME For t he ye ar e nde d 31 D ec em be r 20 2 1 (A mo unt s i n USD t hou san d) Revenue 10 6 , 4 6 3 Cos t o f sa le s (3 4, 58 5) Gr os s pro t 71 ,878 Other operating income 866 Adminis trati ve expens es (13 , 13 1) Prot from opera tions 5 7, 3 4 3 Finance ex pense ( 3 , 0 41) Fo re ign e xch ange g ain / ( los s) (5 6) Pro t b ef or e ta x 54,246 T ax e xp ens e ( 3 3 ,1 0 2 ) Pro t /(L os s) for t he yea r 2 1 ,1 4 4 Other Comprehensive income: Exchange losses arisi ng on translation of foreign operations (3 6 4) T otal comprehensive inc ome/(loss) 2 0,7 8 0 Pro t /(Lo ss) fo r the y ear a t t rib uta bl e to: Ow n er s of th e pa ren t 12 , 3 14 Non- cont rolling interes t 8,830 To t a l 2 1 ,1 4 4 T otal comprehensive income /(loss) att ributable to: Ow n er s of th e pa ren t 12 , 2 0 8 Non- cont rolling interes t 8,5 72 To t a l 2 0,7 8 0 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 7 Fin an cia l st at em en ts – P et ro Nor E & P A S A CONSOL IDA TED ST A TEMENT O F FINANCIAL POSITIO N A s at 3 1 De cem be r 2 02 1 (A mo unt s i n USD t hou san d) ASSETS Current asse ts Inventories 6,227 T rad e an d oth er re cei v ab les 1 3,820 Ca sh an d c ash e qui v al ent s 31,7 55 T ot al cu rre nt a ss et s 51, 8 0 2 Non - current ass ets Proper t y , plant and equipment 39,397 Intang ible assets 7,1 7 2 Right - of -use assets 44 Other receivables 26,837 T ot al no n - c urr ent a ss et s 73,450 T otal assets 1 25,252 LIA BILITIES Current liabilities T rad e an d oth er p aya bl es 29, 9 9 6 Lease liabilit y 58 Lo ans a nd bo rr ow in gs 1 3,079 T otal current liabilities 4 3 ,1 3 3 Non - current liabilitie s Lo ans a nd bo rr ow in gs - Lease liabilit y - Provisions 16, 3 02 T otal non - current liabilitie s 16, 3 02 T otal liabilities 59,4 3 5 NET ASSETS 6 5 , 8 17 Is su ed c api ta l and r es er ves a tt ri but ab le to o wne r s of th e par ent Share capital 6 2 ,1 1 5 Reserves (1, 4 21) Retaine d earnings (1, 3 9 0) To t a l 59, 3 0 4 Non- cont rolling interes ts 6 , 513 TOT AL EQUIT Y 6 5 , 8 17 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 8 Fin an cia l st at em en ts – P et ro Nor E & P A S A CON S OLI DATE D S TA TE ME NT O F CH A NG E S IN C A S H FLO W S For t he ye ar e nde d 31 D ec em be r 20 2 1 (A mo unt s i n USD t hou san d) Ca sh ows f rom o pe rati ng ac t iv iti es Pro t f or th e yea r 54,246 Ad jus t me nt s fo r: Depreciation and amor tisa tion 4,422 A mor ti za t ion o f ri gh t-o f-u se a ss et 16 8 Unw in di ng of di sco unt o n de com mis sio nin g lia bil it y 995 Ne t for eig n exc han ge di e ren ces ( 36 4) T ot al ca sh ow s fro m ope rat ing a c tiv it ie s 59, 4 67 (I ncr es e)/ De cr eas e in tr ad e and o th er re cei v abl es (8, 0 62) Inc re ase i n ad va nce ag ain s t dec omm is sio nin g cos t (5,57 7 ) Inc re ase i n inv ent or ie s (2,6 4 9) (D ec rea se) /i nc rea se in t ra de an d oth er p ay abl es 7, 7 5 8 Cash ( used in )/gen erated fro m operati ons 50,937 Inc ome t a xes p aid ( 3 3 ,1 0 2 ) Ne t cas h o ws fr om op er ati ng ac ti v iti es 1 7, 8 3 5 Investing acti vities Purchases of proper t y , plant and equipmen t (19,7 5 9 Purchases of inta ngible asse ts (8 14) Ne t cas h o ws fr om inv es ti ng ac ti v iti es (2 0, 5 73) Financing activitie s Is sue o f ord ina r y sh are s 2 7, 9 4 3 Pro ce eds f ro m loa ns an d bo rr ow ing s (1, 5 6 3) Rep ay m ent o f loa ns an d bo rr ow ing s (5 ,8 3 3) Repayment of principal portion of lease liabilit y (15 9) Repayment of interest port ion of lease liability (8) Di v id end s pa id to no n - con tr oll ing i nte res t - Ne t cas h (use d in) /f rom nan cin g ac ti vi tie s 20, 38 0 Ne t inc rea se /(de cre as e) in cas h and c as h eq ui val en t s 1 7, 6 4 2 Ca sh an d c ash e qui v al ent s a t be gi nni ng of y ear 1 4 ,1 1 3 Ca sh an d ca sh e qui va le nts a t en d of ye ar 31,7 5 5 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 10 9 Fin an cia l st at em en ts – P et ro Nor E & P A S A Note 1 1 Summar y of signif ic ant accounting policies Th e fo llo wi ng is a su mma r y o f the m ate ri al ac cou nt ing p oli cie s ad opt ed by t he Co mp any i n the p rep ar at ion o f the nan ci al s t ate me nt s . Th e acco un tin g po lic ie s hav e bee n con sis t ent l y app li ed , unl es s oth er w ise s t a ted . 11 . A C A S H AN D C A S H EQ UI VAL EN T S Ca sh an d c ash e qui v al ent s i ncl ud e ca sh on h an d, d ema nd de pos it s , ot he r sho r t-t er m hig hl y li qui d inv es t men t s wi t h or ig ina l mat ur it ie s of t hre e mon th s or le ss . 11 . B TR A D E AN D OT HE R PA YAB LE S T rad e an d oth er p aya bl es ar e ca rr ie d at am or ti se d cos t an d due t o the ir sh or t-te rm n at ure , the y ar e not di sco unt ed . 1 1 .C SHARE CAPIT AL Inc re men t al co s t s dire c t ly a t t ri bu t ab le to t he is sue o f new sha re s are sh ow n in eq ui t y as a d edu c t ion , ne t of t ax , f ro m the proceed s. A s pe r Not e 01 (Corp or ate I nfo rm at io n) and Not e 1 0 (Gr oup A rr ange me nt s an d red om ici le pr oce s s), fo llo wi ng t he com pl et ion o f th e red om ici le p roc es s Pet ro Nor E & P A S A has be com e th e ult im ate p are nt e nt it y for t he Pe tr oN or Gr ou p. Acc ord ing l y a mo re ex ten de d se t of a ccou nt ing p ol ici es f or th e Comp an y wi ll be a dop te d comm en cin g 1 Jan uar y 202 2 . Th es e po lic ie s wi ll mir ro r th e pre v iou s pol ic ies o f Pet roN or E& P Li mi te d as di scl os ed i n Not e 30 t o th e Con sol ida te d na nc ial s t at em ent s o f Pet roN or E &P L imi te d wh ic h hav e be en dis cl os ed in t his a nnu al re por t . Note 1 2 F inancial ins t rume nt s A na nc ial in s tr um ent i s any co nt rac t th at gi v es r ise t o a na nc ial as s et of a ny on e ent i t y an d a na nci al li abi li t y or eq ui t y in s tr um ent o f ano th er en ti t y. Financial asse ts Th e Com pa ny ´ s na nc ial as s et s ar e oth er re cei v abl es a nd c ash an d ca sh eq ui va len t s. Th e cla ss i c at ion o f na nci al as se t s at in it ia l reco gn it io n de pen ds o n the nan cia l as se t ’ s con tr ac t ua l ca sh o w charac teristic s and the C ompany ’s business model for man ag ing t he m. T he Co mpa ny in it ia ll y mea sur es a n anc ial as se t at i t s fai r val ue. Financial asse ts at amortis ed cost Th e Com pa ny me asu res nan cia l as se t s at am or tis e d cos t if bo th of t he fo ll ow ing co nd it ion s are m et : ■ Th e na nc ial a ss et is h el d wi th in a bus in es s mod el w it h th e obj ec t i ve to h old nan ci al as se t s in or der t o coll ec t con tr ac t ua l ca sh o ws a nd , ■ Th e con tr ac t ua l ter ms of t he nan cia l as se t gi ve r ise t o sp eci ed da te s to ca sh o w s tha t are s ol el y pa ym en t s of pr in cip al an d int ere s t on t he pr in cip al a mou nt o ut s t an din g. Fi nan ci al as se t s at a mo r t ise d co s t are s ubs eq uen tl y m eas ure d usi ng th e e ec ti ve i nte re st ( EIR ) me th od an d are s ubj ec t to imp ai rm en t. G ain s and l os se s are re cog ni se d in pro t or los s wh en t he as se t is de re cog nis ed , mo di e d or imp ai re d. Cash equi valents Cash equivalent s are shor t-term, highly -liquid investment s th at ar e rea dil y co nve r t ibl e to k now n am ou nt s of c ash , ar e sub je c t to ins ig ni c an t ris k of ch ange s in va lu e and ge ner al ly hav e a ma tu ri t y o f th ree m on th s or le s s fr om t he da te of acq uis it io n. C ash e qui v ale nt s ar e cla ss i ed as nan cia l as se t s mea sur ed a t amo r t is ed co s t. Derecognition A na nc ial as s et (or , wh er e app lic ab le , a par t of a na nc ial as se t or pa r t of a g rou p of sim ila r na nc ial as s et s) is pr ima ri l y de rec ogn is ed ( i.e. re mo ve d fro m th e Comp an y ’ s st a te men t of na nc ial p osi t ion) wh en t he r igh t s to re cei ve c as h o ws f ro m th e as se t hav e ex pi re d or t he Com pa ny ha s tr ans f er re d it s ri gh t s to rec ei ve c as h ow s f rom t he as s et or h as as sum ed an ob lig at ion t o pay t he re ce iv ed c as h ow s in f ul l wi th ou t ma ter ia l del ay to a th ird p ar t y un de r a ‘pa ss - th rou gh ’ ar ran gem en t ; and e it he r (a ) th e Com pa ny has t ra ns fe rr ed sub s t ant ia ll y all t he r isk s a nd re war ds of t he as s et , or ( b) the Com pa ny ha s nei t her t ra ns fe rr ed n or re t ain ed s ubs t a nt ial ly a ll th e ri sk s an d rew ard s of th e as se t , bu t has t ran s fer re d con tr ol of th e as se t . Financial liabilities Fi nan ci al lia bil it ie s are c las si e d, a t ini ti al re cog ni ti on , as lo ans an d bor ro wi ng s , pay ab le s, o r as der i va ti v es de si gna te d as he dg ing in s tr um en ts i n an e ec ti ve h ed ge, as a ppr opr ia te. De ri v at iv es a re re cog nis ed in it ia ll y at fa ir va lu e. Lo ans , bo rr ow ing s an d pa yab le s are re co gni se d at fa ir va lu e net o f dir ec t l y at tr ib ut ab le t ran s ac t ion c os t s. De ri v at iv es a re na nc ial li abi li ti es w he n the f air v alu e is ne gat i ve, a cco unt ed fo r sim ila rl y as d er iv at i ve s as as se t s. Loans, borrowings and payables Af te r ini ti al re cog ni ti on , inte re s t-b ear in g loa ns an d bo rr ow ing s are s ubs eq ue nt ly m eas ure d at am or ti se d cos t us ing t he EI R me th od . Gai ns an d los se s are r eco gn ise d in pr o t or lo ss wh en t he li abi li tie s ar e dere co gni se d as we ll as t hro ug h th e EIR amor tisation process. A mor ti se d cos t i s ca lc ula te d by t ak in g int o acc oun t any dis cou nt o r pre miu m on a cqui si ti on an d fe es o r cos t s t ha t are an in teg ra l par t of t he EI R . Th e EIR am or ti sa ti on is in cl ude d as na nce co s t s in th e s t ate me nt of p ro t or lo ss . Pay abl es a re me asu red a t th eir n omi nal a mou nt w he n the e ec t of dis cou nt ing i s not ma te ria l. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 110 Fi nan ci al s ta te me nt s – Pet ro No r E& P A S A De re cog nit ion o f na nci al lia bil iti es A na nc ial li abi li t y is d ere cog ni se d wh en th e ob liga t ion un de r th e lia bil it y is dis ch ar ged o r ca nce lle d or e xp ire s. W he n an ex is t ing nan cia l lia bil it y is re pla ce d by ano th er f rom t he s am e le nde r on su bs t an ti all y di e ren t ter ms , o r the t er ms of an ex is t ing l iab ili t y a re sub s t an tia ll y mo di e d, su ch an e xch ange or mo di c a tio n is tr ea ted a s th e der eco gni t ion o f the o ri gi nal lia bil it y an d the r eco gn it io n of a new l iab ili t y. Th e di e ren ce in t he re sp ec t i ve c ar r yi ng am ou nt s is r eco gn ise d in t he s t ate me nt of p ro t or lo ss . Note 1 3 Event s af ter the rep or ting pe riod Th e Com pa ny su cces s f ull y co mpl et ed t he re do mic ile p ro ces s in F ebr ua r y 202 2 as dis cl os ed in N ote 10. Th e imp le men t at io n of t he s che me o f ar ran gem ent o n 24 F eb ru ar y 202 2 re sul te d in Pe tr oNo r E& P A S A re pl aci ng Pe tr oNo r E& P Lt d as t he to p com pa ny of t he Pe tro No r Gro up. Pe tr oN or E& P Lt d was de lis te d f rom t he O sl o Euro ne x t E x pan d on t he s am e da y and on 28 F e br uar y 202 2 th e sha re s of Pet ro Nor E & P A SA w ere lis t ed an d be gan t ra din g on th e mai n Osl o Sto ck E xch ange . Th e na nc ial s t at em ent s a re pr es ent ed a s a cont in uan ce of th e bu sin es s of Pet ro No r E& P Ltd . Du ri ng Mar ch 202 2 , th e 1 , 3 66 , 56 4 sha res t ha t had n ot be en tr ans f er re d to th e VP S in No r w ay pr io r to th e sc hem e of ar ran gem en t wer e sol d ba ck in to th e mar ket a nd t he s ale s pro ce ed s wer e dis t ri bu ted t o the f or me r pre dom ina nt l y Aust ralian inves tors. Th e re dom ic ile p roc es s as dis cl os ed in n ote 10 comp le ted p os t period. At the beginning of 2022, Russia ’s invasion of Ukraine de ep ene d th e ene rg y cr is is an d led t o an imm ed iat e e ec t in in cre asi ng oi l and ga s pr ice s. E con omi c sa nc t io ns to war ds Rus si a and t he e co nom ic un cer t ain t y m ay h ave a n imp ac t on our b usi ne ss a nd ou r mar ket s goi ng fo r w ard . Ev ent s a f t er th e rep or ti ng pe ri od t ha t do not a e c t t he com pa ny ’s n anc ial p osi t ion o n the e nd of t he re po r t ing pe ri od bu t w hic h wi ll a ec t the c omp an y ’ s nan ci al po si ti on in th e fu t ure ar e dis clo se d if s ign i c ant . PETRONOR E&P ASA AN NUA L R EP OR T 20 21 111 F ina nc ial s t ate me nt s – Pe tr oN or E & P A S A State ment of Di rec tors ’ r espon si bil it y Pur su ant t o the N or we gia n Se cur i ti es T ra din g Ac t se c t io n 5 -5 wi t h pe r t ai nin g reg ula ti ons w e her eby co n rm t hat , t o the b es t of o ur kn ow le dge , the co mp any ' s na nci al s t at eme nt s fo r 2021 hav e be en pre pa red i n acco rda nce w it h IF R S , as pro v ide d for b y the EU , and in acc orda nce w i th t he re qui rem ent s f or ad di ti ona l inf or mat io n pro vi de d for b y th e Nor we gia n Acco un tin g Ac t . T he in for ma ti on pr es en ted in th e na nci al s t ate me nt s gi v es a tr ue a nd fa ir pi c t ure of t he Com pa ny 's lia bil it ie s, nan cia l pos it io n and re sul t s v ie wed i n the ir en ti ret y. T o the b es t of o ur k now le dge , th e Boa rd of D ire c to rs ' Rep or t gi ve s a tr ue a nd fa ir pi c tu re of t he de vel op men t , pe r fo rm an ce and nan cia l po sit io n of t he bu sin es s , and i nc lud es a d es cr ipt io n of th e pr in cip al ri sk an d unce r t ai nt y fac tor s f aci ng th e Com pan y and i t s sub sid iar ie s. Ad dit io nal ly, we co n rm to t he be s t of ou r kn ow le dge th at t he "Pa y men t s to gov er nme nt s" i ncl ude d in t he Di rec tor s ’s R epo r t h as be en pr ep are d in acc ord ance w i th t he re qui rem en t s in th e Nor we gia n Se cu ri ti es T ra din g Ac t S ec tio n 5 -5 a wi t h per t ain ing r eg ula tio ns . 29 A pr il 2 022 Th e Bo ar d of Dir ec tor s Pet ro No r E& P A S A Eyas Alhomouz Cha ir of t he B oa rd Gro Kiellan d Direc tor Joseph Iskander Direc tor Ing v il Sm ine s Tybr ing - Gj ed de Direc tor PETRONOR E&P ASA AN NUA L R EP OR T 20 21 112 Fi nan ci al s ta te me nt s – Pet ro No r E& P A S A BDO A S Munk eda ms veie n 4 5 P .O. Bo x 170 4 Vika N- 0121 Osl o Independent Au ditor's Report Petro N or E&P L im ite d - 2021 pag e 1 of 2 Ind epend ent Audi tor 's Repo rt To the Board o f D irect ors in P etro N or E&P Lim ited Opinion We have audited the sp ecial p urpose consolida ted financial s tatements of Pet r o N or E&P Limited. The speci al purpose c onsolidated financi al statements c omprise: • The f inanc ial statements o f t he group, which co mprise the b alance sh eet as at 31 Dece mber 2021, and income statement, stat ement of comprehensi ve income, statemen t of changes in equity and cash flow s for the year then ended, and notes to the financial s tatements, i ncluding a summary of signifi cant accounti ng policies. In our opinion: • The accomp anying finan cial stateme nts give a true and fair view of the financial p osition o f the group as at 31 December 20 21, and its financi al performance and its cash fl ows for the year then ended in accordanc e with International F inancial R eporting Sta ndards as adopted by the EU. Basis for Opinion We cond ucted our audi t in a ccordance with Interna tional S tandards on Auditing ( ISAs). Our responsibiliti es under those standards ar e further descr ibed in the Auditor’s Responsibili ties for the Audit o f the Financial Stateme nts secti on of our rep ort. We ar e independent of the Company and the Group as required by laws and reg ulations and Internati onal Ethics S tandards B oard for Accountan ts’ Internati onal Code of Ethics for Profes sional Accountants (in cluding International Independen ce Standards) (IESBA C ode), and we ha ve ful filled our o ther ethical r esponsib ilities in accordance with these requirem ents. We b elieve tha t the audit evidence we have obtained i s sufficient and appropria te to pr ovide a basis for our op inion. Material unc ertainty r egarding th e Groups ’s ab ility to continue as a going concern We draw attention to N ote 2 a nd the Board o f Director's rep ort, whic h sta te that the Gr oup is currently ad vancing po tential co ntingent arr angement s to impr ove working capital in the even t this will be necessary. Fu rthermore, it is stated th at the G roup has outstanding amounts due to rel ated party shar eholders, plus other d ebt facil ities due in 2022, and material potential cap ital commitmen ts associa ted with its explora tion portfolio . The Group plans to refinance a nd consolidat e its various de b t po sitions bef ore yea r - en d, but acknowledges tha t the recent Økokrim investigatio n as deta iled in N ote 28 may c omplicate re financing initiati ves and extend timetables. As stated in N ote 2 and the Board o f Direct ors’ report , t h e se events or conditions, along wit h other matters as set forth in note N ot e 2 and the Board o f Directors’ repor t , indic ate that a material uncertainty exists that may cast significant doubt on the Groups’ s abil ity to c ontinue as a going concern. Our opinion is not modi fied in re spect of this matter. Other inf ormation The Board of Dire ctors and t he Managi ng Director (manageme nt) is resp onsible for the other information. The ot her informa tion comp rises the B oard of Directors’ r eport and other in formation PETRONOR E&P ASA AN NUA L R EP OR T 20 21 113 Auditor ’s report 2021 Inde pen de nt A uditor 's Report Petro Nor E&P L imited - 2021 pag e 2 of 2 BDO AS, a Norwegian liability company, is a me mber of BDO International Limite d, a UK company limite d by g uarantee , and forms part of the internat ion al BDO network of indep endent memb er fi rms. The Registe r of Business Enterprises: NO 993 606 650 VAT. in t he Annual Report, but d oes not includ e the financial statements and our aud itor’s repor t thereon. Our opinion on the financial sta tements d oes not cover the other in fo r mation. In connec tion with our audit o f the financial s tatements, our r esponsibilit y is to r ead the other information and, in d oing so, consider wh ether the other in fo r mation is materially in consisten t with the consolida ted fina ncial sta tements or o ur knowl edge ob tained in the audit or otherwise appears to be materially mis stated. I f, based on t he work w e have p erformed, we conclude that th ere is a material miss tatement of this o ther in fo rma tion, we a re required to rep ort that fa ct. We ha ve nothing t o report i n this regar d. Responsibiliti es of the Board o f Direct ors and th e Managing Director for the Finan cial S tatements Board of Directors and the Managing Direc tor (manag ement) are resp onsible for the prep aration of financial s tatements that give a true and fair view in accordance w ith Interna tional Financi al Reporting Standards as adopted by the EU, and for such in ternal control as manage ment de termines is necessar y to enable the prep aration o f financial s tatements that are free fr om material misstatemen t, whether due to fra ud or error. In preparing the financial stat ements, manag ement is responsible for ass essing the C ompany’s a nd the Group's ability t o co ntinue as a going concern, dis closing, as applicable, mat ters rela ted to going concern and using the going concern basis of acc ounting unles s manage ment either intends to liquidate the Company or Group or to c ease opera tions, or has no r ealistic al ternativ e bu t t o d o so. Auditor’s R esponsibiliti es for th e Audit o f the Fina ncial Statemen ts Our objec tives are t o obtain re asonable ass urance ab out whether the fina ncial statem ents as a whole are free from mater ial m issta tement, whe ther due to fraud or error, an d to issue a n auditor’s report tha t includes our opinion. R easonab le assuranc e is a hig h level of assurance, b ut is n ot a guarantee that an aud it conduc ted in acc ordance wit h ISAs w ill always detect a material misstatemen t when i t exists. Mis statements can arise from fraud or error and are c onsidered material if, i ndividually or in the aggreg ate, they could reason ably be exp ected to influence the economic decisions o f users take n on the basis o f these financ ial state ments. For further descrip tion of Audit or’s Responsib ilities for the Audi t of the F inancial St atements reference is made to: https://re visorforeningen. no/revisjonsb eretninger BDO AS Børre Skisland State Auth orised Public Accoun tant (This doc ument is sig ned electr onically) PETRONOR E&P ASA AN NUA L R EP OR T 20 21 114 Auditor ’s report 20 21 BDO A S Munk eda ms veie n 4 5 P . O. B ox 17 04 Vika N- 0121 Osl o Independent Au ditor's Report Petro Nor E&P ASA - 20 21 pa ge 1 of 4 Ind epend ent Audi tor 's Repo rt To the Gener al M eeting in P etroNor E&P ASA Report o n the Audit of the Fin ancial S tateme nts Opinion We have aud ited the financial statemen ts of Petr oNor E &P ASA. The financ ial statemen ts compr ise: • The balance she et as at 31 Dec ember 2021 • The income s tatement, s tatement of comprehensi ve income for 2021 • Statement of changes in equity • Statement of cash flows for the year that ended 31 Decemb er 2021 • Notes to the financial statement s, including a summar y o f significant accounting p olicies In our opinion: • The financial statemen ts comply wi th applicab le statutory r equirements, and • The financial statemen ts give a true and fair view of t he financial p osition of the C ompany a s at 31 D ecember 2021, and i ts financial performan ce and its cash flows for the year then ended in accordan ce with International Financial R eporting S tandards as adopted by the EU. Our opini on is consis tent wi th our additional report to the Aud it Commi tt ee. Basis for Opinion We con duct ed our audi t in a ccordance w ith Interna tional Standar ds on Aud iting ( ISAs). Our responsibiliti es under those standards ar e further descr ibed in the Auditor’s Responsibili ties for the Audit o f the Financial Stateme nts secti on of our rep ort. We ar e indep endent of the Company as required b y laws and regulati ons and International E thics S tandards Board for Acc ountants’ International C ode o f Ethics f or Professio nal Acc ountants (in cluding In ternational Indepe ndence Standards) (IESBA Code), and we have fulfilled our o ther ethical r esponsibili ties in acc ordance wi th these require ments. We belie ve that the audi t evidence we have obt ained is su fficient and appropr iate to pro vide a basis for our opinion. To the be st of our knowledge and beli ef, no p rohibited non - au dit s ervices r eferred t o in the Audit Regulation (537/ 2014) Article 5.1 have been provided . We have b een the a uditor of PetroN or E&P ASA for 1 y ear from the incorp oration of the compan y on 1 Oc to ber 202 1. Material unc ertainty r egarding th e Company’s ab ility t o continue as a goi ng concern We draw attention to N ote 2 a nd the Board o f Director's rep ort, whic h state that the G ro u p is currently ad vancing po tential co ntingent arr angement s to impr ove working capital in the even t this will b e necessary. Furthermore, it is sta ted that t he Gro u p has outs tanding am ounts due to related party shar eholders, p lus other d ebt facil ities due in 2022, and m aterial p otential capi tal commitmen ts associa ted with its explora tion portfolio . The Group plans to refinance a nd consolidat e its vario us debt po sitions bef ore year - end, but acknowled ges that the recent Økokrim PETRONOR E&P ASA AN NUA L R EP OR T 20 21 115 Auditor ’s report 2021 Independent Au ditor's Report Petro Nor E&P ASA - 20 21 pag e 2 of 4 BDO AS , a Norweg ian liability c ompan y, is a member of BDO International Lim ited, a UK co mpan y limited by guarantee , and f orms par t of th e internation a l BDO network of indep endent memb er fi rms. The Registe r of Business Enterprises: NO 993 606 650 VAT. investigatio n as deta iled in N ot e 9 may c omplicate refinancing ini tiatives a nd extend timetables. As stated in N ote 2 and the B oard of Directors’ r eport , these eve nts or c onditions, al ong with other matters as set forth in N ot e 2 and the Board of Direc tors’ report , indica te that a materi al uncertainty exists that may cast significant doubt on the Co m pa ny ’s abilit y to con tinue as a g oing concern. Our opinion is not modified in r espect of this matter. Key Audit Matters Key audit matters ar e those matters tha t, in our professional judgmen t, were o f most significance in our audit of the financial sta tements of the curr ent per iod. Descript ion of the key aud it matter How the ke y aud it matter was addresse d in the aud it Scheme of Arrange ment and r e do mi ci le from Australia to Norwa y Petr oNor E &P AS A w as incorpora ted in Oc tober 2021 with the purpose of becomin g the new parent company of th e Petr oN or G roup foll owi ng the implementati on of a Scheme o f Arrangement and succ essful completio n of a process t o redomi cile from Australia t o Norw ay. The Scheme of Arr angement in volved establishing Petr oNor E&P ASA for the purpose of carryi ng out a share swap whereby s hares in PetroNor E&P Limited w ere to be swap ped for shares in P etroNor E&P AS A. On 24 Febr uary 2022, PetroN or E&P Limi ted delis ted its shares on Euronext Expand in co njunction with the listing o f PetroNor E&P ASA sh ares on the Oslo Stock Exchange on 28 February 2022. U nder the Scheme of Arrangemen t, the shares held by PetroNor E&P Limited s hareh olders were transferred to Petro Nor E&P ASA, and in all material r espects the shareholder s are identical b efore and a fter this 1: 1 share swap. The share swap transa ction w ill be acco unted for as a continuan ce of bus iness in the PetroNor Gr oup, wit h PetroNor E&P AS A as new parent company. In t he follo wing reporting perio ds , the co nsolid ated financial stat ements of Petr oNor E&P ASA will b e present ed as a Our audit procedures h ave incl uded a n assessment of mana g ement’s pr o p o sed accounting trea tment of t he Sc hem e of Agreement and process t o redom icile fr om Australia to Norwa y . We have al so eval uat e d th e adequacy of the information provided in the no tes and the Board of Dir ectors’ r eport concern ing the Scheme of Arrangemen t and pr ocess t o redomicile from Austral ia to Norway. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 116 Auditor ’s report 20 21 Independent Au ditor's Report Petro Nor E&P ASA - 20 21 pag e 3 of 4 BDO AS , a Norweg ian liability c ompan y, is a member of BDO International Lim ited, a UK co mpan y limited by guarantee , and f orms par t of th e internation a l BDO network of indep endent memb er fi rms. The Registe r of Business Enterprises: NO 993 606 650 VAT. continuati on of the activities in Petr oNor E&P Limited. As at 31 December 2021, Petr oNor E&P ASA was no t a parent c ompany and has ther efore no t prepar ed consolidated f inancial s tatements for 2021. However, f or information purposes t he annual report for Petr oNor E&P ASA for 2021, includes audited special purpose c onsolidated financial s tatements for PetroN or E&P Limi ted for 2021. Du e to the material impact o n th e pres entation of the financial s tatements for Petro Nor E&P ASA f or 2021, we h ave consid ered the S cheme of Arrange ment and redomicile pr ocess a ke y audit matter in the audit of the Compan y. See Note 10 and the B oard of D irectors’ rep ort for detailed informa tion abou t the Sc hem e of Arrangement and red omicile pro cess. Other inf ormation The Board of Dire ctors and t he Managi ng Director (manageme nt) is resp onsible for the other information. The ot her informa tion comp rises the B oard of Direct ors’ rep ort. Our opini on on t he financial s tatements does not c over the other inf ormation. In connec tion with our audit o f the financial s tatements, our r esponsibilit y is to r ead the other information and, in d oing so, consider wh ether the other informati on is mat erially inco nsistent wi th the financial statem ents or our kn owledge obtained in the audit or otherwise ap pears to b e materially misstated. If, based on the w ork we ha ve perfor med, we c onclude tha t there is a material misstat ement of this other in fo rma tion, we a re required to report that fa ct. We ha ve nothing t o report i n this regar d. Opinion on the Board of D irector’s r eport Based on our kn owledge obtai ned in the a udit, i n our opini on the B oard of Dire ctors’ rep ort • is consisten t with the financial s tatements and • contains the i nformatio n required by applicabl e legal requiremen ts. Responsibiliti es of the Board o f Direct ors and th e Managing Director for the Finan cial S tatements The Board of Dire ctors and t he Managi ng Director (manageme nt) are for the preparati on of financial statements that give a true and fair view in acc ordance wit h Internati onal Finan cial Reporting Standards as adopted by the EU, and for such internal control as m anagemen t determines is necessary to enable the preparati on of financial state ments that ar e free fr om material misstatemen t, whether due to fra ud or error. PETRONOR E&P ASA AN NUA L R EP OR T 20 21 117 Auditor ’s report 2021 Independent Au ditor's Report Petro Nor E&P ASA - 20 21 pag e 4 of 4 BDO AS , a Norweg ian liability c ompan y, is a member of BDO International Lim ited, a UK co mpan y limited by guarantee , and f orms par t of th e internation a l BDO network of indep endent memb er fi rms. The Registe r of Business Enterprises: NO 993 606 650 VAT. In preparing the financial stat ements, manag ement is responsible for ass essing the C ompany’s ability to continue as a going concern, disclosing, a s ap plicable, m atters relat ed to goi ng concern and using the going concern basi s of ac counting u nless manag ement eit her inte nds to liq uidate the Company or to cea se operation s, or has no realis tic alternative but to d o so. Auditor’s R esponsibiliti es for th e Audit o f the Financia l Statements Our objec tives are t o obtain re asonable ass urance ab out whether the fina ncial statem ents as a whole are free from mater ial m issta tement, whe ther due to fraud or error, and to issue an auditor’s report that includes our opini on. Re asona ble assur ance is a hig h level of assura nce, but is not a guarantee that an aud it conduc ted in acc ordance wit h ISAs w ill always detect a material misstatemen t when i t exists. Mis statements can aris e from fraud or err or and are consider ed material if, indivi dually or in the aggreg ate, they could reason ably be exp ected to in fluence the economic decisions o f users take n on the basis o f these financ ial state ments. For furth er descrip tion of Aud itor’s Respon sibilities for the Audi t of t he Financial Statemen ts reference is made to: https://re visorforeningen. no/revisjonsb eretninger Report o n comp liance with Reg ulat ion on Eu rop ean Single El ectron ic Format (ESEF) Opinion We have p erformed an assuran ce engagemen t to obtain reas onable assuranc e that t he f inancial statements w ith fil e name 984500AE EH2D2AK42C11-20 21- 12 - 31 -en. xhtml have b een prepar ed in accordance with Sec tion 5 - 5 of the Norwegia n Securit ies Trad ing Act (V erdipapir handelloven) and the accompanying Regulation on European Single Elec t ro n ic Fo rm at (ES E F) . In our opinion, the financial sta tements h ave been prep ared, in all ma terial resp ects, in accordance with the requirement s of ESEF. Managemen t’s Resp onsibilities Managemen t is resp onsible for preparing a nd publishin g the financial statements in the singl e electronic r eporting format required in ESEF. This responsibilit y compris es an adequa te proce ss and the internal control pr ocedures w hich manage ment de termines is ne cessary for the pr eparation and publication of the financial sta temen ts. Auditor’s R esponsibiliti es For a d escription o f the audi tor’s resp onsibilities w hen perf orming an assur ance engag ement o f the ESEF repor ting, see: h ttps://re visorforeningen. no/rev isjonsberetning er BDO AS Børre Skisland State Auth orised Public Accoun tant (This doc ument is sig ned electr onically) PETRONOR E&P ASA AN NUA L R EP OR T 20 21 118 Glossar y and d eniti ons Bbl On e ba rre l of o il, e qu al to 4 2 US gal lo ns or 159 lit res Bcf Billio n cubic feet bopd B ar rel s of oi l pe r day boepd Bar re ls o f oil e qui v ale nt p er da y CPP Pro du c ti on sh ar ing c ont ra c t , “ Con tr at d e Par ta ge de P rod uc t io n ” in Fr enc h CPR Competent P er son’s Repor t Group or PetroNor Group Pe tro No r E& P Li mi ted a nd i t s su bsi dia ri es IOR Imp ro ved o il re cov er y MMbbl Mil lio n ba rr els o f oil MMBOE Mil lio n ba rr els o f oil e qu iv al ent Mmsc fd Mil lio n s t and ard c ub ic fe et p er d ay PDP Pro ven D ev el ope d Pro du cin g (res er ve s) PSC Produc tion sharing contrac t SNPC So ci été N at ion al d es Pé tr ole s du Co ngo Cor por ate direc tor y DIREC TOR S Eyas Alhomouz, Chair Joseph Iskander Gro Kiella nd Ing v il Sm ine s T y br ing - Gj ed de REGISTER ED OF FICE Frø y as ga te 1 3 024 3 Os lo Nor way T el +47 2 2 55 4 6 07 S TOCK EXCHA NGE LIS TING Oslo Børs T icke r: PN OR I S I N : N O 0 0 111 5 7 2 3 2 SHARE REGI S TR AR DNB B ank A SA , Verdipapirser v ice Dro nn ing Eu fem ias ga te 3 0 01 91 Os lo Nor way AUDITOR S BD O A S Munkedam s veien 45, Vika Atrium 0 12 1 O s l o Nor way T el +47 2 3 1 1 91 0 0 PETRONOR E&P ASA AN NUA L R EP OR T 20 21 119 PetroNor E &P A S A petronore p.com
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