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NORTHERN OFFSHORE


Presentation

Updated 5 September 2001


Operations in offshore drilling and floating production

NORTHERN OFFSHORE INTRODUCTION

Highlights


Northern Offshore ASA est. 2 Dec. 1997 by acquiring three assets, financed through IPO and bank debt


Northern Producer floating prod. facility acquired for US$ 226 mill.


Northern Explorer II drillship acquired for US$ 60 mill.


Northern Explorer III drillship acquired for US$ 100 mill.


Acquisition of the semisubmersible drilling rig Galaxy Driller May 1998 for US$ 50 mill.


Refinancing in May 1998 through a US$ 340 mill., 7 year US Bond at 10 % interest to replace US$ 145
mill. bank debt, Galaxy Driller acquisition and paying back US$ 125 mill. to Shareholders


Settlement of claim against Coplex Resources NL: USD 8.5 million in Cash + 74% interest in Naftex
Energy Corp. and 63% in Petrolex Energy Corp.


May/Sept. 2000 change of domicile to Bermuda. Naftex & Petrolex demerged as Northern Oil ASA.
Acquisition of Discoverer I through equity placement.


As per 30 April 2001, USD 196.8 mill. of Notes repurchased at cost of USD 113.5 mill.


Drillship Energy Searcher bought 22 June 2001, USD 37 mill. (Equity USD 17 mill, bank loan USD 20 m.)

COMPANY

OBJECTIVES

To generate maximum income and enhanced asset values for the
shareholders through:




Acquire well maintained drilling units for the world wide intermediate water depth market




Achieve full employment at competitive rates for all drilling units




In co
-
operation with Texaco, find the optimum use of Northern Producer for Galley




Active finance strategy to optimise on financial instruments and financial opportunities in the
market




Adjust the companies human and financial resources to areas where we achieve maximum
effect




Proactive approach to find alliances and play an active part in restructuring of the offshore
drilling industry





COMPANY SPLIT

Ticker code Oslo Stock Exchange: NOF

Ticker Code Oslo Stock Exchange: NOI

Northern Offshore Ltd., Bermuda

Northern Oil ASA, Oslo

Galaxy Driller

Northern Producer

Naftex Energy Corp.

Petrolex Energy Corp.

Egypt

Brazil

Colombia

Northern Explorer II

Northern Explorer III

Discoverer I

74.4%

62.9%

Effective date: 20 September 2000

Energy Searcher 22.06.01

REASON FOR CHANGE OF DOMICILE

AND SPLIT OF COMPANY

Reasons for moving offshore activities to Bermuda:



Framework for stable operating condition


Better basis for international alliances

Reasons for split of Company



Oil Service and Oil Upstream requires different operations and admin.


No synergy effect between these two business segments


Simpler to evaluate for investors


Improved financing opportunities


Relation to the Bond Holders / Indenture




NORTHERN PRODUCER


Technologically advanced FPF
with high operating flexibility


Specially constructed to operate in
harsh weather conditions and meets
stringent international regulations


Versatile process package enables
FPF to produce in a wide range

of fields


Worldwide marketability


Significant production
capabilities


55,000 bpd of oil


60 mmcfpd of gas


45,000 bpd water injection capacity

TEXACO CONTRACT


Four
-
year term contract to 5 January 2002 extended to 5 Jan. 2003
with Texaco for production of oil and gas at the Galley field in the
UK sector of the North Sea with options to extend for up to an
additional 5 years


Guaranteed cash flow of at least $108 million for four years


Contract term and cash flow closely tied to production
characteristics of the Galley field, other Texaco adjacent reservoirs
and third party fields


Expected life of Texaco contract is seven years



estimated aggregate
contract cash flow of $250
-
300 million


Cash flow (EBITDA) accumulated as of today approx. USD 132
million

GALLEY FIELD


Several adjacent oil and gas fields create several opportunities for
additional projects for Northern Producer

Phase I Development Areas (two wells producing)

Phase II Prospects/Accumulations (one well producing)

3rd Party Prospects/Accumulations

GALLEY FIELD


New Production Well

Galley Field Development Well Location Map

G1

G4

G3z

G2

Palaeocene

Galley North

Galley South

G5

Jurassic

Jurassic

Galley South

Drilling Centre

With Wells

Galley

North

Palaeocene

PAST PRODUCTION LEVEL
-

GALLEY

0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
mar-98
apr-98
mai-98
jun-98
jul-98
aug-98
sep-98
okt-98
nov-98
des-98
jan-99
feb-99
mar-99
apr-99
mai-99
jun-99
jul-99
aug-99
sep-99
okt-99
nov-99
des-99
jan-00
feb-00
mar-00
apr-00
mai-00
jun-00
jul-00
aug-00
sep-00
okt-00
nov-00
des-00
jan-01
feb-01
mar-01
apr-01
mai-01
jun-01
jul-01
aug-01
Barrels per day
Phase II
Phase I
NORTHERN EXPLORER II

NORTHERN EXPLORER III



Intermediate water depth drilling
capabilities (up to 1,000 feet)


Limited investment ($4
-
$6 million)

for upgrade to 1,500 ft. water depth


Potential upgrade of NE III to ultra
deep water depth, being the last ship
of the Gusto design not yet converted.


Two of four ice
-
class designed
drillships worldwide


Preferred equipment in remote
drilling locations due to high

variable deckload capacity


Self
-
propelled



no costly tugs

and heavy lift vessels to mobilize

Discoverer I


Acquisition price September 2000:
USD 12 300 000. Equity finance
through Private Placement.


Water depth drilling capabilities (up
to 1,500 feet).


Turret moored


Completed drilling for PEMEX (3
years) in August 2000.


Drilled down to 6,300 meter well
depth


Preferred equipment in remote
drilling locations due to high deckload
capacity


Self
-
propelled



no costly tugs

and heavy lift vessels to mobilize


DRILLSHIP



Energy Searcher


Acquisition 22 June 2001 at a price of USD
37 mill. Financed: Equity issue USD 17
mill., bank loan USD 20 mill.


Water depth drilling capabilities up to 2,500
feet. Conventionally moored.


Contract to Nexen Indonesia (USD
50,000/day. Other contracts in hand through
June 2002 at rates up to USD 70,000/day.


Well equipped Drilling Vessel in excellent
condition with proven track record.


Management company to market and operate
the Vessel and other Northern units is part of
acquisition: Jet Drilling (S) Pte Ltd.

GALAXY DRILLER


$50 million purchase price


Acquisition made 15. May 1998 and
financed through US Bond offering


Second generation semi submersible


Intermediate water depth drilling capability
(600 feet)


Limited investment ($5
-
$8 million) for
upgrade to 1,500 ft. water depth


Three
-
year bareboat charter

(plus 1
-
year option) back to seller,
defaulted Dec. 1998. USD 20 mill security
package. USD 8.5 collected + shares in
Naftex and Petrolex

MARKET OUTLOOK




Why we expect continued improved market for drilling in intermediate water depth in Asia:




Steady or increased energy consumption




Discipline within OPEC, continued high oil prices




Improved earnings with major oil companies




So far materialized increased demand in high cost deep water and JU in Asia





Increased tender activities and reduced number of floaters in lay
-
up in Asia / W. Africa.




Limited new
-
building program




Increased depletion rate on mature oil fields


Uncertainties:




General economical decline in US, Japan or elsewhere




Continued political unrest in some countries in South East Asia




Market Utilization as per 31 August 01

Source: Petrodata



Working
Idle
Util. %
Working
Idle
Util. %
Working
Idle
Util. %
Africa
12
3
80,0
5
0
100,0
20
3
87,0
Asia / Pacific
12
8
60,0
3
6
33,3
49
10
83,1
Latin America
20
4
83,3
13
1
92,9
15
7
68,2
North America
33
9
78,6
9
0
100,0
102
55
65,0
North Sea
46
4
92,0
1
0
100,0
36
1
97,3
Other
5
5
50,0
0
0
-
68
20
77,3
Total
128
33
79,5
31
7
81,6
290
96
75,1
Semisubmersibles
Drillships
Jack-ups
Only 2
-
3 floaters available or uncommitted in addition to units owned by Northern Offshore

Worldwide supply and demand

Semi submersible Drilling Rigs

0
20
40
60
80
100
120
140
160
180
200
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Number of units
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
% Utilisation
Demand
Supply
% Utilisation
Source: Bassøe Offshore Services

Asia / Pacific rig demand / supply / utilisation

60
70
80
90
100
110
120
130
140
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
Number of units
40 %
50 %
60 %
70 %
80 %
90 %
100 %
110 %
Utilisation %
Supply
Demand
Utilization
Source: DnB Markets

Worldwide supply and demand

Conventional Drillships

0
2
4
6
8
10
12
14
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
0 %
10 %
20 %
30 %
40 %
50 %
60 %
70 %
80 %
90 %
100 %
Demand
Supply
% Utiliation
Source: Bassøe Offshore Services

Market Outlook


South East Asia

Present
Working
Idle
Utilisation
(%)
Semis
12
8
60 %
Drill ships
6
3
67 %
Combined
18
11
62 %
Units available and coming off contracts prior to 31.12.01
(without options and excluding China)
- 0 Drill ships
- 4 Semis
Projected utilisation early 2002 - combined Semis and Drillships
Working
Idle
Utilisation
(%)
Work committed
20
9
69 %
Expected utilisation*
23
6
79 %
*Note:Includes not known requirements
Repurchase of Northern Offshore High Yield
Bonds

The following repurchases of Bonds have been made since December 1998:

USD



Face value


Repurchase


%


Profit








Price

December 1998


10 000 000




5 890 000


58.9 %


4 110 000

1
st

Quarter 1999


21 000 000




8 212 500


39.1 %

12 787 500

2
nd

Quarter 1999


31 725 000

15 276 313


48.2 %

16 448 688

3
rd

Quarter 1999


29 500 000


17 065 000


57.9 %

12 435 000

1
st

Quarter 2000


40 035 000


23 828 500


59.5 %

16 206 500

2
nd

Quarter 2000


37 175 000

23 732 000


63.8 %

13 443 000

4
th

Quarter 2000



3 920 000




2 669 600


68.1 %


1 250 400

1
st

Quarter 2001


23 416 000


16 827 190


71.9%


6 588 810

Total



196 771 000 113 501 103


57.7 %

83 269 898

Original Bond Debt


340 000 000


Outstanding Bond Debt 143 229 000



Repurchase of Northern Offshore High Yield
Bonds II

Bond Repurchased & Other Borrowing
0
50 000
100 000
150 000
200 000
250 000
300 000
350 000
400 000
may -98
jul-98
sep-98
nov-98
jan-99
mar-99
mai-99
jul-99
sep-99
nov-99
jan-00
mar-00
mai-00
jul-00
sep-00
nov-00
jan-01
mar-01
USD*1000
Total borrowing reduced by

USD 160 mill



Therof profit on repurchase

USD 83 mill


Earnings from operation

USD 76 mill

BALANCE SHEET 1998


2001

USD million

30.06.2001
31.12.2000
31.12.1999
31.12.1998
Property & equipm.
225,8
197,2
211,7
263,0
Other curr. assets
10,2
14,9
23,4
26,2
Cash
8,1
4,4
11,3
41,7
Total Assets
244,2
216,5
246,4
330,9
Equity
28,7
10,7
-14,0
-13,6
Long term debt
182,8
184,1
250,3
331,3
Current liabilities
32,7
21,7
10,1
13,3
Total Liab.& Equity
244,2
216,5
246,4
330,9
Equity Ratio:
11,8 %
4,9 %
-5,7 %
-4,1 %
INCOME STATEMENT 1998


2001

USD million

2nd Q
1st Q
Total
Total
Total
2001
2001
2000
1999
1998
Revenues
11 510
11 744
58 523
60 006
119 886
Operating Expenses
-6 049
-5 362
-21 892
-19 873
-30 643
EBITDA
5 461
0
6 382
36 631
40 133
89 243
Depreciation
-4 165
-4 112
-15 624
-15 099
-12 393
Operating profit
1 296
2 270
21 007
25 034
76 850
Financial income
272
21
458
1 194
4 464
Financial expenses
-4 855
-5 089
-22 094
-31 552
-27 349
Net currency gain/-loss
-87
21
268
-379
1 895
Result before tax
-3 374
-2 777
-361
-5 703
55 860
Deferred tax, expensed
0
0
-10 362
-34 594
-22 045
Result before Extraord.
-3 374
-2 777
-10 723
-40 297
33 815
Gain repurchased Bonds
3 241
3 112
29 288
41 671
4 035
Net profit
-133
335
18 565
1 374
37 850
Cash Earnings
4 032
0
4 447
0
44 551
51 067
72 288
Cash Earnings Excl rep. Notes
791
0
1 335
0
15 263
9 396
68 253
EBITDA Calculations Northern Offshore


Assuming no income from drilling units except Energy Searcher (USD 50 000/day)



(all figures USD/day & approx. estimates)


Prod.level


Prod. level






35 000bbls


25 000 bbls


Income Northern Producer (USD 1.50 per bbl average)


135 000


120 000


Income Energy Searcher*




50 000



50 000


Cash operating cost level




-
63 000



-
63 000


EBITDA Northern Producer



122 000


107 000


Lay
-
up cost, four drilling units




-
5 000


-
5 000


Administration





-
4 000



-
4 000


EBITDA Northern Offshore ASA




113 000



98 000


Interest cost US Bond (net bal. 143.2 mill. at 10%)


-
39 200


-
39 200


Interest cost other loans loan (bal. 58,5 mill.at av. 9.4%)


-
15 000


-
15 000


Cash earnings per day





58 800



43 800


*Note: Energy Searcher’s dayrate will increase to a level of USD 70 000 end of this year.








SHARE PRICE / TRADING VOLUME

(last 18 months)


Average daily trading volume last 12 months: 450 000 shares


0
400 000
800 000
1 200 000
1 600 000
2 000 000
2 400 000
2 800 000
3 200 000
3 600 000
4 000 000
03.04.2000
17.04.2000
05.05.2000
24.05.2000
13.06.2000
27.06.2000
11.07.2000
25.07.2000
08.08.2000
22.08.2000
05.09.2000
19.09.2000
03.10.2000
17.10.2000
31.10.2000
14.11.2000
28.11.2000
12.12.2000
28.12.2000
12.01.2001
26.01.2001
09.02.2001
23.02.2001
09.03.2001
26.03.2001
09.04.2001
26.04.2001
11.05.2001
29.05.2001
13.06.2001
27.06.2001
11.07.2001
25.07.2001
08.08.2001
22.08.2001
Trading Volume
0,00
1,00
2,00
3,00
4,00
5,00
6,00
7,00
8,00
9,00
10,00
11,00
12,00
13,00
14,00
15,00
16,00
17,00
18,00
19,00
20,00
Share Price (NOK)
SHARE PRICE NOF + NOI

(Split of Company 20 September 2000)

0,00
2,00
4,00
6,00
8,00
10,00
12,00
14,00
16,00
18,00
20,00
22,00
24,00
26,00
03.04.2000
03.05.2000
03.06.2000
03.07.2000
03.08.2000
03.09.2000
03.10.2000
03.11.2000
03.12.2000
03.01.2001
03.02.2001
03.03.2001
03.04.2001
03.05.2001
03.06.2001
03.07.2001
03.08.2001
03.09.2001
NOI

NOF

NOF + NOI

SHAREHOLDERS, 28 August 2001

SHAREHOLDER
SHARES
%
OSPREY MARITIME PTE LTD
53 813 342
51,41 %
ODIN NORGE

5 240 263
5,01 %
AKSJEFONDET GAMBAK

4 500 000
4,30 %
FRANKLIN ENTERPRISES INC
3 700 000
3,53 %
ODIN NORDEN

3 161 500
3,02 %
KARL JOHAN FONDS AS

1 196 500
1,14 %
GEIR WICKLUND

1 021 000
0,98 %
CITIBANK INTL. PLC. (LUX BRANCH)

1 000 000
0,96 %
VESTA LIV AS

997 588
0,95 %
A WILHELMSEN AS

952 792
0,91 %
C/O KARL JOHAN FONDS AS
868 093
0,83 %
AS TOLUMA

807 320
0,77 %
NOC LTD

637 339
0,61 %
UNION BANK OF NORWAY INT. S.A.

614 886
0,59 %
ODIN OFFSHORE
572 000
0,55 %
VERDIPAPIRFONDET K_SMB

480 500
0,46 %
SPAREBANKEN ROGALAND

450 000
0,43 %
TORSTEIN TVENGE

437 000
0,42 %
SIS SEGAINTERSETTLE AG 25PCT

387 499
0,37 %
ASUTHALDEN

377 506
0,36 %
20 LARGEST SHAREHOLDERS
81 215 128
77,58 %
OTHER SHAREHOLDERS (2,020)
23 465 532
22,42 %
TOTAL SHAREHOLDERS
104 680 660
100,00 %
Northern Offshore
-

Potential

All figueres USD
Current
Potential
Operating
Potential
Dayrates
Dayrate
Cost
Bareboat/day
(1998 actual)
Northern Producer
140 000
150 000
35 000
115 000
Energy Searcher
50 000
90 000
30 000
60 000
Northern Explorer II
0
85 000
28 000
57 000
Northern Explorer III
0
90 000
30 000
60 000
Galaxy Driller
0
67 000
28 000
39 000
Discoverer I
0
66 000
28 000
38 000
Total potential per day
369 000
EBITDA annually
134 685 000
Factor
3
5
7
Gross value
404 055 000
673 425 000
942 795 000
Debt as of today
201 700 000
201 700 000
201 700 000
Potential stock value
202 355 000
471 725 000
741 095 000
Potential stock value/share, USD
1,93
4,51
7,08
(104 680 660 shares)