Offer for DNO shares

Petrolia Invest AS wishes to initiate an industrial sale, restructuring or merger of DNO International ASA ("DNO") in order to maximize shareholder value and offers to purchase up to 33.33% of the outstanding shares in DNO for NOK 10 per share with a consideration of shares in Petrolia ASA.

Petrolia Invest AS believes that the result of the recent Extraordinary General Meeting in DNO has not added any material value for DNO shareholders. Petrolia believes that in order to maximize value for all DNO shareholders it is necessary for the company to be restructured, merged or potentially sold.

Petrolia is therefore taking the initiative to start a process aimed at selling, restructuring or merging DNO with another industrial player at favorable terms for all DNO`s shareholders. In this respect, Petrolia recommends that all DNO shareholders should form a group with the common goal of selling, restructuring or merging DNO, based on a price that reflects the underlying value in DNO. Petrolia is offering DNO shareholders a vehicle to fulfill these objectives by tendering their DNO shares for NOK 10 per share in exchange for Petrolia shares or alternatively inform Petrolia about their support for an industrial sale, restructuring or merger of DNO.

The offer from Petrolia Invest AS represents a significant premium to the latest share prices of DNO of NOK [6-7] per share. This depressed DNO share price reflects the negative view by the stock market of the merger proposal and the effective hostile related party takeover attempt by RAK Petroleum. When the merger negotiations started in February 2011 the DNO share price was above NOK 10 per share.

Petrolia’s book value per share on the 30th June 2011 was approximately NOK 5 per share while the Petrolia share price is lower due to tightly controlled and illiquid trade conditions. The number of Petrolia shares offered per DNO share will be based on a book building process over time.

The forward ambition for Petrolia Invest’s single purpose DNO shareholding vehicle, is to sell, merge or restructure DNO and to realize a minimum price of NOK 12 per DNO share. This is almost double the latest DNO closing price. All Petrolia shareholders will then receive the option of a cash dividend and, or a share dividend for the majority of the price achieved for DNO`s shares in such sale, restructure or merger.

In respect of the potential share price that might be achieved in a sale, restructuring or merger, we support the DNO management valuation presented to the DNO Board of Directors and the auditor Finn Ole Edstrøm from Ernst & Young in June 2011, of a risked valuation of DNO of about NOK 19.5 per share with an unrisked valuation of NOK 29.0 per share. The auditor has a full copy of this valuation report, which is neither referred to nor disclosed in the Prospectus “Equivalent” documents. These figures are comparable with the unrisked valuation of NOK 19.5 per share presented by Degolyer and MacNaughten (Competent Person Report) without the RAK licenses in the Prospectus “Equivalent” Document.

The offer is subject to approvals of all regulatory authorities, laws and regulations, financing and board approvals.

DNO shareholders interested in selling their DNO shareholdings to Petrolia Invest AS for a consideration in Petrolia shares, or interested in commiting to support an industrial sale, restructure or merger of DNO International in order to maximize shareholder value, please send an email to;

Petrolia`s Managing Director Kjetil Forland:  kjetil.forland@petrolia.no