DNO ASA — Remuneration Information 2024

Mar 14, 2024

DNO ASA

2023 REMUNERATION REPORT

1. Introduction

This remuneration report (the "Report") provides an overview of remuneration of leading personnel in DNO ASA¹ for 2023. The Report is based on the Company's remuneration guidelines that was approved by shareholders at the Annual General Meeting on 25 May 2023 (the "Remuneration Guidelines"), published on the Company's website.

The main purpose of the Company's remuneration policy is to contribute to the implementation of the Company's overall business strategy in order to achieve the Company's long-term objectives and maximize value creation for the Company and its shareholders by attracting, retaining and motivating highly qualified employees.

This Report complies with the requirements under sections 6-16a and 6-16b of the Norwegian Public Limited Liability Companies Act (the "Companies Act").

The Report is available on the Company's website for ten years from the time of publishing.

2. Overview of financial year 2023

In a year marked by North Sea exploration success and Kurdistan export shutdown, DNO recorded 2023 revenues of USD 668 million and operating profit of USD 218 million. Across the portfolio net production averaged 52,600 barrels of oil equivalent per day (boepd), of which Kurdistan contributed 34,900 boepd, North Sea 14,200 boepd and West Africa 3,500 boepd.

The North Sea business delivered a string of discoveries last year including Carmen (DNO 30 percent), Norma (30 percent), Heisenberg (49 percent) and Røver Sør (20 percent). Successful 2023 appraisal moved previous discoveries Bergknapp (30 percent) and Ofelia (10 percent) closer to development, as DNO pushes for early commercialization of its discovered resources.

At yearend, gross production from the DNO operated Tawke license (75 percent) in Kurdistan had largely recovered from the March 2023 export pipeline shutdown and was averaging 80,000 boepd. Post pipeline shutdown, the Company's net entitlement share has been sold at prices in the low-to-mid USD 30s per barrel on a cash and carry basis and transported by traders by road tanker or pipeline to local refineries. Concurrently, Tawke license operational spend was cut by some 65 percent from pre-pipeline shutdown levels as drilling activity was curtailed and staffing levels reduced.

The balance sheet remains strong with a yearend equity ratio of 47 percent as the Company exited 2023 with cash deposits of USD 719 million and net cash of USD 153 million. The Company continues to engage in discussions related to recovery of arrears for past deliveries to the Kurdistan Regional Government and payment terms and conditions for any future oil exports, which in turn will drive investments in wells.

DNO remains stubbornly resilient in its second semi-centennium and will take new challenges head on. We will continue to grow a bold and nimble international oil and gas company with prioritization of shareholders who ultimately rank highest among our stakeholders. Last year, the Company returned USD 92 million to shareholders in the form of dividends and another USD 51 million through share buybacks. Furthermore, DNO has kept a flawless bond track record for more than 20 years with no waivers, no amendments and early repayments.

In sum, DNO continues to be a company characterized by low-cost production, successful exploration, attractive growth prospects and a robust balance sheet.

¹ DNO ASA and the companies in which it directly or indirectly owns are separate and distinct entities. However, in this report, the terms "DNO" and "Company" may be used for convenience where reference is made to those companies. Likewise, the words "we", "us", "our" and "ourselves" may be used with respect to the companies of the DNO Group.

3. Remuneration of the Board of Directors

The members of the Board of Directors of the Company (the "Board") receive remuneration as Board directors and as members of established Board committees. The general meeting approves the remuneration of the Board and the Board committees based on proposals presented by the Nomination Committee. The remuneration will normally be approved on an annual basis by the annual general meeting.

The remuneration of the Board members for financial year 2023 was based on the Remuneration Guidelines.

Board remuneration in 2023 and 2022:

Table 1a below provides information of total remuneration of each individual Board director and includes remuneration related to work undertaken in various Board committees.

Remuneration to the Board of Directors (USD thousand)			Fixed remuneration		Proportion
Name, Title	Year	Fixed board remuneration	Other benefits	Remuneration for committee work	Total	variable remuneration
Bijan Mossavar-Rahmani,	2023	1,117	200	10	1,327	15%
Executive Chairman	2022	910		10	920	0%
Gunnar Hirsti,	2023	69	12	14	95	13%
Deputy Chairman (1)	2022	59		13	72	0%
Elin Karfjell,	2023	58	10	7	75	14%
Director	2022	53		6	59	0%
Anita Marie Hjerkinn Aarnæs,	2023	58	10	7	75	14%
Director (2)	2022	33		5	38	0%
Najmedin Meshkati,	2023	36		4	40	0%
Director (3)	2022	0		0	0	0%
Lars Arne Takla,	2023	0		2	2	0%
former Deputy Chairman (4)	2022	24		2	26	0%
Shelley Watson,	2023	0		0	0	0%
former Director (5)	2022	48		12	60	0%
	2023	1,337	233	44	1,614	14%
Total	2022	1,127	0	48	1,175	0%

Separately, a fee of USD 3,483 was paid to Kåre Tjønneland and a fee of USD 2,181 was paid to Ferris J. Hussein for service on the Nomination Committee.

The column "Other benefits" relates to an extraordinary cash remuneration that was approved by shareholders at the Annual General Meeting on 25 May 2023.

(1) Deputy Chairman from June 2022.

(2) Board director and member of the HSSE committee from June 2022.

(3) Board director and member of the HSSE committee from June 2023.

(4) Former Deputy Chairman and member of the HSSE (until May 2022) and Nomination (until May 2023) committees.

(5) Former Board director and member of the audit and HSSE committees until November 2022.

Comparative information on the change of remuneration:

Table 1b below provides comparative information on the change of remuneration for each individual Board director over the five most recent financial year.

Increase/- decrease in total remuneration received from previous year (USD thousand and percentage)
Name, Title,		2019		2020		2021		2022		2023
	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %
Bijan Mossavar-Rahmani, Executive Chairman	-28	-3%	-53	-6%	72	9%	87	10%	407	44%
Gunnar Hirsti, Deputy Chairman	-2	-3%	-4	-6%	6	10%	7	10%	23	32%
Elin Karfjell, Director	-2	-4%	-4	-7%	5	9%	0	0%	16	27%
Anita Marie Hjerkinn Aarnæs, Director							35	-	37	96%
Najmedin Meshkati, Director									40	-
Lars Arne Takla, former Deputy Chairman	-2	-3%	-4	-6%	6	9%	-44	-63%	-24	-94%
Shelley Watson, former Director	-2	-4%	-4	-7%	12	22%	-6	-9%	-60	-100%

General note: The Board remuneration to the Executive Chairman is nominated in USD, while the remuneration to the other Board directors is nominated in NOK and has been converted to USD using the average exchange rate for the year (2023 average: USD/NOK 10.5635). See also specific comments above.

Synthetic shares to Bord of Directors:

Table 1c below provides information of synthetic share awards from 2020 and number of synthetic shares owned as of 31 December 2023 for each individual of the Bord of Directors.

Synthetic shares
Name, Title,
Synthetic shares owned				Award 2020 Award 2021 Award 2022 Award 2023		Unrestricted
as of 31 December 2023
Bijan Mossavar-Rahmani,	Number of shares	0	0	0	347,156	0
Executive Chairman	Value at vesting	Not appl.			Not vested
347,156 Synthetic Shares	(TNOK)		Not appl.	Not appl.		Not appl.
Gunnar Hirsti,	Number of shares	0	0	0	20,693	0
Deputy Chairman	Value at vesting	Not appl.	Not appl.	Not appl.	Not vested	Not appl.
20,693 Synthetic Shares	(TNOK)
Anita Marie Hjerkinn Aarnæs,	Number of shares	0	0	0	17,262	0
Director	Value at vesting		Not appl.	Not appl.	Not vested	Not appl.
17,262 Synthetic Shares	(TNOK)	Not appl.
Elin Karfjell,	Number of shares	0	0	0	17,262	0
Director	Value at vesting
17,262 Synthetic Shares	(TNOK)	Not appl.	Not appl.	Not appl.	Not vested	Not appl.
Najmedin Meshkati,	Number of shares	0	0	0	20,693
Director	Value at vesting
20,693 Synthetic Shares	(TNOK)	Not appl.	Not appl.	Not appl.	Not vested	Not appl.
423,066 Shares		0	0	0	423,066	0
Award dates					5/25/2023

4. Remuneration of Executive Management

The remuneration to Executive Management may consist of a fixed cash remuneration, variable cash remuneration, synthetic share scheme and pension benefits and other benefits and programs.

The remuneration of the Company's Executive Management, including the Managing Director, for financial year 2023 was based on the Remuneration Guidelines.

Remuneration of Executive Management in 2023 and 2022:

Table 2a below provides information of total remuneration of each individual leading person split by various components.

Remuneration to Executive Management (USD thousand)		Fixed remuneration				Variable remuneration		Proportion
Name, Title	Year	Base Salary	Other benefits	Pensio n expens e	One year variable bonus	Syntheti c shares	Total	variable remuneratio n
Chris Spencer,	2023	583	74	19	157	334	1,166	42%
Managing Director	2022	579	83	20	68	152	902	24%
Haakon Sandborg, Chief Financial Officer	2023	410	47	19	114	237	828	42%
	2022	426	44	20	33	67	591	17%
Geir Arne Skau,	2023	405	47	19	114	237	821	43%
Chief Human Resources and Corporate Services Officer	2022	378	68	20	37	68	571	18%
Sameh Hanna,	2023	483	161	-	62	-	707	9%
General Manager Kurdistan region of Iraq	2022	193	67	-	-	-	261	0%
Ørjan Gjerde,	2023	395	47	19	111	-	572	19%
General Manager DNO North Sea	2022	417	36	20	16	-	488	3%
	2023	2,275	376	78	557	808	4,093	33%
Total	2022	1,994	298	79	155	287	2,813	16%

On 7 September 2023, the Company announced that Chris Spencer has been appointed Managing Director of the Company as Bjørn Dale steps down as part of a planned management transition initiated last year. Mr. Spencer has been DNO's Chief Operating Officer (COO) since 2021. The Managing Director remuneration presented above represents Mr. Spencer's remuneration both in the role as the COO and the Managing Director during 2023. A remuneration of USD 1.7 million (not included in the above table) was in 2023 paid to Bjørn Dale, which included a severance pay portion.

On 15 January 2024, Ørjan Gjerde steps down as General Manager of DNO's North Sea Business Unit and is replaced by Elisabeth Femsteinevik (former Exploration Manager in DNO North Sea Business Unit).

Sameh Hanna was part of the Executive Management from August 2022.

Synthetic shares in the table above reflect synthetic shares that vested during the financial year. Other benefits include the pension share which exceeds the maximum legally allowable pension contribution.

Comparative information on the change of remuneration and Company performance:

Table 2b below provides comparative information on the change of remuneration for current Executive Management and former members of the Executive Management (shown as "Other") over the five most recent financial years compared to selected Company performance measures and average remuneration for employees in the Company.

Increase/- decrease in total remuneration received from previous year (USD thousand and percentage)
	2019		2020		2021		2022		2023
Name, Title,	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %
Chris Spencer, Managing Director	29	5%	86	14%	50	7%	156	21%	264	29%
Haakon Sandborg, Chief Financial Officer	-76	-12%	76	14%	-41	-7%	-2	0%	237	40%
Geir Arne Skau, Chief Human Resources and Corporate Services Officer	0	0%	191	89%	25	6%	142	33%	250	44%
Sameh Hanna, General Manager Kurdistan region of Iraq	0	0%	0	0%	0	0%	0	0%	446	171%
Ørjan Gjerde, General Manager DNO North Sea	0	0%	83	20%	65	13%	-73	-13%	83	17%
Other (1)	131	4%	168	5%	242	7%	969	38%	1,264	71%
Company performance:
Total revenues (USD million)	142	17%	-357	-37%	389	63%	373	37%	-710	-52%
EBITDA (USD million)	-89	-14%	-227	-41%	284	88%	413	68%	-636	-62%
Net production (kboepd)	23	27%	-10	-9%	-6	-6%	3	3%	-45	-46%
Average remuneration on a full-time equivalent basis of employees (USD thousand and percentage):
	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %	∆	∆ %
Employees of DNO ASA (excl. Executive Management) (2)	-34	-13%	-55	-24%	106	62%	64	23%	-55	-16%

The remuneration for all members of Executive Management is nominated in NOK, except for the remuneration to Sameh Hanna which was in AED. The remuneration in NOK and AED has been converted to USD using the yearly average exchange rate for the relevant year (2023 average: USD/NOK 10.5635 and USD/AED 3.671).

Comments on increase or decrease in total remuneration prior to reporting year are described in the 2022 remuneration report. Increase/decrease in remuneration compared to last year is shown in the table 2a above.

(1) The amount shown as other include at each yearend former members of the Executive Management who have been part of the Executive Management during the relevant year but are not a part of the Executive Management at the date of issuing this report. See table 2a above. (2) Calculation of average remuneration on a full-time equivalent (FTE) basis of employees (excluding Executive Management) is based on note 3 of the DNO Annual Report and Accounts 2023, parent company accounts (total reported payroll note 3 excluding remuneration to Executive Management divided

by total FTE excluding Executive Management).

Synthetic shares to Executive Management:

Table 2c below provides information of synthetic share awards from 2020 and number of synthetic shares owned as of 31 December 2023 for each individual of the Executive Management.

Synthetic shares
Name, Title, Synthetic shares owned as of 31 December 2023			Award 2020 Award 2021		Award 2022 Award 2023	Unrestricted
Chris Spencer	Number of shares	478,752	0	1,095,215	551,634	317,206
Managing Director 1,558,831 Shares	Value at vesting (TNOK)	5,533	Not appl.	Not vested	Not vested	Not appl.
Haakon Sandborg	Number of shares	59,193	146,354	774,786	179,234	38,974
Chief Financial Officer 876,996 Shares	Value at vesting (TNOK)	632	Not vested	Not vested	Not vested	Not appl.
Geir Arne Skau	Number of shares	59,597	0	768,600	162,977	5,887
Chief Human Resources and Corporate Services Officer	Value at vesting (TNOK)	637	Not appl.	Not vested	Not vested	Not appl.
678,859 Shares
Sameh Hanna	Number of shares	0	0	0	254,707	0
General Manager Kurdistan region of Iraq 254,707 Shares	Value at vesting (TNOK)	Not appl.	Not appl.	Not appl.	Not vested	Not appl.
Ørjan Gjerde	Number of shares	0	0	11,696	101,247	0
General Manager DNO North Sea 112,943 Shares	Value at vesting (TNOK)	Not appl.	Not appl.	114,855	994,246	Not appl.
3,482,336 Shares		597,542	146,354	2,650,297	1,249,799	362,067
Award dates		09-12-2020 20-02-2020 09-02-2020	5/20/2021	27-05-2022 09-03-2022	16-10-2023 10-10-2023 10-03-2023

The value of synthetic shares is shown in NOK thousand and is calculated based on awarded synthetic shares (excluding any dividend shares) multiplied by the Company's share price at vesting date, regardless of when these are settled.

5. Use of the right to reclaim remuneration

The Company may demand variable cash salary refunded to the same extent it may demand fixed cash salary refunded following expiry of the employment, typically in the event of erroneous payments or breach of contractual obligations. No remuneration has been reclaimed.

Auditor's assurance report 2023

Auditor's assurance report 2023

Auditor's assurance report 2023