OKEA ASA

Investor Presentation • Oct 28, 2020

Presentation of third quarter 2020 OKEA ASA

28 October 2020

General and disclaimer

This presentation is prepared solely for information purposes, and does not constitute or form part of, and is not prepared or made in connection with, an offer or invitation to sell, or any solicitation of any offer to subscribe for or purchase any securities. Investors and prospective investors in securities of any issuer mentioned herein are required to make their own independent investigation and appraisal of the business and financial condition of such company and the nature of the securities. The contents of this presentation have not been independently verified, and no reliance should be placed for any purposes on the information contained in this presentation or on its completeness, accuracy or fairness.

The presentation speaks as of the date sets out on its cover, and the information herein remains subject to change.

Certain statements and information included in this presentation constitutes "forward-looking information" and relates to future events, including the Company's future performance, business prospects or opportunities. Forward-looking information is generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions and could include, but is not limited to, statements with respect to estimates of reserves and/or resources, future production levels, future capital expenditures and their allocation to exploration, development and production activities. Forward-looking information involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Such risks include but are not limited to operational risks (including exploration and development risks), productions costs, availability of equipment, reliance on key personnel, reserve estimates, health, safety and environmental issues, legal risks and regulatory changes, competition, geopolitical risk, and financial risks. Neither the Company or any officers or employees of the Company provides any warranty or other assurance that the assumptions underlying such forward-looking information are free from errors, nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments and activities. The Company does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by applicable law.

This presentation contains non-IFRS measures and ratios that are not required by, or presented in accordance with IFRS. These non-IFRS measures and ratios may not be comparable to other similarly titled measures of other companies and have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our operating results as reported under IFRS. Non-IFRS measures and ratios are not measurements of our performance or liquidity under IFRS and should not be considered as alternatives to operating profit or profit from continuing operations or any other performance measures derived in accordance with IFRS or as alternatives to cash flow from operating, investing or financing activities.

The Company's securities have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), and are offered and sold only outside the United States in accordance with an exemption from registration provided by Regulation S of the US Securities Act.

The presentation is subject to Norwegian law.

Q3 Highlights

Operations

• No serious incidents at Draugen, Covid -19 situation managed
• High production reliability at Draugen and Gjøa
• Continued excellent project execution on Draugen; turnaround successfully completed in July
• Production of 13,303 boepd

Financial

• Revenues from oil and gas of NOK 308 million
• EBITDA of NOK 116 million
• Cash position 883 million
• Non-cash effects of NOK 569 million in impairment on Yme
• Significant improvements to liquidity position supported by the temporary petroleum tax changes

Positioned for growth

• Organic growth potential without need for new equity
• Acquisition of Aurora & farm-in to Calypso
• APA 2020 applications submitted
• Maintaining an opportunistic view on M&A

Financials

Oil and gas production, sales and revenues

Revenue decrease mainly due to lower market prices and reduced volumes due to planned maintenance

Draugen Gjøa Ivar Aasen

Income statement

	3rd quarter		9 months
Figures in NOK million	2020	2019	2020	2019
Total operating income	321	622	1 146	2 455
Production expenses	-154	-144	-507	-504
Changes in over/underlift positions and inventory	-31	41	91	-315
Depreciation	-147	-177	-521	-541
Impairment	-572	0	-1 504	-97
Exploration and operating expenses	-20	-115	-92	-226
Profit / loss (-) from operating activities	-603	227	-1 386	772
Net financial items	76	-225	-255	-318
Profit / loss (-) before income tax	-527	1	-1 641	454
Income taxes	508	-79	855	-523
Net profit / loss (-)	-19	-77	-785	-69
EBITDA	116	404	639	1 410

Q3 comments

Income:

• Significantly lower market prices for oil and gas compared to last year

Production expenses:

• NOK/boe of 118 compared to 80 last year
• Shut-down at Draugen due to turnaround and at Gjøa due to tie-in projects of 20 and 17 days in the quarter respectively increased cost per barrel produced

Impairments:

• Driven by increased capital expenditure estimates and revised estimate for start of production at Yme

Exploration and operating expenses:

• Field evaluation activities mainly on Hasselmus and Grevling
• Low SG&A due to cost cutting measures and higher allocation of cost during the quarter (YTD adjustment)

Financial items:

• NOK strengthened 3% against USD during the quarter resulting in unrealised gain on USD nominated bond loans, partly offset by interest expense

Taxes:

• Effective tax rate of 96%
• Deviation from 78% due to financial items and uplift

Impairment

Q3 - Impairment

• •Impairment of NOK 569 million on Yme due to delayed production start and capex increase
• •Improved forward curves for oil and gas was a positive contributor; increased recoverable amount for Draugen and Gjøa

Cash development Q3 2020

Financial robustness and flexibility for growth

• •Temporary tax amendments:
• •Significantly improves cash position with tax refund for tax year 2020 and 2021
• •Direct expensing and 24% uplift
• •Triggers revised assessment of profitable projects and improved project economy
• •Significant buffer to covenant requirements secured until end of 2021
  • •Flexible bond structure and no maturities until mid-2023
• •Bought back OKEA02 at discount for a total nominal value of USD 12.5 million during the year
• •Planning for organic growth without need for new equity

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Operations and assets

Production volumes and highlights Q3

High production reliability from both Draugen and Gjøa

Draugen (OKEA operated)

• •No incidents
• •High production reliability (99%)
• •Lower production due to maintenance turnaround
• •Maintenance turnaround completed in July ahead of schedule and below budget
• •Imposed production limits fulfilled

Gjøa (Neptune operated)

• •PSA to investigate incident on P1 well G-4
• •High production reliability (99%)
• •Lower production due to modifications for the tie-in projects Duva/Nova
• •Gjøa will be compensated for the deferred production when tie-ins are onstream 2021/2022

Draugen (OKEA operated) - Significantly improved performance

Demonstrated improvements in production performance under OKEA operatorship

Draugen - Improvement program for all parameters

Improving financial performance and extending field life

Innovation in OKEA

Subsea scale squeeze carried out with half of standard industry cost

Standard vessel:

• Subsea scale squeeze required every second year to limit Barium Sulphate precipitation near wellbore and in tubing

• Cost down from NOK 25 million to NOK 12 million per operation*

Vessel type	Length	Gross Tonnage	People on Board	Crane capasity
Std Vessel	157m	18 600 tons	90	400 tons
Siem Pride	89m	5 300 tons	30	15 tons

Siem Pride:

Draugen Subsea Scale Squeeze the OKEA way

Siem Pride

• Optimized working procedures enabled scope to be carried out with a much smaller boat than industry standard
• We used our contracted supply vessel Siem Pride
• Logistic planning and management for small vessel operation
• Reduced manning
• ROV operations from onshore control room
• Work executed in collaboration with Siem Offshore, Subsea7, IKM and other suppliers

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Draugen – Energy supply

• •From start in 1993 to 2018, energy was supplied by associated gas
• •Since 2018 until now, a mix of associated gas and diesel was used
• •Draugen Gas Import Project
  • Substituting diesel used for power by gas import
  • Starting now, October 2020
• Contributes to maintaining a high production reliability
• Replacing 54 000 tons of diesel up to Hasselmus first gas
• •Assessment of alternative solutions ongoing
• Power from Shore passed DG1 during the quarter
• Study on carbon capture and storage together with Aker Carbon Capture in order to continue with imported gas/Hasselmus gas

Hasselmus development

The first tie-back to the Draugen platform

•The first OKEA operated subsea development

•Fast track development

•16 mmboe with a break even below 30 USD/boe

•First gas early 2023

•FEED restarted in July 2020 (stopped in March due to Covid-19 and market turmoil)

•Main collaborating companies are SIA (Subsea 7/One Subsea) and Aker Solutions

Calypso – Oil prospect near Draugen

Strengthening OKEA's position and resource potential in the Draugen area

• Agreement signed in September with Neptune for 30% of their working interest in PL938
• Estimated potential of 10-37 million bbls of oil
• Committed to an exploration well expected to be drilled in late 2021 or 2022
• A discovery can be developed as tie-in to Draugen or Njord
• Neptune Energy is operator (30%); partners are Vår Energi (20%) and Pandion Energy (20%)*

Aurora – Potential gas development

Strengthening OKEA's optionality in the Gjøa area; strategic fit with low-cost field development

• Purchase from Equinor (40%) approved by MPE
  • OKEA appointed as Operator
• OKEA's operator capabilities a key enabler for the deal
• Partners are Petoro (35%) and Wintershall Dea (25%)
• Potential 21 mmboe development to be evaluated with partners:
  • Gas production via the Vega-Gjøa pipeline for processing on Gjøa
  • Need for appraisal well and project plan under evaluation together with partners

Development project – Yme (Repsol operated)

• •Production start postponed and capex increased
• •Onshore completion scheduled for late 2020
• •Production start in 2021
• •At plateau adds 7 500 boepd net to OKEA; on average adds 4 900 boepd in the first production year

Outlook & concluding remarks

Outlook Current portfolio to yield substantial production growth

Targeted organic development requires no new equity

Continue to seek inorganic growth opportunities

Demonstrated strong operator capabilities improves strategic position

Guiding 2020: •Production: 14 000 – 15 000 boepd •Capex: NOK 1 000 – 1 100 million (up NOK 100 million from Q2)

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