NORTHERN OFFSHORE

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NORTHERN OFFSHORE
Operations in offshore drilling and floating
production

• Presentation
• Updated 5 September 2001

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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.)

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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

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COMPANY SPLIT
Effective date 20 September 2000
Northern Offshore Ltd., Bermuda
Northern Oil ASA, Oslo
74.4
62.9
Northern Producer
Naftex Energy Corp.
Petrolex Energy Corp.
Egypt Brazil
Colombia
Northern Explorer II
Northern Explorer III
Discoverer I
Energy Searcher 22.06.01
Galaxy Driller
Ticker code Oslo Stock Exchange NOF
Ticker Code Oslo Stock Exchange NOI
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REASON FOR CHANGE OF DOMICILEAND 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

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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

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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

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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
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GALLEY FIELD New Production Well
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PAST PRODUCTION LEVEL - GALLEY
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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

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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

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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.

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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

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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

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Market Utilization as per 31 August 01Source
Petrodata

Only 2-3 floaters available or uncommitted in
addition to units owned by Northern Offshore
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Worldwide supply and demandSemi submersible
Drilling Rigs
Source Bassøe Offshore Services
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Asia / Pacific rig demand / supply / utilisation
Source DnB Markets
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Worldwide supply and demandConventional
Drillships
Source Bassøe Offshore Services
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Market Outlook South East Asia
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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 1st Quarter 1999 21 000 000 8 212
500 39.1 12 787 500 2nd Quarter 1999 31 725
000 15 276 313 48.2 16 448 688 3rd
Quarter 1999 29 500 000 17 065 000 57.9 12
435 000 1st Quarter 2000 40 035 000 23 828
500 59.5 16 206 500 2nd Quarter 2000 37 175
000 23 732 000 63.8 13 443 000 4th Quarter
2000 3 920 000 2 669 600 68.1 1 250
400 1st 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
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Repurchase of Northern Offshore High Yield Bonds
II
Total borrowing reduced by USD 160 mill Therof
profit on repurchase USD 83 mill Earnings from
operation USD 76 mill
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BALANCE SHEET 1998 2001USD million
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INCOME STATEMENT 1998 2001USD million
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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 Searchers dayrate
will increase to a level of USD 70 000 end of
this year.
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SHARE PRICE / TRADING VOLUME(last 18 months)
Average daily trading volume last 12 months
450 000 shares
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SHARE PRICE NOF NOI(Split of Company
20 September 2000)
NOF NOI
NOF
NOI
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SHAREHOLDERS, 28 August 2001
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Northern Offshore - Potential