DNO ASA — Investor Presentation 2017

Feb 8, 2018

Presentation 2017 Interim Results

Corporate overview and operational highlights

Strong operations, strong financials, strong balance sheet

• DNO operated production in Kurdistan currently averaging 113,000 barrels of oil per day (bopd), of which Tawke field 97,000 bopd and Peshkabir field 16,000 bopd
• Leading international operator in Kurdistan (in active rigs, wells drilled, production, oil reserves), contributing more than one-third of overall exports from region
• Twelve monthly Kurdistan export payments received in 2017 totaling USD 380 million net to DNO
• 2017 operating profit of USD 521 million (USD 6 million in 2016) on back of higher entitlement production and recognition of USD 556 million historical receivables settlement
• Further strengthened balance sheet by removal of certain obligations related to Tawke license
• At year-end 2017, net cash position of USD 30 million versus net debt of USD 139 million at end-2016

2017 operational highlights

• Operated production in 2017 averaged 113,500 barrels of oil equivalent per day (boepd), up from 112,600 boepd in 2016
• Of which Kurdistan represented 109,000 bopd and Oman 4,500 boepd
• Company Working Interest (CWI) production averaged 72,300 boepd in 2017 and entitlement production averaged 27,300 boepd
• Drilled 14 wells across three operated fields in Kurdistan
• Fast tracked development of Peshkabir discovery
• Cumulative Tawke field production since inception approaching 230 million barrels

2017 financial highlights

• Annual revenues of USD 347 million (USD 202 million in 2016)
• Received Kurdistan export payments net to DNO totaling USD 380 million in 2017 (USD 210 million in 2016)
• Exited the year with cash balance of USD 430 million (USD 261 million at year-end 2016) plus USD 58 million in treasury shares and marketable securities (USD 22 million at yearend 2016)
• Outstanding bond debt of USD 400 million

Kurdistan export payments net to DNO by month received

January 2016 - December 2017 USD million

Foot on accelerator in Kurdistan

• Over 50 percent hike in 2018 Kurdistan spend to USD 250 million (net to DNO) on back of continued export payments
• Landmark receivables settlement increased DNO's stake in Tawke and Peshkabir fields from 55 percent to 75 percent
• Tawke-48 Cretaceous well currently drilling and will be completed by end-February
• Finalizing plans to drill four more wells at Tawke in 2018
• Hawler-1A well at Benenan heavy oil field in Erbil license achieved technical milestone with first ever multilateral well and first ever dual completion in Kurdistan
• Testing to commence shortly on Hawler-1A well, and if successful, will be followed by additional drilling activity

Fast tracking Peshkabir

• Brought Peshkabir Cretaceous discovery on stream in less than six months and tripled production to over 15,000 bopd by late 2017
• Steady output from Peshkabir-2 (5,600 bopd) and Peshkabir-3 (10,000 bopd) for cumulative production of 2 million barrels to date with an estimated export value of USD 100 million – more than twice the investment
• Six Peshkabir wells slated for 2018 to boost field production
• Targeting 30,000 bopd by summer 2018 and continue to ramp up in second half of the year
• Plan to test deeper Triassic horizon
• Initiating engineering studies for injection of Peshkabir gas for enhanced oil recovery at Tawke

Building new focus area

• DNO awarded participation in 10 exploration licenses under Norway's Awards in Predefined Areas (APA) 2017 licensing round
• Of which seven in North Sea, one in Norwegian Sea and two in Barents Sea
• Adds to existing nine licenses offshore Norway and United Kingdom, of which six on Norwegian Continental Shelf (NCS) and three on UK Continental Shelf (UKCS)
• Val d'Isere prospect on UKCS (22.5 percent working interest) drilled to 3,638 meters by operator Apache, but well encountered no hydrocarbons and consequently plugged and abandoned
• Actively pursuing additional NCS stakes, including exploration, development and production assets

Financial review

DNO financial results – key figures

• Annual revenues of USD 347 million in 2017, up from USD 202 million in 2016
• Kurdistan receivables settlement reflected in operating profit

Financial summary

USD million	Q4 2017	Q3 2017	Q4 2016	2017	2016
Revenue	116.0	73.0	42.1	347.4	201.8
Cost of goods sold	-57.1	-79.4	-36.9	-202.2	-128.7
Gross profit	58.9	-6.4	5.2	145.2	73.1
Expensed exploration	-24.1	-5.9	-1.3	-33.0	-20.3
Administrative expenses	-9.3	-12.0	-9.4	-33.2	-31.0
Other operating income/expenses	-0.2	553.7	11.5	557.5	13.5
Impairment of oil and gas assets	0.0	-60.6	-33.2	-108.4	-29.2
Profit/loss from operating activities	25.7	468.8	-27.1	521.1	6.1
Net finance	-10.8	-11.2	-4.6	-46.1	-39.4
Profit/loss before income tax	14.9	457.6	-31.7	475.1	-33.3
Income tax expense	15.7	5.0	0.5	20.0	-2.1
Net profit/loss	30.6	462.7	-31.2	495.0	-35.3

• Higher revenues driven by higher oil prices and Kurdistan payments
• 2017 annual operating profit of USD 521 million, up from operating profit of USD 6 million in 2016

Investment program

Annual operational spend USD million

• More than doubled operational spend in 2017, with further increases planned for 2018
• Projected 2018 annual capex at USD 150 million
• Stepping up exploration activity in 2018

2017 cash flow

USD million

• Strong 2017 operational cash flow of USD 338.8 million (USD 98.7 million in 2016)
• Cash increase of USD 169.1 million

Capital structure

Financial assets

Equity ratio Percent

• Net cash positive with year-end 2017 cash balance of USD 430 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 8 February 2018. 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.