DNO ASA — M&A Activity 2022

Aug 22, 2022

DNO Enters Transaction Agreement to Acquire Assets in West Africa; Issues Call for Extraordinary General Meeting of Shareholders

DNO Enters Transaction Agreement to Acquire Assets in West Africa; Issues Call for Extraordinary General Meeting of Shareholders

22 August 2022 - DNO ASA, the Norwegian oil and gas operator, today entered into

a transaction agreement pursuant to which RAK Petroleum plc will transfer its

ownership of Mondoil Enterprises LLC to DNO. The all-share transaction comprises

Mondoil Enterprises' 33.33 percent indirect interest in privately-held Foxtrot

International LDC whose principal assets are operated stakes in offshore

production of gas and associated liquids in Côte d'Ivoire, forming a bridgehead

for DNO in West Africa.

"As DNO targets expansion beyond the Kurdistan region of Iraq and the North Sea,

the move into Côte d'Ivoire is an important first step into a highly prospective

region offering a broad set of growth opportunities through acquisition of

producing fields, development assets and exploration licenses," said Bjørn Dale,

DNO's Managing Director. The Company is already evaluating other opportunities

in the region, he added.

Foxtrot International holds a 27.27 percent interest in and operatorship of

Block CI-27 offshore Côte d'Ivoire containing the country's largest reserves of

gas, produced together with condensate and oil, from four offshore fields tied

back to two fixed platforms, meeting more than three-quarters of the country's

gas needs. Foxtrot International also operates an exploration license offshore

Côte d'Ivoire, Block CI-12, in which it holds a 24 percent interest.

In addition to the Foxtrot gas field, which began production in 1999, Block CI-

27 contains the Mahi gas field, developed in 2012, as well as the Marlin oil and

gas field and the Manta gas field which began production in 2016, following a

four-year, USD 1 billion development campaign by the joint venture. Gas produced

from these fields is transported by pipeline to fuel power stations in Abidjan

pursuant to a gas sale and purchase (take-or-pay) agreement put into force in

June 1999 and subsequently increased to 140 million cubic feet per day with a

base price of USD 6.00 per MMBtu, subject to an indexation formula which has

lifted the current price to USD 6.47 per MMBtu.

In early 2020, in connection with the signature of amendments and extension of

the production sharing contract and the gas sales agreement to 2034, the Block

CI-27 joint venture embarked on a two-year, USD 350 million field development

and onshore facilities construction project to supply gas to two new power

stations. Cash flow from operations have funded these capital investments. This

work is nearing completion following the drilling of three new and two side-

track wells; the last well in the program, a side-track, is currently

progressing.

This additional processing and well capacity are slated to increase gas supply

to over 230 million cubic feet per day, subject to electricity sector demand and

well performance. Drilling of up to another two wells over the period of the

extension is planned to maintain the higher production capacity of the license.

During the first half of 2022, gross sales averaged 200 million cubic feet of

gas and 1,500 barrels of oil and condensate per day. Oil and condensate (and

limited quantities of gas) are sold to the local refinery at arms-length prices.

www.foxtrot-international.com (http://www.foxtrot-international.com)

The effective date of the transaction is 1 January 2022 and the agreed

consideration is USD 117.25 million, covering transfer of 100 percent of Mondoil

Enterprises share capital valued at USD 95 million, comprising 9.09 percent

indirect working interest in Block CI-27 and 8 percent in Block CI-12 both held

through the ownership in Foxtrot International, and USD 22.25 million including

USD 21 million in cash and USD 1.25 million in working capital.

DNO will issue 78,943,763 shares as consideration at a share price of NOK 14.38

(rounded). The share price is based on the dividend adjusted weighted average

share price of DNO over the 15 trading days prior to the transaction agreement

date and the average USD/NOK exchange ratio reported by Norges Bank over the

same trading period.

As further announced by RAK Petroleum this morning, the transaction is subject

to RAK Petroleum distributing, by way of a capital repayment, its DNO

shareholding, including the transaction consideration shares, to its

shareholders. This process is expected to be completed in October 2022. DNO will

receive 26,269,183 number of own shares from its 5.1 percent shareholding in RAK

Petroleum which it will retain as treasury shares.

Completion of the transaction is conditional upon shareholder approval at an

extraordinary general meeting of DNO resolving to issue the consideration

shares. The formal notice of the extraordinary general meeting of DNO to be held

on 13 September 2022 is attached and provides further information on the

proceedings as well as a description of the terms and conditions of the

transaction agreement. RAK Petroleum, too, will hold an extraordinary general

meeting to seek shareholder approval of the capital repayment plan.

DNO has conducted a due diligence of the assets to be acquired supported by

third-party assessment of reserves and resources. The transaction has been

negotiated by the independent members of DNO's Board of Directors who, in

addition to the attractive business merits also considered the advantage of

increasing the Company's free float to attract institutional investors and of

augmenting DNO's gas exposure to reduce its carbon footprint. Pareto Securities

AS has been retained as financial advisor to DNO and has provided the

independent directors with a fairness opinion.

PricewaterhouseCoopers AS has, pursuant to section 10-2, cf section 2-6, of the

Norwegian Public Limited Companies Act, issued an independent expert statement

confirming that the value of Mondoil Enterprises at least corresponds to the

value of the consideration shares. The statement is appended to the attached

notice of the extraordinary general meeting.

The electronic system for notification of attendance and for registration of

advance votes at the general meeting is available at the following link:

Electronic r

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(https://investor.vps.no/gm/logOn.htm?token=0cadf7d29851c6d20660f1b0b922bfb20e43

dcb5&validTo=1665658800000&oppdragsId=20220819VPIQU0U0)gistration

(https://investor.vps.no/gm/logOn.htm?token=0cadf7d29851c6d20660f1b0b922bfb20e43

dcb5&validTo=1665658800000&oppdragsId=20220819VPIQU0U0).

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For further information, please contact:

Media: media@dno.no

Investors: investor.relations@dno.no

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DNO ASA is a Norwegian oil and gas operator focused on the Middle East and the

North Sea. Founded in 1971 and listed on the Oslo Stock Exchange, the Company

holds stakes in onshore and offshore licenses at various stages of exploration,

development and production in the Kurdistan region of Iraq, Norway, the United

Kingdom, Netherlands and Yemen.

This announcement is considered to include inside information pursuant to the EU

Market Abuse Regulation and is subject to the disclosure requirements pursuant

to section 5-12 of the Norwegian Securities Trading Act. This announcement was

published by Jostein Løvås, Communication Manager DNO ASA, at the date and time

set out above.