DNO ASA — Investor Presentation 2014

Nov 13, 2014

Third Quarter 2014

Interim Presentation

Operational review

Bijan Mossavar-Rahmani, Executive Chairman

Q3 2014 and year-to-date highlights

• Production at Tawke field in Kurdistan continued without interruption
• DNO Q3 gross production of 124,396 barrels of oil equivalent per day (boepd) and quarterly company working interest (CWI) production of 72,609 boepd
• Stabilizing security environment allowed resumption of Tawke field expansion program with some delay
• Company-wide Q3 investments of USD 52.1 million (YTD USD 234.8 million), ending quarter with cash balance of USD 165.7 million
• Local Kurdistan sales reduced as increasing volumes directed by regional government to export through Ceyhan, Turkey
• Q3 operating revenue of USD 115.7 million (YTD USD 371.9 million) and Q3 operating cash flow of USD 25 million (YTD USD 167.1 million)
• Kurdistan has announced initial USD 75 million payment in November to DNO and other producing companies on account for exports with further payments to follow on a regular basis. With increases in production and exports, operators will receive full contractual entitlements
• Q4 focus on improving cost efficiencies and high grading portfolio
• Though our low finding, development and operating costs give DNO a significant competitive advantage in a weak oil price environment

CWI production

Tawke

• Tawke-25 and Tawke-26 wells completed in Q3 and initially tested at 7,500 barrels of oil per day (bopd) and 5,000 bopd, respectively

• New Tawke-28 well undergoing stimulation and testing; rig moved and currently drilling Tawke-27 well

• With five horizontal wells drilled in 2014, total number of Tawke field wells will reach 28 by year-end, of which 25 are on production

• New 24-inch pipeline connecting central processing facility to Fish Khabur to be completed by year-end
• Field processing capacity to reach 200,000 bopd by early 2015 with delayed installation of early processing facilities
• Plans to drill Peshkabir-2 well in 2015 to appraise the Jurassic oil discovery made at Peshkabir-1 well and to prove additional oil in Cretaceous
• Further processing of Peshkabir 3D seismic data under way
• Peshkabir estimated to contain 225 million barrels in prospective resources

Dohuk and Erbil

Dohuk license

• Summail-2 well completed as a gas producer in the Cretaceous reservoir, delivering 14 million cubic feet per day (mmcfd) to the Dohuk power plant. Other two wells currently shut-in for pressure build-up and monitoring
• A 200-meter oil column encountered during drilling of deeper Cretaceous intervals of Summail-2
• Summail-1 well had earlier confirmed presence of heavy oil in the Jurassic interval
• Initiated further appraisal of these heavy oil discoveries

Erbil license

• Benenan-4 well tested moveable Najmeh oil deeper than in any well previously drilled in the field
• Benenan-4 well also proved much deeper oil water contact, indicating higher volumes of oil in place for the Benenan field
• Further testing of the Najmeh interval is under way at Benenan-4 and Erbil-2 wells
• Testing to optimize commercial production and delivery of heavy oil from the Erbil license to the local market

Oman and UAE

Oman

• Gross production from offshore Block 8 increased to 17,211 boepd in Q3
• Evaluating new drilling targets in West Bukha field
• Onshore, completed new 1,000-km 2D seismic acquisition program in Block 36 with first exploration well to be drilled in 2015

UAE

• Saleh-8 well continues to produce at low rates
• At RAK Onshore exploration license, reprocessing existing seismic data to mature drillable prospects

Tunisia and Yemen

Tunisia

• In Sfax Offshore Exploration Permit, completed 1,000 sq km 3D seismic acquisition program
• Jawhara-3, first of several exploration and appraisal wells, commenced drilling in mid-October and encountered a secondary Eocene target with indications of hydrocarbons
• This intermediate section has been logged and cased and drilling operations will resume to test three deeper secondary and primary targets in the Cretaceous and Turonian
• Well located 4 km north of the Jawhara-1 discovery well which tested 1,500 bopd
• Second Sfax well to follow in the first half of 2015

Yemen

• Stable production of 7,130 bopd gross in Q3, notwithstanding challenging security conditions
• Though all drilling activity and new field development, including Yaalen and Meshgha, remain suspended

Development drilling activity

Exploration well

Appraisal well

Production/development well

		Production and development drilling schedule		2014	2015
Country	Well name	DNO interest	Q3	Q4	Q1	Q2	Q3
Kurdistan	Tawke-25	55.00 %
	Summail-2	40.00 %
	Tawke-28	55.00 %
	Tawke-27	55.00 %
	Tawke-30	55.00 %
	Tawke-31	55.00 %
Yemen	Tasour-28	38.95 %
	Yaalen-4S2	40.00 %
	Nabrajah-18S/S2	40.00 %

Exploration and appraisal drilling schedule				2014		2015
Country	Well name	DNO interest	Gross unrisked MMboe	Q3	Q4	Q1	Q2	Q3
Kurdistan	Peshkabir-2	55.00 %	225
Yemen	Meshga-2	38.95 %	7
	Gabdain-3	18.00 %	55
	Meshga-3	38.95 %	-
Oman	Block 36 -1	75.00 %	100
Tunisia	Jawhara-3	87.50 %	30
Total			417

Financial review

Haakon Sandborg, CFO

Financial results – key figures

-106

-120

• YTD 2014 financial results do not include DNO share of revenue from Tawke oil exports
• Q3 operating profit includes one-off cost of USD 44.4 million related to impairment in RAK Saleh
• Excluding impairment, Q3 operating profit of USD 3.8 million
• Q3 netback of USD 42.4 million

Q3 revenue and gross profit distribution

Financial summary

USD Million	Q3 2014	Q2 2014	Q3 2013	YTD 2014	YTD 2013
Sales	115.7	143.4	135.2	371.9	369.4
Cost of goods sold	-84.9	-78.9	-53.1	-234.9	-159.9
Gross profit	30.8	64.5	82.2	137.0	209.5
Expensed exploration	-13.9	-4.0	-2.0	-23.1	-6.4
Admin/other*	-57.6	-5.9	-16.6	-70.3	-29.5
Profit/loss from operating activities	-40.7	54.6	63.6	43.6	173.6
Net finance	0.5	-7.9	-2.5	-11.0	-8.5
Profit/loss before income tax	-40.2	46.6	61.1	32.6	165.1
Income tax expense	-1.4	-2.2	-14.2	-6.1	-40.0
Net profit/loss	-41.6	44.4	47.0	26.4	125.1

* Admin/other includes one-off cost of USD 44.4 million related to impairment in RAK Saleh

• Q3 sales lower on reduced local sales from Tawke
• YTD lifting cost stable, but DD&A up on higher production volumes

Investment program

Capex and capitalized exploration

• Investments of USD 52.1 million in Q3, mainly for capacity expansion and development in Kurdistan
• YTD investments of USD 234.9 million

Q3 cash flow

• Cash flow from operations reduced by working capital increase due to Tawke local sales underlift
• Q3 capital expenditures funded by cash flow and cash drawdown

Capital structure

* Includes value of treasury shares at market price and of RAK Petroleum PCL shares at fair value

• Low-leverage balance sheet
• Considering new debt facilities to strengthen financial flexibility to refinance, execute work program and pursue new opportunities

Important notice

This presentation (the "Presentation") has been prepared and delivered by DNO ASA ("DNO" or the "Company"). The Presentation and its contents is strictly confidential and may not be reproduced or redistributed, in whole or in part, to any other person than the intended recipient. The Presentation is prepared for discussion purposes only. It does not constitute, and should not be construed as, any offer or invitation or recommendation to buy or sell any of the securities mentioned or described herein.

The Presentation contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or industry and markets in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words "believes", "expects", "predicts", "intends", "projects", "plans", "estimates", "aims", "foresees", "anticipates", "targets", and similar expressions. Any forward-looking statements and other information contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts based on the current expectations, estimates and projections of the Company or assumptions based on information currently available to the Company, which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. Neither the Company, nor any of its subsidiary undertakings or any such person's officers or employees provides any assurance that the assumptions underlying such forward-looking information and statements. are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results.

Any investment involves risks, and several factors could cause the actual results, performance or achievements of the Company as described herein to be materially different from any future results, performance or achievements that may be expressed or implied by statements and information in this Presentation, including, among others, risks or uncertainties associated with the Company's business, segments, development, growth management, financing, market acceptance and relations with customers. More generally an investment will involve risks related to general economic and business conditions, changes in domestic and foreign laws and regulations, taxes, changes in competition and pricing environments, fluctuations in currency exchange rates and interest rates and other factors. Should one or more of such risks or uncertainties materialise, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Presentation.

This Presentation has not been reviewed or registered with any public authority, stock exchange or regulated market place. The distribution of this Presentation and any offering, subscription, purchase or sale of securities issued by the Company in certain jurisdictions is restricted by law, including (but not limited to) USA, Canada, Japan, Australia and Hong Kong. Persons into whose possession this Presentation may come are required to inform themselves about and to comply with all applicable laws and regulations in force in any jurisdiction in or from which it invests or receives or possesses this Presentation and must obtain any consent, approval or permission required under the laws and regulations in force in such jurisdiction. The shares of the Company have not and will not be registered under the U.S. Securities Act or any state securities laws, and may not, except pursuant to an applicable exemption, be offered or sold within the United States, or to the account or benefit of U.S. Persons.

By receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and the relevant securities and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of any relevant investments. This Presentation contains information which has been sourced from third parties believed to be reliable, but without independent verification. Neither DNO nor its advisors makes any undertaking, representation or warranty (express or implied) as to the accuracy or completeness of the information (whether written or oral and whether or not included in this Presentation) concerning the matters described herein. Neither DNO nor any of its advisors accepts any liability whatsoever as to any errors, omissions or misstatements contained herein and, accordingly, neither DNO or its advisers, nor any of their parent or subsidiary undertakings or any such person's affiliates, officers, employees, accepts any liability whatsoever arising directly or indirectly from the use of this Presentation or the information included herein.

The Presentation speaks and reflects prevailing conditions and views as of 13 November 2014. It may be subject to corrections and change at any time without notice. DNO does not intend to, and neither the delivery of this Presentation nor any further discussions of the Company with any recipient shall, under any circumstances, not create any implication that the Company assumes any obligation to update or correct the information herein, nor any implication that there has been no change in the affairs of the Company since such date.