(a public limited liability company organized under the laws of the Kingdom of Norway)Organization number: 987 989 297

Subsequent Offering of up to 2,500,000 additional Offer Share with preferred allocation to Eligible Shareholders as of 25 April 2008 at a subscription price of NOK 23.50 per New Share, raising up to NOK 58,750,000 in gross proceeds.

Subscription Period from and including 29 May 2008 to and including 13 June 2008

the Private Placement at a subscription price of NOK 23.50 raising gross proceeds of NOK 450,001,500

The new shares have not been and will not be registered under the U.S. Securities act of 1933, as amended. See “risk factors” in section 2 for a discussion of certain matters that should be considered in connection with an investment in the new shares.

MANAGED BY

Prospectus dated 28 May 2008

Norwegian Energy Company ASA

Listing of 19,149,000 New Shares on Oslo Børs ASA, each with a nominal value of NOK 3.10 placed in

i

Important information This Prospectus has been prepared in order to provide information about Norwegian Energy Company ASA (“Noreco” or the “Company”) and its business in connection with (i) the listing of 19,149,000 New Shares issued in the private placement completed in April 2008 (the “Private Placement”) and (ii) the subsequent offering of up to 2,500,000 Offer Shares in Noreco offered to Eligible Shareholders as described in this Prospectus (the “Subsequent Offering”).

For the definitions and capitalized terms used throughout this Prospectus, see Section 17 “Definitions and Glossary of Terms” of this Prospectus, which also applies to the prevailing pages of this Prospectus.

_______________________

The Company has furnished the information in this Prospectus. The Managers make no representation or warranty, expressed or implied, as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, nor shall be relied upon as, a promise or representation by the Managers. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act and the Norwegian Regulation on Contents of Prospectuses, which implements the Prospectus Directive (EC/2003/71), including the Commission Regulation EC/809/2004, in Norwegian law. Oslo Børs has reviewed and approved this Prospectus in accordance with the Norwegian Securities Trading Act section 7-7. This Prospectus has been published in an English version only.

All inquiries relating to this Prospectus should be directed to the Company or the Managers. No other than the Company is authorised to give any information about, or make any representation on behalf of, the Company in connection with the Subsequent Offering, and, if given or made, such other information or representation must not be relied upon as having been authorised by the Company.

The information contained herein is as of the date hereof and subject to change, completion or amendment without notice. There may have been changes affecting the Company or its subsidiaries subsequent to the date of this Prospectus. Any new material information and any material inaccuracy that might have an effect on the assessment of the Shares arising after the publication of this Prospectus and before the listing of the Offer Shares on Oslo Børs and the completion of the Subsequent Offering, will be published and announced promptly as a supplement to this Prospectus in accordance with section 7-15 of the Norwegian Securities Trading Act. Neither the delivery of this Prospectus nor the completion of the Listing or the Subsequent Offering at any time after the date hereof will, under any circumstances, create any implication that there has been no change in the Company’s affairs since the date hereof or that the information set forth in this Prospectus is correct as of any time since its date.

The distribution of this Prospectus and the offering of Offer Shares may in certain jurisdictions be

restricted by law. Persons in possession of this Prospectus are required to inform themselves about and to

observe any such restrictions. This Prospectus does not constitute an offer of, or a solicitation of an offer

to purchase, any of the Offer Shares in any jurisdiction or in any circumstances in which such offer or

solicitation would be unlawful. No one has taken any action that would permit a public offering of Offer

Shares to occur outside of Norway.

The Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933 as amended, or with any securities authority of any state of the United States. The Offer Shares may not be offered or sold in or into the United States, Canada, Japan or Australia.

The contents of this Prospectus shall not to be construed as legal, business or tax advice. Each reader of this Prospectus should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Prospectus, you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser.

In the ordinary course of their respective businesses, the Managers and certain of its respective affiliates have engaged, and may continue to engage, in investment and commercial banking transactions with the Company and its subsidiaries.

Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company’s obligations under applicable law, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system.

_______________________

Investing in the Company’s Shares involves risks. See Section 2 “Risk Factors” of this Prospectus.

1

TABLE OF CONTENTS

1. SUMMARY.................................................................................................................................................2

2. RISK FACTORS .......................................................................................................................................11

3. RESPONSIBILITY FOR THE PROSPECTUS ........................................................................................18

4. NOTICE REGARDING FORWARD-LOOKING STATEMENTS .........................................................19

5. THE COMPLETED PRIVATE PLACEMENT ........................................................................................20

6. THE SUBSEQUENT OFFERING ............................................................................................................24

7. PRESENTATION OF THE COMPANY..................................................................................................29

8. THE MARKET..........................................................................................................................................44

9. FINANCIAL INFORMATION AND OPERATING REVIEW ...............................................................50

10. CAPITAL RESOURCES ..........................................................................................................................56

11. PRO FORMA FINANCIAL INFORMATION .........................................................................................62

12. BOARD, ORGANISATION AND MANAGEMENT OF NORECO.......................................................68

13. SHARE CAPITAL AND SHAREHOLDER INFORMATION................................................................75

14. TAXATION...............................................................................................................................................85

15. LEGAL MATTERS...................................................................................................................................89

16. ADDITIONAL INFORMATION..............................................................................................................90

17. DEFINITIONS AND GLOSSARY OF TERMS.......................................................................................92

APPENDICES

APPENDIX 1: ARTICLES OF ASSOCIATION......................................................................................................A 1

APPENDIX 2: 1Q REPORT AS OF 31 MARCH 2008 FOR NORECO................................................................. A 3

APPENDIX 3: ANNUAL REPORT FOR NORECO FOR THE YEAR 2007 ........................................................ A 11

APPENDIX 4: ANNUAL REPORT FOR NORECO FOR THE YEAR 2006 ........................................................ A 63

APPENDIX 5: Q2 REPORT AS OF 30 JUNE 2007 FOR ALTINEX..................................................................... A 79

APPENDIX 6: ANNUAL REPORT FOR TODL FOR THE YEAR 2007.............................................................. A 88

APPENDIX 7: AUIDTOR STATEMENT ON PROFORMA FIGURES................................................................ A 98

APPENDIX 8: SUBSCRIPTION FORM FOR THE SUBSEQUENT OFFERING ................................................ A 100

2

1. SUMMARY

The following summary should be read as an introduction to this Prospectus, and is qualified in its entirety, by

the more detailed information and the Appendices appearing elsewhere in this Prospectus. Any decision to invest in the Shares should be based on a consideration of the Prospectus as a whole.

In case a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might have to bear the cost of translating the Prospectus before legal proceedings are initiated. Civil

liability attaches to those persons who have tabled the summary including any translation thereof, and applied

for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus.

For definitions and capitalized terms used throughout this Prospectus, please refer to Section 17 “Definitions and Glossary of Terms”.

1.1 DESCRIPTION OF NORECO

1.1.1 Introduction

Noreco is an independent oil and gas exploration, development and production company whose activities are focused on the North Sea (mainly Norway, Denmark and United Kingdom).

1.1.2 History

The Company was founded on 28 January 2005. In October 2005, Lyse Energi, Hitec Vision (HVPE), 3i and Noreco’s founders agreed to raise up to NOK 550 million in new equity in the Company, and they remained the primary owners of the Company until May 2007 when the Company raised NOK 880 million in new capital and NOK 440 million in convertible bonds from Norwegian and international institutional investors and was transformed to a Norwegian public limited liability company.

In May 2007, Noreco started acquiring shares in Altinex ASA (“Altinex”), a Norwegian oil company listed on Oslo Børs. Through acquisitions in the market and a mandatory offer set forth on 23 July 2007 Noreco acquired a total of 192,146,106 shares representing 97.14% of the share capital in Altinex to a price of NOK 22 per share. Due to the high acceptance level, Noreco decided to carry out a compulsory acquisition of the remaining shares in Altinex to the same price as in the mandatory offer. As a consequence, Noreco became the owner of 100% of Altinex on 29 August 2007.

On 13 July 2007 the Company issued a NOK 2,300,000,000 Senior Secured callable bond loan and a NOK 500,000,000 Senior Secured callable bond loan in order to finance the acquisition of Altinex.

On 3 September 2007, the extraordinary general meeting of Altinex resolved to apply for a de-listing from Oslo Børs. The shares were de-listed on 13 October 2007.

On 10 October 2007, the extraordinary general meeting of Noreco resolved, inter alia, to split the face value of the Shares into 4, creating a new face value of NOK 3.10 per Share.

On 19 October 2007, the Company completed a Private Placement of shares totalling approximately NOK 550 million in gross proceeds.

On 26 October 2007 and 31 October 2007, Noreco announced the sales of Altinex Services AS and Altinex Reservoir Technology AS.

On 9 November 2007, Noreco was listed on Oslo Børs ASA with the ticker code “NOR”.

On 25 April 2008, Noreco announced its agreement to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. In order to partly finance the transaction, Noreco completed on 28 April 2008 a Private Placement by issuing new shares totalling approximately NOK 450 million.

1.1.3 Business description

The Company employs 71 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. Noreco currently has 8 wholly owned (directly or indirectly) subsidiaries (jointly referred to as the “Noreco Group” or

3

the “Group”). Noreco has ownership in a total of 52 licenses in Norway, Denmark and UK. The portfolio consists of 7 producing fields, Brage and Enoch in Norway, and South Arne, Siri, Nini, Lulita and Cecilie in Denmark. The net total production from these fields in 1Q 2008 was 9,950 boe/day.

There are a total of 15 discoveries in the portfolio, 10 of which are in Norway, 4 in Denmark and 1 in UK.

1.2 PURPOSE AND BACKGROUND FOR THE OFFERINGS

On 25 April 2008, Noreco announced its share sale agreement entered into with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. The transaction includes the producing Siri field in the Danish sector of the North Sea, and will increase Noreco's daily production by more than 20% and add 4.35 million barrels of oil to the Company's proven and probable (2P) reserves.

In order to partly provide the funding required for the acquisition and to increase the equity for general corporate purposes, the Board of Directors of Noreco resolved to raise funding in the form of up to NOK 450 million in new equity through the Private Placement and a further NOK 57.8 million through the Subsequent Offering.

1.3 DESCRIPTION OF THE OFFERINGS

1.3.1 The Private Placement

On 25 April 2008, the Board of Directors resolved to conduct a private placement of up to 19,149,000 New Shares to a subscription price of NOK 23.50 per share, constituting approximately NOK 450 million in gross proceeds. The Private Placement was underwritten with a total of NOK 300 million consisting of a consortium of existing and new shareholders.

The notice of allocation was sent to the investors on 28 April 2008 and payment was received on 2 May 2008. The investors in the Private Placement were delivered existing and unencumbered shares in Noreco in accordance with a Share Lending Agreement entered into between a consortium of lenders, Noreco and the Managers. Please see section 5.7 for a description of the settlement procedure in the Private Placement.

1.3.2 The Subsequent Offering

The shareholders of Noreco as of 25 April 2008, as registered in the VPS on 30 April 2008, except for those shareholders who were given the opportunity to subscribe for new Shares in the Private Placement and their respective affiliates, will, to the extent possible, be given preferred allocation in the Subsequent Offering to the extent required to maintain their relative ownership as of 25 April 2008 following the Private Placement. The Eligible Shareholders will be given preferred allocation for 1 Offer Shares for each 8 Shares owned as of 25 April 2008, rounded up to the nearest whole share.

The Subscription Period for the Subsequent Offering will commence on 29 May 2008 and expire at 16:30 hours (CET) on 13June 2008. The Subscription Period may not be extended.

The subscription price in the Subsequent Offering is NOK 23.50 per Offer Share, which is equal to the subscription price in the Private Placement.

Subscriptions for Offer Shares must be made on a Subscription Form attached as Appendix 8 hereto.

1.4 CONDITIONS AND TIME TABLE FOR THE SUBSEQUENT OFFERING

Below is a brief overview of the terms and time table for the Subsequent Offering:

Shares offered............................................................ Up to 2,500,000 Offer Shares

Subscription price per share ...................................... NOK 23.50 per Offer Share equalling the price in the Private Placement.

Record date................................................................ 25 April 2008

Subscription period.................................................... From and including 29 May to and including 16.30 hours (CET) on 13 June 2008.

4

Preferred allocation ................................................... Eligible Shareholders, i.e. shareholders as of 25 April 2008 (appearing in the VPS on 30 April 2008) who were not invited to participate in the Private Placement are eligible for preferred allocation.

Subscription rights..................................................... The Company will not issue any subscription rights. Each share held by Eligible Shareholders as of the Record Date will be given preferred allocation for 1 Offer Share per 8 Shares owned per record date.

Allocation date .......................................................... On or about 17 June 2008.

Payment date ............................................................. On or about 20 June 2008.

Distribution of allocated shares ................................. On or about 25 June 2008.

Listing of the Offer Shares ........................................ On or about 26 June 2008.

Orders for Offer Shares must be made on a Subscription Form as attached as Appendix 8 hereto. The Subscription Form must be received by the Managers by 16:30 hours (CET) on 13 June 2008.

The Board and the Managers may at their sole discretion refuse any improperly completed, delivered or executed Subscription Form or any subscription which may be unlawful. A subscription is irrevocable and may not be withdrawn, cancelled or modified once it has been received by on of the Managers.

Allotment of the Offer Shares is expected to take place on or about 17 June 2008. The Board reserves the right to round off, cancel or reduce any subscription.

The following allocation criteria will be used in the Subsequent Offering:

1. All Eligible Shareholders will be allocated 1 Offer Share per 8 Shares owned as of 25 April 2008 (appearing in the VPS on 30 April 2008).

2. In the event all Eligible Shareholders do not fully utilize their pre-emptive right, those Eligible Shareholders who have over-subscribed, will have a right to be allocated remaining shares not subscribed for on a pro rata basis. In the event a pro rata allocation is not possible due to few remaining shares, the Company will determine the allocation by drawing lots or applying similar mechanisms through the automated procedure applicable through VPS.

3. To the extent the Subsequent Offering is not fully subscribed and allocated in accordance with 1 and 2 above, allocation will be made to other Subscribers not being Eligible Shareholders.

General information on the number of Offer Shares is expected to be published on or about 16 June 2008 in the form of a stock exchange release through the Oslo Børs information system. All Subscribers being allotted Offer Shares will receive a letter from VPS confirming the number of Offer Shares allotted to the Subscriber and the corresponding amount to be paid. This letter is expected to be mailed on or about 17 June 2008.

Each Subscriber must provide a one-time authorization to debit a specified bank account with a Norwegian bank for the amount (in NOK) payable for the Offer Shares allotted to such Subscriber by signing the Subscription Form when subscribing for Offer Shares. The amount will be debited on or about 20 June 2008. Subscribers not having a Norwegian bank account must ensure that payment for their Offer Shares with cleared funds is made on or before 12:00 (CET) on 20 June 2008 and should contact the Managers in this respect.

1.5 THE LISTING AND ADMISSION TO TRADING OF THE NEW SHARES AND THE OFFER

SHARES

Following the publication of this Prospectus, the Shares issued in the Private Placement will be listed and begin trading on Oslo Børs at the date hereof, being on or about 28 May 2008.

The Offer Shares to be issued to subscribers in the Subsequent Offering will also be listed on Oslo Børs. Assuming timely payment by all Subscribers, the Company expects that these shares will be listed on Oslo Børs on or about 26 June 2008.

5

1.6 EXPENSES IN CONNECTION WITH THE OFFERINGS

Costs attributable to the Private Placement and the Subsequent Offering will be borne by the Company. The total costs are expected to amount to approximately NOK 24 million.

1.7 SUMMARY OF RISK FACTORS

A number of risk factors may adversely affect the Company and the Group as a whole. Below is a brief summary of the most relevant risk factors described in Section 2. Please note that the risks mentioned below are not the only risks that may affect the Company’s business or the value of the Shares. Additional risks not presently known to the Board of Directors of the Company or which are currently considered immaterial may also impair its business operations and prospects.

Operational and industry risk: Market and industry risk include risks related to the Group’s ability to find, acquire, develop and produce from oil and gas reserves that are economically recoverable, risk of inaccurate or incorrect reserves and resource information, risk of required substantial investments in the near future, risk relating to the price of oil and gas, political and regulatory risk, environmental and HSE risk, risk for increased competition, risk for third parties to operate its assets, risk of unexpected shutdowns, risk of future decommissioning liabilities, risk for not attracting and retaining personnel, risk of labour disputes, risk related to legal disputes, and risk associated with damaged equipment and the Group’s insurance policies.

Financial risk: Financial risk include the risk that the Company’s debt arrangements may restrict the Group’s business going forward, the risk of not being able to refinance existing debt, the risk of not being able to comply with covenants of a general, financial and technical nature, and risk associated with exchange rate fluctuation.

Risk factors relating to the Shares: The risks related to the Shares include price volatility of publicly traded securities, difficulties for foreign investors to enforce civil liabilities in Norway, significant restrictions on U.S. investors’ ability to transfer or resell their Shares, and the risk that foreign shareholders may be diluted if they are unable to participate in future offerings.

1.8 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

1.8.1 Board of Directors

The Company’s Board of Directors consists of five members: Lars Takla (Chairman), John Hogan (deputy chairman), Roger O’Neil (member), Therese Log Bergjord (member) and Heidi Marie Petersen (member). For more information, please refer to Section 11 below.

1.8.2 Management

The Group’s executive management comprises: Scott Kerr (CEO), Synnøve Røysland (VP, Southern North Sea), Rune Martinsen (VP, Northern North Sea), Thor Arne Olsen (VP, Commercial), Reinert Seland (VP, Exploration), Jan Nagell (CFO), Birte N. Borrevik (VP, Drilling and Projects), Stig Frøysland (VP, HSE/HR) and Einar Gjelsvik (VP, External Relations). For more information, please refer to Section 11 below.

1.8.3 Employees

As of the date of this Prospectus, the Noreco Group employs 71 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. For more information, please refer to Section 11 below.

1.9 ADVISORS AND AUDITORS

1.9.1 Managers

The Managers for the Private Placement were Pareto Securities AS, P.O. Box 1411 Vika, 0115 Oslo, Norway and Glitnir Securities AS, P.O. Box 1474 Vika, 0161 Oslo, Norway. The Managers for the Subsequent Offering are Pareto Securities AS and Glitnir Securities AS.

6

1.9.2 Legal advisor

The legal advisor to the Company is Arntzen de Besche Advokatfirma AS, P.O. Box 2734 Solli, 0204 Oslo, Norway.

1.9.3 Independent Auditor

The Company’s independent auditor is KPMG AS. For further information, please refer to Section 9.5 in this Prospectus.

1.10 SUMMARY OF OPERATING AND FINANCIAL INFORMATION

The selected financial information set forth in this Prospectus should be read in conjunction with the financial statements and the notes to those statements set out in Appendices 2, 3 and 4 in addition to section 9, 10 and 11 in this Prospectus.

1.10.1 Consolidated income statements

Amounts in NOK 000’s As per 31

March 2008

(unaudited)

IFRS

As per 31

March 2007

(unaudited)

IFRS

FY ended 31

Dec 2007

(audited)

IFRS

FY ended 31

Dec 2006

(audited)

IFRS

Operating revenues ........................................ 435,763 - 839,664 - Total operating expenses ................................ 294,284 19,248 790,614 87,235

Operating result ............................................ 141,479 (19,248) 49,051 (87,235)

Financial income ............................................ 26,248 214 149,001 1,374 Financial expenses.......................................... 164,617 1,087 447,212 2,204

Net financial result........................................ (138,368) (873) (298,210) (830)

Ordinary profit/loss before tax.................... 3,110 (20,121) (249,159) (88,064)

Tax 31,469 15,258 50,469 68,205

Profit/loss for the period .............................. (28,359) (4,865) (198,690) (19,859)

1.10.2 Consolidated balance sheet

Amounts in NOK 000’s As per 31

March 2008

(unaudited)

IFRS

As per 31

March 2007

(unaudited)

IFRS

FY ended 31

Dec 2007

(audited)

IFRS

FY ended 31

Dec 2006

(audited)

IFRS

ASSETS

Total fixed assets ............................................ 8,810,011 17,015 8,746,954 15,832 Total current assets ......................................... 1,580,765 155,628 1,583,735 94,276

TOTAL ASSETS .......................................... 10,390,775 172,642 10,330,688 110,108

EQUITY AND LIABILITIES

Equity

Share capital .................................................. 346,390 31,422 345,385 31,422 Other equity .................................................... 1,321,943 24,470 1,332,066 24,302

Total equity ................................................... 1,668,333 55,892 1,677,451 55,724

Total liabilities and obligations ...................... 7,818,048 252 7,712,504 252 Total short term debt....................................... 904,394 116,498 940,733 54,132

Total liabilities .............................................. 8,722,442 116,750 8,653,237 54,384

TOTAL LIABILITIES AND EQUITY ...... 10,390,775 172,642 10,330,688 110,108

7

1.10.3 Cash flow statement

Amounts in NOK 000’s As per 31

March 2008

(unaudited)

IFRS

As per 31

March 2007

(unaudited)

IFRS

FY ended 31

Dec 2007

(audited)

IFRS

FY ended 31

Dec 2006

(audited)

IFRS

Net cash flow from operating activities .......... 38,815 (34,468) 247,406 (80,373)

Net cash flow from investing activities .......... (309,752) (920) (4,522,036) (9,916)

Net cash flow from financing activities .......... (125,926) 68,050 5,257,667 60,643

Net change in cash and cash equivalents. .. (396,863) 32,662 983,037 (29,645)

Cash and cash equivalents at start of the

period ............................................................. 973,402 11,970 11,970 41,616

Effects of changes in exchange rates on

cash and cash equivalents (17,694) (21,605)

Cash and cash equivalents at end of the

period ............................................................. 558,845 44,632 973,402 11,970

1.10.4 Significant changes in the Company’s financial or trading position since 31 March 2008

On 25 April 2008, Noreco entered into a share sale agreement with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. In order to partly finance the acquisition and to increase the equity for general corporate purposes, Noreco completed a Private Placement raising a total of NOK 450 million.

The Company is not aware of any other significant changes in the financial or trading position of the Noreco Group which has occurred since 31 March 2008.

1.11 PRO FORMA FINANCIAL INFORMATION

On 25 April 2008, Noreco entered into a share sale agreement with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited (TODL). Effective date is 1 January, 2008. Completion is expected to take place by June 2008. The pro forma financial information is based on a share of ownership of 100%, corresponding to the share ownership as of the date of this Prospectus.

The unaudited pro forma financial information has been prepared in accordance with EU Regulation No 809/2004, as included in the Norwegian Securities Trading Act section 5-13 and the CESR’s Level 3 guidance. Because of its nature, the pro forma financial information addresses a hypothetical situation and therefore does not represent the Company’s actual financial position or results. The pro forma profit and loss and balance sheet information does not have a continuing impact on Noreco. The pro forma financial information is prepared for illustrative purposes only.

The pro forma financial statements is set out in Sections 11.5 and 11.6 to this Prospectus.

8

1.12 CAPITALISATION AND INDEBTEDNESS

The table below sets forth the Company’s audited and unaudited consolidated cash and equivalents and capitalisation as at 31 March 2008. The table should be read together with the consolidated financial statements and the related notes thereto, as well as the information under Section 9 “Financial Information and operating review”.

Amounts in thousand NOK 31.03.2008

Unaudited

Total current debt .............................................................................. 904,394

Total non-current debt ........................................................................ 7,818,048

Total shareholders’ equity .............................................................. 1,668,333

Liquidity ......................................................................................... 558,845

Current financial receivable1 ......................................................... 115,943

Current financial debt ..................................................................... 387,349

Non-current financial indebtedness ............................................... 4,632,731

Net financial indebtedness ........................................................... 4,345,292

1.13 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

1.13.1 Major shareholders

As of 26 May 2008 the Company had a total of 1,429 shareholders divided into 1,314 Norwegian and 115 foreign owners.

The table below shows the 5 largest shareholders in Noreco as per 26 May 2008:

Shareholder No of shares %

1 LYSE ENERGI AS 2 17,355,940 13.3%

2 NEC INVEST AS C/O HITECVISION PRIV 16,725,396 12.8%

3 NORDEA BANK NORGE AS AVD VERDIPAPIRFINANS 11,525,527 8.8%

4 IKM INVEST AS 3 8,239,216 6.3%

5 VERDIPAPIRFONDET KLP 5,053,787 3.9%

1.13.2 Related party transactions

Since its inception, the Company has been party to the following related party transactions4:

In connection with the raising of the initial funding from 3i Companies, Lyse Energi and HVPE, Noreco entered into an agreement with Melberg Partners, a company partly owned by Tollak Melberg, one of the Noreco founders and then board member, to provide economic support, investment advice and financial modelling. The contract was completed in October 2005 when Noreco raised private equity capital. However, the compensation for this work was to be paid as the equity was drawn and this resulted in payments to Melberg Partners being made in 2005, 2006 and 2007. All payments to Melberg Partners have now been completed and there is no contractual relation between Noreco and Melberg Partners at this time.

1 “Current financial receivable” includes open position asset/open position liability. 2

10,000,000 Shares are registered under ISIN NO 001 0430150 pending automatic transfer to the Company’s existing ISIN

number, being the date hereof.3

4,000,000 Shares are registered under ISIN NO 001 0430150 pending automatic transfer to the Company’s existing ISIN

number, being the date hereof.4

The companies Lyse Energi AS (Lyse), Energivekst AS/Hitec Private Equity AS (HVPE), 3i Companies (3i Group plc, 3i

UK Private Equity 2004/06 LP, 3i Pan European Growth Capital 2005/06 LP) and Norwegian Company Founders DA

(Founders Holding) are shareholders in the Company.

9

Also in connection with the private equity fund raising in October 2005, Noreco agreed to pay legal costs and negotiation costs for the capital providers along with an ongoing monitoring fee to 3i, Lyse Energi, HVPE and Founders Holding. In return Noreco had access to the expertise of these companies including advice on financial questions, the raising of new funds and future funding requirements. The fee was paid quarterly through 2005, 2006 and until June of 2007. In June of 2007 Noreco raised additional capital and the monitoring fee is no longer valid. There is no longer any fee agreement between Noreco and the private equity providers.

The details for payments made to related parties are outlined under Section 13.6.

1.13.3 Trend information

The Company has not experienced any changes or trends outside the ordinary course of business that are significant to the Noreco Group between 31 March 2008 and the date of this Prospectus, other than those described elsewhere in this Prospectus. Please see Section 7 “Presentation of the Company”, Section 8 “The Market”, Section 9 “Consolidated Financial Information” and Section 13 “Share Capital and Shareholder Matters” for more information about significant recent trends in the Group’s business and relevant markets.

1.13.4 Lock-up arrangement

In connection with the listing of the Shares in November 2007, Pareto and SEB Enskilda entered into a lock-up agreement with the management and board members of Noreco, being Scott Kerr, Tor Arne Olsen, Reinert Seland, Einar Gjelsvik, Rune Martinsen, Birte N. Borrevik and Lars Takla. Under the lock-up agreement, these shareholders have agreed not to offer, sell, contract or otherwise dispose of certain number of shares in the Company for a period of 12 months following the first day of trading of the Shares in Oslo Børs (being on 9 November 2007), without the prior written consent of Pareto and SEB Enskilda.

1.14 ADDITIONAL INFORMATION

1.14.1 Share capital and shareholder matters

Noreco is a Norwegian public limited liability company with registration number 987 989 297.

The Company’s registered share capital is NOK 405,752,310.20 consisting of 130,887,8425 Shares each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Liability Companies Act.

All issued Shares in the Company are vested with equal shareholder rights in all respects. There is only one class of shares and all Shares are freely transferable.

The dilutive effect in connection with the Private Placement and the Subsequent Offering will be approximately 16%, assuming full subscription of the Subsequent Offering.

Prior to the

Private

Placement, and

Subsequent

Offering

Prior to the

Subsequent

Offering

Subsequent

both offerings

No of shares each with a nominal value of NOK 1 ............. 111,738,842 130,887,842 133,387,842 % dilution ...................................................................... 100.00% 85.37% 83.77%

The Shares are registered with VPS under the International Securities Identification Number (ISIN) NO 001 0379266. The New Shares issued in the Private Placement are, until Listing, issued under a separate ISIN number (NO 001 0430150). The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

See Section 12 “Share Capital and Shareholder Information” for a further description of the Company’s share capital.

5A total of 19,149,000 Shares are registered under the separate ISIN number NO 001 0430150. These shares will

automatically assume the Company’s original ISIN number upon publication of this Prospectus, being the date hereof.

10

1.14.2 Articles of Association

The Company’s Articles of Association are included as Appendix 1 to this Prospectus.

According to its Articles of Association, “the business of the company is exploration, production and sale

related to oil and gas activities. The company will obtain participating interests in production licenses by participating in license rounds and through acquisition of participating interests.”

The Company has only one class of shares.

The Board shall consist of three to eight members.

1.14.3 Documents on display

For the life of this Prospectus the following documents may be inspected at www.noreco.com and at the Company’s offices at Haakon VII’s gate 9, 4005 Stavanger, Norway:

• The Company’ Memorandum of Incorporation

• The Articles of Association

• The Company’s historical financial information and auditors report for the 2007, 2006 and 2005 financial years

• The Company’s historical financial information for the three months ended 31 March 2008

• The historical financial information of Altinex for the years 2005-2007

• The prospectus dated 1 November 2007 prepared in connection with the listing of Noreco’s shares on Oslo Børs ASA.

1.14.4 Third party statements

Information contained in this Prospectus which has been sourced from third parties has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information inaccurate or misleading.

11

2. RISK FACTORS

2.1 GENERAL

Investing in Noreco involves inherent risks. Prospective investors should consider, among other things, the risk factors set out in this Prospectus before making an investment decision. The risks described below are not the only risks facing the Company and the Group as a whole. Additional risks not presently known to the Company or currently deemed by the Company to be immaterial to the Group’s business may in future impair the Group’s business operations and adversely affect the price of the Company’s Shares. If any of the following risks actually materialize, Noreco’s business, financial position and operating results could be materially adversely affected.

A prospective investor should consider carefully the factors set out below, as well as the information provided elsewhere in the Prospectus, and should consult his or her own expert advisors as to the suitability of an investment in the Shares.

An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. The information is presented as of the date hereof and is subject to change, completion or amendment without notice.

All forward-looking statements included in this Prospectus are based on information available to the Company on the date hereof and reflect the Company’s present best effort opinions only. The Company assumes no obligation to update any such forward-looking statements unless required by applicable law or regulations. Investors are cautioned that any forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties and that actual results may differ materially from those assumed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those described below and elsewhere in this Prospectus. Reference is also made to Section 4, “Notice regarding forward-looking statements”.

2.2 RISK FACTORS RELATING TO THE GROUP AND THE INDUSTRY IN WHICH IT

OPERATES

2.2.1 The Group is dependent on finding, acquiring, developing and producing oil and gas reserves that

are economically recoverable

The Group is dependent on its ability to appraise, find, acquire, develop and commercially produce oil and gas reserves. The Group must continually locate and develop or acquire new reserves to replace its existing reserves that are being depleted by production. Future increases in the Group's reserves will depend not only on its ability to explore and develop its existing properties but also on its ability to select and acquire suitable additional properties either through awards at licensing rounds or through acquisitions.

Few prospects that are explored are ultimately developed into producing oil and gas fields. Significant expenditure is required to establish the extent of oil and gas reserves through seismic and other surveys and drilling and there can be no certainty that oil and gas reserves will be found.

There are many reasons why the Group may not be able to find or acquire oil and gas reserves or develop them for commercially viable production. For example, the Group may be unable to negotiate commercially reasonable terms for its acquisition, exploration, development or production activities. Further, the Group is dependent on the competence and judgment of third party operators in relation to the development of reserves where it is not itself the operator. The exploration and development of oil and gas assets may be curtailed, delayed or cancelled by unusual or unexpected geological formation pressures, oceanographic conditions, hazardous weather conditions or other factors. There are numerous risks inherent in drilling and operating wells, many of which are beyond the Company’s control. Noreco’s operations may be curtailed, delayed or cancelled as a result of environmental hazards, industrial accidents, occupational and health hazards, technical failures, shortage or delays in the delivery of rigs and/or other equipment, labour disputes and compliance with governmental requirements. Drilling may involve unprofitable efforts, not only with respect to dry wells, but also with respect to wells which, though yielding some petroleum, are not sufficiently productive to justify commercial development or cover operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs.

12

Without successful exploration or acquisition activities, the Group's reserves, production and revenues will decline. There is no assurance that the Group will discover, acquire or develop further commercial quantities of oil and gas.

2.2.2 Reserves and resources information represents estimates which may be inaccurate or incorrect

The reserves data included in this Prospectus are estimates. In general, estimates of the quantity and value of economically recoverable oil and gas reserves and the possible future net cash flows are based upon a number of variable factors and assumptions, such as historic production rates, ultimate reserves recovery, interpretation of geological and geophysical data, timing and amount of capital expenditures, marketability of oil and gas, royalty rates, continuity of current fiscal policies and regulatory regimes, future oil and gas prices, operating costs, development and production costs and workover and remedial costs, all of which may vary from actual results. Estimates are also to some degree speculative, and classifications of reserves are only attempts to define the degree of speculation involved. Consequently, the nature of reserve quantification studies means that there can be no guarantee that estimates of quantities and quality of oil and gas disclosed will be available for extraction. Therefore, actual production, revenues, cash flows, royalties and development and operating expenditures may vary from these estimates. Such variances may be material and may have a material adverse effect on the Company’s valuation, its ability to raise further financing and its financial position in general.

As regards contingent resources, these may not be considered commercially recoverable by the Group for a variety of reasons, including the high costs involved in recovering the contingent resources, the price of oil at the time, the availability of the Group's resources and other development plans that the Group may have. By contrast, prospective resources are those deposits that are estimated, on a given date, to be potentially recoverable from undiscovered accumulations. The Group's estimates of its contingent and prospective resources are uncertain and can change with time and there can be no guarantee that the Group will be able to develop these resources commercially.

2.2.3 Substantial investment will be necessary in the future

The Group will be required to make substantial capital expenditure for the acquisition, exploration, development and production of oil and gas reserves in the future. Such capital expenditures could be covered by revenues, new equity or by obtaining new debt. If the Group’s revenues decline, or if the Company is unable to attract investors to increase the Company’s equity, or if new debt arrangements are not accessible, or only on unattractive commercial terms, the Group will experience a limited ability to undertake or complete future exploration programs, development investments and acquisitions. The Group’s inability to access sufficient capital for its operations could lead to licenses being revoked, or could lead to a material adverse effect on the Group’s financial conditions, results of operations or prospects in general.

2.2.4 Risks relating to the price of oil and gas

The profitability and cash flow of Noreco’s operations will be dependent upon the market price of oil and gas. This is known to fluctuate. Historically, oil prices have fluctuated widely for many reasons, including global and regional supply and demand, and expectations regarding future supply and demand for oil and petroleum products; geopolitical uncertainty; access to pipelines, tanker ships and other means of transporting oil, gas and petroleum products; prices, availability and government subsidies of alternative fuels; prices and availability of new technologies; the ability of the members of the Organisation of Petroleum Exporting Countries (“OPEC”) and other oil-producing nations to set and maintain specified levels of production and prices; political, economic and military developments in oil producing regions, particularly the Middle East; domestic and foreign governmental regulations and actions, including export restrictions, taxes, repatriations and nationalisations; global and regional economic conditions; and weather conditions and natural disasters.

It is impossible to predict accurately future oil and gas price movements. Accordingly, oil and gas prices may not remain at their current levels. The economics of producing from some of the Group's wells may change as a result of lower prices, which could result in a reduction in the volumes of the Group's reserves if some are no longer economically viable to develop. The Group might also elect not to produce from certain wells at lower prices. All of these factors could result in a material decrease in the Group's net production revenue causing a reduction in its oil and gas acquisition, development and exploration activities and financial condition. In addition, bank borrowings available to the Group currently are and in the future are expected to be in part be determined by the Group's borrowing base. A sustained material decline in prices from historical average prices

13

could reduce the Group's borrowing base, thereby reducing the bank credit available to the Group which could result in the Group having to repay a portion, or all, of its bank debt.

2.2.5 Political and regulatory risk

Changes in the legislative and fiscal framework governing the activities of the companies engaged within the oil and gas sector may have a material impact on exploration and development activity or directly affect the Company’s operations. In particular, changes in political regimes will constitute a material risk factor for the Company’s operations in foreign countries. Further, the Group is faced with increasingly complex tax laws. The amounts of taxes the Group pays could increase substantially as a result of changes in, or new interpretations of, these laws, which could have a material adverse effect on its liquidity and results of operations. During periods of high profitability, there are often calls for increased or windfall taxes on oil and gas revenue. Taxes have increased or been imposed in the past and may increase or be imposed again in the future. In addition, taxing authorities could review and question the Group's tax returns leading to additional taxes and penalties which could be material. Decommissioning (where relevant) could also have a material tax impact for the Group’s financial position and results of operations.

In order to conduct its operations in compliance with applicable laws and regulations, the Group must obtain licenses and permits from various government authorities. The Group may incur substantial costs in order to maintain compliance with these existing laws and regulations and additional costs if these laws are revised or if new laws affecting the Group's operations are passed. Furthermore, there can be no assurance that the Group will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and production operations on its properties.

2.2.6 Environmental and HSE risks

All phases of the oil business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and gas operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities. Compliance with such legislation can require significant expenditures and a breach may result in the imposition of fines and penalties, some of which may be material. Environmental legislation is evolving in a manner expected to result in stricter standards and enforcement, larger fines and liability and potentially increased capital expenditures and operating costs. The discharge of oil, natural gas or other pollutants into the air, soil or water may give rise to liabilities to foreign governments and third parties and may require the Company to incur costs to remedy such discharge. No assurance can be given that environmental laws will not result in a curtailment of production or a material increase in the costs of production, development or exploration activities or otherwise adversely affect the Company’s financial condition, results of operations or prospects.

The Group's operations and assets are affected by numerous international, EU and national laws and regulations concerning health and safety and environmental (“HSE'”) matters including, but not limited to, those relating to the health and safety of employees, discharges of hazardous substances into the environment and the handling and disposal of waste. The technical requirements of these laws and regulations are becoming increasingly complex, stringently enforced and expensive to comply with and this trend is likely to continue. The failure to comply with current HSE laws and regulations has and may in the future result in regulatory action, the imposition of fines or the payment of compensation to third parties which each could in turn have a material adverse effect on the Group's business, financial condition and results of operations.

2.2.7 Competition

The oil and gas industry is highly competitive in all its phases. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. Noreco competes with other exploration and production companies, many of which include major international oil and gas companies which may have greater financial resources, staff and facilities than those of the Group. These companies have strong market power as a result of several factors, including the diversification and reduction of risk, including geological, price and currency risks; increased financial strength facilitating major capital expenditures; greater integration and the exploitation of economies of scale in technology and organization; strong technical experience; increased infrastructure and reserves; and strong brand recognition. Due to this competitive environment, the

14

Group may be unable to acquire attractive suitable properties or prospects on terms that it considers acceptable. As a result, the Group's revenues may decline over time, thereby materially and adversely affecting its results of operations or financial condition.

2.2.8 The Group’s debt arrangements may restrict the Group’s business in various ways

The Group’s debt arrangements contain several restrictive covenants, including but not limited to restrictions on assets sales and acquisitions, investments, the ability to pay dividends or other capital distributions, and the possibility to raise additional financial indebtedness. In addition, several financial covenants are imposed on the Company and the Group. Such covenants restrict the Group in various ways in terms of how the Group conducts its business, and the Group may be restricted in responding to changing market conditions or in pursuing favourable business opportunities. Further, the Group will have to dedicate a substantial portion of its cash flow from operations to service debt, which in turn will reduce the amount of cash flow it will have available for capital investment, working capital and other general corporate purposes.

2.2.9 Current production is concentrated in a few number of fields

The Group’s current production of oil and gas is concentrated in a small number of offshore fields. If mechanical problems, storms or other events curtail a substantial portion of the Group's production or if the actual reserves associated with any one of the Group's producing fields are less than the Group's estimated reserves, the Group's results of operations and financial condition could be adversely affected.

2.2.10 The Group relies on third parties to operate some of its assets

While the Group operates certain of its assets, it is not the operator of some of its current development and production assets. The operating agreements with third party operators typically provide for a right of consultation or consent in relation to significant matters and generally impose standards and requirements in relation to the operator's activities. Nevertheless, the Group generally has limited control over the day-to-day management or operations of those assets and is therefore dependent upon the activities of the third party operator. A third party operator's mismanagement of an asset may result in delays or increased costs to the Group. While the Group has purposely acquired interests in assets that are operated by operators it believes to be reputable, there can be no assurance that the operator will observe such standards or requirements.

If a party with an interest in the Group's assets elects not to participate in certain activities relating to those assets that require that party's consent, the Group may be unable to undertake such activities alone or together with the other participants at the desired time or at all. Other participants in the Group's assets may default on their obligations to fund capital or other payments in relation to the assets. In such circumstances, the Group may be required under the terms of operating agreements to contribute all or part of any funding shortfall. Any such delay in or inability to undertake activities or fulfil an obligation to provide further funding could adversely affect the Group's business, results of operations or prospects.

2.2.11 The Group holds a number of licenses in their initial terms

The Group holds a number of interests in exploration licenses or in other licenses that are in their initial terms. The early stages or exploration period of a license are commonly the most risky. These phases of the term of a license require high levels of relatively speculative capital expenditure without a commensurate degree of certainty of a return on that investment.

2.2.12 Unexpected shutdowns may occur

Mechanical problems, accidents, oil leaks or other events at the Group's producing fields or its pipelines or subsea infrastructure may cause an unexpected production shutdown at these fields. Any unplanned production shutdown of the Group's facilities could have a material adverse effect on the Group's business, financial condition and results of operations. In June 2007, a water injection pipeline between the Siri and the Nini platform ruptured. Noreco, through its subsidiary Altinex, holds a 30% interest in this pipeline. The conclusion after detailed investigations is that the whole pipeline needs to be replaced. A replacement can probably not be effected before 2009. Dong (the operator) is however working on a solution to maintain production until then. The replacement costs are assessed at DKK 450-500 million. In addition the licensees have suffered a loss of production income, not yet be finally determined. The Group underwriters have been advised of the incident and have had presented the Group’s initial insurance claim is under preparation both in respect of the physical damage and the loss of production income.

15

2.2.13 Risks associated with future decommissioning liabilities

The Group, through its license interests, has in the past assumed certain obligations in respect of the decommissioning of its fields and related infrastructure and is expected to assume additional decommissioning liabilities in respect of its future operations. These liabilities are derived from legislative and regulatory requirements concerning the decommissioning of wells and production facilities and require the Group to make provision for and/or underwrite the liabilities relating to such decommissioning. The oil and gas industry currently has little experience of decommissioning petroleum exploration and production infrastructure in the North Sea as few such structures have been removed in this region. It is, therefore, difficult to forecast accurately the costs that the Group will incur in satisfying its decommissioning obligations. When its decommissioning liabilities crystallize, the Group will be jointly and severally liable for them with other former or current partners in the field. In the event that other partners default on their obligations, the Group will remain liable and its decommissioning liabilities could be magnified significantly through such default. Any significant increase in the actual or estimated decommissioning costs that the Group incurs may adversely affect its financial condition.

2.2.14 The Group is dependent on attracting and retaining personnel

The Group's success depends, to a large extent, on certain of its key personnel. The loss of the services of any key personnel could have a material adverse affect on the Group. The Group does not maintain, nor does it plan to obtain, key person insurance against the loss of any of its key personnel. In addition, the competition for qualified personnel in the oil and gas industry is intense. There can be no assurance that the Group will be able to continue to attract and retain all personnel necessary for the development and operation of its business.

2.2.15 Risks associated with labour disputes

The Group's contractors or service providers may be limited in their flexibility in dealing with their staff due to the presence of trade unions among their staff. If there is a material disagreement between contractors or service providers and their staff belonging to trade unions, the Group's operations could suffer an interruption or shutdown that could have a material adverse effect on its business, results of operations or financial condition.

2.2.16 Risks associated with legal disputes in general

The Group currently is currently involved in disputes as described in Section 15.1 of the Prospectus, and may from time to time be involved in other legal disputes related to the Group’s operations or otherwise. The outcome of existing and any future disputes may adversely affect the Group’s business, results of operations or financial condition.

2.2.17 Risk associated with damaged equipment and the Group’s insurance policies

The Group’s equipment, including equipment owned by the licenses in which the Group holds interests, may be damaged or in need for replacement. For instance, the water injection pipeline between the Nini field and the Siri Field has been damaged due to a certain type of aggressive corrosion and needs to be replaced and production from the field could be ceased during replacement. Although the Group, or the license in which the Group has an interest, in general will have insurance coverage for property damage and, currently, in respect of loss of production income, it is not certain that all incidents will be covered or that the sums insured under such coverage will be sufficient to hold the Group harmless from the loss occurred. Thus, any significant loss or liability for which the Company is not insured or is found not to be covered could have an adverse effect on the Group’s business, financial condition and results of operation. Further, such damages may lead to the Group’s insurance premiums or the applicable deductibles under the relevant policies being increased.

2.3 RISK FACTORS RELATING TO THE GROUP’S FINANCING

2.3.1 Borrowing and leverage

Borrowings create leverage and the Group is highly leveraged. In addition, the current financing structure is rather complex with several bonds having been issued as well as several bank loan facilities currently being in place. The debt arrangements include several covenants and undertakings of a general, financial and technical nature and several of the debt arrangements contain cross-default provisions. Failure by the borrowers or other obligors to meet any of the covenants or undertakings could result in all outstanding amounts under the different debt arrangements becoming immediately due for payment. In addition, security rights granted to the lenders could be enforced. If outstanding debts were declared due for immediate payment, there would be no assurances that the Group would be able to meet its obligations, and there are no assurances that the Group would be able to

16

obtain alternative financing, either on a timely basis or at all. Any breach of existing covenants and undertakings with a subsequent claim for repayment of all debts outstanding would thus have a material adverse effect on the Group’s financial position and is likely to have a material adverse effect on the value of the Company’s shares, the Group’s operations and future success.

As for new borrowings, the Group will seek to borrow only when the directors of the Company believe that such borrowings will benefit the Group after taking into account considerations such as the need to refinance existing debt, the costs of the borrowing, the repayment schedules and the likely returns on the assets financed with the borrowed monies. However, no assurance can be given that the income will exceed the interests and costs associated with the loans, nor be sufficient to repay the loans when due. Further, no assurances can be given that the Group will be able to refinance on economically attractive terms, or at all.

2.3.2 Risk associated with exchange rate fluctuations

The Group has operations which generate significant cash flows in a variety of currencies. The Group also comprises businesses with various functional currencies (US$ and NOK). Although the Group may undertake limited hedging activities in an attempt to reduce certain currency fluctuation risks, these activities provide only limited protection against currency-related losses.

2.4 RISK FACTORS RELATING TO THE SHARES IN NORECO

2.4.1 Volatility of share price

There can be no assurance that an active market can be sustained with respect to the Shares. The market price of the Shares could fluctuate widely to a number of factors, some of which are beyond the Company’s control, in response, including the following:

• actual or anticipated variations in operating results and/or production levels;

• fluctuations in oil prices and reserve levels;

• changes in financial estimates or recommendations by stock market analysts regarding the Company or its competitors;

• announcements by the Company or its competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

• sales or purchases of substantial blocks of stock;

• additions or departures of key personnel;

• future equity or debt offerings by the Company and its announcements of these offerings; and

• general market and economic conditions.

Moreover, in recent years, the stock market in general has experienced large price fluctuations. These broad market fluctuations may adversely affect the Company's stock price, regardless of its operating results.

2.4.2 Shareholders not participating in future offerings may be diluted and pre-emptive rights may not

be available to US holders of the Company’s Shares

Shareholders in Norwegian public companies such as the Company have pre-emptive rights to subscribe for new shares proportionate to the aggregate amount of the shares they hold. Such pre-emptive rights may be set aside by the shareholders meeting, which could result in existing shareholders being diluted as a result of the share issue.

The Company is not currently subject to the reporting requirements of the US Securities Exchange Act of 1934, as amended, and has no intention to subject itself to such reporting requirements by filing a registration statement under the US Securities Act to register any rights or new Shares. For reasons relating to US securities laws (and the laws in certain other jurisdictions) or other factors, US investors (and investors in such other jurisdictions) may not be able to participate in a new issuance of shares or other securities and may face dilution as a result. If US holders of the Shares (or holders of Shares in other jurisdictions) are not able to receive, trade or exercise pre-emptive rights granted in respect of their Shares in any rights offering by the Company, then they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted.

17

2.4.3 It may be difficult for investors based in the United States to enforce civil liabilities predicated on

U.S. securities laws against the Company, its affiliates, directors and officers

The Company is organized under the laws of Norway. The Company’s directors and officers reside outside of the United States, and the Company’s assets are located outside of the United States. As a result, it may be difficult for investors in the United States to effect service of process within the United States upon the Company or the Company’s directors and officers or to enforce judgments obtained in U.S. courts predicated on the civil liability provisions of U.S. Federal securities laws against the Company or the Company’s directors and officers. In addition, punitive damages in actions brought in the United States or elsewhere may be unenforceable in Norway.

2.4.4 Holders of the Company’s Shares that are registered in a nominee account may not be able to

exercise voting rights as readily as shareholders whose shares are registered in their own names

with the VPS

Beneficial owners of the Company’s Shares that are registered in a nominee account may not be able to vote such shares unless their ownership is re-registered in their names with the VPS prior to the Company’s general meetings. The Company cannot guarantee that beneficial owners of the Company’s Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their shares or otherwise vote their shares in the manner desired by such beneficial owners.

2.4.5 The transfer of Shares is subject to restrictions under the securities laws of the United States and

other jurisdictions

The Company has not registered the Shares under the Securities Act or the securities laws of jurisdictions other than Norway and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act) nor may they be offered or sold in any other jurisdiction in which the registration of the shares is required but has not taken place, unless an exemption from the applicable registration requirement is available or the offer or sale of the shares occurs in connection with a transaction that is not subject to these provisions.

2.4.6 The ability of shareholders to make claims against the Company following registration of the

share capital increase in the Norwegian Register of Business Enterprises is severely limited under

Norwegian law

Following the registration of the capital increase relating to any Shares of the Company in the Norwegian Register of Business Enterprises, subscribers or purchasers of those Shares have very limited recourse against the Company under Norwegian law.

18

3. RESPONSIBILITY FOR THE PROSPECTUS

The Board of Directors of Norwegian Energy Company ASA accepts responsibility for the information contained in this Prospectus. The Board of Directors hereby declares that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of our knowledge, in accordance with the facts and contains no omissions likely to affect its import.

Stavanger, 27 May 2008

The Board of Directors of Norwegian Energy Company ASA

Lars Takla Chairman

John Hogan Roger O'Neil

Therese Log Bergjord Heidi Marie Petersen

19

4. NOTICE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus includes “forward-looking” statements, including, without limitation, projections and expectations regarding the Group’s future financial position, business strategy, plans and objectives. When used in this document, the words “projects”, “forecasts”, “estimates”, “expects”, “anticipates”, “believes”, “plans”, “intends”, “may”, “might”, “will”, “would”, “can”, “could”, “should”, “seek to” or, in each case, their negative, or other variations or similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company and its subsidiaries will operate. Factors that could cause the Group’s actual results, performance or achievements to materially differ from those in the forward-looking statements include but are not limited to:

• the competitive nature of the markets in which the Group operates,

• global and regional economic conditions,

• government regulations,

• changes in political events,

• force majeure events

Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group's actual financial position, operating results and liquidity, and the development of the industry in which it operates may differ materially from those made in or suggested by the forward-looking statements contained in this Prospectus. The Group cannot guarantee that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur. These forward-looking statements are subject to risks, uncertainties and assumptions, including those discussed elsewhere in this Prospectus. Forward-looking statements include statements regarding:

• oil and gas reserves quantities;

• obtaining permits;

• retaining licenses and title to assets;

• the amount and nature of capital expenditure;

• drilling of wells;

• the timing and amount of future production and operating costs;

• availability of equipment;

• business strategies and plans of management; and

• prospect development and property acquisitions.

Some important factors that could cause actual results to differ materially from those in the forward-looking statements are, in certain instances, included with such forward-looking statements and in Section 2 “Risk Factors” in this Prospectus.

The Company undertakes no obligation update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or to persons acting on the Group's behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus.

20

5. THE COMPLETED PRIVATE PLACEMENT

5.1 INTRODUCTION

On 25 April 2008, Noreco announced its share sale agreement entered in with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. The transaction includes the producing Siri field in the Danish sector of the North Sea, and will increase Noreco's daily production by more than 20% and add 4.35 million barrels of oil to the company's proven and probable (2P) reserves.

Talisman Oil Denmark Limited's interest in the Danish sector of the North Sea includes the entire 30% non-operated interest in License 6/95, which contains the producing Siri field. Noreco owns a 20% interest in the Siri field, and will after the transaction hold a 50% share in the field. The Siri platform is an important hub for other fields and discoveries in the area. Noreco holds significant interests in the area, including the Cecilie, Nini, Nini East and Rau fields, and this transaction will create synergies for Noreco in the area.

The acquisition will continue Noreco’s strategic intent to build a leading independent oil and gas company in the North Sea.

The effective date of the transaction is 1 January 2008, and the completion of the acquisition is expected to take place by June 2008, and will be subject to the fulfilment of usual government consents.

In order to partly provide the funding required for the acquisition and to increase the equity for general corporate purposes, the Board of Directors of Noreco resolved to raise funding in the form of up to NOK 450 million in new equity through the Private Placement and a further NOK 57.8 million through the Subsequent Offering (described in more detail in Section 6 to this Prospectus).

5.2 THE SHARES AND SHARE CAPITAL

5.2.1 Share capital

The Company’s registered share capital is NOK 405,752,310.20 consisting of 130,887,842 Shares each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Liability Companies Act. All issued Shares in the Company are vested with equal shareholder rights in all respects. There is only one class of shares and all Shares are freely transferable.

5.2.2 VPS registration

The Shares are registered with VPS under the International Securities Identification Number (ISIN) NO 001 03792666. The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

5.2.3 Legislation and rights attached to the Shares

Reference is made to the review of legislation and rights attached to the Shares in Section 12.8 of the Prospectus.

5.2.4 Mandatory offers

Section 13.7.12 of the Prospectus describes the current and new legislation on mandatory offers applicable to companies listed and incorporated in Norway. The Company or its shareholders have not received any public takeover bids since its inception.

5.2.5 Withholding tax

Section 14.2 of this Prospectus provides information concerning withholding tax for foreign shareholders.

6 The 19,149,000 Offer Shares registered in connection with the Private Placement are pending the publication of this Prospectus, registered in the VPS under a separate ISIN NO 001 0430150.

21

5.3 BOARD RESOLUTION

On 25 April 2008, the Board in Noreco passed, in accordance with the authorization granted by the extraordinary general meeting held on 10 October 2007, the following resolutions regarding the issuance of New Shares in the Private Placement:

The Board resolved to issue 19,149,000 shares, each having a face value of NOK 3.10. The price to be paid for

each share is NOK 23.50. Existing shareholders’ preferential rights are waived, cf. section 10-5 of the Public

Limited Companies Act. The shares are to be subscribed as follows:

1) 11,322,251 shares, equalling a total share contribution of NOK 266,072,898.50, are to be subscribed

by Pareto Securities AS, address Dronning Mauds gt. 3, 0250 Oslo, registration no. 956 632 374.

2) 7,826,749 shares, equalling a total share contribution of NOK 183,928,601.50, are to be subscribed by Glitnir Securities AS, address Haakon VII`s gate 10, 0116 Oslo, registration no. 942 274 238.

The shares are to be paid for in cash no later than 10 May 2008. Payment of the total share contribution is considered done when it is registered paid to Pareto Securities AS’ client account, account no.1201 42 29068.

The total share contribution is then to be transferred to the Company’s account no. 3201 42 30636.

The shares are to be subscribed in a separate subscription form no later than 10 May 2008.

The shares entitle the holder to receive dividends as from registration of the share capital increase in the Register of Business Enterprises and the Central Securities Depository.

Due to the resolved share capital increase, the Board of Directors of the Company made the following resolution:

The first paragraph of Section 4 of the Articles of Association shall be amended to read:

“The share capital of the Company NOK 405,752,310.20 divided on 130 887 842 shares, each with a nominal

value of NOK 3.10,-.”

5.4 OVERVIEW OF THE COMPLETED PRIVATE PLACEMENT

On 25 April 2008, the Board of Directors resolved to conduct a private placement of up to NOK 450 million through a directed issue to institutional investors based on an exemption from the Prospectus requirements under the Securities Trading Act sections 7-2 and 7-4. The Private Placement was conducted as a book-building process with a minimum price of NOK 22.25. The Private Placement was underwritten with a total of NOK 300 million from a consortium of existing and new shareholders at the minimum price.

Completion of the Private Placement was announced on 28 April 2008 under the Company’s ticker “NOR” on www.newsweb.no. The notice of allocation was sent to the investors on 28 April 2008 and payment was received on 2 May 2008. The investors in the Private Placement were delivered existing and unencumbered shares in Noreco in accordance with a Share Lending Agreement entered into between a consortium of lenders, Noreco and the Managers.

The Offer Shares issued in the Private Placement were, at their issue and pending the publication of this Prospectus registered in the VPS with a separate ISIN NO 001 0418825. The Shares will assume the Company’s ordinary ISIN on the date of approval of this Prospectus by Oslo Børs (being the date hereof).

5.5 THE SUBSCRIPTION PRICE IN THE PRIVATE PLACEMENT

Subsequent the closing of the Private Placement, the Board of Directors in cooperation with the Managers decided to set the Subscription Price in the Private Placement to NOK 23.50 per share. When determining the subscription price, the Board considered, among other factors, the level of limit orders received, the Company's average weighted Share price prior to the Private Placement and the level of interest of the Private Placement.

22

5.6 THE UNDERWRITING CONSORTIUM

The Private Placement was underwritten with a total of NOK 300 million from a consortium of existing and new shareholders at the minimum price of NOK 22.25 per share. The underwriters were given a claw-back of half their guaranteed amount in the Private Placement, in addition to a guarantee fee of a total of 1% of the guaranteed amount.

5.7 SETTLEMENT OF THE PRIVATE PLACEMENT

In order to provide the subscribers in the Private Placement with existing and listed Shares at settlement date on 2 May 2008, the Managers and Noreco entered into a share lending agreement with; IKM Invest AS, Melberg Investment AS, Møbelmagasinet Tvedt AS, BD Trading AS, Det Stavangerske Dampskipsselskap, Lyse Energi, TAO Invest AS, Seland Invest AS and Rumar Holding AS (the “Share Lending Consortium”). The Share Lending Consortium agreed to make up to 19,149,000 Shares of its existing and listed Shares in total available to the Managers as a loan to facilitate the settlement of the Shares to be delivered to investors in the Private Placement.

The loan was settled through the redelivery of the 19,149,000 Offer Shares subscribed for by the subscribers in the Private Placement to the Share Lending Consortium. These Shares were not tradable on Oslo Børs prior to the publication of this Prospectus and were issued with ISIN NO 001 0430150 in the VPS. Upon the approval of this Prospectus, the Offer Shares will automatically assume the original ISIN code of the Shares. The Share Lending Consortium received a total of NOK 144,209.27 as compensation for this share loan.

The Offer Shares were issued pursuant to the resolution by the Board meeting of 25 April 2008, referred to in Section 5.3 above.

The payment for the Offer Shares being issued in the Private Placement was made to the Managers on 2 May 2008.

5.8 THE OFFER SHARES

Pending the publication of this Prospectus, the 19,149,000 Offer Shares delivered to the Share Lending Consortium as described in section 5.7 above, were issued with a separate ISIN to the Share Lending Consortium. All of the Offer Shares will assume the same ISIN as the Company’s existing Shares, being ISIN NO 001 0379266 upon the publication of this Prospectus.

All of the Offer Shares are issued electronically in accordance with the regulations set forth in the Norwegian Public Limited Liability Companies Act, are freely tradable and carry the right to any dividend, declared with a record date on or after the date of issuance of the Offer Shares, irrespective of the ISIN code and otherwise rank pari passu with the other outstanding Shares from the date of issuance of the Offer Shares in the Company’s register of shareholders, see also Section 13.7.11 regarding the dividend rights. The Offer Shares issued to the Share Lending Consortium carried the right to dividend from 6 May 2008 which was the date when the share issue was registered with the Norwegian Register of Business Enterprises. For a further description of the rights and tradability of the Shares, see Section 13 (“Share Capital and Shareholder Matters”).

5.9 SHARE CAPITAL FOLLOWING THE PRIVATE PLACEMENT

Following the registration of the New Shares issued in the Private Placement, the Company’s issued share capital is currently NOK 405,752,310.20 consisting of 130,887,842 Shares with a nominal value of NOK 3.1 each.

5.10 DILUTIVE EFFECT

The dilutive effect in connection with the Private Placement will be approximately 14.6%, see table below.

Prior to the Private Placement,

and Subsequent Offering

Subsequent the

Private Placement

No of shares each with a nominal value of NOK 1 .............. 111,738,842 130,887,842 % dilution ....................................................................... 100.00% 85.37%

23

5.11 USE OF PROCEEDS

The gross proceeds from the Private Placement were approximately NOK 450 million. See section 6.19 for net proceeds. The proceeds will, together with available debt, be used to finance the acquisition of the shares in Talisman Oil Denmark Limited and for general corporate purposes.

The share premium resulting from the Private Placement less the direct expenses relating to the Private Placement has been allocated to the Company’s share premium fund.

5.12 MANAGERS AND ADVISORS

The Managers for the Private Placement were Pareto Securities AS, P.O. Box 1411 Vika, 0115 Oslo, Norway and Glitnir Securities AS, P.O. Box 1474 Vika, 0161 Oslo, Norway. The legal advisor to the Company for the Private Placement was Arntzen de Besche Advokatfirma AS, P.O. Box 2734 Solli, 0204 Oslo, Norway.

24

6. THE SUBSEQUENT OFFERING

6.1 BACKGROUND FOR THE SUBSEQUENT OFFERING

The Subsequent Offering comprises an offering of up to 2,500,000 Offer Shares, to be issued in accordance with the regulations set forth in the Norwegian Public Limited Liability Companies Act. The shareholders of Noreco as of 25 April 2008 may submit subscriptions for Offer Shares in the Subsequent Offering. In addition, other investors may submit orders for Offer Shares (see section 6.9 “Allocation criteria” below).

The Shareholders as of 25 April 2008 who were not invited to participate in the Private Placement (the “Eligible Shareholders") will be given preferred allocation in order to enable said shareholders the ability to maintain their relative ownership as of 25 April 2008 following the Private Placement. Accordingly, the pre-emptive rights of the shareholders will be waived, and the Company will not issue any subscription rights. The Board considers the 2,500,000 Offer Shares offered in the Subsequent Offering to be sufficient to give all Eligible Shareholders the ability to maintain their approximate relative ownership. See section 5.1 for a further description of the background for the Private Placement.

6.2 BOARD RESOLUTIONS

With basis in the resolution from the Annual General Meeting held on 25 April 2008, in which the Board was given the authority to issue new shares in the Company, the Board will pass a resolution to issue the Offer Shares when the Subscription Period has expired.

6.3 SHARE CAPITAL FOLLOWING THE SUBSEQUENT OFFERING

The final number of Offer Shares to be issued in the Subsequent Offering will depend on the number of subscriptions received. The maximum number of Offer Shares to be issued is 2,500,000, all with a nominal value of NOK 3.10 per share, will give a further increase in the Company’s total number of issued Shares from NOK 405,752,310.20 (following the Private Placement) to a maximum of NOK 413,502,310.20, each with a nominal value of NOK 3.10 per Share. The Offer Shares will be issued in accordance with Norwegian law pursuant to a resolution by the Board, see Section 6.2. See section 13 “Share Capital and Shareholder Matters” for a further description of the Company’s share capital.

The share premium resulting from the Subsequent Offering, less the direct expenses, will be allocated to the Company’s share premium fund.

6.4 ELIGIBLE SHAREHOLDERS

The shareholders of Noreco as of 25 April 2008, as registered in the VPS on 30 April 2008, except for those shareholders who were given the opportunity to subscribe for Shares in the Private Placement and their respective affiliates in addition to those shareholders that are restricted from participating due to laws and regulations in their home country jurisdiction, will, to the extent possible, be given preferred allocation in the Subsequent Offering to the extent required to maintain their relative ownership as of 25 April 2008 preceding the Private Placement. The Eligible Shareholders will be given preferred allocation for 1 Offer Share for 8 Shares owned as of 25 April 2008, rounded up to the nearest whole share.

The Subsequent Offering is not being and will not be made, directly or indirectly, in or into, or by use of mails or any means or instrumentality (including, without limitation, facsimile transmission, telephone and internet) of interstate or foreign commerce of, or any facilities of a national securities exchange of, the United States of America, its territories and possessions, any State of the United States of America and the District of Columbia (collectively, the “United States”) and the Subsequent Offering will not be capable of acceptance by any such use, means, instrumentality or facilities or from within the United States. In addition, persons located in the United States will not be able to exercise rights to subscribe for the Offer Shares pursuant to the Subsequent Offering.

The Offer Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), nor under any laws of any state of the United States. Such securities may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act or an exemption from registration.

25

6.5 SUBSCRIPTION PERIOD

The Subscription Period for the Subsequent Offering will commence on 29 May 2008 and expire at 16:30 hours (CET) on 13 June 2008. The Subscription Period may not be extended.

6.6 THE SUBSCRIPTION PRICE

The subscription price in the Subsequent Offering is NOK 23.50 per Offer Share, which is equal to the subscription price in the Private Placement. For a description of the basis for determining the subscription price in the Private Placement, see section 5.5 herein.

The Subscribers will not incur any costs related to the subscription for, or allotment of, the Offer Shares.

6.7 SUBSCRIPTION PROCEDURES

Subscriptions for Offer Shares must be made on a Subscription Form in the form attached as Appendix 8 hereto. Eligible Shareholders will receive Subscription Forms which include information on shareholdings as of 25 April 2008 and certain other matters relating to the relevant shareholders.

Accurately completed Subscription Forms must be received by on of the Managers by 16:30 hours CET on 13 June 2008. Subscription Forms sent by regular mail on 13 June 2008 are likely to arrive after the deadline. Neither the Company nor the Managers may be held responsible for delays in the mail system, busy facsimile lines or for non-receipt of Subscription Forms forwarded by facsimile to the Managers. Multiple subscriptions are not allowed in the Subsequent Offering, and additional Subscription Forms from the same Subscriber will be disregarded.

Properly completed and signed Subscription Forms may be faxed, mailed or delivered to the Managers at the addresses set out below:

Pareto Securities AS

Dronning Mauds gate 5 PO Box 1411 Vika N-0115 Oslo Facsimile: +47 22 83 43 09 Telephone: +47 22 87 87 00 www.pareto.no

Glitnir Securities AS

Haakon VIIs gate 10 PO Box 1474 Vika N-0116 Oslo Facsimile: +47 85 02 81 98 Telephone: +47 22 01 63 00 www.glitnir.no

The Board and the Managers may at their sole discretion refuse any improperly completed, delivered or executed Subscription Form or any subscription which may be unlawful. A subscription is irrevocable and may not be withdrawn, cancelled or modified once it has been received by the Managers.

Multiple subscriptions are not allowed. In the event the Eligible Shareholder submits one or more identical Subscription Forms (the same VPS account and same subscription amount), only the first Subscription Form will be registered. The other Subscription Forms will be rejected without further notice.

6.8 SUBSCRIPTION OFFICES

The subscription office for the Subsequent Offering is Pareto Securities and Glitnir Securities.

6.9 ALLOTMENT

Allotment of the Offer Shares is expected to take place on or about 17 June 2008. The Board reserves the right to round off, cancel or reduce any subscription.

The following allocation criteria will be used in the Subsequent Offering:

1. All Eligible Shareholders will be allocated 1 Offer Share per 8 Shares owned as of 25 April 2008 (appearing in the VPS on 30 April 2008).

26

2. In the event all Eligible Shareholders do not utilize their pre-emptive right, those Eligible Shareholders who have over-subscribed, will have a right to be allocated remaining shares not subscribed for on a pro rata basis. In the event a pro rata allocation is not applicable due to few remaining shares, the Company will determine the allocation by drawing lots or applying similar mechanisms.

3. To the extent the Subsequent Offering is not fully subscribed and allocated in accordance with 1 and 2 above, allocation will be made to other Subscribers not being Eligible Shareholders.

General information on the number of Offer Shares is expected to be published on or about 16 June 2008 in the form of a stock exchange release through the Oslo Børs information system. All Subscribers being allotted Offer Shares will receive a letter from VPS confirming the number of Offer Shares allotted to the Subscriber and the corresponding amount to be paid. This letter is expected to be mailed on or about 17 June 2008.

6.10 PAYMENT

Each Subscriber must provide a one-time authorization to debit a specified bank account with a Norwegian bank for the amount (in NOK) payable for the Offer Shares allotted to such Subscriber by signing the Subscription Form when subscribing for Offer Shares. The amount will be debited on or about 20 June 2008. Subscribers not having a Norwegian bank account must ensure that payment for their Offer Shares with cleared funds is made on or before 12:00 (CET) on 20 June 2008 and should contact the Managers in this respect.

If there are insufficient funds on a Subscriber’s bank account or it is impossible to debit a bank account for the amount the Subscriber is obligated to pay, or payment is not received by the Managers according to other instructions, the allotted Offer Shares will be withheld. Interest will in such event accrue at a rate equal to the interest on late payment, currently 12.25% per annum.

The Managers reserve the right to make up to three debits in the period up to 25 June 2008 if there are insufficient funds on the account on the debiting date. If payment for the allotted Offer Shares is not received when due, the Offer Shares will not be delivered to the Subscriber, and the Board reserves the right, at the risk and cost of the Subscriber, to cancel the subscription in respect of the Offer Shares for which payment has not been made, or to sell or otherwise dispose of the Offer Shares, and hold the Subscriber liable for any loss, cost or expense suffered or incurred in connection therewith. The original Subscriber remains liable for payment of the entire amount due, including interest, costs, charges and expenses accrued, and the Managers may enforce payment of any such amount outstanding.

6.11 PUBLICATION OF INFORMATION RELATING TO THE SUBSEQUENT OFFERING

Publication of information related to any changes in the Subsequent Offering and the amount subscribed, will be published on the Oslo Børs information system under the Company’s ticker code “NOR”, and will also be available on the Company’s web-site www.noreco.com. Such announcement is expected to be made on or about 16 June 2008.

6.12 REGISTRATION WITH THE NORWEGIAN CENTRAL SECURITIES DEPOSITORY (VPS)

The Shares are registered with the VPS under the International Securities Identification Number (ISIN) NO 001 0379266. The Offer Shares will not be delivered before they are fully paid, registered with the Norwegian Business of Enterprises and registered in the VPS.

The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

6.13 DELIVERY OF OFFER SHARES

All subscribers subscribing for Offer Shares must have a valid VPS account (established or maintained by an investment bank or Norwegian bank that is entitled to operate VPS accounts) to receive Offer Shares. Assuming that payment from all Subscribers are made when due, delivery of the Offer Shares is expected to take place on or about 25 June 2008. It is expected that the share capital increase will be registered in the Norwegian Register of Business Enterprises on 25 June 2008.

6.14 LISTING OF THE OFFER SHARES

All of the Offer Shares will be listed on Oslo Børs. Assuming timely payment by all Subscribers and employees, the Company expects that the Offer Shares will be listed on Oslo Børs on or about 26 June 2008. The Shares of

27

the Company are not listed, and no application has been filed for listing, on any other stock exchange or regulated market than Oslo Børs.

6.15 TRANSFERABILITY OF THE NEW SHARES

A Subscriber will not under any circumstances be entitled to sell or transfer its Offer Shares until these shares have been paid in full by such Subscriber.

Furthermore, any Subscriber (having paid for its shares) that sells or transfers its Offer Shares before delivery of the Offer Shares on said Subscriber’s VPS account, runs the risk that full payment by all Subscribers does not take place in accordance with the procedures set out in section 6.10 above. In such case, the completion of the Subsequent Offering and thereby the delivery of the Offer Shares to the Subscriber may be delayed. The Subscriber will then run the risk that the Subscriber is unable to settle the sale or transfer its Offer Shares in time.

6.16 SHAREHOLDERS’ RIGHTS RELATING TO THE OFFER SHARES

The Subscribers being allotted Offer Shares in the Subsequent Offering will have full shareholders’ rights in respect of their Offer Shares once such shares are credited to their VPS account, expected on or about 25 June 2008. The Offer Shares will be issued electronically in accordance with the regulations set forth in the Norwegian Public Limited Liability Companies Act and will rank pari passu in all respects with the Company’s other outstanding Shares, including the right to dividends with a record date after Offer Shares are issued, see also Section 13.7.11 regarding the dividend rights. See also Section 13 (“Share Capital and Shareholder Matters”) for a further description of the rights and tradability of the Shares.

6.17 TIMELINESS, VALIDITY, FORM AND ELIGIBILITY OF SUBSCRIPTIONS

All questions concerning the timeliness, validity, form and eligibility of any subscription for Offer Shares will be determined by the Board, whose determination will be final and binding. The Board, or the Managers upon being authorized by the Board, may in its or their sole discretion waive any defect or irregularity in the Subscription Forms, permit such defect or irregularity to be corrected within such time as the Board or the Managers may determine, or reject the purported subscription of any Offer Shares. It cannot be expected that Subscription Forms will be deemed to have been received or accepted until all irregularities have been cured or waived within such time as the Board or the Managers shall determine. Neither the Board, the Company nor the Managers will be under any duty to give notification of any defect or irregularity in connection with the submission of a Subscription Form or assume any liability for failure to give such notification. Further, neither the Board, the Company nor the Managers are liable for any action or failure to act by a financial intermediary through whom any Eligible Shareholder holds his Shares or by the Managers in connection with any subscriptions or purported subscriptions.

6.18 LOCK UP AGREEMENTS

In connection with the listing of the Shares in November 2007, Pareto and SEB Enskilda entered into a lock-up agreement with the management and board members of Noreco, being Scott Kerr, Tor Arne Olsen, Reinert Seland, Einar Gjelsvik, Rune Martinsen, Birte N. Borrevik and Lars Takla. Under the lock-up agreement, these shareholders have agreed not to offer, sell, contract or otherwise dispose of certain number of shares in the Company for a period of 12 months following the first day of trading of the Shares in Oslo Børs (being on 9 November 2007), without the prior written consent of Pareto and SEB Enskilda.

6.19 EXPENSES

Costs attributable to the Subsequent Offering and the Private Placement will be borne by the Company. The total costs are expected to amount to approximately NOK 24 million. The net proceeds, from both offerings, to the Company will be approximately NOK 486 million, assuming full subscription of the Subsequent Offering. In addition cost related to fees to Oslo Børs, printing and distribution of this Prospectus, costs to legal advisor and the Company’s auditor will be borne by the Company.

28

6.20 MANAGERS AND ADVISORS

The Managers for the Subsequent Offering are Pareto Securities, Dronning Maudsgate 3, P.O. Box 1411 Vika, 0105 Oslo, Norway and Glitnir Securities, Haakon VIIs gate 10, P.O. Box 1474 Vika, 0116 Oslo, Norway. The legal advisor to the Company is Arntzen de Besche Advokatfirma AS, P.O. Box 2734 Solli, 0204 Oslo, Norway.

6.21 DILUTIVE EFFECT

The dilutive effect in connection with the Private Placement and the Subsequent Offering will be approximately 16%, assuming full subscription of the Subsequent Offering.

Prior to the

Private

Placement, and

Subsequent

Offering

Prior to the

Subsequent

Offering

Subsequent

both offerings

No of shares each with a nominal value of NOK 1 ............. 111,738,842 130,887,842 133,387,842 % dilution ...................................................................... 100.00% 85.37% 83.77%

6.22 JURISDICTION AND CHOICE OF LAW

This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of Oslo District Court.

29

7. PRESENTATION OF THE COMPANY

Norwegian Energy Company ASA was incorporated on 28 January 2005 and registered in the Norwegian Register of Business Enterprises on 12 March 2005, with registration number 987 989 297. The Company is organized as a public limited liability company in accordance with the Norwegian Public Limited Liability Companies Act.

Noreco’s registered address is Haakon VII's gate 9 4005 Stavanger, Norway. The telephone number is + 47 99 28 39 00, and its web address is www.noreco.com.

7.1 HISTORY AND DEVELOPMENT OF THE COMPANY

The Company was founded on 28 January 2005 by Takla Energy AS (org.no. 987 756 306), Kongsgårdbakken 1 4001 Stavanger; Melberg Invest AS (org.no 980 109 151) Kongsgårdbakken 1, 4001 Stavanger; IKM Gruppen AS (org. no. 965 138 498) Ljosheimveien 3 4050 Sola and Melberg Partners AS (org. no 989 551 434) Kongsgårdbakken 1 4001 Stavanger.

In October 2005, Lyse Energi, Hitec Vision, 3i and Noreco’s founders agreed to raise up to NOK 550 million in new equity in the Company, and they remained the primary owners of the Company until May 2007, when the Company raised NOK 880 million in new capital from Norwegian and international institutional investors and was transformed to a Norwegian public limited liability company.

In May 2007, Noreco started acquiring shares in Altinex, a Norwegian oil company listed on Oslo Børs.

On 11 May 2007, the Company issued a NOK 440,000,000 Senior Unsecured convertible bond loan, and effective as of 9 July 2007 the Company issued two Senior Secured callable bond loans totaling NOK 2,800,000,000, both in order to finance the acquisition of Altinex.

On 23 July 2007, the Company put forward a mandatory offer for the remaining shares in Altinex ASA to an offer price of NOK 22 per Altinex share, and increased its holdings to a total of 192,146,106 shares representing 97.14% of the share capital in Altinex after the expire of the acceptance period. Due to the high acceptance level, Noreco decided to carry out a compulsory acquisition of the remaining shares in Altinex to the same price as in the mandatory offer. As a consequence, Noreco became the owner of 100% of Altinex on 29 August 2007.On 3 September 2007, the extraordinary general meeting of Altinex resolved to apply for a delisting of its shares from Oslo Børs. The shares were de-listed on 13 October 2007.

On 10 October 2007, the extraordinary general meeting of the Company resolved, inter alia, to split the face value of the Shares into 4, creating a new face value of NOK 3.10 per Share.

On 19 October 2007, the Company completed a Private Placement of shares totaling NOK 550 million in gross proceeds.

On 26 October 2007 and 31 October 2007, Noreco announced its sale of Altinex Services AS and Altinex Reservoir Technology AS respectively to IKM Testing AS.

On 9 November 2007, Noreco was listed at Oslo Børs ASA with the ticker code “NOR”.

On 25 April 2008, Noreco announced its agreement to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. In order to party finance the transaction and to increase the equity for general corporate purposes, Noreco completed on 28 April 2008 a Private Placement totalling approximately NOK 450 million.

7.2 LEGAL STRUCTURE

Below is the legal structure of Noreco as per the date of the Prospectus. All subsidiaries are 100% owned.

30

Norwegian Energy

Company ASA

Altinex ASANorwegian Energy

Company UK Ltd.

Altinex Oil

Norway AS

Altinex

International AS

Geopard AS

Altinex Oil

Denmark AS

Altinex Petroleum

Denmark ASAltinex Oil (UK) Ltd.

7.3 DESCRIPTION OF THE COMPANIES IN THE GROUP

7.3.1 Norwegian Energy Company ASA

Noreco is the operative parent company in the Group. The Company was established in January 2005 and holds the Noreco licenses. The Company is incorporated in Norway and have its registered business address in Stavanger, Norway. The parent company has 39 employees.

7.3.2 Norwegian Energy Company UK Limited

Norwegian Energy Company UK Limited was incorporated 23 January 2007. The business address is in Aberdeen, Scotland. The company has no assets or employees.

7.3.3 Altinex ASA

Altinex was acquired by Noreco on 29 August 2007 when Noreco acquired the remaining shares in Altinex not previously owned by Noreco by way of a compulsory acquisition pursuant to the Norwegian Public Limited Liability Companies Act. Altinex was established in 1987 and was listed on Oslo Børs from 1997 until 13 October 2007 when the shares of Altinex were delisted from Oslo Børs. Altinex is the parent company in the Altinex Group of companies. Altinex ASA is incorporated in Norway.

7.3.4 Altinex Oil Norway AS

The company was established in 2004 and is located in Norway and has 9 employees. The company holds the title to a number of producing assets in Norway together with exploration assets in the North Sea

7.3.5 Altinex International AS

The company was established in 2006 by Altinex ASA with the sole purpose of acquiring and holding the shares of Geopard A/S. The company is located in Norway and has no employees

7.3.6 Geopard A/S

The company was established in 2006 by Altinex International AS with the sole purpose of acquiring and holding the shares of Altinex Oil Denmark A/S (Former DENERCO OIL A/S). The company is incorporated in Denmark and has no employees.

31

7.3.7 Altinex Oil Denmark A/S

The company is incorporated in Denmark and holds the title to a number of producing assets in Denmark together with exploration assets in the North Sea. Altinex Oil Denmark was originally established in 1985 and employees 23 persons.

7.3.8 Altinex Oil (UK) Ltd.

The company was established in 2006 by Altinex ASA with the sole purpose of acquiring and holding the shares of Geopard A/S. The company is located in Norway and has no employees.

7.4 BUSINESS OBJECTIVES AND STRATEGY

Noreco is an independent oil and gas exploration, development and production company whose activities are focused on the North Sea (mainly Norway, Denmark and United Kingdom). Since its formation, Noreco has built a portfolio of exploration, appraisal and development assets in Norway. This portfolio has been based on subsurface expertise and technology, innovative business and business relationships. Noreco is aiming to build a leading independent oil and gas company in the North Sea region. Noreco will focus on growing its business through exploiting the existing producing asset base, pursue developments of discoveries and build and mature the exploration portfolio. Noreco has a strong commercial and technical understanding in its core areas on the Norwegian, UK and Danish continental shelves and will actively pursue growth in these core areas through licensing rounds, farm-ins and acquisitions.

Noreco will prioritize recruiting and maintaining a team of first class and highly motivated oil and gas professionals and will let the staff participate in the value creation in the Company.

7.5 OVERVIEW OF THE COMPANY

The Noreco Group employs 71 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen and is in addition cooperating with a number of contractors.

The Noreco Group’s operations are associated with the exploration for and development and production of oil, gas and NGL. The Group considers the risk and return of the business units to be similar and thus comprise one business segment. The Group currently has activities in Norway, UK and Denmark. For 2007 the revenues of NOK 839.7 million were distributed as follows: Norway NOK 296.4 million, UK 0, Denmark NOK546.5 million and other/elimination of NOK -3.2 million. Prior to 2007, Noreco did not have any revenues.

Noreco has ownership in a total of 54 licenses. The licenses are held by Noreco or by its subsidiaries.

The portfolio consists of 7 producing fields, Brage and Enoch in Norway, and South Arne, Siri, Nini, Lulita and Cecilie in Denmark. The net total production from these fields in 1Q 2008 was 9,950 boe/day.

There are a total of 15 discoveries in the portfolio, 10 of which are in Norway, 4 in Denmark and 1 in UK.

32

Noreco Group licenses in Norway, Denmark and UK

7.6 OVERVIEW OF THE SEA LICENSES

7.6.1 Exploration approach

Noreco’s main focus has been to create value through exploration for oil and gas on the NCS. A highly skilled staff and access to relevant data have been the basis for this effort. An early initiative to merge and enhance the quality of available 3D seismic data has resulted in extensive coverage of the main hydrocarbon basins. Noreco is a member of the Diskos Group, giving access to all released wells on the NCS.

33

The Company has from its formation built a framework consisting of Petrel and Eclipse interpretation software, hosted via an ASP to Schlumberger, Stavanger. This system also ensures data management and hosting, minimizing security and retrieval issues.

The portfolio is balanced with respect to timing of development possibilities, with several discoveries and exploration acreage in the North Sea, where economic discoveries can be brought on stream quickly through existing infrastructure, as well as exploration acreage in the Norwegian Sea where prospects are larger, but also requiring longer lead time for development due to infrastructure requirements. The portfolio is also well balanced with respect to exploration play and basin composition, meaning that the prospects have different type and magnitude of risk, offering portfolio protection through diversification. In this manner, any one exploration well outcome will have limited impact on the remaining prospects in the portfolio.

Successful exploration starts by building up knowledge based on available data, using skilled and experienced personnel using efficient interpretation tools. Through access to data and applying regional and detailed geoscience expertise prospects can be matured on the exploration acreage. Access to the exploration acreage is through competitive licensing rounds offered by the Norwegian State or through acquisition or farm-in into licenses held by other oil companies when such opportunity emerge or can be generated. Since the formation of the Company, Noreco has prior to the acquisition of Altinex filed applications in four license award rounds; the Awards in Predefined Areas (“APA”) 2005 (3 licenses), 19th Round (1 license) and APA 2006 (9 licenses, of which 2 operatorships) and APA 2007 (9 licenses, of which 3 operatorships).

The next step in the exploration sequence is to prepare the prospect for drilling. The work consists of a very detailed interpretation of geological and geophysical data to define the hydrocarbon system and the possible trapping of hydrocarbons in good reservoir rock. The studies identify the main risks for the hydrocarbon system to be defect (ie not containing hydrocarbons) as well as a preliminary technical development study and economic assessment to determine if a successful exploration effort will result in a project with sound economic value. If the project analysis is positive, the decision to go ahead with exploration drilling is normally given. However, should the analysis show that for some reason it will not be possible to economically develop the prospects on a license, or that the exploration risk is found to be unacceptable, a decision to hand the license back to the authorities can be made providing any license commitments have been fulfilled. These decision points are key milestones determined by the license conditions laid out in the award documents. An example of such milestone is the “Drill or Drop” decision, where the license needs to commit to an exploration well or relinquish the exploration acreage. Noreco and the operators of Noreco acreage licenses have prospects in different stages of evaluation in all the licenses in the portfolio. The time-span from acquisition of a license to drilling is normally in the range of two to four years. Prior to exploration drilling the volume of oil and gas in prospects on a exploration license are classified as exploration resources and reported as an unrisked volume, and a risk factor indicating the probability of finding hydrocarbon in the license. The risked exploration resources for a license is the unrisked volume multiplied by the exploration risk for the individual prospects.

Noreco is presently building its capacity to execute drilling projects, following approval by the authorities as operator late 2006. The process includes building of internal procedures, in-house qualified operational personnel, a drilling management contractor as well as a rig capacity for the operated drilling program. Noreco has employed highly skilled drilling personnel and has also entered into a frame agreement for drilling operations management with Senergy Ltd. Noreco’s first operated drilling operation is planned for the first half of 2009. The rig for this well is secured. Noreco has also secured rig capacity for own operated exploration drilling through a rig consortium on the Seadrill rig West Alpha, commencing in mid 2009, running for a period of 3 years with an option to extend the contract for another 2 years. Through this contract it is likely that Noreco will have sufficient rig capacity for most of its operated exploration drilling to 2012.

The partner licenses are operated by well reputed oil companies, most of whom has secured rig capacity for their exploration programs. All drilling projects in the Noreco portfolio planned for 2008 have secured rig capacity.

34

7.6.2 Drilling program

The main focus for most oil and gas companies will be to replace and increase the volumes for production, to mature prospects to discoveries and discoveries to development and production. The maturing of the resources starts with exploration and appraisal drilling. Noreco plans to mature and drill approximately 30 exploration/appraisal wells over the next 3-4 years. This significant exploration drilling activity is turning over the current Noreco portfolio over a 3-4 year period, and exposing the company to a risked exploration resource of more than 300 mmboe. An indicative drilling schedule fro 2008 and 2009 is shown below.

Noreco Explo E

share Appr A 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

Pl 274 Oselvar * 15,0 % A Dong

PL148 Nemo * 20,0 % A Lundin

P1114 Huntington * 20,0 % A Oilexco

PL271 Yoda 15,0 % E StatoilHydro

PL348 Galtvort 17,5 % E StatoilHydro

PL274 Ipswich 15,0 % E Dong

7/89 South Tor Pod 6,56 % E Hess

9/06 Gita 12,0 % E Mærsk

P1114 Huntington 20,0 % A Oilexco

PL055 Brage Exp 12,6 % E StatoilHydro

6/95 Siri West 29,0 % E Dong

PL006C SE Tor 15,0 % A Lundin

PL348 Gygrid 17,5 % E StatoilHydro

PL382 Squash 20,0 % E BG

PL006C Hyme 15,0 % E Lundin

PL412 Eiganes 40,0 % E Noreco

PL378 Grossbeak 20,0 % E Revus

PL442 Gamma E 20,0 % E StatoilHydro

PL391 Revheim 20,0 % E BG

6/95 Sara 20,0 % E Dong

PL408 Fjellrev 30,0 % E Det norske

PL400 Blizzard 30,0 % E Lundin

PL316CS Tori 35,0 % E Talisman

PL398S Briggen 30,0 % E Lundin

PL361 Citrin 30,0 % E Talisman

PL360 Lupin 15,0 % E StatoilHydro

*Successfully completed

2008 2009

35

7.6.3 Overview of producing fields

Production

Noreco has a portfolio of seven producing fields, which produced 9,950 boed net to the company in 1Q 2008.

Brage Field, Noreco 12.62%

The Brage Field is located in the Norwegian part of the North Sea 120 km west of Bergen in water depths of 130-170 meters. The field was discovered in 1980, and is operated by StatoilHydro. Production started in 1993, and the maximum production rate of more than 120,000 boed was achieved in 1996. The Brage production facilities consist of an integrated production, drilling and accommodation platform. The crude is exported to the Sture terminal via the Oseberg Transportation System. Gas is exported through the Statpipe system to Kårstø. The integrated platform drilling unit allows for drilling of additional development and exploration wells in order to continuously enhance the oil recovery from the field and to tap potential additional resources in adjacent prospects. A 4D seismic survey has recently been acquired over the field and is being interpreted to identify bypassed oil and possible new targets for infill drilling. For 2008, further infill drilling is planned to optimize production. The average production from the Brage Field in 2007 was approximately 25 000 boed gross. There is prospectivity in the areas around the Brage Field. Two near field exploration targets on the northern flank of the field are planned to be drilled from the Brage platform in 2008.

Enoch Field, Noreco 4.36%

The Enoch Field is located in the central part of the Norwegian North Sea and came on stream in May 2007. The field straddles the Norwegian/UK border, and Talisman is operator for the unitised field. Enoch is developed as a subsea tie-back to the Brae A platform on the UKCS. Produced oil is transported in the Forties pipeline system to Cruden Bay in Scotland, and gas is delivered and sold at the Brae platform. The average production from the Enoch Field in 2007 was approximately 5 500 boed gross.

Siri Field, Noreco 20%

The Siri Field is located in the Danish part of the North Sea, and started production in 1999. The Siri platform is an integrated production and accommodation platform placed on top of an oil storage tank resting on the seabed at a water depth of approximately 65 meters. The oil is produced to the seabed storage tank and via a floating loading buoy transported by shuttle tanker to refineries in North West Europe. The reservoir is produced with water injection and limited gas injection to improve oil recovery. The Siri platform is the host for processing and transport of production from the Nini and Cecilie Fields. The average production from the Siri Field in 2007 was approximately 9 000 boed gross. For 2008 an infill drilling campaign is planned to optimize recovery. The oil discovery Sofie as well as exploration prospectivity has been identified around the field. The Paleocene Siri West prospect is located immediately west of the Siri Field, and is planned to be drilled in 2009. The ownership interest in the Siri field will increase to 50% as a result of the acquisition if and when the acquisition of Talisman Oil Denmark Limited is completed – currently only pending authority approval.

Nini Field, Noreco 30%

The Nini oilfield is located in the Danish part of the North Sea, 32 km northeast of the Siri Field. The Nini Field was discovered in 2000, and production commenced in 2003. The Nini Field is developed with an unmanned wellhead platform and is tied back to the Siri facilities for processing of the oil and gas. The Siri Field is also supplying water injection for the Nini Field. A rupture of the Siri-Nini water injection pipe line in 2007 has been temporarily repaired and a renewal is expected during 2009. Successful infill drilling was done on Nini in 2007. For 2008, further infill drilling is planned to optimize production. The average production from the Nini Field in 2007 was approximately 5 500 boed gross.

South Arne Field, Noreco 6.56%

The South Arne Field is located in the Danish part of the North Sea, and is operated by Hess. Oil production from the field commenced in July 1999 and gas export commenced later in the year. The platform is an integrated production and accommodation platform, where the oil and gas from the South Arne reservoir are separated, processed and exported. The oil is stored in a subsea storage tank and transferred to shuttle tankers via an offshore loading system for onward transport to refineries in North West Europe. The field is developed with a total of 19 production/injection wells that are producing from a low permeability chalk reservoir. Two new infill wells are being planned for 2009. The average production from the South Arne Field in 2007 was approximately 25 000 boed gross. In 2006 significant appraisal of the South Arne northern flank took place with the Rigs-3 appraisal well including three side-tracks. Scope for a distinct development of the northern flank area exist and is currently being matured. Project sanction is possible for end of year 2008, but most likely in 2009.

36

The current development concept includes an unmanned dry well head platform able to accommodate a number of production and injection wells and a tie-back to the South Arne process platform.

Cecilie Field, Noreco 61%

The Cecilie oil Field is located in the Danish part of the North Sea, and was discovered in 2000. Production commenced in 2003. The oil is being produced from one wellhead platform and transported through pipelines to the Siri platform situated approximately 13 km north east of Cecilie. The oil is being processed at the Siri platform to a seabed storage tank and transferred to shuttle tankers via an offshore loading system for onward transport to refineries in North West Europe. The average production from the Cecilie Field in 2007 was approximately 1,500 boed gross.

Lulita, Noreco 28.2%

The Lulita oil and gas field is located in the Danish part of the North Sea, and was discovered in 1992. The reservoir is Middle Jurassic sandstone and has been developed with two extended reach wells from the Harald platform. Following processing on Harald, oil/condensate is transported to Gorm via Tyra East. The gas is exported to Tyra East via a separate pipeline. The average production from the Lulita Field in 2007 was approxi-mately 1,500 boed gross.

7.6.4 Discoveries

Noreco’s portfolio contains 15 discoveries in Norway, Denmark and UK. Most of these are described below. In addition, there are discoveries around the producing fields and in the exploration licenses.

Nini East, Noreco 30%

The Nini East discovery is located in the Danish part of the North Sea, some 7 km away from the producing Nini Field. A successful appraisal well to the Nini East discovery was drilled in June 2007, resulting in a significantly increased resource estimate for the Nini East Field. A field development plan comprising an unmanned wellhead platform tied back via Nini to the Siri platform was approved by the Danish Energy Authority in January 2008 and a development has subsequently been sanctioned by all partners. Production is scheduled to start up in late 2009. Reserves are estimated at approx 17 mmboe gross.

Huntington, Noreco 20%

The Huntington Field is located in the central part of the UK North Sea. The field lies in close proximity to existing infrastructure between the Nelson, Everest and Montrose fields. Oil was discovered on the field by Shell in 1989 in the Triassic Skagerrak Formation, but the discovery was deemed sub-economic at the time. The field was re-awarded in the 21st UK Offshore licensing round, and Oilexco is the operator. The main plan for the license in 2007 was to drill a combined Paleocene and Upper Jurassic prospect followed by appraisal drilling, if successful.

Exploration well 22/14b-5 was drilled in Q2 2007 with a total depth in the Triassic Smith Bank Formation, and it discovered oil in the Paleocene Forties Formation and the Upper Jurassic Fulmar Formation. Both formations displayed good reservoir quality. The two discoveries were tested and flow rates of up to 4600 barrels per day from a 101 ft interval in the Fulmar Formation and 5500 barrels per day from a 50 ft interval in the Forties Formation were obtained.

In Q3 2007 an extensive first phase appraisal programme was initiated. The programme gave important information concerning the lateral distribution of the reservoir quality in the Forties Formation and about the potential of the Fulmar discovery. The appraisal wells have de-risked the resource base and confirmed that Huntington can be developed. Work is currently ongoing to assess the gathered data and information with respect to the total resource potential in the Huntington Field.

The first well in the appraisal programme, 22/14b-6, was drilled and side-tracked multiple times and comprised a total of eight penetrations through the Forties Formation. The last penetration included coring of the pay zone and flow testing of two intervals. The lower test interval was right above the water leg and gave a rate of up to 2100 barrels per day from a 20 ft interval. The upper test interval in the upper part of the pay zone gave a rate of up to 5200 barrels per day from a 75 ft interval, which is in line with the results from the discovery well. The final well in this first appraisal stage was 22/14b-8, which was completed in mid-February 2008. This well was drilled to a total depth in the Triassic Smith Bank Formation and data was gathered both in the Forties and Fulmar Formations. As expected, an oil column was observed in the Forties reservoir. A long core – 166 feet – was cut through the Forties Formation pay zone and upper part of the water zone for special core analyses. This

37

core will give very valuable insight into the reservoir properties of the Forties Formation. The well penetrated the Fulmar Formation far down on the structural closure of the Fulmar discovery. Further work is needed to understand the for the total resource base, in particular for the Fulmar discovery for which there is still a large uncertainty and upside potential. The well was not cored in the Fulmar Formation and neither the Forties nor the Fulmar reservoir were flow tested. Development planning for the Forties Formation discovery is ongoing, and with the intent to bring the Fulmar discovery on stream as Forties production declines. Further appraisal drilling needs and timing for the Fulmar discovery, in particular, will be evaluated based on the outcome of this ongoing development planning effort.

Oselvar, Noreco 15%

The Oselvar discovery was made by Elf in 1991, and is located in the southern part of the Norwegian North Sea in proximity to producing oil fields such as Ula, Gyda and Blane. Two appraisal wells has previously been drilled on the structure, one well being dry and one well encountering oil downdip of the gas discovery well.

In October 2007, the operator Dong spudded a new appraisal well to further delineate the field. The well objectives were to investigate reservoir deliverability, to acquire fluid samples for fluids characterisation, sample reservoir pressure data and cut representative cores. An open hole test flowed 4 920 barrels of oil equivalents per day. All objectives were fulfilled satisfactory and it was decided to side-track the well downflank with the objectives of establishing a free water level and acquires water samples. A representative water pressure gradient was established and water samples were obtained. The well results were positive, and confirmed Noreco’s pre-drill resource estimate of 42 mmboe. Noreco actively took part of the license decision to test the main bore and subsequently to side-track the well downflank to appraise the water leg and possibly identify an upside.

The test proved a significantly improved flow potential compared to previous test conducted on this discovery which is important for the sub surface development planning. The side-track reduced the uncertainty on the free water level and in place volumes as well as giving valuable information regarding the formation water composition to be used in the development planning.

Work has now been initiated to update the sub surface models with the recent well results and progress development planning with the aim of submitting a PDO by early 2009 with anticipated first oil in 2011. In the middle of 2008 another Palaeocene exploration prospect on the license called Ipswich 10 km south of Oselvar will be drilled. A discovery here could promote an area development together with Oselvar.

Nemo, Noreco 20%

The Nemo discovery was made by well 7/7-2 in 1992 in Upper Jurassic sandstone with Statoil as operator. The discovery was later appraised by well 7/7-3, but this well was deemed to be dry with shows. The main plan for the license in 2007 was to drill an appraisal well to the north of the discovery well to prove up the resource base estimate of 22 mmboe. The well 7/4-2 was drilled, and completed in February 2008. The well demonstrated hydrocarbons in the Ula Formation and confirmed a resource base of 20-30 mmboe, and at the same time it strengthened the case for an upside potential. The well was logged, cored and formation pressure tested, all in support of an oil-down-to at least 25 meters below the previous oil-down-to found in the discovery well. The well was not flow tested, but fluids were sampled in connection with formation pressure testing. The well results will now be thoroughly evaluated together with the rest of the license database to support a development decision for the Nemo Field.

South East Tor, Noreco 25%

Noreco acquired a working interest in this license from Lundin in 2006. The license is located in the Norwegian southern North Sea, where chalk reservoirs are proven in several giant oil fields such as Ekofisk and Valhall. The discovery is located in a structural trap, but a major upside may be trapped down-flank in porous chalk analogues to the Danish Halfdan Field. Noreco have made a new geological model for the South East Tor discovery and an assessment of the prospectivity of the area surrounding the discovery. Two wells are planned to be drilled late 2008 / beginning 2009 to appraise the South East Tor discovery and to explore the upside west of the South East Tor structure. The exploration target is believed to be a high porosity oil filled zone in the Tor Fm. Noreco entered on 14 April 2008 into an agreement with Faroe Petroleum sell a 10% interest in licenses PL006C and PL006D, including the South East Tor discovery. Faroe Petroleum will earn a 10% interest in the licenses by carrying 140 millionNOK of all of Noreco’s costs associated with the licenses. Completion of the transaction is pending customary approvals.

38

Flyndre, Noreco 13.34%

The Flyndre Field was discovered in 1974, and has proven hydrocarbons in Paleocene sandstones and in Cretaceous chalk straddling the UK/Norway border. Several production tests with good oil rates have been carried out, but further field evaluation and possibly will be required prior to making a development decision. The operator, Mærsk, is currently working on plans for development of the Paleocene Balmoral Formation.

J1, Noreco 21.8%

The J1 discovery is a gas/condensate discovery located 15 km from the Sleipner West Field in the central part of the Norwegian North Sea. The J1 discovery is being evaluated for further appraisal and development.

Rau, Noreco 40%

The Rau discovery is located in the Danish part of the North Sea. During 2Q2007 a successful exploration well, including three side-tracks, was drilled. The exploration well discovered movable oil in Paleocene sandstone reservoirs. Additionally, the three deviated side-tracks appraised the lateral extent and size of the Rau oil accumulation. All side-tracks found oil and confirmed the reservoir model and the extent of the Rau oil accumulation. Noreco is the operator of Rau, and is currently finalizing the development report on the Rau discovery. Rau is located close to the Cecilie and Siri Fields, and the most likely development scenario for Rau is an unmanned wellhead platform tied back to the Siri Field via Cecilie for processing of the hydrocarbons. A possible project sanction is expected in December 2008.

Amalie, Noreco 29.9%

The Amalie discovery is located 20 km North East of the South Arne Field in the Danish part of the North Sea, and was discovered in 1991. Since the Amalie discovery several gas fields have been discovered in the area, forming the basis for a possible area development of the resources. A development plan for the field was submitted to the Danish Energy Authority (DEA) in December 2001. The plan depends on a tie-in to infrastructure on favorable terms.

7.6.5 Exploration

Noreco’s has an extensive portfolio of 52 exploration licenses, 42 in Norway, 9 in Denmark and 1 in the UK. Below is a description of the exploration licenses with wells planned over the next few months and the licenses awarded in the recent APA2007 licensing round in Norway. In addition, there are near field exploration targets being drilled around the producing fields and existing discoveries in the portfolio. A description of all exploration licenses in Noreco’s portfolio is available on the company’s website www.noreco.com.

Eiganes (PL412), Noreco 40%

The license was awarded in APA 2006 and is located in the Northern part of the Norwegian North Sea. The license has prospectivity in mainly two levels. The Paleocene deep marine sandstones form a trap by pinch-out against the Utsira High. This is the same type of trap as in the very prolific Jotun and Ringhorne Fields in the next blocks to the west. A deeper target, the shallow marine sandstones of Middle Jurassic age is also proven oil-bearing in the region. A small oil discovery (25/6-1) exists on the license. Oil from this discovery is thought to spill into a stratigraphic pinch-out trap updip. Secondary targets also exist in the shallow marine sandstones of Early Jurassic age. Noreco is the operator of this license and has contracted the rig West Alpha to drill an exploration well on the license in 2009.

South Tor Pod (7/89 & 2/06), Noreco 6.56%

The South Tor Pod is an exploration prospect identified through 3D seismic data and comprehensive knowledge of the South Arne Field located some 7 km away. The evaluation shows this prospect to be a low risk prospect with a high reserves upside. The operator Hess plans to drill an exploration well on this prospect during the summer of 2008. If the well is positive, hydrocarbons will be produced from the South Arne Facilities either as a sub-sea tie-back or with a separate platform.

Gita/Maja (9/06 & 9/95), Noreco 12%

In 2007 Noreco entered an agreement with Chevron Denmark to farm into licences 9/06 and 9/95 – the Gita/Maja Licences. Maersk Oil & Gas AS is the operator and the HPHT Gita-1X well will be the first well in the 9/95 licence, but the Gita prospect is expected to cover both licences. The main target is gas/condensate trapped in Upper Jurassic basin-floor sandstone reservoirs, but a potentially large upside is identified in both the Upper Jurassic sandstone and in the shoreface and fluvial sands of the Middle Jurassic aged formations. Spud is planned during summer 2008. Noreco will actively take part in the license work and build its own sub surface

39

models. The results from Gita-1X will improve the understanding of the Jurassic potential in the nearby area covering the Jurassic gas condensate Amalie discovery in which Noreco has a significant interest.

Galtvort (PL348), Noreco 17.5%

The license was purchased from Talisman in 2006, and is located in the Norwegian Sea between the Draugen and Njord producing fields. The license covers the fault-zone between the Halten Terrace and the Trøndelag Platform and has a string of smaller prospects reaching northwards from the Njord Field. The reservoir is of the same type as the Njord Field and is considered low risk. An exploration well to test the Galtvort prospect in the license started in April 2008. On 21 May Noreco announced that gas had been discovered in the well, and that a sidetrack well would be drilled. Drilling on the license is still ongoing, and size of the discovery is not yet decided. A second exploration well to test the Gygrid prospect on the license is planned for 1H2009.

7.7 FUTURE LICENSE ACQUISITION ACTIVITY

Noreco has been active, and have had success, in all Norwegian licensing rounds since the formation of the Company. The success is considered a result of innovative geological ideas, experienced and knowledgeable subsurface staff, an extensive database and value adding networking and co-operation with competitors as required.

The oil companies operating the majority of Noreco’s portfolio are reputed and competent E&P companies. Noreco has also co-operated successfully with several companies in Areas of Mutual Interest (AMI), which are arrangements to combine strengths with other E&P companies to compete for new licenses.

Noreco will continue to apply this access strategy going forward. Noreco will participate actively in the APA2008, 20th Round on the NCS and the 25th Round on the UKCS in 2008.

Noreco will also pursue further growth through acquisitions of licenses that are more mature or more material than the licenses offered up in the licensing rounds. Such acquisitions can include exploration acreage, discoveries, development and producing fields where Noreco sees value creation potential.

Future awards and acquisition of licenses are important to Noreco’s business model, and the Company will demonstrate its competence and capacity by actively managing and maturing licenses the Company already own.

7.8 RESERVES AND RESOURCES

Noreco’s classification of reserves is based on the Society of Petroleum Engineers’ (SPE) Petroleum Resource Management System published in 2007. The system is a recognized resource classification system in accordance to the Oslo Børs Circular 2/2007 “Guidelines for the disclosure of hydrocarbon reserves, contingent resources and results from exploration activities”.

The SPE resource classification system uses “reserves”, “contingent resources” and “prospective resources” to classify hydrocarbon resource of varying technical maturity. The maturity within each class is also described to help guide classification of a given asset.

7.8.1 Reserves

Noreco reserves are only those resources we consider to fulfill the maturity requirement proposed in the SPE classification system. Reserves are typically those volumes of hydrocarbon that can be expected to be produced from known accumulation with the plans that are approved or are likely to be approved in the near future. Reserves includes those volumes that will be produced by the current development (infrastructure and wells), volumes that will be produced by sanctioned developments, wells and projects, and volumes that will be produced by developments, projects or wells that are deemed justified for development. Justified for development are those investments that are commercially viable at the time of reporting, and where there are no reasonable contingencies that could preclude development.

The Reserves are also classified according to uncertainty or probability of the reserves being produced. Noreco is classifying reserves into the following categories;

- 1P – Reserves are the hydrocarbon volumes that have a reasonable certainty of being produced (from a field, a development, a well). In Noreco’s reserves philosophy, the P1 reserves should be a

40

realistic/conservative expectation of the producible volumes without being too conservative or too optimistic.

- 2P – Reserves are the hydrocarbon volumes that likely to be produced (from a field, a development or a well). For the producing fields in Noreco’s portfolio, the difference between the 1P and 2P reserves are relatively small, reflecting that the 1P reserves are classified as being realistic/conservative. The 2P reserves will have a slightly higher risk of not being produced.

- 3P – Reserves are the hydrocarbon volumes that can possibly be produced (from a field, a development, a well). The 3P reserves will typically include the upside potential in the field, i.e. reserves that have a lower probability of being produced.

All hydrocarbon volumes classified as reserves in 1P, 2P and 3P must fulfil the maturity criteria for Reserves, as described (in production, sanctioned or justified for development) above.

Reserves are also divided into two categories based on the status of the reserves. Developed reserves are those volumes of hydrocarbons that can be produced from the already executed development, i.e. from existing wells and infrastructure without significant new capital expenditures. Undeveloped reserves are those volumes that are planned to be produced based on new capital expenditures.

7.8.2 Reserves Portfolio

Noreco has producing reserves from a total of 7 fields, whereof five fields on the Danish Continental Shelf (DCS) and two fields on the Norwegian Continental Shelf (NCS). More information on the fields is available on Noreco’s homepage www.noreco.com and in the 2007 annual report. The total 2P reserves are 31 mmboe.

Cecilie Field, DCS, operated by Dong, Noreco 61%

The reserves for the Cecilie Field are based on expected decline of the already producing reserves. There are no new reserves development planned for Cecilie.

Lulita Field, DCS, operated by Dong, Noreco 28.2%

The reserves for the Lulita Field are based on decline analysis and assessment of the restrictions of producing Lulita across the Harald platform. No new reserves development is planned for Lulita.

Nini Field, DCS, operated by Dong, Noreco 30%

The reserves assessment of the Nini Field is based on decline analysis of existing wells, upgrading of the water injection pipeline and drilling of one dual target water injector on the Nini Field. The sanctioned development of the Nini East Field is included as undeveloped reserves for the Nini license. The Nini East development is bringing new reserves across the Siri platform, and is extending the field life for the Siri, Stine and Nini Fields by contributing to lowering the unit operating cost for the fields.

Siri/Stine Fields, DCS, operated by Dong, Noreco 20%

The reserves for the Siri and Stine Fields are based on decline analysis of the existing production wells. One additional Siri well is included in the reserve estimates for Siri.

South Arne, DCS, operated by Hess, Noreco 6.56%

The reserves assessment of the South Arne Field is based on performance assessment of the field’s production and review of reservoir modelling results from the South Arne Field. The reserves are based on remedial well activity to restore and improve production from existing wells, as well as drilling of further two production wells.The South Arne Northern Extension (SANE) is included as undeveloped probable reserves, requiring additional infrastructure and well investments.

Brage, NCS, operated by StatoilHydro, Noreco 12.62%

The reserves assessment for the Brage Field is based on detailed decline analysis of the Brage wells and assessment of the forward work program in the long term plan for the field. The drilling of a long reach well to develop the Brage north flank has recently been completed successfully with significant impact on field performance and expected reserves. Further drilling is planned over the next three years, with three wells to be completed in 2008. The forward drilling program includes a mix of production, injection and exploration wells, aimed at improving recovery and increasing the field STOOIP.

41

Enoch, NCS, operated by Talisman, Noreco 4.36%

The Enoch Field reserves are based on the expected production performance for the Enoch development well with gas lift and with low pressure operations from 2009. The low pressure operations project is in the define stage with expected execution starting in the second half of 2008.

Asset/Field WI Ultimate Recovery Cumulative Production Proved Reserves (1P) Proved + Probable (2P)

Oil/NGL Gas Oil/NGL Gas Oil/NGL Gas Oil/NGL Gas

(%) (MMBBLS) (BCF) (MMBBLS) (BCF) (MMBBLS) (BCF) (MMBBLS) (BCF)

Cecilie 61.00% 3,91 0,00 3,39 0,00 0,53 0,00 1,53 0,00 Lulita 28.20% 1,82 6,24 1,48 5,28 0,34 0,96 0,63 1,48 Nini 1 30.00% 10,74 0,00 5,97 0,00 4,78 0,00 8,35 0,00 Siri 4 20.00% 11,30 0,00 10,23 0,00 1,07 0,00 1,63 0,00 South Arne 2 6.56% 11,33 16,47 7,34 10,81 3,99 5,66 6,56 11,95

Stine 4 20.00% 1,23 0,00 0,93 0,00 0,92 0,00 1,27 0,00 Brage 3 12.62% 44,17 17,71 39,46 11,45 4,71 6,26 6,36 9,33 Enoch 4.34% 0,21 0,34 0,08 0,08 0,13 0,26 0,45 0,84 Totals 84,71 40,76 68,87 27,62 16,47 13,14 26,78 23,60

1 Includes Nini East development 2 Includes South Arne Northern Extension development 3 Includes A-28B Bowmore 4 Excludes reserves from the acquisition of Tallisman Oil Denmark Limited

7.8.3 Contingent resources

Discoveries (known accumulations) where development has not yet been sanctioned or is for other reasons uncertain (new technology needed, resources requiring further evaluation, limited market/export solutions etc). The probability of the contingent resources is classified into category 1C, 2C and 3C, in a classification scheme corresponding to the scheme used for reserves and described above.

- 1C – Contingent Resources is a realistic/conservative estimate for the volumes that can be produced from the discovery with a given assumed development scheme.

- 2C – Contingent Resource is the volumes that are likely to be produced from the development of the discovery.

- 3C – Contingent Resource is the volumes that possibly can be expected to be produced from a development of the discovery. The Contingent Resources are based on deterministic evaluations of the recoverable volumes.

Contingent resources portfolio

Noreco contingent resources are from discoveries in various stages of maturation towards development on the Norwegian Continental Shelf, Danish Continental Shelf and UK continental shelf. The volumetric evaluation of the contingent resources has not been reassessed since the issuing of the Noreco prospectus in November 2007. The table below indicates the appraisal activity on the discoveries since November 2007 (completed appraisal in bold), indicating that these discoveries have been further matured. However, these do not yet qualify as reserves as defined by the SPE resource classification system.

Huntington – an extensive appraisal program has been completed for the Forties Fm in Huntington. One appraisal well with 8 sidetracks, 2 DST and extensive coring have been completed. The data from the appraisal campaign is being incorporated into 3D reservoir models for evaluation of resource in place and recoverable resources. This subsurface evaluation work is still ongoing and conclusion on the resource basis is expected in 2Q/3Q2008. One appraisal well has also been completed to the Fulmar Fm, which has given valuable informa-tion. The uncertainty on the Fulmar reserves remain significant and additional appraisal activity is required to conclude on the full potential. A seismic survey will be acquired over Huntington in 2008 aimed at improving the mapping of the reservoirs.

Without improved seismic data and probably also additional appraisal drilling, it will be difficult to reduce the uncertainty on the Fulmar volumes. In parallel with the subsurface work, plans are being made for a rapid phased development of Huntington Field, with a possible fast track development of the Forties Fm, followed by a Fulmar development when the Fulmar Fm has been sufficiently appraised. It is expected that the resources associated with the Forties Fm will be bookable in 2008, following a development decision and when plan for field development and operation is filed.

42

Oselvar – a successful appraisal well was completed in February 2008, and has provided encouraging results with respect to development of the field. Incorporation of the appraisal well results are ongoing and studies are being conducted to evaluate development options for the field. A plan for development and operation (PDO) is planned for 2008.

Nemo – a successful appraisal well was completed in March 2008. Subsurface work is starting up to incorporate well results and mature development options for the Nemo discovery.

Rau – the discovery assessment has been completed and filed with Danish authorities. The development decision for the discovery is currently pending a commerciality evaluation and subsequent declaration of commerciality to the Danish authorities. The evaluation work is ongoing and the conclusions are expected in second half of 2008.

Amalie – there are currently no direct evaluation activity ongoing on Amalie. The development of the field is pending a commercial gas off take solution in the Amalie area. Exploration is planned for the Amalie neighbouring blocks and could help move Amalie forward. Based on this, Amalie has been moved to contingent resources.

Brage Flank – following the successful Bowmore appraisal/development well that was completed in February 2008, 0.9 mmboe of the Brage Flank contingent resources have been booked as reserves. Appraisal drilling has been ongoing until recently on the Huntington, Oselvar and Nemo discoveries. Reservoir studies and analysis are ongoing to evaluate the impact on the contingent resource estimate for these discoveries, and hence a new assessment of the volumetric is not available for year end estimates of the contingent resources.

Asset/

Field

WI Contingent

Resources (2C)

(%) (Net. MMBOE)

P1114, Huntington. UKCS, Forties & Fulmar 20.00% 34.50 P1114, Huntington, UKCS, Triassic 20.00% 15.10 PL274 Oselvar, NCS 15.00% 6.30 PL148 Nemo, NCS 15.00% 4.40 PL006C South East Tor, NCS 25.00% 6.10 7/06 Rau, DCS 40.00% 5.20 7/86 Amalie, DCS 29.92% 10.50 PL018C Flyndre, NCS 13.34% 6.20 PL048C J1, NCS 5.45% 0.70 PL442 Gamma, NCS 20.00% 4.80 PL256, Sklinna, NCS 10.00% 1.80 PL348, Tau, NCS 17.50% 1.00 16/98, Connie, DCS 61.00% 1.10 PL055B Brage Flank 12.62% 4.00 6/95 Sofie, DCS 20.00% 0.20 PL412, 25/6-1, NCS 40.00% 0.20 Total Contingent Resources 102.10

7.8.4 Prospective resources

Prospective resources are those quantities of petroleum which are estimated, on a given date to be potentially recoverable from undiscovered accumulations. Noreco`s estimated prospective resources as of the date of this prospectus is 375 mmboe

7.9 RESEARCH AND DEVELOPMENT

Noreco is not involved in any research and development activities, apart from general industry sponsored projects.

43

7.10 ENVIRONMENTAL ISSUES

The Company is not obliged to carry out environmental protection measures that would be significant to the business or financial situation. However, all phases of the oil business present environmental risks and hazards and are subject to environmental regulation pursuant to a variety of international conventions and state and municipal laws and regulations. Environmental legislation provides for, among other things, restrictions and prohibitions on spills, releases or emissions of various substances produced in association with oil and gas operations. The legislation also requires that wells and facility sites be operated, maintained, abandoned and reclaimed to the satisfaction of applicable regulatory authorities.

44

8. THE MARKET

8.1 ENERGY OVERVIEW

The world’s energy consumption has increased constantly during recent years. The trend shows that there still is a growth in consumption of oil, together with natural gas and coal while the use of nuclear energy and hydroelectric energy has stagnated. The oil market is an integral part of the world economy, where demand moves in line with the general economy. The International Monetary Fund (IMF) estimates world economic growth at 5.2% in 2007 and 2008. Demand for oil is estimated by the Energy Information Administration (EIA) to 85.9Mbd in 2007 (growing 1.3 Mbd in 2007) and growing 1.5 Mbd in 2008 compared to 2007. EIA’s supply and consumption estimates for the second quarter of 2007 suggest OECD inventories on a days-of-supply basis will continue to decline to the low end of the 5-year average range and if OPEC does not increase production, inventory levels could fall below the 5-year average, with the attendant price effects according to EIA.

OPEC is an international organization of twelve countries, which are heavily reliant on oil revenues as their main source of income. Membership is open to any country which is a substantial net exporter of oil and shares the ideals of the organization. The current members are Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

Twice a year, or more frequently if required, the Oil and Energy Ministers of the OPEC countries meet to decide on the organization’s output level and consider whether any action to adjust output is necessary in the light of recent and anticipated oil market developments. As oil prices have increased further, it has become evident that OPEC at the moment does not have enough production capacity to meet the growth in world demand. The organization is planning to increase its capacity in the coming years, mainly from Saudi-Arabia, to attempt to regain control over prices.

World Oil Consumption by Region

0

10

20

30

40

50

60

70

80

90

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004

MM

BO

E/D

ay

North America S&C America Europe Middle East Africa Asia Pacific

Source: British Petrolem databases 2006 (www.bp.com)/Pareto Research

As a consequence of a solid global economy and a strong increase in oil demand, the general international offshore oil and gas market showed a healthy development from 1995 until 1997. The financial crisis in Asia and the oil price collapse in 1998/99 led to a weak market in the period from 1998 to 2000. As energy prices increased, this contributed to an improvement during 2001, but the upturn was short as the weakening in global economy negatively influenced the rate of new investments in new oil and gas fields, whereas the market for offshore services and modifications were only modesty affected due to the continuous upgrading and production support. This development continued into 2002 and 2003, but during the end of 2003 and 2004, demand for oil

45

showed a significant improvement. The demand and prices in the offshore modification and services markets provide a favorable market outlook for 2007 and into 2008 after record high oil prices have boosted investments in the industry.

Despite strong oil prices from late 1999, oil companies have until recently been reluctant to increase exploration and production spending accordingly. Until mid 2003, the high prices were more a result of OPEC’s success in controlling the supply side rather than growing demand. However, since then the situation has changed and oil demand has shown a strong year-to-year growth. Since there is currently close to no excess production capacity worldwide, increased exploration and production activity is expected to continue. A recent Lehman Brothers survey of 300 oil and gas companies found that “the long term cycle in worldwide exploration expenditures and drilling activity, currently in its fifth year, is very much intact.” According to the survey, E&P spending is expected to increase by 13 percent in 2007, following a growth of 28 percent in 2006. According to Rigzone, overall utilization for the entire competitive worldwide rig fleet is currently 86.9 percent. This is up from 85.9 percent a year ago. Within this average, drill ship utilization is 77.1 percent, semisubmersibles 85.8 percent and jack-ups 88.1 percent. These data reflect utilization of competitive rigs and do not distinguish by capability. According to ODS Petrodata, the utilization of drill rigs capable of operating in water depth exceeding 5,000 feet has been running 100 percent since mid-2005.

8.2 THE OIL MARKET

8.2.1 The oil price

The oil price as of today is at record highs in nominal terms but not in real terms. As can be seen from the second graph below, it is still under the level in the early eighties after the Iranian Revolution when the price peaked at US$ 84.6/Bbl in 2005 dollars. The oil price (Brent December) is currently US$ 132.56/Bbl.

The Brent Crude-Current Month23/5/08

95 96 97 98 99 00 01 02 03 04 05 06 07

0

20

40

60

80

100

120

Crude Oil-Brent Cur. Month FOB U$/BBL

Source: DATASTREAM

46

Real and future Oil Price

Real Crude Oil Price

0

10

20

30

40

50

60

70

80

90

100

1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007

1965-2006 in $2006 (2007: current)

WTI future curve

64

66

68

70

72

74

76

78

80

82

Sep

-07

Mar-0

8

Sep

-08

Mar-0

9

Sep

-09

Mar-1

0

Sep

-10

Mar-1

1

Sep

-11

Mar-1

2

Sep

-12

US

D/b

bl

WTI 13/09/07 WTI 20/09/07

Source: British Petroleum databases (www.bp.com), Pareto Research, Bloomberg databases (www.bloomberg.com)

The oil price is affected by a number of factors, including changes in supply and demand, OPEC regulations, weather conditions, regulations from domestic and foreign authorities, political and economic conditions and the price of substitutes.

The use of oil with respect to the total energy consumption has also increased, but it must be noted that the market is dynamic and that means that the demand for oil is inversely linked to the price. Longer periods of high oil prices can therefore lead to increased use of alternative energy sources at the cost of oil demand.

47

8.2.2 Oil market balance

Oil demand and supply

79.00

80.00

81.00

82.00

83.00

84.00

85.00

86.00

87.00

88.00

1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07E 3Q07E 4Q07E

Mb

d

Supply Demand

Source: Energy Information Administration (EIA) 2007 database,( www.eia.doe.gov/)/Pareto Research

8.3 THE NORWEGIAN CONTINENTAL SHELF

According to the Ministry of Petroleum and Energy, the NCS offers a significant remaining resource potential. Of estimated 82bn boe of oil and gas reserves, some 1/3 of total resource potential is produced, 1/3 discovered and 1/3 still undiscovered.

NCS oil and gas reserves

Source: The Norwegian Ministry of Petroleum and Energy databases( www.regjeringen.no)

In order to tap this resource potential, the oil industry has to increase its exploration efforts on the NCS. The Norwegian Government is emphasizing the importance of exploration by having a generous tax regime that recoups up to 78% of the exploration costs. New entrants have been awarded an increasing number of new licenses and the major existing players are increasing their activity levels.

As of today, 60% of the NCS is opened for exploration activity. In the Barents Sea, only the southern part is currently available to the industry, with the possibility that huge areas will be opened in near future. According

48

to the Ministry of Petroleum and Energy Norway is currently experiencing a period of vigorous activity on the NCS. Higher oil prices have brought significant increases in the activity level providing ample business opportunities for the global supply and service industry. There is a substantial potential for enhanced production and new discoveries.

Norway's cluster of high-technology service companies can turn even marginal reservoirs into profit centres, and the stable political scene lets the Company plan for the long-term. Norway is among others perceived to be the most stable country in the world according to “The failed states index 2007” by Foreign Policy.

In 2003 the Norwegian Government introduced the APA system in mature parts of the NCS. The APA system ensures that very large areas close to existing and planned infrastructure are available for the industry in the years to come. This will lead to efficient use of production and transportation installations on the NCS. The APA system gives new and smaller players on the NCS good opportunities. The APA area will be expanded as new areas mature, but the area is not to be reduced.

The production licenses are awarded through licensing rounds (APA and normal licensing rounds). The Norwegian Ministry of Petroleum and Energy announces what areas are available for production licenses. The applicants are able to apply individually or as a group. The Ministry of Petroleum and Energy considers among others the applicant’s geological understanding, technical expertise, experience regarding the applicant’s activities and financial strength. All happens through an objective, non-discriminatory process with announced terms. Former experiences which the Ministry of Petroleum and Energy has had with the certain applicant may also have significance.

Number of production licenses

0

10

20

30

40

50

60

2003 2004 2005 2006

Source: The Norwegian Ministry of Petroleum and Energy databases( www.regjeringen.no)

The number of both production licenses and the number of companies to receive license offers has increased significantly the last years (see figures).

49

Number of companies to rece ive license offe r

0

5

10

15

20

25

30

35

2003 2004 2005 2006

Source: The Norwegian Ministry of Petroleum and Energy databases( www.regjeringen.no)

Areas to be awarded (km2)

0

5000

10000

15000

20000

25000

2003 2004 2005 2006

Source: The Norwegian Ministry of Petroleum and Energy databases( www.regjeringen.no)

The aim of a well defined licensing policy is to organize licensing rounds with a scale and tempo that secures the right activity level, cost-efficiency and high value creation.

50

9. FINANCIAL INFORMATION AND OPERATING REVIEW

You should read the following discussion of the financial condition and results of operations in conjunction with

the financial statements included in this Prospectus. The following discussion contains forward-looking statements that are based on current assumptions and estimates by the Company’s management regarding

future events and circumstances. The Company’s actual results could differ materially from those expressed or

implied by the forward-looking statements as a result of many factors, including those described in Section 2 “Risk factors”.

Annual reports including audited historical financial information and audit reports in respect of 2007, 2006 and 2005 may be found at the Company’s website at www.noreco.com. The annual reports for Noreco for the years 2007 and 2006 are included in this Prospectus in Appendix 3 and 4 respectively. The annual report for 2006 also includes the 2005 financial figures. The annual financial statements have been audited by Deloitte AS. The figures for 1Q 2008 as included below have been prepared by the Company and have not been audited.

The Company’s financial information for the 1Q 2008 is enclosed as Appendix 2 to this Prospectus.

9.1 BASIS FOR PREPARATION

The 2007 accounts, with comparable 2006 figures have been prepared based on IFRS accounting standards. These accounts comprise income statement, balance sheet, statement of changes in equity, cash flow statement, accounting principles and notes to the accounts, and are included in Appendix 3 to this Prospectus. These IFRS adjusted accounts have been subject to audit.

9.2 SUMMARY OF ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

Please see the annual report for 2007 note 2 in Appendix 3, for the Company’s accounting policies.

9.3 HISTORICAL FINANCIAL INFORMATION

9.3.1 Income statements

Amounts in NOK 000’s As per 31

March 2008

(unaudited)

IFRS

As per 31

March 2007

(unaudited)

IFRS

FY ended

31 Dec

2007

(audited)

IFRS

FY

ended 31

Dec 2006

(audited)

IFRS

FY ended

31 Dec 2005

(audited)

IFRS

Operating revenues ............................. 435,763 - 839,664 - -

Productions expenses 80,882 - 214,830 - - Exploration and appraisal expenses....... 29,815 5,395 145,543 25,735 7,809 Payroll expenses .................................... 31,955 9,663 103,239 31,312 3,184 Depreciation and write-down expenses.................................................

131,349 221 278,386 694 58

Other operating expenses....................... 20,283 3,969 48,617 29,494 13,850

Total operating expenses ..................... 294,284 19,248 790,614 87,235 24,903

Operating result ................................... 141,479 (19,248) 49,051 (87,235) (24,903)

Financial income ................................... 26,248 214 149,001 1,374 154 Financial expenses................................. 164,617 1,087 447,212 2,204 (4)

Net financial result............................... (138,368) (873) (298,210) (830) 150

Ordinary profit/loss before tax........... 3,110 (20,121) (249,159) (88,064) (24,753)

Tax 31,469 15,258 50,469 68,205 19,265

Profit/loss for the period ..................... (28,359) (4,865) (198,690) (19,859) (5,487)

51

9.3.2 Balance sheet

Amounts in NOK 000’s As per 31

March

2008

(unaudited)

IFRS

As per 31

March

2007

(unaudited)

IFRS

FY ended 31

Dec 2007

(audited)

IFRS

FY ended

31 Dec

2006

(audited)

IFRS

FY ended

31 Dec

2005

(audited)

IFRS

ASSETS

FIXED ASSETS Goodwill ................................................ 1,430,667 - 1,445,992 - - Deferred tax asset .................................. 135,206 5,147 111,391 5,147 1,211 License interests, exploration assets ...... 4,577,746 10,091 4,379,448 8,882 - Production facilities ............................... 2,661,119 - 2,803,887 - - Other machinery and equipment............ 5,273 1,777 6,236 1,804 1,463

Total fixed assets .................................. 8,810,011 17,015 8,746,954 15,832 2,675

Accounts rec. and other current receivables .............................................

565,814 15,693 297,470 4,842 1,911

Tax receivables ...................................... 456,106 95,303 265,866 77,464 19,441 Cash at bank and in hand etc ................. 558,845 44,632 1,020,399 11,970 41,615

Total current assets ............................. 1,580,765 155,628 1,583,735 94,276 62,968

Total assets ........................................... 10,390,775 172,642 10,330,688 110,108 65,644

EQUITY AND LIABILITIES

Equity

Share capital ......................................... 346,390 31,422 345,385 31,422 2,135 Other equity ........................................... 1,321,943 24,470 1,332,066 24,302 47,804

Total equity .......................................... 1,668,333 55,892 1,677,451 55,724 49,939

Liabilities and obligations

Deferred tax liabilities ........................... 2,505,780 - 2,396,463 - - Provisions for other liabilities and charges ..................................................

679,537 252 712,452 252 -

Convertible bond loan .......................... 354,048 - 349,232 - - Bond loan .............................................. 3,741,431 - 3,730,514 - - Other long term liabilities ..................... 527,252 - 523,843 - -

Total liabilities and obligations........... 7,818,048 252 7,712,504 252 -

Short term liabilities

Other current liabilities .......................... 481,742 17,999 625,969 19,132 15,704 Current income taxes payable................ 184,055 - 92,765 - Other short term interest bearing debt ... 238,598 98,500 222,000 35,000

Total short term debt .......................... 904,394 116,498 940,733 54,132 15,704

Total liabilities ..................................... 8,722,442 116,750 8,653,237 54,384 15,704

TOTAL LIABILITIES AND

EQUITY ...............................................10,390,775 172,642 10,330,688 110,108 65,644

52

9.3.3 Cash flow statements

Amounts in NOK 000’s As per 31

March 2008

(unaudited)

IFRS

As per 31

March

2007

(unaudited)

IFRS

FY ended

31 Dec 2007

(audited)

IFRS

FY ended

31 Dec

2006

(audited)

IFRS

FY ended

31 Dec

2005

(audited)

IFRS

Cash flow from operating

activities

Ordinary result before tax.................... 3,111 (20,121) (249,159) (88,064) (24,753) Depreciation and writedown expenses............................................... 131,349 221 278,386 694 58 Taxes paid / refunded (17,957) (173,928) 17,573 - Loss on sale of fixed assets held for sale 23,490 - Pension cost with no cash impact 714 407 252 - Effect of changes in exchange rates 67,888 (88,087) - Financial items with no cash effect 21,805 (23,904) - Change in accounts receivable (102,287) 35,001 3,372 Change in trade payables ..................... 56,622 (1,106) 63,122 (4,569) 10,420 Change in other current balance sheet items ........................................... (122,430) (13,462) 382,078 (6,258) -

Net cash flow from operating

activities .............................................. 38,815 (34,468) 247,406 (80,373) (10,901)

Cash flow from investing activities

Proceeds from sale of tangible fixed assets 27,502 - Purchase of tangible assets .................. (89,168) (920) (169,653) (9,916) - Purchase of intangible fixed assets ...... (220,584) (254,681) (1,522) Purchase of investments in shares ....... (4,125,204) -

Net cash flow from investing

activities .............................................. (309,752) (920) (4,522,036) (9,916) (1,522)

Cash flow from financing activities

Issue of share capital............................ 9,688 4,550 1,910,240 25,643 54,039 Proceeds from issuance of long term debt ...................................................... 170,402 63,500 3,160,427 - - Repayment of long term debt (132,698) - Proceeds from issuance of short term debt ..................................................... 16,598 187,000 35,000 - Interest paid (189,916) -

Net cash flow from financing

activities .............................................. (125,926) 68,050 5,257,667 60,643 54,039,

Net change in cash and cash

equivalents. ........................................ (396,863) 32,662 983,037 (29,645) 41,615

Cash and cash equivalents at start

of the period ....................................... 973,402 11,970 11,970 41,616 -

Effects of changes in exchange

rates on cash and cash equivalents (17,694) (21,605) -

Cash and cash equivalents at end

of the period ....................................... 558,845 44,632 973,402 11,970 41,615

53

9.3.4 Statement of Changes in Equity

Amounts in NOK 000’s Share

Capital

Share

Premium

Fund

Other

Equity

Paid-in but

not

registered

Capital

Total Equity

Equity as at 1 Jan 2006.................... 2,135 (4,100) 51,905 49,940

Net Profit for the year........................ (19,859) - Capital Increase February 2006 ......... 20,341 31,564 (51,905) - Capital Increase May 2006 ................ 959 1,790 2,749 Capital Increase September 2006 ...... 7,910 14,763 22,673 Capital Increase December 2006 ....... 77 144 221

Equity at 31 Dec 2006 ...................... 31,422 48,260 (23,959) - 55,723

Equity as per 1 Jan 2007 31,422 48,260 (23,959) - 55,723

Capital Increase 2007 311,571 1,654,600 1,966,171 Transferred from convertible bond Transferred – share split & fund emission Share issue cost Value-adjusted financial instruments Translation differences – foreign exchange

2,392 (2,392) (55,391)

41,675

(43,411) (88,087)

41,675 -

(55,391) (43,411)

(-88,087) Net income (loss) (198,690) (198,690) Coverage of loss (189,085) 189,085 -

Equity at 31 Dec 2007 345,385 1,455,453 (123,387) - 1,677,451

Equity as per 01 Jan 2008

Issue of share capital Value of share-based incentive plans Value adjustment financial instruments Currency translation differences Net results for the period

345,385

1,005 1,455,453

8,683 (123,387)

495 (2,897) 11,954

(28,358)

- 1,677,451

9,688 495

(2,897) 11,954

(28,358)

Equity at 31 Mar 2008..................... 346,390 1,464,136 (142,193) - 1,668,333

9.4 INFORMATION ON FINANCIAL CONDITION AND OPERATING RESULTS

Below is an overview of the financial condition and operating results for Noreco for the full years 2007 compared to 2006 and 1 quarter 2008 compared to the first quarter of 2007. The comments to the financial year ended 2006 compared to the financial year 2005 may be found in the prospectus dated 1 November 2007 prepared in connection with the listing of the Company’s shares on Oslo Børs ASA. See also section 16.2 below.

Please refer to Section 2 for a description of the general risk factors regarding any governmental, economic, fiscal, monetary or political policies or factors that could materially affect, directly or indirectly, Noreco’s operations.

9.4.1 Developments in the years ended December 31 2007 compared to full year 2006

The NOK 4.4 billion acquisition of Altinex ASA in 2007 transformed the company, and represents the key driver behind the significantly different results for 2007 compared to 2006. Prior to the acquisition of Altinex the company did not have any oil and gas production. Altinex has been incorporated in the accounts from 01.07.07. As a result of the Altinex acquisition, the Group’s production in 2007 was 1.9 mmboe, equivalent to approximately 10 400 boed from in the period 01.07 – 31.12.07. The production was realized at an average price of USD 75 per boe. The financial results are further impacted by reinvestment of the revenues from the 7 producing fields into exploration, appraisal and development activities of the Group aimed at fuelling further growth. In 2007, the company completed one appraisal well on the Huntington Field. Another two appraisal wells commenced late in 2007 (Nemo and Oselvar). All three wells were successful, and the costs associated with the wells were capitalized.

Operating revenues in 2007 was NOK 840 million (0 in 2006). Operating results (EBIT) for 2007 was NOK 49 mill, up from NOK -87 million in 2006 The Group’s profit before tax (EBT) was NOK -249 million compared to NOK -88 million for 2006. Net results for the year were NOK -199 million compared to NOK -20 million for

54

2006. Net cashflow from operating activities increased from NOK -80 million in 2006 to NOK 247 million in 2007. Net cashflow from investing activities in 2007 was NOK -4,522 mill, compared with NOK -10 million the year before, interest-bearing debt amounted to NOK 4,826 million at the end of 2007, compared with NOK 35 million the year before. Total bank deposits amounted to NOK 973 million at the end of 2007 compared to NOK 12 million in 2006.

The Group strengthened its financial position in 2007 through new equity of a total of NOK 1,910 million net of issue cost, and issuance of new bonds of NOK 2,800 mill, and issuance of a convertible loan of NOK 430 mill. The Group divested its assets in Oman and two oil service companies (Altinex Services AS and Altinex Reservoir Technology AS) in 2007 to focus its activities on upstream oil and gas in the North Sea region in line with the strategy.

9.4.2 Developments in the first half of 2007 compared to the first half of 2006

Operations and result

The 2Q 2007 reflect higher activity than in 2Q 2006 mainly due to an increased number of licenses held by Noreco (17 licenses in the beginning of 2007 compared to 3 licenses in the beginning of 2006). As per 30 June 2007 Noreco was holding 21 licenses in the NCS. This is in addition to the Altinex licenses.

The increased activity and spending reflects the investments in direct exploration. In addition the number of employees has increased as a result of these investments (from 8 employees as of 1 January 2006 to 20 employees in the beginning of 2007).

Balance sheet

The balance sheet includes the consolidated balance for the Altinex Group and for Noreco. In the consolidated balance the acquisition price for the shares have been eliminated and value has been allocated to the various assets according to IFRS accounting principles. Reference is made to note 9 referring to the acquisition of Altinex in the 2Q report attached hereto as Appendix 3.

Cash flow

Noreco raised NOK 1,195 million in new equity, NOK 440 million in convertible bonds, and NOK 506 million in bank debt during 1H to finance the acquisition of Altinex. Other than this, cash flow has been provided through a credit facility with SR Bank for financing of exploration activity (Facility of NOK 70 + NOK 260 million).

9.4.3 Developments in the years ended December 31 2005 compared to full year 2006

Operations and result

The operating loss for 2006 was NOK 87.2 million compared to NOK 25 million in 2005, reflecting the increased activity in exploration investments in 2006.

Balance sheet

Limited capital was called during 2006 (NOK 25 million), and exploration investments were financed through existing equity and bank financing.

Cash flow

Financing through 2006 was made through equity and bank loan (Exploration financing).

Segment information

The Company has not divided its operations in any segment or geographical segments. The Company therefore does not report its segment information.

9.4.4 Developments in the first quarter of 2008 compared to the first quarter of 2007

The Noreco Group had Q1 2008 operating revenues of NOK 436 million (0 in Q1 2007) and earnings before interest, tax, depreciation and amortisation (EBITDA) of NOK 273 million (-19 in Q1 2007) after exploration expenses of NOK 30 million (5 in Q1 2007). Net result was NOK -28 million (-5 in Q1 2007). The achieved oil, gas and NGL prices adjusted for the cost of put-options expiring in the same period was USD 91/boe. Depreciation and amortization amounted to NOK 131 million (0 in Q1 2007).

55

Net financial expense in the first quarter was NOK -138 million (-1 in Q1 2007).

Noreco has oil price hedging instruments in place, which secure a major part of expected production volume against oil prices below USD 75 per barrel up to April 2009 and for oil prices below USD 50 per barrel through the first quarter of 2010.

Total equity and liabilities as at 31, March 2008 was NOK 10,391 million with equity of NOK 1,668 million. At the end of the quarter, the Group’s interest bearing debt was NOK 4,871 million and the Group held NOK 559 million in cash.

There has been one capital increase during Q1. The company raised NOK 10 million in equity in February 2008. The share capital has thereby been raised from NOK 345.4 million as per 31Decembe,r 2007 to NOK 346.4 million as per 31 March, 2008.

Net cash flow from operations as at 31 March, 2008 was NOK 39 million, compared to NOK -34 million in Q1 2007. Net cash flow from investing activities in 2008 was NOK -309 million compared with NOK 0.9 million the year before.

9.4.5 Significant changes in the Company’s financial or trading position since 31 March 2008

On 25 April 2008, Noreco entered into a share sale agreement with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited for a consideration of USD 83 million debt free, cash free. Net working capital as per 31 December, 2007 will be added or deducted when arriving at the final consideration payable upon completion. As such the stated acquisition price relates to the 30% ownership share in the Siri licence. Effective date is 1 January, 2008. Completion is expected to take place by June 2008. In order to partly finance the acquisition, Noreco completed a Private Placement raising gross new equity of NOK 450 million. Costs related to the equity financing is estimated at NOK 21.2 million.

In 2007 Talisman Oil Denmark Limited reported revenues of USD 72 million (70 in 2006), EBITDA of USD 58 million (61 in 2006), EBIT of USD 33 million (38 in 2006) and net profit after taxes of USD 25 million (23 in 2006). The accounts were prepared based on UK GAAP.

The Company is not aware of any other significant changes in the financial or trading position of the Noreco Group which has occurred since 31 March 2008.

9.5 INDEPENDENT AUDITOR

The Company’s auditor is KPMG Sørkedalsveien 6, 0369. KPMG was elected the Company’s auditor at the Company’s annual general meeting held 25 April 2008. The audit partners of KPMG are members of the Norwegian Institute of Public Accountants (DnR). The Company’s auditor from 2005 to 2008 has been Deloitte AS (org. no 980 211 282), Karenslyst Alle 20, 0213 Oslo, Norway. The audit partners of Deloitte are members of the Norwegian Institute of Public Accountants (DnR). Following the acquisition of Altinex ASA, Noreco decided to change its auditor to KPMG, who had been the auditor of Altinex ASA and its subsidaries.

56

10. CAPITAL RESOURCES

Since its incorporation, the Company has raised NOK 2,056 million through issuing new Shares and NOK 4,831 million in debt, and these funds have financed the Company’s commitments and liabilities.

As of 31 March 2008, the Company had cash, cash equivalents and marketable securities of NOK 558.8 million.

For further reference, see cash flow statements in Appendix 2 and Appendix 3 to this Prospectus.

10.1 WORKING CAPITAL STATEMENT

In the opinion of the Company, its working capital is sufficient for its present requirements for the next 12 months. The Company’s further investments in exploration and development as described in Section 10.7 for the period beyond 12 months following this date will be funded through external financing and equity raising (see also Section 10.3 below).

10.2 THE PRIMARY SHORT AND LONG TERM SOURCES OF CASH FLOW

The net cash flow from operations was NOK 247.4 million and NOK -80.3 million in 2007 and 2006 respectively. This development from 2006 to 2007 reflects the acquisition of Altinex ASA. The net cash flow from investing activities amounted to NOK -4,552 million and NOK -10 million in 2007 and 2006 respectively. This reflects investments in licenses on the NSC in 2006 that has further increased in 2007, and purchase of shares in Altinex ASA as well as capitalization of exploration costs in 2007.

As per 31 March, the net cash flow from operations was NOK 39 million and NOK -34 million in 2008 and 2007 respectively. This development from 2006 to 2007 reflects the acquisition of Altinex ASA The net cash flow (consolidated) from investing activities was NOK -310 million in 2008 mainly consisting of purchase of intangible fixed assets. Net cash flow from financing activities (consolidated) was NOK -126 million reflecting interest paid.

The primary short and long term of capital for Noreco for the financing of the operation consisted of a convertible bond booked at NOK 354 million, bond loans booked at NOK 3,741 million, other long term debt booked at NOK 170 million, reserve based financing booked at NOK 366 million and equity. In addition, the company has an exploration drawing facility with SR Bank of NOK 800 million to be spent on financing. NOK 409 million was drawn as per 31 March 2008 from the exploration drawing facility.

There are no limitations on the transfer of liquid assets from subsidiaries.

10.3 FUNDING STRUCTURE AND RESTRICTIONS OF USE OF CAPITAL RESOURCES

As per 31 March 2008, the Noreco Group was funded by NOK 1,668 million in equity, NOK 354 million in convertible bonds, NOK 3,741 million in various bonds, NOK 366 million in reserve based financing and NOK 409 million (170,8 million long term and 238,6 million short term) from the exploration drawing facility with SR Bank of NOK 800 million.

Going forward, any new investments in exploration will be financed partly by equity (30 – 35%) and partly by debt through a bank drawing facility (65 – 70%). Any investment in development is assumed to be financed through reserve based lending (60 – 70%) and through equity (30 – 40%). Any new asset acquisitions will be financed using combinations of the above financing tools depending on the type of investment (Exploration, development or producing assets). Please see Section 10.7.2 and 10.7.3 for an overview of the planned investments.

For a description of the development in the debt structure after 30 June 2007, please refer to Section 10.5.

As of 31 March 2008, the Company held NOK 904 million of current debt (of which NOK 239 million was interest bearing) and NOK 7,818 million non-current debt (of which NOK 4,633 million was interest bearing). Equity as of 31 March 2008 was NOK 1,668 million.

Actual

31 March 2008

Working Capital Ratio 1.75

(Current Assets/Current Liabilities)

Debt to Equity Ratio 5.23

57

10.4 CAPITALISATION AND INDEBTEDNESS

The table below sets forth the Company’s audited and unaudited consolidated cash and equivalents and capitalisation as at 31 March 2008. The table should be read together with the consolidated financial statements and the related notes thereto, as well as the information under Section 9 “Financial Information and operating review”.

Amounts in thousand NOK 31.03.2008

Unaudited

Current debt

Guaranteed........................................................................................

Secured............................................................................................. 238,598

Unsecured......................................................................................... 665,796

Total current debt ............................................................................ 904,394

Non-current debt

Secured............................................................................................. 4,278,683

Unsecured......................................................................................... 3,539,365

Total non-current debt ..................................................................... 7,818,048

Shareholders’ equity

Paid in capital.................................................................................... 2,055,589

Retained earnings and other reserves.................................................... -387,245

Total shareholders’ equity ........................................................... 1,668,333

Amounts in thousand NOK 31.03.2008

Unaudited

Cash and cash equivalents .................................................................. 558,845

Trading securities ..............................................................................

Liquidity.......................................................................................... 558,845

Current financial receivable7 ........................................................... 115,943

Current bank debt .............................................................................. 238,598

Current portion of non-current debt......................................................

Other current financial debt8 ............................................................... 148,751

Current financial debt...................................................................... 387,349

Net current financial indebtedness (+ net financial receivable) .......... -287,439

Non-current bank loans ...................................................................... 537,252

Bonds issued ..................................................................................... 3,741,431

Other non-current loans9..................................................................... 354,048

Non-current financial indebtedness ................................................. 4,632,731

Net financial indebtedness ............................................................... 4,345,292

7 “Current financial receivable” includes open position asset/open position liability. 8 Other current financial debt” includes accrued interest 9 Other non-current loans consists of convertible loan

58

10.5 BORROWINGS

10.5.1 Total borrowings

The Group’s total gross borrowings amounted to NOK 5084.5 million as of 31 March 2008, of which NOK 238.6 million is current.

The table below sets out the composition of the borrowings as of 31 March 2008: The Group has a DKK 5 million and a NOK 5 million overdraft facility and no financial leasing.

10.5.2 NOK 440 million convertible bond loan issue

On 11 May 2007, the Company took up a NOK 440 million convertible bond loan of which NOK 10 million has been converted to equity before this Prospectus is being issued. The convertible bond loan has an interest rate of 6% and matures in 2012. Interest is to be paid semi annually, with first payment in November 2007. The conversion price is set to NOK 22.25 per Noreco share (after share split). In connection with the loan, the Company has to comply with certain covenants including but not limited to request of information in the event of any default of payment, preparation of interim reports, not sell or dispose substantial part of its assets or operation and not make any dividend payments.

10.5.3 The Senior Secured Callable Bond Loans

On 9 July 2007, Noreco issued a NOK 2,800 million senior secured callable bond to finance the acquisition of shares in Altinex. The bond matures on 13 July 2010, and consists of a fixed tranche of NOK 2,300 million with an interest of 11% p.a. and a floating tranche of NOK 500 million with an interest of 6 month NIBOR plus 5.25%. Interest payments are made in semi annual arrears. Main covenants under the loan agreement include that no dividends are allowed; an requirement for additional equity in place within six months; a value clause for Noreco’s shares in Altinex; interest bearing debt over EBITDA adjusted for exploration costs of less than 8.0; and certain book equity ratios and market adjusted equity ratios. If Noreco was to breach the covenants, the Company will have to implement measures to comply within a period of 1-2 months. Furthermore, there are certain restrictions on additional debt, sale of assets and the investments on exploration drilling under the bond loan agreement.

10.5.4 NOK 300 million 9.50% callable bond issue

Issuer: Altinex Oil Norway AS. Final maturity: 9 February 2011.

Financial covenants:

• maintain Equity to Capital Employed ratio of at least 0.25.

Other main covenants:

• not sell the interest in the Brage field

• unless the Equity to Capital Employed ratio is at least 0.35, not pay dividends

• restrictions on sale of asset

10.5.5 NOK 500 million 8.5% open bond issue

On 7 June 2005, Altinex Oil Norway AS issued an 8.5% open bond loan of NOK 500 million. As of this date a total of NOK 100 million has been drawn ant the parent company Altinex ASA has invested NOK 50 million in the bond. The Open Bond Loan matures on 7 June 2010.

Covenants

• Book Equity to Capital Employed to be at least 0.25

• unless Book Equity to Capital Employed exceeds 0.35, not pay more than 50% of distributable profits as dividends

• restrictions on sale of assets

59

10.5.6 USD 155 million revolving borrowing base facility

Borrowers: Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S. Guarantor Geopard A/S. Final maturity 31 December 2011.

Financial covenants:

• aggregate current assets to aggregate current liabilities of the Danish companies (excluding the current portion of long term debt under the facility) to be in excess of 1.10x.

• maximum total debt under the facility to EBITDA ratio of 3.00x.

Technical covenants:

In relation to the total outstanding under the facility:

(i) Field Life Cover Ratio is greater than 1.3:1 (ii) Loan Life Cover Ratio is greater than 1.2:1 and (iii) Debt Service Cover Ration is greater than 1.2:1

Other main covenants:

• negative pledge for Geopard A/S, Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S

• restrictions on additional financial indebtedness for Geopard A/S, Altinex Oil Denmark A/S and Altinex Petroleum Denmark A/S

• restrictions on sale of assets (certain exceptions for sale on arm's length basis for cash)

• dividends from the Danish companies (maximum 40% of aggregate net income and subject to i.a. the total outstanding amount under the loan not exceeding the borrowing base amount under the facility)

• restrictions on acquisitions (certain exceptions for acquisitions of E&P companies and E&P licenses

• restrictions on mergers between the Danish companies

• no Danish company shall make any payments under a subordinated loan of NOK 335,000,000 (Altinex ASA as lender, Geopard A/S as borrower)

10.5.7 NOK 660 million bond issue

On 22 June 2006, Geopard A/S issued a Bond Loan of a total of NOK 660 million. The loan matures on 22 June 2012. Noreco notified the Loan Trustee and the bondholders on 9 May that it wishes to redeem the whole outstanding amount under the Geopard Bond by 23 June 2008 at a price of 105%.

If bank facility with BNP Paribas is refinanced, Field Life Coverage Ratio shall be at least 1.30x times the drawn and outstanding refinanced bank debt.

If bank facility with BNP Paribas is refinanced, Loan Life Coverage Ratio shall be at least 1.20x times the drawn and outstanding refinanced bank debt.

Other main covenants:

• restrictions on dividend payments

• restrictions on further financial indebtedness (applicable to the Group, i.e. Issuer and subsidiaries)

• restrictions on sale of assets (applicable to the Group)

• negative pledge applicable to the Group

• restrictions on sale of shares in the issuer

10.5.8 NOK 800 million exploration facility

On 1 February 2008, Noreco entered into an exploration facility of NOK 800 million with Sparebanken 1 SR – Bank and DnB NOR Bank ASA. The loan matures 31.12.09 and is secured by first priority assignment of the tax refunds from the Norwegian State, and pledge in certain licences on the Norwegian Continental shelf. 70% of the exploration activity is financed by the loan.

10.6 GUARANTEES

Noreco has 1 February 2008 entered into a bank guarantee amounting to US$ 25 million to Seadrill Offshore AS in respect drilling slots. The guarantee is valid until 22 February 2012.

60

10.7 INVESTMENTS

10.7.1 Historical investments

Noreco’s principle investments since start up have been investing in exploration licenses through license rounds and through acquisitions on the NCS. In the start-up year of 2005, the Company used NOK 25 million in direct and indirect exploration costs related to prequalification as a licensee and application for licenses on the Norwegian Continental Shelf.

The Group invested NOK 29 million in exploration in 2006, NOK 344 million in exploration in 2007 and NOK 250 million as per 31 March 2008.

NOK million 2007 2006

Exploration ................................................... 29 344

Development ............................................... 0 16

During 2007, Noreco acquired all shares in Altinex ASA. The acquisition cost was NOK 4,351 million. In the consolidated financial statement (ownership 100%) the acquisition thereby will result in an additional booking of goodwill in the range of NOK 950 million.

The financing of these investments has been made through cash in hand, cashflow from operations, equity issues and debt.

As can be seen from the Balance Sheet included in section 9.3.2 above, Noreco holds no other significant tangible fixed assets than the share of production facilities held through the ownership share in various producing oil & gas assets.

10.7.2 Committed and ongoing investments

On 25 April 2008, Noreco announced its agreement to acquire all the shares in Talisman Oil Denmark Limited for a consideration of US$ 83 million. In order to partly finance the transaction, Noreco completed on 28 April 2008 a Private Placement totaling approximately NOK 450 million.

In the period 2008 up to and including 2010 it is the intention to drill approximately 10 wells a year and thereby invest some NOK 2,400 million on exploration drilling. In the period up to 2011, the plans are to invest in development spending currently estimated to be in the range of NOK 4,200 million starting in 2008. These investments will be financed through cash in hand, cashflow from operations, equity and debt.

The Company’s planned investments for the years 2008-20010 in exploration and development are as follows:

NOK million 2008 2009 2010

Exploration ................................................... 600 1,350 450

Development ................................................ 600 1,650 1,950

In addition to the committed investments shown above further non committed activities and investments are expected. The company also has ambitions to continue to grow through acquisitions of assets and companies.

10.7.3 Principal future investments

Noreco has committed to specific work programs on awarded licenses. These programs include acquisition, purchase and reprocessing of seismic data and participation in wells. Noreco’s share of such estimated obligation amounted to approximately NOK 800 million as per 31 December 2007. In addition, Noreco has entered into “carry” arrangements where Noreco pays the sellers portion of the exploration expenditures. Total remaining commitments under such arrangements was approximately NOK 400 million as per 31 December 2007. Investments for all these commitments are included in the estimated exploration and development figures above and will be invested during the period 2008 and 2009.

10.8 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment include production facilities, facilities under construction, machinery and equipment, fixtures, etc. Items of property, plant and equipment are valued at cost, less accumulated

61

depreciation and write-downs. Facilities under construction are not depreciated until the asset is put into operation. The cost price comprises the acquisition price plus direct costs associated with the acquisition incurred up until the time the asset is ready to be put into operation. For tangible assets produced in-house, the cost price includes the direct and indirect cost of materials, components, suppliers and salaries. No profit is included when capitalizing tangible assets produced in-house. For tangible assets to which liabilities attach with respect to closure and removal, and this liability is recognized as such, this sum will be added to the acquisition cost of the tangible asset concerned. The cost price of a complex asset is divided into separate parts which are depreciated individually if the economic life of the separate parts varies in length.

Costs accrued after the tangible asset has been put into operation, such as repair and maintenance costs, are normally charged to expenses. If it can be demonstrated that the repair/maintenance has led to increased earnings, the costs associated with this will be capitalized as additions to property, plant and equipment.

When assets are sold, disposed of or replaced, the cost price and accumulated depreciation is written back, and any losses or gains from the disposal taken to income. Production facilities comprise investments in devices, plant and infrastructure which are used in the production of hydrocarbons. The cost price of production facilities, as well as any capitalized amounts resulting from provisions for closure and removal, is depreciated in accordance with the production unit method. Depreciation is carried out in line with the production of hydrocarbons in relation to the estimated producible reserves in each field. Capitalized costs which can be ascribed to and used during the field’s entire lifespan are depreciated in relation to total proven reserves. Costs which can be ascribed to developed reserves are depreciated in relation to total developed reserves.

The cost price for other property, plant and equipment is depreciated on a straight line basis over the economic life of the asset. The depreciation periods used are as follows:

- plant and equipment 6-10 years

- fixtures and other equipment 3-5 years

The depreciation period and method is reviewed annually to ensure that the method and period employed correspond with the asset’s actual economic situation. The same also applies to the asset’s scrap value.

Each year tangible assets are assessed for impairment. Emphasis is placed on factors which are relevant to the individual asset. These include external factors, such as market prices for hydrocarbons and technological developments, as well as internal factors, such as the Group’s intentions for continued use, cost of use, and wear and tear. If the asset is deemed to be impaired, an assessment is made of its residual value. If the book value of an asset exceeds its residual value the impairment is recognized in the accounts.

Write-downs which have been recognized in previous accounting periods are reversed when it becomes apparent that the circumstances prompting the write-down no longer exist or the asset’s estimated loss in value is less than it actually was. The reversal is recorded either in the profit and loss statement or as an increase in other reserves. However, a reversal will not take place if to do so would lead to the book value of the asset exceeding that which it would have been if it had been depreciated in the normal way.

As can be seen from the Balance Sheet included in section 9.3.2 above, Noreco holds no other significant tangible fixed assets than the share of production facilities held through the ownership share in various producing oil & gas assets.

62

11. PRO FORMA FINANCIAL INFORMATION

11.1 DESCRIPTION OF ACQUISITIONS IMPLYING PREPARATION OF PRO FORMA

FINANCIAL INFORMATION

Pro forma figures should only be prepared if an acquisition/disposal is considered significant for the Group. In this respect, significant is defined by the Committee of European Securities Regulators (CESR) as 25% of total assets, revenue or operating profit, cf. the CESR’s advice to the European Commission on a possible amendment to Regulation (EC) 809/2004 regarding the historical financial information which must be included in a prospectus of October 2005, and recital (9) of the European Commission Regulation (EC) 809/2004. The transactions mentioned in the next two paragraphs are considered significant in relation to CESR’s definition.

Noreco has from the middle of May 2007 and up November 2007 acquired all of the outstanding shares in Altinex. The pro forma financial information is based on a share of ownership of 100%, corresponding to the share ownership as of October 2007.

On 25 April 2008, Noreco entered into a share sale agreement with Paladin Resources Limited (whose ultimate parent company is Talisman Energy Inc) to acquire all the shares in Talisman Oil Denmark Limited (TODL). Effective date is 1 January, 2008. Completion is expected to take place by June 2008. The pro forma financial information is based on a share of ownership of 100%, corresponding to the share ownership as of the date of this Prospectus.

11.2 SOURCES OF PRO FORMA INFORMATION

The unaudited pro forma financial information related to Altinex has been compiled based on the audited financial statements of Noreco (IFRS) and the unaudited interim consolidated condensed financial information of Altinex (IFRS) for the quarter ended 30 June 2007.

The unaudited pro forma financial information related to TODL has been compiled based on the audited financial statements of Noreco (IFRS) and the audited financial statements of TODL (UKGAAP) for the financial year ended 31 December, 2007 and the unaudited interim financial report of Noreco (IFRS) and the unaudited interim internal financial information of TODL for the quarter ended 31 March 2008. See Section 16.2 (cross-reference list) for Altinex annual report for 2006.

11.3 BASIS FOR PREPARATION OF THE PRO FORMA FIGURES

The unaudited pro forma financial information related to the acquisition of Altinex, has been prepared to illustrate the main effects that the acquisition of Altinex (“the Altinex acquisition”) would have had on the consolidated profit and loss statement for 2007 for Noreco.

The unaudited pro forma condensed profit and loss statements for the twelve months ended 31 December 2007 give effect to the acquisition of Altinex as if it had occurred on 1 January 2007.

The unaudited pro forma financial information related to TODL has been compiled in connection with the acquisition of TODL, to illustrate the main effects the acquisition of TODL (“the transaction” or “the TODL acquisition”) would have had on:

• the consolidated profit and loss statement for 2007 and the unaudited condensed consolidated profit and

loss statement for 1Q 2008 for Noreco, and

• the unaudited condensed consolidated balance sheet as of 31 March 2008 of Noreco if the transaction had

occurred at an earlier period.

The unaudited pro forma condensed profit and loss statements for the three months ended 31 March 2008 and the twelve months ended 31 December 2007 give effect to the acquisition of TODL as if it had occurred on 1 January 2008 and 1 January 2007 respectively. The unaudited pro forma condensed balance sheet as of 31 March 2008 gives effect to the acquisition of TODL as if it had occurred on 31 March 2008.

The unaudited pro forma financial information has been prepared in accordance with EU Regulation No 809/2004, as included in the Norwegian Securities Trading Act section 5-13 and the CESR’s Level 3 guidance.

63

Because of its nature, the pro forma financial information addresses a hypothetical situation and therefore does represent the Company’s actual financial position or results. The pro forma profit and loss and balance sheet information does not have a continuing impact on Noreco. The pro forma financial information is prepared for illustrative purposes only.

11.4 PRO FORMA ACCOUNTING PRINCIPLES

The unaudited pro forma financial information has been compiled using accounting principles that are consistent with the accounting principles described in section 9.2 in this Prospectus. These accounting principles are those used by Noreco.

11.5 PRO FORMA CONSOLIDATED INCOME STATEMENT 2007

11.5.1 Unaudited pro forma consolidated profit and loss information for 2007

Summary Profit and Loss Infomation

Noreco ASA

Altinex ASA as of

30 Jun 2007

Talisman Oil

Denmark IFRS adjustments

Pro forma

adjustments

Pro forma twelve

months ending 31

December 2007

All figures in tNOK (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Operating revenues 839.664 634.510 422.617 -17.867 1.878.924

Production costs 214.830 133.916 98.912 -2.716 444.941

Exploration costs expensed 145.543 20.490 258 0 166.291

Salary expenses 103.239 36.719 0 0 139.958

Other operating expenses 48.617 27.180 0 0 75.797

Operating results before depreciation and amortization

(EBITDA)

327.436 416.205 323.447 -15.150 0 1.051.937

Depreciation and amortization 278.386 308.991 148.552 -2.663 30.778 764.044

Operating result (EBIT) 49.051 107.214 174.895 -12.486 -30.778 287.893

Net financial items -298.210 -116.751 18.818 0 -194.920 -591.062

Profit before tax (EBT) -249.159 -9.537 193.713 -12.487 -225.698 -303.170

Tax -50.469 82.637 46.632 -3.746 -61.649 13.405

Net results -198.690 -92.174 147.080 -8.742 -164.049 -316.575

11.6 PRO FORMA CONSOLIDATED INCOME STATEMENT 1Q 2008

11.6.1 Unaudited pro forma condensed profit and loss information for 1Q 2008

Summary Profit and Loss Infomation

Noreco ASA

Talisman Oil

Denmark IFRS adjustments

Pro forma

adjustments

Pro forma three

months ending 31

March 2008

All figures in tNOK (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Operating revenues 435.763 67.079 33.332 536.174

Production costs 80.882 6.660 3.827 91.369

Exploration costs expensed 29.815 32 0 29.847

Salary expenses 31.955 0 0 31.955

Other operating expenses 20.283 0 0 20.283

Operating results before depreciation and amortization

(EBITDA)

272.828 60.387 29.505 0 362.722

Depreciation and amortization 131.349 55.945 -15.137 -9.146 163.011

Operating result (EBIT) 141.479 4.442 44.644 9.146 199.710

Net financial items -138.368 -3.832 0 -142.200

Profit before tax (EBT) 3.110 610 44.643 9.146 57.510

Tax 31.469 -828 11.161 2.287 44.088

Net results -28.359 1.436 33.481 6.860 13.422

64

11.6.2 Unaudited pro forma condensed balance sheet information for 1Q 2008

Summary Balance Sheet Information

Noreco ASA

Talisman Oil

Denmark IFRS

Pro forma

adjustments

Pro forma as of 31

March 2008

All figures in tNOK (Unaudited) (Unaudited) (Unaudited) (Unaudited)

Fixed assets

License interests, exploration assets 4.577.746 206.251 220.751 5.004.748

Deferred tax assets 135.206 0 135.206

Goodwill 1.430.667 2 44.489 1.475.158

Production facilities 2.661.119 242.609 2.903.728

Other machinery and equipment 5.273 0 5.273

Total fixed assets 8.810.010 448.862 265.240 9.524.113

Current assets

Accounts receivable 192.107 52.365 244.472

Tax receivables 456.106 0 456.106

Other current receivables 373.707 101.957 475.664

Bank deposits, cash in hand, etc. 558.845 3.423 -41.332 520.936

Total current assets 1.580.765 157.746 -41.332 1.697.178

Total assets 10.390.775 606.607 223.908 11.221.291

Equity

Share capital 346.390 20 59.342 405.752

Other equity 1.321.943 211.092 157.846 1.690.881

Total equity 1.668.333 211.112 217.188 2.096.633

Provisions and other long-term liabilities

Deferred tax liabilities 2.505.780 10.708 44.492 2.560.980

Provisions for other liabilities and charges 679.537 266.973 -37.772 908.738

Convertible loan 354.048 0 354.048

Bond issue 3.741.431 0 3.741.431

Other long-term interest bearing debt 537.252 0 537.252

Total provisions and other long-term liabilities 7.818.048 277.681 6.720 8.102.449

Current liabilities

Other short term interest bearing debt 238.598 0 238.598

Accounts payable 125.596 62.393 187.989

Current income taxes payable 184.055 2.901 186.956

Public duties payable 34.512 0 34.512

Other current liabilities 321.634 52.521 374.155

Total current liabilities 904.394 117.814 0 1.022.208

Total liabilities 8.722.442 395.495 6.720 9.124.657

Total equity and liabilities 10.390.775 606.607 223.908 11.221.291

11.7 NOTES TO THE PRO FORMA ADJUSTMENTS

11.7.1 Comments to adjustments related to 2007 Pro forma Consolidated Income Statement

Noreco’s acquisition of Altinex ASA is included in Noreco consolidated figures from 1 July 2007. The preparation of pro forma consolidated income statement for 2007 therefore includes pro forma figures related to the acquisition of Altinex ASA in addition to pro forma figures related to the TODL acquisition.

The pro forma inclusion of Altinex ASA consists of the inclusion of Consolidated Income Statement of Altinex ASA as of 30 June 2007 and pro forma impact of the acquisition of Altinex ASA as if the acquisition by Noreco had taken place as of 1 January 2007.

65

The pro forma adjustments included in the table above can be split as follows on the two acquisitions:

Pro forma adjustments Income Statement 2007

Altinex ASA TODL Total

All figures in tNOK (Unaudited) (Unaudited) (Unaudited)

Depreciation and amortization 36.730 -5.952 30.778

Operating result (EBIT) -36.730 5.952 -30.778

Net financial items -194.920 -194.920

Profit before tax (EBT) -231.650 5.952 -225.698

Tax -63.137 1.488 -61.649

Net results -168.513 4.464 -164.049

Comments related to the acquisition of Altinex ASA

The Company provisionally performed an allocation of the cost of the business combinations to the assets acquired and liabilities and contingent liabilities assumed in accordance with IFRS 3. The Company provisionally determined that the excess value based on the purchase price compared to book values as of 30 June 2007 primarily related to offshore producing properties and non-producing discoveries and goodwill. The allocation of excess value was as follows:

Producing properties NOK 715.3 million Non producing discoveries NOK 3,377.7 million Goodwill NOK 788.6 million Deferred tax liability NOK (1,628.8) million

In the unaudited pro forma financial information the producing properties have been amortised based on produced quantities of oil and gas, which resulted in additional amortization expenses of NOK 36.7 million in 1H 2007, with associated tax benefits. According to IFRS non producing properties shall not be amortized until they become producing properties. Until then such properties will be evaluated for impairment. No amortization of non producing properties is therefore included in the unaudited pro forma condensed profit and loss statements. The majority of Altinex oil and gas properties are located on the Danish continental shelf within a tax regime with an ordinary tax rate of 25%. In addition, a hydrocarbon tax may be added at certain oil price levels. In the allocation of excess value it is assumed that Altinex’s business will not be charged this additional tax. Altinex also holds oil and gas properties in UK and Norway with a marginal tax rate of 50% and 78 % respectively. Consequently, deferred taxes have been recorded based on the individual tax rate applicable to the relevant location of the various properties.

The net result of the pro forma adjustments related to the acquisition of Altinex ASA included above is a NOK 7.7 million higher loss than included in the pro forma consolidated income statement prepared in connection with the Initial Public Offering. The change is due to an adjustment of financing expenses.

Convertible bond

In connection with the purchase of the shares in Altinex a convertible bond with a nominal value of NOK 440 million was approved by Noreco’s general meeting held 8 May 2007. The bonds carry an interest of 6% p.a. and can be converted at any time prior to the tenth Banking Day prior to 11 May 2012 (both dates inclusive) (NOK 22.25).

In the unaudited pro forma condensed profit and loss statement an adjustment to reflect the new debt structure has been performed as if it had occurred in the beginning of the period (01.01.2007) as the bond is issued in connection with the acquisition of Altinex.

IAS 32 requires that the convertible bond is split into a liability and equity component. The liability is recorded at fair value and the equity component is determined as the residual amount at inception. Transaction costs are allocated between the two elements and recorded against debt and equity accordingly. The equity instrument is subsequently not revalued unless, it is considered to be a separate derivative. IAS 32 has a number of requirements that must be fulfilled for the derivative to be treated as an equity instrument. Among others, it is required that the financial instrument be settled by the issuer, only with the exchange of a fixed amount of cash

66

or other financial asset for a fixed number of its own equity instruments. The debt element is subsequently accounted for under amortized cost using the effective interest method.

The following adjustments relating to the convertible bond have been made in the unaudited pro forma financial information:

• When adjusting for the bond, the nominal value has been split between equity (NOK 80 million) and long term debt (NOK 360 million) based on discounted net present values of the cash flow relating to the loan. The difference between the bond’s nominal value and the value of the discounted cash flows has been adjusted as equity. The long term debt and the equity element are recorded as liability and equity respectively, net of transaction cost. The equity element has been amortized, in accordance with the effective interest method, over the bonds life an added to financial expense with NOK 8.0 million in 1H 2007.

• The interest expense on this bond has been added to financial expenses with NOK 13.2 million in 1H 2007. Tax expenses have been adjusted by 28% of this amount.

• The bond has a transaction cost of NOK 17.6 million. The cost is divided proportionally between equity and long term debt and amortized over the bond’s life and has been added to financial expense with NOK 1.4 million in 1H 2007 (in accordance with the effective interest method).

Debt

In connection with the purchase of shares in Altinex, Noreco on 9 July 2007 entered into a Senior Secured Callable Bond with Norsk Tillitsmann ASA as the loan trustee. The Bond has a total limit of NOK 2,800 million. However only the amount effectively used has been considered and included in the pro forma financial information. Fees related to this facility have been included as financial expenses by NOK 1.8 million in 1H 2007 in the pro forma financial information. Amortization of transaction costs and interest expense related to the loan has been included in the 1H 2007 consolidated income statement.

The Bonds will run without instalments and mature in whole in July 2010.

In the unaudited pro forma condensed profit and loss statements we have performed an adjustment to reflect as if the portion of the Bond drawn upon in connection with the acquisition, NOK 2,767.1 million, was drawn at the beginning of the period presented (01.01.2007).

In the unaudited pro forma financial information the following adjustments have been made relating to debt (as directly related to the transaction):

• The amount drawn upon of the Bond of NOK 2,767.1 million has been recorded at amortised cost of NOK 2,767.1 million.

• Interest and fees related to Bond resulted in additional financial expenses of NOK 11.6 million in 1H 2007 (in accordance with the effective interest method cost.). Adjustments in tax expenses of 28% of these amounts have been included. The interest expenses have been calculated based on the fixed interest rate in the Bond of 11% p.a.

Comments related to the acquisition of TODL

The IFRS adjustments relate to difference in accounting principle related to accounting for over- and underlift. The over-and underlift position represents the accumulated difference between produced and sold volume of oil and gas at the end of the accounting period. If the company is in an underlift position, the accumulated volume produced on their share exceeds the volume sold, whereas the company in an overlift position has sold more than their share of accumulated production. TODL recognizes underlift based on production cost as adjustments to relevant expense items, whereas Noreco recognizes underlift based on market value of produced volumes. Production costs include all direct expenses as well as depreciation and amortization. TODL has in their audited financial statements for 2007 identified the accounting impact if they had valued the underlift based on market value. In 2007 TODL lifting position changed from an underlift position at the beginning of the year to an overlift position at the end of the year. This had an impact of NOK 17.8 million increase in revenues, NOK 2.7 million in reduced production expenses and NOK 2.7 million in reduced depreciation and amortization. The pre-tax number included as an adjustment corresponds to the equivalent USD figure stated by TODL. The adjustment has been tax effected at 25%.

67

The pro forma adjustment stems from the reversal of depreciation and amortization included in the financial statements of TODL and inclusion of depreciation and amortization of the total value allocated to producing properties as calculated based updated reserve estimates and actual production in 2007. The pro forma adjustment has been tax effected.

11.7.2 Comments to adjustments related to Q1 2008 Pro forma Consolidated Income Statement

The IFRS adjustments relates to difference in accounting principle related to accounting for over- and underlift. TODL recognizes underlift based on production cost as adjustments to relevant expense items, whereas Noreco recognizes underlift based on market value of produced volumes. TODL has in their internal reporting identified the accounting impact if they had valued the underlift based on market value. TODL has gone from an overlift position of approximately 94,000 boe as of 31 December 2007 to an underlift position of approximately 67,000 boe as of 31 March 2008. This has resulted in the inclusion of NOK 33.3 million in increased revenues as compared to the TODL principle of reducing costs to reflect underlift, and the increase of production cost and depreciation by NOK 3.8 million and NOK 31.1 million respectively. The depreciation included for internal reporting also reflects excess values that have been pushed down to the company for internal reporting purposes only. Consequently a reversal of deprecation and amortization of an estimated NOK 46.3 million that has been pushed down for group reporting purposes is also included in the IFRS adjustments. Therefore the significant impact also to depreciation and amortization in Q1 2008 figures. The adjustments have been tax effected at 25%.

The pro forma adjustment stems from the reversal of depreciation and amortization included in the financial statements of TODL and inclusion of depreciation and amortization of the total value allocated to producing properties as calculated based updated reserve estimates and actual production in Q1 2008. The pro forma adjustment has been tax effected.

11.7.3 Comments related to Unaudited pro forma condensed balance sheet information for 1Q 2008

The Company has provisionally performed an allocation of the cost of the business combinations to the assets acquired and liabilities and contingent liabilities assumed in accordance with IFRS 3. The Company has provisionally determined that the excess value based on the purchase price compared to book values as of 31 March 2008 primarily relates to offshore producing properties and goodwill. Provisional allocation of excess value:

Producing properties...................................................................... NOK 220.8 million Goodwill ........................................................................................ NOK 44.5 million Abandonment accrual .................................................................... NOK 37.8 million Deferred tax liability...................................................................... NOK (44.5) million

TODL oil and gas properties are located on the Danish continental shelf within a tax regime with an ordinary tax rate of 25%. In addition, a hydrocarbon tax may be added at certain oil price levels. In the preliminary allocation of excess value it is assumed that TODL’s business will not be charged this additional tax. Deferred taxes have been recorded based on the individual tax rate applicable.

The split between the various assets may subsequently change after the completion of the purchase price allocation. If more of the cost of the business combination should be allocated to producing properties we would in our unaudited pro forma profit and loss statements have shown higher amortization expenses.

11.7.4 Financing of the acquisition

Total estimated purchase price amounts to NOK 469.6 million based on the NOK/USD exchange rate as of 31 March 2008. The acquisition has been financed by equity of NOK 428.3 million and the remaining has been assumed financed by the available cash deposit.

11.8 AUDITOR’S STATEMENT TO THE PRO FORMA FINANCIAL FIGURES

The Company’s auditor KPMG AS has issued a report to the pro forma adjustments regarding the pro forma consolidation financial statements of Noreco. The report is included in Appendix 7 to this Prospectus.

68

12. BOARD, ORGANISATION AND MANAGEMENT OF NORECO

12.1 BOARD OF DIRECTORS

In accordance with Norwegian law, the Board of Directors is responsible for administering the Company’s affairs and for ensuring that the Company’s operations are organized in a satisfactory manner.

The Company’s business address serves as c/o address in relation to the Board members in the Company.

The Board of Directors has 5 voting members, four of which represent a total of approximately 27% of the shares in the Company. Below is an overview of the members of the current Board of Directors:

Name Position Has served

since

Term

Expires

Options held Shares held

Lars Takla Chairman January 2005 2009 30,000 1,461,43610

John Hogan Deputy chairman November 2005 2009 20,000 354,528 Roger O’Neil Board member March 2007 2009 20,000 289,444 Therese Log Bergjord Board member November

2007* 2009 0

8,000 Heidi Marie Petersen Board member November

2007* 2009 0

1,732

Lars Takla (64), Chairman.

Mr. Takla is one of the founders of Noreco, and the chairman of Noreco’s Board of Directors. He is the former Managing Director for ConocoPhillips in Norway. He is a member of a number of industry forums, and is widely recognized for his long and dedicated effort for the oil and gas industry in Norway. Mr. Takla is a Norwegian citizen and resides in Sandnes, Norway.

John Hogan (55), Deputy chairman.

Mr. Hogan has spent over 30 years in the oil and gas industry and he has extensive international experience at board level. He spent his early career with Shell, Britoil and Elf Aquitaine. He joined LASMO plc in 1981, running their US oil and gas business for 5 years before being made Managing Director of LASMO North Sea plc between 1989 and 1993. Mr. Hogan was appointed to the main board of LASMO plc as Executive Director and Chief Operating Officer between 1993 and 1999. Since then he has worked at board level in a number of companies in the energy sector. Mr. Hogan is a British citizen and resides in Kent, England.

Roger O'Neil (69), Board member.

Mr. O'Neil has had a career in the oil industry with Mobil Oil and Statoil and has served as a non-executive director on boards of public companies in the UK and Asia. Mr. O’Neil is an American citizen and resides in London, England.

Therese Log Bergjord (42), Board member. Mrs. Log Bergjord is Sales Director in Business Group Salmon Feed, Skretting. From 2004 until 2007, she was Vice President Commercial in the Pan Fish group, after serving as Vice President Finance in the same group since 2003. Mrs. Log Bergjord started her career in ConocoPhillips where she held various leading positions during her 16 years with the company. Mrs. Log Bergjord is a Norwegian citizen and resides in Hafrsfjord, Norway.

Heidi Marie Petersen (49), Board member. From 2003 and until June 2007, Mrs. Petersen was CEO in Rambøll Oil & Gas AS. From 1997 and until 2000, she was vice president in Kværner Oil & Gas AS Sandefjord, and up until 2004 she continued as Managing Director when the company changed name to Future Engineering AS. Mrs. Petersen was also a major owner in Future Engineering AS. Mrs. Petersen is a Norwegian citizen and resides in Sandefjord, Norway.

12.1.1 Independence of the Board of Directors

All the members of the Board of Directors are independent of the Company’s major shareholders. Furthermore, in the Company’s opinion, all members of the Board of Directors are independent of the Company’s

10 In addition to these shares, Lars Takla has acquired 2 Bonds, each with a nominal value of 500,000 to a price of NOK 101.50.

69

management and main business relations. The Board of Directors thus satisfies the requirements for independence set out in the Norwegian Code of Practice for Corporate Governance.

12.2 MANAGEMENT

The executive management is responsible for the daily management and the operations of the Company.

The table below sets forth the Company’s current executive management.

Name Position Served since Shares held11

Options held12

Scott Kerr CEO July 2005 1,587,878 75,684 Birte N. Borrevik VP, Drilling and Projects October 2006 96,310 41,552 Einar Gjelsvik VP, External Relations January 2006 58,189 31,619 Jan Nagell CFO November 2006 15,766 43,120 Reinert Seland VP, Exploration September 2005 1 011,942 41,552 Rune Martinsen VP, Northern North Sea December 2005 1,014,833 44,520 Stig Frøysland VP, HSE/HR August 2007 17,222 40,000 Synnøve Røysland VP, Southern North Sea September 2006 0 39,854 Thor Arne Olsen VP, Commercial January 2006 1,079,141 50,456

The Company’s business address serves as the c/o address in relation to the management of the Company. The executive management consists of the following persons:

Scott Kerr (50), CEO. Mr. Kerr has been the CEO of Noreco since July 2005. He holds over 27 years of experience from the oil industry and was previously the managing director for BP Norway. He also held the position as Business Unite Leader for Russia and Kazakhstan for Arco, and he has been the president for CIS and North Africa Regions Reservoir Engineering. Mr. Kerr holds a Bachelor of Science degree in Petroleum Engineering from University of Wyoming. Mr. Kerr is an American citizen, and resides in Jørpeland, Norway.

Synnøve Røysland (41), VP, Southern North Sea. Mrs. Røysland joined Altinex in September 2006. She has 18 years' experience in drilling whereas 2 years as field manager. For more than 10 years, she worked as drilling supervisor and superintendent in the North Sea, mainly with Norsk Hydro in Norway and also with DONG in Denmark. She has also been managing drilling projects in Egypt, Namibia and UK. Mrs. Røysland gained an MSc in Petroleum Technology from Stavanger Technical University in 1988. Mrs. Røysland is a Norwegian citizen, and resides in Virum, Denmark.

Rune Martinsen (43), VP, Northern North Sea. Mr. Martinsen took over his current position in September 2007 and was previously the HSE and Engineering Manager for Noreco where he started in December 2005. Mr. Martinsen has more than 15 years of experience in various subsurface, and held previously various leadership positions in subsurface in BP. He also held a leading position in business management in Amoco, and has been the subsurface manager for Valhall and reservoir engineer in Hod fields. Mr. Martinsen holds a Master of Science degree in Petroleum Engineering from Høyskolesenteret in Rogaland. Mr. Martinsen is a Norwegian citizen, and resides in Stavanger, Norway.

Thor Arne Olsen (52), VP, Commercial. Mr. Olsen was previously the business development Manager, a position he has held since January 2006. Mr. Olsen holds over 25 years of commercial experience and his previous positions include business development/A&D manager for BP Norway, commercial manager for Amoco Norway in addition to key positions across the upstream value chain in Norway and internationally. Mr. Olsen holds a Master of Business and Administrations degree from the Norwegian School of Economics and Business Administration. He also holds extensive commercial experience from the Norwegian continental shelf, US and UK continental shelf activities. Mr. Olsen is a Norwegian citizen, and resides in Stavanger, Norway.

Reinert Seland (54), VP, Exploration. Mr. Seland has been employed in Noreco since September 2005. He holds a Master of Science degree in Marine Geology from the University of Bergen and holds over 25 years of exploration experience. He has previously held various exploration positions, including executive Vice President for Business Development in Aker Kværner Geo. Mr. Seland is a Norwegian citizen, and resides in Stavanger, Norway.

11 Direct and indirect holding of Shares 12

Options awarded in January 2008.

70

Jan Nagell (48), CFO. Mr. Nagell joined Altinex in May 2004. He has 25 years’ experience within the Norwegian and international offshore industry, and has worked in all phases of the oil business, from exploration, construction to production. He holds a Master’s Degree in Business and Economics from the Norwegian School of Management (BI) from 1984. Mr. Nagell is a Norwegian citizen, and resides in Bærum, Norway

Birte N. Borrevik (49), VP, Projects and Drilling. Mr. Borrevik was employed in Noreco in October 2006. She holds over 25 years of drilling and project experience, including drilling manager for BP, project general manager Valhall Flank Development, Major Projects Technoloogy Unit in UK. She holds a Bachelor of Science in Petroleum Engineering from the University of Stavanger. Ms. Borrevik is a Norwegian citizen, and resides in Stavanger, Norway.

Stig Frøysland (51), VP, HSE/HR. Mr. Frøysland joined Altinex Oil in August 2007. He has 20 years’ E&P experience from Norsk Hydro both in Norway and internationally where he held various senior HSE-management positions related to drilling, operations and production. In addition, he has been involved in strategic and tutorial work related to company-culture building and quality. Mr. Frøysland has a Diploma in HSE from Loughborough University, a degree from the Norwegian Police University College and studies in Law from Bergen University. Mr. Frøysland is a Norwegian citizen, and resides in Sandsli, Norway.

Einar Gjelsvik (35), VP, External Relations. Mr. Gjelsvik joined Noreco in January 2006. Prior to joining Noreco, he held various positions in BP, including Business Development Analyst and Business Planning and Performance Management Team Leader for BP Norway. He holds approx 10 years of experience in the oil and gas industry. Mr. Gjelsvik holds a Master's degree in Business Administration, Strategic Management from the Norwegian School of Economics and Business Administration from 2004, as well as a Master's Degree in Science, Chemical Engineering from the Norwegian University of Science and Technology from 1996. Mr. Gjelsvik is a Norwegian citizen, and resides in Stavanger, Norway.

12.3 CONFLICTS OF INTEREST, ETC.

As far as the Company and the Board of Directors are aware of, there are no conflicts of interest between any duties to the Company of the members of the administrative, management of supervisory bodies, and their private interests and/or other duties. The Company or the Board of Directors are further not aware of any such potential conflicts of interest, except for in connection with related party transactions as described in section 13.6 below.

During the last five years preceding the date of this Prospectus, no member of the Board of Directors and no member of the executive management have: • been subject to any convictions in relation to indictable offences or convictions in relation to fraudulent

offences; • received any official public incrimination and/or sanctions by any statutory or regulatory authorities

(including designated professional bodies) or ever been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company; or

• been declared bankrupt or been associated with any bankruptcy, receivership or liquidiation in his capacity as a founder, director or senior manager of a company, with the exception of Mrs. Petersen who was chairman of the board of directors of the company Future Sør when it filed for bankruptcy in March 2004, and Mrs. Log Bergjord who was a board member of the company Pan Fish Denmark AS when it filed for bankruptcy in 2005.

During the five years preceding the date of this Prospectus, the members of the current Board of Directors and the executive management hold or have held the following directorships and/or positions (apart from their directorships and/or positions of the Noreco Group):

71

Board of directors Current directorships/ positions Previous directorships/ positions

Lars Takla Stavanger -regionen Næringsutvikling (Board Member) ONS Stiftelsen (Chairman of the Board) Upstream AS (Board Member) Norfuel AS (Board Member) Targa Fashion AS (Board Member) Targa Fashion Shoes AS (Board Member) Targa Holding AS (Board Member) Targa Kilden AS(Chairman of the Board) Targa Stavanger AS (Chairman of the Board) Takla Energy AS (CEO and Chairman of the Board)

Stiftelsen Rogalandsforskning (Chairman of the Board) Norges Forskningsråd (Board Member) Environment Northern Seas Foundation (Chairman of the Board) Sense Intellifield (Chairman of the Board) Norpipe AS (Board Member) Norsea Gas AS (Board Member) Norpipe Oil AS (Chairman of the Board) ConocoPhillips Scandinavia AS (Board Member) ConocoPhillips Norge (Board Member) Norsea Ltd. (Chairman of the Board)

John Hogan Velosi Ltd (Chairman of the Board) PanGeo Inc (Chairman of the Board) Argos Resources Ltd (CEO)

Acteon Ltd (Chairman of the Board) Caledonia Oil & Gas Ltd (Board Member) Highland Energy Ltd (Board Member) GWE AG (Chairman of the Board)

Roger O’Neil Clearvision International (UK) (Board Member) Petroleum Geo Services ASA (Chairman of the Nomination Committee) Upstream AS (Board Member)

Pearl Energy Ltd (Board Member) Enterprise Oil PLC (Board Member) Marley PLC (Board Member)

Therese Log Bergjord Skretting AS (Sales Director BG Salmon Feed)Næringsforeningen i Stavangerregionen (Board Member) Norconserv AS (Board Member) Blue Planet AS (Board Member)

Marine Harvest AS (VP Commercial) Eksportutvalget for Fisk AS (Board Member) Pan Fish Norway AS (Board Member) Pan Fish Canada Ltd (Board Member) Pan Fish Sales USA AS (Board Member) Pan Fish France SA (Chairman of the Board) Pan Fish Faroes AS (Chairman of the Board) Pan Fish Denmark AS (Board Member) NOFIMA AS (Board Member) Glad Mat AS (Board Member) Akvaforsk AS (Board Member)

Heidi Marie Petersen Sandefjord Airport Torp (Chairman of the Board) DnBNOR ASA (Board Member) DnBNOR Audit Committee (Member) Aker Kværner ASA (Board Member) Skagerak Energi (Board Member) Glamox ASA (Board Member) Ocean Heavylift ASA (Board Member) Scan Geophysical ASA (Board Member) Nortechs FPSO ASA (Board Member) Awilco Offshore (Board Member) Arendal Fossekompani (Board Member) Norsk Hydro (Board Member)

Ramboll Oil & Gas (CEO) Rambøll Future (CEO) Kværner Oil & Gas (VP) DnBNOR Bank ASA (Board Member)) Sparebanken Vestfold (Board Member) Goodtech ASA (Board Member)

72

Management Current directorships/positions Previous directorships/positions

Scott Kerr Kerr Energy AS (Chairman of the Board) BP Norge AS (Managing Director) LUKARCO BV (Chairman of the Board) BP Oil Norge AS (Board Member)

Synnøve Røysland None None

Rune Martinsen Rumar Holding AS (Chairman of the Board) Bedriftsveien 19 AS (Chairman of the Board) Omar Invest AS (Board Member) Omar Consulting AS (Board Member)

None

Thor Arne Olsen TAO Invest AS (CEO and Chairman of the Board)

None

Reinert Seland Seland Invest AS (CEO and Chairman of the Board)

None

Jan Nagell None None

Birte N. Borrevik Berentsten legat A, (Board Member) Berentsen legat B, (Board Member) Berentsen legat C, (Board Member) Reinert Tørresen's legat (Board Member) BNB Holdings AS (Chairman of the Board)

BP Norge AS (Deputy Board Member)

Stig Frøysland Voss Fjellandsby Hytteeigarlag BA (Chairman of the Board)

None

Einar Gjelsvik None None

12.4 REMUNERATION AND BENEFITS

12.4.1 Remuneration and benefits to the management

The below table sets out the remuneration and benefits to the management for the year 2007 (all numbers in TNOK):

Name Position Salary Bonus Pension

premiums13

Other

remun. 14

Total

Scott Kerr CEO 2,261 862 121 904 4,148 Jan Nagell (1) CFO 271 0 27 3 301 Stig Frøysland (1) VP, HSE/HR 251 0 28 3 282 Einar Gjelsvik (1) VP, IR/ER 219 41 15 19 294 Birte N. Borrevik VP, Drilling & Projects 1,415 99 132 421 2,067 Thor Arne Olsen VP, Commercial 1,887 363 129 722 3,101 Rune Martinsen VP, Northern North Sea 1,650 321 100 441 2,512 Synnøve Røysland (1)

VP, Southern North Sea 267 0 30 0 297

Reinert Seland VP, Exploration 1,541 300 135 508 2,484 Ludvig Høvring (2) CFO 1,343 202 108 412 2,085

(1) From 22 October 2007 (2) Until 21 October 2007

The column “Total” comprises all considerations/benefits that are regarded as taxable income salary, including base salary, holiday pay, bonuses, the value of benefits such as free car and phone. Holiday pay pursuant to the Norwegian Annual Paid Holiday Act is not included in base salary, however included in the total salary.

The Company has no outstanding loans or guarantees to any member of the management.

Should the Company, in connection with a merger, de-listing or takeover of substantially all the assets, request that a member of the Noreco management resigns from his/her position and leave the Company or that the

13 Covers pension compensation for salaries below 12G, effective for all employees.14 Covers pension compensation for salaries above 12G, effective for all employees.

73

employee takes up a substantially different position in the Company or a Group company, and the employee decline such a request and leaves the company, the employee will be entitled to a severance payment equal to 12 months basic salary. No severance payment will be conducted if the employment is terminated due to the employee's breach of the employment agreement, cf. section 15-7 no. 1, last alternative and section 15-14 of the Norwegian Working Environment Act. The severance payment provision only applies to the current members of the Noreco management.

12.4.2 Remuneration and benefits to the Board of Directors

The remuneration of directors of the Board of Directors shall be determined on an annual basis by the Company’s shareholders in the Company’s annual general meeting. The directors may also be reimbursed for, inter alia, travelling, hotel and other expenses incurred by them in attending meetings of the Board of Directors or in connection with the business of the Company.

For the year 2007, the remuneration for the Board of Directors was NOK 1,434,000, whereof the chairman of the Board of Directors received NOK 550,000 and each board member received NOK 355.000.

No member of the Board of Directors is party to any contracts with the Company providing for benefits upon termination of service.

12.4.3 Pensions and other obligations

The underlying calculations are linked to the Contractual Early Retirement schemes effective for all employees. The Company has not established any separate pension schemes for the management or the members of the Board of Directors. Hence, no obligations in respect of the management or any board members are set aside or accrued in the balance sheet.

The total pension costs for the Company for 2007 was NOK 3,343,000.

12.4.4 Share option program

At the Extraordinary General Meeting held on 14 January 2008, the Board of Directors’ proposal of establishing an option scheme was endorsed. The scheme applies to everyone who were employed with the Company at the end of 2007. The option scheme has a duration of three years and the price is set at NOK 33 per option. For 2008 the CEO will be awarded options corresponding to 100% of his annual salary. The Noreco Group management team will be awarded options corresponding to 80% of the annual salary. Other employees will be awarded options corresponding to 40% of the annual salary.

As of 31 March 2008, a total of 1,077,051 options had been issued to Noreco Group employees, of which 817,952 options had been given to employees of the parent company.

12.4.5 Lock-up agreements

The managers for the listing in November 2007 have entered into lock-up agreements with the management and board members of Noreco. Further information is set out in section 6.18 in this Prospectus.

12.5 EMPLOYEES

As of the date of the Prospectus, the Group has 71 employees. The table below illustrates the development in number of employees over the last two years, as per the end of each calendar year.

2007 2006

Number of employees 70 18

Approximately 45 of the employees are working in Norway (offices in Stavanger and Oslo), Norway and approximately 35 at the office in Holte, Denmark.

12.6 BOARD SUB-COMMITTEES

The Board of Directors has decided to implement two sub-committees; one Audit Committee and a Remuneration and Corporate Governance Committee.

74

12.6.1 The Audit Committee

The Audit Committee Charter states, inter alia, that the Audit Committee shall:

• act as preparatory body in connection with the supervisory role of the Board of Directors with respect to financial control and review and external audit of the Company’s financial statements;

• consist of at least two members independent of the Company’s management and to be elected by the Board of Directors;

• fulfill the requirements as to independency (as set out in the Norwegian Code of Practice for Corporate Governance (the “Code”) issued by the Norwegian Corporate Governance Board on 4 December 2007); and

• consider and propose to the Board of Directors, for presentation and election by the annual general meeting, the independent auditors of the Company.

Lars Takla, Roger O'Neil and Therese Log Bergjord are members of the Audit Committee. CFO Jan Nagell are attending the meetings of the Audit Committee.

12.6.2 Remuneration and Corporate Governance Committee

The Remuneration and Corporate Governance Committee Charter states, inter alia, that the Remuneration and Corporate Governance Committee shall:

• act as preparatory body in connection with the supervisory role of the Board of Directors with respect to remuneration compensation and other benefits of the Company’s CEO and other senior executives;

• consist of at least two members independent of the Company’s management and to be elected by the Board of Directors;

• fulfill the requirements as to independency as set out in the Code; and

• make proposals for long-term incentive schemes applicable to the Company’s CEO and other senior executives.

Lars Takla, John Hogan and Heidi Petersen are members of the Remuneration and Corporate Governance Committee.

12.7 NOMINATION COMMITTEE

The Articles of Association states, inter alia, that the Nomination Committee shall prepare a motion for the annual general meeting relating to:

• Election of members of the Board of Directors and the chairperson of the Board of Directors;

• Election of the members of the Nomination Committee and the chairperson of the Committee;

• The remuneration of the Directors and the members of the Nomination Committee; and

• Any amendments of the Nomination Committee’s mandate and charter.

Lars Takla, Ole Melberg and Eimund Nygaard are members of the Nomination Committee.

12.8 CORPORATE GOVERNANCE

The Company endeavors to maintain high standards of corporate governance and is committed to ensure that all shareholders of the Company are treated equally. The Company has adopted and implemented appropriate corporate governance principles. However, as of the date of this Prospectus, the Company is not in full compliance with the Code. The Company is deviating from the Code in the following matters:

12.8.1 General meetings

Not all members of the Board, all members of the Nomination Committee or the auditor will normally attend the general meeting.

12.8.2 Take-overs

There has not been established any guiding principles for take-over.

75

13. SHARE CAPITAL AND SHAREHOLDER INFORMATION

The following description includes certain information concerning the Company’s share capital, a brief

description of certain provisions contained in the Company’s Articles of Association as they are in effect at the date of this Prospectus and a brief description of certain aspects of Norwegian law, including the Norwegian

Public Limited Liability Companies Act. The summary does not purport to be complete and is qualified in its

entirety by the Company’s Articles of Association and Norwegian law. Any change in the Articles of Association is subject to approval by a general meeting of shareholders.

13.1 SHARE CAPITAL AND SHARES

The Company’s registered share capital is NOK 405,752,310.20 consisting of 130,887,842 Shares15 each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Liability Companies Act. All issued Shares in the Company are vested with equal shareholder rights in all respects. There is only one class of shares and all Shares are freely transferable.

The Shares have been created under the Norwegian Private and Public Limited Liability Companies Acts, and registered in book-entry form in the VPS under the international securities identification number (ISIN): NO 001 0379266. The Offer Shares are, until Listing, issued under a separate ISIN number (NO 001 0430150). The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway.

Noreco has since 9 November 2007 been listed on Oslo Børs with the ticker-code “NOR”.

13.1.1 Legislation and rights attached to the Shares

Reference is made to the review of legislation and rights attached to the Shares in Section 12.8 of the Prospectus.

13.1.2 Mandatory offers

Section 13.7.12 of the Prospectus describes the current and new legislation on mandatory offers applicable to companies listed and incorporated in Norway. The Company or its shareholders have not received any public takeover bids since its inception.

13.1.3 Withholding tax

Section 14.2 of this Prospectus provides information concerning withholding tax for foreign shareholders.

13.2 OUTSTANDING AUTHORISATIONS

13.2.1 Authorisation to issue shares

At the Annual General Meeting held 25 April 2008, the Board of Directors of Noreco was given the following authorizations to issue new shares:

Authorization – employee incentive schemes:

a) The Board of Directors is authorized to increase the Company’s share capital by a total amount of NOK 3,100,000, by one or several share issues of up to a total of 1,000,000 shares, each with a nominal value of NOK 3.10. The subscription price and other terms will be determined by the Board of Directors.

b) The authorization includes the right to increase the Company’s share capital in return for non-cash contributions or the right to assume special obligations on behalf of the Company.

c) The preferential rights pursuant to Section 10-4 of the Public Limited Liability Companies Act may be waived by the Board of Directors.

d) The authorization may only be used for issuing of new shares in relation with employee incentive schemes in force at any time for employees in the Norwegian Energy Company ASA-group.

15 Subsequent the registration of the Private Placement. A total of 19,149,000 Shares are registered under the separate ISIN number NO 001 0430150. These shares will automatically assume the Company’s original ISIN number upon publication of this Prospectus, being the date hereof.

76

e) The authorization shall be effective from the date it is registered in the Norwegian Register of Business Enterprises and shall be valid for a period of one year from its effective date.

Authorization – raising of equity:

a) The Board of Directors is authorized to increase the Company’s share capital by a total amount of NOK 173,195,202, by one or several share issues of up to a total of 55,869,420 shares, each with a nominal value of NOK 3.10. The Board of Directors is further authorized to determine the price and terms of such offerings and subscriptions.

b) The preferential rights pursuant to Section 10-4 of the Public Limited Liability Companies Act may be waived by the Board of Directors.

c) The authorization may only be used for issuing of new shares directed towards existing shareholders in full or in part, in order to bring new investors into the Company, in connection with the Company’s acquisitions within the oil and energy sector, or in connection with mergers.

d) The authorization shall be effective from the date it is registered in the Norwegian Register of Business Enterprises and shall be valid for a period of one year from its effective date.

The two authorizations described above replace all previously issued authorizations to the Board of Directors to increase the Company’s share capital.

13.2.2 Authorisation to purchase treasury shares

The Board of Directors has not been granted an authorisation to acquire any treasury shares. The Company does currently not own any treasury shares.

13.3 WARRANTS AND OPTIONS ETC.

The Company has issued a convertible loan in the amount of NOK 440 million of which NOK 10 million has been converted to equity as per the date of this Prospectus. The loan is convertible into a maximum number of new shares equalling a capital increase of NOK 60,804,017.46. The conversion rate is NOK 22.25 per share after the share split as set out below in Section 12.4). The latest conversion date is 10 business days prior to 11 May 2012 (both days inclusive). For a detailed description of the convertible bond loan, please refer to Section 10.5.2 of this Prospectus.

At the Extraordinary General Meeting held on 14 January 2008, the Board of Directors’ proposal of establishing an option scheme was endorsed. The scheme applies to everyone who were employed with the Company at the end of 2007. The option scheme has a duration of three years and the price is set at NOK 33 per option. For 2008 the CEO will be awarded options corresponding to 100% of his annual salary. The Noreco Group management team will be awarded options corresponding to 80% of the annual salary. Other employees will be awarded options corresponding to 40% of the annual salary.

As of 31 March 2008, a total of 1,077,051 options had been issued to Noreco Group employees, of which 817,952 options had been given to employees of the parent company.

Except for the above, the Company has not issued any options, convertible securities, exchangeable securities or securities with warrants giving any one the right to acquire Shares through utilization of such rights.

77

13.4 HISTORICAL DEVELOPMENT IN SHARE CAPITAL AND NUMBER OF SHARES

Below is a table showing the development of the Company’s share capital since inception to the date of the Prospectus:

Date of resolution Type of change in

share capital

No. of shares

after change

Par value

(NOK)

Subscription

price

Share capital after

change

28 January 2005 Inception 1,085 1,000 n.a. 1,085,000.0025 April 2005 Capital increase 1,785 1,000 2,866.36 1,785,000.0013 June 2005 Capital increase 2,135 1,000 2,866.36 2,135,000.0021 December 2005 Capital increase 22,476 1,000 2,866.36 22,476,000.0015 February 2006 Capital increase 23,435 1,000 2,866.36 23,435,000.00

23 May 2006 Capital increase 31,345 1,000 2,866.36 31,345,000.0027 September 2006 Capital increase 31,422 1,000 2,866.36 31,422,000.0018 April 2007 Capital increase 33,634 1,000 2,866.36/3,363.00 33,634,000.0016 May 2007 Capital increase16 3,588,667 12.298995 35.26 44,137,000.0011 June 2007 Capital increase 13,476,307 12.298995 35.26 165,745,032.4111 June 2007 Capital increase 22,382,807 12.298995 89.00 275,286,033.9211 June 2007 Capital increase 22,418,419 12.298995 35.26 275,724,025.7329 June 2007 Capital increase 22,818,924 12.298995 150.00 280,649,834.7215 August 2007 Capital increase 22,931,283 12.298995 89.00 282.031.737,5023 August 2007 Capital increase 23,681,175 12.298995 150.00 291,254,655.4610 October 2007 Share-split 94,724,700 3.10 n.a. 293,646,570.0019 October 2007 Capital increase 94,728,164 3.10 37.50 293,657,308.4022 October 2007 Private Placement 111,394,831 3.10 33.00 345,323,976.1021 November 2007 Capital increase 111,414,358 3.10 37.50 345,384,509.8016 January 2008 Share program 111,738,842 3.10 30.00 346,390,410.2025 April 2008 Private Placement 130,887,842 3.10 23.50 405,752,310.20Pending Subsequent Offer17 133,387,842 3.10 23.50 413,502,310.20

As of 31 December 2007 and as of 1 January 2008, the Company had an issued share capital of NOK 345,384,509.80, comprised by 111,414,358 Shares with a par value of NOK 3.10. As of 31 December 2006 and 1 January 2007, the Company had an issued share capital of NOK 31,422,000, comprised by 31,422 Shares with a par value of NOK 1,000.

13.5 OWNERSHIP STRUCTURE

As of 26 May 2008 the Company had a total of 1,429 shareholders divided into 1,314 Norwegian and 115 foreign owners registered in the VPS. The table below shows the 20 largest shareholders in the Company as registered in the VPS on 26 May 2008. Shareholders owning 5% or more of the Company have an interest in the Company’s share capital which is notifiable according to the Norwegian securities law (for a description of the notifications thresholds etc, see section 13.7.15):

The table below shows the 20 largest shareholders in Noreco as registered in the VPS as per 26May 2008:

16 Following share split resolved in General Meeting held 8 May 2007 17

If fully subscribed.

78

Shareholder No. of shares %

1 LYSE ENERGI AS 18 PRIV ........................................................... 17,355,940 13.26 % 2 NEC INVEST AS C/O HITECVISION......................................... 16,725,396 12.78 % 3 NORDEA BANK NORGE AS AVD VERDIPAPIRFINANS....... 11,525,527 8.81 % 4 IKM INVEST AS 19 ........................................................................ 8,239,216 6.29 % 5 VERDIPAPIRFONDET KLP......................................................... 5,053,787 3.86 % 6 MORGAN STANLEY & CO. INC.* ............................................ 4,090,355 3.13 % 7 CREDIT SUISSE SECURITIES ................................................... 3,308,576 2.53 % 8 UBS AG, LONDON BRANCH *................................................... 3,169,947 2.42 % 9 BANK OF NEW YORK, BRUSSELS BRANCH *....................... 3,085,500 2.36 % 10 VARMA MUTUAL PENSION INSURANCE ............................. 2,913,065 2.23 % 11 GOLDMAN SACHS INT. - EQUITY -* ...................................... 2,192,757 1.68 % 12 BANK OF NEW YORK, BRUSSELS BRANCH *....................... 2,013,196 1.54 % 13 BJØRN RYGG INVESTERING AS ............................................. 1,878,284 1.44 % 14 ARCTIC SECURITIES ASA ........................................................ 1,601,000 1.22 % 15 JP MORGAN CHASE BANK* ..................................................... 1,519,228 1.16 % 16 SPENCER TRADING INC. .......................................................... 1,515,000 1.16 % 17 TAKLA ERERGY AS ................................................................... 1,461,436 1.12 % 18 FOLKETRYGDFONDET ............................................................. 1,436,000 1.10 % 19 TOPAS AS ..................................................................................... 1,364,204 1.04 % 20 AWILCO INVEST AS .................................................................. 1,348,400 1.03 %

Total 20 largest .............................................................................. 91,796,814 70.13 %

Others.............................................................................................. 39,091,028 29.87 %

Total ............................................................................................... 130,887,842 100.0%

* Registered as a nominee shareholder in the VPS.

Each Share represents one vote in the Company’s general meetings, and none of the Company’s major shareholders have different voting rights (see section 12.8.5 below for further details).

The major shareholders of the Company are defined as holding more than 10% of the share capital. The major shareholders are NEC Invest AS (12.8%), Lyse Energi AS (13.3%), Nordea Bank Norge AS (8.8%) and IKM Invest AS (6.3%). The Company is not aware of any other arrangements that may result in, prevent, or restrict a change of control of the Company.

13.6 TRANSACTIONS WITH RELATED PARTIES

Since inception, the Company has been party to the following related party transactions20:

In connection with raising initial funding from 3i Companies, Lyse Energi and HVPE, Noreco entered into an agreement with Melberg Partners, a company partly owned by Tollak Melberg, one of the Noreco founders and a board member, to provide economic support, investment advice and financial modeling. Their contract was completed in October 2005 when Noreco raised private equity capital. However, the compensation for this work was to be paid as the private equity was drawn and this resulted in payments to Melberg Partners in 2005, 2006 and 2007. All payments to Melberg Partners have been made and there is no contractual relation with Melberg Partners at this time.

1810,000,000 Shares are registered under ISIN NO 001 0430150 pending automatic transfer to the Company’s existing ISIN

number, being the date hereof.19

4,000,000 Shares are registered under ISIN NO 001 0430150 pending automatic transfer to the Company’s existing ISIN

number, being the date hereof.DThe companies Lyse Energi AS (Lyse), Energivekst AS/Hitec Private Equity AS (HVPE), 3i Companies (3i Group plc, 3i UK Private Equity 2004/06 LP, 3i Pan European Growth Capital 2005/06 LP) and Norwegian Company Founders DA

(Founders Holding) are shareholders in the Company.

79

Also in connection with raising private equity funding in October 2005, Noreco agreed to pay legal costs and negotiating costs for the capital providers along with an ongoing monitoring fee to 3i, Lyse Energi, HVPE and Founders Holding. In return Noreco had access to the expertise of these companies including advice on financial questions, raising of new funds and future funding requirements. The fee was paid quarterly through 2005, 2006 and until June of 2007. In June of 2007 Noreco raised additional capital and the advisory fee is no longer valid. There is no longer any fee agreement between Noreco and the private equity providers.

Below are the details for payments made to the parties outlined above:

Year 2006

Company Scope NOK

Melberg Partners AS Work associated with raising private equity funds and prequalification 463,582

Lyse Energi AS Advisory fee 200,000

HVPE Advisory fee 200,000

3i Companies Advisory fee 200,000

Founders Holding Advisory fee 60,000

Year 2007

Company Scope NOK

Melberg Partners AS Work associated with raising private equity funds and prequalification 1,825,054

Lyse Energi AS Advisory fee 89,010

HVPE Advisory fee 89,010

3i Companies Advisory fee 89,101

Founders Holding Advisory fee 48,173

All of the above contracts have been completed and the Company has no further obligations to any of the companies listed above. In addition to these contracts, the Company has had contracts with Lars Takla (Takla Energy AS), John Hogan and Roger O’Neil for Board services. These contracts have now been terminated.

13.7 THE ARTICLES AND CERTAIN ASPECTS OF NORWEGIAN COMPANIES LAW

13.7.1 The Articles of Association

The Norwegian Public Limited Liability Companies Act applies to the Company. The Articles of Association of the Company are included as Appendix 1 to this Prospectus.

In accordance with the Articles of Association section 3, the Company’s objectives are ”exploration, production

and sale within the oil and natural gas industry. The Company will seek ownership in production licenses

through participation in licensing rounds and by acquiring interests in licenses”.

The Board of Directors of the Company shall consist of up to 8 board members, and the Company is represented by (i) the joint signature of two Board members, or (ii) by the Chief Executive Officer (“CEO”) and one Board member jointly.

According to the Articles of Association section 10, the annual general meeting of shareholders shall resolve the following issues: 1. Election of Board members and the Chairman of the Board 2. Approval to the Annual Accounts and Annual Report including distribution of dividend 3. Election of the members and the chairperson of the Nomination Committee and amendments of the

Nomination Committee’s Mandate and Charter 4. 4. Such other matters as, according to law or the Articles of Association, fall within the duties of the

General Meeting.

80

The annual general meeting shall also deal with the statement from the Board of Directors relating to the determination of salary and other benefits to the leading employees according to Section 6-16 a of the Public Limited Liability Companies Act.

13.7.2 The general meeting of shareholders

In accordance with Norwegian law, the annual general meeting of the Company's shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of general meetings be sent to all shareholders whose addresses are known at least two weeks prior to the date of the meeting. A shareholder may vote at the general meeting either in person or by proxy. Although Norwegian law does not require the Company to send proxy forms to its shareholders for general meetings, the Company includes a proxy form with notices of general meetings.

In addition to the annual general meeting, extraordinary general meetings of shareholders may be held if deemed necessary by the Board of Directors. An extraordinary general meeting must also be convened for the consideration of specific matters at the written request of the Company's auditors or shareholders representing a total of at least 5% of the share capital.

Shareholders who wish to take part in a general meeting must give notice to the Company by the date stated in the calling notice, which date must be at least two working days prior to the general meeting.

13.7.3 The Board of Directors

The administration of the Company pertains to the Board of Directors, which shall oversee the proper organization of the business. The Board shall supervise the administration of the Company, hereunder supervise the CEO.

The members of the Board of Directors are elected by the general meeting by majority vote. The general meeting also resolves the annual remuneration of the members of the Board upon the proposal of the Nomination Committee.

13.7.4 The management of the Company

The Board of Directors employs the CEO of the Company and resolves his/her remuneration. The CEO conducts the day-to-day business in accordance with the guidelines and instructions of the Board of Directors. The CEO has the right to participate at Board meetings. The CEO employs the other members of the executive management and resolves their remuneration.

Under Norwegian law the members of the executive management do not become members of the Board, unless the general meeting elects them. The CEO cannot be elected as Chairman of the Board of Directors of the Company.

13.7.5 Voting rights

Each share in the Company carries one vote and all of the Shares have an equal right to vote at the general meetings.

In general, resolutions that shareholders are entitled to make pursuant to Norwegian law or the Articles of Association of the Company, requires approval by a simple majority of the votes cast. However, in the case of election of directors to the Board of Directors, the persons who obtain the most votes are elected. Further, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights in connection with any share issue, to approve a merger or demerger, to amend the Articles of Association, to authorize an increase or reduction in the share capital, to authorize an issuance of convertible loans or warrants or to authorize the Board of Directors to purchase the Company's own Shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at the general meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval of all the holders of such shares or class of shares as well as the majority required for amendments to the Articles of Association of the Company.

81

Decisions that (i) would reduce any existing shareholder's right in respect of dividend payments or other rights to the assets of the Company or (ii) restrict the transferability of the Shares require a majority vote of at least 90% of the share capital represented at the general meeting in question as well as the majority required for amendments to the Articles of Association of the Company. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amendments to the Articles of Association of the Company.

In general, in order to be entitled to vote, a shareholder must be registered as the beneficial owner of the Shares in the share register kept by the VPS. Beneficial owners of shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any persons who are designated in the register as holding such shares as nominees.

Readers should note that there are varying opinions as to the interpretation of Norwegian law in respect of the right to vote nominee-registered shares. For example, Oslo Børs has in a statement on 21 November 2003 held that in its opinion “nominee-shareholders” may vote in general meetings if they prove their actual shareholding prior to the general meeting.

13.7.6 No restriction on ownership of the Shares

Neither the Company’s Articles of Association nor the Norwegian Public Limited Liability Companies Act restricts ownership of the Shares. There are no limitations under Norwegian law on the rights of non-residents or foreign owners to hold or vote for the Shares.

13.7.7 Freely transferable shares

There are no limitations on the transferability of the Shares under Norwegian law or according to the Articles of Association.

13.7.8 Additional issuances and preferential rights

All issuances of shares by the Company, including bonus issues, require an amendment to the Articles of Association of the Company, which requires support by at least two-thirds of the votes cast and at least two thirds of the capital represented at the general meeting. Furthermore, under the Norwegian Public Limited Liability Companies Act the Company’s shareholders have a pre-emptive right to subscribe for new shares issued. The pre-emptive rights may be waived by a resolution in a general meeting by two-thirds of the votes casted and at least two thirds of the capital represented at the general meeting. A waiver of the shareholders’ preferential rights in respect of bonus issues requires the approval of all outstanding shares, irrespective of class.

The general meeting may, by two-thirds of the votes cast and at least two thirds of the capital represented, authorize the Board of Directors to issue new shares and to waive shareholders' preferential rights in connection with such issuances. Such authorization may be effective for a maximum of two years, and the par value of the shares to be issued may not exceed 50% of the registered nominal share capital when the authorization is registered.

Under Norwegian law, bonus issues may be distributed, subject to shareholder approval, by transfer from the Company’s free equity or from its share premium reserve. Such bonus issues may be effectuated either by issuing shares or by increasing the par value of the shares outstanding.

To issue shares to holders who are citizens or residents of the United States upon the exercise of preferential rights, the Company may be required to file a registration statement in the United States under United States securities laws. If the Company decides not to file a registration statement, such holders may not be able to exercise their preferential rights and in such event would be required to sell such rights to eligible Norwegian persons or other eligible non-U.S. holders to realize the value of such rights.

13.7.9 Related Party Transactions

Under Norwegian law, an agreement between the Company and a shareholder, the shareholder's parent, a director of the Company or the CEO of the Company, or any connected person to the shareholder or the shareholder's parent, that involves consideration or performance from the Company in excess of one-twentieth

82

of the Company's share capital at the time of such agreement is not binding on the Company unless the agreement has been approved by a general meeting. Certain exemptions may apply, such as for business agreements in the normal course of the Company's business containing pricing and other terms and conditions that are normal for such agreements, as well as the purchase of securities at a price that is in accordance with market quotes. Any performance of an agreement that is not binding on the Company must be reversed.

13.7.10 Minority Rights

Norwegian law contains a number of protections for minority shareholders against oppression by the majority, including but not limited to those described in this and preceding paragraphs. Any shareholder may petition the courts to have a decision of its Board of Directors or general meeting declared invalid on the grounds that it unreasonably favors certain shareholders or third parties to the detriment of other shareholders or the company itself. In certain circumstances shareholders may require the courts to dissolve the company as a result of such decisions. Minority shareholders holding 5% or more of the Company's share capital have a right to demand in writing that it hold an extraordinary general meeting to discuss or resolve specific matters. In addition, any shareholder may in writing demand that the Company place an item on the agenda for any shareholders' meeting if it is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if at least two weeks remain before the shareholders' meeting is to be held.

13.7.11 Dividends

Under Norwegian law, no interim dividends may be paid in respect of a financial period as to which audited financial statements have not been approved by the annual general meeting of shareholders. Any proposal to pay a dividend must be recommended or accepted by the Board of Directors and approved by the shareholders at a general meeting. The shareholders at the annual general meeting may vote to reduce (but not to increase) the dividends proposed by the Board of Directors.

Dividends in cash or in kind are payable only out of (i) the annual profit according to the adopted income statement for the last financial year, (ii) retained profit from previous years, and (iii) distributable reserves, after deduction of (a) any uncovered losses, (b) the book value of research and development, (c) goodwill, (d) net deferred tax assets recorded in the balance sheet for the last financial year, (e) the aggregate value of any treasury shares that the Company has purchased or been granted security over during the preceding financial years, (f) any credit or security given pursuant to sections 8-7 to 8-9 of the Norwegian Public Limited Liability Companies Act, (g) any part of the annual profit which, according to law or the Articles of Association, cannot be paid out as dividends, and provided always that such distribution is compatible with good and prudent business practice with due regard to any losses which may have occurred after the last balance sheet date or which may be expected to occur. The Company cannot distribute any dividends if the equity, according to the balance sheet, amounts to less than 10% of the total balance sheet without a two months’ creditor notice period.

Under Norwegian foreign exchange controls currently in effect, transfers of capital to and from Norway are not subject to prior government approval. However, all payments to and from Norway shall be registered with the Norwegian Currency Registry. Such registration is made by the entity performing the transaction. Further, each physical transfer of payments in currency shall be notified to the Norwegian customs. Consequently, a non-Norwegian resident may receive dividend payments without Norwegian exchange control consent if such payment is made through a licensed bank.

The Board of Directors will consider the amount of dividend (if any) to recommend for approval by the Company’s shareholders, on an annual basis, based upon the earnings of the Company for the years just ended, the financial situation of the Company at the relevant point in time and any restrictive covenants in the Noreco Group’s financing agreements.

13.7.12 Mandatory offer requirement

New mandatory offer regulation in compliance with EU’s Take-Over-Directive (Directive 2004/25/EF) has been adopted by the Norwegian legislators in the Securities Trading Act Chapter 6. The regulation included in Chapter 6 came into force on 1 January 2008.

Norwegian law requires any person, entity or group acting in concert that acquires more than 1/3 of the voting rights of a Norwegian company primary listed on Oslo Børs to make an unconditional general offer for the purchase of the remaining shares in the company. The offer is subject to approval by Oslo Børs before

83

submission of the offer to the shareholders. The Offer Price per share must be at least as high as the highest price paid or agreed by the offeror in the six-month period prior to the date the 1/3 threshold was exceeded, but equal to the market price if the market price was higher when the 1/3 threshold was exceeded. In the event that the acquirer thereafter, but prior to the expiration of the bid period acquires, or agrees to acquire, additional shares at a higher price, the acquirer is obliged to restate its bid at that higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered. A shareholder who fails to make the required offer must within four weeks dispose of sufficient shares so that the obligation ceases to apply (i.e. reduce the ownership to a level below 1/3). Otherwise, Oslo Børs may cause the shares exceeding the 1/3 limit to be sold by public auction. Until the mandatory bid is given or the shares exceeding the 1/3 threshold are sold, the shareholder may not vote for shares exceeding the 1/3 threshold, unless a majority of the remaining shareholders approve. The shareholder can, however, exercise the right to dividends and pre-emption rights in the event of a share capital increase. Oslo Børs may impose a daily fine upon a shareholder who fails to make the required offer or sell down below 1/3.

A shareholder or consolidated group that owns shares representing more than 1/3 of the votes in a listed company, and that has not made an offer for the purchase of the remaining shares in the company in accordance with the provisions concerning mandatory offers (e.g., due to available exemptions), is obliged, in general, to make a mandatory offer in the case of each subsequent acquisition. However, there are exceptions to this rule.

There will be a repeated obligation when passing 40% and 50%. Shareholders holding shares above the mentioned thresholds at the time of implementation of the new rules will be required to give a mandatory offer for all issued shares if acquiring additional shares after the effectuation of the new rules.

The Company has not received any indications of public takeover bids by third parties or bids to acquire controlling interest during the last 12 months.

13.7.13 Compulsory Acquisition

If a shareholder, directly or via subsidiaries, acquires Shares representing more than 90% of the total number of Shares as well as more than 90% of the total voting rights attached to such Shares, then such majority shareholder has a right (and each remaining minority shareholder of the Company have a right to require such majority shareholder) to effect compulsory acquisition for cash of the Shares not already owned by such majority shareholder. Commencement of a compulsory acquisition would imply that the majority shareholder has become the owner of the thus acquired Shares with immediate effect. Upon effecting the compulsory acquisition the majority shareholder would have to offer the minority shareholders a specific price per share, the determination of which price would be at the discretion of the majority shareholder. Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months’ duration, request that the price be set by the Norwegian courts. Absent such request or other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the two months deadline. The cost of such court procedure would, as a general rule, be for the account of the majority shareholder, and the courts would have full discretion in respect of the valuation of the Shares as per the effectuation of the compulsory acquisition. If a compulsory acquisition is effected within three months after the expiry of the mandatory offer period, the consideration offered under the mandatory offer shall be applied as the price offered under the compulsory acquisition, unless special circumstances call for a different offer price. If the majority shareholder by virtue of a voluntary offer has become the owner of more than 90% of the total number of Shares as well as more than 90% of the total voting rights attached to such Shares, a compulsory acquisition may be commenced without first launching a mandatory offer, provided however, that (i) the compulsory acquisition is commenced within four weeks after completion of the voluntary offer, (ii) the consideration offered is at least equal to the consideration which would have been offered if a mandatory offered had been launched, and (iii) a payment guarantee similar to the guarantee which is required under a mandatory offer, has been issued.

13.7.14 Insolvency/Liquidation

According to the Norwegian Public Limited Liability Companies Act, the Company may be liquidated by a resolution in a general meeting of the Company passed by a two-thirds majority of the aggregate votes cast as well as two thirds of the aggregate share capital represented at such meeting. The Shares rank pari passu in the event of a return on capital by the Company upon a liquidation or otherwise.

13.7.15 Disclosure obligations

A person, entity or group acting in concert that acquires shares, options for shares or other rights to shares resulting in its beneficial ownership, directly or indirectly, in the aggregate meeting or exceeding the respective thresholds of 5%, 10%, 15%, 20%, 25%, 33.34%, 50%, 66.67% or 90% of the share capital or the voting rights

84

in the Company has an obligation under Norwegian law to notify Oslo Børs immediately. The same applies to disposal of shares (but not options or other rights to shares) resulting in a beneficial ownership, directly or indirectly, in the aggregate meeting or falling below said thresholds.

13.7.16 Insider trading

According to Norwegian law subscription for, purchase, sale or exchange of shares which are quoted, or incitement to such dispositions, must not be undertaken by anyone who has precise information about the financial instruments, the company or other matters which are suited to influence the price of the financial instruments or related financial instruments noticeably, and which are not publicly available or commonly known in the market. The same applies to entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights connected with such shares or incitement to such disposition.

13.8 SHAREHOLDER AND DIVIDEND POLICY

13.8.1 Shareholder policy

The Company will inform the Company’s shareholders and the market in general on an ongoing basis of the Company’s development, activities and special events, ensuring that as far as possible the pricing of the Company’s Shares reflects the underlying values and expectations on future profits. Such information will, among other things, take the form of annual reports, quarterly reports, stock exchange bulletins, press releases and investor presentations when appropriate.

13.8.2 Dividend policy

The Company will strive to follow a dividend policy favourable to shareholders. This will be achieved by sound business development and continuous growth. The Company aims over time to give shareholders a competitive return on capital relative to the underlying risk. The Company has not previously paid any dividends.

13.9 SHAREHOLDER’S AGREEMENTS ETC.

The Company is not aware of any existing shareholders agreement as regards the Shares.

85

14. TAXATION

Set out below is a summary of certain Norwegian tax matters related to the purchase, holding and disposal of

shares. The summary is based on Norwegian laws, rules and regulations applicable as of the date of this Prospectus, and is subject to any changes in law occurring after such date. Such changes could possibly be

made on a retroactive basis. The summary does not address foreign tax laws.

The summary is of a general nature and does not purport to be a comprehensive description of all the Norwegian tax considerations that may be relevant to a decision to acquire, own or dispose of the Shares.

Shareholders are advised to consult their own tax advisers concerning the overall tax consequences of

purchasing, owning or depositing of the Shares under the laws of their country and/or state of citizenship, domicile or residence.

For the purpose of the tax summary set out below, please note that references to Norwegian or foreign shareholders refer to the tax residency rather than the nationality of the shareholder.

14.1 NORWEGIAN TAXATION OF SHAREHOLDERS TAX RESIDENT IN NORWAY

This section summarizes Norwegian tax rules relevant to shareholders that are residents of Norway for Norwegian tax purposes (“Norwegian shareholders”).

14.1.1 Taxation of dividends

Norwegian Personal Shareholders

For shareholders who are individuals (“Personal Shareholders”) tax resident in Norway, dividends exceeding a calculated tax-free allowance are subject to taxation at a rate of 28%. The tax-free allowance is calculated on a share by share basis (i.e. not on a portfolio basis), on the basis of the tax purchase price of the share multiplied with a determined risk free rate of interest after tax. Any part of the calculated allowance one year exceeding the dividend distributed on the share the same year (“unused allowance”) is added to the tax purchase price of the share and included in the basis for calculating the tax-free allowance the following year.

The tax-free allowance is allocated to the Personal Shareholders holding shares at the end of each calendar year. Personal Shareholders who transfer shares will not be entitled to deduct any calculated allowance related to the year of transfer.

Norwegian Corporate Shareholders Dividend distributions to Norwegian shareholders that are limited liability companies and similar entities(“Corporate Shareholders”) from a limited liability company tax resident in Norway are exempt from Norwegian taxation.

14.1.2 Taxation on capital gains on disposal of shares

Norwegian Personal Shareholders

Sale, redemption or other disposal of shares is considered as realization for Norwegian tax purposes. Capital gains are taxable in Norway as ordinary income in the year of disposal, taxed at a rate of 28%. Losses on shares are tax deductible in the shareholders ordinary income in the year of disposal. The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number of shares realized.

The taxable gain/deductible loss on the realization of shares is calculated per share, as the difference between the consideration received and the tax purchase price of the share, including costs incurred in relation to the acquisition or realization of the share. Any unused allowance on a share (see above) may be set off against capital gains related to the realization of the same share, but it can not lead to or increase a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realization of a share will be annulled. The tax-free allowance is allocated to the Personal Shareholders holding shares at the end of each calendar year. Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer.

If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be disposed of (on a first-in first-out principle).

86

A Personal Shareholder who moves abroad and ceases to be tax resident in Norway as a result of this, will be deemed taxable in Norway for potential gain of NOK 500,000 or more, related to all of the shares held at the time the tax residency ceased, as if the shares were realized at this time (“the exit tax rules”). The payment may be postponed with adequate security. If the person moves to a jurisdiction within the EEA, there is no demand for adequate security, provided that the EEA state and Norway have a mutual agreement of exchange of information and assistance with collection of taxes.

If the shares are realized within five years after the tax residency ceased, the tax assessment might be changed if the actual gain is less than the calculated potential gain. However, the recalculation can not create or increase a deductible loss.

If the person moves to a jurisdiction within the EEA, potential losses of NOK 500,000 or more, on all of the shares held at the time tax residency ceases will be tax deductible. Taxation (loss deduction) will occur at the time the shares are actually sold or otherwise disposed of. If the shares are not realized within five years after the shareholder ceased to be resident in Norway for tax purposes, the tax liability calculated under these provisions will not apply.

Personal Shareholders who move abroad and cease to be resident in Norway for tax purposes as a result of this, are taxable for any capital gain (regardless of the NOK 500,000 threshold as described above) related to shares in Norwegian companies which is realized within five years from the cease of the Norwegian tax residency, unless the shareholder was taxed on the basis of potential gain as described above. Losses related to the realization of shares within five years from the cease of the Norwegian tax residency, are deductible.

If both the exit tax rules and the five year rule are applicable, the exit tax rules shall prevail.

Any double taxation convention concluded by Norway and another state to which the shareholder has moved may influence upon the application of these rules.

Norwegian Corporate Shareholders

Corporate Shareholders are exempt from capital gain taxation on realization of shares in limited liability companies and similar entities tax resident in Norway. Correspondingly, losses upon the realization and costs incurred in connection with the purchase and realization of such shares are not deductible for tax purposes.

14.1.3 Net Wealth Tax

Corporate Shareholders are exempt from Norwegian net wealth tax.

Personal Shareholders are subject to net wealth taxation. Shares will form part of their basis for calculation of Norwegian net wealth tax. The value for assessment purposes for shares listed on Oslo Børs is the quoted value as of 1 January in the assessment year(i.e the year following the tax year). The current marginal wealth tax rate is 1.1%.

14.2 NORWEGIAN TAXATION OF SHAREHOLDERS RESIDENT IN OTHER JURISDICTIONS

This section summarizes Norwegian tax rules relevant to shareholders that are not residents of Norway for Norwegian tax purposes (“Foreign Shareholders”). The potential tax liabilities for foreign shareholders in the jurisdiction where they are resident for tax purposes or other jurisdictions will depend on tax rules applicable in the relevant jurisdiction.

14.2.1 Taxation of dividends

Foreign Personal Shareholders

Personal Shareholders resident in other jurisdictions than Norway are subject to withholding tax at a rate of 25%., or a lower rate pursuant to the provisions in an applicable tax treaty. Personal Shareholders tax resident within the EEA may, as an alternative, apply to the Norwegian tax authorities for a tax refund calculated in accordance with the principles for calculating the dividends taxation for Norwegian shareholders. Under Norwegian law, the distributing company is responsible for the withholding of such taxes at source.

Foreign Corporate Shareholders Corporate Shareholders tax resident within the EU/EEA are not subject to withholding tax on dividend

distributions from a Norwegian limited liability company, provided that the shareholder is a company which is

actual established and carries out genuine economic activity within the EEA.

87

According to Norwegian domestic legislation, Corporate Shareholders tax resident outside the EU/EEA are as a main rule subject to withholding tax at a rate of 25%. Non-EU/EEA shareholders may benefit from a lower withholding tax rate according to an applicable tax treaty between the respective state of residency and Norway. Under Norwegian law, the distributing company is responsible for the withholding of such taxes at source.

Foreign Personal and Corporate Shareholders

A distributing company will normally deduct withholding tax at the applicable rate when dividends are paid directly to an eligible Foreign Shareholder based on the information registered with the VPS with regard to the tax residence of the foreign shareholder. Foreign Corporate and/or Personal Shareholders who have suffered a higher withholding tax than set out in an

applicable tax treaty may apply to the Central Office for Foreign Tax Affairs (Nw: Sentralskattekontoret for

utenlandssaker) for a refund of the excess withholding tax deducted.

Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee, by agreeing to

provide certain information regarding beneficial ownership, has obtained approval from the Central Office for

Foreign Tax Affairs for the dividend to be subject to a lower withholding tax rate. To obtain such approval the

nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to

withholding tax at a reduced rate.

If a Foreign Corporate or Personal Shareholder is carrying on business activities in Norway and the relevant shares are effectively connected with such activities, the shareholder will be subject to the same taxation as a Norwegian Corporate or Personal Shareholder, as described above.

Foreign Shareholders should consult their own advisers regarding the availability of treaty benefits in respect of dividend payments including the ability to effectively claim refund of withholding tax.

14.2.2 Taxation of capital gains on disposal of shares

Foreign Personal Shareholders Personal Shareholders resident in other jurisdictions are not subject to taxation in Norway on gain from the realisation of shares in a Norwegian limited liability company, unless the shareholder i) holds the shares in connection with the conduct of a trade or business in Norway, or ii) has been a resident in Norway for tax purposes during the five calendar years preceding the realisation, and the gains are not exempted from taxation in Norway according to an applicable tax treaty.

Foreign Corporate Shareholders

Gains from the realisation of shares in a Norwegian limited liability company by a Foreign Corporate Shareholder are not subject to taxation in Norway.

14.2.3 Net Wealth Tax

Foreign Personal Shareholders are not subject to net wealth taxes on shares in Norwegian limited liability companies, unless the shareholder holds the shares in connection with the conduct of a trade or business in Norway.

Foreign Corporate Shareholders are exempt from net wealth tax on shares in Norwegian limited liability companies, unless the shareholder holds the shares in connection with the conduct of a trade or business in Norway.

14.3 DUTIES ON THE TRANSFER OF SHARES

No stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares in Norwegian limited liability companies.

14.4 INHERITANCE TAX

When shares are transferred either through inheritance or as a gift, such transfer may give rise to inheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the shares are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance tax, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the

88

decedent’s country of residence. Irrespective of residency or citizenship, Norwegian inheritance tax may be levied if the shares are effectively connected with certain business activities carried out by the shareholder in Norway.

In the case of listed shares, the basis for the tax calculation is the market value of the shares

89

15. LEGAL MATTERS

15.1 DISPUTES

Noreco is together with the other private owners of the South Arne field party to a dispute with Dansk Naturgas A/S regarding the natural gas sale and purchase agreement for the South Arne field. The licensees claim abuse of dominant position, unfair contract price, restriction of competition and discrimination by Dansk Naturgas A/S in connection with the entering into and operation of the depletion gas sales and purchase agreement. The forum is Copenhagen Arbitration, and a final hearing is expected late 2008/early 2009. A positive outcome may hold a positive value for Altinex up to DKK 100-150 million.

Altinex, on behalf of the Cecilie licensees, has filed an administrative appeal to the Ministry of Transport and Energy regarding the DEA’s decision not to grant an exemption from the obligation to pay the 5% pipeline duty. A positive outcome may hold a value for Altinex of up to DKK 50-60 million.

In June 2007, a water injection pipeline between the Siri and the Nini platform ruptured. Noreco, through its subsidiary Altinex, holds a 30% interest in this pipeline. The conclusion after detailed investigations is that the whole pipeline needs to be replaced. A replacement can probably not be effected before 2009. Dong (the operator) is however working on a solution to maintain production until then. The replacement costs are assessed at DKK 450-500 million. In addition the licensees have suffered a loss of production income, not yet be finally determined. The Group underwriters have been advised of the incident and have had presented the Group's initial insurance claim is under preparation both in respect of the physical damage and the loss of production income.

After the merger between Statoil and Hydro, the merged StatoilHydro has commenced restructurings by early retirement of onshore employees from the age of 58. A similar program for offshore employees has been notified. Of estimated total restructuring costs, StatoilHydro demands that NOK 3.2 billion is charged to the joint financials for fields on the NCS which are operated by StatoilHydro, out of which NOK 2 billion is allocated to the partners of StatoilHydro. In April 2008, StatoilHydro gave notice to its partners that an arbitration will be commenced to solve this issue. Noreco is only involved indirectly through its license interest in the Brage field, and has reserved approximately NOK 10 million for a possible negative outcome of the arbitration (the amount equals StatoilHydro's initial claim towards Noreco).

Except for the above, the Company has not in the previous 12 months been involved in or threatened with governmental, legal or arbitration proceedings which may have, or have had significant effects on the Company’s or Group’s financial position or profitability.

15.2 MATERIAL CONTRACTS

Noreco has not entered into any agreements of significant importance to the Company with other companies in the same group, and has not entered into any agreements with “close associates” that by their nature or circumstances are unusual for Noreco and/or, as far as Noreco is aware, the close associate in question.

15.3 MATERIAL CONTRACTS OUTSIDE THE ORDINARY COURSE OF BUSINESS

The Company does not have any material contracts which have been entered into outside the ordinary course of business.

90

16. ADDITIONAL INFORMATION

16.1 DOCUMENTS ON DISPLAY

For the life of this Prospectus the following documents may be inspected at www.noreco.com and at the Company’s offices at Haakon VII’s gate 9, 4005 Stavanger, Norway:

• The Company’ Memorandum of Incorporation

• The Articles of Association

• The Company’s historical financial information and auditors report for the 2007, 2006 and 2005 financial years

• The Company’s historical financial information for the three months ended 31 March 2008

• The historical financial information of Altinex for the years 2005-2007 and the quarterly reports

• The prospectus dated 1 November 2007 prepared in connection with the listing of Noreco’s shares on Oslo Børs ASA.

16.2 CROSS REFERENCE LIST

Cross

reference

Section in

prospectus

Incorporated

by reference

Internet site Specifica

tion

Comments to financial condition

Section 9.4 Prospectus dated 1 November 2007

http://www.noreco.com/investor_relations/shareholder_information/prospectus/

Section 8.4.2

Consolidated Financial statements

Section 9.3 Noreco Annual report 2005

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 5-8

Accounting policies

Section 9.2 Noreco Annual report 2005

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 5

Notes Section 9.3 Noreco Annual report 2005

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 9-15

Auditor statement

Section 9.5 Noreco Annual report 2005

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 15

Consolidated Financial statements

Section 11 Altinex Annual report 2006

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 33-35

Accounting policies

Section 11 Altinex Annual report 2006

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 38-45

Notes Section 11 Altinex Annual report 2006

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 38-99

Auditor statement

Section 11 Altinex Annual report 2006

http://www.noreco.com/investor_relations/financial_performance_and_reports/

Page 32

16.3 STATEMENT REGARDING SOURCES

The Company confirms that when information in this Prospectus has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

16.4 STATEMENT REGARDING EXPERT OPINIONS

The Company confirms that when information in this Prospectus has been sourced from a third party it has been accurately reproduced and as far as the Company is aware and is able to ascertain from the information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. The Noreco reserves and resource estimates have been verified by Macgolyor MacNaugthon and Senergy ltd. Macgolyor MacNaughton has provided verification of the producing fields (with exception of the Brage field) in conjunction with the listing on Oslo Børs in November 2007 or the 2007 annual reserve statement for Noreco.

91

16.5 IDENTIFICATION OF PERSONS RESPONSIBLE

The Prospectus has been prepared by the management of the Company under the instruction and supervision of the Company’s Board of Directors. The Board of Directors has assumed the sole responsibility for the information given in the Prospectus and has signed the declaration set out in section 3 in this Prospectus.

In the preparation of the Prospectus, the management of the Company has relied on the services of third parties, including Pareto Securities AS (Oslo, Norway), KPMG AS as statutory auditors, and Arntzen de Besche Advokatfirma AS as the Company’s legal advisors. The mentioning of these companies acting as advisors shall not create any implication that these parties assume responsibility for the information contained in the Prospectus and no representation or warranty, expressed or implied, is made by any Manager or adviser to the Company as to the accuracy or completeness of such information, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation by any Manager or Company adviser as to the past, present or future.

92

17. DEFINITIONS AND GLOSSARY OF TERMS

17.1 DEFINITIONS

The definitions set out below apply to the whole of this Prospectus and is of general nature.

Altinex ................................... Altinex ASA (registrationOrg number 845 278 822), a fully owned subsidiary of Noreco.

Altinex Group........................ Altinex ASA with all existing and future subsidiaries. Altinex International: ............ The company being the indirect owner of all the non-Norwegian licenses

within the Altinex Group, with registration org number 989 753 673, a wholly owned subsidiary of Noreco.

Altinex Oil Norway: ............. The company being the owner of all the Norwegian licenses within the Altinex ASA Group, with registration org number 987 008 644, a wholly owned subsidiary of Noreco.

Articles of Association or Articles: .................................

The Articles of Association of the Company.

Board: .................................... The Board of Directors of Noreco. Eligible Shareholders: ........... The shareholders in Noreco as of 25 April 2008 (as appearing in the VPS on 30

April 2008) who were not invited to participate in the Private Placement and are not restricted from participating in the Subsequent Offering due to laws and regulations in their applicable jurisdiction.

IFRS: ..................................... International Financial Reporting Standards, issued by the IASB. Investor:................................. Legal and physical persons applying for Offer Shares in the Subsequent

Offering. ISIN ...................................... International Securities Identifying Number Managers: .............................. Pareto Securities AS and Glitnir Securities AS. Money Laundering Act:......... The Money Laundering Act of June 20 2003 no. 41 (“Hvitvaskingsloven”). Offer Shares:.......................... Up to 2,500,000 offer shares issued in the Subsequent Offering. New Shares:........................... 19,149,000 New Shares issued in the Private Placement. NOK: ..................................... Norwegian Kroner, the lawful currency of the Kingdom of Norway. Noreco Group: ...................... Noreco with all existing and future subsidiaries, including Altinex Group Noreco or the Company: Norwegian Energy Company ASA, registrationorg. number 987 989 297 Norwegian Public Limited Liabilities Companies Act: ....

The Norwegian Public Limited Companies Act of 13 June 1997 no. 45 (“Allmennaksjeloven”).

Norwegian Securities Trading Act: ........................................

The Securities Trading Act of 19 June 1997 no. 79 (“Verdipapirhandelloven”).

Norwegian Stock Exchange Regulations:...........................

The Stock Exchange Regulations of 17 January 1994 no. 30, last amended by Regulation of 9 December 2005 nr. 1427 (“Børsforskriften”).

Oslo Børs:.............................. Oslo Børs ASA (translated “the Oslo Stock Exchange”). Private Placement: ................. 19,149,000 New Shares issued to existing shareholders and external investors

in the Private Placement to NOK 23.50 per Share. Prospectus:............................. This Prospectus dated 27 May 2008 prepared in connection with the

Subsequent Offering. Record Date: .......................... 25 April 2008. Securities Depository Act: .... The Norwegian act of 2002 no. 64 regarding securities depository. Securities Depository: ........... Verdipapirregisteret, Verdipapirsentralen (“VPS”) Securities Trading Act ........... The Norwegian Securities Trading Act of 19 June 1997 No.79 Share(s):................................. “Shares” means common shares in the capital of Noreco and “Share” means

any one of them. Subscriber:............................. See “Investor” above. Subscription Form: ................ The subscription form to be used to apply for Offer Shares. Subscription Period: ............. The subscription period in which Subscription Forms may be submitted to the

Managers in respect of the Subsequent Offering, being from and including 29 May 2008 to and including 13 June 2008 at 16:30 (Oslo time).

Subscription Price:................. NOK 23.50 per share. Subscription Rights: .............. Each Eligible Shareholder will be allocated 1 non-transferable subscription

rights for each 8 Shares owned (the “Subscription Right”) in Noreco as of 25 April 2008 (the “Record Date”), as registered in the VPS Registry on 25 April 2008. One Subscription Right gives the right to subscribe for one Offer Share. No fractions of Offer Shares may be subscribed. The minimum subscription is

93

one Offer Share. Subsequent Offering:............. The offering of up to 2,500,000 Offer Shares at a subscription price of NOK

23.50 per share with preferential allocation to Eligible Shareholders as further described in Section 6 herein.

USD:...................................... United States Dollars. VPS account: ......................... An account with VPS for the registration of holdings of securities. VPS:....................................... Verdipapirsentralen (Norwegian Central Securities Depository), which

organizes the Norwegian paperless securities registration system.

17.2 GLOSSARY OF TERMS

The glossary of terms set out below applies to the whole of this Prospectus.

Bbl ......................................... Barrel HY ......................................... Half year ended 30 June IFRS....................................... International Financial Reporting Standards mmboe ................................... Million barrels of oil equivalents. NCS ....................................... Norwegian Continental Shelf. NIBOR: ................................ The Norwegian Inter-Bank Offer Rate, rounded off to two decimal places for a

6 - six - month period that is quoted on Reuters NIBR page at 12.00 noon in Oslo on the Interest Determination Date.

NOK ...................................... Norwegian Kroner, the lawful currency of Norway OTC....................................... The over-the-counter market in Oslo, Norway, operated by the Norwegian

Securities Dealers Association US$........................................ United States Dollars, the lawful currency of the United States VPS........................................ The Norwegian Central Securities Depository, who organises the Norwegian

paperless securities registration system (“Verdipapirsentralen”)

A 1

Appendix 1: Articles of Association for Norwegian Energy Company ASA

(last amended 25 April 2008)

§ 1

The Name of the Company

The name of the Company is Norwegian Energy Company ASA.

The Company is a public limited company.

§ 2

Registered Office

The Company has its registered office in the municipality of Stavanger.

§ 3

The Object of the Company

The business of the Company is exploration, production and sale related to oil and gas activities. The Company will obtain participating interests in production licenses by participating in license rounds and through acquisition of participating interests.

§ 4

Share Capital and Share Classes

The Company’s share capital is NOK 405,752,310.20 divided between 130,887,842 shares, each with a face value of NOK 3.10.

The shares shall be registered in the securities register (“verdipapirregisteret”).

No restrictions apply to the transfer of shares.

§ 5

The Board of Directors

The Board of Directors shall have from 3 to 8 members in accordance with a decision by the General Meeting. The Chairman of the Board/Chair of the Meeting shall not have a casting vote.

§ 6

Signature rights

Two members of the Board of Directors jointly, or the Chief Executive Officer and a member of the Board of Directors jointly shall have authority to sign for the Company.

§ 7

Nomination Committee

The Nomination Committee shall consist of three members. The term of office shall be two years unless the Annual General Meeting determines that the term shall be shorter.

The Nomination Committee shall prepare a motion for the Annual General Meeting relating to:

a) Election of members of the Board of Directors and the chairperson of the Board of Directors. b) Election of the members of the Nomination Committee and the chairperson of the Committee. c) The remuneration of the Directors and the members of the Nomination Committee. d) Any amendments of the Nomination Committee’s Mandate and Charter.

Sections 6-7 and 6-8 of the Public Limited Companies Act apply correspondingly in relation to the members of the Nomination Committee.

A 2

§ 8

Chief Executive Officer

The Company shall have a Chief Executive Officer.

§ 9

Voting Rights

At the Company's General Meeting each share has one vote. An owner with shares registered through a custodian approved pursuant to Section 4-10 of the Public Limited Companies Act has voting rights equivalent to the number of shares which are covered by the custodian arrangement provided that the owner of the shares shall within two working days before the General Meeting provide the Company with his name and address together with a confirmation from the custodian to the effect that he is the beneficial owner of the shares held in custody, and provided further the Board of Directors shall not disapprove such beneficial ownership after receipt of such notification.

Shareowners who wish to take part in the General Meeting, must give notice to the Company by the date stated in the Calling Notice, which date must be at least two working days before the General Meeting.

§ 10

Annual General Meeting

The Annual General Meeting shall deal with the following:

1. Election of Board members and the Chairman of the Board 2. Approval to the Annual Accounts and Annual Report including distribution of dividend 3. Election of the members and the chairperson of the Nomination Committee and amendments of the

Nomination Committee’s Mandate and Charter 4. Such other matters as, according to law or the Articles of Association, fall within the duties of the

General Meeting.

The Annual General Meeting shall also deal with the statement from the Board of Directors relating to the determination of salary and other benefits to the leading employees according to Section 6-16 a of the Public Limited Companies Act. There shall be a consultative vote regarding the principles relating to determining the salary of the leading employees set by the Board of Directors. The principles regarding benefits according to Section 6-16 a first paragraph, third period, no 3, shall be approved by the General Meeting.

§ 11

Chairperson

The General Meeting shall be chaired by the Chairperson of the Board of Directors.

A 3

Appendix 2: 1Q report for 2008 for Noreco F

AS

ET

Tph

oto:

Gei

r Egi

l Ber

gjor

d

A 4

A 5

A 6

A 7

A 8

A 9

A 10

A 11

Appendix 3: Annual report for Noreco for 2007

A 12

A 13

A 14

A 15

A 16

A 17

A 18

A 19

A 20

A 21

A 22

A 23

A 24

A 25

A 26

A 27

A 28

A 29

A 30

A 31

A 32

A 33

A 34

A 35

A 36

A 37

A 38

A 39

A 40

A 41

A 42

A 43

A 44

A 45

A 46

A 47

A 48

A 49

A 50

A 51

A 52

A 53

A 54

A 55

A 56

A 57

A 58

A 59

A 60

A 61

A 62

FA

SE

TT

A 63

Appendix 4: Annual report for Noreco for 2006

A 64

A 65

A 66

A 67

A 68

A 69

A 70

A 71

A 72

A 73

A 74

A 75

A 76

A 77

A 78

A 79

Appendix 5: Q2 report as of 30 June 2007 for Altinex ASA

• S

olid

fi n

ancia

ls-

Revenue o

f M

NO

K 3

39.5

- E

BIT

DA

of

MN

OK

22

7.9

- C

ash

fl o

w o

f M

NO

K 1

17

.3

• Q

2 p

rod

uctio

n o

f 9

27

9 b

oe

/d

• E

noch o

il fi eld

on s

tream

• S

uccessfu

l appra

isal of

the N

ini E

ast

oil

dis

covery

– P

art

ner

/ 30 %

ow

ned

• T

hre

e n

ew

sig

nifi

ca

nt

wild

ca

t o

il d

isco

ve

rie

s:

- R

au o

il dis

covery

in D

enm

ark

– O

pera

tor

/ 40 %

ow

ned

- H

un

tin

gto

n F

ort

ies o

il d

isco

ve

ry in

th

e U

K –

Pa

rtn

er

/ 2

0 %

ow

ne

d-

Hu

ntin

gto

n F

ulm

ar

oil

dis

co

ve

ry in

th

e U

K –

Pa

rtn

er

/ 2

0 %

ow

ne

d

• F

irst

opera

ted d

rilli

ng o

pera

tions in D

enm

ark

com

ple

ted w

ithin

budget

and

w

ith

ou

t lo

st-

tim

e in

cid

en

ts

• A

ward

of

one n

ew

Norw

egia

n p

roduction lic

ence (

PL 4

42)

– P

art

ner

/ 20 %

• N

ore

co a

s a

new

and m

ajo

r share

hold

er

• N

o lo

st

tim

e a

ccid

en

ts (

LTA

)

A 80

So

lid

Fin

an

cia

ls i

n Q

2 –

Altin

ex r

ep

ort

ed

Q2

re

ve

nu

es o

f N

OK

33

9.5

mill

ion

an

d e

arn

ing

s b

efo

re i

nte

rest,

ta

x,

de

pre

cia

tio

n a

nd

am

ort

isa

tio

n (

EB

ITD

A)

of

NO

K 2

27

.9 m

illio

n.

Th

e a

ve

rag

e o

il, g

as a

nd

NG

L p

rice

ad

juste

d f

or

the

co

st

of

oil-

pri

ce

he

dg

ing

wa

s U

SD

64

.77

/bo

e.

Th

e n

et

resu

lt a

fte

r fi n

an

ce

an

d t

ax

en

de

d a

t N

OK

– 6

8.9

mill

ion

. T

he

ne

t re

su

lt w

as n

eg

ative

ly a

ffe

cte

d b

y d

ire

ctly

exp

en

se

d e

xp

lora

tio

n c

osts

an

d w

rite

do

wn

of

exp

lora

tio

n c

osts

of

NO

K 8

7.1

m

illio

n r

ela

tin

g t

o c

om

ple

ted

dri

llin

g c

am

pa

ign

s i

n O

ma

n i

n Q

1 a

nd

Q1

20

07

. C

ash

fl o

w f

rom

op

era

tio

ns w

as N

OK

11

7.3

mill

ion

.

Sta

ble

Pro

du

cti

on

– N

et

pro

du

ctio

n a

ve

rag

ed

9,2

79

bo

e/d

. P

rod

uctio

n i

n t

he

last

pa

rt o

f th

e q

ua

rte

r w

as s

ligh

tly lo

we

r th

an

fo

reca

ste

d,

ma

inly

du

e t

o f

acili

-tie

s d

ow

ntim

e,

faste

r w

ate

r-cu

t d

eve

lop

me

nt

in t

he

ne

w p

rod

uctio

n w

ell

in t

he

Bra

ge

fi e

ld,

de

laye

d d

rilli

ng

on

th

e S

ou

th A

rne

fi e

ld a

nd

sh

ut

do

wn

of

the

Nin

i fi e

ld.

Fo

r Q

3 2

00

7,

a p

rod

uctio

n in

th

e r

an

ge

of

10

,00

0 b

oe

/da

y is f

ore

ca

ste

d.

Th

e f

ore

ca

ste

d i

ncre

ase

in

pro

du

ctio

n i

s e

xp

ecte

d t

o c

om

e f

rom

ne

w p

rod

uc-

tio

n w

ells

in

Bra

ge

, S

ou

th A

rne

an

d N

ini

to c

om

e o

n s

tre

am

du

rin

g t

he

th

ird

qu

art

er.

No

tew

ort

hy

Dri

llin

g S

uc

ce

ss –

Altin

ex i

s t

he

op

era

tor

for

an

d 4

0 %

ow

ne

r o

f o

ne

im

po

rta

nt

wild

ca

t lig

ht

oil

dis

co

ve

ry (

Ra

u-1

) a

nn

ou

nce

d m

id M

ay l

oca

ted

so

uth

we

st

of

the

Ce

cili

e fi

eld

in

th

e D

an

ish

pa

rt o

f th

e N

ort

h S

ea

, p

art

icip

ate

s

in a

nd

20

% o

wn

er

of

two

sig

nifi

ca

nt

wild

ca

t lig

ht

oil

dis

co

ve

rie

s (

Hu

ntin

gto

n

Pa

leo

ce

ne

Fo

rtie

s F

orm

atio

n a

nd

Hu

ntin

gto

n J

ura

ssic

Fu

lma

r F

orm

atio

n)

an

-n

ou

nce

d e

nd

Ma

y lo

ca

ted

in th

e U

K C

en

tra

l No

rth

Se

a a

nd

pa

rtic

ipa

tes w

ith

30

% in

th

e s

ucce

ssfu

l ap

pra

isa

l of th

e N

ini E

ast lig

ht o

il d

isco

ve

ry a

nn

ou

nce

d m

id

Ju

ne

lo

ca

ted

no

rth

ea

st

of

the

Nin

i fi e

ld in

th

e D

an

ish

pa

rt o

f th

e N

ort

h S

ea

.

Th

e tw

o n

ew

Hu

ntin

gto

n li

gh

t o

il d

isco

ve

rie

s w

ill s

ign

ifi ca

ntly in

cre

ase

th

e C

om

-p

an

y’s

re

se

rve

s a

nd

to

ge

the

r w

ith

th

e r

ece

ntly d

isco

ve

red

Ra

u li

gh

t o

il fi n

d a

nd

su

cce

ssfu

l a

pp

rais

al

dri

llin

g o

n N

ini

Ea

st

cle

arl

y d

em

on

str

ate

s t

ha

t A

ltin

ex O

il is

mo

vin

g f

rom

be

ing

a p

rod

uctio

n c

om

pa

ny t

o a

fu

ll-va

lue

ch

ain

exp

lora

tio

n

an

d p

rod

uctio

n c

om

pa

ny t

ha

t ca

n g

row

by t

he

dri

ll b

it.

Fu

rth

er,

th

e H

un

tin

gto

n

dis

-co

ve

rie

s w

ill a

lso

co

nstitu

te a

n e

xce

llen

t sta

rt t

o t

he

Co

mp

an

y’s

pla

nn

ed

exp

an

sio

n o

n t

he

UK

sh

elf.

Man

dato

ry o

ffer

by N

ore

co

– N

orw

eg

ian

En

erg

y C

om

pa

ny A

SA

(“N

ore

co

”)

ha

s b

eco

me

a n

ew

ma

jor

sh

are

ho

lde

r in

Altin

ex d

uri

ng

th

e l

ast

qu

art

er

an

d

the

co

mp

an

y n

ow

ow

ns a

nd

ho

lds r

igh

ts t

o m

ore

th

an

67

% o

f th

e s

ha

res i

n

Altin

ex.

On

20

Ju

ly,

No

reco

ma

de

a m

an

da

tory

off

er

to a

cq

uir

e a

ll th

e s

ha

res in

Altin

ex

no

t a

lre

ad

y o

wn

ed

by N

ore

co

. T

he

off

er

pri

ce

is N

OK

22

pe

r sh

are

, p

aya

ble

in

ca

sh

or

a c

om

bin

atio

n o

f sh

are

s in

No

reco

. T

he

acce

pta

nce

pe

rio

d is f

rom

an

d

inclu

din

g 2

3 J

uly

20

07

to

an

d in

clu

din

g 2

0 A

ug

ust

20

07

.

Purs

uant

to t

he N

orw

egia

n S

ecurities T

radin

g A

ct, s

ections 4

-16,

the B

oard

of

Altin

ex h

as issued a

sta

tem

ent

on t

he m

andato

ry o

ffer.

The s

tate

ment

has b

een

publis

ched t

hro

ugh O

slo

Bø

rs’

info

rmation s

yste

m u

nder

the c

om

pany’s

tic

ker

code “

ALX

” and is a

lso a

vaila

ble

on the c

om

pany’s

web s

ite w

ww

.altin

exoil.

com

.

A 81

Q1-2

007

Q2-2

007

Q3-2

007

Q4-2

007

Pro

duction b

oe/d

9 2

71

9 2

79

10 0

00

11 2

00

Avera

ge p

rice (

boe)

US

D

(incl. N

GL a

nd G

as)

55,8

8

64,7

7

65

68

MN

OK

Revenue

295

340

360

420

EB

ITD

A

188

228

Depre

cia

tions a

nd a

mort

isations

-134

-175

Fin

ancia

l item

s,

net

-56

-60

Tax

-21

-62

Ne

t re

su

lt

-23

-6

9

Ca

sh

fl o

w a

fte

r ta

x p

aym

en

t,

bu

t b

efo

re in

ve

stm

en

ts

and d

ebt

repaym

ents

94

117

Pro

duct

ion g

uid

ing for

the r

em

ain

der

of 2007 d

epends

on tim

e-

and v

olu

me im

pact

of pla

nned n

ew

w

ells

and a

ctiv

ities

A 82

Pro

du

ctio

n a

nd

Fie

lds -

Net p

roduct

ion fr

om

the C

om

pany’

s se

ven fi

eld

s av-

era

ged 9

,279 b

oe/d

for Q

2 2

007. D

ela

yed d

rillin

g, a

dis

cove

red ruptu

re in

the

wate

r-in

ject

ion p

ipelin

e f

rom

the S

iri p

latfo

rm t

o t

he s

ate

llite

s N

ini and S

tine

Segm

ent 1 (

a S

iri p

roduct

ion w

ell)

and lo

wer

than e

xpect

ed p

roduct

ion fro

m

the B

rage fi e

ld in

the la

tter

part o

f th

e s

eco

nd q

uarter

cause

d a

n o

il pro

duc-

tion s

lightly

low

er th

an fo

reca

sted. T

he g

raph b

elo

w s

how

s A

ltinex’

s net d

aily

pro

duct

ion p

er fi e

ld for Q

2 2

007.

The

fi rst

Bra

ge p

roduct

ion w

ell

in th

e p

lanned 5

-year dril

ling c

am

paig

n c

am

e

on s

tream

in the b

egin

nin

g o

f Q

2 2

007. T

he w

ell

is a

5,6

43 m

ete

rs lo

ng h

ori-

zonta

l pro

duce

r co

mple

ted i

n t

he S

tatfj

ord

rese

rvoir,

with

initi

al

pro

duct

ion

much

hig

her

than e

xpect

ed,

close

to 1

3,0

00 b

oe/d

, (1

,650 b

oe/d

net

to A

l-tin

ex)

, but

with

a f

airl

y ra

pid

incr

ease

in w

ate

r cu

t. T

he p

ruduct

ion h

as

now

ass

um

ed a

rate

whic

h c

an b

e c

onsi

dere

d n

orm

al fo

r a w

ell

pro

duci

ng f

rom

th

is fo

rmatio

n. T

he w

ell

is th

e fi

rst o

f seve

ral w

ells

pla

nned to

be d

rille

d in

the

Bra

ge

fi eld

and a

dja

cent p

rosp

ect

s ove

r th

e c

om

ing y

ears

. Dril

ling o

f the n

ext

pro

duct

ion w

ell,

31/4

-A-4

0 A

/B,

is i

n p

rogre

ss w

ith e

xpect

ed h

and o

ver

to

pro

duct

ion tow

ard

s th

e e

nd o

f Q

3 2

007.

Pro

duct

ion c

om

mence

d o

n 1

June fro

m the E

no

ch

fi eld

where

Alti

nex

hold

s

a 4

.36%

inte

rest

in the u

niti

sed fi e

ld w

hic

h s

traddle

s th

e U

K a

nd N

orw

egia

n

sect

ors

in U

KC

S B

lock

16/1

3a a

nd N

CS

Blo

ck 1

5/5

(uniti

zed a

t 80%

and

20%

, re

spect

ively

). T

he s

ingle

horiz

onta

l deve

lopm

ent w

ell

has

had a

peak

rate

in t

he o

rder

of

15,0

00 b

oe/d

giv

ing a

net

to A

ltinex

of

650 b

oe/d

. T

he

Enoch

pro

duct

ion is

transp

orted to a

nd p

roce

ssed a

t th

e B

rae A

lpha faci

lity

som

e 1

5 k

m t

o t

he n

orthw

est

of

Enoch

, and o

il is

exp

orted v

ia t

he F

ortie

s

pip

elin

e s

yste

m.

On th

e S

ou

th A

rne

fi eld

the E

NS

CO

102 rig

contin

ues

the d

rillin

g o

f tw

o in

fi ll

wells

. T

he d

rillin

g is

behin

d s

chedule

with

pro

duct

ion fro

m-

and w

ate

r in

jec-

tion in

the w

ells

exp

ect

ed to c

om

mence

durin

g Q

3 2

007.

On the S

ou

th A

rne N

ort

hern

Exte

nsio

n r

ese

rvoir

and c

once

pt eva

luatio

ns

are

ongoin

g w

ith a

ntic

ipate

d p

roje

ct s

anct

ion d

urin

g the fi

rst half

of 2008.

On the S

irifi e

ld the in

fi ll–

dril

ling c

am

paig

n is

aw

aiti

ng the a

rriv

al o

f th

e E

N-

SC

O 7

0 j

ack

-up d

rillin

g r

ig d

ue t

o a

rriv

e e

arly

Q4 2

007.

Due t

o a

leak

in

the w

ate

r in

ject

ion p

ipelin

e f

rom

Siri

to S

tine S

eg.1

/Nin

i, w

ate

r in

ject

ion i

n

both

Stin

e S

eg. 1 a

nd N

ini has

been c

lose

d. D

urin

g the d

rillin

g o

f th

e N

A-8

pro

duci

on w

ell

wate

r w

as

inje

cted in

to N

ini f

rom

the rig

. Repair

of t

he p

ipelin

e

is e

xpect

ed d

urin

g Q

3 0

7.

The p

lanned d

eve

lopm

ent-

drilli

ng c

am

paig

n o

n N

ini

com

mence

d i

n l

ate

Ju

ne w

ith t

he d

rilli

ng o

f th

e N

A-8

pro

duct

ion w

ell

whic

h c

am

e o

n s

tream

re

cently

.

Follo

win

g the s

ucc

ess

ful a

ppra

isal o

f th

e N

ini E

ast

oil

dis

cove

ry the r

esu

lts

of th

e N

ini-5

appra

isal d

rillin

g c

am

paig

n w

ill b

e u

sed in

the e

valu

atio

n o

f th

e

tech

nic

al a

nd e

conom

ical f

easi

bili

ty o

f a fast

deve

lopm

ent of N

ini E

ast

. If

de-

velo

ped to

geth

er w

ith th

e rece

nt R

au o

il dis

cove

ry, t

he li

fe o

f and o

il re

cove

ry

from

the S

iri fi

eld

incl

udin

g th

e s

ate

llite

fi eld

s N

ini a

nd C

eci

lie w

ill b

e p

rolo

nged

and in

crease

d a

nd m

ay

thus

create

sig

nifi

cant added v

alu

e.

On

Cecilie

and L

ulita

, pro

duct

ion h

as

been fairl

y st

able

durin

g the q

uarter,

and n

o d

eve

lopm

ent act

iviti

es

have

take

n p

lace

.

1.6

50

1.7

50

1.0

00

45

0

3.3

00

15

0

1.0

00

So

uth

Arn

e (

DC

S)

Sir

i (D

CS

)

Nin

i (D

CS

)

Cec

ilie (

DC

S)

Lu

lita

(D

CS

)

Bra

ge

(N

CS

)

En

oc

h (

NC

S)

A 83

Exp

lora

tio

n

an

d

Bu

sin

ess

Develo

pm

en

t -

The

exp

lora

tion a

ctiv

ities

durin

g Q

2 2

007 h

ave

focu

sed o

n

the co

mpre

hensi

ve and ve

ry su

ccess

ful

exp

lora

tion

and a

ppra

isal d

rillin

g p

rogra

mm

e.

Alti

nex,

as

opera

tor

for

the

Danis

h

Lic

ence

7/0

6,

com

ple

ted t

he d

rillin

g o

f th

e R

au

-1 e

xplo

ratio

n w

ell

in

the D

anis

h p

art o

f th

e N

orth S

ea. T

he R

au-1

exp

lora

-tio

n w

ell

was

dril

led w

ith t

he jack

-up d

rillin

g r

ig N

oble

G

eorg

e S

auva

geau a

s a v

ertic

al hole

to 2

,571 m

and

enco

unte

red m

ova

ble

oil

in P

ale

oce

ne s

andst

one r

es-

erv

oirs

. A

dditi

onally

, th

ree devi

ate

d si

detrack

s w

ere

dril

led t

o a

ppra

ise t

he l

ate

ral

ext

ent

and s

ize o

f th

e

Rau o

il acc

um

ula

tion. A

ll si

detrack

s fo

und o

il and c

on-

fi rm

ed t

he r

ese

rvoir

model and t

he e

xtent

of

the R

au

oil

acc

um

ula

tion.

An e

xtensi

ve l

oggin

g a

nd s

am

plin

g

pro

gra

mm

e w

as

carr

ied o

ut.

The r

ese

rvoir

pro

duct

ivity

w

as

adequate

ly te

sted b

y m

eans

of s

o-c

alle

d m

ini-t

est

-in

g w

hic

h m

ade a

full

pro

duct

ion test

unnece

ssary

. A

ll geolo

gic

al obje

ctiv

es

were

met,

and t

he d

rillin

g o

f th

e

Rau-1

well

and t

he t

ech

nic

ally

challe

ngin

g s

idetrack

s

were

succ

ess

fully

com

ple

ted o

n t

ime,

with

in b

udget

and w

ithout any

LTA

or se

rious

inci

dents

.

Base

d o

n p

relim

inary

resu

lts, A

ltinex

is o

ptim

istic

with

re

spect

to t

he c

om

merc

ial pote

ntia

l and f

ast

deve

lop-

ment of th

e R

au o

il dis

cove

ry. T

he d

isco

very

is lo

cate

d

just

9 k

m s

outh

west

of th

e C

eci

lie p

roduct

ion p

latfo

rm.

Alti

nex

is n

ow

as

opera

tor

carr

ying o

ut

a c

om

pre

hen-

sive

stu

dy

to e

valu

ate

the s

ize a

nd c

om

merc

ialit

y of t

he

Rau o

il acc

um

ula

tion.

Alti

nex

made, a

s a p

artner in

the d

rillin

g o

f the 2

2/1

4b

-5

(Hu

ntin

gto

n) w

ell

in U

K li

cence

P.1

114, tw

o s

ignifi

cant

dis

cove

ries

of oil

in s

andst

one r

ese

rvoirs

of P

ale

oce

ne

and J

ura

ssic

age.

The d

isco

very

well

was

dril

led t

o a

to

tal

depth

of

13,3

25 f

eet

into

the T

riass

ic S

kagerr

ak

Form

atio

n.

Oil

bearin

g r

ese

rvoir

sandst

ones

were

en-

counte

red in

the P

ale

oce

ne F

ortie

s at a d

epth

of 8,9

60

feet

and i

n t

he U

pper

Jura

ssic

Fulm

ar

at

a d

epth

of

12,7

50 feet.

The

Pale

ocen

e F

ort

ies r

ese

rvoir

was

dril

l ste

m test

ed

thro

ugh p

erfora

tions

from

8,9

75 fe

et t

o 9

,025 fe

et i

n 9

8

feet o

f oil

bearin

g F

ortie

s sa

nd.

The te

st fl

ow

ed 4

1º A

PI

oil

at

a r

ate

of

5,5

77 b

bls

/d a

nd a

ssoci

ate

d g

as

at

an

est

imate

d r

ate

of

3.4

MM

scf/d

thro

ugh a

72/6

4 i

nch

ch

oke

with

a fl o

win

g tubin

g p

ress

ure

of 395 p

si. T

here

w

as

no w

ate

r or

sand p

roduce

d d

urin

g t

he t

est

. F

low

ra

tes

were

seve

rely

rest

ricte

d b

y th

e t

est

equip

ment

util

ized for th

e test

.

The

Up

per

Ju

rassic

Fu

lmar

rese

rvoir

at

12,7

50 f

eet

was

dril

l st

em

test

ed t

hro

ugh 1

01 f

eet

of

perfora

tions

acr

oss

130 f

eet

of

oil

bearin

g F

ulm

ar

sand.

The t

est

fl o

wed 3

9º A

PI o

il up to

a m

axi

mum

rate

of 4

,624 b

bls

/d

and a

ssoci

ate

d g

as

at a r

ate

of 1.6

MM

scf/d

thro

ugh a

64/6

4 in

ch c

hoke

with

a fl

ow

ing tubin

g p

ress

ure

of 310

psi

. T

here

was

no w

ate

r or

sand p

roduce

d d

urin

g t

he

test

. F

low

rate

s w

ere

rest

ricte

d b

y th

e t

est

equip

ment

util

ized for th

e test

.

Further

appra

isal of

the H

untin

gto

n o

il dis

cove

ries

are

pla

nned f

or

the f

ourth q

uarter

usi

ng o

ne o

f O

ilexc

o’s

tw

o

long

term

co

ntract

ed

sem

i-subm

ers

ible

dril

ling

rigs.

The s

truct

ure

s te

sted b

y th

e 2

2/1

4b-5

Huntin

gto

n

exp

lora

tion w

ell are

sig

nifi

cant.

This

appra

isal c

am

paig

n

will

confi r

m t

he s

ize o

f th

e s

truct

ure

s w

hic

h w

ill a

id in

the d

efi n

ition o

f pote

ntia

l deve

lopm

ent so

lutio

ns

goin

g

forw

ard

.

The N

ini-5 a

ppra

isal

well

in t

he D

anis

h N

ini

East

oil

dis

cove

ry w

as

dril

led a

s a v

ertic

al w

ell

and r

each

ed to-

tal d

epth

in c

halk

of D

ania

n a

ge a

t 1793 m

ete

rs b

elo

w

mean s

ea l

eve

l. T

he w

ell

pro

ved t

he p

rese

nce

of

oil

and m

inor am

ounts

of g

as

in P

ale

oce

ne s

andst

ones.

In

ord

er

to a

ppra

ise the e

xtent and q

ualit

y of th

e o

il-bear-

ing rese

rvoir,

corin

g w

as

perform

ed a

nd tw

o s

idetrack

s

were

dril

led w

hic

h a

lso c

onfi r

med t

he p

rese

nce

of

oil.

T

he in

form

atio

n a

cquire

d d

urin

g lo

ggin

g a

nd s

am

plin

g

confi r

med the p

roduct

ivity

of th

e r

ese

rvoir.

The r

esu

lts

of

the N

ini-5

appra

isal w

ell

exc

eeded t

he p

re-d

rill ex-

pect

atio

ns

of

rese

rvoir

connect

ivity

and o

il sa

tura

tion

and s

trength

en t

he e

xpect

atio

n o

f a f

ast

deve

lopm

ent

of th

e N

ini E

ast

oil

dis

cove

ry.

The d

rillin

g o

f the M

aeen

-1 e

xplo

ratio

n w

ell lo

cate

d in

the

south

ern

part o

f Om

an B

lock

4, w

ith E

nC

ana a

s opera

-to

r, w

as

abandoned p

rior t

o re

ach

ing p

lanned to

tal d

epth

(“

TD

”). T

he w

ell

reach

ed a

TD

at 2

427 m

ete

rs w

here

as

the p

lanned T

D w

as

at 3

641 m

ete

rs. T

he M

aeen-1

well

suffe

red s

eve

re d

rillin

g p

roble

ms,

whic

h r

esu

lted i

n a

re

-spud a

nd e

ventu

ally

the d

eci

sion t

o a

bandon t

he

well

prio

r to

havi

ng r

each

ed t

he p

rimary

targ

et

in t

he

well.

It

is a

dis

appoin

tment

that

the w

ell

did

not

reach

th

e p

lanned T

D,

but

the i

nfo

rmatio

n a

nd r

esu

lts f

rom

th

e t

wo w

ells

dril

led d

urin

g t

he c

am

paig

n w

ill b

e u

sed

to e

valu

ate

the w

ay

forw

ard

as

well

as

the r

em

ain

ing

pote

ntia

l of th

e O

man B

lock

3&

4.

Alti

nex

Oil

was

aw

ard

ed o

ne a

dditi

onal l

icence

(PL

442)

in the N

orw

egia

n A

PA

2006 a

ward

s announce

d b

y th

e

Min

istry

of

Petrole

um

and E

nerg

y on 3

1 M

ay

2007.

Alti

nex

Oil

has

20 %

equity

and N

ors

k H

ydro

is o

pera

-to

r w

ith 4

0 %

. T

he li

cence

is lo

cate

d im

media

tely

east

of th

e F

rigg fi e

ld a

nd c

onta

ins

the G

am

ma o

il and g

as

dis

cove

ry p

rove

n b

y tw

o w

ells

, 25/2

-10 S

and 2

5/2

-11.

Alti

nex

belie

ves

that th

is d

isco

very

pote

ntia

lly c

ould

be

deve

loped c

om

merc

ially

, and t

he w

ork

pro

gra

mm

e is

focu

sed to

ward

s an a

ppra

isal o

f the G

am

ma d

isco

very

as

well

as

eva

luatio

n o

f oth

er pro

spect

s in

the li

cence

.

HS

E a

nd

Pers

on

nel - A

ltinex

is in

the fi n

al p

roce

ss o

f beco

min

g p

re-q

ualifi

ed a

s opera

tor

in N

orw

ay.

Sub-

stantia

l effo

rts

have

been p

ut in

to o

rganis

atio

nal d

eve

l-opm

ent

in f

orm

of

managem

ent

syst

em

s and t

rain

ing

of st

aff.

Recr

uitm

ent of new

sta

ff is

contin

uin

g, and S

tig F

røys

-la

nd h

as

join

ed A

ltinex

Oil

as

Gro

up V

ice P

resi

dent a

nd

Pre

sident

for

HS

E.

His

consi

dera

ble

HS

E e

xperie

nce

w

ill b

e o

f im

portance

to A

ltinex

both

opera

tionally

and in

co

nnect

ion w

ith t

he a

pplic

atio

n f

or

pre

-qualifi

catio

n a

s

opera

tor in

Norw

ay.

Oil S

erv

ice &

En

vir

on

men

t -

Our

stra

tegy

rem

ain

s to

sp

lit t

he E

&P

part o

f th

e c

om

pany

repre

sentin

g o

ver

97%

of

the c

om

pany’

s re

venues,

fro

m t

he O

il S

erv

ice

& E

nvi

ronm

ent

div

isio

n.

So f

ar

we h

ave

been u

nable

to

split

the t

wo u

nits

and c

oncl

ude o

n a

struct

ure

that

would

repre

sent

valu

e c

reatio

n f

or

Alti

nex’

share

hold

-ers

. M

anagem

ent w

ill c

ontin

ue to w

ork

on a

split

of th

e

two d

ivis

ions.

A 84

Th

e A

ltin

ex G

rou

p r

ep

ort

ed

se

co

nd

qu

art

er

20

07

op

era

tin

g r

eve

nu

es o

f M

NO

K

33

9.5

an

d e

arn

ing

s b

efo

re i

nte

rests

, ta

x,

de

pre

cia

tio

n a

nd

am

ort

iza

tio

n (

EB

IT-

DA

) o

f M

NO

K 2

27

.9.

Ne

t re

su

lt a

fte

r fi n

an

ce

an

d t

ax w

as M

NO

K –

68

.9.

Th

e

ach

ieve

d o

il, g

as a

nd

NG

L p

rice

s a

dju

ste

d fo

r th

e c

ost o

f p

ut-

op

tio

ns e

xp

irin

g in

th

e s

am

e p

eri

od

wa

s U

SD

64

.77

/bo

e.

In th

e se

co

nd

q

ua

rte

r, p

rod

ucin

g a

sse

ts a

re d

ep

recia

ted

w

ith

M

NO

K 9

3.4

. E

xp

lora

tio

n c

osts

are

dir

ectly e

xp

en

se

d w

ith

MN

OK

10

.8 a

nd

am

ort

iza

tio

n o

f ca

pita

lize

d e

xp

lora

tio

n c

osts

is f

urt

he

rmo

re d

ed

ucte

d w

ith

MN

OK

76

.3.

Imp

air

-m

en

t o

f g

oo

dw

ill a

mo

un

ts t

o M

NO

K 4

.3. A

mo

rtiz

atio

n o

f ca

pita

lize

d e

xp

lora

tio

n

co

st

is r

ela

ted

to

th

e M

ae

en

-1 w

ell

dri

lled

in

Om

an

. O

uts

tan

din

g b

ala

nce

of

ca

pita

lize

d e

xp

lora

tio

n c

osts

as p

er

30

Ju

ne

is M

NO

K 1

73

.

Ne

tfi n

an

cia

ls in

th

e s

eco

nd

qu

art

er

wa

s M

NO

K -

60

.2. T

his

fi g

ure

inclu

de

s in

ter-

est

exp

en

se

s o

f M

NO

K 4

6.1

an

d a

dis

ag

io o

f M

NO

K 1

3.0

re

late

d t

o u

n-h

ed

ge

d

inte

r-co

mp

an

y lo

an

s. A

ll e

xte

rna

l lo

an

s in

fo

reig

n c

urr

en

cy a

re f

ully

he

dg

ed

.

At

the

en

d o

f se

co

nd

qu

art

er,

Altin

ex h

as o

il p

rice

he

dg

ing

in

str

um

en

ts in

pla

ce

, w

hic

h s

ecu

re a

ma

jor

pa

rt o

f e

xp

ecte

d p

rod

uctio

n v

olu

me

ag

ain

st

oil

pri

ce

s b

e-

low

US

D 5

0 p

er

ba

rre

l u

ntil Ju

ne

20

09

.

To

tal e

qu

ity a

nd

lia

bili

tie

s a

s a

t 3

0 J

un

e w

ere

MN

OK

3,7

88

, w

ith

eq

uity o

f M

NO

K

83

0 (e

qu

ity ra

tio

of 2

1.9

pe

r ce

nt)

. At t

he

en

d o

f se

co

nd

qu

art

er 2

00

7, t

he

Gro

up

’s

ne

t in

tere

st

be

ari

ng

de

bt

wa

s M

NO

K 1

,49

2.

Ca

sh

fl o

w f

rom

op

era

tin

g a

ctivitie

s e

nd

ed

at

MN

OK

11

7.3

. A

s a

t 3

0 J

un

e t

he

Gro

up

’s liq

uid

ity is h

ea

lth

y w

ith

MN

OK

22

0 in

ca

sh

.

A 85

ALT

INE

X A

SA

CO

NS

OL

IDA

TE

D I

NC

OM

E S

TA

TE

ME

NT

- I

FR

S

All

fi g

ure

s i

n t

NO

K

2. q

uart

er

- 07

2. q

uart

er

– 0

6

YT

D 2

007

YT

D 2

006

2006

Opera

ting incom

e

339 5

31

244 7

31

634 5

10

365 4

25

1 1

10 0

02

Pro

duction c

ost

64 6

74

49 5

58

133 9

16

70 1

11

211

636

Exp

lora

tion c

ost

s exp

ense

d

10 7

73

3 5

12

20 4

90

3 6

11

30 9

65

Oth

er

opera

ting e

xpenses

36 1

83

25 6

08

63 8

99

40 6

73

116 7

11O

pera

ting r

esults b

efo

re

depre

cia

tion a

nd a

mort

i-sation (

EB

ITD

A)

227 9

01

166 0

52

416 2

05

251 0

29

750 6

90

Depre

cia

tion

and a

mort

isation

175 0

75

105 4

39

308 9

91

122 2

66

455 4

72

Opera

ting r

esult (

EB

IT)

52 8

25

60 6

14

107 2

14

128 7

64

295 2

18

Fin

ancia

l item

s, net

-60 2

49

-17 2

52

-116 7

51

-29 6

69

-138 9

61

Pro

fi t befo

re tax (

EB

T)

-7 4

24

43 3

62

-9 5

37

99 0

95

156 2

57

Tax

-61 5

16

-23 5

10

-82 6

37

-64 9

43

-106 2

45

Net

results

-68 9

40

19 8

52

-92 1

74

34 1

52

50 0

12

ALT

INE

X A

SA

CO

NS

OL

IDA

TE

D B

AL

AN

CE

SH

EE

T -

IF

RS

All

fi g

ure

s i

n t

NO

K

30.0

6.0

7

30.0

6.0

6

31.1

2.0

6

No

n-C

urr

en

t assets

G

oodw

ill

583 8

17

672 8

57

626 3

49

Defe

rred t

ax a

ssets

50 9

29

74 5

79

50 1

38

Lic

ense inte

rests

, explo

ration a

ssets

401 7

85

305 0

97

331 2

71

Oth

er

concessio

ns, pate

nts

and lic

ences

356

500

428

Pro

duction facili

ties

2 2

98 6

48

2 6

02 8

61

2 4

57 5

62

Oth

er

machin

ery

and e

quip

ment

21 1

84

16 9

94

22 6

44

To

tal n

on

-cu

rren

t assets

3 3

56 7

20

3 6

72 8

88

3 4

88 3

92

Cu

rren

t assets

In

vento

ry,

inclu

din

g u

nderlift

81 3

06

69 3

41

35 9

13

Account re

ceiv

able

s a

nd o

ther

curr

ent re

ceiv

able

s

130 1

35

265 5

86

234 4

32

Bank d

eposits, cash in h

and, etc

.

220 3

05

1 4

82 1

38

332 0

38

To

tal cu

rren

t assets

431 7

47

1 8

17 0

65

602 3

83

To

tal assets

3 7

88 4

66

5 4

89 9

53

4 0

90 7

75

Eq

uit

y

Share

capital

197 8

02

196 4

48

196 4

48

Oth

er

equity

631 8

22

704 9

00

751 2

63

To

tal eq

uit

y

829 6

24

901 3

49

947 7

11

Lia

bil

itie

s

Defe

rred t

ax lia

bili

ties

478 4

00

631 1

25

535 0

41

Pro

vis

ions for

oth

er

liabili

ties a

nd c

harg

es

362 7

81

328 9

57

374 9

16

Convert

ible

loan

230 7

62

0

226 7

70

Bond issue

930 9

31

983 0

24

986 5

14

Oth

er

long-t

erm

inte

rest

bearing d

ebt

550 2

74

0

545 4

35

Curr

ent

incom

e t

axes p

ayable

216 2

53

235 2

59

208 4

54

Oth

er

curr

ent lia

bili

ties

189 4

42

2 4

10 2

39

265 9

34

To

tal liab

ilit

ies

2 9

58 8

41

4 5

88 6

05

3 1

43 0

64

To

tal eq

uit

y a

nd

lia

bilit

ies

3 7

88 4

66

5 4

89 9

53

4 0

90 7

75

ALT

INE

X A

SA

CO

NS

OL

IDA

TE

D C

AS

H F

LO

W S

TA

TE

ME

NT

Fo

r th

e p

eri

od

F

or

the p

eri

od

F

or

the p

eri

od

All

fi g

ure

s i

n t

NO

K

01.0

1 –

30.0

6.0

7

01.0

1 –

30.0

6.0

6

2006

Net cash fro

m o

pera

ting a

ctivitie

s

211

636

146 6

94

687 0

55

Net cash fro

m investing a

ctivitie

s

-371 6

15

-539 7

58

-2 8

82 8

01

Net cash fro

m fi n

ancin

g a

ctivitie

s

48 2

45

1 6

89 1

45

2 3

41 7

27

Net ch

ange in

cash

and c

ash

equiv

ale

nts

-1

11 7

33

1 2

96 0

81

145 9

81

Cash a

nd c

ash e

quiv

ale

nts

at th

e b

egin

nin

g o

f period

332 0

38

186 0

57

186 0

57

Cash a

nd c

ash e

quiv

ale

nts

at th

e e

nd o

f period

220 3

05

1 4

82 1

38

332 0

38

CO

NS

OL

IDA

TE

D S

TA

TE

ME

NT

AN

D C

HA

NG

ES

IN

EQ

UIT

Y

Fo

r th

e p

eri

od

F

or

the p

eri

od

F

or

the p

eri

od

All

fi g

ure

s i

n t

NO

K

01.0

1 –

30.0

6.0

7

01.0

1 –

30.0

6.0

6

2006

Bala

nce

at th

e b

egin

nin

g o

f period

947 7

11

257 4

59

257 4

59

Capita

l incr

ease

5 9

38

608 9

53

622 0

22

Reco

gnin

tion o

f sh

are

base

d

paym

ents

/conve

rtib

le b

ond

1 6

33

827

16 4

80

Valu

e a

dju

stm

ent fi n

anci

al i

nst

rum

ents

-1

53

0

-7 8

41

Curr

ency

tra

nsl

atio

n d

iffere

nce

s -3

3 3

32

-42

9 5

78

Net re

sults

for

the p

eriod

-92 1

74

34 1

52

50 0

12

Bala

nce

at th

e e

nd o

f period

829 6

24

901 3

49

947 7

11

A 86

1)

Ba

sis

fo

r p

rep

ara

tio

n

The c

onsolid

ate

d i

nte

rim

fi n

ancia

l sta

tem

ents

for

the s

econd q

uart

er

of

2007 c

om

prises A

ltin

ex A

SA

and its

subsid

iaries.

The c

onsolid

ate

d

inte

rim

fi nancia

l sta

tem

ents

for

the s

econd q

uart

er

of

2007 h

ave b

een

pre

pare

d i

n a

ccord

ance w

ith t

he r

egula

tions o

f O

slo

Sto

ck E

xchange

and I

AS

34 “

The i

nte

rim

fi n

ancia

l sta

tem

ents

”. T

he i

nte

rim

fi n

ancia

l sta

tem

ents

do n

ot

inclu

de a

ll in

form

ation r

equired f

or

annual fi nancia

l sta

tem

ents

and s

hould

for

this

reason b

e r

ead in

conju

nction w

ith A

ltin

-ex’s

2006 c

onsolid

ate

d fi n

ancia

l sta

tem

ents

. T

he a

ccounting p

rincip

les

applie

d a

re the s

am

e a

s those u

sed for

the A

ltin

ex’s

2006 c

onsolid

ate

d

fi nancia

l sta

tem

ents

. T

hese s

tate

ments

were

pre

pare

d in a

ccord

ance

with I

nte

rnational

Fin

ancia

l R

eport

ing S

tandard

s (

IFR

S)

as a

ppro

ved

by t

he E

uro

pean U

nio

n a

nd i

nte

rpre

tations b

y t

he I

nte

rnational

Ac-

counting S

tandard

Board

(IA

SB

).

(2)

Sh

are

cap

ital

In t

he

an

nu

al g

en

era

l m

ee

tin

g o

n 9

Ma

y 2

00

7,

it w

as r

eso

lved t

o c

arr

y

out

a r

evers

e s

plit

of

the c

om

pany’s

share

s.

The r

evers

e s

plit

im

plie

s

that th

e c

om

pany’s

share

s w

ill b

e m

erg

ed 1

0:1

, im

ply

ing that 10 s

hare

s

of par

valu

e N

OK

0,1

0 w

ill a

fter

the r

evers

e s

plit

becom

e 1

share

of par

valu

e N

OK

1,0

0. A

ltin

ex A

SA

has a

share

capital of

NO

K 1

97,8

01,6

08

div

ided into

197,8

01,6

08 s

hare

s,

each s

hare

par

valu

e N

OK

1,0

0.

(3)

Sh

are

op

tio

ns

an

d s

ha

re b

as

ed

pa

ym

en

ts

1,8

21,7

50 o

rdin

ary

share

options w

ere

gra

nte

d to

managem

ent a

nd k

ey

pers

onnel at A

ltin

ex’ board

meeting in S

epte

mber

2005.

The e

xerc

ise

price o

f th

e g

rante

d o

ptions is e

qual to

the m

ark

et

price o

f th

e s

hare

s

on t

he d

ate

of

the g

rant

(NO

K 4

.00).

1,3

53,3

00 o

f th

ese o

ptions w

ere

calle

d in

January

2007 a

nd p

er 30 J

une 2

007, c

om

pany e

mplo

yees h

ad

208,0

00 o

ptions o

uts

tandin

g in c

onnection w

ith t

his

schem

e.

550,0

00

ord

inary

share

options w

ere

gra

nte

d t

o m

em

bers

of

the b

oard

at

the

genera

l assem

bly

in J

uly

2006 a

nd p

er

30 J

une 2

007 m

em

bers

of

the

board

had 3

00,0

00 o

ptions o

uts

tandin

g in

connection w

ith this

schem

e.

2,7

30,0

00 o

rdin

ary

share

options w

ere

gra

nte

d t

o t

he e

mplo

yees a

t A

ltin

ex’

board

meeting 2

5 O

cto

ber

2006 a

nd p

er

30 J

une 2

007 t

he

com

pany’s

em

plo

yees h

ad 2

,490,0

00 o

ptions o

uts

tandin

g in

connection

with th

is schem

e.

100,0

00 ord

inary

share

options w

ere

gra

nte

d to

m

em

bers

of

the b

oard

at

the g

enera

l assem

bly

in M

ay 2

007.

450 0

00

ord

inary

share

options w

ere

gra

nte

d to the e

mplo

yees a

t Altin

ex’ b

oard

m

ee

tin

g 1

2 J

un

e 2

00

7. T

he

exe

rcis

e p

rice

of

all

the

op

tio

ns g

ran

ted

in

2006 a

nd 2

007 i

s N

OK

15.5

0.

The f

air v

alu

e o

f th

e o

ptions h

as b

een

dete

rmin

ed u

sin

g t

he B

lack-S

chole

s v

alu

ation m

odel. C

alc

ula

ted o

p-

tion c

osts

for

the s

econd q

uart

er

2007 a

re M

NO

K 0

,9. A

ll fi gure

s m

en-

tioned a

bove a

re a

fter

the r

evers

e s

plit

of

the c

om

pany’s

share

s.

(4)

Exp

lora

tio

n a

nd

develo

pm

en

t co

sts

fo

r o

il a

nd

gas a

ssets

Exp

lora

tio

n c

osts

are

acco

un

ted

fo

r in

acco

rda

nce

with

th

e s

ucce

ssfu

le

ffo

rt m

eth

od

. T

his

me

an

s t

ha

t a

ll e

xp

lora

tio

n c

osts

in

clu

din

g p

re-

op

era

tin

g c

osts

(se

ism

ic a

cq

uis

itio

ns,

se

ism

ic s

tud

ies,

inte

rna

l m

an

ho

urs

, e

tc.)

are

exp

en

se

d a

s i

ncu

rre

d.

Exce

ptio

ns a

re c

osts

re

late

d

to a

cq

uis

itio

n o

f lic

en

ce

s a

nd

dri

llin

g o

f e

xp

lora

tio

n w

ells

. T

he

se

co

sts

a

re t

em

po

rari

ly c

ap

ita

lize

d p

en

din

g a

n e

va

lua

tio

n o

f th

e e

co

no

mic

s

of

the

exp

lora

tio

n d

rilli

ng

fi n

din

gs.

If h

yd

roca

rbo

ns a

re d

isco

ve

red

, th

e c

osts

re

ma

in c

ap

ita

lize

d.

If n

o h

yd

roca

rbo

ns a

re f

ou

nd

or

if t

he

dis

co

ve

rie

s a

re n

ot

co

mm

erc

ially

pro

fi ta

ble

, th

e d

rilli

ng

co

sts

are

ex-

pe

nse

d. A

ll co

sts

of

de

ve

lop

ing

oil

an

d g

as fi e

lds a

re c

ap

ita

lize

d.

(5)

Dep

recia

tio

ns a

nd

am

ort

izati

on

s

Depre

cia

tion

of

pro

duction

equip

ment

is

calc

ula

ted

in

accord

ance

with t

he u

nit o

f pro

duction m

eth

od.

The a

cquis

itio

n c

ost

for

Altin

ex O

il D

enm

ark

A/S

is s

hare

d b

etw

een d

ebt

and e

quity i

n a

ccord

ance w

ith

IFR

S p

rincip

les.

The a

dded v

alu

es w

hic

h a

re a

llocate

d t

o p

roducin

g

fi eld

s w

ill b

e a

mort

ized in

accord

ance w

ith th

e u

nit o

f pro

duction m

eth

od.

(6)

Taxes

Incom

e t

ax e

xpenses f

or

the p

eriod a

re c

alc

ula

ted b

ased o

n t

he t

ax

rate

applic

able

to t

he e

xpecte

d t

ota

l annual

earn

ings.

The o

rdin

ary

in

com

e t

ax is 2

8%

in b

oth

Denm

ark

and N

orw

ay.

In a

dditio

n,

there

is

an e

xtr

a p

etr

ole

um

tax o

f 50%

rela

ted to e

xplo

ration a

nd p

roduction o

n

the N

orw

egia

n C

ontinenta

l S

helf.

In D

enm

ark

there

is a

petr

ole

um

tax

of

70%

, but

at

curr

ent

oil

price levels

Altin

ex O

il D

enm

ark

A/S

will

not

be in a

positio

n w

here

they h

ave to p

ay the e

xtr

a p

etr

ole

um

tax.

The defe

rred ta

x and ta

x advanta

ge are

based on th

e diff

ere

nce

betw

een b

ook v

alu

e a

nd fi s

cal valu

e o

f assets

and lia

bili

ties.

(7)

Go

od

wil

l – D

efe

rred

tax l

iab

ilit

ies

The a

cquis

itions

of

DE

NE

RC

O O

IL A

/S,

the B

rage fi

eld

and t

he E

noch

fi e

ld h

ave

been t

reate

d i

n a

ccord

ance

with

IF

RS

3 –

Busi

ness

Com

bi-

natio

ns.

The a

cquis

ition p

rice

s are

allo

cate

d t

o a

ssets

and l

iabili

ties

at

the e

stim

ate

d f

air v

alu

es

at

the a

cquis

ition d

ate

s. T

he t

ax

base

of

the

acq

uired a

ssets

and li

abili

ties

is n

ot a

ffect

ed b

y th

e a

cquis

itions.

As

all

ac-

quis

itions

are

tre

ate

d a

s B

usi

ness

Com

bin

atio

ns,

the d

iffere

nce

betw

een

new

fair v

alu

es

and b

ooke

d v

alu

es

prior

to t

he a

cquis

itions

resu

lts in a

ch

ange in

the D

efe

rred tax

liabili

ty. T

he c

hange in

Defe

rred tax

liabili

ty in

tu

rn a

ffect

s G

oodw

ill. A

ll G

oodw

ill in

the c

onso

lidate

d b

ala

nce

sheet i

s th

e

equiv

ale

nt of th

e v

alu

e o

f th

e in

crease

d D

efe

rred tax

liabili

ty a

t th

e d

ay

of

the a

cquis

itions.

Goodw

ill is

, acc

ord

ing to

IFR

S, n

ot a

mort

ized, b

ut w

ill b

e

subje

ct to im

pairm

ent te

stin

g.

Oslo

, 10 A

ugust

2007,

Board

of A

ltin

ex A

SA

A 87

ww

w.a

ltin

ex

oil

.co

m

For

more

deta

ils,

ple

ase c

onta

ct

CE

O O

laf

I. E

llingsen +

47 9

08 2

6 4

85,

or

CF

O S

igurd

Kayser

+47 9

92 5

3 3

61

This

inte

rim

report

will

only

be p

resente

d a

t our

website w

ww

.altin

exoil.

com

and n

ot be d

istr

ibute

d

by p

ost.

A 88

Appendix 6: Annual report for TODL for 2007

A 89

A 90

A 91

A 92

A 93

A 94

A 95

A 96

A 97

A 98

Appendix 7: Auditor statement on pro forma fi gures

A 99

A 100

Appendix 8: Subscription Form for the Subsequent Offering

NORECO ASA

SUBSEQUENT OFFERINGMay/June 2008

SUBSCRIPTION FORMThe terms and conditions for the Subsequent Offering are set out in the Prospectus dated 27 May 2008 (the“Prospcetus”). Properly completed subcription forms must be received by Pareto Securities AS, P.O. Box 1411 Vika, N-0115 Oslo, telephone +47 22 87 87 00, telefax: +47 22 83 43 09 or Glitnir Securities AS, P.O. Box 1474 Vika, N-0116 Oslo, telephone +47 22 01 63 00, telefax: +47 85 02 81 98 by 13 June 2008 at 16:30 hrs. (Norwegian time). SUBSCRIPTION GUIDELINESThe new shares offered in the Subsequent Offering (the “New Shares”) can be subscribed from and including 29 May to and including 13 June 2008 at 16:30 hours (CET). Existing shareholders in Norwegian Energy Company ASA (”NORECO”) as of 25 April 2008, as registered in the VPS on 30 April 2008, who were not given the opportunity to subscribe for shares in the Private Placement (“the Eligibible Shareholders”) will be entitled to preferred allocation in the Subsequent Offering. Subscription rights will issued in connection with the Subsequent Offering. For each 8 shares owned as per 25 April 2008, Eligible Shareholders will be be entitled to preferred allocation of 1 OfferShare. Over-subscription is allowed. The subscription price for one New Share is NOK 23.50 which equals the subscription price in the Private Placement. See section 6 in the Proscpectus for details. In case of any discrepancies between the Subscription Form and the Prospectus, the Prospectus shall prevail.The subscriber bear the risk of any delay in the postal communication, busy facsimiles and data problems preventing orders from being received by the Managers.

PAYMENT FOR THE SUBSCRIBED SHARES Each subscriber provides by signature on this subscription form Pareto Securities AS an irrevocable power of attorney to debit a specified Norwegian bank account for payment of the allotted New Shares. Debit of the account will take place on or about 20 June 2008 (see below for specification of bank account). Should the subscriber have insufficient funds or payment be delayed for any reason, a penalty interest will be payable on the delayed sum according to the Norwegian Act on Interest on Overdue Payements of 17 December 1976. In such event, Noreco also reserves the right to cancel the subscription, or to sell the allotted New Shares at the subscriber’s risk and cost. The allotted New Shares will not be transferable before they are fully paid and registered at the subscribers VPS-account. Such registration is expected to occur on or about 25 June 2008 at the earliest.

Notification of allottments will be sent out on or about 17 June 2008. Payment for the allotted New Shares must be must be available on the subscribers specified bank account on or by 20 June 2008.

Subscribers VPS-account no. No. of subscription rights per 25.04.08:

No. of New Shares subscribed: (For official use: Serial no.)

Amount to be paid per Share

NOK 23.50 =

Total amount to be paid

NOK

Pursuant to the terms and conditions set out in the Prospectus, I/we hereby irrevocable subscribe for the above number of New Shares.

I/We hereby give an irrevocable power of attorney to Pareto Securities AS and Glitnir Securities AS for the direct debiting from my Norwegian bank account for the allotted amount (no. of allotted shares x subscription price). (Bank account no. 11 digits)

NB! If the bank account number for debit is not specified, the subscription form can not be registered.

Subscription place and date

Must be dated in the subscription period Binding signature. The subscriber must be of age.

When signing per procura, documentation in form of company certificate or power of attorney must be enclosed.

DETAILS OF THE SUBSCRIBER

Subscribers VPS account no.

Subscribers first name

Subscribers surname/company name

Street address (private subscribers: state home)

Postal code and area

Date of birth and national ID number (11 digits) MUST BE COMPLETED

Bank account number

Nationality of subscriber

PLEASE NOTIFY THE REGISTRAR OF ANY CHANGES:

E-mail address/Phone number (daytime)

This Subscription Form is delivered only together with the Prospectus dated 27 May 2008 for Noreco.

Norwegian Energy Company ASAHaakon VII’s g 9P.O. Box 550 Sentrum4005 Stavanger NorwayTel: +47 99 28 39 00Fax: +47 51 53 33 33 www.noreco.com

Pareto Securities ASADronning Maudsgate 3P.O. Box 1411 Vika 0115 Oslo NorwayTel: +47 22 87 87 00Fax: +47 22 87 87 10www.pareto.no

Glitnir Securities ASHaakon VII’s g 10P.O. Box 1474 Vika0161 Oslo NorwayTel: +47 22 01 63 00Fax: +47 22 01 63 10www.glitnir.no

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION INTO OR IN THE UNITED STATES, CANADA, JAPAN OR AUSTRALIA.