DNO ASA — Investor Presentation 2015

Feb 5, 2015

Fourth quarter

Interim Presentation 2014

DNO

Operational review

Bijan Mossavar-Rahmani, Executive Chairman

2014 highlights

• Record output achieved in 2014 with gross production up 66 percent from 2013 to 117,482 barrels of oil equivalent per day (boepd) and company working interest (CWI) production up 76 percent to 68,958 boepd
• Gross production at flagship Tawke field in Kurdistan rose 131 percent year-on-year to 91,255 barrels of oil per day (bopd) in 2014; production continued uninterrupted in 2014 despite security conditions
• Operating revenue of USD 452 million in 2014 with operating cash flow of USD 181 million
• Capital expenditures of USD 297 million, up from USD 288 million in 2013, primarily driven by capacity expansion and development programs in Kurdistan
• In line with industry practice, DNO reassessed the book value of its oil and gas assets at year end to adjust for significant decline in global oil prices and operational results, leading to USD 297 million in impairments
• Operating loss of USD 243 million in 2014 was driven by these non-cash impairments; absent impairments, operating profit stood at just over USD 53 million
• Ended the year with a cash balance of USD 114 million and another USD 63 million in marketable securities
• In December received first payment totaling USD 21 million net to DNO in respect of independent exports by the Kurdistan Regional Government from Tawke
• Expect to receive additional payments for past and ongoing exports but timing remains uncertain
• Process of normalization of Kurdistan's oil industry continues under challenging political, economic and security environment

2015 preview

• DNO celebrated ten year anniversary in Kurdistan last year and remains fully committed to the region
• On track to increase Tawke field production capacity to 200,000 bopd in early 2015
• Hit 100 million barrel cumulative production milestone at Tawke on 4 February
• Focus shifts to the development of the Benenan field in the Erbil license where recent testing and appraisal have indicated more than two billion barrels of oil-in-place
• Decline in oil prices is prompting all oil and gas companies, including DNO, to cut costs
• Though low finding, development and operating costs give DNO a significant competitive advantage in a weak oil price environment
• Still, priority in 2015 is to align our spending with our earning
• This involves optimizing operations, cutting back discretionary expenditures and high-grading our portfolio – a process DNO started late last year and is ongoing
• But this also means realizing larger revenues from Kurdistan operations in line with our contractual terms
• DNO has restarted Tawke sales into the local market and plans to ramp up such sales in the first quarter
• Revenues from Kurdistan local sales and exports will drive 2015 capital program
• DNO continues to have one foot on the accelerator and one on the brake

CWI production

• Five horizontal wells were drilled in 2014, bringing the total number of wells to 28 by year end, of which 26 are on production
• Tawke-27 was drilled in record time and at a cost of under USD 10 million
• Tawke-30, the last well in the current drilling campaign, is to be completed in Q1 2015
• Field production and processing capacity on track to reach 200,000 bopd by early 2015
• To transport the increased output, a new 24-inch pipeline connecting the central processing facility to Fish Khabur was successfully completed on time and on budget
• Further processing of 3D seismic data underway ahead of drilling in the Peshkabir field, estimated to contain over 225 million barrels of gross unrisked prospective resources

Dohuk and Erbil

Dohuk license

• Deliverability from the Summail field remains significantly lower than initially expected
• Summail-1 producing intermittently; evaluating enhancement options

Erbil license

• Benenan field now estimated to hold more than two billion barrels of oil-in-place
• Further testing of the Najmeh interval is underway at Benenan-4 and Erbil-2 wells; interference test data for Erbil-2 showed excellent communication in parts of the reservoir
• Plan to optimize commercial production and delivery of Benenan heavy crude with a focus on the local market

Oman and United Arab Emirates

Oman

• Offshore at Block 8, gross production averaged 15,678 boepd in 2014; new development well under consideration to increase West Bukha oil and gas output
• Onshore at Block 36, continue to identify drilling targets

United Arab Emirates

• Reprocessing existing seismic on RAK Onshore license
• Saleh field producing small volumes of gas and liquids on an intermittent basis

Tunisia and Yemen

Tunisia

• At Sfax Offshore Exploration Permit, Jawhara-3 vertically drilled to a total depth of 2,815 meters and completed in January
• Douleb and Bireno formations water bearing in compartments of the structure targeted by the well; two secondary objectives had oil shows
• Further analysis of logging and testing results being performed to re-evaluate Jawhara field oil-in-place estimates
• Petrogas acquired a 35 percent participating (40 percent paying) interest in Sfax last November

Yemen

• Production ongoing; new drilling activities suspended due to security environment
• At Block 47, production startup at Yaalen field on hold, as is appraisal of the Meshgha discovery at Block 32

Financial review

Haakon Sandborg, CFO

Financial results – key figures

• 2014 operating loss of USD 243.2 million, including one-off impairment charges of USD 296.7 million in Kurdistan, Oman, United Arab Emirates and Yemen; excluding impairments, operating profit of USD 53.5 million
• Gross export deliveries from Tawke of 18.6 million barrels in 2014; DNO's contractual share of exports not reflected in key figures

^* Average exchange rate for 2010 -2012 used for conversions

2014 revenue and gross profit distribution

Financial summary

USD Million	Q4 2014	Q3 2014	Q4 2013	2014	2013
Sales	80.1	115.7	133.6	452.0	503.0
Cost of goods sold	-81.6	-84.9	-48.4	-316.5	-208.3
Gross profit	-1.6	30.8	85.1	135.5	294.7
Expensed exploration	-27.5	-13.9	-3.9	-50.6	-10.3
Administrative/other*	-257.7	-57.6	-187.0	-328.1	-216.5
Profit/loss from operating activities	-286.8	-40.7	-105.7	-243.2	67.9
Net finance	2.4	0.5	-1.2	-8.7	-9.7
Profit/loss before income tax	-284.4	-40.2	-106.9	-251.8	58.2
Income tax expense	31.9	-1.4	8.8	25.8	-31.3
Net profit/loss	-252.5	-41.6	-98.1	-226.1	27.0

* Administrative/other in Q4 2014 includes one-off impairment charges of USD 252.2 million in Kurdistan, Oman and Yemen

• Lower Q4 revenues due to reduced local sales from Tawke as Kurdistan ramped up exports through Turkey
• Stable 2014 lifting costs but DD&A up on higher production

Investment program

Capex and capitalized exploration

• Investments increased to USD 297 million in 2014, mainly for capacity expansion and development programs in Kurdistan
• Significant capex reduction expected in 2015

2014 cash flow

• Cash flow from operations reduced by Tawke local sales underlift
• 2014 capital expenditures funded by cash flow and cash drawdown

Capital structure

• Low-leverage balance sheet
• Significant unrealized FX gain on NOK bond loan
• Reviewing options for refinancing of bond debt and new long-term funding

Important notice

This presentation (the "Presentation") has been prepared and delivered by DNO ASA ("DNO" or the "Company"). Copyright of all published material including photographs, drawings and images in this document remains vested in DNO and third party contributors as appropriate. Accordingly, neither the whole nor any part of this document shall be reproduced in any form nor used in any manner without express prior permission and applicable acknowledgements. No trademark, copyright or other notice shall be altered or removed from any reproduction.

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.

Although the Company believes that its expectations and the Presentation are based upon reasonable assumptions, 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 materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this Presentation.

DNO is making no representation or warranty, expressed or implied, as to the accuracy, reliability or completeness of the Presentation, and neither DNO nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

The Presentation speaks and reflects prevailing conditions and views as of 5 February 2015. It may be subject to corrections and change at any time without notice except as required by law. The delivery of this Presentation - or any further discussions of the Company with any recipient - shall not, under any circumstances, 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.