DNO ASA — Investor Presentation 2016

Feb 9, 2017

Presentation 2016 interim results

Corporate overview and operational highlights

Corporate overview

• Back on track in 2016 to profitability and growth
• Commencing in first half of year, more regular payments for Kurdistan oil exports in line with contracts
• Following which DNO resumed drilling in second half of year
• While keeping overall corporate spend below cash from operations
• Leading to operating profits following two consecutive years of losses
• And strengthened balance sheet
• Continue to cut costs by shedding non-performing assets
• Bolstering staff in preparation for increased activity in 2017

2016 operational highlights

• Operated production in 2016 averaged 112,600 barrels of oil equivalent per day (boepd)
• Of which Kurdistan represented 107,300 bopd and Oman 5,300 boepd
• Company Working Interest (CWI) production averaged 69,200 boepd in 2016
• Accelerated development of shallow Jeribe reservoir overlying main Tawke Cretaceous reservoir
• Withdrew from five licenses in 2016
• Drilled four new production wells, one appraisal well, one exploration well and one water disposal well

2016 financial highlights

• Annual revenues of USD 201 million, up from USD 187 million in 2015
• Received 10 monthly Tawke export payments in 2016 totaling USD 292 million gross, of which USD 210 million net to DNO including USD 26 million towards booked receivables
• Operating profit of USD 6 million, up from operating loss of USD 174 million in 2015 and USD 243 million in 2014
• 2016 operational spend of USD 125 million, down from USD 161 million in 2015
• Exited the year with cash balance of USD 261 million, up from USD 238 million at end-2015

2016 Tawke activity

• Four production wells completed at Tawke field during 2016, of which three targeted shallow Jeribe reservoir and one deeper Cretaceous reservoir
• Jeribe wells drilled in record time and cost with own rig staffed with all Kurdish crew
• New wells added around 10,000 bopd of production at combined cost to DNO of USD 10 million
• Workovers of several existing wells further helped reverse natural field decline and stabilize production
• Most active driller in Kurdistan
• And at just below 115,000 bopd, DNO production currently exceeds that of all other international oil companies operating in Kurdistan combined

Stepped up drilling in 2017

• Planned 2017 capital investments of USD 100 million
• Bringing 2017 operational spend to an estimated USD 185 million
• Current Tawke drilling program includes four new production wells, of which two are Cretaceous and two shallow Jeribe, plus a water disposal well
• Next steps for Peshkabir include drilling of third well to appraise recent Cretaceous discovery
• In Erbil license, expect Q4 spud of Hawler-1A well
• In Oman, two wells to be brought on production this year at Block 8 offshore, one a sidetrack to West Bukha-5 and other the Bukha-1 well reinstatement
• Three additional Cretaceous wells at Tawke to increase production contingent on timely and predictable export payments

Cretaceous oil discovery at Peshkabir

• Peshkabir-2 well designed to explore Cretaceous and appraise previous Jurassic discovery reached total depth of 3,500 meters in late January
• Tested 3,800 bopd of 28° API from a 170 meter interval in the Cretaceous and currently undergoing final testing of Jurassic horizon
• Total well cost within original budget of USD 17.5 million
• Considering early production from Peshkabir-2 and trucking oil to DNO's gathering, processing and export facilities at Fish Khabur 12 kilometers away
• Peshkabir field positions DNO for production and reserves growth in Kurdistan portfolio

Annual Statement of Reserves

• At year-end 2016, DNO's CWI proven and probable reserves (2P) and contingent resources (2C) estimated at 530 million barrels of oil equivalent (MMboe), up from 523 MMboe a year earlier
• CWI 2P reserves of 368 MMboe, down from 392 MMboe after adjusting for produced volumes. CWI 2C resources estimated at 161 MMboe, up from 132 MMboe at end-2015
• DNO's year-end 2016 Reserve Life Index (R/P) of 15 years on a 2P reserves basis and 21 years on a 2P reserves and 2C resources basis
• At the main Tawke field, on a gross basis, 2P reserves and 2C resources stood at 604 MMbbls, down from 643 MMbbls at end 2015. Proven reserves dropped to 348 MMbbls from 387 MMbbls after adjusting for field production of 39 MMbbls, while probable reserves remained unchanged at 156 MMbbls and 2C resources remained unchanged at 100 MMbbls
• Elsewhere on the license, the Cretaceous discovery at the Peshkabir field, principally of oil, added 48 MMboe of gross 2C resources

2017 well schedule

Financial review

DNO financial results – key figures

• Annual revenues of USD 201 million in 2016, up from USD 187 million in 2015
• Recovery of cash flow and operating profit in 2016

Kurdistan 2016 payments

• During 2016, 10 monthly payments totaling USD 292 million received for Tawke exports
• Of which USD 210 million net to DNO, including USD 26 million toward booked receivable
• Three 2016 export payments made in Q1 2017: USD 39 million (USD 28 million net to DNO) for October exports; USD 8 million (USD 6 million net to DNO) for balance of June exports; and USD 35 million (USD 25 million net to DNO) for November exports

2016 Kurdistan payments net to DNO by month received USD million

Financial summary

USD million	Q4 2016	Q3 2016	Q4 2015	2016	2015
Revenue	41.7	48.8	54.5	201.3	187.4
Cost of goods sold	-36.9	-29.1	-26.7	-128.7	-197.0
Gross profit	4.8	19.8	27.9	72.6	-9.5
Expensed exploration	-1.3	0.6	-4.1	-20.3	-23.5
Administrative expenses	-9.4	-6.9	-6.2	-31.0	-19.0
Other operating income/expenses	11.5	-2.3	-19.3	13.5	-29.1
Impairment of oil and gas assets	-33.2	-2.0	-79.7	-29.2	-92.9
Profit/loss from operating activities	-27.6	9.1	-81.3	5.7	-174.0
Net finance	-4.6	-11.5	-27.8	-39.4	-62.5
Profit/loss before income tax	-32.2	-2.4	-109.1	-33.7	-236.5
Income tax expense	1.0	-0.8	25.8	-1.6	24.1
Net profit/loss	-31.2	-3.2	-83.3	-35.3	-212.3

• Improved 2016 financials on back of higher revenues and lower cost of goods sold
• 2016 annual operating profit of USD 6 million, up from operating loss of USD 174 million in 2015

Investment program

Annual operational spend USD million

Capex Expex Lifting

• Stepping up operational spend by 50 percent in 2017
• Projected capex of USD 100 million

2016 cash flow

USD million

• Strong 2016 operational cash flow of USD 98.2 million (-USD 35.4 million in 2015)
• Cash increase of USD 23.5 million
• Tawke booked local sales receivable down by USD 33 million

Capital structure

2014 2015 2016 USD million

Cash deposits

Equity ratio Percent

• Year-end 2016 cash balance of USD 261 million
• Net debt of USD 139 million
• Solid balance sheet with low leverage

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 forwardlooking 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 9 February 2017. 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.