A Brief Presentation	3
Contract Overview	4-5
Financial Summary 2009-2013	6
Board of Directors' Report 2013	7-11
Directors' Responsibility Statement	12
Accounts Fred. Olsen Energy Group	13-44
Consolidated Statement of Separate Income	13
Group Consolidated Statement of Comprehensive Income	14
Consolidated Statement of Financial Position	15-16
Consolidated Statement of Changes in Equity	17
Consolidated Statement of Cash Flows	18
Notes to the Consolidated Financial Statements	19-44
Accounts Fred. Olsen Energy ASA	45-56
Income Statement	45
Balance Sheet	46
Statement of Cash Flows	47
Notes to the Financial Statements	48-56
Auditor's Report	57-58
Corporate Governance	59-63
Corporate Social Responsibility Reporting	64-66
Addresses	68

A Brief Presentation

Fred. Olsen Energy ASA is listed on Oslo Stock Exchange and is a leading provider of exploration and development services to the oil and gas industry. The Company is based on more than 160 years experience within shipping and more than 40 years in off shore drilling, and provides competitive solutions to the benefi t of its customers, employees and shareholders.

(in transit to West Africa)

Revenues 2013

6 750	6 774		NOK mill
5 400
4 050
2 700
1 350
0							301

EBITDA 2013

3 402

Employees per 31.12.2013

1 500	1 445
1 200
900
600
300		Off shore drilling
0	174	Engineering and fabrication

Contract Overview

Name/			Built year/	Water
(Ownership)	Type	Location	upgrade	depth	Features
Bolette Dolphin (100%)	Gusto P 10 000	In transit to West Africa	2014	12 000 ft	285 t, 1100 t and 1*165 t deck cranes, 15 000 psi
Belford Dolphin (100%)	Drill ship	Mozambique 2000		10 000 ft	80 000 barrels storage 2*80 t deck cranes, 15 000 psi
Bollsta Dolphin (100%)	Moss maritime CS 60E	Under construction at	Hyundai Heavy Industries Co., Ltd.	10 000 ft	2*100 t deck cranes, 15 000 psi
Blackford Dolphin (100%)	Aker H-3 Enhanced	Brazil	1974/-08	7 000 ft	2*85 t deck cranes 15 000 psi
Bideford Dolphin (100%)	Aker H-3 Enhanced	Norway, North Sea	1975/-99	1 500 ft	145 t + 150 t deck cranes 10 000 psi
Borgland Dolphin (100%)	Aker H-3 Enhanced	Norway, North Sea	1976/-99	1 500 ft	145 t + 170 t deck cranes 15 000 psi
Bredford Dolphin (100%)	Aker H-3	Norway, North Sea	1976 /-81/-97/-01/-07	1 500 ft	2*50 t deck cranes 10 000 psi
Borgny Dolphin (100%)	Aker H-3	Brazil	1977 /-85/-91/-92/-97/-02 /-10	2 300 ft	2*50 t deck cranes 10 000 psi
Byford Dolphin (100%)	Aker H-3	UK, North Sea	1973 /-85/-90/-96/-98 /-10	1 500 ft	142 t + 153 t deck cranes 15 000 psi
Borgsten Dolphin (100%)	Aker H-3 Tender support vessel North Sea	UK,	1975 /-85/-95/-00/-13	1 500 ft	155 t +150 t deck cranes
Borgholm Dolphin Aker H-3 (100%)	Accommodation	UK, North Sea	1975/-02		1*37.5 t deck crane 314 beds in double cabins

1) Karoon 2) Anadarko 3) MPX 4) Capricorn (Cairn) 5) BP Class Renewal Survey / yard Mobilization Option

Financial Summary 2009-2013 Fred. Olsen Energy – Group

Income Statement Data All amounts in NOK million	2013	2012	2011	2010	2009
Revenues	7 021.5	6 876.8	6 470.9	6 018.6	6 600.0
Operating profit before depreciation (EBITDA)	3 358.3	3 533.5	3 540.7	3 400.6	3 981.2
Net result after tax (hereof majority interests)	1 739.0	1 823.9	2 086.1	1 938.3	2 749.0
Minority interests	-4.0	1.8	1.4	-3.3	5.1
Assets
Current assets	3 324.3	2 971.1	4 255.2	3 269.7	3 736.0
Long term assets	15 327.5	12 941.5	10 609.2	10 252.0	10 133.5
Total assets	18 651.8	15 912.6	14 864.4	13 521.7	13 869.5
Liabilities and equity
Interest bearing debt	4 826.6	4 927.2	5 750.2	5 539.0	6 721.7
Total liabilities	9 910.0	8 307.1	6 877.3	6 582.4	8 189.9
Equity of majority	8 741.8	7 605.5	7 981.2	6 934.0	5 671.0
Minority interests	0.0	0.0	6.9	5.3	8.7
Total liabilities and equity	18 651.8	15 912.6	14 865.4	13 521.7	13 869.5

Key Figures	Definitions	2013	2012	2011	2010	2009
Market capitalization	1	16 466.8	16 126.7	13 405.5	17 193.8	14 806.1
Net interest bearing debt	2	3 475.5	3 540.4	3 565.6	4 040.7	4 707.6
Enterprise value	3	19 942.3	19 667.1	16 971.1	21 234.5	19 513.7
Debt/Book equity ratio		0.55	0.65	0.72	0.80	1.19
Debt/Market capital ratio		0.29	0.31	0.43	0.32	0.45
Current ratio	4	0.65	0.88	2.05	1.66	1.52
EBITDA margin	5	47.8 %	51.3 %	54.7 %	56.5 %	60.3 %
Average number of shares outstanding		66.7 mill	66.7 mill	66.7 mill	66.7 mill	66.7 mill
Share price at year end	6	246.9	241.8	201.0	257.8	222.0
Earnings per share (EPS)	7	26.2	27.5	31.5	29.5	41.5
Diluted earnings per share		26.2	27.5	31.5	29.5	41.5
Capital expenditures per share		-40.2	-64.1	-22.0	-17.8	-34.1
Price/Earnings	8	9.4	8.9	6.4	8.9	5.4
Price/Book	9	1.9	2.1	1.7	2.5	2.6
EV/EBITDA		5.9	5.6	4.8	6.2	4.9

1 Closing price * number of shares at year-end

2 Short-term debt + Long-term debt - Cash and cash equivalents

3 Market capitalisation + Net interest bearing debt

4 Current assets / Current liabilities
5 EBITDA / Revenues
6 Last trade on last trading day of the year
7 Net profit / average number of shares outstanding
8 Closing price / EPS
9 Closing price / Book value per share

The operating activities of Fred. Olsen Energy ASA and its subsidiaries ("the Group") consist of offshore drilling as well as engineering and fabrication services. The parent company of the Group is Fred. Olsen Energy ASA ("the Company"), with its corporate headquarters located in Oslo, Norway. The Group manages its activities from offices in Norway, the UK, Singapore, South Africa, Mozambique and Brazil. Operation of the Group's offshore units is managed through Dolphin Drilling AS (100% owned) in Stavanger and Dolphin Drilling Ltd. (100% owned) in Aberdeen. The Harland & Wolff (H&W) shipyard (92.2% owned), located in Belfast, Northern Ireland, and related activities form the Group's engineering and fabrication division.

Gross revenues in 2013 were NOK 7 022 million, an increase of NOK 145 million from the previous year. The Group achieved earnings before depreciation and amortization, financial expenses and taxes (EBITDA) of NOK 3 358 million compared to EBITDA of NOK 3 533 million in 2012. The cash flow from operations amounted to NOK 3 262 million compared to NOK 3 876 million for 2012. Net interest bearing debt at 31 December 2013 for the Group was NOK 3 475 million.

Markets and prospects

The consolidation in the offshore drilling market continued into 2013 with stable demand experienced in our domestic UK and Norwegian markets as well as internationally in deepwater. The company was able to capitalise on this market position securing attractive long term contracts for the Blackford Dolphin in the UK during late 2013 as well as extension on contracts for Borgny Dolphin, Bredford Dolphin and Borgland Dolphin earlier in the year. This leaves the company with a strong contract portfolio with only one unit, the Borgny Dolphin due available before the end of 2014. By year-end the fleet contract backlog was 32 months (36 months in 2012). The secured contract value for the fleet as per 31 December 2013 was approximately USD 4.7 billion (USD 5.1 billion in 2012).

Throughout 2013 the contracting activity dropped quarter by quarter in all market segments. This development was mainly driven by the Exploration and Production companies starting to cut back on their spending plans, combined with the same companies having already secured strategic rig capacity. The most recent market fixtures is indicating some softening of rates and an acceptance of shorter term contracts.

It is expected that these market conditions will continue through 2014 and possibly into 2015. The need for operators to sustain or grow production levels will trigger an increased contracting activity in due course. This is likely to be aided by an expected increase in development drilling for deepwater in particular. The UK and Norwegian markets are expected to experience a more limited impact of the recent slowdown, partly because demand is relatively robust but also because a large proportion of the fleet is contracted on a multi-year basis.

The Group operates three deepwater units, including the newbuild Bolette Dolphin which was delivered in February 2014, and five mid-water semi-submersible drilling rigs in addition to one tender support vessel and one accommodation unit. Three of the semi-submersible drilling rigs are operating on the Norwegian Continental Shelf. A new semi-submersible drilling rig for harsh environment, Bollsta Dolphin, is scheduled to be delivered in 3Q 2015.

Offshore Drilling

The drilling activities generated revenues of NOK 6 774 million compared to NOK 6 485 million in 2012. Within the drilling segment, the Group achieved EBITDA of NOK 3 402 million. In 2012, the corresponding result was NOK 3 503 million.

Bideford Dolphin continued operations under a three-year drilling contract for Statoil ASA in 2013. In January 2014 a new threeyear extension of the current drilling contract was commenced with Statoil ASA. The operator has an option for a two-year contract extension. The unit is scheduled to undertake its fiveyear Class Renewal Survey at Coast Center Base (CCB) in second quarter 2014.

Borgland Dolphin continued operations in 2013 under the fouryear drilling contract with a consortium consisting of several oil companies, managed by Rig Management Norway AS. The contract will expire in April 2014. A new 18 well drilling contract, estimated to 3.5 years, was entered into with a Rig Management Norway consortium consisting of four oil companies. The unit is scheduled to undertake its five-year Class Renewal Survey fourth quarter 2014.

Bredford Dolphin completed operations under a ten well drilling program for Lundin Norge in September 2013, and commenced a new twelve well drilling campaign with an AGR coordinated group of four oil companies for operation on the Norwegian Continental Shelf. The contract is estimated to expire in January 2016. The unit completed its five-year Class Renewal Survey in August 2012.

Belford Dolphin continued operations under the four-year drilling contract with Anadarko Petroleum Corporation. The contract will expire end 2015. The unit is currently operating offshore Mozambique. The unit is scheduled to undertake its five-year Class Renewal Survey first quarter 2015.

Blackford Dolphin completed operations in Brazil in third quarter 2013 and started mobilization to UK to undertake its Class Renewal Survey (CRS) and upgrades at Harland & Wolff (H&W). Upon completion of the CRS the unit will drill one well for MPX North Sea Ltd in the UK sector and one well offshore Ireland for Capricorn Ireland Ltd (a wholly owned subsidiary of Cairn Energy PLC). In July 2013 a new nine-month contract was entered into with Nexen for operations in UK. In December 2013 a new 572 days contract was entered into with Chevron for UK operations. Chevron has an option to extend the contract for a further period of between 300 and 700 days.

Borgny Dolphin continued operations under a five-year drilling contract with Petrobras. In January 2013 the contract with Petrobras was extended with approximately one year and is now estimated to expire in September 2014. The unit is scheduled to undertake its five-year Class Renewal Survey second half 2014.

Byford Dolphin completed operations under a three-year drilling contract and commenced a new three-year drilling contract with BP Exploration Operating Co. Ltd., estimated to expire in April 2016. The unit is scheduled to undertake Class Renewal Survey, including installation of a new BOP, in first half 2015. The operator has an option for a three year contract extension.

Borgsten Dolphin completed is Class Renewal Survey, conversion and upgrade to become a Tender support vessel in February 2013. The unit then commenced a 40 months contract for Tender Support service at the Dunbar platform with Total E&P UK Ltd. The operator has an option for two six month periods.

Borgholm Dolphin commenced its accommodation contract with Shell after its five year Class Renewal Survey at the Fayard yard in Denmark. In December 2012 a new 9 months accommodation contract was entered into with BG with estimated commencement in August 2014.

The ultra-deepwater drillship, Bolette Dolphin was delivered from Hyundai Heavy Industries Co., ltd in Korea in February 2014. The unit is mobilizing to West Africa to commence a fouryear drilling contract with Anadarko Petroleum Corporation in second quarter 2014.

The harsh environment ultra-deepwater semi-submersible drilling rig Bollsta Dolphin, currently under construction at Hyundai Heavy Industries Co., ltd in Korea, is scheduled to be delivered third quarter 2015 and after mobilization commence a five-year drilling contract with Chevron North Sea Limited.

Engineering and Fabrication

Total revenues within the engineering and fabrication division amounted to NOK 301 million and EBITDA was NOK - 43 million. In 2012, total revenues were NOK 392 million and EBITDA was NOK 30 million. The H&W yard continued its operations in engineering, ship repair and shipbuilding. The yard delivered in 2013 the sleeve cluster elements for Kværner Verdal AS and the floatation tanks in first quarter 2014. During the year several offshore renewable energy projects were delivered, including three foundations to support meteorological masts for Forewind and Seagreen through Universal Foundation AS. In addition the yard has provided services to some 23 vessels ranging from short duration emergency repairs to normal maintenance repair dockings.

The core workforce increased to 174 employees in 2013 (2012: 161). The company will continue to seek to secure contracts within renewal and offshore projects, in addition to shipbuilding, ship repair and engineering in the years to come.

Financial result and balance sheet at year end

Consolidated revenues of NOK 7 022 million represent an increase of 2% compared to 2012, reflecting increased revenues from offshore drilling services. EBITDA for the Group was NOK 3 358 million, a decrease of NOK 175 million compared to 2012. After depreciation and amortisation of NOK 1 424 million, the operating profit was NOK 1 935 million, compared to an operating profit of NOK 2 183 million in 2012. Net financial expenses were NOK 94 million, a decrease of 182 million from the previous year. Profit before taxes was NOK 1 841 million compared to NOK 1 907 million in 2012. The net profit for the year was NOK 1 735 million against NOK 1 824 million in 2012. At year-end, the Group had consolidated assets of NOK 18 652 million. The ratio of net interest bearing debt to total assets was 17% compared to 22% at the beginning of the year. The book value of the equity was NOK 8 742 million. Net cash from operating activities was NOK 2 947 million against NOK 3 581 million in 2012. Cash and cash equivalents decreased by NOK 36 million during the year, from NOK 1 387 million to NOK 1 351 million at the end of the year.

Fred. Olsen Energy ASA is a holding company and provides management services to the subsidiaries within the Group. The Company had revenues of NOK 8 million in 2013, compared to NOK 7 million in 2012. EBITDA for the year was negative NOK 70 million compared with negative NOK 45 million in 2012. Net profit was NOK 1 186 million compared to NOK 1 597 million in 2012. The decrease of NOK 411 million is mainly due to a group contribution of NOK 1 311 million compared to a group contribution of NOK 1 759 million in 2012. The annual accounts of the Company and the consolidated accounts are based on the assumption of continued operation.

International Financial Reporting Standards (IFRS)

The consolidated financial statements have been prepared in accordance with the Norwegian Accounting Act and International Financial Reporting Standards (IFRS) as adopted by EU and interpretations adopted by the International Accounting Standards Board (IASB). The accounts for the parent company have been prepared in accordance with the Norwegian Accounting Act.

Investment and capital resources

Capital expenditures amounted to NOK 2 684 million in the year compared to NOK 4 274 million in 2012. The capital expenditures were mainly related to the Group's investment in two newbuilds, of which the Bolette Dolphin was delivered in first quarter 2014 and the Bollsta Dolphin which is scheduled to be delivered in third quarter 2015, as well as Class Renewal Survey and upgrades for Borgsten Dolphin, Borgholm Dolphin and Blackford Dolphin.

Per 31 December 2013, the Group's debt consisted of one credit facility with a consortium of banks and one bond loan. The facility is a combined term loan and revolving credit facility of initially USD 1 500 million, established in June 2012, with final maturity in 2017. The purpose of the facility was to refinance all of the Company's bank loans at that time. The outstanding amount under the credit facility at year-end was USD 583 million. The bond loan (FOE 04) of NOK 1 400 million was raised in the Norwegian bond market in May 2011 and has final maturity in May 2016. The bond loan (FOE 05) of NOK 1 100 was raised in the Norwegian market in February 2014 and has final maturity in February 2019. See also note 23 page 44.

Research and development activities

The Group's research and development activities are an integrated part of the ongoing operations and are being carried out through cooperation with various engineering- and equipment supply vendors. The Group constantly monitors and evaluates new drilling rig related technology, including those materializing through the operations and project developments. Expenditures on research activities, undertaken with the prospect of gaining technical know-how and understanding, are recognized in the income statement as incurred expenses.

Financial risks

The Group is exposed to certain financial risks related to its activities. These are mainly foreign exchange risks, interest rate risks and credit risks. The Group continuously monitors and manages its financial risks by hedging its exposure. See also note 13.

Liquidity risk

The outstanding under the bank facility at year-end was USD 583 million. The Company is in compliance with all covenants in its loan agreements. See also note 13 for further details.

Foreign exchange

The Group's financial statements are presented in NOK. The Group's revenues consist primarily of USD, NOK and GBP with USD as the most dominant currency. The Group's expenses are primarily in NOK, GBP and USD. As such, the Group's earnings are exposed to fluctuations in the currency market. The Group's future foreign exchange exposure is dependent upon the currency denomination of revenues and expenses, however, in the longer term, parts of the USD/NOK exposure are neutralized due to a majority of the Group's debt being denominated in USD.

Interest rate

The Group is exposed to fluctuations in interest rates for USD. At 31 December 2013 approximately 6% of the Group's interest expense was based on fixed interest rate swap agreements. The remaining portion of the debt was based on floating interest rates (USD LIBOR and NIBOR) plus a margin.

Credit risk

Due to the nature of the Group's operations, revenues and related receivables are typically concentrated amongst a relatively small customer base, including national oil companies, super majors, majors and independent oil companies. The Group continuously evaluates the credit risk associated with customers and, when considered necessary, requires certain guarantees. The Group's short-term investments are limited to cash deposits in the Group's relationship banks and derivative financial instruments are normally entered into with the Group's main relationship banks. As such, the Group considers its exposure to credit risk to be moderate.

Corporate Governance

The Company emphasizes the importance of maintaining and further developing its corporate governance policy and sup9

Board of Director's Report 2013 Fred. Olsen Energy Group and Fred. Olsen Energy ASA

ports the principles set out in the Norwegian Code of Practice for Corporate Governance. A description of the Company's compliance with the above recommended Corporate Governance principles is presented on pages 59 to 63.

The Board of Directors consists of five board members who are elected for a two-year period. All of the Directors are independent of the Company's management and three of them are independent also in relation to the Company's main shareholders Ganger Rolf ASA and Bonheur ASA. 40% of the Board of Directors are women. During 2013 the Board of Directors had 6 meetings.

The Board of Directors has appointed an Audit Committee consisting of two Directors, of which one is independent of the main shareholders of the Company. The charter of the Audit Committee is to assist the Board of Directors in fulfilling its responsibilities concerning the financial reporting process, internal controls, management of financial risks, the audit process and the Group's process for monitoring compliance with applicable laws and regulations.

The Board of Directors has appointed a Compensation Committee comprising four Directors, including the Chairman of the Board. The Compensation Committee discusses and recommends to the Board of Directors salary and benefits for the Chief Executive Officer and Senior Management, as well as the management incentive schemes for the Group. The compensation to the Chief Executive Officer comprises salary, pension scheme, company car and performance bonus.

Dividends will be distributed subject to earnings, the Company's investment plans, financial strategy, market conditions and approval by the shareholders. In addition, the Company may consider share buy-backs in accordance with the authorization to the Board of Directors from the Annual General Meeting. In 2007 the Company distributed dividends for the first time since the listing in 1997. The Company paid a dividend of NOK 10 per share for 2006 and stated that the Company will pursue the strategy to pay a dividend of NOK 10 per share. The Board has decided to propose to the Annual General Meeting in May 2014 a dividend payment of NOK 10 per share and an additional NOK 10 per share as an extraordinary dividend for the year 2013.

Share Capital Issues

The Annual General Meeting in May 2013 authorized the Board of Directors to issue up to 6 669 422 new shares in the Company through an equity issue and to issue up to 6 669 422 new shares by raising loans with the right to subscribe for new shares for a period of up to one year. At the time of approving final accounts, these authorizations have not been used. At year-end the Company owned 430 100 own shares (2012: 430 100). At 31 December 2013 the Company's share capital amounted to NOK 1 334 million, corresponding to 66 694 229 shares at par value NOK 20 each.

Safety, work environment, organization and equal opportunities The Group has a strong focus on health, safety and environment (HSE) for its employees, subcontractors and customers. Continuous efforts involve planning, training of personnel and careful selection of subcontractors. The Group maintains a "zero accident" objective and is closely monitoring its established procedures for operations, projects and work sites both onshore and offshore. The Total Recordable Incident (TRI) rate for offshore drilling and related services in 2013 was 6.0 per one million working hours, compared to 4.6 per one million working hours in 2012. TRI includes personnel injuries of the categories lost time incidents and medical treatment incidents.

Sick leave was 4.76% (2012: 3.94%) for the Group and 0.40% (2012: 1.17%) for the Company. The Group continues to focus on reducing sick leave. The Group aims to be a workplace with equal opportunities, offering challenging and motivating jobs to all personnel, regardless of nationality, culture, religion or gender. The composition of genders within the Group reflects the available recruitment base for offshore work, which traditionally has a higher proportion of men, being the nature of the offshore industry worldwide. However, the Group's policy is to offer equal opportunities for male and female. Two out of five members of the Board of Directors are women, including the Chairman of the Board. At year-end 2013 the Group had 1 619 employees, including 13 in the parent company. 146 of the employees were women and 11 percent of leading onshore personnel within the Group are women. A description of the Company's Corporate Social Responsibility is presented on pages 64 to 66.

Significant legal matters

During 2013 the Group had one legal dispute with business counterparts. See also note 18.

External Environment

The Group's operations involve activities that entail potential risks to the external environment. The Group is careful in its approach to the environment and continuously strives to reduce the use of hazardous chemicals and materials to minimize negative effects and seeks alternative products to safeguard the environment. The Parent Company acts as a holding company to the Group and has no activities that entail potential significant risks to the external environment.

Allocation of profit

The Board of Directors proposes an ordinary dividend of NOK 10 per share and an additional NOK 10 per share as an extraordinary dividend for the year 2013. Net profit after tax for the parent company was NOK 1 186 million, which is proposed allocated as follows:

For dividend	1 325 million
From retained earnings	139 million
Total allocated	1 186 million

Annual General Meeting

The date of the Annual General Meeting is scheduled for 27 May 2014.

Oslo, 31 December 2013 / 26 March 2014 Fred. Olsen Energy ASA

Anette S. Olsen	Jan Peter Valheim	Cecilie B. Heuch	Øivin Fjeldstad	Agnar Gravdal	Ivar Brandvold
Chairman					Chief Executive Officer

Directors' Responsibility Statement Fred. Olsen Energy – Group

Today, the Board of Directors and the Chief Executive Officer reviewed and approved the Board of Directors' report and the consolidated and separate annual financial statements for Fred. Olsen Energy ASA, for the year ending and as of 31 December 2013 (annual report 2013). Fred. Olsen Energy ASA's consolidated financial statements have been prepared in accordance with IFRSs and IFRICs as adopted by the EU and additional disclosure requirements in the Norwegian Accounting Act, and that should be used as of 31 December 2013. The separate financial statements for Fred. Olsen Energy ASA have been prepared in accordance with the Norwegian Accounting Act and Norwegian accounting standards as of 31 December 2013. The Board of Directors' Report for the Group and the parent company is in accordance with the requirements in the Norwegian Accounting Act and Norwegian accounting standard no 16, as of 31 December 2013.

To the best of our knowledge:

the consolidated and separate annual financial statements for 2013 have been prepared in accordance with applicable accounting standards
the consolidated and separate annual financial statements give a true and fair view of the assets, liabilities, financial position and profit (or loss) as a whole as of 31 December 2013 for the Group and the Company.
the Board of Directors' report for the group and the parent company includes a true and fair review of
the development and performance of the business and the position of the Group and the Company.
the principal risks and uncertainties the Group and the Company face.

Oslo, 31 December 2013 / 26 March 2014 Fred. Olsen Energy ASA

Anette S. Olsen	Jan Peter Valheim	Cecilie B. Heuch	Øivin Fjeldstad	Agnar Gravdal	Ivar Brandvold
Chairman					Chief Executive Officer

Consolidated Statement of Separate Income Fred. Olsen Energy – Group

For the years ended 31 December

Amounts in NOK 000's	Note	2013	2012*
Revenues	2,17,19	7 021 537	6 876 823
Materials		-102 108	-185 686
Salaries and other personnel costs	3,17	-1 906 898	-1 654 245
Other operating expenses	4,17	-1 654 200	-1 503 421
Operating profit before depreciation,
amortisation and net financial expenses		3 358 331	3 533 471
Depreciation and amortisation	7	-1 423 767	-1 350 657
Operating profit before net financial expense		1 934 564	2 182 814
Financial income		379 560	160 250
Financial expenses		-473 252	-436 402
Net financial expenses	5,13,17	-93 692	-276 152
Profit before tax		1 840 872	1 906 662
Income tax expenses	6	-105 849	-82 781
Profit for the year		1 735 023	1 823 881
Attributable to:
Equity holders of the parent		1 739 004	1 822 072
Non-controlling interest		-3 981	1 809
Profit for the year	11	1 735 023	1 823 881
Basic earnings per share	21	26.24	27.50
Diluted earnings per share	21	26.24	27.50

The notes represent an integral part of the consolidated financial statements.

* The 2012 result have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Group Consolidated Statement of Comprehensive Income Fred. Olsen Energy – Group

For the years ended 31 December

Amounts in NOK 000's	2013	2012*
Profit for the year	1 735 023	1 823 881
Items that will never be reclassified to statement of separate income
Actuarial losses on defined benefit pension plans	-3 726	-32 910
Income tax relating to components of other comprehensive income	-6 701	6 536
Items that are or may be reclassified to statement of separate income
Exchange differences on translation of foreign operations	736 931	-583 167
Total comprehensive income for the year	2 461 527	1 214 340

Attributable to:
Equity holders of the parent	2 462 246	1 214 959
Non-controlling interests	-719	-619
Total comprehensive income for the year	2 461 527	1 214 340

The notes represent an integral part of the consolidated financial statements.

* The 2012 result have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Consolidated Statement of Financial Position Fred. Olsen Energy – Group

Amounts in NOK 000's	Note	31.12.2013	31.12.2012*	01.01.2012*
Assets
Property, plant and equipment	7	15 064 680	12 684 546	10 449 194
Intangible assets	8	98 577	98 577	98 577
Other non-current assets	15,17	159	1 956	331
Deferred tax assets	9	164 075	156 441	154 362
Total non-current assets		15 327 491	12 941 520	10 702 464
Consumable spare parts		626 335	430 965	466 407
Prepayments and tax refunds		192 765	188 878	405 364
Trade and other receivables	13,17	1 154 121	964 502	1 199 774
Cash and cash equivalents	10	1 351 102	1 386 764	2 183 628
Total current assets		3 324 323	2 971 109	4 255 173
Total assets		18 651 814	15 912 629	14 957 637

The notes represent an integral part of the consolidated financial statements.

* The 1 January 2012 and 31 December 2012 balances have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

..continues on the next page

Fred. Olsen Energy – Group

Consolidated Statement of Financial Position

Amounts in NOK 000's	Note	31.12.2013	31.12.2012*	01.01.2012*

Equity
Share capital		1 333 884	1 333 884	1 333 884
Share premium		548 125	548 125	548 125
Translation reserves		-196 573	-933 504	-350 337
Reserve for own shares		-8 602	-8 602	-8 602
Retained earnings		7 064 925	6 665 612	6 193 388
Share of equity attributable to shareholders of the parent	11	8 741 759	7 605 515	7 716 458
Non-controlling interests		0	0	0
Total equity		8 741 759	7 605 515	7 716 458
Liabilities
Interest-bearing loans and borrowings	12,13,17	4 028 369	4 196 873	4 429 469
Employee benefits	15	737 807	654 597	613 176
Financial instruments	13	20 600	36 567	124 408
Total non-current liabilities		4 786 776	4 888 037	5 167 053
Interest-bearing loans and borrowings	12,13,17	798 181	730 312	1 318 394
Trade and other payables	17	265 032	206 274	220 557
Financial instruments	13	1 092	47 746	9 842
Tax payable		46 103	17 648	13 043
Other accrued expenses and deferred revenue	7	4 012 871	2 417 097	512 290
Total current liabilities		5 123 279	3 419 077	2 074 126
Total liabilities		9 910 055	8 307 114	7 241 179
Total equity and liabilities		18 651 814	15 912 629	14 957 637

The notes represent an integral part of the consolidated financial statements.

* The 1 January 2012 and 31 December 2012 balances have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Oslo, 31 December 2013 / 26 March 2014 Fred. Olsen Energy ASA

Anette S. Olsen	Jan Peter Valheim	Cecilie B. Heuch	Øivin Fjeldstad	Agnar Gravdal	Ivar Brandvold
Chairman					Chief Executive Officer

Consolidated Statement of Changes in Equity Fred. Olsen Energy – Group

				Reserve			Non
	Share		Share Translation	for own	Retained		controll.	Total
Amounts in NOK 000's	capital	premium	reserves	shares	earnings	Total	interests	equity

Balance at 1 January 2012	1 333 884	548 125	-350 337	-8 602	6 193 388	7 716 458	0	7 716 458
Total comprehensive income
for the period	0	0	-583 167	0	1 797 507	1 214 340	0	1 214 340
Dividends	0	0	0	0	-1 325 283	-1 325 283	0	-1 325 283
Balance at 31 December 2012 *	1 333 884	548 125	-933 504	-8 602	6 665 612	7 605 515	0	7 605 515
Balance at 1 January 2013	1 333 884	548 125	-933 504	-8 602	6 665 612	7 605 515	0	7 605 515
Total comprehensive income
for the period	0	0	736 931	0	1 724 596	2 461 527	0	2 461 527
Dividends	0	0	0	0	-1 325 283	-1 325 283	0	-1 325 283
Balance at 31 December 2013	1 333 884	548 125	-196 573	-8 602	7 064 925	8 741 759	0	8 741 759

The notes represent an integral part of the consolidated financial statements.

Consolidated Statement of Cash Flows Fred. Olsen Energy – Group

For the year ended 31 December

Amounts in NOK 000's	Note	2013	2012*
Cash flows from operating activities
Profit before income tax		1 840 872	1 906 662
Adjustment for:
Depreciation and amortisation	7	1 423 767	1 350 657
Interest expense	5	114 408	135 425
Loss/(gain) on sale of property, plant and equipment		-3 685	4 880
Unrealised gain on financial instruments		-64 439	-46 226
Changes in trade and other receivables		-125 489	245 594
Changes in trade and other payables		146 587	381 930
Changes in other balance sheet items		-70 329	-103 385
Cash generated from operations		3 261 692	3 875 537
Interest paid		-225 795	-203 418
Income taxes paid		-89 141	-91 197
Net cash from operating activities		2 946 756	3 580 922
Cash flows from investing activities
Purchases of property, plant and equipment		-1 251 637	-2 551 039
Proceeds from sale of equipment		6 460	5 773
Net cash used in investing activities		-1 245 177	-2 545 266
Cash flows from financing activities
Proceeds from interest bearing loans		660 491	4 530 825
Repayments of interest bearing loans		-1 143 316	-4 898 692
Dividends paid	11	-1 325 283	-1 325 283
Net cash used in financing activities		-1 808 108	-1 693 150
Net decrease in cash and cash equivalents		-106 529	-657 494
Cash and cash equivalents at 1 January		1 386 764	2 183 628
Effect of exchange rate fluctuations on cash held		70 867	-139 370
Cash and cash equivalents at 31 December	10	1 351 102	1 386 764

The notes represent an integral part of the consolidated financial statements.

* The 2012 result have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Notes to the Consolidated Financial Statements Fred. Olsen Energy – Group

Note 1 - Significant accounting policies

Fred. Olsen Energy ASA (the "Company") is a company domiciled in Norway.

The consolidated financial statements of the Company for the year ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as the "Group").

The financial statements were authorised for issue by the Directors on 26 March 2014.

Basis of accounting

The consolidated financial statements have been prepared in accordance with the Norwegian Accounting Act and International Financial Reporting Standards (IFRS) as adopted by the European Union.

Basis of preparation

The financial statements are presented in Norwegian Kroner (NOK), rounded to the nearest thousand. They are prepared on the historical cost basis except that derivative financial instruments are measured at fair value.

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed regularly. Actual results may differ from these estimates.

Judgements made by management in the application of IFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed below.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

The accounting policies have been applied consistently by Group entities.

Basis of consolidation

Subsidiaries

The consolidated financial statements include the Company and its subsidiaries (the Group of companies). Subsidiaries are entities controlled by the Group. See note 22 for details of the subsidiaries.

Transactions eliminated in consolidation

All material intra-group transactions, any unrealised income and expenses arising from intra-group transactions and intra-group balances have been eliminated in preparing the consolidated financial statements.

Foreign currency

Foreign currency transactions

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each entity are presented in NOK, which is the functional currency of the Company, and the presentation currency of the consolidated financial statements.

In preparing the financial statements of the individual entities, transactions in foreign currencies are translated at the foreign exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the functional currency at the foreign exchange rate at the balance sheet date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transactions. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated using the exchange rates ruling at the dates the fair value was determined.

Financial statements of foreign operations

The assets and liabilities of foreign subsidiaries are translated into NOK at the foreign exchange rate at the balance sheet date. The revenues and expenses of foreign subsidiaries are translated using average monthly foreign exchange rate, which approximates that foreign exchange rates on the dates of the transactions. Foreign exchange differences arising on translation are recognised directly as a separate component of equity.

Financial Instruments

Financial assets and financial liabilities are recognized on the Group's balance sheet when the Group becomes a party to the contractual provisions of the instruments.

Derivative financial instruments

The Group uses derivative financial instruments to manage its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are classified as at fair value through profit or loss.

Derivative financial instruments are recognised initially at cost. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on re-measurement to fair value is recognised in profit or loss. There are no derivatives to which hedge accounting is applied.

The fair value of interest rate swaps is the estimated amount that the Group would receive or pay to terminate the swap at the balance sheet date. The fair value of forward exchange contracts is their market price at the balance sheet date, being the present value of the quoted forward price as provided by financial institutions.

Trade and other receivables

Trade and other receivables are stated at their amortised cost less impairment losses.

Cash and cash equivalents

Cash and cash equivalents includes cash, bank deposits and other shortterm highly liquid assets that are readily convertible to known amounts of cash and which are subject to insignificant changes in value.

Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interestbearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

Trade and other payables

Trade and other payables are stated at cost.

Property, plant and equipment

Owned assets

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost of self-constructed assets and modifications includes the cost of material, direct labour and other direct attributable cost to bring the asset to a working condition for its intended use. Rigs and drillships under construction are accounted for using the percent of completion method and recognised if it is probable that the future economic benefits associated with the asset will flow to the entity and it's cost can be measured reliably.

Where components of an item of property, plant and equipment have different useful lives, they are accounted for separately.

Subsequent expenditures are capitalised when it is probable that they will give rise to future economic benefits. Other costs are recognised in the income statement as incurred.

Borrowing costs are capitalised as part of the cost on certain qualifying assets in accordance to IAS 23. A qualifying asset is one which necessarily takes a substantial period of time to be made ready for its intended use, which are generally assets that are subject to major development or construction projects.

Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful life of each component of property, plant and equipment. The estimated useful lives, residual values and decommissioning costs are reviewed at each financial year end. Any changes are accounted for prospectively as a change in accounting estimate. No decommissioning costs have been recorded to date, and the presence of any obligations is reviewed at each financial year end.

The estimated useful lives are as follows:

Rigs	20 to 25 years
Deepwater Drillship	25 years
Major components	5 to 15 years
Plant and Buildings	5 to 50 years
Machinery and Equipment	3 to 10 years

Repairs and maintenance

Costs for Class Renewal Surveys (CRS) on offshore units required by classification societies, are capitalised and depreciated over the anticipated period between surveys, generally five years. Other repair and maintenance costs are expensed as incurred.

Intangible assets

Goodwill

Goodwill represents amounts arisen on the acquisition of subsidiary, and is the difference between the cost of the acquisition and the fair value of identifiable net asset acquired.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to the cash generating unit and is tested annually for impairment.

Research and development

Expenditures on research and development activities, undertaken with the prospect of gaining technical knowledge and understanding, is recognised in the income statement as an expense as incurred.

Consumable spare parts

The Group categorizes spare parts into two groups, spare parts and spare equipment. A spare part is a consumable that is not depreciated, but expensed when used against repair and maintenance cost. A spare equipment is larger spare item that is recorded as a rig component and depreciated. Consumables are recorded at cost and are expensed when used.

Impairment

The carrying amounts of the Group's assets, other than inventories and deferred tax assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. When considering impairment indicators, the Group considers both internal (e.g. adverse changes in performance) and external sources (e.g. adverse changes in the business environment). These are analyzed by reviewing dayrates and broker valuations. The recoverable amount of an asset is the higher of its fair value less costs to sell and value in use. The value in use is calculated as the present value of the expected future cash flows for the individual units.

The value in use is used for the annual impairment test for goodwill, which is the present value of the future cash flows from continuing use and ultimate disposal expected to be derived from the cash generating unit that includes goodwill, which is Dolphin Drilling AS, representing the Group's North Sea activities on the Norwegian continental shelf. The discount rate used in the calculations is based on a risk-free rate and a market risk premium.

An impairment loss is recognised if the carrying amount of an asset exceeds the recoverable amount.

Employee benefits

Pensions

The Company and certain of its subsidiaries have pension plans for employees which provide for a defined pension benefit upon retirement. The benefit to be received by employees generally depends on many factors including length of service, retirement date and future salary increases. The Group's net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their services in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date reflecting the maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary.

Re-measurements of the net defined benefit liability, which comprise actuarial gains and losses, are recognised in other comprehensive income (OCI).

In addition, employees of other subsidiaries are covered by multi-employer pension plans administered by trade unions and by plans administered by related companies. Costs related to these plans are expensed as incurred.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Revenue

Charter rate contracts

Revenue derived from charter-hire contracts or other service contracts is recognised in the period that services are rendered at rates established in the relevant contracts. Certain contracts include mobilisation fees payable at the start of the contract. In cases where the fee covers a general upgrade of a rig or equipment which increases the value of the rig or equipment beyond the contract period, the fee is recognised as revenue over the contract period whereas the investment is depreciated over the remaining lifetime of the asset. In cases where the fee covers specific upgrades or equipment specific to the contract, the mobilisation fee is recognised as revenue over the estimated contract period. The related investment is depreciated over the estimated contract period.

Long-term engineering and fabrication contracts

Revenues on long-term contracts are recognised using the percentage of completion method throughout the performance period of the contract when the outcome can be measured reliably. The percentage of completion is typically calculated based on the ratio of contract costs incurred to date to total estimated contract costs after providing for all known or anticipated costs. On certain contracts the Group may use the ratio of incurred to total estimated direct labour hours to determine the percentage of completion. Costs include material, direct labour and engineering. Selling, general and administrative expenses are charged to operations as incurred. The effect of changes in estimates of contract costs is recorded currently. An expected loss on a contract is recognised immediately in the income statement.

Costs and estimated earnings in excess of billings on uncompleted contracts represent revenues earned under the percentage of completion method but not yet billable under the terms of the contract. Amounts billed in advance of satisfying revenue recognition criteria on long term contracts are classified as billings in excess of costs and estimated earnings on uncompleted contracts.

Generally, contract revenues become billable upon the Group attaining certain contract milestones. The Group typically does not require collateral from customers except in situations where warranted due to assessments of risk factors.

Expenses

Operating lease expenses

Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease.

Net financing costs

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, interest receivable, foreign exchange gains or losses, and gains and losses on financial instruments.

Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised in OCI, in which case it is recognised in OCI.

Current tax is the expected tax payable on the taxable income for the year and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method. Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Segment reporting

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur

Notes Fred. Olsen Energy – Group

expenses, including revenues and expenses that relate to transactions with the other of the Group's component. The Group provides services and operates within the two operating segments; offshore drilling and engineering and fabrication. The operating segments' results are reviewed regularly by the Group's management to make decisions and assess its performance, and for which discrete financial information is available.

Earnings per share

Basic

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the Company and held as treasury shares.

Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has no dilutive potential ordinary shares outstanding.

Changes in accounting principles

The Group implemented IAS 19 Employee Benefits (as revised in 2011) as at 1 January 2013 with retrospective application, which changed the measurement principles of expected return on plan assets and removed the accounting policy choice for recognition of actuarial gains and losses using the corridor mechanism.

The following table summarizes the financial effects on implementation of the accounting principle:

	Impact of changes in accounting policies
	As previously		Restated	As previously		Restated
Amounts in NOK 000's	reported	Changes	01.01.2012	reported	Changes	31.12.2012
Pension assets	3 012	-2 904	102	1 121	646	1 767
Employee benefit liability	-248 288	-364 888	-613 176	-263 221	-391 376	-654 597
Deferred tax assets	58 209	96 153	154 362	56 365	100 076	156 441
Net decrease in retained earnings		-271 639			-290 654
Translation reserves	-350 337	-	-350 337	-936 782	3 278	-933 504
Retained earnings	6 458 153	-264 765	6 193 388	6 950 977	-285 365	6 665 612
Non-controlling interests	6 874	-6 874	-	8 567	-8 567	-
Net decrease in retained earnings		-271 639			-290 654

Changes in Group Income Statement and Comprehensive income:

	As previously		Restated
	reported	Changes	2012

Profit before tax	1 901 371	5 291	1 906 662
Tax	-81 264	-1 517	-82 781
Profit for the year	1 820 107	3 774	1 823 881
Actuarial losses on defined benefit pension plans	-	-32 910	-32 910
Income tax related to components of other comprehensive income	-	6 536	6 536
Exchange differences on translation of foreign operations	-586 752	3 585	-583 167
Total comprehensive income for the period	1 233 355	-19 015	1 214 340
Attributable to:
Equity holders of the parent	1 231 662	-16 703	1 214 959
Non-controlling interests	1 693	-2 312	-619
Total comprehensive income for the period	1 233 355	-19 015	1 214 340

New accounting policies

IFRS 13, Fair Value Measurement was effective 1 January 2013. IFRS 13 replaces the fair value guidance contained in individual IFRS with a single source of fair value measurement guidance including a "fair value hierarchy". The standard also requires additional disclosures that enable users to access the methods and inputs used to develop fair value measurements. The adoption of IFRS 13 did not result in material impact on the consolidated financial statements.

There have not been any new IFRS standards or interpretations issued after the completion of the annual consolidated financial statements for the year ended 31 December 2013 that have a significant impact on the Group's financial reporting.

IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12, Disclosure of Interests in Other Entities and the amendments to IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures must be adopted effective 1 January 2014. Given the nature of the Group's structure and investments activities, the adoption of these standards and amendments are not expected to have a material impact on the consolidated financial statements.

Accounting estimates and judgments

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

For accounting purposes the Group makes estimates and assumptions concerning the future. The resulting accounting estimates may differ from the eventual outcome, but are regarded as the best estimate at the balance sheet date. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

I) Income taxes

The Group is subject to income taxes in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognises liabilities for anticipated tax issues based on best estimate of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such difference will impact the income tax and deferred tax provisions in the period in which such determination is made.

II) Pension obligations

The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost for pensions include the discount rate. Any changes in these assumptions will impact the calculated pension obligations. The Group determines the appropriate discount rate at the end of each year. This is rate that used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. The rate used for Norwegian subsidiaries is based on 10 year government bonds or OMF rate. Beyond 10 years the rate has been based on an extrapolation of the government bond rate and long-term swap rates for the relevant period. Other key assumptions for pension obligation are based on current market conditions.

III) Estimates of fair value for rigs and drill ship

At each balance sheet date judgement is used to determine whether there is any indication of impairment of the Group fleet of rigs and the drill ship. If any such indication exists, the asset's recoverable amount is estimated. When considering impairment indicators, the Group considers both internal (e.g. adverse changes in performance) and external sources (e.g. adverse changes in the business environment). These are analyzed by reviewing dayrates and broker valuations. If an indicator of impairment is noted, further management estimate is required to determine the amount, if any, of impairment. In order to measure for potential impairment, the carrying amount of the rigs and drill ship would be compared to the recoverable amount, which is the value in use. The value in use is calculated as the present value of the expected future cash flows for the individual units, requiring significant management estimates of the proper discount rates as well as the length and amounts of cash flows. An impairment loss would then be recognised to the extent the carrying amount exceeds the recoverable amount.

IV) Estimated fair value of cash generating unit for impairment testing of goodwill

In accordance with the accounting policy the Group tests annually whether goodwill has suffered any impairment. The recoverable amounts of cash-generating unit have been determined based on a value-in-use calculation. This calculation requires the use of estimates and is based on assumptions that are consistent with the market valuation of the Group.

Note 2 - Segment reporting

Segment information is presented in respect of the Group's operating segments and is based on the Group's management and internal reporting structure. For each of the strategic business units, internal management reports are reviewed on a monthly basis.

Inter-segment pricing is determined on an arm's length basis.

Operating segments

The Group comprises the following operating segments:

Offshore drilling provides services to the offshore oil and gas industry. Fred. Olsen Energy ASA is included within the offshore drilling segment.
Engineering and fabrication provides engineering, fabrication, ship building and repair services for various offshore and onshore industries. In addition, the yard holds a waste management license and is used as logistics and assembly base for offshore windfarms.

Operating segments

				Engineering and
Amounts in NOK 000's		Offshore drilling		fabrication		Eliminations		Consolidated
	2013	2012*	2013	2012*	2013	2012*	2013	2012*
Revenues from external customers	6 773 688	6 485 109	247 849	391 714	0	0	7 021 537	6 876 823
Inter-segment revenues	0	0	53 378	0	-53 378	0	0	0
Total revenues	6 773 688	6 485 109	301 227	391 714	-53 378	0	7 021 537	6 876 823
							0	0
Operating expenses	-3 372 092	-2 982 033	-344 492	-361 319	53 378	0	-3 663 206	-3 343 352
Segment result before depreciation
and amortisation	3 401 596	3 503 076	-43 265	30 395	0	0	3 358 331	3 533 471
Depreciation and amortisation	-1 413 844	-1 342 920	-9 923	-7 737	0	0	-1 423 767	-1 350 657
Segment result	1 987 752	2 160 156	-53 188	22 658	0	0	1 934 564	2 182 814
Net financing costs	-95 778	-279 063	2 086	2 911	0	0	-93 692	-276 152
Income tax expenses	-105 849	-78 770	0	-4 011	0	0	-105 849	-82 781
Profit/(loss) for the period	1 786 125	1 802 323	-51 102	21 558	0	0	1 735 023	1 823 881
Segments assets	18 295 528	15 625 097	377 899	341 812	-21 613	-54 280	18 651 814	15 912 629
Segments liabilities	9 534 863	7 955 693	396 805	351 421	-21 613	0	9 910 055	8 307 114
Capital expenditures	2 641 206	4 256 034	42 343	18 055	0	0	2 683 549	4 274 089

Net cash from operating activities	2 942 857	3 572 881	3 899	8 041	0	0	2 946 756	3 580 922
Net cash used in investing activities	-1 202 834	-2 527 211	-42 343	-18 055	0	0	-1 245 177	-2 545 266
Net cash from financing activities	-1 808 108	-1 693 150	0	0	0	0	-1 808 108	-1 693 150

Geographical information

		Europe		Asia		Americas		Africa		Consolidated
	2013	2012*	2013	2012*	2013	2012*	2013	2012*	2013	2012*
Revenues from
external customers 1)		4 862 742 4 639 068	1 151	1 490	1 102 558 1 184 818		1 055 086 1 051 447		7 021 537 6 876 823
Capital expenditure	111 051	58 319		2 572 498 4 215 770	0	0	0	0	2 683 549 4 274 089

Of the total revenue in 2013, Norway and UK contributed 44% and 26% respectively (2012: 41% and 26%). Revenues from Statoil in 2013 constituted 26% (2012: 14%) and revenues from Anadarko constituted 15% (2012: 15%).

1) Based on location of units. Revenues in Asia are of administrative nature.

* The 2012 numbers have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Note 3 - Salaries and other personnel costs

Amounts in NOK 000's	2013	2012*
Salaries	1 426 337	1 174 260
Social security costs and employee taxes	200 481	185 262
Pension costs	149 686	137 863
Training	49 597	53 883
Temporary staff	136 416	99 905
Other	91 412	71 467
Capitalised personnel expenses	-147 031	-68 395
Total	1 906 898	1 654 245
Average number of employees	1 622	1 452
Number of employees at year end	1 619	1 536
Average man-labour year	1 933	1 795

Other includes insurance expenses for offshore and onshore personnel, health plan and other personnel expenses.

The costs of employee benefits that are incurred for employees working directly on the construction of assets have been capitalised and are included as part of the rig costs. See note 7.

* The 2012 pension cost has been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Note 4 - Other operating expenses

Amounts in NOK 000's	2013	2012
Repairs and maintenance on offshore units	520 403	526 655
Recharged expenses	256 252	228 123
Rig overheads	374 943	290 410
Travel	165 076	125 324
General operating expenses	48 633	51 047
Insurance	70 766	74 719
Provision for bad debt	3 831	9 785
Professional and operational fees	94 026	86 164
Catering costs	96 175	83 468
Property rental expenses	23 095	24 815
Loss on sale of assets	1 000	2 911
Total	1 654 200	1 503 421

Fees for audit and other services provided by the Group's auditor are as follows:

2013	2012
5 118	5 183
960	874
64	23
6 142	6 080

Notes Fred. Olsen Energy – Group

Note 5 - Net financial expenses

Amounts in NOK 000's	2013	2012
Financial income
Interest income	12 859	14 670
Gain on financial instruments	86 420	37 720
Foreign exchange gain	280 281	107 860
Total	379 560	160 250

Financial expense
Interest expenses	114 408	135 425
Amortised borrowing cost	33 033	21 830
Loss on financial instruments	49 098	74 407
Other financial expenses	69 372	55 879
Foreign exchange loss	207 341	148 861
Total	473 252	436 402
Net financial expense	-93 692	-276 152

Net financial expenses include non-cash interest on borrowings calculated using the effective interest rate method.

Gain on financial instruments in 2013 includes unrealised gain of NOK 62 million related to fixed interest contracts and NOK 24 million related to currency contracts where NOK 2 million were unrealised. (2012: unrealised gain of NOK 38 million related to fixed interest contracts).

Loss on financial instruments in 2013 relates to realised loss on fixed interest contracts of NOK 47 million (2012: NOK 63 million) and loss on currency contracts of NOK 2 million (2012: NOK 11 million)

The interest cost is net of capitalised interest costs of NOK 106 million (2012: NOK 68 million).

Note 6 - Income tax expenses

Amounts in NOK 000's	2013	2012*
Current tax expenses	112 936	80 414
Deferred tax expenses/(benefits)	-7 087	2 367
Total income tax expenses in income statement	105 849	82 781
Income tax relating to components of other comprehensive income	6 701	-6 536
Reconciliation of effective tax rate		2013
Profit before tax		1 840 872
Income tax using the domestic corporation tax rate	28.0 %	515 444
Permanent differences	2.2 %	40 279
Effect of foreign subsidiaries	-28.7 %	-528 152
Change in limitation of deferred tax assets related to tax loss carryforward	4.3 %	78 278
Effective tax rate	5.7 %	105 849
Reconciliation of effective tax rate		2012*
Profit before tax		1 906 662
Income tax using the domestic corporation tax rate	28.0 %	533 865
Permanent differences	0.1 %	1 419
Effect of foreign subsidiaries	-28.9 %	-551 112
Change in limitation of deferred tax assets related to tax loss carryforward	5.2 %	98 609
Effective tax rate	4.3 %	82 781

* The 2012 deferred tax expenses have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 1, page 22 for details.

Note 7 - Property, plant and equipment

	Rigs and	Machinery and	Plant, building
Amounts in NOK 000's	drillships	equipment	and land	Total

Cost
Balance at 1 January 2012	15 845 480	428 650	108 525	16 382 655
Acquisitions	4 215 262	52 210	6 617	4 274 089
Disposals	-93 160	-2 497	0	-95 657
Effect of movements in foreign exchange	-1 127 196	-11 895	-3 224	-1 142 315
Balance at 31 December 2012	18 840 386	466 468	111 918	19 418 772
Balance at 1 January 2013	18 840 386	466 468	111 918	19 418 772
Acquisitions	2 571 873	103 625	8 051	2 683 549
Disposals	-108 630	-5 956	-931	-115 517
Effect of movements in foreign exchange	1 750 887	38 744	8 445	1 798 076
Balance at 31 December 2013	23 054 516	602 881	127 483	23 784 880

Accumulated depreciation
Balance at 1 January 2012	5 509 635	361 393	62 433	5 933 461
Depreciation charge for the year	1 327 961	21 519	1 177	1 350 657
Disposals	-89 308	-1 469	0	-90 777
Effect of movements in foreign exchange	-446 945	-10 203	-1 967	-459 115
Balance at 31 December 2012	6 301 343	371 240	61 643	6 734 226
Balance at 1 January 2013	6 301 343	371 240	61 643	6 734 226
Depreciation charge for the year	1 391 016	31 369	1 382	1 423 767
Disposals	-106 445	-4 114	-931	-111 490
Effect of movements in foreign exchange	633 737	35 117	4 843	673 697
Balance at 31 December 2013	8 219 651	433 612	66 937	8 720 200
Carrying amounts

At 1 January 2012	10 335 845	67 257	46 092	10 449 194
At 31 December 2012	12 539 043	95 228	50 275	12 684 546
At 1 January 2013	12 539 043	95 228	50 275	12 684 546
At 31 December 2013	14 834 865	169 269	60 546	15 064 680

Interest cost of NOK 106 million (2012: NOK 68 million) has been capitalized to Bolette Dolphin and Bollsta Dolphin under construction. The Group's weighted average interest rate on current borrowings has been applied for the calculation.

The acquisitions include accruals of NOK 1.6 billion based on percent of completion of Bolette Dolphin and Bollsta Dolphin under construction. The total accruals are recorded under other accrued expenses and deferred revenue and amount to NOK 3.1 billion.

Decommissioning costs

There is no decommissioning liability on the drillship or the drilling rigs as there is no legal or constructive obligation to dismantle or restore the assets. In practice, assets of this nature are rebuilt when no longer useful, laid up in dry dock or scrapped. For a standard vessel special demobilising yards pay for a vessel to be scrapped per light displacement tonne (LDWT) of the vessel.

..the note continues on the next page

Residual values

The residual value is reviewed at each year end, with any change in estimate it is accounted for prospectively.

The most common method to estimate residual values for ships is to use scrap price which is publicly noted by brokers in USD per LDWT of a complete vessel with all normal machinery and equipment on board. This method is used to determine the residual value for the drillship Belford Dolphin. The estimated residual value for Belford Dolphin as at 31 December 2013 is USD 11.0 million. (2012: USD 13.8 million).

Drilling rigs are considerably more complicated to scrap than ships and have less metal and scrapable/recoverable material due to their construction, design and nature. The price that could be recovered from the sale for scrap is estimated to approximate the cost of extracting this scrap metal. Therefore, no residual value is recorded since if the assets were disposed of in their expected ages and conditions at the end of their useful lives, at current prices no material net amount is estimated to be recovered.

Useful lives

The useful lives of the assets are reviewed at each year end. Management has reviewed each of the rigs by expected usage and considered the scheduled 5 years Class Renewal Surveys going forward.

Borgsten Dolphin undertook a yard stay for conversion into a tender support vessel and an early Class Renewal Survey. This was completed early February 2013. Borgholm Dolphin completed its Class Renewal Survey early 2013.

Estimates of the lifetimes for 2nd generation rigs are based on the assumption that they will carry out their next forthcoming Class Renewal Survey and continue to operate five years thereafter. Belford Dolphin, Blackford Dolphin, Bideford Dolphin, Borgland Dolphin are either new or substantially upgraded, and have longer expected useful lifetimes than the 2nd generation rigs. Two more scheduled Class Renewal Surveys have been assumed followed by five years operation for Bideford Dolphin and Borgland Dolphin. Three more scheduled Class Renewal Surveys are assumed for Belford Dolphin. Blackford Dolphin completed its upgrade and refurbishment in August 2008 with an estimated lifetime of 25 years at the time.

	Estimates
	Remaining lifetime		Net book value as at
In million of NOK	as at 31 December 2013		31 December
		2013	2012
Belford Dolphin	16	1 101	1 048
Bideford Dolphin	11	574	568
Borgland Dolphin	11	748	755
Byford Dolphin	6	527	570
Borgny Dolphin	6	593	709
Borgsten Dolphin	5	590	636
Bredford Dolphin	9	1 116	1 140
Borgholm Dolphin	4	295	177
Blackford Dolphin	20	3 442	3 112
Bolette Dolphin (delivered February 2014)		3 978	2 748
Bollsta Dolphin (under construction)		1 871	1 076
Total rigs and drillship		14 835	12 539

Impairment

No impairment loss was recorded in 2013 or 2012.

Commitments

Commitments related to investments are approximately USD 531 million as at 31 December 2013 including USD 396 million related to Bollsta Dolphin and USD 24 million related to Bolette Dolphin under construction which where ordered in 2012 and 2011 respectively. Financing for the delivery of Bolette Dolphin was secured through the fleet refinancing in 2012.

Note 8 - Intangible assets

Goodwill

The intangible asset balance of NOK 98 577 consists entirely of goodwill relating to Dolphin Drilling AS, included in the offshore drilling segment.

Impairment

The Group performs an impairment test of the goodwill in December of each year. A value in use calculation is used for the impairment test, which is the present value of the future cash flows from continuing use and ultimate disposal expected to be derived from the cash generating unit which is Dolphin Drilling AS. Fair value is not readily determinable.

The value in use calculation was based on the following key assumptions.

Cash flows were projected based on operating cash flows from firm contract day rates and expected day rates less budgeted operating expenses for the rigs being operated by Dolphin Drilling AS which was projected over the remaining assets lives of the rigs. A zerogrowth rate was applied.
A discount rate of 8.1 % was applied in determining the recoverable amount of the unit.

The recoverable amount of Dolphin Drilling AS was estimated to be higher than its carrying amount and no impairment was required.

Sensitivity

Cash flows could vary significantly for Dolphin Drilling AS, however an impairment would still not be expected to be incurred due to the significant estimated recoverable amount exceeding the carrying amount.

Note 9 - Deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

		Assets		Liabilities		Net
Amounts in NOK 000's	2013	2012	2013	2012	2013	2012
Property, plant and equipment	-522	-13 678	0	32 449	-522	18 771
Provisions	-1 500	-21 691	0	0	-1 500	-21 691
Other items	-162 565	-158 039	512	4 588	-162 053	-153 451
Tax value of loss carry-forward recognised	0	-70	0	0	0	-70
Tax (assets)/liabilities	-164 587	-193 478	512	37 037	-164 075	-156 441
Set off 1)	512	37 037	-512	-37 037	0	0
Net tax (assets)/liabilities	-164 075	-156 441	0	0	-164 075	-156 441

1) Deferred tax assets and liabilities are offset only when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to income tax levied to the same taxable entity.

Unrecognised deferred tax assets:

Deferred tax assets have not been recognised in respect of the following items:

Amounts in NOK 000's	2013	2012
Deductible temporary differences	68 890	62 913
Tax losses	828 946	804 637
Other	0	35 722
Total unrecognised deferred tax assets	897 836	903 272

As at 31 December 2013, approximately NOK 1.1 billion of the tax losses carried forward are available to offset the taxable income for subsidiaries in UK and NOK 2.2 billion for subsidiaries in Norway, in total NOK 3.3 billion in tax losses carried forward for the Group. These losses are not recorded as a deferred tax asset due to uncertainty of the level of the future suitable taxable profits in taxable jurisdictions.

The tax losses carried forward have no expiry date.

Fred. Olsen Energy – Group

Notes

Note 10 - Cash and cash equivalents

Amounts in NOK 000's	2013	2012
Cash related to payroll tax withholdings	35 544	32 778
Other restricted cash	33 205	33 664
Total restricted cash	68 749	66 442
Unrestricted cash	1 282 353	1 320 322
Total cash and cash equivalents	1 351 102	1 386 764

Note 11 - Capital and reserves

Share capital and share premium

Par value per share	NOK 20
Number of shares authorized	73 363 651
Number of shares issued	66 694 229
Outstanding shares	2013	2012
As at 31 December	66 264 129	66 264 129

Translation reserves

This reserve represents exchange differences resulting from the consolidation of subsidiaries having different functional currencies.

Reserve for own shares

The Company held 430 100 shares as at 31 December 2013 (unchanged from 2012).

Dividend

The Board has decided to propose to the Annual General Meeting in May 2014 an ordinary dividend payment of NOK 10 per share and an extraordinary dividend payment of NOK 10 per share for the year 2013. This will amount to NOK 1 325.3 million based on outstanding shares as at 31 December 2013.

The Annual General Meeting in May 2013 approved the Board's proposal of an ordinary dividend payment of NOK 10 and an extraordinary dividend of NOK 10 per share for the year 2012. The payment was made in June 2013 and amounted to NOK 1 325.3 million (2012: 1 325.3 million).

Note 12 - Interest-bearing loans and borrowings

Amounts in NOK 000's					31.12.13	31.12.12
				Nominal		Nominal
	Currency	Interest rate	Maturity	value	Balance	value	Balance
Bond loan	NOK	3M Nibor + 4.25%	2016	1 400 000	1 393 233	1 400 000	1 387 633
Fleet loan USD 1 500 million facility	USD	Libor + margin 1)	2017	3 548 013	3 433 317	3 670 484	3 539 552
Total interest bearing loans and borrowings				4 948 013	4 826 550	5 070 484	4 927 185
Current interest bearing loans and borrowings					798 181		730 312
Non-current interest bearing loans and borrowings					4 028 369		4 196 873
Total interest bearing loans and borrowings					4 826 550		4 927 185

1) The fleet loan is based on USD Libor (1, 3 or 6 months) plus a margin.

Of the interest bearing debt of the Group at 31 December 2013, NOK 3 548 million or USD 583 million is denominated in US dollars (2012: NOK 3 670 million or USD 659 million), and NOK 1 400 million is denominated in NOK (2012: 1 400 million).

Per 31 December 2013 USD 270 million is undrawn and available under the credit facility for general corporate purposes.

Note 13 - Financial risk management

Capital management

The Group's objective is to have a sound financial position in order to maintain market confidence and sustain future development of the business. The Board monitors the capital structure and return on capital on a continuous basis, with the aim to maintain a strong capital base while maximizing the return on capital. The Board has since 2007 proposed a dividend on a yearly basis and has proposed extraordinary dividends from time to time..

The Company may purchase its own shares in the market within the authorization given by the Annual General Meeting. The Company does not have a formally defined share buy-back program however this is evaluated on a continuous basis.

The Group has the following financial covenants in its loan agreements:

Net debt/EBITDA to be less than 4.5x
Interest coverage to be higher than 2.5x
Minimum free cash of USD 30-50 million

The Group is in compliance with the covenants in all agreements.

Market risk

The Group is exposed to credit-, interest rate- and foreign currency risks in its operations. Derivative financial instruments are from time to time entered into to hedge against fluctuations in foreign currency rates and interest rate levels. The Group does not enter into commodity contracts.

Credit risk

Due to the nature of the Group's operations, revenues and related receivables are typically concentrated amongst a relatively small customer base of international oil and gas companies. The Group continually evaluates the credit risk associated with customers and, when considered necessary, requires certain guarantees, either in the form of parent company guarantees, bank guarantees or cash collateral. The Group's short-term investments are limited to cash deposits in the Group's relationship banks and derivative financial instruments are normally entered into with the Group's main relationship banks. As such, the Group considers its exposure to credit risk to generally be moderate.

At 31 December 2013 there was no significant concentration of credit risk. Maximum exposure to credit risk is reflected in the carrying value of each financial asset, including derivative financial instruments, in the balance sheet.

Amounts in NOK 000's	2013	2012
Loans and receivables	1 154 277	964 688
Cash and cash equivalents	1 351 102	1 386 764
Total	2 505 379	2 351 452

Receivables are to be collected from the following type of customers:

Amounts in NOK 000's	2013	2012
Loans to employees 1)	156	186
Customers	1 154 121	964 502
Total	1 154 277	964 688

1) Average interest rate for loans to employees was 2.3% in 2013 and 2.6% for 2012. Part of the amount contains rolling travel advances.

The ageing of trade receivables at the reporting date was:

	2013					2012
	Nominal value	Provision	Balance	Nominal value	Provision	Balance
Not due	961 169	0	961 169	779 435	0	779 435
Overdue 0-30 days	115 695	0	115 695	97 901	0	97 901
Overdue 30-90 days	2 439	0	2 439	2 546	0	2 546
Overdue 90-180 days	0	0	0	76	0	76
Overdue 180-360 days	0	0	0	0	0	0
Overdue > 360 days 1)	98 855	-24 037	74 818	131 514	-46 970	84 544
Total	1 178 158	-24 037	1 154 121	1 011 472	-46 970	964 502

1) see note 18

Liquidity risk

In June 2012, a credit facility with an original amount of USD 1.5 billion was established. The facility has final maturity in 2017 with quarterly instalments of USD 44.1 million, when fully drawn. In May 2011, the Group established a bond loan of NOK 1.4 billion with maturity in May 2016. The Group is in compliance with covenants in all loan agreements. The Group continuously evaluates the refinancing need and will carry out refinancing transactions from time to time. The overview of the Group's loans and adjacent repayment schedule is further detailed in note 12. The following are the contractual maturities of financial liabilities including interest payments.

Amounts in NOK 000's					Due in
		Nominal Contractual
31 December 2013	value 31.12.13	cash flows	2014	2015	2016	2017
Bond loan (NOK)	1 400 000	1 597 043	83 160	83 160	1 430 723	0
Fleet loan (USD)	3 548 013	3 816 557	909 819	881 914	854 009	1 170 815
Total interest bearing loans and borrowings	4 948 013	5 413 600	992 979	965 074	2 284 732	1 170 815
					Due in
		Nominal Contractual
31 December 2012	value 31.12.12	cash flows	2013	2014	2015	2016	2017
Bond loan (NOK)	1 400 000	1 690 144	86 240	86 240	86 240	1 431 424	0
Fleet loan (USD)	3 670 484	4 087 755	575 526	559 432	543 339	664 204	1 745 254
Total interest bearing loans and borrowings	5 070 484	5 777 899	661 766	645 672	629 579	2 095 628	1 745 254

Interest rate risk

The Group is exposed to fluctuations in interest rates for USD and NOK. The Group has historically used interest rate derivatives to achieve a mix of exposure to fixed and floating interest rate on its debt instruments. During the recent years, the Group has had up to approximately 50% of its interest expenses based on fixed rates, either as fixed rate loans or through interest rate derivatives. As per 31 December 2013 approximately 6% of outstanding debt was at fixed rate. At 31 December 2013 the Group's USD denominated debt amounted to USD 583 million, while the NOK denominated debt amounted to NOK 1 400 million. The debt with floating interest rate is based on USD Libor or Nibor plus a margin. USD 50 million is based on a fixed rate of 3.16% plus a margin, and was fixed for 10 years from 2009.

Net unrealized gain of NOK 62 million (2012: NOK 38 million) and realized loss of NOK 47 million (2012: NOK 63 million) was recorded as net financial expense in 2013 related to fixed rate agreements. The mark-to-market value of the interest rate swaps are measured as the difference between the agreed fixed rate and the current market interest rate with the corresponding maturity as the remaining fixed rate maturity.

Foreign currency risk

The Group is exposed to foreign currency risks related to its operations and debt instruments. The Group's financial statements are denominated in Norwegian kroner (NOK) and most of the subsidiaries use US dollar (USD) as their functional currency. Some subsidiaries also use the British Pound (GBP) as their functional currency. The Group's revenues consist primarily of NOK, GBP and USD with USD as the main currency. The Group's expenses are primarily in NOK, GBP and USD. As such, the Group's earnings are exposed to fluctuations in the foreign currency market. The Group's future foreign currency exposure is dependent upon the currency denomination of future operating contracts and denomination of operating expenses. In 2013, approximately 82% of revenues and 14% of operating expenses are in USD. In the longer term, parts of the USD/NOK exposure is neutralised due to a majority share of the Group's debt being denominated in USD. 71 % of total debt is denominated in USD, while 29% is denominated in NOK.

At 31 December 2013, the Group had outstanding currency derivative contracts for forward sale of USD 18 million towards GBP and USD 15 million towards NOK.

The hedging is structured as convertible forwards as follows on an average basis:

Currency	Total outstanding	Avg. forward rate	Avg. knock in rate	Expiry dates
GBP/USD	18 000 000	1.54	1.38	18.02-30.05.14
USD/NOK	15 000 000	5.97	6.83	05.02-06.08.14

USD will be sold at spot between forward price and knock-out level. If the spot rate touches the knock-out level the contract becomes a standard forward contract at forward rate, similarly one will receive forward rate if the spot rate is less favourable than the forward rate.

..the note continues on the next page

Notes Fred. Olsen Energy – Group

The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price. Net fair market value of currency forward contracts as per 31 December 2013 was NOK 8.3 million recorded as current assets (2012: NOK 5.8 million). A net gain of NOK 23 million related to foreign exchange contracts was recorded as financial income in 2013 (2012: loss of NOK 11 million).

Sensitivity analysis

In managing interest- and currency risks the Group aims to reduce the impact on its earnings from short-term fluctuations in interest rates and currency exchange rates. Over the longer-term changes in currency exchange rates and interest rate levels will have an impact on the Group's earnings.

Interest rate sensitivity

At 31 December 2013 it is estimated that 1 – one percent incremental change in USD LIBOR and NIBOR is estimated to have an effect on the net result of approximately NOK 31.7 million (2012: NOK 16.0 million), taken into account the fixed rate portion of the net debt.

The Group is exposed to fluctuations in the interest rates. At the reporting date the following table shows the amounts of financial instruments with fixed and variable interest:

Amounts in NOK 000's	2013	2012
Fixed rate instruments
Financial liabilities	-304 185	-1 982 400
Variable rate instruments
Bank deposits	1 351 102	1 386 764
Financial liabilities	-4 643 828	-3 088 084
Total variable rate instruments	-1 892 726	-1 701 320

Exchange rate sensitivity from operations

For the year 2013 a 10% increase in USD/NOK would increase the Group's profit by NOK 377 million while a 10% increase in GBP/NOK would decrease the profit by NOK 88 million.

Exchange rate sensitivity on balance sheet items and derivatives as at reporting date

At December 2013, an incremental change in the GBP/USD and the USD/NOK exchange rate will have the following impact on profit before tax due to the currency derivatives of USD 18 million which is sold against GBP and USD 15 million sold against NOK (please see section on foreign currency risk), accounts payable denominated in GBP, accounts receivables in USD and currency deposits where currencies differ from the various functional currencies:

Impact on profit in NOK	GBP/USD			USD/NOK
	2013		2012			2013		2012
% change in exchange rates	10%	-10%	10%	-10%	10%	-10%	10%	-10%
Through outstanding currency derivatives	30.0	-	37.2	-11.0	-	7.4	0	8.7
Through accounts payable	-2.7	2.7	-4.0	4.0	5.3	-5.3	1.3	-1.3
Through accounts receivable	-	-	-	-	36.1	-36.1	2.9	-2.9
Through currency deposit accounts	6.3	-6.3	2.8	-2.8	28.8	-28.8	31.7	-31.7
Total impact in NOK million	33.6	-3.6	36.0	-9.8	70.2	-62.8	35.9	-27.2

Fair values

The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

Amounts in NOK 000's	2013	2012
	Carrying amount	Fair value	Carrying amount	Fair value
Assets carried at fair value
Currency contracts	8 271	8 271	5 758	5 758
Assets carried at amortised cost
Trade and receivables	1 154 277	1 154 277	964 688	964 688
Cash and cash equivalents	1 351 102	1 351 102	1 386 764	1 386 764
Total	2 505 379	2 505 379	2 351 452	2 351 452

Notes Fred. Olsen Energy – Group

Amounts in NOK 000's	2013	2012
	Carrying amount	Fair value	Carrying amount	Fair value
Liabilities carried at fair value
Non-current liabilities
Interest rate swaps	20 599	20 599	36 567	36 567
Current liabilities
Interest rate swaps	-	-	47 747	47 747
Currency contracts	-	-	-	-
Total	20 599	20 599	84 314	84 314
Liabilities carried at amortised cost
Secured bank loans	3 433 317	3 548 013	3 539 552	3 670 484
Bond loan	1 393 233	1 400 000	1 387 633	1 400 000
Trade and other payables	265 032	265 032	206 274	206 274
Total	5 091 582	5 213 045	5 133 459	5 276 758

The gain or loss on re-measurement to fair value for the financial instruments stated at fair values is recognized in profit or loss.

The mark to market value on the interest swaps is derived from the interest rate difference between the fixed rate and the relevant market interest rate for the remaining maturity of the interest rate swap.

The Group is required to disclose the hierarchy of how fair value is determined for financial instruments recorded at fair value in the consolidated financial statements. The hierarchy gives highest priority to quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Level 2 includes assets and liabilities whose values are based on quoted prices in markets that are not active or model inputs that are observable either directly or indirectly.

	Level 1	Level 2	Level 3	Total
31 December 2013
Currency contracts	-	8 271	-	8 271
Interest rate swaps	-	-20 599	-	-20 599
Total	-	-12 328	-	-12 328
31 December 2012
Currency contracts	-	5 758	-	5 758
Interest rate swaps	-	-84 314	-	-84 314
Total	-	-78 556	-	-78 556

The fair value of currency contracts and interest rate swaps are based on banker quotes, based on similar contracts which are traded in an active market and quotes reflect the actual transaction in similar instruments.

Note 14 - Mortgages and guarantees

Amounts in NOK 000's	2013	2012
Interest bearing debt	3 548 013	3 670 484
Other guarantees and liabilities	33 205	33 664
Total	3 581 218	3 704 148
The net book value of assets pledged as security:
Rigs and drillship	8 096 769	7 829 369
Total	8 096 769	7 829 369

As a normal part of it operations, the Group has provided performance guarantees in relation to certain of its drilling contracts. The net book value of Bolette Dolphin will be pledged as security at delivery.

Note 15 - Employee benefits

Pension plans

Fred. Olsen Energy ASA including its subsidiaries Dolphin Drilling AS and Harland & Wolff Group Ltd/Harland & Wolff Heavy Industries Ltd have independent pension plans that provide employees with a defined benefit upon retirement. The employees participating in these plans are entitled to future pension payments based on length of service and salary upon retirement. The total number of employees involved in the pension plans as of 31 December 2013 was 687 and the number of pensioners was 2 039, of which the majority is related to Harland & Wolff. Each of these pension plans are operated independently of each other and have no recourse in case of underfunding to either other pension plans or other companies within the Group.

Characteristics of the plans:

Harland & Wolff Group Ltd's:

The pension scheme liabilities are spread mainly across the deferred and pensioner categories. The weighted average duration of the scheme's liabilities is 14.5 years. The scheme remains open to accrual for existing active members but is not open for new members. As of 31 December the active members are 62. Existing members (excluding Executive members) accrue an annual pension of 1/60th (to 1/30th depending on membership category) of final salary for each year of pensionable service, increasing in line with inflation while in payments. The scheme also provide 50% spouse's pension on the death of a member.

Norway:

Employees have the right to future pension benefits based on the number of contribution years and the salary level at the pensionable age. The retirement age is 67 years. The offshore personnel retire at age 60. The pension funds are administered by pension funds legally separated from the Group.

The pension plan for the Norwegian Group companies is in accordance with the Norwegian law concerning mandatory occupational pension (OTP).

Fred. Olsen Energy ASA has pension agreement for senior management, in which the beneficiaries will receive 70% of their final year salary with early retirement at the age of 65. This is unfunded pension obligations.

Employees not eligible for coverage under the defined benefit plans in the UK are eligible to participate in pension plans in accordance with local industrial, tax and social regulations. All of these plans are considered defined contribution plans. The Company's contributions to defined contribution plans for year ended December 31, 2013 and 2012 were NOK 12.7 million and NOK 10.2 million respectively. The Company's contribution to Norwegian seamen pension was NOK 16.8 million in 2013 and NOK 15.4 million in 2012.

The 2012 balances have been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). The status of the defined benefit obligations is as follows:

Amounts in NOK 000's	2013	2012
Present value of unfunded obligations	67 486	52 057
Present value of funded obligations	2 292 634	2 001 502
Total present value of obligations	2 360 120	2 053 559
Plan assets at market value	1 622 313	1 400 729
Net liability for defined benefit obligations	-737 807	-652 830
Hereof unfunded pension plans	-67 486	-52 057
Hereof funded pension plans	-670 321	-600 773
Net liability for defined benefit obligations	-737 807	-652 830
Other investments	0	1 767
Employee benefits	-737 807	-654 597
Balance at 31 December	-737 807	-652 830

Movements in the net liability for defined benefit obligations recognised in the balance sheet:

		Defined benefit		Fair value of		Net defined
Amounts in NOK 000's		obligation		plan assets		benefit liability
Funded	2013	2012	2013	2012	2013	2012
Balance at 1 January	-2 001 502	-1 904 897	1 400 729	1 340 397	-600 773	-564 500
Pension contribution	0	0	63 572	85 263	63 572	85 263
Benefits paid by the plan	85 598	78 475	-79 205	-70 305	6 393	8 170
Total	85 598	78 475	-15 633	14 958	69 965	93 433
Included in profit or loss:
Interest	-82 349	-77 184	58 110	57 283	-24 239	-19 901
Current service cost	-85 881	-82 436	0	0	-85 881	-82 436
Net pension cost	-168 230	-159 620	58 110	57 283	-110 120	-102 337
Included in other comprehensive income:
Actuarial gain/(loss) arising from:
Demographic assumptions	-114 002	0	0	0	-114 002	0
Financial assumptions	24 642	-53 012	48 461	21 840	73 103	-31 172
Experience adjustments	45 294	-4 283	0	0	45 294	-4 283
	-44 066	-57 295	48 461	21 840	4 395	-35 455
Foreign currency translation	-164 434	41 835	130 646	-33 749	-33 788	8 086
Balance at 31 December	-2 292 634	-2 001 502	1 622 313	1 400 729	-670 321	-600 773
Hereof Harland & Wolff Group Ltd	-1 503 486	-1 349 073	1 250 362	1 075 763	-253 124	-273 310
Amounts in NOK 000's
Unfunded					2013	2012
Balance at 1 January					-52 057	-48 572
Benefits paid by the plan					1 408	1 513
Included in profit or loss:
Current service costs					-6 519	-6 319
Interest on pension liability					-2 197	-1 622
Net pension cost					-8 716	-7 941
Included in other comprehensive income:
Actuarial gain/(loss) arising from:
Demographic assumptions					-8 429	0
Financial assumptions					1 423	7 956
Experience adjustments					-1 115	-5 013
					-8 121	2 943
Balance at 31 December					-67 486	-52 057
Total expense recognised in the income statement for all defined benefit plans:

Amounts in NOK 000's	2013	2012
Current service costs	92 400	88 755
Interest on obligations	84 546	78 806
Expected return of plan assets	-58 110	-57 283
Net pension cost for defined benefit plans	118 836	110 278
Hereof Harland & Wolff Group Ltd	17 562	14 021

..the note continues on the next page

Notes

Major categories of plan assets

	2013	2012
Equity instruments	36 %	31 %
Corporate bonds	36 %	43 %
Government bonds	12 %	11 %
Annuities	10 %	10 %
Real estate	4 %	4 %
Cash	2 %	1 %
Plan assets	100 %	100 %

98.7% of the equities and 77.1% of the bonds are quoted at bid prices. The annuities have been valued on a basis consistent with the valuation of the scheme`s liabilities. There are no investments in the Company or in property occupied by the Group.

Total present value of obligations

Amounts in NOK 000's	2013	2012
Employees	889 971	725 755
Deferred	573 001	530 087
Pensioners	897 148	797 717
Total present value of obligations	2 360 120	2 053 559

Assumptions used in the calculation of pension obligations are as follows:

	2013			2012
	UK	Norway	UK	Norway

Assumed salary increases	3.3%	5.0%	2.7%	5.0%-5.5%
Discount rates / return on assets	4.5%	4.0%	4.4%	3.9%

Sensitivity:	Increase in PBO 1)
Amounts in NOK 000's
Future salary and pension increase with 0.25%	-31 245
Discount rates / return on assets decrease by 0.25%	-100 583
Future mortality increase by 1 year	-104 195

1) Projected Benefit Obligation

Expected contributions to funded defined benefit plans in 2014 are NOK 80 million. Expected payments of benefits for the unfunded plans are in 2014 estimated to be NOK 1.3 million.

Risks:

The major risks for the defined benefit plans are interest rate risk, investment risk, inflation risk and longevity risk.

A potential risk for the Harland and Wolff Group PLC pension scheme may impact on the ability to meet the benefits payable and on the stability of future contributions. The current recovery plan started in March 2012 assumes that future experience will match the valuation assumptions and estimated to cover the deficit over 15 years. If future experience (for example investment returns lower than expected) is unfavourable the deficit will take longer than 15 years unless revised.

Note 16 - Rental & Leases

Leases

The Group has certain long-term operating leases expiring on various dates, some which contain renewal options.

Nominal accumulated non-cancellable operating lease rentals are as follows:

Amounts in NOK 000's	2013	2012

Less than one year	7 917	7 529
Between one and five years	16 142	17 232
More than five years	287 757	260 977
Total	311 816	285 738

The Group does not have any financial leases. The Group subsidiary Compact Properties (NI) Ltd. in Belfast has a property lease contract that expires in 2114 and is the major part of the above.

Note 17 - Related parties

In the ordinary course of business, the Group recognises revenues and expenses with related companies, which may have a significant impact on the Group's consolidated financial statements. The Group receives certain administrative and legal advisory services from Fred. Olsen & Co. The agreements are on arms-length terms and are subject to ordinary termination provisions. Other related parties relate entirely to Ganger Rolf ASA and Bonheur ASA which are the owners of a combined 51.92 % of the Group, and their subsidiaries and Fred. Olsen & Co. Revenues and purchases from such companies were as follows:

Amounts in NOK 000's	2013	2012
Revenues
Others	35 465	42 745
Total	35 465	42 745
Operating expense
Others	2 904	797
Fred. Olsen & Co.	6 794	6 212
Total	9 698	7 009
Accounts receivables
Other	855	20 528
Total	855	20 528
Accounts payable
Fred. Olsen & Co.	144	613
Other	915	105
Total	1 059	718
Loan to employees
Loan to employees	156	186
Total	156	186

1) Average interest rate for loans to employees was 2.3% for 2013 and 2.6% for 2012. Part of the amount contains rolling travel advances.

There are no loans to Senior Management.

Fred. Olsen Energy – Group

Notes

The remunerations of Board of Directors and Senior Management were as follows:

	Board of Directors
Amounts in NOK 000's	2013	2012
Remuneration	1 080	1 080
Total	1 080	1 080
	Senior Management

Amounts in NOK 000's	2013	2012
Salary	16 118	14 563
Bonus	7 225	3 347
Pension costs	1 031	836
Other	2 698	2 518
Total	27 072	21 264

Board
remuneration	Salary	Bonus	Other	Pension	Total

138	4 688	2 340	551	225	7 942
64	2 073	1 046	170	175	3 528
202	6 761	3 386	721	400	11 470
	3 106	1 685	1 239	166	6 196
	2 288	1 316	152	248	4 004
	1 873	321	202	-	2 396
	2 090	517	182	217	3 006
202	16 118	7 225	2 496	1 031	27 072

250					250
200					200
200					200
200					200
200					200
30					30
1 080					1 080

2012

Board
remuneration	Salary	Bonus	Other	Pension 1)	Total

138	4 154	1 110	552	207	6 161
65	1 890	494	144	160	2 753
203	6 044	1 604	696	367	8 914
	2 972	878	1 210	188	5 248
	2 186	598	114	194	3 092
	1 825	267	184	-	2 276
	1 536	-	111	87	1 734
203	14 563	3 347	2 315	836	21 264

250					250
200					200
200					200
200					200
200					200
30					30

1) Pension has previous years included pension cost. This has been changed to reflect the contributions to the plans. 2012 has been restated accordingly.

Total 1 080 1 080

Senior Management consists of Group management (Chief Executive Officer and Chief Financial Officer) and the Managing Directors in the subsidiaries, for a total of 6 employees.

The Management has a management cash bonus scheme. The beneficiaries of the scheme are senior management and certain key personnel. Annual payments under the scheme, maximised to one year's salary, are subject to the Group achieving certain predefined financial criteria, including achieved budget goals and development of the Company's share price. The Group has not any share based remuneration scheme or any termination agreements.

Guidelines for 2013

The Board of Directors of Fred. Olsen Energy ASA has a Compensation Committee comprising four Directors including the Chairman of the Board and two Directors independent of the main shareholders. The Compensation Committee discusses and recommends to the Board salary and benefits for the Chief Executive Officer and Senior Management as well as management incentive schemes for the Group.

The policy of Fred. Olsen Energy ASA is to offer competitive payments and benefits to Senior Management to attract qualified management within the Company's business segments. The Company seeks to apply competitive and motivating remuneration principles to attract, develop and retain highly qualified employees.

The salaries paid to the Senior Management are determined on the basis of the responsibility and complexity of the appointment in question. A part of the remuneration to the Senior Management is based on the Company's financial performance and related to achieved budget goals and the increase in market value of the shares for the Company.

The remuneration for 2013 has been in accordance with the statement presented at the Annual General Meeting in May 2013.

Fred. Olsen Energy – Group

Notes

Note 18 - Contingencies

Outstanding receivables from customers

As per 31 December 2013 the Group was involved in legal disputes with one specific customer with the claims in dispute amounting to USD 14.5 million plus interests and legal expenses.

The Group has made provisions of USD 4.0 million based on evaluations of the status of all the outstanding receivables.

Outstanding issues from suppliers

A Group Company is involved in customs issues in one of the countries of operation. This is not expected to have an effect on the accounts.

Note 19 - Uncompleted contracts

At 31 December 2013 the Group's engineering and fabrication division had uncompleted activities on various ship repair and manufacturing at Harland & Wolff.

Profit recognised of estimated earnings and net outstanding receivables on long term uncompleted contracts (with unconsolidated entities) are as follows:

Amounts in NOK 000's	2013	2012
Contract revenue during the period, external	247 849	391 714
Contract revenue during the period, internal	53 378	0
Contract cost incurred plus recognised profit on uncompleted contracts	258 865	242 258
Less progress billings to date	-260 222	-259 244
Deferred revenue, net	-1 357	-16 986

The deferred revenue is included in the accompanying balance sheet under the following captions:

2013	2012
5 690	2 471
7 047	19 457
-1 357	-16 986

Note 20 - Shareholder information

Shareholders holding more than 1% of the shares at 31 December 2013 are as follows:

Shareholder	Percent of shares	Number of shares
Bonheur ASA	25.96 %	17 314 382
Ganger Rolf ASA	25.96 %	17 314 382
Folketrygdfondet	4.09 %	2 725 400
Clearstream Banking S.A	2.41 %	1 609 339
JP Morgan Chase bank	1.87 %	1 249 676
State Street Bank and Trust Co.	1.78 %	1 188 084
JP Morgan Chase bank	1.42 %	948 999
State Street Bank and Trust Co.	1.27 %	844 388
Skandinaviska Enskilda Banken AB	1.25 %	831 232
Bank of New York Mellon	1.15 %	770 249
Svenska Handelsbanken AB	1.13 %	755 072
BNP Paribas Sec.Services S.C.A	1.05 %	699 925
Others	30.66 %	20 443 101
Total	100.00 %	66 694 229

Shares owned directly by the Company's directors and Senior Management at 31 December 2013:

Name	Title	Shares

Anette S. Olsen	Chairman	100 *)
Øivin Fjeldstad	Director	3 220
Agnar Gravdal	Director	10 000

*) Private Fred. Olsen related interests directly/indirectly hold a majority shareholding interest with the Company.

Note 21 - Earnings per share

The calculation of basic and diluted earnings per share is based on the following data:

Earnings
Amounts in NOK 000's	2013	2012
Earnings for the purpose of basic earnings per share	1 739 004	1 822 072
Effect of dilutive potential ordinary shares	0	0
Earnings for the purpose of diluted earnings per share	1 739 004	1 822 072
Number of shares
In 1000's	2013	2012
Weighted average number of ordinary shares for the purposes of basic earnings per share	66 264	66 264
Effect of dilutive potential ordinary shares	0	0
Weighted average number of ordinary shares for the purposes of diluted earnings per share	66 264	66 264
Earnings per share
	2013	2012
Basic	26.24	27.50
Diluted	26.24	27.50

Note 22 - Subsidiaries

The ownership percentage in subsidiaries companies as of 31 December 2013 was as follows:

		Shareholding and
Company	Jurisdiction	voting shares

Dolphin Drilling AS	Norway	100.0 %
Dolphin International AS	Norway	100.0 %
Blackford Dolphin Pte. Ltd.	Singapore	100.0 %
Bideford Dolphin Pte. Ltd.	Singapore	100.0 %
Borgland Dolphin Pte. Ltd.	Singapore	100.0 %
Borgsten Dolphin Pte. Ltd.	Singapore	100.0 %
Byford Dolphin Pte. Ltd.	Singapore	100.0 %
Borgny Dolphin Pte. Ltd.	Singapore	100.0 %
Dolphin Drilling Pte. Ltd.	Singapore	100.0 %
Borgholm Dolphin Pte. Ltd.	Singapore	100.0 %
Bredford Dolphin Pte. Ltd.	Singapore	100.0 %
Bolette Dolphin Pte. Ltd.	Singapore	100.0 %
Bollsta Dolphin Pte. Ltd.	Singapore	100.0 %
Dolphin Drilling Personnel Pte. Ltd.	Singapore	100.0 %
Dolphin Drilling Ltd.	Scotland	100.0 %
Dolphin Drilling Operations Ltd.	Scotland	100.0 %
Dolphin Mexicana AS	Norway	100.0 %
Dolphin Drilling South Africa (Proprietary) Ltd.	South Africa	100.0 %
Perforadora Dolphin Mexicana	Mexico	100.0 %
Dolphin Drilling Perfuracão Brasil Ltda.	Brazil	100.0 %
Dolphin Brasil Ltda.	Brazil	100.0 %
Dolphin Drilling Malta Ltd.	Malta	100.0 %
Atlan Shipping Co. Ltd.	Bermuda	100.0 %
Harland and Wolff Group PLC	Northern Ireland	92.2 %
Harland and Wolff Heavy Industries Ltd.	Northern Ireland	92.2 %
Compact Holdings (NI) Ltd.	Northern Ireland	100.0 %
Compact Properties (NI) Ltd.	Northern Ireland	100.0 %

Note 23 - Subsequent events

In February 2014, the new build ultra deepwater drillship, Bolette Dolphin, was delivered from Hyundai Heavy Industries Co., ltd, and commenced mobilisation to West Africa.

In February 2014, the Company raised a bond loan of NOK 1.100 million in the Norwegian bond market. The loan has five year maturity and a coupon of Nibor 3 months + 3.0%.

For the years ended 31 December

Amounts in NOK 000's	Note	2013	2012*
Revenues	15	7 674	6 826
Gain on sale of property	7	100	0
Salaries and other personnel costs	3	-58 363	-35 912
Other operating expenses	4	-18 917	-15 603
Operating loss before depreciation and net financial income		-69 506	-44 689
Depreciation and amortisation	7	-6 184	-6 060
Operating loss before financial income		-75 690	-50 749
Financial income		1 386 342	1 805 277
Financial expenses		-124 739	-156 966
Net financial income	5	1 261 603	1 648 311
Profit before tax		1 185 913	1 597 562
Income tax expense	6	0	0
Profit for the year		1 185 913	1 597 562
Proposed allocations:
Dividends		1 325 283	1 325 283
To/(from) other equity		-139 370	272 279
Total allocations		1 185 913	1 597 562

The notes represent an integral part of the financial statements.

* The result for 2012 has been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 2 for details.

Balance Sheet Fred. Olsen Energy ASA

As at 31 December

Amounts in NOK 000's	Note	2013	2012*
Assets
Property, plant and equipment	7	6 107	12 105
Investments in subsidiary companies	16	3 638 332	3 136 534
Other non-current assets	8, 15	32 989	511 282
Deferred tax assets	6	0	0
Total non-current assets		3 677 428	3 659 921
Other current assets		3 467	1 776
Trade and other receivables	9, 15	1 318 100	1 782 168
Currency derivatives	17	8 271	5 758
Cash and cash equivalents	10	213 575	93 199
Total current assets		1 543 413	1 882 901
Total assets		5 220 841	5 542 822
Equity
Share capital		1 333 884	1 333 884
Treasury shares		-8 602	-8 602
Share premium		548 125	548 125
Other equity		515 858	666 462
Total equity	11	2 389 265	2 539 869
Liabilities
Interest-bearing loans and borrowings	12	1 400 000	1 400 000
Other non-current liabilities	3	70 096	51 991
Total non-current liabilities		1 470 096	1 451 991
Trade and other payables	13, 15	250	204 156
Dividends	11	1 325 283	1 325 283
Other accrued expenses	14	35 947	21 524
Total current liabilities		1 361 480	1 550 963
Total liabilities		2 831 577	3 002 954
Total equity and liabilities		5 220 841	5 542 822

The notes represent an integral part of the financial statements.

* The balance per 31 December 2012 has been stated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 2 for details.

Oslo, 31 December 2013 / 26 March 2014 Fred. Olsen Energy ASA

Anette S. Olsen	Jan Peter Valheim	Cecilie B. Heuch	Øivin Fjeldstad	Agnar Gravdal	Ivar Brandvold
Chairman					Chief Executive Officer

Statement of Cash Flows Fred. Olsen Energy ASA

For the years ended 31 December

Amounts in NOK 000's	2013	2012*
Cash flows from operating activities
Profit before income taxes	1 185 913	1 597 562
Adjustment for:
Group contribution	448 773	-659 380
Depreciation and amortisation	6 184	6 060
Interest expenses	85 657	95 027
Unrealised currency loss / (gain)	-4 599	24 042
Changes in trade and other receivables	13 627	14 354
Changes in trade and other payables	8 763	1 600
Changes in other balance sheet items	11 440	8 559
Cash generated from operations	1 755 758	1 087 824
Interest paid	-86 295	-96 586
Net cash from operating activities	1 669 463	991 238
Cash flows from investing activities
Net purchase of property, plant and equipment	-187	-509
Investment in subsidiary	-8 558	0
Net cash used to investing activities	-8 745	-509
Cash flows from financing activities
Intercompany interest-bearing loans	-215 059	299 943
Dividend paid	-1 325 283	-1 325 283
Net cash used to financing activities	-1 540 342	-1 025 340
Net increase in cash and cash equivalents	120 376	-34 611
Cash and cash equivalents at 1 January	93 199	127 810
Cash and cash equivalents at 31 December	213 575	93 199

The notes represent an integral part of the financial statements.

* The result for 2012 has been restated to reflect the implementation of IAS 19 Employee Benefits (as revised in 2011). See note 2 for details.

Note 1 - Basis of presentation

Fred. Olsen Energy ASA (the Company) is domiciled in Norway. The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Norway.

The financial statements which have been prepared by the Company's Board of Directors and Management should be read in conjunction with the report of the Board of Directors and the Auditors report. The financial statements have been prepared in accordance with the requirements of the Norwegian Accounting Act.

Fred. Olsen Energy ASA is a company being consolidated into the Bonheur group of companies. Bonheur ASA has prepared consolidated financial statement and have business address Fred. Olsens gt. 2, Oslo.

The notes and accounting policies refer to the Company's financial statements unless specified otherwise.

Note 2 - Summary of significant accounting policies

Foreign currency

Gains and losses on transactions denominated in foreign currencies are included in financial income/(expense). Assets and liabilities are translated at the exchange rate on the balance sheet date.

Property, plant and equipment

Property, plant and equipment are recorded at cost and are depreciated on a straigt-line basis over 3-5 years.

Investments in subsidiaries

Investments in subsidiaries are accounted for using the cost method in the Company's accounts. The investments are valued at cost less any impairment losses. Write downs to fair value are recognised when the impairment is considered not to be temporary. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, if no impairment loss had been recognised.

Classification and valuation of other balance-sheet items

Current assets and current liabilities include items due within one year. Other assets and liabilities due after one year are classified as non-current assets or non-current liabilities. Current assets are valued at the lowest of cost and fair value. Current liabilities are valued at nominal value at the time of recognition.

Cash and cash equivalents

The cashflow statement is prepared in accordance with the indirect method. Cash and cash equivalents includes cash and bank deposits that are readily convertible to cash.

Non-current assets

The carrying amount of the Company's non-current assets, other than deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, each asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is determined by the higher of fair value or estimated future discounted cash flows. In estimating future discounted cash flows, certain assumptions are made concerning discount rates which vary depending on the asset, terms of relevant contracts, foreign currencies, useful life of the assets and market growth. Impairment losses are recognised in the income statement.

Financial instruments

Interest rate derivatives

The Company uses derivative financial instruments to manage the Group's exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Unrealised gains and loss on interest rate derivatives are recognised on a current basis.

Forward exchange contracts

The Company enters into forward currency contracts throughout the year to hedge the currency exposure on income, expenses, investments and debt in Great British pounds (GBP), United States dollars (USD) and Norwegian kroner (NOK). Unrealised gains/losses on foreign exchange contracts used to offset the effect of anticipated transactions are marked to market and recognised as financial income or expenses.

Income taxes

Deferred tax assets and liabilities are recognised for the future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the financial statements and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates as they apply to taxable income in the years in which the differences are expected to be recovered or settled. Deferred tax assets are recognised in the balance sheet to the extent that is more likely than not that benefits will be recognised.

Use of estimates

In the preparation of the financial statements, management is required to make estimates and assumptions affecting reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Pensions

The Company's pension plans for employees provide for a defined pension benefit upon retirement. The benefit to be received by employees generally depends on many factors including length of service, retirement date and future salary increases. The Company accounts for defined benefit pension plans in accordance with NRS 6A, which means that the company can elect to present pension liabilities in NGAAP accounts in accordance with IAS 19. Costs related to these plans are expensed as incurred. Amendments have been issued to IAS 19, which change the measurement principles of expected return on plan assets and remove the accounting policy choice for recognition of actuarial gains and losses using the corridor mechanism. The impact on the Company is quantified below.

Restated Statement of Financial Position

		Changes	Restated		Changes	Restated
Amounts in NOK 000's	31.12.2012	31.12.2012	31.12.2012	01.01.2012	01.01.2012	01.01.2012
Pension assets	1 121	646	1 767	3 012	-2 907	105
Employee benefit liability	-45 760	-6 231	-51 991	-38 705	-9 667	-48 372
Equity	2 545 454	-5 585	2 539 869	2 273 615	-12 574	2 261 041
Decrease in pension cost		441

The pension cost for defined benefit plans are estimated to be NOK 12 million in 2013 (2012: NOK 11.5 million).

Note 3 - Salaries and other personnel costs

Amounts in NOK 000's	2013	2012*
Salaries	36 691	18 421
Social security expenses	4 411	2 955
Pension costs	12 165	11 507
Travel expenses	3 091	2 493
Other	2 006	535
Total	58 363	35 912
Average number of employees	13	12

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

Salaries, remuneration and other personnel expenses to the Chief Executive Officer, Senior Management and Board of Directors, see note 17 for the Group.

Pension Plans

Fred. Olsen Energy ASA has pension plans that provide employees with a defined benefit plan upon retirement. The employees participating in these plans are entitled to future pension payments based on length of service and salary upon retirement. The total number of employees involved in the pension plans as of 31 December 2013 was 13. The pension plan assets consist primarily of bank deposits, investments in fixed income and equity securities. The pension plan for the Company is in accordance with the Norwegian law concerning mandatory occupational pension (OTP).

As of 01.06.2012 the defined benefit plan was closed for new members, and are included in the defined contribution plan.

The Company has an extended pension plan agreement for CEO and Senior Management, in which the beneficiaries will receive 70% of their final year salary at early retirement at the age of 65. This was until 31 December 2006 a funded pension plan. From 1 January 2007 this was changed to unfunded pension obligations.

The funded status of the defined benefit pension plans is as follows:

Amounts in NOK 000's	2013	2012*
Projected benefit obligation	93 545	72 064
Plan assets at market value	23 449	21 839
Net pension liability	-70 096	-50 225

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

At 31 December 2013 the pension liability are presented in the balance sheet as a pension liability of NOK 70.1 million. At 31 December 2012 the net pension are presented in the balance sheet as a pension asset of NOK 1.8 million and as a pension liability of NOK 52.0 million.

Assumptions used in the calculation of pension obligations are as follows:

	2013	2012*
Assumed salary increases	4.0 %	4.0 %
Discount rates	4.0 %	3.9 %
Expected rates of return on pension plan assets	4.0 %	3.9 %

Net periodic pension costs for defined benefit plans are as follows:

Amounts in NOK 000's	2013	2012*
This period's earned pensions	9 876	9 817
Interest expense on pension liabilities	3 089	2 332
Earnings on pension funds	-890	-642
Net pension cost for defined benefit plans	12 075	11 507
Net pension cost for defined contribution plans	90	0

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

Social security cost of pension cost is included in the calculation from the actuary, and is expensed in net pension cost.

The following loans were outstanding to employees of the Company:

Amounts in NOK 000's	2013	2012
Loan to employees	62	85
Total	62	85

The loans comply with Company law requirements and are adequately secured, when required.

Note 4 - Other operating expenses

Amounts in NOK 000's	2013	2012
General operating overheads	17 964	14 806
Property rental expenses	953	797
Total	18 917	15 603

Fees for audit (exclusive VAT) and other services provided by the Company's auditor are as follows:

Amounts in NOK 000's	2013	2012
Audit fees	1 409	1 371
Tax advisory services	351	23
Other non-audit services	44	294
Total	1 805	1 688

Note 5 - Financial income and expenses

Amounts in NOK 000's	2013	2012
Financial income
Interest income	7 313	12 189
Group contribution	1 310 607	1 759 380
Gain on foreign currency contracts	24 498	0
Other financial income	8 588	14 455
Foreign exchange gains	35 335	19 253
Total	1 386 342	1 805 277
Financial expense
Interest expenses	86 937	95 920
Loss on foreign currency contracts	1 921	11 187
Other financial expenses	4 210	3 630
Foreign exchange losses	31 671	46 230
Total	124 739	156 966

Net Financial income 1 261 603 1 648 311

The Board of Directors of the subsidiary Dolphin International AS has proposed a Group contribution to Fred. Olsen Energy ASA of NOK 1.2 billion. The Board of Directors of the subsidiary Dolphin Drilling AS has proposed a Group contribution to Fred. Olsen Energy ASA of NOK 93.9 million.

Interest income is related to return on cash and cash equivalents and loans to other companies in the Group.

Other financial expenses is primarily amortised borrowing costs and fees to the Oslo Stock Exchange.

Information regarding interest income and expenses from Group companies and other related parties is provided at note 15.

Note 6 - Taxes

Temporary differences between the book and tax basis of assets and liabilities, and related deferred taxes, are as follows:

Amounts in NOK 000's	2013	2012*
Temporary difference	-61 834	-40 720
Losses carried forward	-837 083	-966 004
Limitation of deferred tax assets	898 917	1 006 724
Net basis for deferred tax (assets)/liabilities	0	0

Deferred tax assets have not been recognised in respect of these items, because it is not probable that future taxable profits will be available against which the Company can utilize the benefits.

The provisions for income taxes are as follows:

Amounts in NOK 000's	2013	2012*
Profit before income tax	1 185 913	1 597 562
Change in temporary differences	21 115	-3 864
Permanent differences	-1 078 106	-1 593 416
Basis taxes payable	128 922	282
Tax rate	28 %	28 %

Effective tax rate:

Amounts in NOK 000's	2013		2012*
Expected income tax expense according to statutory tax rate (28%)	332 056	28 %	447 317	28 %
Permanent differences	-301 870		-447 990
Effect of tax losses utilised / not recognized	-30 186		672
Income tax	0	0 %	0	0 %

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

Note 7 - Property, plant and equipment

Amounts in NOK 000's	2013	2012

Cost
Balance at 1 January	31 490	30 981
Additions during the period	625	509
Disposals during the period	-550	0
Balance at 31 December	31 565	31 490
Accumulated depreciation
Balance at 1 January	19 385	13 325
Depreciation during the period	6 184	6 060
Disposals during the period	-111	0
Balance at 31 December	25 458	19 385
Net book value at 31 December	6 107	12 105

Note 8 - Other non-current assets

Amounts in NOK 000's	2013	2012*
Pension assets (see note 3)	0	1 767
Capitalised borrowing costs	6 767	9 567
Long-term receivables (see note 15)	26 222	499 948
Total	32 989	511 282

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

Note 9 - Trade and other receivables

Amounts in NOK 000's	2013	2012
Trade	0	15
Related parties (see note 15)	1 318 100	1 782 153
Total	1 318 100	1 782 168

Note 10 - Cash and cash equivalents

Amounts in NOK 000's	2013	2012
Payroll taxes	1 093	1 087
Total restricted cash	1 093	1 087
Unrestricted cash	212 482	92 112
Total cash and cash equivalents	213 575	93 199

Note 11 - Capital and reserves

Amounts in NOK 000's	Share capital	Treasury shares	Share premium	Paid in other equity	Other equity	Total
Balance at 1 January 2012*	1 333 884	-8 602	548 125	154 801	232 833	2 261 041
Net profit for the year	0	0	0	0	1 597 562	1 597 562
Actuarial gain on defined benefit pension plans	0	0	0	0	6 548	6 548
Proposed dividend	0	0	0	0	-1 325 283	-1 325 283
Balance at 31 December 2012*	1 333 884	-8 602	548 125	154 801	511 661	2 539 869
Balance at 1 January 2013	1 333 884	-8 602	548 125	154 801	511 661	2 539 869
Net profit for the year	0	0	0	0	1 185 913	1 185 913
Actuarial loss on defined benefit pension plans	0	0	0	0	-11 370	-11 370
Other changes	0	0	0	0	136	136
Proposed dividend	0	0	0	0	-1 325 283	-1 325 283
Balance at 31 December 2013	1 333 884	-8 602	548 125	154 801	361 057	2 389 265

* Restated. Opening balance 1 January 2012 are restated concerning certain employee benefits. See note 2 for details.

Treasury shares

The Company has not purchased any own shares in 2013 and at 31 December 2013 the Company holds 430 100 of its own shares.

Notes Fred. Olsen Energy ASA

Par value

The par value per share in the Company is NOK 20.

Dividend

The Annual General Meeting in May 2013 approved the Board's proposal of an ordinary dividend payment of NOK 10 per share and an extraordinary dividend of NOK 10 per share for the year 2012. The payment was made in June 2013 and amounted to NOK 1 325.3 million.

The Board has decided to propose to the Annual General Meeting in May 2014 an ordinary dividend payment of NOK 10 and an extraordinary dividend payment of NOK 10 per share for the year 2013. This will amount to NOK 1 325.3 million based on outstanding shares as at 31 December 2013.

Unrestricted equity

The unrestricted equity of the parent Company is as follows:

Amounts in NOK 000's
Share Premium	548 125
Other equity	361 057
Paid in other equity	154 801
Treasury Shares	-8 602
Total	1 055 381

Note 12 - Interest-bearing loans and borrowing

				Principal and interest payments
	Balance	Interest rate				2017 &
Amounts in NOK 000's	at 31.12.13	at 31.12.13	2014	2015	2016	Thereafter
Bond loan (NOK)	1 400 000	5.94%	83 160	83 160	1 430 723	0
Total parent company facilities	1 400 000		83 160	83 160	1 430 723	0

In May 2011 the Company completed a senior unsecured bond issue of NOK 1 400 million, with a coupon of 3 months NIBOR + 4.25%. The maturity date for the bond is 12th of May 2016. See also note 23 for the Group.

Note 13 - Trade and other payables

Amounts in NOK 000's	2013	2012
Trade	76	74
Related parties (note 15)	174	204 082
Total	250	204 156

See note 15 for additional information on balances with Group companies and other related parties.

Note 14 - Other accrued expenses

Amounts in NOK 000's	2013	2012
Accrued wages	23 792	9 345
Accrued interest	11 543	12 179
Other	612	0
Total	35 947	21 524

Note 15 - Related parties

In the ordinary course of business, the Company recognises revenues and expenses with related companies, which may have a significant impact on the Company's financial statements. The Company receives certain administrative and legal advisory services from Fred. Olsen & Co. The agreements are on arms-length terms and are subject to ordinary termination provisions. Other related parties relate entirely to Ganger Rolf ASA and Bonheur ASA which are the owners of a combined 53.4 % of the shares in the Company, and their subsidiaries and Fred. Olsen & Co.

Revenues, purchases, interest income and interest expenses from such companies were as follows:

Amounts in NOK 000's	2013	2012
Revenues
Subsidiaries	7 674	6 826
Total	7 674	6 826
Operating expenses
Subsidiaries	70	224
Other related parties	7 746	7 009
Total	7 816	7 233
Financial income
Subsidiaries	1 325 178	1 784 542
Total	1 325 178	1 784 542
Financial expense
Subsidiaries	1 277	859
Total	1 277	859
Revenues from subsidiaries are recharge of personnel expenses and administrative income. Financial income relates primarily to Group Contribution.
Amounts in NOK 000's	2013	2012
Other non-current assets
Subsidiaries	26 160	499 863
Other related parties	62	85
Total	26 222	499 948
Trade and other receivables
Subsidiaries	1 318 100	1 782 153
Total	1 318 100	1 782 153

The balance relates primarily to loans to subsidiaries and Group Contribution.

The subsidiaries will repay the loans based on the "pay-as-you earn" principle. The interest rate is based on market rate plus a margin.

Trade and other payables
Subsidiaries	30	203 469
Other related parties	144	613
Total	174	204 082

Note 16 - Shares in subsidiaries and other equity investments

			Amounts in NOK 000's
		% of holding &		Net profit		Historical Accumulated	Reversal of	Repaid	Book
Subsidiaries	Business Offices	voting shares	Equity	(loss)	cost	write downs	write downs	equity	value
Dolphin Drilling AS	Tananger, Norway	100 %	109 833	279 780	850 611	-555 693	140 000	-70 000	364 918
Dolphin International AS Oslo, Norway		100 %	7 898 589	1 731 296	2 717 264	0	0	0	2 717 264
Atlan Shipping Co. Ltd.	Hamilton, Bermuda	100 %	57 868	-86	907 492	-853 212	0	0	54 280
Dolphin Drilling
Perfuracao Brasil Ltda.	Macae, Brazil	2 %	-125 593	-56 913	72	0	0	0	72
Dolphin Drilling
Operations Ltd.	Aberdeen, UK	100 %	519 475	-5 087	501 798	0	0	0	501 798*
Total					4 977 237	-1 408 905	140 000	-70 000	3 638 332

* The shares in Dolphin Drilling Ltd. was converted from subsidiary loan to shares in subsidiary.

Note 17 - Financial instruments

The Company is exposed to interest rate- and foreign currency risks in its operations. Derivative financial instruments are from time to time entered to hedge against fluctuations in foreign currency rates and interest rate levels.

Interest rate risk

The Company may be exposed to interest rate risk and may use interest rate derivatives or fixed rate loans to achieve a satisfactory mix of exposure to fixed and floating interest rate on the Company's debt instruments. The Company had no interest derivatives at 31 December 2013 or 2012.

Foreign currency risk

At 31 December 2013 the Company had outstanding currency derivative contracts for forward sale of USD 18 million against GBP (2012: USD 40 million) and USD 15 million against NOK (2012: USD 10 million)

The hedging is structured as convertible forwards as follows on an average basis:

	Total outstanding	Avg. forward rate		Expiry dates

GBP/USD	18 000 000	1.54	1.38	18.02.-30.05.2014
USD/NOK	15 000 000	5.97	6.83	05.02.-06.08.2014

The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price. Net fair market value of currency forward contracts as per 31 December 2013 was NOK 8.3 million recorded as current asset (2012: NOK 5.8 million). A net gain of NOK 22.6 million related to foreign exchange contracts was recorded as financial income in 2013 (2012: net loss of NOK 11.2 million).

Auditor's Report

Corporate Governance

Implementation and reporting on corporate governance

High standards of Corporate Governance is a cornerstone of Fred. Olsen Energy. A strong Corporate Governance framework provides the guide to our overall approach to business operations, dealings and providing services to customers and adding shareholder value.

The Board of Directors in Fred. Olsen Energy continually develop and refine its Corporate Governance policy and strive to be in compliance with the Norwegian Code of Practice for Corporate Governance (NUES). The Corporate Governance is subject to an annual assessment of the Board of Directors. Corporate Governance instituted throughout our Company reflects the economy and industry we operate in.

The Corporate Governance chapter is structured in the same order as the Norwegian Code of Practice. In the Board of Directors Report, Fred. Olsen Energy is required to report our Corporate Governance in accordance with the Norwegian Accounting Act section 3-3b. We refer to this report in the Board of Directors report.

Business

According to the Articles of Association, the Company's purpose is to carry out shipping business, including the ownership and leasing of floating platforms and everything related thereto, including owning shares and interests in companies with similar or related businesses. In carrying out their duties, assignments or appointments for the Company, all employees are expected to follow high standards of ethical and nondiscrimination behaviour. The objectives of the company, as defined in its articles of association, are to own or carry out industrial and other associated businesses, management of capital, and other functions for the Group, and to participate in or acquire other businesses. The principal strategies of the Group are presented in the Annual Report. Each year, the Board of Directors evaluates the strategy, goals and guidelines of the Company through designated strategy processes. Information concerning the financial position and principal strategies of the Company, and any changes thereto is disclosed to the market in the context of the Company's quarterly reporting and in designated market presentations.

Equity and dividends

To the extent it is considered desirable; the Company may raise new equity in the capital market to strengthen its business within the offshore segment. In this regard the Board of Directors received an authorization from the Annual General Meeting in 2013 to increase the share capital by 6 669 422 shares through an equity issue and to increase the share capital by another 6 669 422 shares through convertible loans. This mandate expires at the next Annual General Meeting. When the General Meeting of shareholders considers whether or not to authorize the Board of Directors to carry out share capital increases for multiple purposes, each purpose must be considered separately by the meeting. At 31 December 2013, consolidated equity is NOK 8 742 million (NOK 7 606 million for 2012), which is equivalent to 47% (48%) of total assets. The Board of Directors considers this satisfactory. The Company's need for financial strength is considered at any given time in the light of its objectives, strategy and risk profile.

The Annual General Meeting authorized the Board in 2013 to purchase up to 10% of the company's own share capital, pursuant to Sections 9-2 onwards of the Public Limited Companies Act, in order to allow greater flexibility around managing the Company's capital structure. This mandate expires at the next Annual General Meeting. As at 31 December 2013 the Company held 430 100 shares of its own shares.

Dividends will be distributed subject to earnings, the Company's investment plans, financial strategy and approval by the shareholders. The Company may consider share buy-backs in accordance with the authorization to the Board of Directors from the Annual General Meeting. In 2007 the Company distributed dividends for the first time since the listing in 1997. The Company paid dividends of NOK 10 per share and stated that the Company will pursue the strategy to pay a dividend of NOK 10 per share subject to earnings, investment plans and financial strategy. The Board of Directors has decided to propose to the Annual General Meeting in May 2014 a dividend payment of NOK 10 per share as ordinary dividend plus an extraordinary dividend of NOK 10 per share for the year 2013.

Treatment of shareholders, transactions with close associates

The Company's shares are listed on Oslo Stock Exchange. Shares have been issued in only one share class. The Company's transactions in own shares will be carried out in the market at market price. All shares in the Company have equal rights and all shareholders have the right to participate in General Meetings.

There have been no share capital increases in the Company since the listing in 1997 except conversion of the convertible bond loan FOE 02 in the period 2005 to 2008. In a case where the preemptive right of existing shareholders is waived in connection with a capital increase a stock notice with the reasoning behind the proposal will be issued to the Oslo Stock Exchange.

Corporate Governance

In connection with transactions that are not immaterial between the Company and related parties (see note 17), a competent Board of Directors consisting of Board members independent of the Company's main shareholders, Bonheur ASA and Ganger Rolf ASA, will deal with any possible conflicts of interest. In such cases the Board will ensure that an independent valuation is presented to the Board.

The Company has established routines to ensure that the Board is notified if Directors or management directly or indirectly have material interest in agreements entered into by the Company.

Freely negotiable shares

The Company has no restrictions on ownership and voting rights.

General Meetings

The Annual General Meeting (AGM) is normally held in May each year. Invitations together with all supporting documents and resolution proposals are sent to shareholders and will also be available on the Company's website 21 days prior to the AGM. The supporting documents must contain all the documentation necessary to enable the shareholders to decide on the matters to be decided. The registration to participate in the AGM is set as close to the AGM date as possible.

The auditor is present at the AGM. The Chairman for the AGM is elected at the AGM. One shareholder together with the Chairman will sign the minutes and approval of the Notice of the Meeting and the Agenda. It is intended for the Board of Directors and the Company's auditor to attend the general meeting.

Shareholders registered in the Norwegian Registry of Securities (VPS) can vote in person or by proxy. Shareholders who can not attend the meeting are urged to authorize a proxy, and the system facilitates the use of proxies on each individual item on the agenda. Shareholders, who are not able to attend the Annual General Meeting in person, may execute a proxy in the name of another person attending the meeting. Such proxy may be issued to the Chairman Anette S. Olsen, CEO Ivar Brandvold or any other person. If no name is stated the proxy will be considered given to the Chairman of the meeting. Proxy for the Chairman or other representatives of the Company may only be given to the extent such proxy supports a vote fully consistent with the Board's proposals.

The Annual General Meeting of shareholders elects individually the members to the Board of Directors, appoints the external auditor, determines the auditor's remuneration, approves the annual result and dividend proposed by the Board of Directors and determines the remuneration to the Board of Directors. The summons and registration form are distributed to all shareholders according to the address list in VPS, at least 21 days before the Annual General Meeting.

Nomination committee

Fred. Olsen Energy ASA has for the time being no Nomination Committee. Due to the owner structure of the company, the company has not found a need to establish an independent Nomination Committee. The Board will appoint a Nomination Committee as a sub-committee of the Board on an ad hoc basis if required.

Corporate Assembly and Board of Directors, composition and independence

In accordance with Norwegian law, the Board of Directors is responsible for managing the Company and for ensuring that the Company's operations are organized in a satisfactory manner. The Company's Articles of Association provides that the Board of Directors shall have no less than three and no more than seven members. In accordance with Norwegian law, the CEO and at least half of the members of the Board of Directors must either be resident in Norway, or be citizens of and resident in an EU/ EEA country. The Annual General Meeting of the shareholders elects each member of the Board of Directors individually. The Board of Directors consists of five Board members who are elected for a two-year period. The Chairman of the Board is elected annually by the Board of Directors.

All of the Directors are independent of the Company's management and three of them are independent also in relation to the Company's main shareholders, Ganger Rolf ASA and Bonheur ASA. 40% of the Members of the Board are women. In 2013 the Board of Directors had six meetings. Board members are elected based on need for expertise, capacity and ability to make balanced decisions in the best interests of the shareholders in general. The Board shall operate independently of any special interests and function effectively as a collegiate body in the best interests of the shareholders in general. Four Directors attended all Board meetings, while one Director was excused from one meeting. The Board of Directors are encouraged to own shares in the Company. The Company has no Corporate Assembly.

The Board of Directors consists of:

Anette S. Olsen (b. 1956), Chairman. Ms. Olsen has been the Chairman of the Board since the inception of the Company in 1997. Since 1994 Ms. Olsen has been the sole proprietor of Fred. Olsen & Co. – which is in charge of the management of the stock listed companies Bonheur ASA and Ganger Rolf ASA, where Ms. Olsen holds the position as Managing Director. Ms. Olsen holds chairman and ordinary board positions with a number of companies, amongst others with First Olsen Ltd., Fred. Olsen Renewables Ltd., Fred. Olsen Cruise Lines Ltd., Timex Corporation and NHST Media Group AS. Ms. Olsen holds a BA in Business Organization and an MBA. Ms. Olsen is a Norwegian citizen, resident in Oslo, Norway.

Øivin Fjeldstad (b. 1936), Director, independent of main shareholders. Mr Fjeldstad served as a deputy to the Board for several years and has been a Director since 2002. He is now active as an independent consultant and board member. Previously, he has been senior adviser to HSH Nordbank, Hamburg/Kiel. In the period 1993 – 98 he was Managing Director of DnB Luxembourg SA. He has also experience as deputy managing director of Bergen Bank/Den norske Bank, and served 4 years as group finance director in Akergruppen. At present he holds chairman and board positions with a number of companies and he has previous experience from several boards both in Norwegian and foreign companies. Mr. Fjeldstad has political experience as a former member of the Norwegian parliament. He is a graduate of the Norwegian School of Business and Economics. Mr. Fjeldstad is a Norwegian citizen, resident in Ringerike, Norway.

Agnar Gravdal (b. 1941), Director, independent of main shareholders. Mr. Gravdal became a Director of the Board in May 2007. He is currently working as independent consultant after being CEO at the Rosenberg Yard from 2003-2007. In addition, he has many years experience from CEO positions within various companies in the Kværner group, Aker group and Umoe group as well as from development and design of advanced LNG ships. He holds positions within several boards, including chairman of the board in Sway AS and Lyse Produksjon AS and board member in Fred. Olsen Production ASA, Scanfuel AS and Inwind AS. He holds a Master Degree in Naval Architecture and Marine Engineering from NTNU 1968. Mr. Gravdal is a Norwegian citizen, resident in Stavanger, Norway.

Cecilie B. Heuch (b. 1965), Director, independent of main shareholders. Ms. Heuch became a Director of the Board in 2007. She is presently Chief Human Resource Officer in DNV GL. Ms Heuch has previously worked for Norsk Hydro in the fertilizer division (now Yara), in Hydro Aluminium and in Corporate staff. She has had several positions within economic and market analysis, strategy and business development. Ms. Heuch graduated from Institutd'Etudes Politiques de Paris. She has a MSc from London School of Economics and a Business diploma from Henley Management College. Ms. Heuch is a Norwegian citizen, resident in Bærum, Norway.

Jan Peter Valheim (b. 1951), Director. Mr. Valheim became a Director of the Board in May 2007 after he resigned from the position as Chief Financial Officer (CFO) of the Company and joined Fred. Olsen & Co. as CFO. Prior to joining Fred. Olsen Energy ASA in 2002, Mr. Valheim had previously held positions in Scribona AB, PC Lan ASA, Saga Petroleum ASA and Fearnley Finans AS. Mr. Valheim is a graduate from BI Norwegian School of Management. He is a Norwegian citizen, resident in Bærum, Norway.

The work of the Board of Directors

The Company has implemented guidelines for the work of the Board of Directors. The purpose of these guidelines is to establish a practical tool for the Board's annual plan for exercising of good Corporate Governance. The Board has prepared special instructions for the CEO. The current composition of Directors reflects adequate competence relative to the main business areas of the Group. The Board of Directors has appointed an Audit Committee consisting of two Directors, of which one is independent of the main shareholders of the Company. The charter of the Audit Committee is to assist the Board in fulfilling its responsibilities concerning the financial reporting process, internal controls, management of financial risks, the audit process, and the Company's process for monitoring compliance with applicable laws and regulations. The Audit Committee has regular meetings with the management and the external auditor. Parts of the meetings with the external auditor are without participation of the management. The Board of Directors has appointed a Compensation Committee comprising four Directors including the Chairman of the Board and two of the independent Directors. The Compensation Committee discusses and recommends to the Board salary and benefits for the Chief Executive Officer and senior management as well as the management incentive schemes for the Group. Meetings of the Board of Directors are chaired by the Chairman of the Board. If the Chairman of the Board is absent, the Board must select a member to chair the meeting.

The Board evaluates its own work and work methods annually, and the evaluation forms the basis for adjustments and measures. In addition, the Board's competencies, overall and those of each Board member, are evaluated.

Corporate Governance

Risk management and internal control

Board of Directors holds responsibility that proper guidelines and internal control processes are instituted and operated. The Company's risk management, financial reporting and internal control procedures are reviewed by the Audit Committee in accordance with its charter. The risk management process of the Group is carried out in accordance with the Group's Risk Management Manual. The process ensures identification and treatment of all relevant risks in order to support the organization in achieving defined corporate objectives, enable explicit consideration of risks in decision-making and maintain the risk exposure of the Group at an acceptable level. The operational risk management, financial reporting and internal controls are carried out within each subsidiary business segment in accordance with the nature of the operations and the government legislation in the relevant jurisdiction. In addition, the Company carries out internal audits related to specific projects and to the ongoing business. Risk management related to foreign exchange, interest rate management and short-term investments is handled by the parent company on behalf of the subsidiaries, in accordance with listed authorizations, policies and procedures. The Company receives reports on the financial development of each business segment and subsidiary on a monthly basis. The Audit Committee will raise issues to the Board of Directors if deemed necessary and a review of the Group's risks is part of an annual review.

Remuneration of the Board of Directors

The Board's remuneration reflects the Board's responsibility, expertise, time commitment and the complexity of the Company. All Directors are remunerated with a fixed fee and the remuneration is not linked to the Group's bonus scheme and there is no option program for Directors. If any additional remuneration is given to Board members it will be specified in the annual report. The remuneration to the Board of Directors is fully disclosed in note 17. In 2013 none of the Board of directors have worked for the Company outside of their directorships

Executive Management

The Chief Executive Officer (CEO) is appointed by and serves at the discretion of the Board of Directors. He is responsible for the daily management and the operations of the Company. The CEO is not a member of the Board of Directors.

The executive management consists of:

Ivar Brandvold (b. 1956), Chief Executive Officer. Mr. Brandvold joined the company in September 2009, and was appointed President and Chief Executive Officer as of November 2009. Before joining the company, Mr. Brandvold held the position as Chief Operating Officer of DNO International ASA. He previously has 23 years of experience from Norsk Hydro ASA, of which he has held a number of positions within the company's oil and gas activities, including the overall responsibility for Norsk Hydro's global drilling operations from 2002 to 2007. Mr. Brandvold has a Master of Science degree from The Norwegian Institute of Science and Technology (NTNU) in Trondheim, Norway. Mr. Brandvold is a Norwegian citizen, and resides in Bergen, Norway.

Hjalmar Krogseth Moe (b. 1971), Chief Financial Officer. Mr. Moe has been Chief Financial Officer since June 2007. Mr. Moe joined Fred. Olsen Energy ASA in January 2005 as Financial Manager, and has previously held positions in Aros Securities and A. Sundvall ASA/Kaupthing ASA. Mr. Moe is a graduate from BI Norwegian School of Management. He is a Norwegian citizen and resides in Bærum, Norway.

Joakim Kleppe (b. 1951), Chief Executive Officer of Dolphin Drilling AS since June 2002. Mr. Kleppe was previously Senior Vice President HR/QHS&E & ICT at Dolphin Drilling AS and had been working within similar responsibilities and professions for 16 years for Kværner/Kværner Oil & Gas. Mr. Kleppe is a graduate from University of Bergen and Rogaland Distriktshøyskole, Stavanger. Mr. Kleppe is a Norwegian citizen and resides in Stavanger, Norway.

Graeme Murray (b. 1968), Managing Director Dolphin Drilling Limited since April 2012. Prior to his appointment Mr. Murray was General Counsel of Subsea 7 for 10 years. Beginning his career as a solicitor in private practice, Mr. Murray has also held legal positions with Halliburton and Coflexip Stena. A member of the Law Society of Scotland, Mr. Murray has an LLB degree and postgraduate Diploma in Legal Practice from Aberdeen University and is a Notary Public. Mr. Murray is UK citizen and resides in Aberdeen, Scotland.

Per Johansson (b. 1951), Managing Director Dolphin Drilling Pte. Ltd. since May 2007. Per Johansson was Managing Director for Dolphin Drilling Ltd from 2002 to 2007. Mr. Johansson has worked in the oil industry since 1977. He joined Dolphin Drilling Ltd. in 1990 and has been a member of the management in Dolphin Drilling Ltd. since 1995. Mr. Johansson is a graduate from Technical School and holds all drilling related certificates. Mr. Johansson is a Norwegian citizen and resides in Singapore.

Robert J Cooper (b. 1952), Chief Executive Officer, Harland and Wolff Group Plc. Mr. Cooper was appointed CEO of Harland and Wolff Group PLC in February 2003. Prior to that he held the position as fi nancial director in the Harland and Wolff Group from 1993. Mr. Cooper joined the Company in 1983 as a trainee accountant, and after completing his ICMA professional examinations he held a number of positions within the fi nance department. Mr. Cooper is a UK citizen and resides in Belfast, Northern Ireland.

Remuneration of the executive management

The Board has adopted guidelines for remuneration of executive management in accordance with section 6-16a of the Norwegian Public limited Liability Companies Act. These guidelines are communicated to the Annual General Meeting.

The Board's Compensation Committee present and recommends to the Board of Directors salary and benefi ts for the Chief Executive Offi cer and leading personnel as well as management incentive schemes for the Group.

Management has had a cash bonus scheme since 2005. The benefi ciaries of the scheme are the executive management and certain key personnel. Annual awards under the scheme, maximized to one year's salary, are subject to the Group achieving certain predefi ned fi nancial criteria, including achieved budget goals and development of the Company's share price. See also note 17 on page 40.

Information and communications

The Company provides information to the market through quarterly and annual reports; investor- and analyst presentations open to the media and by making operational and fi nancial information available on the Company's website. Events of importance are made available to the stock market through notifi cation to the Oslo Stock Exchange in accordance with the Stock Exchange regulations. Information is provided in English.

Takeovers

In light of the Company's shareholder structure, with the controlling shareholders holding a majority of the shares, the Board of Directors has not found it appropriate to establish separate guidelines to prepare for a take-over situation.

Auditor

The auditor is appointed by the Annual General Meeting, The remuneration of the auditor is stated in the Annual Report and approved by the general meeting of shareholders. The same fi rm of auditors should also as a general rule be appointed for all subsidiaries. The auditor should not perform any work for the Company which could lead to confl icts of interest. The Audit Committee is responsible for ensuring that the auditor's independent role is maintained and, on a annual basis, the auditor presents a review of the Company's internal control procedure to the committee. A summary annual audit plan shall be presented to the Audit Committee once a year. In accordance with the auditor's independence requirement, the Company is cautious when using the elected external auditor for tasks other than the fi nancial audit required by law. Nevertheless, the auditor may be used for tasks that are naturally related to the audit, such as technical assistance with tax returns, annual accounts, understanding of accounting and tax rules and confi rmation of fi nancial information in various contexts. Information about fees paid by the Company to the auditor is provided in the Annual Report. The Audit Committee is kept informed, on a regular basis, of all work undertaken by the auditor. The auditor provides the Board with an annual written confi rmation that a number of requirements, including independence and objectivity are met. The auditor attends meetings of the Audit Committee that deal with the fi nancial statements and that review the report on the auditor's view of the Company's accounting principles, risk areas and internal control routines. The external auditor also takes part in the Board's discussions on the fi nal annual fi nancial statements. Both the Audit Committee and Board of Directors ensures that it is able to discuss relevant matters with the auditor without the presence of the management.

Corporate Social Responsibility Reporting

Introduction

The Corporate Strategy, Corporate Governance and the Code of Conduct Policy constitute the fundamental steering principles in the Group. Together these form the foundation of how we should act and operate in the Group as well as giving the priorities and the direction of the Group.

Supplementary to these principles are the Corporate Management Systems. Together, these define the roles and responsibilities within the organization and towards our stakeholders, including employees, customers, shareholders, regulatory and governmental bodies, financial institutions, vendors and the environment as well as local communities and countries where we operate.

Working environment

The Group has a strong focus on health, safety and environment (HSE) for its employees, subcontractors and customers, embedded in our "zero accident" objective. We are closely monitoring the established procedures for operations, projects and work sites both onshore and offshore. Continuous efforts involve planning, training of personnel and careful selection of subcontractors. The objective of "zero accident" applies to personnel injuries, harm to the environment and material damage.

The Total Recordable Incident (TRI) rate for offshore drilling and related services in 2013 was 6.0 per one million working hours, compared to 4.64 per one million working hours in 2012. TRI includes personnel injuries of the categories lost time incidents and medical treatment incidents.

Furthermore, all incidents relating to personnel, environment and equipment with a high potential risk factor are recorded separately (defined as "high potential"). All injuries and damages are registered and the potential risk factors are determined based on a "five by five" risk matrix system. Only one personnel injury is categorized as high potential during the year. The incident was a finger injury due to improper hand placement during a lifting operation. The other high potential incidents are damages on equipment and certain falling objects during work operations. The damages on equipment were small, however the incidents could have a potential for more serious damages or consequences and therefore registered as high potential incidents.

Co-operation and experience transfer between the operational regions have been systemized and improved by regular network meetings within each discipline and on top management level. HSE results are measured and benchmarked continuously in order to improve performance and to react proactively to negative trends.

To meet our "zero accident" objective on a long-term basis five areas of continuous improvement have been established. These can be summarized as follows:

Adherence to the Management Systems; follow rules and procedures
Observation techniques on site; including pictures and documented observations
Red zone areas on the units; restricted zones for personnel entry
Zip card reporting; reporting of incidents and actions for improvement
Avoid falling objects; procedures related to preventing falling objects

When negative trends are observed or any rigs are under performing on their KPIs, corrective actions are taken. In 2012 we had a negative trend on falling objects on some of the rigs. In addition there was an increase in personal injuries, however not classified as high potential. Actions were taken in the respective rig teams gave positive effect; the frequency rate of falling objects was 6.05 per one million working hours in 2013 versus 12.49 per one million working hours in 2012. The implementation of mandatory last minute risk assessment and debrief prior to and after each work task have improved the planning process and the lesson learnt process.

Leadership training for offshore personnel has continued in 2013 with further focus on planning and debriefs of work processes. All rig crews have been trained in observation technique and we can see the proactive risk awareness improving in the daily job tasks.

The Group has performed several HSE activities in 2013 in order to continuously improve the HSE performance and culture. Special focus in 2013 has been implementation of a new common management system and database for the operations of all rigs across the Group. The management systems in the Group govern both HSE, onshore and operational related activities. All rigs and onshore operational departments will be included in the common system in 2014 in order to improve the transfer of best practices within the Group. New HSE goals and key performance indicators (KPI) have been developed for the period 2014-

Corporate Social Responsibility Reporting

The KPIs cover areas such as personnel injuries, emissions to the environment and damages to equipment. The goals and the KPIs have been developed and agreed with a high degree of workforce involvement in order to achieve ownership and follow up.

Internal audits have been carried out in order to verify knowledge and implementation of the management system and the result from these audits confirm that the management system is well known and accessible. Findings from audits are presented to top management and to the department in question and corrective actions are taken. The internal audit plan is comprehensive and monthly status and updates are performed.

Sick leave was 4.76% in 2013 versus 3.94% in 2012. The Group continues to focus on reducing sick leave. We have several training programs for employees with the aim of preventing sick leave, focusing for example on ergonomics in order to prevent injuries. We have implemented procedures for how to follow up employees in case of sick leave.

Equality

The Group aims to be a workplace with equal opportunities, offering challenging and motivating jobs to all personnel, regardless of gender. The composition of genders within the Group reflects the available recruitment base for offshore work, which traditionally has a higher proportion of men, being the nature of the offshore industry worldwide. For offshore operations 4% are women, while for onshore operations, there are 37% women. There are no particular initiatives to attract or retain either female or male employees.

Two out of five members of the BOD are women, including the Chairman of the Board. At year-end 2013 the Group's Offshore Drilling segment had 1 445 employees. 9% of the employees are women and 11% of leading onshore personnel within the Group are women.

Discrimination

The Group aims to be a workplace with equal opportunities, offering challenging and motivating jobs to all personnel, regardless of nationality, culture, religion or gender. It is the Group's Code of Conduct Policy to conduct business in accordance with the letter and spirit of the law and with the overriding ethical standards of good business conduct including non-discrimination behavior. The Group does not accept any form of discrimination or harassment e.g. based on race, color, religion, gender, age and disability.

The composition of nationalities reflects the available recruitment base for the offshore drilling industry. Per year-end 2013, there were more than 20 nationalities working for the Group. There are to a large extent local management teams in the foreign subsidiaries and as well as local Managing Directors.

Environment

The Group's operations involve activities that entail potential risks to the external environment, with the main risks being emissions to air and discharges to sea.

One of the corporate focus areas going forward includes technical solutions and environmental initiatives with the aim to reduce the environmental impact of our business activities.

The Group is careful in its approach to the environment and discharges to sea are continuously monitored and reported. The Group strives to reduce the use of hazardous chemicals and materials through established routines and procedures and seeks alternative products to safeguard the environment.

The CO2 emissions are continuously monitored and reported. The Group is consumer of different types of fuel oil in our operations. This is primarily for operations of the rigs, but also for travelling as well as heating of office buildings. The emission of CO2 amounted to 118 310 metric tons in 2013, compared to 121 051 metric tons in 2012. The fuel consumption amounted to 42 537 m3 in 2013 versus 43 525 m3 in 2012.

The international rigs in the Group are ISO 9000-14 001 certified. The target for 2014 is to also certify the Norwegian based rigs with ISO 9000-14 001. Furthermore, the Group will during 2014 evaluate measures that can be undertaken in order to further reduce the environmental impact from our operations.

Corporate Social Responsibility

The Corporate Strategy and Code of Conduct Policy constitute the foundation in managing our Corporate Social Responsibility as a Group. The Code of Conduct Policy is distributed to our main suppliers and relations as well as to all employees. The Corporate Strategy emphasizes the respect for human rights and ethical behavior including the zero tolerance for corruption. In addition compliance with the UK Bribery Act is managed through a separate Ethics and Bribery Procedure.

Corporate Social Responsibility Reporting

All employees may be part of a union. There is no specific policy regarding human rights, however this is treated in the Code of Conduct.

The Group has a zero tolerance for corruption related to any parts of our business. The Code of Conduct Policy and Ethics and Bribery Procedure, underline that any form of corruption or bribery is strictly prohibited. This includes any type of undue payments made to influence someone conducting their duties. There shall be full transparency and all transactions shall be backed by invoices. Use of intermediaries is based on the internal procurement procedures in the Group. It is emphasized that all contracts with intermediaries shall include a contract clause stating that any corruptive actions or unethical behaviour is prohibited while representing any company within the Fred. Olsen Energy Group. Specific training regarding UK Bribery Act has been carried out within the organization and towards subcontractors. Furthermore, there are internal audit plans that are carried out on a yearly basis, of which some of the scope covers bribery and corruption.

There are clear and strict guidelines with regard to gifts received by any member of the Fred. Olsen Energy Group as well as for those offered by any Group member.

Initiatives in 2014 will be to further enhance the knowledge of the Code of Conduct Policy. The principles will be emphasized regularly when representatives from the Senior Management have review meetings with management teams and employees. Furthermore, a new routine will be established to attach the policy to the employment contracts to all new employees.

Fred. Olsen Energy ASA

Enterprise number: 977 388 287 Fred. Olsens gate 2 N-0152 Oslo, Norway Telephone: +47 22 34 10 00 Fax: +47 22 41 18 40 E-mail: [email protected] www.fredolsen-energy.com

Reporter

Chief Executive Officer Hjalmar Krogseth Moe, Chief Financial Officer

Dolphin Drilling AS

Enterprise number: 920 473 210 Plattformveien 5 N-4056 Tananger, Norway Telephone: + 47 51 69 43 00 Fax: + 47 51 69 61 56 www.dolphindrilling.no

Joakim Kleppe, Managing Director

Dolphin Drilling Ltd.

UK Registration number: 1017560 Howe Moss Dr., Kirkhill Industr. Est. Dyce, Aberdeen AB21 0GL, Scotland Telephone: +44 1224 411 411 Fax: +44 1224 411 482 E-mail: [email protected] www.dolphindrilling.no

Managing Director

Dolphin Drilling Pte. Ltd.

Enterprise number: 200303833E One Temasek Avenue #36-02 Millenia Tower Singapore 039192 Telephone: +65 6305 4710 Fax: +65 6305 4711 E-mail: [email protected] www.dolphindrilling.com.sg

Per Johansson, Managing Director

Harland and Wolff Group Plc.

UK Registration number: NI 38422 Queen's Island, Belfast BT3 9DU Northern Ireland Telephone: +44 2890 458 456 Fax: +44 2890 458 515 E-mail: [email protected] www.harland-wolff.com

Robert Cooper, Managing Director

AI assistant

Dolphin Drilling AS — Annual Report 2013

3582_rns_2014-04-30_5ba4268a-af1c-426c-b58f-b96d0281341e.pdf

Contents

A Brief Presentation

EBITDA 2013

Contract Overview

Financial Summary 2009-2013 Fred. Olsen Energy – Group

Markets and prospects

Offshore Drilling

Engineering and Fabrication

Financial result and balance sheet at year end

International Financial Reporting Standards (IFRS)

Investment and capital resources

Research and development activities

Financial risks

Liquidity risk

Foreign exchange

Interest rate

Credit risk

Corporate Governance

Share Capital Issues

Significant legal matters

External Environment

Allocation of profit

Annual General Meeting

Directors' Responsibility Statement Fred. Olsen Energy – Group

Consolidated Statement of Separate Income Fred. Olsen Energy – Group

For the years ended 31 December

Group Consolidated Statement of Comprehensive Income Fred. Olsen Energy – Group

For the years ended 31 December

Consolidated Statement of Financial Position Fred. Olsen Energy – Group

Fred. Olsen Energy – Group

Consolidated Statement of Financial Position

Oslo, 31 December 2013 / 26 March 2014 Fred. Olsen Energy ASA

Consolidated Statement of Changes in Equity Fred. Olsen Energy – Group

Consolidated Statement of Cash Flows Fred. Olsen Energy – Group

Notes to the Consolidated Financial Statements Fred. Olsen Energy – Group

Note 1 - Significant accounting policies

Basis of accounting

Basis of preparation

Basis of consolidation

Subsidiaries

Transactions eliminated in consolidation

Foreign currency

Foreign currency transactions

Financial statements of foreign operations

Financial Instruments

Derivative financial instruments

Trade and other receivables

Cash and cash equivalents

Interest-bearing borrowings

Trade and other payables

Property, plant and equipment

Owned assets

Depreciation

The estimated useful lives are as follows:

Repairs and maintenance

Intangible assets

Goodwill

Research and development

Consumable spare parts

Impairment

Employee benefits

Pensions

Provisions

Revenue

Charter rate contracts

Long-term engineering and fabrication contracts

Expenses

Net financing costs

Income tax

Segment reporting

Notes Fred. Olsen Energy – Group

Earnings per share

Basic

Diluted

Changes in accounting principles

Changes in Group Income Statement and Comprehensive income:

New accounting policies

Dolphin Drilling AS Annual Report 2013