DNO ASA — M&A Activity 2018

Nov 26, 2018

DNO to make cash offer for all shares of Faroe Petroleum plc

DNO to make cash offer for all shares of Faroe Petroleum plc

Not for release, publication or distribution, in whole or in part, in or into

any jurisdiction where to do so would constitute a violation of the relevant

laws of such jurisdiction

Oslo, 26 November 2018 - DNO ASA, the Norwegian oil and gas operator, today

announced the terms of an offer to be made by DNO ASA for the whole of the

issued and to be issued share capital of Faroe Petroleum plc (other than the

105,247,866 Faroe Shares already held by DNO, representing 28.22 percent of

Faroe's issued share capital).

The Offer will be 152 pence in cash for each Faroe Share, valuing Faroe's

existing issued and to be issued share capital at approximately £607.9 million.

Of the Offer value of approximately £443.8 million on a fully diluted basis,

£402.6 million is attributable to the current issued share capital of Faroe

(other than those Faroe Shares already held by DNO and the Faroe Employment

Benefit Trust) and the balance £41.2 million is attributable to DNO's

understanding of the number of outstanding share options and awards granted by

Faroe to its directors, management and employees, representing approximately 7

percent dilution of Faroe's current issued share capital.

The Offer Price represents a premium of 44.8 percent to Faroe's share price of

105 pence at the close of business on 3 April 2018, the last business day before

DNO announced its first acquisition of shares in Faroe and a premium of 20.8

percent to Faroe's share price of 125.8 pence at the close of business on 23

November 2018, the last business day before this announcement.

Commenting on the Offer, Bijan Mossavar-Rahmani, Executive Chairman of DNO,

said:

"We are pleased now to engage directly with the Faroe shareholders with a

proposed all-cash voluntary offer of 152 pence per share which represents a

premium of 44.8 percent to the closing price of 105 pence on the day before DNO

announced its first acquisition of Faroe shares last April, and a premium of

20.8 percent to the closing price of 125.8 pence last Friday. In the period

between our first acquisition, triggering significant bid speculation, and this

offer, the price of Brent crude has dropped 13 percent and oil and equity

markets have entered a period of great uncertainty.

For those shareholders who wish to exit, DNO is therefore offering a

considerable premium.

For those who wish to remain, there is no assurance of Faroe achieving its full

value potential in a volatile commodity and financial markets environment as a

relatively small scale, financially constrained UK-AIM listed company whose

share price performance has remained stubbornly disappointing, with the very

notable exception of short-term spikes following the sale of a particular large

block of shares by one investor to another (most recently to DNO) and the

attendant speculation about an impending takeover premium with each such

transaction.

We firmly believe that Faroe's assets, the substantial part of which are

Norwegian, are better placed in the bosom of DNO, Norway's oldest independent

oil and gas company, currently operating gross production of 125,000 barrels per

day which compares with the 7,500 barrels of oil equivalent a day of gross

production operated by Faroe. DNO's proven and probable reserves were nearly

four times those of Faroe's as reported at 31 December 2017.

Whether the offer achieves DNO's minimum acquisition target or the acquisition

of all of Faroe's shares, we attach great importance to retaining the skills,

knowledge and expertise of Faroe's operational management and employees. We

intend to retain Faroe's Aberdeen head office and each of the other offices."

This stock exchange notice should be read in conjunction with, and is subject

to, the full text of the announcement on the offer (including its Appendices)

(the "Offer Announcement") which will be made available in a separate stock

exchange notice today and, subject to certain restrictions relating to persons

resident in Restricted Jurisdictions, on DNO's website at

www.dno.no/en/investor-relations/offer_announcement_26November (for the

avoidance of doubt, the contents of such website are not incorporated into and

do not form part of this announcement). The Offer will be subject to the

Conditions and certain further terms set out in Appendix 1 of the Offer

Announcement and to the full terms and conditions to be set out in the Offer

Document. Appendix 2 to the Offer Announcement contains the sources and bases of

certain information contained herein and in the Offer Announcement. Appendix 3

to the Offer Announcement contains the definitions of certain terms used herein

and the Offer announcement.

DNO ASA

Media: media@DNO.no                      Tel: +47 911 57 197

Investors: ir@DNO.no

Brunswick

Patrick Handley                                        Tel: +44 20 7404 5959

Lambert Energy Advisory Limited

Philip Lambert                                                 Tel:

+44 20 7491 4475

David Anderson                                  Tel: +44 20 7491 4475

Pareto Securities AS

Petter Sagfossen                                   Tel: +47 228 78 748

Further information

This stock exchange notice and the information included herein are subject to

the disclosure requirements pursuant to section 5-12 of the Norwegian Securities

Trading Act.

This announcement is not intended to and does not constitute, or form part of,

an offer, invitation or the solicitation of an offer to purchase, otherwise

acquire, subscribe for, sell or otherwise dispose of any securities, or the

solicitation of any vote or approval in any jurisdiction, pursuant to the Offer

or otherwise, nor shall there be any sale, issuance or transfer of securities of

Faroe in any jurisdiction in contravention of applicable law. The Offer will be

made solely by means of the Offer Document (and (in respect of Faroe Shares held

in certificated form) the acceptance forms accompanying the Offer Document,

which will, together, contain the full terms and conditions of the Offer

including details of how it may be accepted.

Please be aware that addresses, electronic addresses and certain other

information provided by Faroe Shareholders, persons with information rights and

other relevant persons for the receipt of communications from Faroe may be

provided to DNO during the offer period as required under Section 4 of Appendix

4 of the Code to comply with Rule 2.11 of the Code.

Lambert Energy Advisory Limited, which is authorised and regulated in the UK by

the FCA, is acting exclusively for DNO and no one else in connection with the

Offer and will not be responsible to anyone other than DNO for providing the

protections afforded to clients of Lambert Energy Advisory Limited nor for

providing advice in relation to the Offer or any other matters referred to in

this announcement.

Pareto Securities AS is acting exclusively for DNO and no one else in connection

with the Offer and will not be responsible to anyone other than DNO for

providing the protections afforded to clients of Pareto Securities AS nor for

providing advice in relation to the Offer or any other matters referred to in

this announcement.

Overseas jurisdictions

The availability of the Offer to Faroe Shareholders who are not resident in and

citizens of the UK or the United States may be affected by the laws of the

relevant jurisdictions in which they are located or of which they are citizens.

Persons who are not resident in the UK or the United States should inform

themselves of, and observe, any applicable legal or regulatory requirements of

their jurisdictions. Further details in relation to Overseas Shareholders will

be contained in the Offer Document.

The release, publication or distribution of this announcement in or into

jurisdictions other than the UK may be restricted by law and therefore any

persons who are subject to the law of any jurisdiction other than the UK or the

United States should inform themselves about, and observe, any applicable

requirements. Any failure to comply with the applicable restrictions may

constitute a violation of the securities laws of any such jurisdiction. To the

fullest extent permitted by applicable law, the companies and persons involved

in the Offer disclaim any responsibility or liability for the violation of such

restrictions by any person. This announcement has been prepared for the purposes

of complying with English law and the Code and the information disclosed may not

be the same as that which would have been disclosed if this announcement had

been prepared in accordance with the laws of jurisdictions outside of England.

The Offer will not be made, directly or indirectly, in, into or from any

jurisdiction where to do so would violate the laws in that jurisdiction.

Accordingly, copies of this announcement and formal documentation relating to

the Offer will not be and must not be, mailed or otherwise forwarded,

distributed or sent in, into or from any jurisdiction where to do so would

violate the laws of that jurisdiction.

Notice to US Faroe Shareholders

The Offer is being made for the securities of an English company and is subject

to UK disclosure requirements, which are different from those of the United

States. The financial information included in this announcement has been

prepared in accordance with International Financial Reporting Standards and thus

may not be comparable to financial information of US companies or companies

whose financial statements are prepared in accordance with generally accepted

accounting principles in the United States.

The Offer will be made in the United States pursuant to the applicable US tender

offer rules and otherwise in accordance with the requirements of the Code.

Accordingly, the Offer will be subject to disclosure and other procedural

requirements, including with respect to withdrawal rights, offer timetable,

settlement procedures and timing of payments, that are different from those

applicable under US domestic tender offer procedures and law. If the Offer is

instead implemented by means of a scheme of arrangement as provided for under

English law it will not be subject to the tender offer rules of the US Exchange

Act. Accordingly, the Offer would be subject to disclosure requirements and

practices applicable in the UK to schemes of arrangement which differ from the

disclosure requirements of US tender offer rules.

The receipt of cash pursuant to the Offer by a US Faroe Shareholder will likely

be a taxable transaction for US federal income tax purposes and under applicable

state and local, as well as foreign and other tax laws. Each holder of Faroe

Shares is urged to consult his or her independent professional advisor

immediately regarding the tax consequences of acceptance of the Offer.

It may be difficult for US Faroe Shareholders to enforce their rights and any

claim arising out of the US federal securities laws, since DNO is located in a

country other than the United States, and some or all of their officers and

directors may be residents of countries other than the United States. US Faroe

Shareholders may not be able to sue a non-US company or its officers or

directors in a non-US court for violations of the US securities laws. Further,

it may be difficult to compel a non-US company and its affiliates to subject

themselves to a US court's judgement.

In accordance with normal UK practice and pursuant to Rule 14e-5(b) of the US

Exchange Act, DNO or its nominees, or its brokers (acting as agents), may from

time to time make certain purchases of, or arrangements to purchase, Faroe

Shares outside the United States, other than pursuant to the Offer, before or

during the period in which the Offer remains open for acceptance. These

purchases may occur either in the open market at prevailing prices or in private

transactions at negotiated prices. Any information about such purchases will be

disclosed as required in the UK, will be reported to a Regulatory Information

Service and will be available on the London Stock Exchange website,

www.londonstockexchange.com.

Forward looking statements

This announcement (including information incorporated by reference in this

announcement), oral statements made regarding the Offer, and other information

published by DNO contain statements which are, or may be deemed to be, "forward-

looking statements". Forward-looking statements are prospective in nature and

are not based on historical facts, but rather on current expectations and

projections of the management of DNO about future events, and are therefore

subject to risks and uncertainties which could cause actual results to differ

materially from the future results expressed or implied by the forward-looking

statements. The forward-looking statements contained in this announcement

include statements relating to the expected effects of the Offer on DNO and

Faroe, the expected timing and scope of the Offer and other statements other

than historical facts. Often, but not always, forward-looking statements can be

identified by the use of forward-looking words such as "plans", "expects" or

"does not expect", "is expected", "is subject to", "budget", "scheduled",

"estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or

"believes", or variations of such words and phrases or statements that certain

actions, events or results "may", "could", "should", "would", "might" or "will"

be taken, occur or be achieved. Although DNO believes that the expectations

reflected in such forward-looking statements are reasonable, DNO can give no

assurance that such expectations will prove to be correct. By their nature,

forward-looking statements involve risk and uncertainty because they relate to

events and depend on circumstances that will occur in the future. There are a

number of factors that could cause actual results and developments to differ

materially from those expressed or implied by such forward-looking statements.

These factors include the satisfaction of the Conditions, as well as additional

factors, for example, oil and gas operations, particularly those relating to

development stage assets which are subject to varying inputs that may impact

timing, including, inter alia, permitting; environmental regulation; changes to

regulators and regulation; third party manufacturers and service providers; the

weather and asset partner and operator actions. Other unknown or unpredictable

factors could cause actual results to differ materially from those in the

forward-looking statements. Such forward-looking statements should therefore be

construed in the light of such factors. DNO, its associates, directors, officers

and advisers provide no representation, assurance or guarantee that the

occurrence of the events expressed or implied in any forward-looking statements

in this announcement will actually occur. You are cautioned not to place undue

reliance on these forward-looking statements. Other than in accordance with its

legal or regulatory obligations DNO is under no obligation, and DNO expressly

disclaims any intention or obligation, to update or revise any forward-looking

statements, whether as a result of new information, future events or otherwise.

No profit forecasts or quantified benefits statement

No statement in this announcement is intended as a profit forecast, profit

estimate or qualified benefits statement and no statement in this announcement

should be interpreted to mean that earnings per Faroe Share or DNO share for the

current or future financial years would necessarily match or exceed the

respective historical published earning per Faroe Share or DNO share or to mean

that the enlarged group's earnings in the first 12 months following the Offer,

or in any subsequent period, would necessarily match or be greater than those of

DNO or Faroe for the relevant preceding financial period or any other period.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code, any person who is interested in 1 percent or more

of any class of relevant securities of an offeree company or of any securities

exchange offeror (being any offeror other than an offeror in respect of which it

has been announced that its offer is, or is likely to be, solely in cash) must

make an Opening Position Disclosure following the commencement of the offer

period and, if later, following the announcement in which any securities

exchange offeror is first identified. An Opening Position Disclosure must

contain details of the person's interests and short positions in, and rights to

subscribe for, any relevant securities of each of (i) the offeree company and

(ii) any securities exchange offeror(s). An Opening Position Disclosure by a

person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London

time) on the 10(th) business day following the commencement of the offer period

and, if appropriate, by no later than 3.30 pm (London time) on the 10(th)

business day following the announcement in which any securities exchange offeror

is first identified. Relevant persons who deal in the relevant securities of the

offeree company or of a securities exchange offeror prior to the deadline for

making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1

percent or more of any class of relevant securities of the offeree company or of

any securities exchange offeror must make a Dealing Disclosure if the person

deals in any relevant securities of the offeree company or of any securities

exchange offeror. A Dealing Disclosure must contain details of the dealing

concerned and of the person's interests and short positions in, and rights to

subscribe for, any relevant securities of each of (i) the offeree company and

(ii) any securities exchange offeror(s), save to the extent that these details

have previously been disclosed under Rule 8. A Dealing Disclosure by a person to

whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on

the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding,

whether formal or informal, to acquire or control an interest in relevant

securities of an offeree company or a securities exchange offeror, they will be

deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any

offeror and Dealing Disclosures must also be made by the offeree company, by any

offeror and by any persons acting in concert with any of them (see Rules

8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant

securities Opening Position Disclosures and Dealing Disclosures must be made can

be found in the Disclosure Table on the Takeover Panel's website at

www.thetakeoverpanel.org.uk, including details of the number of relevant

securities in issue, when the offer period commenced and when any offeror was

first identified. You should contact the Panel's Market Surveillance Unit on

+44 (0)20 7638 0129 if you are in any doubt as to whether you are required to

make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website and hard copies

A copy of this announcement and the documents required to be published by Rule

26 of the Code will be made available, subject to certain restrictions relating

to persons resident in Restricted Jurisdictions, on DNO's website at

www.dno.no/en/investor-relations/offer_announcement_26November. For the

avoidance of doubt, the contents of such website are not incorporated into and

do not form part of this announcement.

You may request a hard copy of this announcement by contacting Equiniti Limited

on 0333 207 6399 or +44 121 415 0973 (if calling from outside the UK). Lines are

open from 8.30 a.m. to 5.30 p.m. (UK time) Monday to Friday (excluding English

and Welsh public holidays). Calls to the +44 121 415 0973 from outside the UK

will be charged at the applicable international rate. Please note that calls may

be recorded and randomly monitored for security and training purposes. Please

note that Equiniti Limited cannot provide advice on the merits of the Offer nor

give financial, tax, investment or legal advice. Alternatively, you may request

a hard copy of this announcement by submitting a request in writing to Equiniti

Limited at Corporate Actions, Equiniti Limited, Aspect House, Spencer Road,

Lancing, West Sussex BN99 6DA. If you have received this announcement in

electronic form, copies of this announcement and any document or information

incorporated by reference into this document will not be provided unless such a

request is made.