Governmental approval granted for Noreco’s acquisition of Shell’s Danish upstream assets

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Oslo, 29 April 2019: Norwegian Energy Company ASA ("Noreco" or the "Company") hereby announces that Danish Energy Agency (“DEA”) has granted its approval for Noreco’s acquisition of Shell’s Danish upstream assets.

“Through this transformational acquisition, Noreco will become the second largest oil and gas producer in Denmark and establish itself as a considerable exploration and production company in the North Sea,” says Riulf Rustad, Chairman of the Board of Noreco.

Included in the acquisition are proven and probable (2P) reserves of 209 million barrels of oil equivalents (mmboe) based on an independent CPR assessment as per year-end 2017, of which 65% are liquids. The seller’s share of production from DUC in 2017 was 67 thousand barrels of oil equivalents per day (mboepd).

Further details of the transaction

As previously informed, Altinex AS, a wholly owned subsidiary of Noreco, acquires 100% of the shares in Shell Olie- og Gasudvinding Danmark B.V. ("SOGU") (the “Acquisition”) and thereby becomes the indirect owner through SOGU of inter alia:

• a 36.8% interest in Danish Underground Consortium (“DUC”), which includes a 36.8% interest in the DUC facilities, wells and interconnecting pipelines;
• a 100% interest in Shell Olie- og Gasudvinding Denmark Pipelines ApS (“SOGUP”), which will own a 41.4% interest in the Tyra West – F3 gas pipeline;
• a 36.8% direct interest in the 8/06 Area B License including its corresponding entitlement to hydrocarbons won and saved under the 8/06 Area B License; and
• a 18.4% interest in the Lulita Field unitization and operations, including its corresponding entitlement to hydrocarbons won and saved under the Lulita Field. In addition Noreco has held a 10% interest in the Lulita Field for many years, which means that the Company’s interest in the field, post transaction, will be 28.4%.

The DEA’s approval is subject to inter alia the following conditions:

• Guarantees from Noreco on behalf of SOGU and SOGUP towards the Danish state for obligations in respect of licence 8/06, area B and the Tyra West – F3 gas pipeline to be acquired;
• Secondary liability declarations from Shell towards the Danish state for SOGU´s 36.8% ownership in DUC and SOGUP´s 41.4% ownership in the Tyra West – F3 gas pipeline;
• Required services level agreement internal within the Noreco group regarding support functions to subsidiary companies approved by the DEA;
• Certain subsequent conditions related to the Noreco organization.

Following the approval, Noreco will work towards closing the Acquisition by the end of May 2019.

In connection with closing of the Acquisition, it is expected that inter alia the following shall take place (as have been previously informed):

• The release of funds to Altinex AS from the seven-year Reserve Based Lending Facility;
• Noreco’s repayment of the outstanding NOR10 bond loan;
• The completion of the directed share capital increase of USD 352 million in Noreco (the “Private Placement”), as resolved on the extraordinary general meeting held on 8 November 2018 (the “EGM”); 
• The completion of the convertible bond loan issue in Noreco of USD 160 million, as resolved on the EGM (the “Convertible Bond”);
• Preparations for the launch of the USD 40 million subsequent offering towards eligible existing shareholders of Noreco as of 16 October 2018, as resolved on the EGM (the “Subsequent Offering”);
• Approval of the prospectus in relation to the Private Placement and the listing of the new shares on the Oslo Stock Exchange, listing of the bonds in the Convertible Bond on the Oslo Stock Exchange and the Subsequent Offering (the “Prospectus”).

It is currently expected that the Prospectus will be approved by the Financial Supervisory Authority of Norway in early June 2019, with commencement of the subscription period for the Subsequent Offering shortly thereafter.

Contacts:

 Riulf Rustad, Chairman of the Board, +47 900 87 703 or ir@noreco.com

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About Norwegian Energy Company ASA

Noreco is a publicly owned company with focus on the oil, gas and offshore industry. The company's shares are listed on the Oslo Stock Exchange (ticker NOR). For further information, please visit: www.noreco.com.

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