Annual report 2022

Contents

PetroNor E&P in brief

......................................................

4

CEO letter

...........................................................................

6

Portfolio

..............................................................................

8

Annual statement of reserves

......................................

16

ESG report

.......................................................................

25

Corporate governance

..................................................

34

Board of directors

..........................................................

40

Management

..................................................................

44

Board of directors’ report

.............................................

47

Statement of remuneration

.........................................

64

Financial statements

.....................................................

66

Statement of directors' responsibility

.....................

117

Independent auditor’s report

.....................................

118

Contact

..........................................................................

124

3

Our business locations

1

CONGO BRAZZAVILLE

16.83 per cent indirect

participating interest in PNGF

Sud offshore licence group.

2

NIGERIA

13.1 per cent economic interest

in Aje Field in licence OML113.

3

THE MSCGC BASIN

The Gambia A4 licence

90 per cent interest.

Guinea-Bissau Bissau 100

per cent interest in the

Sinapa

(Block 2) and Esperança

(Blocks 4A and 5A) licences.

90 per cent operated interest in

the Senegalese ROP and SOSP

licences subject to arbitration.

2

1

Business Model

OUR MISSION

Our mission is to generate

shareholder value by

leveraging the technical and

commercial skillset of the

company to enhance our

reserve base, production, and

cash flow.

PetroNor E&P is committed

to the highest standards of

corporate governance, and to

deliver operational excellence

safely and efficiently.

OUR VISION

Our strategic vision is to steadily

build the company into a full

cycle, Africa-focused exploration

and production company with

an emphasis on producing and

developing assets with upside

potential.

OUR WORK

We are an independent oil and

gas exploration and production

company with multiple licenses

in countries in West Africa – the

Republic of the Congo, Guinea-

Bissau, Senegal, The Gambia,

and Nigeria. The company has

amassed a diverse and high-

quality portfolio comprising

economically robust production,

development upside, and highly

prospective exploration targets

in West Africa.

PetroNor E&P in brief

PETRONOR E&P ASA

ANNUAL REPORT 2022

4

About PetroNor E&P

Net profit (USD million):

34.3

2021:

21.1

EBITDA (USD million):

96.4

2021:

61.9

EBIT (USD million):

87.1

2021:

57.3

2P Reserves (MMboe):

20.3

2021:

21.1

2C Contingent resources (MMboe):

37.1

2021:

12.7

Market capitalisation (USD million):

111.4

2021:

131.8

Earnings per share (USD cents):

1.96

2021:

1.06

Net debt (USD million):

13.8

2021:

18.7

Delivered an average

net allocated

production of 4,021

bopd in 2022. 6

wells in 2022. The

sucessful infill drilling

program continued

with additional 4

scheduled for 2023.

Lifting of 800,177

bbls at average

realised price of USD

90.99/bbl.

The Gambia A4 licence

was awarded for an

initial exploration

period of three years.

Seeking partners

to participate in

the drilling of the

Atum-1X well.

Acquisition of

interest in OML113

offshore Nigeria was

completed.

The process to

redomicile from

Australia to Norway

was completed

successfully and

PetroNor E&P ASA

listed on Oslo Stock

Exchange on 28

February 2022.

Renegotiation of

debt facility of USD

11 million.

Extended the board

with the addition

of

two new directors

appointed in January

2023.

2022 Highlights and

subsequent events

PETRONOR E&P ASA

ANNUAL REPORT 2022

About PetroNor E&P

Interim Chief Executive Officer:

A transformative year

PRODUCTION ABOVE EXPECTATIONS

As part of the infill drilling programme in

Congo, four infill wells in the Litanzi field were

successfully added during the year, producing

with rates significantly above expectations. The

rig subsequently drilled two infill producers in

Tchibeli Northeast. The final allocated average

net production from the PNGF Sud field complex

during 2022 was 4,021 bopd, but following the

addition of the increased well capacity from the

infill program, average working interest increased

to consistently greater than 5,200 bopd during 1

st

quarter 2023.

Separately, one Tchibeli NE well includes a deeper

exploration target that discovered an oil column

in the Vandji sandstones that is being evaluated to

understand future regional potential.

The Dagda jack-up rig that successfully drilled

four Litanzi wells and two Tchibeli wells during

2022 is now being repurposed and converted to

a permanent production platform. Meanwhile

the Axima jack-up rig that will take over drilling

responsibilities on the infill drilling programme is

currently operating for another partnership and is

expected to return to work on the Tchibeli field in

Q2 2023.

NEW LIFTING AGREEMENT

During the year, to mitigate delays to implementing

a new oil sales agreement with ADNOC, the

company re-established lifting arrangements

with operators at the Djeno terminal. These

arrangements delivered the lifting and sale of more

than 800 thousand bbls during the 4

quarter at an

average oil price of USD 90.99/bbl, generating full-

year revenue of USD 146 million, compared with

USD 106 million in the previous year. The increase

is driven by higher oil prices.

As a result, the group reported an EBITDA of USD

96.4 million for the year ended 31 December 2022,

compared to USD 61.9 million in the same period in

2021. Net profit attributable to the equity holders

of the parent more than doubled, from USD 12.3

million in 2021 to USD 26.9 million for the year

ended 31 December 2022.

Strong cash flow from operating activities and new

debt facilities resulted in a cash position of USD

24.8 million at year-end.

GOOD PROGRESS WITH THE AJE

RE-DEVELOPMENT

The long-awaited acquisition of Panoro’s interest

in Oil Mining Lease no. 113 offshore Nigeria was

completed during the year, and PetroNor now has

a seat at the licence group table. The acquisition of

the ownership interest in the Aje field is strategically

attractive and supports our stated growth strategy

of acquiring assets that add production, material

reserves, and resources to the company. The

planned gas deliveries to onshore West Africa also

represent opportunities within the ESG space. We are

continuing with the work to finalise elements of the

transaction with the licence operator, YFP. Meanwhile,

work progresses on the Aje field re-development

plan with partners and gas off-takers.

LARGE SCALE EXPLORATION PROSPECTS

PetroNor has a portfolio of large scale exploration

prospects in addition to those surrounding its fields

in the Congo and Nigeria. In October 2022, the A4

licence in The Gambia was awarded to the Company

and its partner, the Gambia National Petroleum

Corporation (GNPC). PetroNor is the operator with

a participating interest of 90 per cent, with GNPC

holding 10 per cent.

The PetroNor exploration team have been consistent

and passionate advocates for the potential of this

part of the Atlantic margin. It is our shared objective

with our partner that these efforts will lead to a

future drilling program.

Well planning for the Atum-1X exploration well are

being advanced for the licences in Guinea-Bissau,

based on encouragement from farm-out discussions.

In Senegal, the arbitration process to resolve the

legacy licence dispute is completed and awaiting

ruling.

With this as the backdrop, I would like to thank our

team and our partners for their great efforts in 2022.

THE IMPORTANCE OF SAFE AND COMPLIANT

OPERATIONS

Although 2022 has been a year with good progress

for PetroNor, the ongoing investigations from the

National Authority for Investigation and Prosecution

of Economic and Environmental Crime in Norway

and the Department of Justice in the US continue to

represent a difficult backdrop for the company. As

previously stated, the charges are brought against

individuals and neither PetroNor nor other group

companies have been charged.

I want to reiterate that the company takes

compliance very seriously and has refreshed it’s

internal procedures consistent with a Norwegian

governance model. The company has set up a

dedicated board sub-committee to manage the

company’s response to the investigations and has

engaged an independent law firm. Part of the agreed

remit for this independent advisor has been to

conduct a targeted fact-finding process. A summary

from this process is being reviewed by the PetroNor

board and has been shared with the investigating

authorities consistent with the company’s stated

policy of co-operation. At the time of writing this

report, there are no further updates in relation to

the progress of the investigations.

FORWARD STRATEGY

The success of our infill well investments achieved

during 2022 has given evidence to the long-

term reserve growth that is possible from our

producing assets. The cash flow from oil sales

funds these investments and supports our

development and exploration assets. In addition

the company continues to consider inorganic

growth opportunities. As our production is largely

unleveraged, we have an opportunity to leverage

further to execute on value-accretive M&A

opportunities. The board is also considering other

approaches to deliver value for shareholders as our

cash position strengthens.

Sincerely,

Jens Pace

Interim CEO PetroNor E&P

– PetroNor E&P is well positioned to deliver

shareholder value from both its existing portfolio

and new opportunities.

PETRONOR E&P ASA

ANNUAL REPORT 2022

Production:

Congo-Brazzaville

PetroNor holds a 16.83 per cent indirect participation

interest in the licence group of PNGF Sud (Tchibouela

II, Tchendo II and Tchibeli-Litanzi II) through Hemla

E&P Congo SA. In addition, the group holds a right

to negotiate, in good faith, along with the contractor

group of PNGF Sud, the terms of the adjacent licence

of PNGF Bis. If the group is able to secure entry into a

production sharing contract, the group expects to be

granted a 23.6 per cent indirect interest in PNGF Bis.

PNGF Sud is operated by Perenco, a world-leading

specialist in low-cost brownfield optimisation of

mature production assets like PNGF Sud.

Production has continued to grow and operating cost

per unit production has been significantly reduced,

all achieved through improving maintenance

routines, production processing capacities along

with field integrity investments in a stepwise and

prudent manner.

Tchendo debottlenecking adding (40 kbwpd) water

treatment capacity and export pumps (3x20 kbfpd)

to allow additional fluids from both Tchendo and

Litanzi.

Tchendo

Litanzi

Tchibouela

Tchibouela east

Louissima

Lusom

Suem

Tchibeli

Tchibeli

NE

Net interest:

16.8%

Producing wells:

69

(net) (MMbbl):

18.5

2C Resources

(net) (MMbbl):

13.9

Accumulated

produced

1 January 2022

(MMbbl):

Gross

477

The license partnership is now well underway on

its announced 17 well infill drilling programme with

a three-year investment programme of some USD

400 million to deliver increased production and

reserves.

PNGF SUD

Licence overview

Since the entry of the new contractor group in early

2017, incremental improvements via well workovers,

surface production process improvements and

structural integrity and HSE improvements have

resulted in year-on-year growth in production at a

relatively low CAPEX spending. The goal has been

to optimise the existing well stock by re-activating

producers and injectors, re-allocating production

intervals, increasing well lift capacities as well as

increasing and managing production capacities

and intra-field power consumption between the 8

wellhead-platforms in PNGF-Sud.

Licence activity

The average gross PNGF production was 23,891

bopd in 2022 with a continued low lifting cost of

$12.4/bbl. The workover programme continued

successfully in 2022. On the surface side, significant

0

5

10

15

20

25

30

35

Tchibouela

■

Tchibouela East

■

Tchendo

■

Tchibeli Albien

■

Tchibeli NE

■

Litanzi Albien

Jan

2017

Jun

2017

Nov

2017

Apr

2018

Sep

2018

Feb

2019

Jul

2019

Des

2019

May

2020

Oct

2020

Mar

2021

Aug

2021

Jan

2022

Jun

2022

Apr

2023

Nov

2022

Sep

2023

investments were made on additional water

handling capacity, additional export pumps

plus starting the commissioning on additional

generators for intra-field power generation.

Correspondingly, integrity improvements were

made on several steel structures.

The 17 well infill drilling programme started in 2021.

A total of 6 wells on Litanzi and Tchibeli NE were

drilled between November 2021 and November

2022. Drilling progress was initially significantly

delayed due to failure of equipment such as the

top-drive system and generators. The effect of

these delays on the field was however offset by

significantly better production performance than

expected including the addition of an exploration

discovery in the pre-salt (Vanji) in Tchibeli NE which

was immediately put on production.

Production capacity thus increased from an

average 20.6 kbopd in 2021, via an average 2022

production of 23.9 kbopd to a current production

capacity significantly above 30 kbopd in the initial

period of 2023. The drilling rig used for the drilling

of these two campaigns, Petrofor Dagda, has now

been converted to a production platform in Tchibeli

NE and the derrick has been removed. Another

jack-up rig, the Petrofor Axima, is currently drilling

a four well campaign for Perenco before returning

to continue the planned infill drilling programme

on Tchibeli and Tchendo expected to start in the

second quarter of 2023. Also planned in 2023 is the

commissioning of a refurbished 14 slot production

jack-up to be added to Tchendo in the second half

of the year.

0

5

10

15

20

25

30

35

Tchibouela

■

Tchibouela East

■

Tchendo

■

Tchibeli Albien

■

Tchibeli NE

■

Litanzi Albien

Oil production

kbopd

Jan

2022

Feb

2022

Mar

2022

Apr

2022

May

2022

Jun

2022

Jul

2022

Aug

2022

Sep

2022

Oct

2022

Nov

2022

Dec

2022

Jan

2023

Feb

2023

Apr

2023

Jun

2023

Aug

2023

Mar

2023

May

2023

Jul

2023

Sep

2023

Oct

2023

Nov

2023

Dec

2023

Located North-West of PNGF Sud, PNGF Bis license

contains two discoveries, Louissima and Loussima

SW. The two discoveries are proven by three wells

drilled between 1985 and 1991. The partnership has

a right to negotiate the licence on given terms, such

negotiations would see PetroNor receive a 23.6 per

cent indirect participation in PNGF Bis.

The three discovery wells tested from 1,150 to 4,700

bopd of light, good quality oil. Perenco has recently

made a detailed reinterpretation, 3D modelling

and facilities study for the Loussima SW discovery,

yielding >100 MMbbl of in-place resources and a

possible tie-back to PNGF Sud via pipeline.

AGR Petroleum Services warrants 2C resources

of 29 MMbbl including verification of the tie-back

scenario given above.

PETRONOR E&P ASA

ANNUAL REPORT 2022

11

Portfolio

West African

Gas

Pipeline

Lagos

OML-113

Ogo

Aje

Seme

Development:

Nigeria

Aje Production AS is being created as a joint

venture between PetroNor and Yinka Folawiyo

Petroleum Deep Water Limited (“YFP-DW”)

and this venture will lead the technical and

management efforts in the next phase of the Aje

field development. PetroNor will contribute the

acquired interest in Aje, and YFP-DW will contribute

all interest in Aje to the Aje Production JV.

PetroNor’s ownership will be 52 per cent in

Aje Production which will hold a 15.5 per cent

participating interest and an economic interest in

the order of 38.755 per cent in OML 113 during the

majority of the project period. YFP has undertaken

to align its voting rights with Aje Production’s

objectives in the development of the Aje field.

Licence overview

The Aje Field was discovered after drilling of the

Aje-1 well in 1996. The OML-113 block covers 835

km² with water depths ranging from 100m to

1,500m. Five wells have been drilled; oil production

is from Turonian and Cenomanian age reservoirs.

Overlying the Turonian oil rim is a significant

gas-condensate discovery which has not been

developed.

Forward plan

The development plans will target the gas,

condensate, and oil in a low-risk development

plan. Wet gas will be brought to shore for further

processing and extraction of LPG. The Nigerian

government encourages stop-flaring programmes

and the country is in dire need of electrical power.

According to the UN sustainability goals, gas is

an important transition fuel for Africa. Thus, in

addition to closing down existing gas flaring in the

field and piping additional gas to shore, this is in

sum a particularly ESG-friendly project in these

parts of the world.

Development plans for the Aje gas condensate and

additional oil are under discussion jointly with the

license partners. The plan is to proceed toward

an FID involving changeout of the FPSO, drilling

further gas and oil development wells, building a

30 km pipeline to shore to a receiving LPG plant

close to the export compressor station of the

West African Gas Pipeline (WAGP). Condensate

and oil will be produced and offloaded offshore

while offtake agreements will include gas sales

and swap arrangement for gas and LPG products.

The previous FPSO was released

from the field

as it has reached the end of economic field life

and does not have the proper ratings for gas

development.

Albeit delayed, significant progress has been made

on negotiations of gas offtake contracts and the

company is moving forward both in our discussions

with license partners and relevant financing

institutions.

PetroNor hopes to progress the project toward

final investment decision late 2023.

The landmark

Lagos bridge in

Nigeria.

PETRONOR E&P ASA

ANNUAL REPORT 2022

13

Portfolio

SOSP

A4

Block 2

(Sinapa)

Block 4A

(Esperança)

Shelf edge

Block 5A

(Esperança)

ROP

Guinea-

Bissau

Sinapa-2

and

Esperança

4A/5A

Net working interest:

100%

Area in km

2

:

4,963

Operator:

PetroNor

E&P AB

The

Gambia

Net working interest:

90%

Area in km

2

:

1,376

Operator:

PetroNor E&P

Exploration:

The MSGBC Basin

GUINEA-BISSAU SINAPA-2 AND ESPERANÇA

4A/5A LICENCES

Licence overview

Following acquisition of the Sinapa (Block 2) and

Esperança (Blocks 4A and 5A) licenses offshore

Guinea Bissau in May 2021. PetroNor assumed

operatorship and an interest of 78.57 per cent in

both licenses. The two main prospects, Atum and

Anchova, are commercially attractive, low risk

prospects, with net unrisked, combined summed

mean recoverable, prospective resources of

467 MMbbl for upper and lower Albian targets

(PetroNor estimate). Oil has already been

discovered on the Sinapa licence, Atum and

Anchova prospects are analogous to the Sangomar

field to the North along the margin in Senegal.

Success at Atum-1X will be a highly significant play

extending well and will open up further exploration

activity in the country.

PetroNor has completed interpretation of the 3D

seismic data across both licences and is seeking

partners to participate in the drilling of the Atum-1X

well.

The purchase of SPE Guinea Bissau AB from

Svenska Petroleum Exploration AB received formal

in-country governmental approval in late April 2021.

Subsequently, in May 2021, the Svenska subsidiary

was formally renamed PetroNor E&P AB. The

current exploration phase of both Guinea-Bissau

licences end in October 2023. All minimum financial

commitments have been met but the drilling

obligation is outstanding.

PetroNor has re-initiated planning for drilling the

Atum-1X well, building on extensive preparation

work carried out by the previous operator,

supported by EXCEED Energy based in Aberdeen.

Long lead items required for drilling operations

were already secured before PetroNor took over

operatorship and a number of key pre-drill studies

have now been completed and more are underway.

EXCEED and PetroNor are fully engaged in drilling

preparations whilst continuing efforts to secure a

partner.

THE GAMBIA A4 LICENCE

Licence overview

In November 2022, the company was awarded

a new 30-year lease for the A4 licence with

terms based on the newly developed Petroleum,

Exploration and Production Licence Agreement

– PEPLA model. A proportion of prior sunk costs

associated with Block A4 have been carried into

the new agreement. The first three-year period

of the licence has been split into two 18 month

periods. The first period involves an extensive

work program with a drill or drop decision in

May 2024.

PetroNor has licenced additional 3D PSDM seismic

data (TGS Jaan 3D) to give an enhanced regional

perspective and to better understand recent well

results both successes and failures in this part of

the MSGBC Basin. PetroNor is seeking a partner to

join the company in drilling one exploration well in

this highly attractive acreage 40kms to the South

of the Sangomar fieldin Senegal. The key prospects

in A4 are the ‘Lamia-South’ prospect (net mean

prospective recoverable resource 295mmbo)

and

the ‘Rosewood’ prospect (net mean prospective

recoverable resource 350 mmbo), both with

commercial volumes and attractive probability of

success. PetroNor considers Lamia South to be a

genuine analogue for the Sangomar Field (unlike

recent wells in adjacent acreage). PetroNor aims

to participate in any future well at an equity level

of 30-50 per cent and hopes to drill in 2024 upon

entering the second phase of the first exploration

period.

SENEGAL

Licence overview

The Senegal Offshore Sud Profond and Rufisque

Offshore Profond licences were awarded to

the company in 2011. In July 2018, the company

registered arbitration proceedings with the

International Centre for Settlement of Investment

Disputes (ICSID) (case ARB/18/24) to protect its

interests in the licenses. The arbitration was held in

Paris in March 2022. The company awaits the final

arbitration ruling.

Senegal

Annual statement of reserves

Reserves are the volume of hydrocarbons that are

expected to be produced from known accumulations:

■

On Production

■

Approved for Development

■

Justified for Development

Reserves are also classified according to the

associated risks and probability that the reserves

will be produced.

1P

Proved reserves represent volumes that will

be recovered with 90 per cent probability.

3P

Proved + probable + possible volumes will be

recovered with 10 per cent probability.

Contingent resources are the volumes of

hydrocarbons expected to be produced from

known accumulations:

■

In planning phase

■

Where development is likely

■

Where development is unlikely with present

basic assumptions

■

Under evaluation

Contingent Resources are reported as 1C, 2C, and

3C, reflecting similar probabilities as reserves.

DISCLAIMER

The information provided in this report reflects

reservoir assessments, which in general must be

recognised as subjective processes of estimating

hydrocarbon volumes that cannot be measured in

an exact way.

PETRONOR E&P ASA

It should also be recognised that results of recent

and future drilling, testing, production, and new

technology applications may justify revisions

that could be material. Certain assumptions

on the future beyond PetroNor’s control have

been made. These include assumptions made

regarding market variations affecting both product

prices and investment levels. As a result, actual

developments may deviate materially from what is

stated in this report.

The estimates in this report are based on third

party assessments prepared by AGR Petroleum

Services AS (“AGR”) in March 2023 for PNGF Sud

and PNGF Bis (2023 AGR CPR). For OML113 (Aje),

reserves and resources are based on a CPR from

AGR/Tracs from March 2019.

PETRONOR ASSETS PORTFOLIO

The group holds exploration and production assets

in Africa through subsidiaries and joint ventures,

namely the offshore PNGF Sud production licenses

in the Republic of Congo, the Sinapa (Block

2) and Esperança (Blocks 4A and 5A) licenses

offshore Guinea-Bissau, the A4 license offshore

The Gambia. The group reserves its rights to the

Rufisque Offshore Profond and Senegal Offshore

Sud Profond licences offshore Senegal, which are

currently in arbitration. In July 2022, PetroNor

completed the purchase of Pan-Petroleum Nigeria

Holding BV and Pan- Petroleum Services Holdings

BV that together hold 100 per cent of the shares in

Pan-Petroleum Aje Ltd (“Pan Aje”), representing an

economic interest between 12.1913 per cent and

16.255 per cent in OML 113. This transaction is now

part of this annual statement of reserves (“ASR”).

The exploration assets in Guinea-Bissau, The

Gambia and Senegal only constitute prospective

resources, therefore are not considered part of this

ASR.

PNGF Sud:

Offshore Congo Brazzaville, operator Perenco,

PetroNor 16.83 per cent

PNGF Sud is a development and exploitation license

comprising three (3) production license agreements

(Tchibouela II, Tchendo II and Tchibeli-Litanzi

II), which contain six oil fields: Tchibouela Main,

Tchibouela East, Tchendo, Tchibeli, Tchibeli North

East and Litanzi.

PetroNor E&P’s indirect subsidiary, HEPCO, holds

a 20 per cent (16.83 per cent net to PetroNor) non-

operated interest in the PNGF Sud licenses offshore

Congo. The operator of the licenses is Perenco which

holds a 40 per cent interest in the PNGF Sud licenses.

Effective since 1 January 2017, the ownership of the

licenses has an expiry date after 20 years plus a

5-year extension period.

Since granting of the licenses, Perenco, with

partner support has been committed to strict HSE

compliance while growing production, improving

maintenance routines and field integrity in a

stepwise and prudent manner.

In November 2021, the 17 well infill programme

commenced on PNGF Sud with four infill wells

on Litanzi. In November 2022, two wells were

completed in Tchibeli North East. Production

ramped up significantly in 2022 in response to the

infill drilling programme. The year ended with a

December production of 30.344 bopd (5,107 net to

PetroNor). Three or four wells are expected to be

drilled on Tchibeli in the second quarter of 2023.

Gross production during 2022 was 8.72 MMbbls of

oil and 8.3 Bcf of gas. This corresponds to average

23.891 bopd and 22.7 mmscfd.

In March 2023, AGR performed a full competent

persons report (CPR) covering the reserves (1P,

2P and 3P) and resources (1C, 2C and 3C) in both

PNGF Sud and PNGF Bis. The above figures were

evaluated as of 31 December 2022.

As per the PRMS/SPE guidelines, only the portion

of gas is contributing to power generation (on

Tchibouela and Tchendo only) and is included in

the overall reserves in the AGR CPR. The gas is

being used centrally in the field complex as fuel for

power-generating turbines which is subsequently

transmitted to the individual field platforms via

electrical power cables. For the purpose of this

report, the numbers quoted below as MMbbls do

not include the oil equivalent gas but are included

in the appendix reserves and resource tables.

This PetroNor ASR uses as the basis the reserves

and resources from the 2023 AGR CPR yielding

reserves and resources as per 31 December 2022.

As the only product sold is oil, PetroNor will in

the text below when referring to reserves and

resources mainly refer to oil and term these with

the unit MMbbls or including condensate, LPG and

gas as oil equivalents MMboe.

As at 31 December 2022, AGR evaluated that gross

1P proved reserves yield 74.5 MMbbls in all of the

PNGF Sud fields in the Cenomanian, Turonian,

Senonian and Albian reservoirs. Gross 2P proved

plus probable reserves at PNGF Sud amounted

to 110.0 MMbbls in the same reservoirs. Gross 3P

proved plus probable plus possible reserves at

PNGF Sud amounted to 146.5 MMbbls.

PETRONOR E&P ASA

ANNUAL REPORT 2022

17

Annual statement of reserves

Lagos skyline.

PETRONOR E&P ASA

ANNUAL REPORT 2022

18

Annual statement of reserves

Gross 1C resources yield 25.5 MMbbls in all of the

PNGF Sud fields in the Cenomanian, Turonian,

Senonian and Albian reservoirs. Gross 2C resources

at PNGF Sud amounted to 42.0 MMbbls in the

same reservoirs. Gross 3C resources at PNGF Sud

amounted to 72.3 MMbbls.

These evaluations yield 1P proved reserves net to

PetroNor of 12.5 MMbbls, 2P proved plus probable

reserves net to PetroNor of 18.5 MMbbls and 3P

proved plus probable plus possible reserves net to

PetroNor of 24.7 MMbbls.

Additional potentially recoverable resources net

to PetroNor are approximately 4.3 MMbbls 1C, 7.1

MMbbls 2C and 12.2 MMbbls 3C.

These reserves and contingent resources are

PetroNor’s net volumes before deductions for

royalties and other taxes, reflecting the production

and cost sharing agreements that govern the

assets.

PNGF Bis:

Offshore Congo Brazzaville, operator Perenco,

PetroNor 23.6 per cent

Located North-West of PNGF Sud, PNGF Bis license

contains two discoveries, Louissima and Loussima

SW. The two discoveries are proven by three wells

including DST’s drilled from 1985-1991. The primary

potential is identified in the pre-salt Vanji formation

with promising DST rates, but the exploration and

appraisal wells also include an oil column in the

post-salt Senji fm (not tested).

The contractor group of PNGF Sud has not yet

secured the rights to carry out petroleum activities

on PNGF Bis however a likely scenario comprises

a long-term test production period with a rented

jack-up with a purchase option and an 11 km

pipeline tie-back to one of the existing Tchibouela

process platforms. This would allow cost recovery

of the investments during the test production

and allows upscaling the production levels with

additional producers as resources are matured to

reserves.

Net to PetroNor 1C contingent resources yield 5.3

MMbbls in the Loussima SW Vanji and Senji fm.

Net 2C at PNGF Bis Loussima SW amounts to 6.8

MMbbls in the same reservoirs. Net 3C amounts to

8.4 MMbbls.

MANAGEMENT DISCUSSION AND ANALYSIS

PetroNor uses the services of AGR Petroleum

Services for 3

rd

party verifications of its reserves

and resources.

All evaluations are based on standard industry

practice and methodology for production

decline analysis and reservoir modelling based

on geological and geophysical analysis. The

following discussions are a comparison of the

volumes reported in previous reports, along with

a discussion of the consequences for the year-end

2022 ASR:

PNGF Sud

During the years from 2017 to 2022, production

and reserves have grown from the initial c. 15,000

bopd and 62 mmbo when Perenco and partners

took over. An additional c. 47 mmbo has been

produced in the period, thus representing a reserve

replacement ratio of more than 200 per cent for the

period. This has materialised through revitalising

existing producers via replacements or upsizing of

electrical submersible pumps (ESP’s), acidizing, clean

up or reperforating wells or converting wells from

the Cenomanian to the Turonian (less depleted)

formations. Significant surface debottlenecking is

also taking place, projects ranging from improved

power generation, gas-lift compressor upgrades,

pump replacements and other surface process

improvements. Production from Tchibeli has been

routed to Tchendo by installing a new pipeline to

avoid third party processing tariffs previously paid to

the Nkossa FPSO. These brick-by-brick improvements

together with infill drilling have yielded a production

level during 2022 of 23,891 bopd. The production

improvements alone have yielded more than a 100

per cent reserves replacement each year at a cost

of less than 1 USD/bbl. An infill drilling program

was decided for the Litanzi field in 2019 and in 2020

for Tchendo and Tchibeli. Development drilling of

the Tchibeli NE discovery was further sanctioned in

2021. Consequently, the 2C resources in these fields

have been converted to 2P reserves. Development

of 3D static and dynamic models has been and

will continue to form the basis of further infill

drilling programmes on PNGF Sud. As part of the

commitment to infill drilling, significant 2C resources

have been transferred to 2P reserves on Litanzi, (in

2019), Tchendo, Tchibeli and further in Tchibeli NE.

The infill potential in Tchibouela and Tchendo has

been maintained with a significant 2C potential.

Further gross/net 2C resources of 9.3/1.6 mmbo

were added in the 2023 AGR CPR in Tchibouela East

in response to identifying infill drilling potential for

another 5 wells in the field.

Gross produced volumes during 2022 constituted

net/gross 1.5/8.7 MMbbls. Only minor adjustments

were made to 2P reserves for 2022, with a

decrease of net/gross -0.6/-3.4 mmbo attributed

to production adjustments. 2C resources have

increased by 1.6/9.3 to 13.9/70.9 MMbbls, primarily

for additional infill potential in Tchibouela East.

PETRONOR E&P ASA

ANNUAL REPORT 2022

The PNGF partnership is investing in additional

power generation facilities on Tchiboela and

Tchendo. According to PRMS, gas reserves for this

should be classified as reserves. Total gas reserves

attributed to power generation has been estimated

at 9.9/59.0 bcf, corresponding to 1.8/10.5 mmboe in

the reserve’s balances.

Production rates are reported by AGR to increase

significantly in 2023 and 2024 to respectively 32,550

and 33,100 bopd.

PNGF Bis

Subject to agreement with the government and

investment decisions on the Loussima SW project,

these reserves may become reserves approved

for development. The 2C resources in PNGF Bis

have been reaffirmed by AGR as part of this years’

reserves and resource audit without change to

the numbers. It is expected that these discoveries

will have priority following the infill drilling

programmes in PNGF Sud.

Given a successful Loussima SW, a similar

development potential is also likely for the

Loussima Discovery.

Aje – OML113

As part of the completion with Panoro on this

transaction, reserves and resources from this

license are included in PetroNor’s balances.

Reserves and resources are based on a CPR from

AGR/Tracs from March 2019. As the bulk of these

are 2P reserves based on a Field Development Plan

(FDP) submitted to and approved by the Nigerian

Upstream Petroleum Regulatory Commission

(NUPRC, formerly DPR) in 2018 and the current

development plan will need a resubmission and

approval, PetroNor assumes the same reserves

now to be contingent resources. The relatively

insignificant production in the period 2019 to 2021

are subtracted from these numbers. Revenue

and cost-bearing interests vary through the

development production period from 12.2 per cent

and 16.3 per cent and net resources have been

modelled and listed in the tables below. The 2C

resources net to PetroNor are 9.7 mmbo of liquids

and 79 bcf of gas, in total 22.8 mmboe. (AGR Tracs

use 6 mscf/boe).

ASSUMPTIONS

The commerciality and economic tests for the PNGF

Sud, PNGF Bis and Aje reserves and resources

volumes were based on an oil and condensate price

of 70 USD/bbl, although the reserves and resources

are not very sensitive to this parameter as OPEX

levels are currently at 10-12 USD/bbl in PNGF

and estimated at ca 7 USD/bbl in Aje on plateau

production.

2P Reserves

(MMboe)

2021

2022

2022 PN Net

Balance – gross AGR, PNGF Sud

123.3

120.5

20.3

(MMboe)

2021

2022

2022 PN Net

Balance 2P/2C gross, PNGF Sud

158.4

164.9

27.8

Balance 2P/2C gross, Sud+Bis

187.3

193.8

34.6

Balance – 2P/2C gross, ALL PNGF Sud +Aje

339.0

57.3

PetroNor’s total 1P Reserves at the end of 2022

amounted to 14.3 MMbbls. PetroNor’s 2P Reserves

amount to 20.6 MMbbls and PetroNor’s 3P

Reserves amount to 26.61 MMbbls. This reflects

the 6 April 2022 reserve report for the PNGF Sud

field, conducted by AGR Petroleum Services AS and

production since the field start-up.

PetroNor’s Contingent Resource base includes

discoveries of varying degrees of maturity towards

development decisions. By the end of 2022,

PetroNor’s assets contain a total 2C volume of

approximately 12.3 MMbbl.

Interim CEO PetroNor E&P

RESERVES AND RESOURCES AS PER 31 DECEMBER 2021 (AGR CPR DATED 17 MARCH 2022)

Gross reserves (developed or under development):

1P

2P

3P

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil

mmbo

Gas

bcf

Boe

mmboe

100% PNGF Sud

Tchibouela

38.02

31.50

43.63

48.52

37.85

55.26

59.87

43.68

67.65

Tchibouela East

2.39

2.39

3.29

-

3.29

4.30

4.30

Tchendo

14.48

13.03

16.80

23.53

21.17

27.30

31.75

21.51

35.58

Tchibeli

7.12

-

7.12

14.02

-

14.02

21.57

-

21.57

Tchibeli Northeast

4.87

-

4.87

9.56

9.56

14.86

-

14.86

Litanzi

7.64

-

7.64

11.06

-

11.06

14.16

-

14.16

Subtotal

74.52

44.53

82.45

109.98

59.02

120.49

146.51

65.19

158.12

100% PNGF Bis

Loussima (Bis)

-

-

-

-

-

-

-

-

-

Total

74.52

44.53

82.45

109.98

59.01

120.49

146.51

65.19

158.12

Gross contingent resources (undeveloped):

1C

2C

3C

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil mmbo

Gas

bcf

Boe

mmboe

100% PNGF Sud

Tchibouela

13.60

8.90

15.19

21.20

13.80

23.66

34.10

22.30

38.07

Tchibouela East

6.45

-

6.45

11.61

-

11.61

18.93

-

18.93

Tchendo

5.40

-

5.40

9.14

-

9.14

19.20

-

19.20

Tchibeli

-

-

-

-

-

-

-

-

-

Tchibeli Northeast

-

-

-

-

-

-

-

-

-

Litanzi

-

-

-

-

-

-

-

-

-

Total

25.45

8.90

27.04

41.95

13.80

44.41

72.23

22.30

76.20

100% PNGF Bis

Loussima (Bis)

22.40

-

22.40

28.90

-

28.90

35.80

-

35.80

OML 113

Aje

35.65

292.70

84.43

63.05

492.80

145.18

104.45

791.90

236.43

Total

83.50

301.60

133.87

133.90

506.60

218.49

212.48

814.20

348.43

PETRONOR E&P ASA

ANNUAL REPORT 2022

Net PetroNor reserves (developed or under development):

1P

2P

3P

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil mmbo

Gas

bcf

Boe

mmboe

16.83% PNGF Sud

Tchibouela

6.40

5.30

7.34

8.17

6.37

9.30

10.08

7.35

11.39

Tchibouela East

0.40

-

0.40

0.55

-

0.55

0.72

-

0.72

Tchendo

2.44

2.19

2.83

3.96

3.56

4.59

5.34

3.62

5.99

Tchibeli

1.20

-

1.20

2.36

-

2.36

3.63

-

3.63

Tchibouela East

0.82

-

0.82

1.61

-

1.61

2.50

-

2.50

Litanzi

1.29

-

1.29

1.86

-

1.86

2.38

-

2.38

Subtotal

12.55

7.49

13.88

18.51

9.93

20.27

24.65

10.97

26.61

23.56% PNGF Bis

Loussima (Bis)

-

-

-

-

-

-

-

-

-

Total

12.55

7.49

13.88

18.51

9.93

20.27

24.65

10.97

26.61

Net PetroNor contingent resources (undeveloped):

1C

2C

3C

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil

mmbo

Gas

bcf

Boe

mmboe

Oil mmbo

Gas

bcf

Boe

mmboe

16.83% PNGF Sud

Tchibouela

2.29

1.5

2.56

3.57

2.32

3.98

5.74

3.75

6.41

Tchibouela East

1.09

-

1.09

1.95

-

1.95

3.19

-

3.19

Tchendo

0.91

-

0.91

1.54

-

1.54

3.23

-

3.23

Tchibeli

-

-

-

-

-

-

-

-

-

Tchibouela East

-

-

-

-

-

-

-

-

-

Litanzi

-

-

-

-

-

-

-

-

-

Subtotal

4.29

1.5

4.56

7.06

2.32

7.47

12.16

3.75

12.83

Loussima (Bis)

5.28

-

5.28

6.81

-

6.81

8.44

-

8.44

OML 113

Aje

5.35

45.70

12.97

9.66

78.70

22.78

14.49

111.50

33.08

Total

14.92

47.20

22.81

23.53

81.02

37.06

35.09

115.25

54.35

0

5

10

15

20

25

30

35

40

0

20

40

60

80

100

120

140

160

■

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

2041

PETRONOR E&P ASA

ANNUAL REPORT 2022

23

Annual statement of reserves

PETRONOR E&P ASA

ANNUAL REPORT 2022

24

ESG report

ESG report 2022:

Creating value in a

sustainable manner

During 2023, PetroNor will further strengthen

its ESG-strategy, and will report according to

international standards also common in the oil

& gas industry, such as GRI (Global Reporting

Initiative) and TCFD (Task Force on Climate-

Related Financial Disclosures), to ensure that the

company’s efforts are documented in a reliable and

accessible manner. The company will also commit

to global guidelines, such as the UN Sustainable

Development Goals.

To enable the above, the company has started a

structured process to assess the sustainability

reporting, acknowledging new and strengthened

legislation in ESG. This process shall ensure that

policies, internal systems, and procedures comply

with the requirements of relevant acts.

AN OUTLOOK ON THE OIL AND GAS

INDUSTRY

As Russia invaded Ukraine in 2022, energy

security became a part of the equation to create

a sustainable energy system for the world and

created disruption in the energy supply to Europe

in particular. The energy transition continues

its momentum though, as policies for replacing

hydrocarbons with renewables help make each

country less dependent on imported energy. Further,

climate change poses tangible risks to the planet and

humanity.

Nations in Africa have been less exposed to the

turmoil in energy prices in Europe. However,

affordable clean energy for the environmental and

socioeconomic development of the countries in

Africa remains a priority. This was also part of the

discussions in COP27 in Sharm El-Sheik in Egypt

in December 2022. COP 27 had high on its agenda

the financing of sustainable energy systems in

developing countries, including Africa. One result

is the establishment of a fund to aid countries

facing severe damage from climate change.

PetroNor’s current operations are all located in

West Africa. The company believes that credible

operators such as PetroNor have a key role to play

in delivering a smooth and steady transition that

enables the African continent to continue to benefit

from its natural resources until a more viable and

fully sustainable solution is ready.

Natural gas is recognised as an important

transition fuel for Africa. In that context, PetroNor’s

ownership and instrumental role in the Aje license

offshore Nigeria are expected to contribute

positively in ESG terms for countries connected to

the West African Gas Pipeline (WAGP). The Aje field

ceased production and thus gas was flared in 2022.

PetroNor is seeking to provide technical advice to

the partnership, and aims to re-develop the field

providing natural gas into the WAGP, as well as

LPG to the Nigerian market. By engaging in these

activities, PetroNor will assist in lowering harmful

emissions in the region.

Debt financing of the oil and gas industry has

gradually become more demanding. Any energy

company in the sector has to demonstrate a track

record of sound operations with regards to ESG

to secure debt financing. PetroNor is taking this

challenge seriously, conducting its operations in a

prudent manner and so addressing these demands,

as well as diligently reporting on the same.

STAKEHOLDER ENGAGEMENT AND

MATERIALITY

The integrity of the capital markets is based on full

and fair disclosure of information. The company

treats all shareholders equally and seeks to provide

PETRONOR E&P ASA

ANNUAL REPORT 2022

ESG report

consistent and transparent information to ensure

fair treatment of all stakeholders.

On 1 July 2022, Norway enacted a new Transparency

Act. The main purpose of the Transparency Act is

to promote enterprises' respect for fundamental

human rights and decent working conditions in

connection with the production of goods and the

provision of services. The Act shall also ensure the

general public’s access to information regarding

how enterprises address adverse impacts on

fundamental human rights and decent working

conditions. As a result, the company shall publish

the required statement in accordance with the

guidelines of the Act. Further, the company will

provide adequate measures and arrangements to

support the requirements of the Act.

PetroNor will publish a statement on due diligence

in accordance with the Norwegian Transparency

Act by June 2023. The statement will be published

on the company website.

ENVIRONMENTAL IMPACT

PetroNor endeavours to conduct all operations

in an environmentally responsible manner. As an

operator of offshore concessions, it is the duty of

PetroNor to minimise any adverse impact on the

environment. It is the company’s policy to manage

all activities in a responsible manner, in accordance

with the principles of sustainable development.

Handling climate change

PetroNor is well aware that climate change is high

up on the political agenda. As a consequence,

new laws and regulations could have a material

impact on the company’s business. Additional

legal and/or regulatory measures could result

in project delays or cancellations, a decrease in

demand for fossil fuels and additional compliance

obligations. Each of these issues could materially

and adversely impact the company’s costs and/or

revenues. Another example would be sustained

lower oil and gas prices or price declines which

may inter alia lead to a material decrease in net

production revenues.

As part of an overall structured process to

strengthen its ESG efforts, PetroNor will integrate

climate risk to its risk management system and

report according to TCFD. Climate risk will be an

important aspect of financial and internal control

going forward, as well as short- and long-term

strategic planning and business development.

Reducing environmental impact

Carrying out environmental impact assessments

(EIA) prior to all major activities is one way

PetroNor seeks to minimise any adverse impact

on the environment. The company communicates

the results to all government agencies and other

relevant stakeholders. This later effort is also

part of the obligations in the new Norwegian

Transparency Act.

Further, PetroNor will ensure that environmental

management plans are in place and that their

implementation is regularly monitored. The

company will continually review and update

procedures regarding protection of the

environment to ensure they are valid and

appropriate. Contingency plans are in place to

swiftly mitigate any potential damage to the

environment. As a part of the management

plans, PetroNor will establish a plan for climate

accounting and start reporting on the company’s

emissions.

To the best of the company’s knowledge, all

operations have been conducted within the

limits set by approved environmental regulatory

authorities. The company is aware of its

environmental obligations with regards to its

exploration activities and ensures that it complies

with the relevant environmental regulations when

carrying out any exploration work.

During 2022, there have been no significant known

breaches of the environmental regulations in place

for the group’s exploration and production licenses.

SOCIAL IMPACT

Protecting Human Rights

As stated in its published code of conduct,

PetroNor is committed to conducting business

in a manner which respects human rights as set

out in the UN Universal Declaration of Human

Rights. The company seeks business partners and

contractors who follow equivalent high standards,

which is also part of the obligations in the new

Norwegian Transparency Act. In 2023, the company

will establish a tactical plan on how to verify

that partners and suppliers are prudent in the

protection of human rights.

The company has a zero-tolerance approach to

modern slavery and child labour in any part of the

organisation and supply chains. PetroNor strives

to ensure that all workers have safe, secure, and

healthy working conditions. The workplace shall

be free from any form of harsh or inhumane

treatment.

PetroNor’s customers, contractors, subcontractors,

and suppliers shall not engage in or use child

labour. Applicable national laws shall be complied

PETRONOR E&P ASA

ANNUAL REPORT 2022

26

ESG report

with, and only workers who meet the applicable

minimum legal age requirement shall be employed.

The PetroNor management must ensure that all

PetroNor representatives (employees, directors,

consultants, etc.) are treated fairly. It is the

responsibility of the management to monitor

practices and attitudes that may lead to acts of

harassment in the workplace.

We expect our business partners and suppliers

to comply with applicable laws, respect

internationally recognised human rights and

adhere to our ethical standards when conducting

business with or on behalf of PetroNor. The

company’s standard service agreement oblige the

contractor to comply with the company’s code of

conduct where standards regarding human rights

are declared.

The company continues to follow-up its “know your

supplier policy”, using adequate judgement and

appropriate software to help make sure that it only

does business with organisations and individuals

that share its standards for compliance and

integrity.

PetroNor must refuse to do business with, and

provide no assistance to, those who engage in

illegal conduct related to PetroNor’s business.

In 2022, there were no cases identified in the

group nor its supply chains that were in violation of

human rights.

A healthy and safe work environment

Health and safety policies are essential for

PetroNor with the goal of avoiding accidents and

incidents and performing all its activities with focus

on and respect for people. The company’s objective

for health, environment, safety, and quality (HSEQ)

is zero accidents and zero unwanted incidents in all

activities.

PetroNor’s representatives frequently travel to

hold meetings or visit installations in connection

with held and prospective oil and gas assets.

The company focuses on oil and gas assets

located in West Africa. The group seeks to

ensure adequate safety levels for management

and employees travelling whether in Africa or

elsewhere.

As part of

the efforts to

achieve social

acceptability,

PetroNor aims

to work closely

alongside local

partners to

improve the

lives of the

communities it

operates in.

PETRONOR E&P ASA

ANNUAL REPORT 2022

27

ESG report

With its non-operated licenses, PetroNor is

dependent on the efforts of the operators with

respect to achieving prudent ESG-performance.

However, the company has chosen to take an active

role in all license committees with the conviction

that high safety standards are the best means

to achieve successful operations. Through this

involvement, PetroNor can influence the choice of

technical solutions, vendors and quality of applied

procedures and practices.

In 2022, no accidents that resulted in loss of human

lives or serious damage to people or property have

been reported. Time lost due to employee illness or

accidents was negligible. Employee safety is of the

highest priority, and the company is continuously

working towards identifying and employing

administrative and technical solutions that ensure

a safe and efficient workplace.

Investing in local communities

PetroNor has a strong focus on corporate social

responsibility (CSR) as well as an ethical code of

conduct. Social acceptability is a foundation for

conducting the company’s business.

As part of the efforts to achieve social acceptability,

PetroNor aims to work closely alongside local

partners to improve the lives of the communities

it operates in. To ensure the company’s efforts are

sustainable, corporate social investments were

and are primarily focused on project work in the

following key areas:

■

Access to education and human capacity

development: projects designed to expand

educational opportunities through building

schools, scholarships.

■

Access to quality health: training local

health and medical professionals,

investments in medical equipment and

health facilities.

■

Projects/campaigns designed to help local

communities access/improve community

conditions.

The company is supporting the CSR projects

through its subsidiary in the Republic of Congo

such as drilling water wells to provide drinking

water to communities, as well as the projects

organised by the operator in the PNGF Sud license

group.

During 2022 this Congolese subsidiary allocated

USD 1.5 million (2021 USD 1.5 million) of its annual

profits as a provision towards CSR projects.

Petronor

E&P has an

equality concept

integrated in its

human resources

policies.

PETRONOR E&P ASA

ANNUAL REPORT 2022

28

ESG report

Equality and diversity

PetroNor aims to maintain a working environment

with equal opportunities for all based on

performance; irrespective of gender, age, religion,

ethnicity, sexual preference, political belief, disability,

or any other protected status. PetroNor values each

member of the team and is committed to providing

an environment recognised for its positive energy,

equality, and professionalism, and that treats

everyone with fairness, respect, and dignity.

The company has an equality concept integrated

in its human resources policies. A diversified

working environment is embraced, and the group’s

personnel policies promote equal opportunities

and rights, and prevents discrimination based on

gender, ethnicity, colour, language, religion or belief.

All employees are governed by PetroNor’s code of

conduct, to ensure uniformity in behaviour across a

workforce representing a multitude of nationalities.

PetroNor is a knowledge-based group in which

a majority of the workforce has earned college

or university level educations; or has obtained

industry-recognised skills and qualifications

specific to their job requirements. Employees are

remunerated exclusively based upon skill level,

performance, and position.

Proportion of local employees in West Africa:

2022

actual

2021

actual

Staff

59%

Proportion of women:

2022

actual

2021

actual

Staff

37%

Executive management team

50%

50%

During 2022, the monthly average number of

employees and long-term consultants was 34

(2021: 35).

Harassment and intimidation

Courtesy and respect are important aspects of a

sound working environment and business dealings.

PetroNor does not tolerate discrimination of

colleagues or others affected by its business. The

company will not tolerate any verbal or physical

conduct that may lead to the harassment of others,

disrupts the work performance of others, or

conduct that creates a hostile work environment.

The company expects all employees to treat

everyone they come into contact with through work

or work-related activities in a respectful manner.

In 2022, there were no reported instances of

intimidation or harassment .

The main objective of PetroNor’s corporate

governance framework is to develop a strong,

sustainable and competitive company in the best

interest of the shareholders, employees and

society at large, within the laws and regulations of

the respective country.

PetroNor’s board of directors are responsible

for establishing the Corporate Governance

framework of the company. Further, PetroNor

seeks to comply with all the requirements covered

in The Norwegian Code of Practice for Corporate

Governance (the “Code”).

The company has implemented corporate values,

ethical guidelines and guidelines for corporate

social responsibility. These values and guidelines

are described in PetroNor’s Code of Conduct with

further details in internal policies.

In accordance with the Norwegian Accounting

Act, the company annually reports on matters

relating to environmental and social issues, labour

environment, equality and non- discrimination, the

compliance with human rights and the combat of

corruption and bribery.

The board of directors and management aim for a

controlled and profitable development and long-

term creation of growth through well-founded

governance principles and risk management.

The Board will give high priority to finding the

most appropriate working procedures to achieve,

inter alia, the aims covered by these corporate

governance guidelines and principles.

The company has in this respect initiated a

structured process to ensure its adherence to

changes in legal requirements resulting in an

improved ESG strategy and corresponding results

thereof. The 2022-enacted Transparency Act is

particularly noted, and the board of directors has

actioned plans, as per the captioned Act, to publish a

statement for due diligence before end of June 2023.

HSE management

To avoid negative impact on the environment,

local communities and the workforce, the

company integrates technical, economic and

HSE considerations into decision making and

operational processes to achieve long-term

sustainability of the business and to reduce risk.

The company strives for continuous improvement

as lessons learned from past operations are

incorporated into business practices going forward.

The company endeavours to comply with

international and local HSE standards. The health,

safety and welfare of all personnel involved and of

the general public is the highest priority.

All employees and business partners are encouraged

to speak up and stop any work if they feel it is or

could be unsafe to life or the environment. Further

to report any instances of unsafe practices and/or

any dangerous working situations.

In 2022, there were no matters identified that were

in violation of HSE management in the group.

Code of Conduct

A prudent code of conduct is of strategic importance

to the business, and part of the overall framework of

environmental, social and governance (ESG). It has

been approved by the board of directors and is to be

revised from time to time to reflect the activities as

the company develops and as laws and regulations

may change. The code of conduct is available on

the company’s website. The code of conduct will be

updated on a yearly basis, and there will be periodic

training to ensure all representatives are up to

date on how PetroNor expects them to act when

representing the company.

PetroNor shall conduct business with integrity,

respecting the cultures, dignity, and rights of

PETRONOR E&P ASA

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ESG report

individuals everywhere it operates. The company

shall always strive to maintain high ethical

standards and conduct its business in a way that

makes people proud to work for PetroNor. Further,

PetroNor shall strive to ensure that activities also

create local growth in a sustainable manner in each

of the countries in which it operates, both through

local partnerships and competence transfer.

The code of conduct is based on PetroNor’s

fundamental principles of business ethics. It

summarises the company’s values and standards

and further describes what is expected of both

the company and its employees. The company

expects all its representatives to comply with

the code of conduct. PetroNor also expects all

business partners, joint venture partners and

suppliers to act in a manner that is consistent

with the principles of the code of conduct.

Further, compliance with national, regional, and

international laws and regulations is mandatory for

all activities in the company.

In 2022, no cases have been identified in the group,

its supply chains or in its business relations that are

in violation of the code of conduct.

Anti-corruption

PetroNor has a zero-tolerance approach to

bribery and corruption and is committed to acting

professionally, fairly and with integrity in all its

business dealings and relationships. The company

complies with all applicable anti-corruption laws

and regulations. Overall, the company’s policy is to

conduct all of its business in an honest and ethical

manner.

PetroNor’s representatives must not accept, make,

seek, or offer bribes or monetary advantages

of any kind. This includes money, benefits,

entertainment or services or any material benefit

to or from public officials or other business

partners, which are given with the intent of gaining

improper business or personal gain. In this respect,

the company has established a gift & hospitality

register to ensure compliance with the policy.

The current shareholders and all of PetroNor’s

representatives are required to comply with

Norwegian laws, the UK Bribery Act and the US

FCPA as well as local laws in the jurisdictions where

the company conduct business.

PetroNor’s anti-bribery and corruption policy can

be found on the company’s website. The policy

will be updated annually, with periodic training of

company representatives. Each representative of

the company signs the code of conduct, stating

they have read it and will comply with it.

The company is aware of an ongoing investigation

by Norwegian Økokrim (National Authority

for Investigation and Prosecution of Economic

and Environmental Crime) regarding alleged

corruption. As per press release from Økokrim,

the investigation is focused on individuals, and

neither PetroNor E&P ASA nor any of its subsidiary

companies have had charges brought against them.

In 2022, no cases have been identified in the group,

its supply chains or in its business relations that are

in violation with laws and/or the anti-bribery and

corruption policy.

Transparency initiative

The company registered in 2020 as a supporting

company with the Extractive Industries

Transparency Initiative, EITI.

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ESG report

Over 50 countries have committed to strengthening

transparency and accountability of their extractive

sector management by implementing the EITI

Standard. Currently, of the countries PetroNor

has oil & gas operations in, the Republic of Congo,

Nigeria and Senegal have committed to the EITI

standard. Norway and the UK are also signatories

to the initiative.

Countries are assessed on their progress in

meeting the requirements of the EITI Standard

through Validation, progress of "very high"

demonstrating

best progress in the three

juristictions in the EITI's quality assurance

mechanism:

Country

Current status

Latest validation

Republic of Congo

Moderate

2023

Nigeria

Satisfactory progress

2019

Senegal

Very high

2021

PetroNor supports the EITI Association in its

objective to make the EITI Principles and the

EITI requirements the internationally accepted

standard for transparency in the oil, gas and

mining sectors, recognising that strengthened

transparency of natural resource revenues can

PetroNor believes

in openness and

transparency for

all its business

dealings and

activities.

PETRONOR E&P ASA

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ESG report

reduce corruption, and the revenue from extractive

industries can transform economies, reduce

poverty, and raise the living standards of entire

populations in resource-rich countries.

The company discloses taxes and payments to

governments in connection to its oil and gas licences

in accordance with the legal requirements in the

Norwegian Security Trading Act. This country-by-

country reporting is included in the directors’ report.

Supporting companies uphold the EITI Standard

through reporting in EITI implementing countries

where they operate. Supporting companies are

expected to meet a lot of expectations. Many of

these expectations are also covered by the rules

of companies listed on the Oslo Stock Exchange.

Where relevant, PetroNor will make efforts to

satisfy all expectations.

Whistle blower mechanism

PetroNor believes in openness and transparency

for all its business dealings and activities. Illegal

or unethical matters may negatively impact the

working environment and the business in general.

It is important that the company deals with such

matters properly. All current and former PetroNor

representatives, who have concerns about any

aspect of the company’s business are encouraged

to raise them and to disclose any information which

relates to improper, unethical or illegal conduct

with regards to the activities of the company.

Every PetroNor representative has a right and

an obligation to raise their concerns about our

business including matters such as:

■

Potential breaches of law

■

Breach of ethical norms and internal guidelines

■

Discrimination or harassment at the workplace

■

Conditions that may endanger life or health

Whistleblowers shall not suffer any detrimental

treatment from either the company or colleagues as

a result of raising a genuine concern. An independent

disclosure service is available at:

https://petronor.

integrity.complylog.com

/. ComplyLog is part of

Euronext Corporate Services making the service

available to listed companies on any of their stock

exchanges. If a case is reported, the independent

disclosure service will contact the correct person

within the company to start dealings with the

disclosure. Also, if a disclosure is made directly to

a management representative, or to a member of

the board, the person receiving the disclosure is

obligated to follow up the disclosure according to the

agreed procedures.

No cases were reported during 2022.

Responsibility for ESG

The CEO is responsible for the company’s daily

operations. Further, the CEO ensures that all

necessary information is presented to the board

of directors. The board will evaluate the company’s

vision and strategy at least on a yearly basis.

The board has the overall responsibility for the

management and supervision of the activities in

general.

The board decides the strategy of the company and

is the ultimate decision taker in new projects and/

or investments.

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ESG report

Statement on corporate

governance in PetroNor E&P

PetroNor seeks to comply with all the requirements

covered in The Norwegian Code of Practice for

Corporate Governance (the “Code”). The latest

version of the Code of 14 October 2021 is available

on the website of the Norwegian Corporate

Governance Board,

www.nues.no

. The Code is

based on the “comply or explain” principle, in that

companies should explain alternative approaches

to any specific recommendation. The company also

seeks to comply with the Oslo Stock Exchange Code

of Practice for Investor Relation (IR) of 1 July 2019.

1:

IMPLEMENTATION AND REPORTING ON

CORPORATE GOVERNANCE

The main objective for PetroNor’s corporate

governance is to develop a strong, sustainable

and competitive company in the best interest of

the shareholders, employees and society at large,

within the laws and regulations of the respective

country. The board of directors (the board) and

management aim for a controlled and profitable

development and long-term creation of growth

through well-founded governance principles and

risk management.

PetroNor seeks

to communicate

clearly with all

stakeholders.

The board will give high priority to finding the

most appropriate working procedures to achieve,

inter alia, the aims covered by these corporate

governance guidelines and principles.

The Code comprises 15 points. The corporate

governance report is available on the company’s

website

www.petronorep.com

.

2: BUSINESS

PetroNor is a full cycle oil and gas exploration

and production company listed on the Oslo Stock

Exchange with the ticker PNOR. PetroNor holds

exploration and production assets in Africa.

The company’s business is defined in the Articles of

Association §3, which states:

“The company’s business is to invest in companies

and entities that are involved in the energy industry

and the oil and gas industry worldwide, as well as

investment activities and other related activities.”

The company is focused on growing production and

reserves by leveraging existing assets to capitalise

on new venture opportunities combined with

targeted high impact exploration. With strategic

and long-term large shareholders from Abu Dhabi

and Norway, PetroNor will look to capitalise on the

industry experience and government relations in

these jurisdictions.

PetroNor’s vision is to:

■

Become a leading full-cycle E&P company.

■

Use our experience and competence in

enhancing value in projects in Africa to the

benefit of the countries we operate in and the

shareholders of the company.

■

Create values for the shareholders in a

sustainable manner where due regards are

given to economical, social, and environmental

issues. The board will evaluate the group's vision

and strategy at least on a yearly basis, also

including input from shareholders not directly

represented in the board of directors.

The oil and gas exploration and production industry

is a high-risk-high-reward industry where PetroNor

is exposed to the fluctuations in the oil price, risks

involved in petroleum production as well as drilling

of production, appraisal and exploration wells. The

company will seek opportunities across its core

region but may opportunistically invest outside of

its core area.

PetroNor will aim to steadily build and increase

its reserve base while using free cash flow to

pursue defined exploration targets in selected and

highly prospective basins with a view to delivering

significant value to its shareholders from high impact

wells whilst being a good corporate citizen and

promoting excellence in operations and innovation.

PetroNor has implemented corporate values, ethical

guidelines, and guidelines for corporate social

responsibility. These values and guidelines are

described in PetroNor’s Code of Conduct with further

details in internal policies. In accordance with the

Norwegian Accounting Act, the company annually

reports on matters relating to environmental and

social issues, labour environment, equality and non-

discrimination, the compliance with human rights,

and the combat of corruption and bribery.

The board of directors evaluates the company’s

objectives, strategies, and risk profiles yearly.

3:

EQUITY AND DIVIDENDS

The oil and gas E&P business is highly capital

dependent, requiring PetroNor to be sufficiently

capitalised. PetroNor’s board of directors will ensure

that the company at all times has an equity capital at

a level appropriate to its objectives, strategy and risk

profile. The board needs to be proactive in order for

PetroNor to be prepared for changes in the market.

Mandates granted to the board to increase the

company’s share capital or to purchase PetroNor

shares will normally be restricted to defined

purposes and are normally limited in time to the

following year’s annual general meeting. Any

acquisition of PetroNor shares will be carried

out through a regulated marketplace at market

price, and the company will not deviate from the

principle of equal treatment of all shareholders. If

there is limited liquidity in the company’s shares

at the time of such transaction, the company will

consider other ways to ensure equal treatment of

all shareholders.

Mandates granted to the board for issue of shares

for different purposes will each be considered

separately by the general meeting.

Payment of dividends will be considered in the

future, based on the company’s capital structure

and dividend capacity as well as the availability of

alternative investments.

4:

EQUAL TREATMENT OF SHAREHOLDERS

PetroNor has one class of shares representing one

vote at the annual general meeting. The Articles of

Association contains no restriction regarding the

right to vote.

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35

Any decision to deviate from the principle of equal

treatment by waiving the pre-emption rights of

existing shareholders to subscribe for shares in the

event of an increase in share capital will be justified

and disclosed in the stock exchange announcement

of the increase in share capital. Such deviation

will be made only in the common interest of the

shareholders of the company.

Transactions in PetroNor shares will be made over

the stock exchange or by other means at market

prices. If there is a limited liquidity in the PetroNor

shares, the board will consider other ways of

dealing with equal treatment of shareholders when

making transactions in the PetroNor shares.

5:

SHARES AND NEGOTIABILITY

The shares of PetroNor are listed on the Oslo Stock

Exchange. There are no restrictions on ownership,

trading or voting of shares in PetroNor’s Articles of

Association.

6: GENERAL MEETINGS

PetroNor’s annual general meeting is to be held by

the end of June each year.

The board will take necessary steps to ensure that

as many shareholders as possible may exercise their

rights by participating in general meetings of the

company, and to ensure that general meetings are

an effective forum for the views of shareholders and

the Board. The company shall arrange the general

meetings so that the shareholders can attend by

electronic means, unless there is a reason to refuse.

An invitation and agenda (including proxy) will be

sent out no later than 21 days prior to the meeting

to all shareholders in the company. The invitation

will also be distributed as a stock exchange

notification. The invitation and support information

on the resolutions to be considered at the general

meeting will furthermore normally be posted on

the company’s website

www.petronorep.com

no

later than 21 days prior to the date of the general

meeting.

The recommendation of the nomination committee

will normally be available on the company’s website

at the same time as the notice.

PetroNor will ensure that the resolutions and

supporting information distributed are sufficiently

detailed and comprehensive to allow shareholders

to form a view on all matters to be considered at the

meeting.

According to Article 7 of the company’s Articles of

Association, registrations for the company’s annual

general meeting must be received at least five

calendar days before the meeting is held.

The chair of the board, as well as the company

auditor and CEO of the company, shall be present

at the general meetings, unless the circumstances

preclude such. The chair of the nomination

committee as well as other board members should

attend the general meetings. An independent

person to chair the general meeting will, to the

extent possible, be appointed. Normally, the general

meetings will be chaired by the company’s external

corporate lawyer.

Shareholders who are unable to attend in person

will be given the opportunity to vote by proxy.

The company will nominate a person who will

be available to vote on behalf of shareholders

as their proxy. Information on the procedure for

representation at the meeting through proxy will

be set out in the notice for the general meeting. A

form for the appointment of a proxy, which allows

separate voting instructions for each matter to

be considered by the meeting and for each of the

candidates nominated for elections will be prepared.

Dividend, remuneration to the board, and the

election of the auditor, are among the matters

that will be decided at the annual general meeting.

After the meeting, the minutes are released on the

company’s website.

7: NOMINATION COMMITTEE

According to Article 8 of the company’s Articles of

Association, the company shall have a nomination

committee of up to three members, to be elected

by the general meeting. The nomination committee

shall present proposals to the general meeting

regarding (i) election of the chair of the board,

directors and any deputy members, and (ii) election

of members of the nomination committee. The

nomination committee shall also present proposals

to the general meeting for remuneration of the

board and the nomination committee, which is to

be determined by the general meeting. The general

meeting shall adopt instructions for the nomination

committee. Due to the company's current

shareholder composition, the nomination committee

will not necessarily be independent of the major

shareholders and the company will continuously

consider this matter and whether to later propose a

more independent appointment of the nomination

committee.

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Corporate governance

8:

BOARD OF DIRECTORS – COMPOSITION

AND INDEPENDENCE

The composition of the board ensures that

the board represents the common interests

of all shareholders and meets the company’s

need for expertise, capacity, and diversity. The

members of the board represent a wide range

of experience including upstream E&P industry,

oil service, energy politics and finance. The

composition of the board ensures that it can

operate independently of any special interests.

Board members are normally elected for a period

of two years. Recruitment of members of the

board may be phased so that the entire board

is not replaced at the same time. The general

meeting elects the chair and deputy chairperson

(if any). The company’s website and annual report

provide detailed information about the directors'

expertise and independence. The company has

a policy whereby the members of the board are

encouraged to own shares in the company, but

to dissuade from a short-term approach which is

not in the best interests of the company and its

shareholders over the longer term.

The board is to be composed of at least 2

members who are independent of the company's

major shareholders, and more than half of the

members are to be independent of the company's

management and material business relations.

9:

THE WORK OF THE BOARD AND

SUB-COMMITTEES

The board has the overall responsibility for the

management and supervision of the activities in

general. The CEO is responsible for the company’s

daily operations and ensures that all necessary

information is presented to the board.

The board decides the strategy of the company

and is the final decision in new projects and/or

investments. The board’s instructions for its own

work as well as for the executive management have

particular emphasis on clear internal allocation of

responsibilities and duties. The chair of the board

ensures that the board’s duties are undertaken in

efficient and correct manner.

The board has established separate rules of

procedures for its work. Such rules of procedure

also address how the board and management shall

deal with agreements with related parties, and in

particular whether independent valuations of such

agreements should be obtained. In addition, the

board will report on such agreements in its annual

report.

The board shall stay informed of the company’s

financial position and ensure adequate control

of activities, accounts, and asset management.

The director’s experience and skills are crucial to

the company both from a financial as well as an

operational perspective.

An annual schedule for the board meetings is

prepared and discussed together with a yearly plan

for the work of the board. The board will consider

evaluating its performance and expertise annually.

The company has guidelines to ensure that

members of the board and executive personnel

notify the board if they have any material direct or

indirect interest in any transaction entered into by

the company. Should the board need to address

matters of a material character in which the chair is

or has been personally involved, the matter will be

chaired by an independent member of the board to

ensure a more independent consideration.

The board has established an audit & risk

committee and a remuneration committee as

association, of the board.

The audit & risk committee shall consist of at least

three members appointed by and among the board.

All members of the audit & risk committee must be

non-executive directors, a majority of the members

should be independent of the management and the

company, and there must be adequate accounting

and finance competence among the members of

the committee. The audit & risk committee's role is

to supervise the group's accounting and financial

performance, as well as ensuring that adequate

internal control and reporting requirements exist.

The role is further detailed in a separate audit &

risk committee charter.

The remuneration committee shall consist of up to

three members appointed by and among the board.

All members shall be independent of the

management. The remuneration committee’s role

is to assist and advise the board on matters relating

to the remuneration of the board and management,

as well as salary, bonus and benefit policies for the

employees in general. The role is further detailed in

a separate remuneration committee charter.

In addition, the board created a further sub-

committee to support the board with the

independent fact finding process relating to

Økokrim matter. The committee does not comprise

any persons subject to the charges or any

investigations.

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Corporate governance

10: RISK MANAGEMENT AND INTERNAL

CONTROL

Financial and internal control, as well as short-

and long-term strategic planning and business

development, all according to PetroNor’s business

idea and vision and applicable laws and regulations,

are the board’s responsibilities and the essence of

its work. This emphasises the focus on ensuring

proper financial and internal control, including risk

control systems.

The board approves the company’s strategy and

level of acceptable risk, as documented in the

guiding tool “Risk Management” described in

the relevant note in the consolidated financial

statements in the annual report.

The board carries out an annual review of the

company’s most important areas of exposure to

risk and its internal control arrangements.

For further details on the use of financial

instruments, refer to relevant note in the

consolidated financial statements in the annual

report and the company’s guiding tool “Financial

Risk Management” described in relevant note in

the consolidated financial statements in the

annual report.

11: INFORMATION AND COMMUNICATIONS

The company has established guidelines for

the company’s reporting of financial and other

information. The chair and CEO are authorised by

the board to speak to, or be in contact with the press.

The company publishes an annual financial

calendar including the dates the company plans to

publish the quarterly and interim updates and the

date for the annual general meeting. The calendar

can be found on the company’s website and will

also be distributed as a stock exchange notification

and updated on Oslo Stock Exchange’s website.

The calendar is published at the end of the fiscal

year, according to the continuing obligations for

companies listed on the Oslo Stock Exchange.

All information to shareholders is published

simultaneously on the company’s website and to

appropriate financial news media.

PetroNor normally makes two half-year

presentations per year to shareholders, potential

investors and analysts in connection with half-

year quarterly earnings reports or trading updates,

in addition to four quarterly production updates.

The half-year presentations are held through

webinars to facilitate participation by all interested

PetroNor has

established

guidelines for

reporting

PETRONOR E&P ASA

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Corporate governance

shareholders, analysts, potential investors, and

members of the financial community. A question-

and-answer session is held at the end of each

presentation to allow management to answer the

questions of attendees. A recording of the webinar

presentation is retained on the company’s website

www.petronorep.com

for a limited number of days.

The company also makes investor presentations

at conferences in Norway and internationally. The

information packages presented at such meetings

are published simultaneously on the company’s

website.

12: TAKE-OVERS

PetroNor has established the following guiding

principles for how the board will act in the event

of a take-over bid. In a bid situation, the board

shall help to ensure that shareholders are treated

equally, and that the company’s business activities

are not disrupted unnecessarily. The board shall

ensure that shareholders are given sufficient

information and time to form a view of relevant

offers.

Today, the board does not hold any authorisations

as set forth in Section 6-17 of the Securities Trading

Act, to effectuate defence measures if a takeover

bid is launched on PetroNor.

The board may be authorised by the general

meeting to acquire its own shares but will not be

able to utilise this in order to obstruct a takeover

bid, unless approved by the general meeting

following the announcement of a takeover bid.

As a rule, the company will not enter into agreements

with the purpose to limit the company’s ability to

arrange other bids for the company’s shares unless

it is clear that such an agreement is in the common

interest of the company and its shareholders. As a

starting point, the same applies to any agreement

on the payment of financial compensation to the

bidder if the bid does not proceed. Any financial

compensation will as a rule be limited to the costs

the bidder has incurred in making the bid. The

company will generally seek to disclose agreements

entered into with the bidder that are material to the

market’s evaluation of the bid no later than the time

of the publishing of the announcement that the bid

will be made.

In the event of a take-over bid for the company’s

shares, the board will not exercise mandates

or pass any resolutions with the intention of

obstructing the take-over bid unless this is

approved by the general meeting following

announcement of the bid.

If an offer is made for the company’s shares, the

Board will issue a statement evaluating the offer

and making a recommendation as to whether

shareholders should or should not accept the

offer. The board will also arrange a valuation with

an explanation from an independent expert. The

valuation will be made public no later than at

the time of the public disclosure of the board’s

statement. Any transactions that are in effect a

disposal of the company’s activities will be decided

by a general meeting.

13: AUDITOR

The auditor will be appointed by the general

meeting.

The board has appointed an audit & risk committee

as a sub-committee of the board, which will

meet with the auditor regularly. The auditor shall

on an annual basis submit an additional report

to the audit committee in which it declares its

independence and explains the results of the

statutory audit carried out by providing a range of

information about the audit.

The auditor will send a complete management

letter/report to the board – which is a summary

report of risks faced by the business. The auditor

participates in meetings of the Board that deal with

the annual accounts, where the auditor reviews

any material changes in the company’s accounting

principles, comments on any material estimated

accounting figures and reports all material matters

on which there has been disagreement between

the auditor and the executive management of the

company.

In view of the auditor’s independence of the

company’s executive management, the auditor is

also present in at least one board meeting each

year at which neither the CEO nor other members

of the executive management are present. The

board shall on an annual basis review the internal

control procedures jointly with the auditor,

including weaknesses identified by the auditor and

assess proposals for improvement.

PetroNor places importance on independence and

has established guidelines in respect of retaining

the company’s external auditor by the company’s

executive management for services other than the

audit.

The board reports the remuneration paid to the

auditor at the annual general meeting, including

details of the fee paid for audit work and any fees

paid for other specific assignments.

PETRONOR E&P ASA

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39

Corporate governance

EYAS ALHOMOUZ

Chair of the board

Qualifications:

Mr Alhomouz graduated from Brigham Young

University in Provo, UT with a degree in Chemical

Engineering and from the Colorado School of Mines,

in Golden, CO with a master's degree in Mineral

and Energy Economics.

Experience:

Mr Alhomouz has a strong experience from the oil

and gas sector covering the US, North Africa, and

the GCC. He began his career with Schlumberger

Oilfield Service as a wireline engineer in Midland,

Texas. From there he went on to work for Cromwell

Energy in Denver, Colorado, as international

business development manager. Then, as a COO

and financial director of Prism Seismic, he oversaw

the growth of the Colorado based consulting and

oil and gas software development firm and later

the acquisition of the company by Sigma Cubed,

where, post-acquisition of Prism Seismic, he went

on to serve as a director of business development,

Middle East. Mr. Alhomouz's career then took him

to Qatar as a general manager of Jaidah Energy, an

Omani-Qatari owned company servicing the oil and

gas sector in Qatar. Mr. Alhomouz is currently the

CEO of Petromal Sole Proprietorship LLC.

Mr Alhomouz is not independent of the main

shareholding.

JOSEPH ISKANDER

Director

Qualifications:

Mr Iskander holds a Degree in Accounting and

Finance with high distinction from Helwan University,

Egypt.

Experience:

Mr Iskander brings over 25 years of experience

in the financial services industry, covering asset

management, private equity, portfolio management,

financial restructuring, research, banking, and audit.

He began his career at Deloitte & Touche (Egypt) as an

auditor. Mr. Iskander served as non-executive director

on the boards of EFG Hermes in Egypt, Oasis Capital

Bank in Bahrain, Sun Hung Kai & Co in Hong Kong,

Qalaa Holdings in Egypt, Emirates Retakaful in UAE,

Marfin Laiki Bank in Cyprus and Marfin Investment

Group in Greece. Mr. Iskander headed the research

team at Egypt’s Prime Investments and was earlier an

investment advisor at Commercial International Bank

(CIB) He then went on and joined Dubai Group as an

investment manager in 2004 and has worked on a

range of M&A transactions, advisory services, asset

management, and private equity transactions with a

collective value in excess of USD 8 billion. Mr. Iskander

was managing director of asset management at

Dubai Group and the former head of research at

Dubai Capital Group until 2009. He joined Emirates

International Investment Company in July of 2017 as

the head of investments

spearheading and managing

EIIC’s investments. He is also the chief executive

officer of Entrust Capital Limited an EIIC company. EIIC

is a subsidiary of National Holding in Abu Dhabi.

Mr Iskander is not independent of the main shareholding.

PETRONOR E&P ASA

ANNUAL REPORT 2022

40

INGVIL SMINES TYBRING-GJEDDE

Director

Qualifications:

Ms Smines Tybring-Gjedde graduated from BI

Norwegian Business School with a Master’s degree

in Management Programs, with strong focus on

interaction, leadership, and strategy.

Experience:

Experienced former Norwegian minister of national

public security with overall responsibility of public

safety, emergency planning, and cybersecurity.

Mrs Tybring Gjedde was also minister of Svalbard

and the Norwegian polar regions. Before her

position as minister, she served as deputy

minister in the Ministry of Petroleum and Energy

for 4 years, with a portfolio of exploration policy,

development, operations, exploration activity,

the Ministry's contact with other petroleum-

producing countries and international forums, in

addition to the government's national climate

policy, global environmental issues, and the

government's CCs full-scale project. Mrs Tybring

Gjedde has a demonstrated history of working in

the O&G, energy, and renewable industry in private

and state-owned companies in various leading

positions for more than 20 years.

Ms Smines Tybing-Gjedde is an independent director.

GRO KIELLAND

Director

Qualifications:

Mrs Kielland holds an MSc in Mechanical

Engineering from the Norwegian University of

Science and Technology (NTNU).

Experience:

Mrs Kielland has over 30 years of experience

having held a number of leading positions in

the oil and gas industry both in Norway and

abroad, among others as CEO of BP Norway. Her

professional experience includes work related to

both operations and field development, as well as

HSE. She has been holding non-executive roles for

the last 15 years, mainly within the energy industry,

working with different ownership structures,

including listed companies, privately owned, PE

owned and start-up companies.

Mrs Kielland is an independent director.

PETRONOR E&P ASA

ANNUAL REPORT 2022

41

Board of directors

AZZA FAWZI

Director

Qualifications:

Ms Fawzi holds a B.S.B.A, Finance from American

University Kogod School of Business.

Experience:

Mrs. Fawzi is a former Shell finance executive

where her areas of responsibility included

the US,

Qatar, Brazil, Nigeria, Egypt, Oman, UAE, Malaysia,

Mexico, and India, contributing to the business

turnaround of Deep Water in the US Gulf of Mexico.

As a senior finance leader, she works not only to

ensure that the appropriate control framework are

in place but also to provide strategic direction and

ensure value maximisation for shareholders. She

is an international oil and gas finance executive

with global board, audit, and executive leadership

experience.

Mrs Fawzi is an independent director.

JARLE NORMAN-HANSEN

Director

Qualifications:

Mr Norman-Hansen holds a Bachelor’s degree in

Economics from BI Norwegian Business School and an

ICFA from The Norwegian School of Economics.

Experience:

Mr. Norman-Hansen has more than 30 years

of experience from the Nordic property and

capital markets overseeing acquisitions and asset

management of multibillion investments as well as

acting as advisor to many of Scandinavia’s largest real

estate capital markets transactions.

Mr Norman-Hansen is not independent of shareholding.

PETRONOR E&P ASA

PETRONOR E&P ASA

ANNUAL REPORT 2022

43

Board of directors

JENS PACE

Interim chief executive officer

Qualifications:

Mr Pace holds a BSc in Geology

and Oceanography from the

University of Wales and an MSc

in Geophysics from Imperial

College, London, UK.

Experience:

Jens Pace has over 40 years of

industry experience gained

initially with major companies,

BP, and Amoco, and since

2012, with African Petroleum

Corporation and PetroNor. With

a background in geoscience,

Jens has held senior leadership

positions in E&P for the

past 20 years, operating in a

wide variety of international

jurisdictions. Jens was CEO of

African Petroleum and following

the merger with PetroNor, he

served as a director. On 9

February 2022, Jens stepped

down from the board and was

appointed as interim CEO.

CLAUS FRIMANN-DAHL

Chief technical officer

Qualifications:

Mr Frimann-Dahl holds a BSc

in Petroleum Engineering from

Texas A&M University and an

MSc from the University of

Trondheim (NTH).

Experience:

Mr. Frimann-Dahl has 30 years’

experience from the oil and gas

industry, with managerial and

technical roles. His experience

covers operational roles with

Phillips Petroleum, Norsk Hydro,

and Hess in the North Sea

Norway and Denmark, Russia,

Egypt and the US. He was the

co-founder of Ener Petroleum

which was later acquired by

Dana Petroleum and KNOC.

MICHAEL BARRETT

Exploration officer

Qualifications:

Mr. Barrett has a BSc in

Geology & Geophysics from

Durham University and a

MSc in Petroleum Geology

& Geophysics from Imperial

College, Royal School of Mines.

Experience:

Mr. Barrett has over 30 years

global exploration experience

from his career at Chevron

Corporation, and more recently

at Addax/Sinopec International

African Petroleum and PetroNor.

Mr. Barrett has held a variety

of technical roles covering

exploration and new ventures,

and was part of Chevron’s

global Exploration Review

Team, specialising in play and

prospect risk assessment, and

volumetric assessment. He

has extensive experience in

portfolio management and

commercial evaluation of oil and

gas opportunities. Mr. Barrett

also brings added strength to

the team with his background

in quantitative geophysics,

stratigraphic interpretation

workflows and 3D visualisation.

PETRONOR E&P ASA

ANNUAL REPORT 2022

EMAD SULTAN

Strategy and contracts manager

Qualifications:

Mr. Sultan holds a BSc Mechanical

Engineering degree from the

University of Washington.

Experience:

Mr. Sultan has 20 years of

international exploration and

production experience. He has

held multiple operation and

marketing management positions

with international oil field services

companies. He has also worked in

a number of technical, contracting

and strategy management roles with

major oil and gas operators.

CHRISTOPHER BUTLER

Group financial controller

Qualifications:

Mr. Butler is a Fellow of

the Institute of Chartered

Accountants in England and

Wales and has a BSc in Physics

from Warwick University.

Experience:

Mr. Butler has over 18 years

of financial and corporate

experience from positions in

public practice, oil & gas, and

mining spread over Africa, Asia,

and Europe, with roles that

included financial reporting,

contract negotiations, M&A, due

diligence, treasury and system

implementations.

PETRONOR E&P ASA

ANNUAL REPORT 2022

45

PETRONOR E&P ASA

ANNUAL REPORT 2022

46

Board of directors’ report

Board of directors’ report

The board of directors' report is presented for

PetroNor E&P ASA (“PetroNor” or “the company”)

and its subsidiaries for the year ended 31 December

2022.

DIRECTORS

The names of directors of the ultimate parent entity

of the group in office during the financial year and

until the date of this report are as follows. Directors

were in office for this entire period unless otherwise

stated.

PetroNor E&P ASA

Role

First appointed

Resigned

E Alhomouz

Non-exec chair

1 October 2021

-

J Iskander

Non-exec director

8 October 2021

-

J Pace

Non-exec director

1 October 2021

9 February 2022

I Smines Tybring-Gjedde

Non-exec director

1 October 2021

-

G Kielland

Non-exec director

1 October 2021

-

J Norman-Hansen

Non-exec director

26 January 2023

-

A Fawzi

Non-exec director

26 January 2023

-

The names of the directors of PetroNor E&P Limited

(Australia), up to completion of the redomicile from

Australia to Norway and the company ceasing to be

the parent company of the group in February 2022,

are as follows:

First appointed

E Alhomouz

Non-exec chair

30 August 2019

-

J Iskander

Non-exec director

30 August 2019

-

J Pace

Non-exec director

1 March 2020

-

I Smines Tybring-Gjedde

Non-exec director

29 May 2020

-

G Kielland

Non-exec director

1 February 2021

-

A Neuling

Non-exec director

6 April 2020

-

R Steinepreis

Non-exec director

6 April 2020

-

OVERVIEW OF THE BUSINESS

The board of directors’ report for the PetroNor

group (“the group”) comprises PetroNor E&P ASA

(“the parent company“) and all subsidiaries and

associated companies.

PetroNor E&P ASA is a Norwegian publicly listed

liability company with its head office in Oslo,

Norway.

The company is an independent oil and gas

exploration and production company with a

portfolio of assets in countries offshore West

Africa (Republic of Congo, The Gambia, Guinea-

Bissau, Senegal and Nigeria).

As of 31.12.2022, the company holds, through its

Congo subsidiary, 2P oil reserves of 18.5 MMbbls

and an average net production in 2022 of 4,021

bopd. In addition, PetroNor holds a portfolio of

exploration licences in Guinea-Bissau, The Gambia,

and Senegal with net unrisked prospective

resources of approximately 3.3 billion barrels

of oil (from multiple prospects, based upon ERC

Equipoise Competent Persons Report Letter March

2015 and management updates).

The asset portfolio as described in the portfolio

section is supported by staff in Norway, multiple

locations in Africa, the UK, and the UAE. The

management team at PetroNor has in-depth

industry experience from the oil and gas upstream

industry. Together they have built a broad network

of industry contacts, and developed strong

relationships with governments, institutions and

trusted partners fostered over many years of

valued collaboration.

Strategic Platform

PetroNor is a full cycle, Sub-Saharan oriented E&P

company focused on growing production and

reserves by leveraging existing assets to capitalise

on new venture opportunities combined with

targeted high impact exploration.

The management

team at PetroNor

has in-depth

industry

experience from

the oil and gas

upstream industry.

PETRONOR E&P ASA

ANNUAL REPORT 2022

48

Board of directors’ report

With strategic and long-term shareholders from

Norway and Abu Dhabi, PetroNor will look to

leverage its industry experience and government

relations in these jurisdictions.

Business Model

PetroNor will aim to steadily build and increase

its reserve base while using free cash flow to

pursue defined exploration targets in selected

and highly prospective basins, with a view to

delivering significant value to its shareholders from

high impact wells whilst being a good corporate

citizen and promoting excellence in operations and

innovation.

The synergies between PetroNor’s business

model and the latest technologies developed in

the offshore of the Norwegian Continental Shelf

allow for the maximum commercial outcome

with the least environmental impact. The transfer

of technology and excellence to the company’s

partners or host countries ensures long term

collaborations and development.

PetroNor looks at creating value through

application of cutting edge and smart technology

but always aims to strike the right balance between

innovations and proven technology. PetroNor E&P

gives special interest to IOR (improved oil recovery)

for improved and efficient operations.

The company’s area of focus is on Sub-Saharan

Africa and, more specifically, proven and producing

assets in the region with development and IOR

potential.

We leverage on our background and experience

from the oil and gas industry in Norway, the

country with the highest oil recovery rate in the

world, in our operations. The PetroNor team has a

proven track record from both IOR in the North Sea,

as well as from direct, day-to-day, on the ground

operations in Africa. The company’s flat structure

and assumed strict focus on execution and delivery

enable it to move rapidly to take advantage of

opportunities.

With many years of experience working in the

international oil and gas business, the management

and technical staff are able to apply and utilise

cutting edge industry innovations and technologies

to PetroNor's projects globally in order to maximise

their potential value. With access to the Norwegian

equity market with sophisticated investors in the

energy sector coupled with a strong cornerstone

investor from Abu Dhabi, the company is well

positioned to access capital both for smaller and

larger transaction opportunities.

IMPORTANT EVENTS

■

Lifting of 800,177 bbls occurred in 2022 at average

realised price of USD 90.99/bbl.

■

PNGF Sud gross production in 2022 was 8.72

MMbbls (2021: 7.53 MMbbls), corresponding to

a net allocated to the company of 1.47 MMbbls

(2021: 1.27), 4,021 bopd on average for the period

(2021: 3,473 bopd).

■

6 wells were drilled in PNGF Sud in 2022 with

additional 4 scheduled for 2023.

■

Listing on the main exchange of Oslo Børs

following the redomicile process from Australia to

Norway; first day of trading on 28 February 2022

■

Extended the board by addition of two new

members in January 2023

■

Acquisition of Panoro Energy ASA’s interest in Oil

Mining Lease no. 113 (“OML 113”) offshore Nigeria

was completed.

■

Award of The Gambia A4 licence (PetroNor 90

per cent equity and operator; Gambian National

Petroleum Company (GNPC) 10 per cent)

■

Successful renegotiation of debt facility for USD 11

million was completed prior to the end of the year.

PRINCIPAL ACTIVITY

The company’s principal activity during the year

was oil and gas exploration and production.

REVIEW OF OPERATIONS

Corporate

Corporate restructuring

On 7 October 2021, PetroNor E&P Limited and

PetroNor E&P ASA entered into an agreement

whereby shares in PetroNor E&P Limited

(previously listed on Euronext Expand) were

swapped for shares in PetroNor E&P ASA as part

of the process to redomicile the company from

Australia to Norway. Subsequently, PetroNor E&P

ASA submitted its application for its shares to be

listed on Oslo Stock Exchange.

On 29 November 2021, an extraordinary general

meeting was held in PetroNor E&P Ltd by order

of the Supreme Court of Western Australia where

the shareholders of the company approved the

proposed Scheme of Arrangement.

PetroNor E&P Ltd received the final approval from

the supreme court of Western Australia on 17

February 2022, followed by delisting of its shares

from Euronext Expand on 24 February 2022 in

conjunction with the listing of PetroNor E&P ASA.

PetroNor E&P ASA began trading on Oslo Stock

Exchange 28 February 2022 following the 1 to

1 share swap. The two Australian directors and

the company secretary were not reappointed

to PetroNor E&P ASA after the redomicile. In

PETRONOR E&P ASA

January 2023, following an extraordinary general

meeting, two additional directors were appointed

to the board so that the board now consists of

six directors, three of which are considered to be

independent.

Økokrim charges

In December 2021, the National Authority for

Investigation and Prosecution of Economic and

Environmental Crime (Nw.: Økokrim) in Norway

brought charges against individuals related

to the company. Økokrim announced that the

investigations were related to the individuals in

question on suspicion of corruption concerning

undisclosed projects in Africa, in addition to

confirming that no charges had been brought

against the group or other companies. The

company takes anti-corruption and the matter at

hand seriously and adopted a series of remediation

steps.

The individuals charged by Okokrim in December

were removed from business operations and Jens

Pace was appointed interim CEO of PetroNor.

The board engaged independent legal counsel

to support its governance and compliance steps,

initiating an independent fact finding process, to

identify any misconduct, to analyse the causes of

the underlying conduct, and setting up a separate

board sub-committee to support the board

with the matter at hand. These measures are

designed to assure the further implementation

of an effective anti-corruption and compliance

programme, founded on its existing code of

conduct, governing documents and related policies.

The board will instigate any other remedial action

deemed relevant to the situation. The measures

taken by the company are led by the board sub-

committee which does not comprise any persons

subject to the charges or any investigations.

Completion of OML 113 acquisition

On 13 July, PetroNor announced the completion of

the purchase of the Panoro Energy ASA (“Panoro”)

wholly owned subsidiaries Pan-Petroleum Nigeria

Holding BV (renamed “Aje Nigeria Holding BV” )

and Pan-Petroleum Services Holdings BV (renamed

“Aje Services Holding BV”) that together hold 100

per cent of the shares in Pan-Petroleum Aje Ltd (

renamed “Aje Production Ltd“). Pan Aje participates

in the exploration for and production of

hydrocarbons in Nigeria and holds a 6.502 per cent

participating interest, with a 16.255 per cent cost

bearing interest, representing an economic interest

of between 12.1913 per cent and 16.255 per cent in

OML 113, containing the Aje oil and gas field. The

upfront consideration to Panoro for the transaction

was USD 10 million which was paid via the allotment

and issue of 96,577,537 new PetroNor shares (“the

consideration shares”). The consideration shares

were issued and subsequently registered with

the Norwegian Register of Business Enterprises

(Brønnøysundregistrene) on 26 July 2022.

Asset overview

Republic of Congo – PNGF Sud

The company has three production licence

agreements (Tchbouela II, Tchendo II, and Tchibeli-

Litanzi II), which cover six oil fields located in

80-100 m water depths approximately 25 km off

the coast of Pointe-Noire. The complex oil field was

discovered in 1979, commenced production in 1987,

and is called PNGF Sud.

Since granting of the licences in January 2017,

Perenco, with partner support has been committed

to strict HSE compliance while growing production,

improving maintenance routines and field integrity

in a stepwise and prudent manner. This led to

an increase in gross production from c. 15,000

bopd gross in January 2017 to an average gross

production in 2022 of 23,891 bopd.

The 17-well drilling campaign targeting PNGF

Sud that commenced in 2021 led to six new wells

in 2022 adding to the production. The drilling

programme will continue in 2023 with work

scheduled to commence in April 2023 to add four

planned new wells.

The PNGF Sud fields are developed with eight

wellhead platforms and currently produce from 67

active production wells, with oil exported via the

onshore Djeno terminal. With its long production

history, substantial well count and extensive

infrastructure, PNGF Sud offers well diversified and

low risk production and reserves with low break-

even cost.

In March 2023, AGR Petroleum prepared a

competent person’s report (“CPR”) whereby the

reserves were calculated as at 31 December 2022.

Using the CPR and adjusting for 2022 production as

at 31 December 2022:

Participation Interest

16.83%

1P reserves (MMbbls)

12.5

2P reserves (MMbbls)

18.5

PetroNor’s contingent resource base includes

discoveries of varying degrees of maturity

towards development decisions. At the end of

the year, PNGF Sud contains a net 2C volume of

approximately 7.1 MMbbls assuming a 16.83 per

cent participation interest.

PETRONOR E&P ASA

ANNUAL REPORT 2022

50

Gross production during 2022 was 8.72 MMbbls,

corresponding to 1.47 MMbbls net to the company.

The current indirect participation interest is 16.83

per cent following transactions during 2021.

Republic of Congo – PNGF Bis

PNGF Bis is located next to PNGF Sud and contains

two discoveries from 1985-1991 in the structures

of Loussima SW and Loussima. The company and

its PNGF Sud partners have a right to negotiate the

licence agreement.

The three discovery wells tested from 1,150 to

4,700 bopd of light, good quality oil. Perenco has

made a detailed reinterpretation, 3D modelling

and facilities study for the Loussima SW discovery,

yielding >100 MMbbl of in-place resources and a

possible tie-back to Tchibouela.

AGR Petroleum Services warrants gross 2C

resources of 28.9 MMbbl including verification

of the tieback scenario given above. PetroNor’s

indirect participation interest is 23.56 per cent

following transactions in 2021.

Nigeria – OML-113 / The Aje Field

As announced on 27 January 2022, the Nigeria

Upstream Petroleum Regulatory Commission

(formerly the Nigerian Department of Petroleum

Resources) provided its consent to PetroNor’s

acquisition of Panoro’s ownership interest in Oil

Mining Lease no. 113 (“OML 113”) offshore Nigeria,

containing the Aje oil and gas field. The acquisition

transaction completed in July 2022. PetroNor now

holds a 6.502 per cent participating interest with a

16.255 per cent cost bearing interest, representing

between 12.1916 per cent and 16.255 per cent in

the OML 113 licence area which contains the Aje oil

and gas field.

Aje Production was created as a joint venture

between PetroNor and Yinka Folawiyo Petroleum

Deep Water (“YFP-DW”) will lead the technical and

management efforts in the next phase of the Aje

field development. PetroNor will contribute the

acquired interest in Aje, and YFP-DW will contribute

all interest in Aje to the Aje Production JV.

PetroNor entered into separate agreements with

the OML 113 operator in 2019 to create a holding

company to exploit the substantial gas and liquids

reserves at Aje. The regulatory process for this

agreement was aligned with the transaction

and was approved concurrently with the Panoro

transaction. Petronor and YFP-DW are working

towards completing the formation of the jointly

owned Aje Production. PetroNor’s ownership

will be 52 per cent in Aje Production which will

hold a 15.5 per cent participating interest and an

economic interest in the order of 38.755 per cent in

OML 113 during the majority of the project period.

YFP has undertaken to align its voting rights with

Aje Production’s objectives in the development of

the Aje field.

PetroNor continues work to update the field

development plan (“FDP”) to expedite gas

development and engaged with potential off-

takers and partners. The consent from the Nigeria

Upstream Petroleum Regulatory Commission

has allowed PetroNor to re-engage financial and

industrial partners with a target to mature the

project towards an FID. Development plans for the

Aje gas condensate and additional oil is progressing

jointly with the license partners. The plan is to

proceed toward an FID involving changeout of the

FPSO, drilling further gas and oil development

wells, building a 30 km pipeline to shore to a

receiving LPG plant close to the export compressor

station of the West African Gas Pipeline (WAGP).

Condensate and oil will be produced and offloaded

offshore while offtake agreements will include

gas sales and swap arrangement for gas and LPG

products.

Exploration the MSGBC Basin

The Gambia – A4

Following positive discussions with the Gambian

Government, PetroNor announced that it has

decided to exercise its right to continue with

the Petroleum, Exploration, Development and

Production Licence Agreement (“PEPLA”) for the A4

licence in The Gambia.

PetroNor and Gambia National Petroleum

Corporation (“GNPC”) have also signed a Joint

Operating Agreement (“JOA”) for the A4 Licence

offshore Gambia. GNPC, as Government licensee,

has been assigned a 10 per cent participating

interest in the license.

The first exploration period is for three years, the

first 18 months of which are for additional prospect

technical maturation work. The well commitment

is made upon entry to the second 18-month

period. This highly prospective block lies 30 km

South of the Senegal “Sangomar” field which will

start production in 2023 at 100,000 bopd. The

block contains multiple low risk commercial size

prospects.

PetroNor E&P Gambia Ltd will be able to carry

approved prior sunk costs associated with A4 into

the new agreement.

The PEPLA is a royalty plus tax system valid for 30

years with an option of a 10-year extension. Post

PETRONOR E&P ASA

ANNUAL REPORT 2022

51

Board of directors’ report

discovery, the licence moves into an exploration/

appraisal phase where the commercial potential

of the discovery is ascertained and a development

decision taken, followed by a development and

subsequent production phase.

The A4 licence is located offshore within the

Mauritania-Senegal-Gambia-Bissau-Conakry Basin.

Hydrocarbons are proven throughout the basin,

the most local and notable is the 460 MMbbls

Sangomar field, 30 km to the North in Senegal

due to produce first oil in late 2023, operated by

Woodside Petroleum.

PetroNor continues to seek partners to drill one

exploration well in this highly attractive acreage

and aims to participate in any future well at an

equity level of 30-50 per cent.

Guinea-Bissau – Sinapa 2 and Esperança 4A & 5A

PetroNor is continuing to advance plans to drill

the Atum prospect within the Sinapa 2 licence.

Following the publication, post period, in the

Official Gazette of Guinea-Bissau (Boletim Oficial

45), the FAR Ltd 21.43 per cent equity interest has

officially been transferred to PetroNor E&P AB. FAR

had formally applied to withdraw from the licences

following an announcement on the 15 March 2022.

Petronor now holds 100 per cent equity.

Drilling preparation was restarted with EXCEED in

the third quarter of 2022. Long lead items required

for drilling operations have been secured and

pre-drill studies and detailed well planning and

preparation are under way.

The Atum-1x well will test a highly attractive and

material prospect on the Sinapa 2 licence. Recently

reprocessed seismic data has been interpreted as

part of the ongoing evaluation of both licences and

as preparation to drilling.

Senegal – ROP & SOSP

In July 2018, the company’s subsidiary African

Petroleum Senegal Limited registered arbitration

proceedings with the International Centre for

Settlement of Investment Disputes (ICSID) (case

ARB/18/24) to protect its interests in the Senegal

Offshore Sud Profond and Rufisque Offshore

Profond blocks. We await the outcome of the ICSID

Tribunal which held a hearing on jurisdiction and

the merits in Paris during March 2022.

FINANCIAL REVIEW

The board of directors (“the board”) confirms

that the annual financial statements have

been prepared pursuant to the going concern

assumption, and that this assumption was realistic

at the balance sheet date. The going concern

assumption is based upon the financial position

of the group and the development plans currently

in place. The group recognises that in order to

fund on-going operations and pursue organic

and inorganic growth opportunities it will require

additional funding. This funding may be sourced

through joint venture equity or share issues or

through debt finance.

The going concern basis assumes the continuity

of normal business activity and the realisation of

assets and the settlement of liabilities in the normal

course of business. The underlying business of

the group created a net profit after tax of USD

34.3 million for the year ended 31 December 2022,

with strong production from the Congo assets

generating 5,206 bopd in first quarter of 2023. As

at 31 December, 2022 the group had a cash balance

of USD 24.8 million (2021 USD 31.8 million). The

company has listed on the main exchange of Oslo

Børs, successfully refinanced its debt, achieved

high production levels following a successful

in-fill drilling campaign and continues to seek

for potential partners to join the company on its

exploration portfolio. This demonstrates that the

business has continued to operate effectively, and

businesses are willing to engage with the company

and this has enabled the directors of PetroNor (“the

directors”) to form the opinion that the company

will be in a position to continue to meet its liabilities

and obligations for a period of at least twelve

months from the date of signing this report.

This financial report does not include any

adjustments relating to the recoverability and

classification of recorded asset amounts or to the

amounts and classification of liabilities that might

be necessary should the group not continue as a

going concern.

The following financial review is based on the

financial statements of PetroNor E&P ASA and its

subsidiaries. The statements have been prepared in

accordance with International Financial Reporting

Standards (IFRS) as adopted by the EU as well as

Norwegian accounting legislation.

In the view of the board, the statement of

comprehensive income, statement of changes

in equity, statement of financial position and

cashflow provide satisfactory information about

the operations, financial results and position of the

group and the parent company at 31 December

2022.

The consolidated financial statements are

presented in US dollars.

PETRONOR E&P ASA

ANNUAL REPORT 2022

52

Board of directors’ report

Consolidated statement of comprehensive income

Key consolidated income statement figures

For the year ended 31 December

Amounts in USD million

2022

2021

Revenue from sales of petroleum products

72.8

57.6

Assignment of tax oil

47.6

33.1

Assignment of royalties

25.7

15.8

146.1

106.5

EBITDA

96.4

61.9

34.3

21.1

Quantity of oil lifted (barrels)

800,177

831,089

Average selling price (USD per barrel)

90.99

69.31

Quantity of net oil produced after royalty, cost oil and tax oil (barrels)

900,495

821,536

The directors are pleased to report that favourable

market conditions and the on-going corporate

focus on cost control have resulted in EBITDA of

USD 96.4 million for the year.

The group generated a net profit for the year of

USD 34.3 million (2021: USD 21.1 million). These

figures are due to an improving global market price

for oil and to a steady production from PNGF Sud

throughout the year as a result of the workover

program. In fact, since the group first entered the

licences in 2017, it has seen a 59 per cent increase in

the gross field production.

During 2022, there were only 2 liftings of oil, with a

3.7 per cent decrease on the 831,089 barrels lifted

in 2021. Increased oil prices during 2022 resulted

in the group achieving higher revenues over lower

volumes. The group achieved an average selling

price of USD 90.99/bbl for the year, compared to

the USD 69.31/bbl in 2021. As a consequence, the

group reports USD 146.1 million in revenue, a 37.2

per cent increase on 2021 USD 106.5 million.

Exploration expenses for The Gambia licence for

the year were USD 0.5 million with licence costs

for Guinea-Bissau being USD 0.3 million. Under

PetroNor’s accounting policy, seismic data costs

and time writing are expensed and not capitalised

to intangible assets.

The administrative expense in 2022 of USD 14.4

million were higher than in 2021 (USD 13.1 million)

and included business development costs of

USD 0.5 million (USD 0.5 million 2021). The group

also incurred non-recurring third-party costs

of approximately USD 0.4 million relating to the

redomicile project, in addition to excess personnel

costs and legal fees relating to the Økokrim matter.

The company believes that the redomicile was a first

step to further streamlining the group’s corporate

structure and further reduce corporate overheads in

the longer term. Listing on the Oslo Stock Exchange

will enhance the group's profile with investors,

business partners, suppliers and customers, giving

the group better access to capital markets. The move

gives shareholders access to a more liquid market

for shares and will facilitate a more diversified

shareholder base and additional investors.

Financial position, financing and equity

The group continues to build the strength of

the balance sheet with condensed statement of

financial position below.

Condensed consolidated balance sheet

At 31 December

Amounts in USD million

2022

2021

Current assets

44.8

Non-current assets

139.6

Total assets

184.5

Current liabilities

26.4

Non-current liabilities

48.2

16.3

Total liabilities

74.6

Net assets

109.9

97.6

Non-controlling interests

12.3

109.9

The OML 113 assets acquired have been fully

consolidated onto the balance sheet, which has

resulted in an addition to intangible assets of USD

34.3 million. The infill drilling programme on the

PNFG Sud asset has added USD 35.7 million to

property plant and equipment (“PPE”) and along with

the acquisition of the OML 113 PPE of USD 0.9 million

added USD 36.5 million to tangible assets. With the

award of the A4 licence in The Gambia during the

year, licence costs of USD 1.0 million were added

to intangible assets in accordance with PetroNor’s

capitalisation policy. The past costs of the former

A4 licence are allowed to be carried over to the new

licence, the past cost pool is far in excess of the

carrying value of the asset as at 31 December 2022.

Historic expenditure on the Guinea-Bissau

licences had been impaired prior to acquisition by

PetroNor; in accordance with PetroNor accounting

policies only those costs relating directly to the

licences have been capitalised to intangible assets.

Drilling inventories were written back up to cost

in the period reflecting conditions in the drilling

market. The prior impairment to inventory values

was unwound increasing the value of inventories

in Guinea-Bissau by USD 2.5 million. Material

inventories for the PNGF Sud assets have also

increased by USD 1.7 million as a result of the

ongoing infill drilling campaign. There was minimal

stock at the end of 2021 as a lifting had occurred

just before year end on 31 December 2021,

consequently crude oil inventories have increased

by USD 6.9 million in 2022.

The group has advanced USD 29.4 million (2021:

USD 26.8 million) in cash to the operator towards

the asset retirement obligation (“ARO”) of PNGF

Sud, this is considered a non-current “Other

receivable”.

The level of trade receivables has reduced as

compared to the 2021 closing position. This was

due to the lifting on the PNFG Sud assets at year

end, trade receivables being USD 1.1 million at year

end 2022 versus USD 13.8 million in 2021.

The addition of joint venture payables for the OML

113 asset, USD 2.7 million is offset by the early

payment of joint interest billings for the PNGF asset

so that trade payables of USD 20.8 million are USD

9.2 million lower than the 2021 closing position of

USD 30.0 million. In addition, the level of liabilities

to related parties has been substantially reduced in

2022 with the payment of USD 1.3 million prior to

year-end.

The level of provisions has increased due to the

addition of an asset retirement obligation for

OML 113 of USD 3.8 million . In addition, funds set

aside for CSR projects in the PNFG Sud assets have

been reclassified as provisions USD 3.6 million.

Provisions, net of the unwinding of discount, were

USD 24.6 million versus USD 16.3 million in 2021.

Funding

At the year end, PetroNor closed on a debt

refinancing facility of USD 11 million, repayable

over 24 months. The funding was put in place at an

interest rate of 11 per cent and on similar terms to

the previous facility. Loan proceeds were received

net of a facility arrangement fee of 1.5 per cent. The

previous facility had been completed and expunged

in Q4 2022 in addition a separate USD 3.9 million

“Symero” loan was also repaid. PetroNor therefore

exit the year with a restructured balance sheet.

Cash Flow

Cash generated from operations were USD 81.9

million, however the inflows were seen in the last

part of the year due to the timing of the liftings.

The investment in PNGF Sud assets consumed USD

35.7 million in cash in the period but the benefits

in increased production were already being yielded

in record production levels by the end of the year.

Repayment of loans and borrowings were USD

13.1 million in the period with the addition of a

new financing facility at the year-end of USD 11.0

million giving a net reduction in loan debt of USD

2.1 million.

The group exits the accounting period with a cash

balance of USD 24.8 million.

Parent company results

At the presentation date of the financial

statements, the parent entity of the group was

PetroNor E&P ASA, a company domiciled in

Norway.

The company reported a loss for the period of USD

5.8 million. The company’s financial activities were

purely corporate and include professional fees and

fees for the services of the board directors.

Dividends paid or recommended

During the year, no dividend was paid or

recommended at group level.

RISK FACTORS

Operational risk factors

The group participates in oil and gas projects in

countries in West Africa with emerging economies,

such as Congo Brazzaville, Nigeria, The Gambia,

Senegal, and Guinea-Bissau.

Oil and gas exploration, development and

production activities in such emerging markets

are subject to significant political and economic

uncertainties that may include, but are not limited

to, the risk of war, terrorism, expropriation,

nationalisation, renegotiation or nullification of

existing or future licences and contracts, changes in

crude oil or natural gas pricing policies, changes in

taxation and fiscal policies, imposition of currency

controls and imposition of international sanctions.

Travel bans, asset freezes or other sanctions may

be imposed and have historically been imposed on

countries in which the group operates.

The jurisdictions in which the group operates may

also have less developed legal systems than more

established economies which could result in risks

such as:

i.

effective legal redress in the courts of such

jurisdictions, whether in respect of a breach of

law or regulation, or in an ownership dispute,

being more difficult to obtain;

ii.

a higher degree of discretion on the part of

governmental authorities;

iii.

the lack of judicial or administrative guidance on

interpreting applicable rules and regulations;

iv. inconsistencies or conflicts between and within

various laws, regulations, decrees, orders, and

resolutions; or

v. relative inexperience of the judiciary and courts

in such matters.

PETRONOR E&P ASA

ANNUAL REPORT 2022

55

Board of directors’ report

The group may also target acquisitions in other

countries in Africa. The production sharing or other

licencing contracts in such jurisdictions may provide

for payments to the governments and/or national

oil companies (farm-in fees, signature bonuses,

taxes, training budgets, equipment budgets,

carry of certain expenditures etc.). Furthermore,

the group has a number of consultants working

for it in the area. Although the group believes all

its consultancy agreements are entered into on

clear and transparent terms, there is a risk that

agents or other persons acting on behalf of the

group may engage in corrupt activities without the

knowledge of the group. Under applicable laws

relating to the group's assets, local participation

is or may be required in the oil and gas sector,

but it may prove difficult to always receive final

confirmation as to who the ultimate owners and

affiliations of such local partners are. Through the

group's investigation, it has not been possible to

substantiate ultimate ownership and affiliations

of all, current local partners in Congo and there

can be no assurance that there are no government

affiliations within the ultimate shareholders of

the local partners in Congo. Corrupt practices of

third parties or anyone working for the group or

any of its affiliated parties, or allegations of such

practices, may have a material adverse effect on the

reputation, performance, financial condition, cash

flow, prospects and/or results of the group.

While the Økokrim personal investigation into

individuals associated with the company continues

without resolution, business partners may be

required to perform enhanced KYC procedures on

PetroNor before they can engage with the group.

This may cause delays to new operations or even

Under applicable

laws relating to

the group's assets,

local participation

is or may be

required in the oil

and gas sector.

PETRONOR E&P ASA

ANNUAL REPORT 2022

56

Board of directors’ report

stop possible relationships depending on the risk

profiles of individual businesses.

Business risk factors

The group's business, results of operations, value

of assets, reserves, cash flows, financial condition

and access to capital depend significantly upon,

and may be adversely affected by, the level of oil

and gas prices, which are highly volatile.

The group's revenues, cash flow, reserve estimates,

profitability and rate of growth depend substantially

on prevailing international and local prices of oil and

gas. Prices for oil and gas may fluctuate substantially

based on factors beyond the group's control.

Consequently, it is impossible to accurately predict

future oil and gas price movements. Oil and gas

prices are volatile and have witnessed significant

changes in recent years, for many reasons, including,

but not limited to, changes in global and regional

supply and demand, geopolitical uncertainty,

availability of equipment and new technologies,

weather conditions and natural disasters, terrorism

as well as global and regional economic conditions.

Sustained lower oil and gas prices or price declines

may inter alia lead to a material decrease in the

group's net production revenues.

Currently, all of the group’s production comes from

fields in the PNGF Sud asset in Congo Brazzaville.

The group’s operations and cash flow will be

restricted to a very limited number of fields.

If mechanical or technical problems, storms,

shutdowns or other events or problems affect

the current or future production of the current

producing assets of the group, or new fields coming

into production, it may have direct and significant

impact on a substantial portion of the group’s

production and hence the group’s revenue, profits

and financial position as a whole.

Rising climate change concerns have led and

could lead to additional legal and/or regulatory

measures which could result in project delays or

cancellations, a decrease in demand for fossil fuels

and additional compliance obligations, each of

which could materially and adversely impact the

group's costs and/or revenues.

In general, the group's operations are subject to

risks which are typical for the offshore oil and gas

industry, all of which may have a material adverse

effect on the group's operations, cash flow and

financial position, relating (but not limited) to the

following:

■

extension of existing licences and permits,

including whether any extensions will be subject

to onerous conditions;

■

delays, cost inflation, potential penalties,

and regulatory requirements with respect to

exploration, development projects and

■

production of hydrocarbons, which may lead

to hydrocarbon production being restricted,

delayed or terminated due to a number of

internal or external factors;

■

decommissioning obligations and activities

which will incur costs that may be in excess of

expectations and budgets;

■

third-party operators and partners and conflicts

within a licence group, such as the publicly know

disputes within the Aje group;

■

capacity constraints and cost inflation in the

service sector and lack of availability of required

services and equipment;

■

legal disputes and legal proceedings the group

may be involved in in order to defend or enforce

any of its rights or obligations under its licences,

agreements or otherwise, which may be costly

and time consuming;

■

legal charges against individuals who are related

to the company, i.e. the ongoing prosecution

against persons who are major shareholders of-

and related to the company, which may lead to

reputational damage and complications related

to the group's dealing with third parties and the

authorities and its raising of debt and equity

financing;

■

restricted or limited access to necessary

infrastructure or capacity booking for the

transportation of oil and gas;

■

restrictions with respect to offtake of oil and

gas, including currency exchange regulations

delaying or preventing timely settlement, off-

taker credit risks as well as hostilities or acts of

terrorism or war preventing offtake or impeding

offtake and further production of crude;

■

restrictions in the ability to sell or transfer

licence interests due to regulatory consent

requirements, provisions in its joint operating

agreements, including pre-emption rights, if any,

or applicable legislation;

■

extremely complex and stringent regulations

concerning health, safety, and environment

issues; and

■

capsizing, environmental pollution to sea and air

and other maritime disasters.

Financial risk factors

The overall risk management program seeks

to minimise the potential adverse effects of

unpredictable fluctuations in financial markets on

financial performance, i.e., risks associated with

currency exposures and debt servicing. Financial

instruments such as derivatives, forward contracts

and currency swaps are continuously being

evaluated for the hedging of such risk exposures.

PETRONOR E&P ASA

ANNUAL REPORT 2022

57

Board of directors’ report

Due to the international nature of its operations,

the group is exposed to risk arising from currency

exposure, primarily with respect to the Norwegian

Kroner (NOK), and the Great British Pound (GBP).

The group's activities are and will continue to

be capital intensive. The group expects future

investments into existing and new hydrocarbon

assets to be served by cash flow from ongoing

operations. However, it is also expected that

the group will look to raise debt to part-fund

future growth. Such debt may not be timely

available, or only be available at terms which are

unattractive or makes investments less profitable

than first expected. Restrictions in raising, or the

unavailability of debt may prevent the group from

grosing as planned and may make the group to

forego or lose attractive opportunities which in

turn could have a negative impact on the group’s

financial position and future prospects.

SHARE CAPITAL

PetroNor E&P ASA is listed on the Oslo Stock

Exchange where it trades under the ticker symbol

PNOR. At 31 December 2022, the company’s

share capital consisted of 1,423,568,543 ordinary

shares. At an extraordinary general meeting on

23 February 2022, PetroNor E&P ASA issued new

shares in a ratio of 1:1 to the existing shareholders

of PetroNor E&P Limited.

The company has one class of shares in issue,

and in accordance with the Norwegian Public

Limited Companies Act, all shares in that class

provide equal rights in the company. Each of the

shares carries one vote. The shares are freely

transferrable. The Articles of Association do not

provide for any restrictions on the transfer of

shares, or a right of first refusal for the shares.

Share transfers are not subject to approval by

the board of directors. The shares are registered

in book-entry form with the Norwegian Central

Securities Depository (VPS) and have ISIN

NO0011157232.

At 31 March 2023, the company had 8,352

shareholders and 1,423,568,543 shares. The table

below shows the 20 largest shareholders in the

company:

#

Shareholder

Number of shares

Per cent

1

Petromal LLC

1

481,481,666

33.82%

2

Symero Limited

2

138,763,636

9.75%

3

NOR Energy AS

3

135,070,623

9.49%

4

Ambolt Invest AS

4

87,583,283

6.15%

5

Gulshagen III AS

5

45,000,000

3.16%

6

Gulshagen IV AS

5

45,000,000

3.16%

7

Energie AS

24,313,630

1.71%

8

Nordnet Livsforsikring AS

21,722,952

1.53%

9

Nordnet Bank AB

20,356,061

1.43%

10

Enga Invest AS

10,722,775

0.75%

11

Omar Al-Qattan

7,645,454

0.54%

12

Leena Al-Qattan

7,645,454

0.54%

13

Pust For Livet AS

7,497,609

0.53%

14

Danske Bank A/S

7,001,749

0.49%

15

UBS Switzerland AG

6,920,643

0.49%

16

Avanza Bank AB

4,175,551

0.29%

17

Helge Holdhus

4,014,000

0.28%

18

Sandberg JH AS

4,000,000

0.28%

19

Spit Air AS

4,000,000

0.28%

20

Kjell Rygg

3,399,200

0.24%

Subtotal

1,066,314,286

74.90%

Others

357,254,257

25.10%

Total

1,423,568,543

100.00%

Options

Unissued shares under option

At the date of the publishing of this report there

were no share options in the company.

213,400 options with an exercise price of NOK 2.50

each in PetroNor E&P Limited (Australia) expired on

11 January 2022 before the redomicile to Norway.

Further 1,176,070 options with an exercise price of

NOK 7.75 each expired on 31 May 2022.

No ordinary shares were issued on the exercise of

options in 2022 (2021: nil).

Interests in Shares & Options

At the date of this report:

■

Interim CEO Mr Pace holds 1,465,524 shares.

■

Board Chair Mr Alhomouz has no personal

interests in shares, but has influence over

481,481,666 shares as the CEO of significant

shareholder Petromal LLC.

■

Board member, Jarle Norman-Hansen holds

directly and through an indirect beneficial

interest 89,733,877 shares.

No other current directors hold shares or options.

Meetings of directors

The board of PetroNor E&P ASA held a total of 11

board meetings and 2 extraordinary meetings

in 2022. The number of directors' meetings of

PetroNor E&P Limited (Australia) held during the

period where each director held office during the

financial year was five.

Indemnifying directors and officers

The group has taken out an insurance policy to

indemnify the directors and officers of the group

against liability when acting for the group.

ESG

PetroNor is required to report on its corporate

responsibility and selected related issues under

§3-3a and §3-3c of the Norwegian Accounting Act.

The detailed reporting on all relevant topics can be

found in the separate ESG report, which is included

in this Annual Report on page 25.

Outside the

PetroNor head

office in Oslo

following listing

on the Oslo Bors.

PETRONOR E&P ASA

CORPORATE GOVERNANCE

Good corporate governance provides the

foundation for long-term value creation, to

the benefit of shareholders, employees and

other stakeholders. The Board of PetroNor has

established a set of governance principles in

order to ensure a clear division of roles between

the Board, the executive management and

the shareholders. The principles are based on

the Norwegian Code of Practice for Corporate

Governance.

PetroNor EP& ASA is subject to annual corporate

governance reporting requirements under

section 3-3b of the Norwegian Accounting Act and

the Norwegian Code of Practice for Corporate

Governance, cf. section 7 on the continuing

obligations of stock exchange listed companies.

The Accounting Act may be found (in Norwegian) at

www.lovdata.no

. The Norwegian Code of Practice

for Corporate Governance, which was last revised

on 14 October 2021, may be found at

www.nues.no

.

PetroNor revised its Code of Conduct due to the

change in legal legislation as a consequence of

installing a Norwegian entity as the new Parent

company of the group. The full policy is available on

the company’s website. The annual statement on

corporate governance for 2022 has been approved

by the board and can be found on page 34 in this

Annual Report.

RESEARCH AND DEVELOPMENT

The group made no investments in research and

development in 2022 or 2021.

PAYMENTS TO GOVERNMENTS

This country-by-country report has been developed

to comply with the legal requirements in the

Norwegian Security Trading Act ("Verdipapir-

handelloven") § 5-5a. The detailed regulation can

be found in the regulation "Forskrift om land-for-

land rapportering".

In 2022, the company was engaged in extracting

activities encompassed by the legislation above in

the following countries: Republic of Congo, Nigeria,

The Gambia, Guinea-Bissau and Senegal. This

report discloses relevant payments to governments

for extractive activities in the countries above,

in addition to some contextual information as

required by the regulation in the "Forskrift om land-

for-land rapportering".

Basis for preparation

The report includes direct payments to

governments from subsidiaries, joint operations,

and joint ventures. In some cases, however, certain

payments to governments may be made by an

operator on behalf of a partnership. This is often

the case for area fees. In such cases, the company

will report their paying interest share of the

payment made by the operator.

Definitions

Government

– In the context of this report, a

government means any national, regional, or local

authority of a country. It includes a department,

agency or undertaking controlled by that authority.

Project

– For this reporting, a project is defined as

an investment in a concession agreement.

Licence fees

– Typically levied on the right to use

a geographical area for exploration, development,

and production, and include rental fees, area

fees, entry fees, severance tax, concession fees

and other considerations for licences and/or

concessions. Administrative government fees that

are not specifically related to the extractive sector,

or to access extractive resources, are excluded.

Materiality

– As per the “Forskrift om land-for-land

rapportering”, payments made as a single payment,

or as a series of connected payments that equal or

exceed Norwegian Kroner (NOK) 800,000 during

the year are disclosed.

Reporting currency

– Payments to governments

are converted from the functional currency of each

legal entity into the presentation currency, United

States Dollars (USD). The payments for entities

whose functional currencies are other than USD are

converted into USD at the foreign exchange rate at

the average annual rate.

Payments to governments and contextual

information

The consolidated overview below discloses the sum

of the company's payments to governments in each

individual country where extractive activities are

performed, per country/project.

PETRONOR E&P ASA

ANNUAL REPORT 2022

Payments per project

In USD thousand

Royalties

Oil tax

Other amounts

Total

PNGF Sud

25,650

46,803

1,987

74,440

Total Congo

25,650

46,803

1,987

74,440

A4

Nil

Nil

1,000

1,000

Total The Gambia

Nil

Nil

1,000

1,000

Sinapa

Nil

Nil

111

111

Esperanca

Nil

Nil

111

111

Total Guinea-Bissau

Nil

Nil

222

222

OML 113*

Nil

Nil

1,000

1,000

Total Nigeria

Nil

Nil

1,000

1,000

* From the point of acquisition in July 2022.

In USD thousand

Main country of

operations

EEs

Interest paid or payable

to a group entity

Norway

PetroNor E&P ASA

Norway

-

-

PetroNor E&P Services AS

Norway

3

-

Hemla Africa Holding AS

Norway

-

-

Aje Production AS

Norway

-

-

Australia

PetroNor E&P Pty Ltd

Australia

-

-

Cyprus

PetroNor E&P Ltd

Cyprus

1

360

Republic of Congo

Hemla E&P Congo SA

Republic of Congo

3

304

United Kingdom

PetroNor E&P Services Ltd

United Kingdom

4

-

Nigeria

PetroNor E&P Ltd

Nigeria

4

-

Aje Production Ltd

Nigeria

-

-

Netherlands

Aje Services Holding BV

The Netherlands

-

-

Aje Nigeria Holdings BV

The Netherlands

-

-

Cayman Islands

Petroleum E&P Gambia Ltd

The Gambia

3

-

African Petroleum Senegal Ltd

Senegal

-

-

Senegal

African Petroleum Senegal SAU

Senegal

2

-

Sweden

PetroNor E&P AB

Guinea-Bissau

-

-

1) Average number of employees’ during the year excluding directors.

SIGNIFICANT CHANGES IN THE

STATE OF AFFAIRS

Just before the year-end in 2021, the company

refreshed its code of Conduct and associated

policies in anticipation of becoming subject to the

laws and regulations of Norway with the redomicile

project and intention to move the listing to the

main Oslo Stock Exchange. The redomicile was

completed in February 2022 resulting in PetroNor

E&P ASA becoming the parent entity of the Group

and listing on the Oslo Børs.

SIGNIFICANT EVENTS AFTER THE

BALANCE DATE

On 26 January 2023, two new directors were

appointed to the board. The appointments

were pursuant to recommendations from the

nomination committee. The two new directors,

Mrs. Azza Fawzi and Mr. Jarle Norman-Hansen, take

the company’s board to a total of six directors.

In the Official Gazette of Guinea-Bissau (Boletim

Oficial 45), it was announced that following the

withdrawal of FAR Limited from the Sinapa and

Esperança licences offshore Guinea-Bissau, their

equity interest had been awarded to PetroNor.

At the start of February, 317,904 bbls of oil were

lifted from the Djeno Terminal. This sale generated

a cash inflow of USD 24.1 million. At the end of

March, a further 260,362 bbls of oil were lifted

generating USD 21.2 million of cash inflow.

In a CPR update prepared by AGR Petroleum

Services AS on the company’s PNGF Sud asset

in Congo, the 2P reserves were updated to 18.5

MMbbls

with 2C reserves updated to 23.5 MMbbls

on a gross basis.

Except for the above, the company has not

identified any events with significant accounting

impacts that have occurred between the end of the

reporting period and the date of the publishing of

this report.

LIKELY DEVELOPMENTS AND EXPECTED

RESULTS

As the infill drilling program for Litanzi and Tchendo

continues with the drilling rig returning in the

second quarter, the company looks forward to

seeing the continued impact of this significant three

year CAPEX investment program on the production

levels of the PNGF Sud licence as these new wells

come into operation.

The company will continue to seek partners for its

high equity exploration portfolio to share in the

value creation through the drill bit.

After the 2022 hearings in Paris for the arbitration

matter associated with the Senegalese licences, a

decision is expected from the Tribunal.

The board wishes to thank the staff, consultants,

services providers and shareholders for their

continued commitment to the company.

DECLARATION BY THE BOARD OF

DIRECTORS AND CEO

We hereby confirm that, to the best of our

knowledge, the consolidated annual financial

statements for 1 January to 31 December 2022

have been prepared in accordance with applicable

accounting standards and that the information in

the financial statements give a true and fair view of

the assets, liabilities, financial position and profit or

loss of the company. We confirm that the financial

statements give an accurate and fair view of the

development, profit, and position of the company,

as well as a description of the principal risks and

uncertainties it is facing.

Oslo, Norway, 28 April 2023

The board of directors and CEO – PetroNor ASA

Eyas Alhomouz

Gro Kielland

Joseph Iskander

Ingvil Smines Tybring-Gjedde

Chair

Director

Director

Director

Azza Fawzi

Jarle Norman-Hansen

Jens Pace

Director

Director

Interim CEO

PETRONOR E&P ASA

ANNUAL REPORT 2022

62

PETRONOR E&P ASA

ANNUAL REPORT 2022

63

Board of directors’ report

Statement of remuneration

Purpose and general principles for operation

of the remuneration committee

The committee must at least annually review

and re-assess its terms of reference and

the instructions relating to the review and

determination of remuneration of the executives

and senior management team. Any recommended

changes must be proposed to the board, which

must have sole authority to amend the terms of

reference of the remuneration committee.

The committee must be appointed by the board to:

■

Evaluate and propose the compensation of the

company’s chief executive officer (“CEO”) and

other members of the executive management

team; and

■

Produce an annual report on the compensation

of the executive management team, which must

be included in the company’s annual accounts

pursuant to applicable rules and regulations,

including accounting standards, promulgated

from time to time.

The committee may hold meetings at such time and

location as the committee may determine, but in

no event must the committee meet less frequently

than annually. When it deems it appropriate, the

committee may meet immediately before or after

any meeting of the board, but should otherwise

meet separately from the board.

At any meeting of the committee, a majority of

its members must constitute a quorum. When a

quorum is present at any meeting, a majority of

committee members present may take any action.

The committee may establish rules and procedures

for the conduct of its meetings that are consistent

with its charter.

The members and the chair of the committee

must be appointed and replaced by the board. The

committee must be composed of three members.

The majority of the members of the committee

should be independent of the company's

management.

The chair of the committee must be elected by the

committee among those of its members who are

independent of the company’s management.

The chair of the committee must report annually

to the board in an executive session on the

committee’s activities. Such annual reports must

include a review of the committee’s performance.

The committee must annually review its own

performance.

Duties and responsibilities of the

remuneration committee

The committee’s duties and responsibilities must

be to:

■

review and approve corporate goals and

objectives relevant to the compensation of the

CEO,

■

evaluate the performance of the CEO in light

of those goals and objectives and set the

compensation level for the CEO based on this

evaluation.

In determining the long-term incentive component

of the CEO compensation, if any, the committee

may consider the company’s performance and

relative shareholder return, the value of similar

incentive awards given to CEO’s at comparable

companies and the awards given to the CEO in past

years;

■

make recommendations to the board with

respect to incentive-compensation plans and

equity-based plans;

■

conduct an annual review of director

compensation and recommend to the board

for its approval the form and amount of such

compensation;

■

assist the board in developing and evaluating

potential candidates for executive positions,

including the CEO, and oversee the development

of executive succession plans;

■

review and approve the executive management

team’s employment agreements, severance

arrangements and change in control agreements

PETRONOR E&P ASA

ANNUAL REPORT 2022

64

and provisions when, and if, appropriate, as well

as any special supplemental benefits; and

■

review major organisational and staffing

matters.

The committee has the authority to retain and

terminate compensation consultants or firms

to assist in the evaluation of the compensation

of the executive management team and the

board, including the authority to approve such

consultants’ or firms’ fees and other retention

terms, which must be borne by the company.

Principles of the company’s management pay

policy

As an international player in its industry, the

company is determined to compete in a market that

is at the top management level internationally when

determining salaries for managers in the company.

It is the board's policy that in order to ensure the

best possible leadership, salaries must be offered

at satisfactory levels for the individual, and that

are competitive in an international market. Due to

the company's international business, the level of

executive pay may, as a starting point, be relatively

high in a national context.

Principles for fixed salary

It is the company's policy that executive salaries

should mainly be expressed in a fixed monthly

salary that reflects the person's position and

experience.

Principles for pension benefits

Pension schemes shall in principle be the same for

managers as stipulated in general for employees in

the company. The board may, however, determine

additional pensions and/or insurance schemes for

certain executives.

Principles for severance schemes

Severance pay schemes established upon

resignation will normally be seen in connection

with confidentiality clauses and anti-competitive

clauses in the individual employment contract, so

that they only compensate for such restrictions

in the person's right to take up new work. As a

starting point, severance pay schemes shall have

deductions for income elsewhere.

Principles for share-based incentives and

other remuneration

Currently, the company does not have any share

based incentive schemes, nor any bonus schemes.

The board will consider to introduction of such

schemes in the future.

Any deviations from these principles will be

reported in the remuneration report for the

relevant year.

Detailed information about the individual

remuneration to the members of the board

and senior executives in 2022 and their share

ownership is detailed in the consolidated financial

statements note 25B Related Parties – Board and

key management personnel remuneration.

Oslo, Norway, 28 April 2023

The board of directors – PetroNor ASA

Eyas Alhomouz

Gro Kielland

Joseph Iskander

Ingvil Smines Tybring-Gjedde

Chair

Director

Director

Director

Azza Fawzi

Jarle Norman-Hansen

Director

Director

PETRONOR E&P ASA

ANNUAL REPORT 2022

65

Consolidated statement of comprehensive income

......................................................................

68

Consolidated statement of financial position

..................................................................................

69

Consolidated statement of changes in equity

..................................................................................

70

Consolidated statement of cash flows

...............................................................................................

71

Notes to the consolidated financial statements

............................................................................

72

Note 01

Corporate information

.........................................................................................................................................

72

Note 02

Basis of preparation

.............................................................................................................................................

72

Note 03

Significant accounting judgements, estimates, and assumptions

..............................................................

73

Note 04

Revenue

.................................................................................................................................................................

74

Note 05

Cost of sales

...........................................................................................................................................................

74

Note 06

Other operating income

......................................................................................................................................

74

Note 07

Exploration expenses

..........................................................................................................................................

75

Note 08

Administrative expenses

.....................................................................................................................................

75

Note 09

Finance expenses

.................................................................................................................................................

76

Note 10

Tax expense

...........................................................................................................................................................

76

Note 11

Earnings per share

................................................................................................................................................

77

Note 12

Inventories

.............................................................................................................................................................

77

Note 13

Trade and other receivables

...............................................................................................................................

78

Note 14

Cash and cash equivalents

..................................................................................................................................

78

Note 15

Segment information

...........................................................................................................................................

79

Note 16

Property, plant, and equipment

.........................................................................................................................

79

Note 17

Intangible assets

...................................................................................................................................................

80

Note 18

Leases

.....................................................................................................................................................................

81

Note 19

Trade and other payables

....................................................................................................................................

82

Note 20

Loans and borrowings

.........................................................................................................................................

82

Note 21

Provisions

...............................................................................................................................................................

83

Note 22

Deferred tax liabilities

..........................................................................................................................................

84

Note 23

Share capital

..........................................................................................................................................................

84

Note 24

Reserves

.................................................................................................................................................................

85

Note 25

Related party transactions

.................................................................................................................................

86

Note 26

Acquisition of subsidiaries

.................................................................................................................................

90

Note 27

Risk management

.................................................................................................................................................

92

Note 28

Financial instruments

..........................................................................................................................................

95

Note 29

Commitments and contingencies

......................................................................................................................

95

Note 30

Events subsequent to reporting date

...............................................................................................................

96

Note 31

Summary of accounting policies

........................................................................................................................

96

Financial statements

PetroNor E&P ASA

PETRONOR E&P ASA

ANNUAL REPORT 2022

Company statement of comprehensive income

...........................................................................

106

Company statement of financial position

......................................................................................

107

Company statement of changes in equity

.....................................................................................

108

Company statement of cash flows

..................................................................................................

108

Notes to the financial statements – PetroNor E&P ASA

..............................................................

109

Note 01

Corporate information

.......................................................................................................................................

109

Note 02

Basis of preparation

...........................................................................................................................................

109

Note 03

Employee benefit expenses

..............................................................................................................................

110

Note 04

Auditors’ remuneration

.....................................................................................................................................

110

Note 05

Cash and cash equivalents

...............................................................................................................................

110

Note 06

Investment in subsidiaries

................................................................................................................................

110

Note 07

Acquisition of subsidiaries

................................................................................................................................

111

Note 08

Equity

....................................................................................................................................................................

112

Note 09

Related parties

....................................................................................................................................................

113

Note 10

Risk management

...............................................................................................................................................

113

Note 11

Financial instruments

.......................................................................................................................................

114

Note 12

Commitments and contingencies

....................................................................................................................

115

Note 13

Events after the reporting period

....................................................................................................................

115

Note 14

Summary of accounting policies

......................................................................................................................

115

Statement of directors’ responsibility

.............................................................................................

117

Alternative performance measures

................................................................................................

123

Glossary and definitions

.....................................................................................................................

124

Corporate directory

.............................................................................................................................

124

PETRONOR E&P ASA

ANNUAL REPORT 2022

67

Financial statements

Consolidated statement of comprehensive income

For the year ended 31 December

Amounts in USD thousand

Note

2022

2021

Revenue

4

146,066

106,463

Cost of sales

5

(46,210)

(34,585)

Gross profit

99,856

71,878

Other operating income

6

-

866

Exploration expense

7

1,630

(2,270)

Administrative expenses

8

(14,378)

(13,131)

Profit from operations

87,108

57,343

Finance expense

9

(3,322)

(3,041)

Foreign exchange gain/(loss)

(1,932)

(56)

Profit before tax

81,854

54,246

Tax expense

10

(47,579)

(33,102)

Profit/(loss) for the year

34,275

21,144

Other comprehensive income:

Exchange losses arising on translation of foreign operations

1,418

(364)

Items that may subsequently be reclassified to profit or loss

1,418

(364)

Total comprehensive income/(loss)

35,693

20,780

Profit/(loss) for the year attributable to:

Owners of the parent

26,887

12,314

Non-controlling interest

25a

7,388

8,830

Total

34,275

21,144

Total comprehensive income/(loss) attributable to:

Owners of the parent

28,305

12,208

Non-controlling interest

25a

7,388

8,572

Total

35,693

20,780

Earnings per share attributable to members:

USD cents

USD cents

Basic profit/(loss) per share

11

1.96

1.06

Diluted profit/(loss) per share

11

1.96

1.06

The accompanying notes form part of these consolidated financial statements.

PETRONOR E&P ASA

Consolidated statement of financial position

At 31 December

Amounts in USD thousand

Note

2022

2021

ASSETS

Current assets

Inventories

12

18,824

6,227

Trade and other receivables

13

1,171

13,820

Cash and cash equivalents

14

24,816

31,755

Total

44,811

51,802

Non-current assets

Property, plant, and equipment

16

67,479

39,397

Intangible assets

17

42,283

7,172

Right-of-use assets

18

462

44

Other receivables

13

29,432

26,837

Total

139,656

73,450

Total assets

184,467

125,252

LIABILITIES

Current liabilities

Trade and other payables

19

20,751

29,996

Lease liability

18

179

58

Loans and borrowings

20

5,500

13,079

Total

26,430

43,133

Non-current liabilities

Loans and borrowings

20

5,500

-

Lease liability

18

280

-

Provisions

21

24,563

16,302

Deferred tax liabilities

22

9,031

-

Other payables

19

8,738

-

Total

48,112

16,302

Total liabilities

74,542

59,435

Net assets

109,925

65,817

Issued capital and reserves attributable to owners of the parent

Issued capital

23

72,115

62,115

Reserves

24

(3)

(1,421)

Retained earnings

24

25,497

(1,390)

Total

97,609

59,304

Non-controlling interests

25a

12,316

6,513

Total equity

109,925

65,817

The accompanying notes form part of these consolidated financial statements.

The financial statements were approved and authorised for issue by the board of directors on 28 April 2023.

PETRONOR E&P ASA

Consolidated statement of changes in equity

Amounts in USD thousand

Note

Share

capital

Share

premium

Foreign

currency

translation

reserve

Retained

earnings

Non-

controlling

interest

Total

For the year ended 31 December 2022

Balance at 1 January 2022

62,115

-

(1,421)

(1,390)

6,513

65,817

Profit for the year

-

-

-

26,887

7,388

34,275

Other comprehensive income

-

1,418

-

-

1,418

Total comprehensive loss for the year

-

-

1,418

26,887

7,388

35,693

Unwinding PetroNor E&P Ltd (Australia) share capital

(62,115)

-

-

-

-

(62,115)

Issue of shares in PetroNor E&P ASA

23

149

61,966

-

-

-

62,115

Issue of ordinary shares as consideration for business

combination

23

10

9,990

-

-

-

10,000

Dividends to non-controlling interest

-

-

-

-

(1,585)

(1,585)

Balance at 31 December 2022

159

71,956

(3)

25,497

12,316

109,925

For the year ended 31 December 2021

Balance at 1 January 2021

17,735

-

(956)

(8,853)

14,370

22,296

Profit/(loss) for the year

-

-

-

12,314

8,830

21,144

Other comprehensive income

-

-

(106)

-

(258)

(364)

Total comprehensive loss for the year

-

(106)

12,314

8,572

20,780

Issue of capital

23

45,943

-

-

-

-

45,943

Share issue costs

23

(1,563)

-

-

-

-

(1,563)

Acquisition of equity interest from non-controlling

interest

-

-

(359)

(4,851)

(16,429)

(21,639)

Balance at 31 December 2021

62,115

-

(1,421)

(1,390)

6,513

65,817

The issued share capital for PetroNor E&P Ltd (Australia)

formerly the parent entity in 2021 is adjusted to reflect historic

fair value adjustments on two reverse takeover events so as to

reflect group share capital. The like for like share exchange and

relisting on the Oslo Børs is a continuation of the business and

so group share capital remains unchanged following the issue

of 1,326,991,006 shares.

The accompanying notes form part of these consolidated financial statements.

PETRONOR E&P ASA

ANNUAL REPORT 2022

Consolidated statement of cash flows

For the year ended 31 December

Amounts in USD thousand

Note

2022

2021

Cash flows from operating activities

Profit for the year

81,854

54,246

Adjustments for:

Depreciation and amortisation

9,152

4,422

Amortisation of right-of-use asset

146

168

Unwinding of discount on decommissioning liability

842

995

Impairment reversal –

inventory

(2,519)

-

Net foreign exchange differences

1,418

(364)

Finance expense

2,444

2,038

Total

93,337

61,505

Decrease/(increase) in trade and other receivables

12,631

(8,062)

Decrease/(increase) in advance against decommissioning cost

13

(2,595)

(5,577)

Increase in abandonment provision

3,652

-

Increase in inventories

12

(10,078)

(2,649)

(Decrease)/increase in trade and other payables

(11,875)

7,758

Cash (used in) / generated from operations

85,072

52,975

Income taxes paid

10

(47,579)

(33,102)

Net cash flows from operating activities

37,493

19,873

Investing activities

Purchases of property, plant, and equipment

16

(35,756)

(19,759)

Purchases of intangible assets

17

(2,353)

(814)

Net cash flows from investing activities

(38,109)

(20,573)

Financing activities

Issue of ordinary shares

23

(52)

27,943

Share issue costs

-

(1,563)

Proceeds from loans and borrowings

20

11,000

-

Repayment of loans and borrowings

20

(13,079)

(5,833)

Interest on loans and borrowings

20

(2,444)

(2,038)

Repayment of principal portion of lease liability

18

(127)

(159)

Repayment of interest portion of lease liability

18

(36)

(8)

Dividends paid to non-controlling interest

(1,585)

-

Net cash (used in) / from financing activities

(6,323)

18,342

Net (decrease)/increase in cash and cash equivalents

(6,939)

17,642

Cash and cash equivalents at beginning of year

31,755

14,113

Cash and cash equivalents at end of year

14

24,816

31,755

The accompanying notes form part of these consolidated financial statements.

PETRONOR E&P ASA

Notes to the consolidated financial statements