Important information

Important information

This Prospectus has been prepared in order to provide information about Norwegian Energy Company ASA (“Noreco” or the “Company”) and its business in connection with the listing of 80,000,000 New Shares issued in a private placement conducted in September 2009, subject, inter alia, to approval by the Company’s general meeting on 14 October 2009 (the “Private Placement”).

For the definitions and capitalised terms used throughout this Prospectus, see Section 15 “Definitions and Glossary of Terms” of this Prospectus, which also applies to the prevailing pages of this Prospectus.

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The Company has furnished the information in this Prospectus. The Managers (Joint Lead Bookrunners and Co-Lead Managers) make no representation or warranty, expressed or implied, as to the accuracy or completeness or verification of such information, and nothing contained in this Prospectus is, nor shall be relied upon as, a promise or representation by the Managers in this respect, whether as to the past or the future. None of the Managers assume any responsibility for the accuracy, completeness or verification of this Prospectus and accordingly disclaim, to the fullest extent permitted by applicable law, any and all liability whether arising in tort, contract or otherwise which they might otherwise be found to have in respect of this document or any such statement. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act and related secondary legislation, including the Norwegian Regulation on Contents of Prospectuses, which implements the Prospectus Directive (EC/2003/71), including the Commission Regulation EC/809/2004, in Norwegian law. Oslo Børs has reviewed and approved this Prospectus in accordance with Section 7-7 of the Norwegian Securities Trading Act. This Prospectus has been published in an English version only.

The Managers are acting exclusively for the Company and no one else in connection with the Private Placement. They will not regard any other person (whether or not a recipient of this document) as their respective clients in relation to the Private Placement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients nor for giving advice in relation to the Private Placement or any transaction or arrangement referred to herein.

Investors also acknowledge that: (i) they have not relied on the Managers or any person affiliated with the Managers in connection with any investigation of the accuracy of any information contained in this Prospectus or their investment decision.

Any reproduction or distribution of this Prospectus, in whole or in part, and any disclosure of its contents or use of any information herein for any purpose other than providing a presentation of the Company and to inform the market about the Private Placement, is prohibited.

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

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

The distribution of this Prospectus may in certain jurisdictions be restricted by law. The Company and the Managers require persons in possession of this Prospectus to inform themselves about and to observe any such restrictions. This Prospectus does not constitute an offer of, or a solicitation of an offer to purchase, any of the New Shares in any jurisdiction or in any circumstances in which such offer or solicitation would be unlawful. No one has taken any action that would permit a public offering of New Shares to occur outside of Norway. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Private Placement and/or the Prospectus that are not known or identified by the Company and the Managers at the date of this Prospectus may apply in various jurisdictions as they relate to the Private Placement and the Prospectus.

The New Shares have not been and will not be registered under the Securities Act, or with any securities authority of any state of the United States and may not be offered or sold within the United States except pursuant to an exemption from, or transaction not subject to, the registration requirements of the Securities Act. The New Shares may not be offered or sold in or into Canada, Japan or Australia.

In making an investment decision, each investor must rely on their own examination, analysis and enquiry of the Company and the terms of the Private Placement, including the merits and risks involved. None of the Company or the Managers, or any of their respective representatives, is making any representation to any offeree or purchaser of the New Shares regarding the legality of an investment in the New Shares by such offeree or purchaser under the laws applicable to such offeree or purchaser.

The New Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time. The contents of this Prospectus shall not to be construed as legal, business or tax advice. Each reader of this Prospectus should consult its own legal, business or tax advisor as to legal, business or tax advice. If you are in any doubt about the contents of this Prospectus, you should consult your stockbroker, bank manager, lawyer, accountant or other professional adviser.

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

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

This Prospectus is subject to Norwegian law. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of the Norwegian courts with Stavanger City Court as legal venue in the first instance.

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TABLE OF CONTENTS

1. SUMMARY ...4

2. RISK FACTORS ...11

3. RESPONSIBILITY FOR THE PROSPECTUS ...20

4. NOTICE REGARDING FORWARD-LOOKING STATEMENTS ...21

5. THE PRIVATE PLACEMENT...22

6. PRESENTATION OF THE COMPANY ...27

7. THE MARKET...44

8. FINANCIAL INFORMATION AND OPERATING REVIEW ...51

9. CAPITAL RESOURCES ...58

10. BOARD, ORGANISATION AND MANAGEMENT OF NORECO...65

11. SHARE CAPITAL AND SHAREHOLDER INFORMATION...73

12. TAXATION...83

13. LEGAL MATTERS...87

14. ADDITIONAL INFORMATION...89

15. DEFINITIONS AND GLOSSARY OF TERMS...91

APPENDICES

1. SUMMARY

The following summary should be read as an introduction to this Prospectus, and is qualified in its entirety, by the more detailed information appearing elsewhere in this Prospectus and in the documents incorporated hereto by reference. Any decision to invest in the Shares should be based on a consideration of the Prospectus as a whole.

In case a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might have to bear the cost of translating the Prospectus before legal proceedings are initiated. Civil liability attaches to those persons who have tabled the summary including any translation thereof, and applied for its notification, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus.

For definitions and capitalised terms used throughout this Prospectus, please refer to Section 15“Definitions and Glossary of Terms”.

1.1 DESCRIPTION OF NORECO 1.1.1 Introduction

Noreco is a publicly owned, independent E&P company with focus on exploration, development and production of oil and gas in the North Sea region.

1.1.2 History

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

In May 2007, Noreco started acquiring shares in Altinex ASA (“Altinex”), a Norwegian oil company listed on Oslo Børs. In August 2007 Noreco obtained the ownership of 100% of Altinex.

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

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

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

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

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

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

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

On 3 November 2008, Noreco received approval from its NOK 2,800 million bondholders to redeem NOK 560 million of bonds at par value and remove the covenant related to the market adjusted equity ratio in the loan agreement.

On 20 March 2009, Noreco has received approval from its bondholders for a refinancing of the existing NOK 2,240 million bond. The refinancing entails a new amortisation profile and extension of parts of the loan, which

In May 2009, Noreco completed a private placement for a total of 13,400,000 new shares.

On 29 June 2009, Noreco entered into a 1,050 million NOK loan facility agreement with Sparebank 1 SR-Bank (lead), DnB NOR and BNP Paribas which will part finance Noreco's exploration and appraisal activities in Norway in 2009 and 2010.

1.1.3 Business description

The Company employs 77 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. Noreco currently has 8 wholly owned (directly or indirectly) subsidiaries (jointly referred to as the “Noreco Group” or the “Group”). Noreco has ownership in a total of 57 licenses in Norway, Denmark and UK. The portfolio consists of 7 producing fields: Brage and Enoch in Norway, and South Arne, Siri, Nini, Lulita and Cecilie in Denmark. The net total production from these fields in Q2 2009 was 11,500 boepd.

There are a total of 23 discoveries in the portfolio, 14 of which are in Norway, 6 in Denmark and 3 in UK. 1.2 DESCRIPTION OF THE OFFERING

1.2.1 The Private Placement

On 22 September 2009, the Managers, on behalf of the Company, approached certain investors with the purpose of conducting a directed share issue in the Company (the “Private Placement”) as set out in the Company’s stock exchange announcement of same date. On 23 September 2009, agreements were entered into with investors in the Private Placement for the subscription of a total of 80,000,000 New Shares at a subscription price of NOK 15 per New Share, equalling gross proceeds of NOK 1,200 million. The proceeds from the Private Placement will be used to strengthen the Company’s financial position in order to finance capital expenditures related to developments of certain oil and gas discoveries and for general corporate purposes.

Completion of the Private Placement is conditional upon approval by the Company’s extraordinary general meeting (the “EGM”) to be held on 14 October 2009 together with other relevant corporate resolutions and the Placing Agreement (see Section 5.1.6) not having been terminated by the Managers in accordance with its terms. The Board of Directors has proposed that the existing shareholders’ pre-emptive rights pursuant to Section 10-4 of the Norwegian Public Limited Companies Act be deviated from in the Private Placement in order to secure timely and expedient subscriptions and payments of substantial amounts required by the Company.

Notice of allocation in the Private Placement was sent to the investors on 23 September 2009. Provided that the Private Placement is approved by the EGM, the other conditions for completion are fulfilled and the Placing Agreement not having been terminated, the investors in the Private Placement will be delivered New Shares in Noreco on or about 19 October 2009, but in no event later than 30 November 2009.

In order to ensure fair and equal treatment of the Company’s shareholders, the Board of Directors has proposed that the Company conduct a subsequent offering following the completion of the Private Placement. Employees and shareholders of the Company as of 22 September 2009 may subscribe for Shares in the Subsequent Offering.

Existing shareholders of the Company who as of 22 September 2009 held 60,000 Shares or less and who did not participate in the Private Placement will be given partial preferred allocation in order to enable said shareholders the ability to maintain relative ownership as of 22 September 2009. In addition, a separate tranche will be reserved for the employees of the Company.

Please see Section 5, “The Private Placement” for further information.

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

Following the publication of this Prospectus, the shares issued in the Private Placement will be listed and begin trading on Oslo Børs at the date hereof, being on or about 19 October 2009.

The Offer Shares to be issued to subscribers in the Subsequent Offering will also be listed on Oslo Børs. Assuming timely payment by all subscribers, the Company expects that these shares will be listed on Oslo Børs on or about 4 November 2009.

1.4 EXPENSES IN CONNECTION WITH THE OFFERINGS

Costs attributable to the Private Placement and the Subsequent Offering will be borne by the Company. The total costs are expected to amount to approximately NOK 55 million.

1.5 SUMMARY OF RISK FACTORS

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

Operational and industry risk: Market and industry risk include risks related to the Group’s ability to find, acquire, develop and produce from oil and gas reserves that are economically recoverable, risk of inaccurate or incorrect reserves and resource information, risk of required substantial investments in the near future, risk relating to the price of oil and gas, political and regulatory risk, environmental and HSE risk, risk for increased competition, risk for debt arrangements to restrict its business, risk of concentrated production, risk for third parties to operate its assets, risk of joint and several liability with license partners, risk of holding licenses in initial terms, risk of unexpected shutdowns, risk associated with the production shutdown on the Siri platform, risk of future decommissioning liabilities, risk for not attracting and retaining personnel, risk of labour disputes, risk related to legal disputes, risk for potential dispute related to the convertible bond issued in May 2007, risk associated with damaged equipment and the Group’s insurance policies, risk associated with dependence on oil field services providers, risk associated with the global financial crisis and risk relating to unitisation of the Huntington Forties accumulation.

Financial risk: Financial risk include the risk associated with borrowing and leverage, risk associated with exchange rate fluctuations, financial liquidity risk and risk related to the dependence on oil field services providers.

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

1.6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES 1.6.1 Board of Directors

The Company’s Board of Directors consists of six members: Lars Takla (Chairman), John Hogan (deputy chairman), Rebekka Glasser Herlofsen (member), Therese Log Bergjord (member), Aasulv Tveitereid (member), Søren Poulsen (employee representative) and Malin E. Flor Helgesen (deputy employee representative). For more information, please refer to Section 10 “Board, Organisation and Management of Noreco”.

1.6.2 Management

The Group’s executive management comprises: Scott Kerr (CEO), Jan Nagell (CFO), Rune Martinsen (COO). Einar Gjelsvik (VP, Strategy & IR), Lars Fosvold (VP, Exploration), Thor Arne Olsen (VP Business Development), Stig Frøysland (VP, HSE/HR), Birte N. Borrevik (VP, Drilling and Projects), and Synnøve Røysland (VP, Southern North Sea). For more information, please refer to Section 10 “Board, Organisation and Management of Noreco”.

1.6.3 Employees

As of the date of this Prospectus, the Noreco Group employs 77 oil and gas professionals in its offices in Stavanger, Oslo and Copenhagen. For more information, please refer to Section 10 “Board, Organisation and Management of Noreco”.

1.7 ADVISORS AND AUDITORS 1.7.1 Managers

The Managers for the Private Placement are SEB Enskilda AS, and Merrill Lynch International as Joint Lead Bookrunners and Carnegie ASA and Pareto Securities AS as Co-lead Managers. The Manager for the Subsequent Offering is SEB Enskilda AS. Merrill Lynch International, Carnegie ASA and Pareto Securities AS will not take part in the Subsequent Offering.

1.7.2 Legal advisor

The legal advisor to the Company is Arntzen de Besche Advokatfirma AS, P.O. Box 2734 Solli, NO-0204 Oslo, Norway.

1.7.3 Independent Auditor

The Company’s independent auditor is KPMG AS. For further information, please refer to Section 8.5 “Independent Auditor” in this Prospectus.

1.8 SUMMARY OF OPERATING AND FINANCIAL INFORMATION

The selected financial information set forth in this Prospectus should be read in conjunction with the financial statements and the notes to those statements incorporated hereto by reference, see Section 14.2 in addition to Section 8 “Financial Information and Operating Review”, Section 9 “Capital Resources” and Section 10 “Board, Organisation and Management of Noreco” in this Prospectus. The financial information has been prepared according to IFRS.

1.8.1 Consolidated income statements Amounts in NOK 000’s Q2 2009 (unaudited) Q2 2008 (unaudited) H1 2009 (unaudited) H1 2008 (unaudited) FY ended 31.12.2008 (audited) FY ended 31.12.2007 (audited) FY ended 31.12.2006 (audited) Operating revenues ... 400,648 639,492 869,472 1,075,255 2,423,531 835,968 - Total operating expenses ... 597,125 334,529 1,117,142 628,813 1,599,970 780,353 87,235 Operating result... (196,477) 304,963 (247,670) 446,442 823,560 55,615 (87,235) Financial income ... 27,169 33,540 80,658 59,788 161,680 174,430 1,374 Financial expenses... 134,590 204,369 294,642 368,986 717,274 438,254 2,204 Net financial result... (107,421) (170,829) (213,984) (309,198) (555,593) (263,824) (830) Ordinary profit/loss

before tax... (303,898) 134,134 (461,654) 137,244 267,967 (208,209) (88,064) Tax (203,336) 95,262 (314,616) 126,731 147,754 (17,097) (68,205) Profit/loss for the

1.8.2 Consolidated balance sheet

Amounts in NOK 000’s As per

30.06.2009 (unaudited) As per 30.06.2008 (unaudited) FY ended 31.12.2008 (audited) FY ended 31.12.2007 (audited) FY ended 31.12.2006 (audited) ASSETS

Total fixed assets ... 10,425,656 10,118,610 9,908,989 8,842,302 15,832 Total current assets ... 1,785,730 2,096,686 2,378,793 1,584,552 94,276 TOTAL ASSETS ... 12,211,386 12,215,295 12,287,781 10,426,853 110,108 EQUITY AND LIABILITIES

Equity

Share capital ... 487,534 413,502 444,428 345,385 31,422 Other equity ... 2,301,,784 1,901,302 2,552,058 1,438,872 24,302 Total equity ... 2,789,318 2,314,804 2,996,486 1,784,257 55,724 Total liabilities and obligations ... 7,444,593 8,702,144 7,760,561 7,723,858 252 Total short term debt... 1,977,474 1,198,348 1,530,734 918,738 54,132 Total liabilities ... 9,422,067 9,900,492 9,291,295 8,642,596 54,384 TOTAL LIABILITIES AND

EQUITY ... 12,211,386 12,215,295 12,287,781 10,426,853 110,108

1.8.3 Cash flow statement

Amounts in NOK 000’s As per

30.06.2009 (unaudited) As per 30.06.2008 (unaudited) FY ended 31.12.2008 (audited) FY ended 31.12.2007 (audited) FY ended 31.12.2006 (audited)

Net cash flow from operating activities ... 114,626 356,396 1,378,052 362,339 (80,373) Net cash flow from investing activities ... (673,290) (964,308) (1,198,552) (4,548,660) (9,916) Net cash flow from financing activities ... 351,481 681,286 (363,280) 5,169,617 60,643 Net change in cash and cash equivalents ... (207,183) 73,374 (183,780) 983,296 (29,645) Cash and cash equivalents at start of the

period ... 867,349 973,661 973,661 11,970 41,616 Effects of changes in exchange rates on

cash and cash equivalents ... (11,789) (11,054) (77,467) (21,605) - Cash and cash equivalents at end of the

period ... 648,377 1,035,981 867,349 973,661 11,970

1.8.4 Significant changes in the Company’s financial or trading position since 30 June 2009

Apart from the Private Placement described in Section 5 “The Private Placement”, there have not been any significant changes in the Company’s financial or trading position since 30 June 2009. The production shutdown on the Siri field on 31 August 2010 (as described in Section 6.6.3 “Overview of Producing Fields”) will have a temporary negative effect on production revenues and will lead to increased costs related to the repair, but is not expected to give other significant effects the Company’s financial or trading position.

1.9 CAPITALISATION AND INDEBTEDNESS

The table below sets forth the Company’s audited and unaudited consolidated cash and equivalents and capitalisation as at 30 June 2009. The table should be read together with the consolidated financial statements and the related notes thereto, as well as the information under Section 8 “Financial Information and Operating Review”.

Amounts in thousand NOK 30.06.2009

Unaudited

Total current debt... 1,977,474 Total non-current debt... 7,444,593

Total shareholders’ equity ... 2,789,318

Liquidity1... 648,377

Current financial receivable ... 160,013

Current financial debt ... 1,101,630

Non-current financial indebtedness ... 3,983,571

Net financial indebtedness ... 4,276,811

1.10 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS 1.10.1 Major shareholders

As at 9 October 2009 the Company had a total of 2,160 shareholders divided into 1,942 Norwegian and 218 foreign owners registered in the VPS

The table below shows the 5 largest shareholders in Noreco as per 9 October 2009:

Shareholder No of shares %

1 GOLDMAN SACHS INT. 24,198,428 15.39 %

2 LYSE ENERGI AS 20,314,127 12.92 %

3 IKM INDUSTRI-INVEST AS 9,980,937 6.35 %

4 ETON PARK FUND LP 6,565,197 4.17 %

5 FOLKETRYGDFONDET 6,500,000 4.13 %

1.10.2 Related party transactions

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

The details for payments made to related parties are outlined under Section 11.6 “Transactions with Related Parties”.

1.10.3 Trend information

The Company has not experienced any changes or trends outside the ordinary course of business that are significant to the Noreco Group between 31 December 2008 and the date of this Prospectus, other than those described elsewhere in this Prospectus. Please see Section 6 “Presentation of the Company”, Section 7 “The Market”, Section 8 “Consolidated Financial Information” and Section 11 “Share Capital and Shareholder Information” for more information about significant recent trends in the Group’s business and relevant markets.

1.11 ADDITIONAL INFORMATION 1.11.1 Share capital and shareholder matters

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

The Company’s registered share capital is NOK 487,533,704.70 consisting of 157,268,937 shares each with a nominal value of NOK 3.10 fully paid and issued in accordance with the Norwegian Public Limited Companies Act.

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

The dilutive effect in connection with the Private Placement and the Subsequent Offering will be approximately 50.87%, assuming full subscription in the Subsequent Offering.

Prior to the Private Placement and Subsequent Offering Prior to the Subsequent Offering

No of shares each with a nominal value of NOK 3.10... 157,268,937 237,268,937

% dilution... 50.87%

The Shares are registered with VPS under the International Securities Identification Number (ISIN) NO 001 0379266. The registrar for the Shares is Sparebank 1 SR-Bank, Bjergsted Terrasse 1, 4007 Stavanger, Norway. See Section 11 “Share Capital and Shareholder Information” for a further description of the Company’s share capital.

1.11.2 Articles of Association

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

According to its Articles of Association, “the business of the company is exploration, production and sale related to oil and gas activities. The company will obtain participating interests in production licenses by participating in license rounds and through acquisition of participating interests.”

The Company has only one class of shares. The Board shall consist of three to eight members. 1.11.3 Documents on display

For the life of this Prospectus the following documents may be inspected at www.noreco.com and at the Company’s offices at Haakon VII’s gate 9, NO-4005 Stavanger, Norway:

 The Company’ Memorandum of Incorporation  The Articles of Association

 The Company’s historical financial information and auditor’s report for the 2008, 2007 and 2006 financial years

 The Company’s historical financial information for the six months ended 30 June 2009  The historical financial information of Altinex for the years 2006-2007

1.11.4 Third party statements

2. RISK FACTORS 2.1 GENERAL

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

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

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

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

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

2.2.1 Ability to obtain economically recoverable oil and gas reserves

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

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

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

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

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

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

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

2.2.3 Substantial investment required

The Noreco Group will be required to make substantial capital expenditure for the acquisition, exploration, development and production of oil and gas reserves in the future. Such capital expenditures could be covered by revenues, new equity or by obtaining new debt. If the Noreco Group’s revenues decline, or if the Company is unable to attract investors to increase the Company’s equity, or if new debt arrangements and/or capital expenditure financings in general are not accessible, or only on unattractive commercial terms, the Noreco Group will experience a limited ability to undertake or complete future exploration programs, maintenance of existing fields, development investments and acquisitions. Limited available capital expenditure will also impact the Noreco Group’s ability to maintain existing fields as well as undertake R&D initiatives. The Noreco Group’s inability to access sufficient capital for its operations could lead to licenses being revoked or relinquished or defaulting by the Company under commercial arrangements, including joint venture agreements, or could lead to a material adverse effect on the Noreco Group’s financial conditions, results of operations or prospects in general.

2.2.4 Risks relating to the price of oil and gas

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

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

2.2.5 Political and regulatory risks

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

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

2.2.6 Health, Safety and Environmental (HSE) risks

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

The Noreco Group's operations and assets are affected by numerous international, EU and national laws and regulations concerning health and safety and environmental (“HSE”) matters including, but not limited to, those relating to the health and safety of employees, discharges of hazardous substances into the environment and the handling and disposal of waste. The technical requirements of these laws and regulations are becoming increasingly complex, stringently enforced and expensive to comply with and this trend is likely to continue. The failure to comply with current HSE laws and regulations has resulted and may in the future result in

regulatory action, the imposition of fines or the payment of compensation to third parties which each could in turn have a material adverse effect on the Noreco Group's business, financial condition and results of operations. 2.2.7 The industry in which the Company operates is highly competitive

The oil and gas industry is highly competitive in all its phases. There is strong competition for the discovery and acquisition of properties considered to have commercial potential. Noreco competes with other exploration and production companies, many of which include major international oil and gas companies which may have greater financial resources, staff and facilities than those of the Noreco Group. These companies have strong market power as a result of several factors, including the diversification and reduction of risk, including geological, price and currency risks; increased financial strength facilitating major capital expenditures; greater integration and the exploitation of economies of scale in technology and organisation; strong technical experience; increased infrastructure and reserves; and strong brand recognition. Due to this competitive environment, the Noreco Group may be unable to acquire attractive suitable properties or prospects on terms that it considers acceptable. As a result, the Noreco Group's revenues may decline over time, thereby materially and adversely affecting its results of operations or financial condition.

2.2.8 Debt arrangements may restrict the Noreco Group’s business

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

2.2.9 Production is concentrated in a few number of fields

The Noreco Group’s current production of oil and gas is concentrated in a small number of offshore fields. As at the date of this Prospectus, seven out of a total of 57 licenses are producing licenses. Out of the 7 producing fields, Brage and Siri are the two largest producing fields, contributing 28.7% and 36.5% of total production based on Q2 2009 results. If mechanical problems, storms or other events curtail a substantial portion of the Noreco Group's production or if the actual reserves associated with any one of the Noreco Group's producing fields are less than the Noreco Group's estimated reserves, the Noreco Group's results of operations and financial condition could be adversely affected.

2.2.10 The Noreco Group relies on third parties

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

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

2.2.11 Risk of joint and several liability with its license partners

The Noreco Group is liable on a joint and several basis together with its license partners for certain of the liabilities of the specific license group. Such liability may apply both to licenses in their initial term and to producing licenses. These liabilities could be derived from legislative and regulatory requirements, and/or from agreements with third parties entered into on behalf of the specific license group. Failure by a license partner to fulfil its financial obligations may therefore increase the Noreco Group’s exposure related to the license in question. Any significant increase in costs as a consequence of joint and several liability may adversely affect the financial condition of the Noreco Group.

2.2.12 The Noreco Group holds a number of licenses in their initial terms

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

2.2.13 Unexpected shutdowns may occur

Mechanical problems, accidents, oil leaks, hazardous weather conditions or other events at the Noreco Group's producing fields or its pipelines or subsea infrastructure may cause an unexpected production shutdown at these fields. Any unplanned production shutdown of the Noreco Group's facilities could have a material adverse effect on the Noreco Group's business, financial condition and results of operations. In June 2007, a water injection pipeline between the Siri and the Nini platform ruptured. Noreco, through its subsidiary Altinex, holds a 30% interest in this pipeline. The conclusion after detailed investigations was that the whole pipeline needed to be replaced. Further, the production over the Siri platform was temporarily shut-down on 31 August 2009 after cracks in the riser support structure were found during a routine inspection. The production shutdown includes all production from Siri, Nini and Cecilie. (see Section 2.2.14 “Risks associated with the production shutdown on the Siri platform” for more details), which based on Q2 2009 production figures contributed to 52.8% of the Group’s total production. Timing of the start up of the Siri platform remains uncertain. If similar problems were to occur, the licensees may suffer a loss of production income.

2.2.14 Risks associated with production shutdown on the Siri platform

Production on the Siri platform was temporarily shutdown on 31 August 2009 as a routine inspection revealed cracks in steel plates covering a riser support structure. The production shutdown includes all production from the Siri, Nini and Cecilie fields. The Siri manning was reduced to a minimum while further investigation and mitigation planning is ongoing. Dong Energy, the Siri operator, has established a project organisation that is working inspection, analysis and mitigation with the aim of restoring production. Noreco is fully supportive of the operator’s efforts and prioritisation and is in close dialogue with the operator on forward process and options. Prior to the shutdown, production from the Siri field was 10,000 barrels of oil equivalents per day gross, while total production over the Siri platform was in the order of 13,500 barrels of oil equivalents per day gross. The shutdown is not expected to have any adverse effect on the reservoir or field reserves, and production is expected to be fully restored when the Siri facilities are expected back in service in first half of November 2009. As a consequence of the temporary shut down at Siri, Noreco will reduce the production guidance for 2009 (currently between 13,000 boepd and 13,500 boepd). A revision will be made when the exact timing of the start-up of the Siri-field is known, currently expected for first half of November 2009. However, there can be no assurance that the Siri field will be operational in first half of November 2009, nor as to the ultimate cost of remediation and, in particular, whether any of such costs (including lost revenues) will be recovered under any of the Company's insurance policies.

2.2.15 Risks associated with future decommissioning liabilities

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

Group will remain liable and its decommissioning liabilities could be magnified significantly through such default. Any significant increase in the actual or estimated decommissioning costs that the Noreco Group incurs may adversely affect its financial condition.

2.2.16 The Noreco Group is dependent on attracting and retaining personnel

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

2.2.17 Risks associated with labour disputes

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

2.2.18 Risks associated with legal disputes in general

The Noreco Group is currently involved in disputes as described in Section 13.1 “Disputes” of this Prospectus, and may from time to time be involved in other legal disputes and legal proceedings related to the Noreco Group’s operations or otherwise. Such disputes and legal proceedings may be expensive and time-consuming, and could divert management’s attention from the Noreco Group’s business. Furthermore, legal proceedings could be ruled against the Company and the Company could be required to, inter alia, pay damages, halt its operations, stop its expansion projects, etc, which could consequently adversely affect the Noreco Group’s business, prospects, results of operations or financial condition.

2.2.19 Risk associated with potential dispute on the conversion price of the convertible bond issued by the Company in May 2007

There is a discussion between the Company and the loan trustee relating to the prevailing conversion price for the NOK 440 million convertible bond loan issued by the Company in accordance with convertible bond loan agreement dated 11 May 2007 with NOK 218.5 million currently outstanding. The discussion regards the interpretation of the loan agreement's price conversion mechanism on new share issues, and specifically whether or not the share issue completed by the Company on 13 May 2009 at NOK 16 per share triggers a conversion under the convertible bond loan agreement – therefore requiring an adjustment of the original NOK 22.25 conversion price down to such price. In the Company's opinion, based also on legal advice received, such adjustment is not warranted under the loan agreement and should not take place, but there can be no assurance that the Company's view will prevail or that a court of law will rule in favour of the Company should the discussions lead to a dispute and/or litigation.

2.2.20 Risk of damaged equipment and the Noreco Group’s insurance policies

The Noreco Group’s equipment, including equipment owned by the licenses in which the Noreco Group holds interests, may be damaged or in need for replacement. For instance, the water injection pipeline between the Nini field and the Siri Field was damaged in 2007 due to a certain type of aggressive corrosion. Further, the production over the Siri platform was temporarily shut-down on 31 August 2009 after cracks in the riser support structure were found during a routine inspection and production has been stopped (see Section 2.2.14 “Risks associated with the production shutdown on the Siri platform” for more details). The production shutdown includes all production from Siri, Nini and Cecilie. Although the Noreco Group, or the license in which the Noreco Group has an interest, in general will have insurance coverage for property damage and, currently, in respect of loss of production income, it is not certain that all incidents will be covered or that the sums insured under such coverage will be sufficient to hold the Noreco Group harmless from the loss occurred. Thus, any significant loss or liability for which the Company is not insured or is found not to be covered could have an adverse effect on the Noreco Group’s business, financial condition and results of operation. Further, such damages may lead to the Noreco Group’s being refused coverage by some insurers or may lead to the Noreco

2.2.21 Dependence on oil field services providers

The Noreco Group may be subject to liability claims due to the inherently hazardous nature of its business or for act and omissions of sub-contractors and other service providers. Any indemnities the Noreco Group may receive from such parties may be difficult to enforce is such sub-contractors, operators or other service providers lack adequate resources.

2.2.22 Risk associated with the global financial crisis

The Noreco Group is influenced in general by the economic situation in the markets where the Noreco Group operates. The global economy and the global financial markets have been characterised by substantial uncertainty and problems of historical enormity since early 2007, and this remains very much the case as at the date of this Prospectus. The global financial markets are experiencing a liquidity crisis, and several of the largest financial institutions have become subject to insolvency, liquidations or governmental takeovers and seizures. Several countries have tried to take steps to mitigate such problems, but despite of this the volatility and serious decrease in the global financial markets and stock exchanges has continued and created an economic recession in a number of the world’s economies, such as in the United States.

A continued decrease in the global economy and problems relating to governmental treasuries, equity- and debt markets, the access to and cost of capital, the general confidence by consumers, increased unemployment, inflation and interest rates may have a grave and substantial effect on the Noreco Group’s business, revenues, financial position and equity. The exact effects of the global financial crisis on the Noreco Group are very uncertain and not possible to describe in any precise manner as at the date of this Prospectus.

2.2.23 Unitisation of the Huntington Forties accumulation may lead to delays in submitting a Field Development Plan and commencement of production

Following drilling in the 22/14a block of two Forties formation discoveries to the east and southeast of the Huntington field in 4Q 2008, one of the wells showed that the Huntington Forties accumulation extends across the block boundary, requiring a unitisation of the field in parallel with the development activities. Failure to reach timely agreement on unitisation with the neighbouring field may lead to delays in submitting a Field Development Plan for the Huntington Field. Delay in submitting the plan may further lead to delays in the development of the Field and delayed commencement of production, such delays possibly having a negative impact on the economics of developing the Huntington field.

2.3 RISK FACTORS RELATING TO THE NORECO GROUP’S FINANCING 2.3.1 Risks associated with borrowing and leverage

Borrowings create leverage and the Noreco Group is highly leveraged. In addition, the current financing structure is rather complex with several bonds having been issued by different entities within the Noreco Group as well as several bank loan facilities currently being in place with different entities within the Noreco Group as the borrower. The debt arrangements include security interests over major parts of the Company’s assets, several covenants and undertakings of a general, financial and technical nature and several of the debt arrangements contain cross-default provisions. Failure by the borrowers or other obligors to meet any of the covenants or undertakings could result in all outstanding amounts under the different debt arrangements becoming immediately due for payment. In addition, security rights granted to the lenders could be enforced. If outstanding debts were declared due for immediate payment, there would be no assurances that the Noreco Group would be able to meet its obligations, and there are no assurances that the Noreco Group would be able to obtain alternative financing, either on a timely basis or at all. Any breach of existing covenants and undertakings with a subsequent acceleration of all debts outstanding would thus have a material adverse effect on the Noreco Group’s financial position and is likely to have a material adverse effect on the value of the Company’s shares, the Noreco Group’s operations and future success.

In addition, bank borrowings available to the Noreco Group currently are and in the future are expected to be in part determined by the Noreco Group's borrowing base. A sustained material decline in the price of oil and gas from historical average prices could reduce the Noreco Group's borrowing base, thereby reducing the bank credit available to the Noreco Group which could result in the Noreco Group having to repay a portion, or all, of its bank debt.

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

2.3.2 Risk associated with exchange rate fluctuations

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

2.3.3 Financial liquidity Risk

Noreco’s business requires much liquidity and involves significant near term obligations, debt service obligations (interest charge and principal repayment) and capital expenditure and, depending on the evolution of the production field, in certain circumstances it may need to obtain further external debt and equity financing at a future date. There is no assurance that such additional funding, if required, will be available on acceptable terms at the relevant time. Furthermore, any incremental debt financing may involve restrictive covenants, which may limit Noreco’s operating flexibility. If additional funds are raised through the issuance of equity or equity-linked instruments, Noreco’s shareholders may experience a reduction in their percentage shareholdings. An inability to obtain sufficient funding for its operations, exploration or development plans, may adversely affect the Noreco’s business, results of operations and cash flows.

2.3.4 Dependence on oil field services providers

The Noreco Group may be subject to liability claims due to the inherently hazardous nature of its business or for acts and omissions of sub-contractors and other service providers. Any indemnities the Noreco Group may receive from such parties may be difficult to enforce if such sub-contractors, operators or other service providers lack adequate resources.

2.4 RISK FACTORS RELATING TO THE NORECO SHARES 2.4.1 Volatility of share price

There can be no assurance that an active market can be sustained with respect to the Shares. The market price of the Shares could fluctuate widely due to a number of factors, some of which are beyond the Company’s control, including, but not limited to, the following:

 actual or anticipated variations in operating results and/or production levels;  fluctuations in oil prices and reserve levels;

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

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

 sales or purchases of substantial blocks of stock;  additions or departures of key personnel;

 future equity or debt offerings by the Company and its announcements of these offerings; and  general market and economic conditions.

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

2.4.2 Risks associated with dilution

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

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

2.4.3 It may be difficult for investors based in the United States to enforce civil liabilities predicated on U.S. securities laws against the Company, its affiliates, directors and officers

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

2.4.4 Additional risk for holders of Company’s Shares that are registered in a nominee account

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

2.4.5 The transfer of Shares is subject to restrictions

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

2.4.6 Limitations to make claims against the Company

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