Untitled

Annual

Report

2022

Material and diversified

production base

Maximising value creation

with hub-centred strategy

World-class capabilities,

with tangible growth and

track record

Credible path to net zero

(scope 1 and 2) by 2030

Material cash flow genera-

tion and investment grade

balance sheet supporting

attractive and resilient dis-

tributions

A leading pure-play E&P

independent on the attractive NCS

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Vår Energi

Company in brief

Company history

2022 Key figures

2022 highlights

CEO message

Growth and value creation

Strategic foundation

Norwegian Continental Shelf

Delivering growth and operational excellence

Value creation beyond 2025

Proven hub strategy

Finance policy

Sustainability

Leadership

Executive management

Board of Directors

Directors’ report

Operational review

Reserves and resources (PRMS)

Sustainability

Health, Safety, Security, Environment and Quality (HSSEQ)

People, organisation and working environment

R&D

Financial review

Risks and risk management

Outlook

Payments to governments report

Governance

Shareholder information

Financials

Financial statements

Auditor’s report

118

Responsibility statement

122

Appendix

123

Alternative Performance Measures

123

Glossary

124

General ESEF data

125

CONTENTS

VÅR ENERGI

GROWTH AND VALUE CREATION

SUSTAINABILITY

LEADERSHIP

DIRECTORS’ REPORT

GOVERNANCE

FINANCIALS

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GROWTH AND VALUE CREATION

SUSTAINABILITY

LEADERSHIP

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Vår Energi annual report 2022Vår Energi annual report 2022

We are Vår Energi

Vår Energi is a leading independent upstream oil and gas company on the Norwegian continental shelf (NCS).

The Company is founded on more than 50 years of NCS operations, a robust and diversified asset portfolio with

ongoing development projects centred around hubs, and a strong exploration track record. With more than 900

employees and equity stakes in 36 producing fields, Vår Energi produced net 220 kboepd of oil and gas in 2022.

The Company has an ambition to increase production to 350 kboepd

by end 2025 while reducing production cost to USD 8

per boe

from USD 13.5 per boe in 2022 as new projects come onstream and

effects from improvement measures are achieved. Material cash flow

generation and an investment grade balance sheet enable attractive

and resilient dividend distributions. The Company declared USD 1 075

million in dividend for 2022. For 2023, Vår Energi further plans to

distribute a dividend of USD 270 million for the first quarter and

approximately 30% of cash flow from operations after tax for the

full year. From 2023 and onwards, the Company plans to distribute

20–30% of CFFO as dividends.

On 16 February 2022, Vår Energi was listed on Oslo Stock Exchange (OSE)

under the ticker “VAR”. The initial public offering (IPO) provided access

to Norwegian and international capital markets, a diversification of the

Company’s ownership structure and supported employee- participation.

Vår Energi is committed to deliver a better future. The Company’s

ambition is to be the safest operator on the NCS, the partner of choice,

an ESG leader and a net-zero producer (Scope 1 and 2) at operated

fields by 2030.

Production

kboepd

CFFO

USD million

Free cash flow

USD million

Dividends for the year

USD million

20222021

220

246

20222021

5 682

4 580

20222021

3 089

1 995

20222021

950

1 075

Real 2021

This includes dividends of USD 300 million paid in March 2023

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Vår Energi | Company in briefVår Energi | Company in brief

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A 50-year success story continues

Creation of a leading NCS pure-play independent

Established in

Norway since 1965

Actively involved in

Norwegian offshore oil

& gas since 1963

First license

awarded

(PL 001)

Point Resources

established¹

2016

Acquisition of

ExxonMobil’s

operated NCS

business

2017

Ekofisk

production

1971 2016

1965

Goliat first Barents

Sea oil field in

production

2018

Merger between

Point Resources

and Eni Norge

2019

Aquisition of

ExxonMobil’s

non-operated

NCS portfolio

New organisational

structure and

strengthened

executive team

Feb 2022 Nov 2022

Listed on Oslo

Stock Exchange

Production

from Balder

1999 2003

Production from

Ringhorne

Established through a three-way merger between Core Energy, Spike exploration and Pure E&P, all of which were fully owned by HitechVision

The Group’s heritage is built on over 50 years of

operations on the NCS, including the very first

license issued on the NCS in 1965 (PL001). Vår

Energi AS was established in 2018 through the

merger of Eni Norge AS and Point Resources AS.

Eni Norge AS was founded in 1965, while Point

Resources was created through the merger of

the HitecVision portfolio companies in 2016,

which then acquired the Norwegian operated

business of ExxonMobil in 2017. In 2019, the

Company further proved its ability to execute

complex transactions, with the acquisition of

substantially all of ExxonMobil’s partner-operated

assets on the NCS

Vår Energi’s strengths, competencies and best

practices have been developed over time,

combining the strength of two supermajors

to harness ExxonMobil’s and Eni’s operational

resources and technical expertise. The Company

also leverages on HitecVision’s NCS expertise

with demonstrated history of value creation.

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2022 Key figures

Actual serious injury frequency

0.1

(0)

emissions (operated licenses)

kg/boe

9.0

(~9.0)

EBITDAX

USD million

8 547

(4 821)

Net interest bearing debt/EBITDAX

0.3x

(1.0x)

Crude oil

Gas

NGL

56%

37%

Balder area

Barents Sea area

North Sea

Norwegian Sea

10%

35%

13%

42%

20222021

9 780

6 043

Revenue from crude oil sales

Revenue from gas sales

Revenue from NGL sales

20222021

13.5

Production split

2022

Production split by hubs

2022

Petroleum revenues split

by product type

USD million

Production cost

USD/boe

2021 in brackets

Per million working hours

Vår Energi share

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Key events in 2022

January

• ESG-rated by Sustainalytics as 14

of 155 E&P

companies

• Entered into a five-year helicopter-sharing

agreement with Equinor in the North Sea to

reduce costs and environmental footprint

• Awarded 10 new production licenses in the

Awards in Predefined Areas (APA), five of which

as operator

February

• 16 February: First day of trading as

a listed company on the Oslo Stock

Exchange

• Entered into 10-year sponsorship

agreement with Folkehallene in

Stavanger to support improvement

of public health and social

development

May

• PDO

submitted for the

Eldfisk North project in the

North Sea to the Ministry of

Petroleum and Energy

• PDO

submitted for the

Halten East project in the

Norwegian Sea

June

• Announcement of new organisational

structure and management team in

preparing Vår Energi for future growth

• Entered strategic partnership with Aker

Solutions, Ocean Installer and Saipem

for SPS/SURF

deliveries

September

• Revised schedule and cost

estimate for the project Balder X

October

• FID for the Smørbukk North

project in the Norwegian Sea

November

• Implementation of new

organisational stucture with

strengthened management team

December

• Confirmation of gas discovery in the operated Lupa well in the Barents Sea - the largest

discovery on the NCS in 2022

• PDO

submitted for the Verdande project in the Norwegian Sea

• Received first CDP rating and became a signatory to the UN Global Compact

• Revised PDO

for the Njord electrification project in the Norwegian Sea

July ‑ August

• Increased acreage positions

with new operatorships in the

Balder area

• Joined OGCI’s global “Aiming

for Zero Methane Emissions

Initiative”

Plan for Development and Operations

Subsea Production Systems and Subsea Umbilicals, Risers and Flowlines

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Vår Energi | 2022 highlightsVår Energi | 2022 highlights

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CEO message

Growth and value creation

2022 reaffirmed the importance of the Norwegian continental shelf (NCS) as a

reliable supplier of energy to Europe. At Vår Energi we have a clear strategy to deliver

long-term value creation for all stakeholders.

Just over a year ago, we listed on the Oslo Stock Exchange as a leading independent oil and gas

company on the attractive NCS with a clear plan for high-value growth, ESG leadership and

attractive shareholder distributions.

Today, I am proud to state that we remain firmly on track for more than 50% production growth

by end-2025, in line with the ambitions presented at the listing, and we have a tangible plan for

high value creation beyond. In 2022, we delivered improved safety performance, firmed up our

path to net zero, generated strong cash flow and declared nearly USD 1.1 billion in dividends,

exceeding our expectations at the start of the year.

When we listed on 16 February 2022, we went from two to 19.000 owners. I am pleased to see

our shareholder base growing to almost 30.000 over the past year. It is also a sign of engage-

ment, ownership, and dedication that more than 80% of our employees hold shares in Vår Energi,

truly making it

our

Company.

Clear value proposition

We create value from a large and diversified asset portfolio with a significant reserve base. Our

strategy is centred around four hub areas, maximising utilisation of infrastructure and securing

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future growth. Together with our strong operational and exploration

capabilities and safety culture, the hub areas form the basis for long-

term profitable growth.

Our strategic belief in the importance of the NCS strengthened during

2022 amid growing concerns for Europe’s energy supply as the war

in Ukraine continued. During the year, Norway became the biggest

supplier of gas to European markets, supporting energy security in the

short, medium, and long term. And we, at Vår Energi, are proud to be

part of this, delivering energy to millions of European households every

day. Against this backdrop, we serve an important role as a predictable

and sustainable gas supplier.

Strong cash flow generation

Oil and gas production averaged 220 thousand barrels per day, a

decrease of 10% from 2021 due to natural decline, maintenance activ-

ities and operational issues affecting both own and partner-operated

fields. Natural gas represented 37% of 2022 production. We delivered

high value creation supported by high oil and gas prices which led

to record cash flow from operations of USD 5.7 billion and material

distributions to our shareholders. We expect to pay further a USD 270

million dividend for the first quarter of 2023, while maintaining our

plan to distribute 20%-30% of cashflow from operations over time. For

2023, we target the high end of the interval.

This is enabled by a solid financial position and an investment grade

balance sheet. In 2022, we issued our first bonds in the US debt market,

largely refinancing our bridge-to-bond facility and diversifying our

debt structure. Supported by strong operational cashflow we delivered

a second consecutive year with a significant reduction in the leverage

ratio, which was 0.3x at year-end.

Realising our full potential

Looking ahead, our ambitions for 2025 are based on our 17 sanctioned

high-value development projects in our key hub areas led by Balder X,

Breidablikk and Johan Castberg. At year-end, 11 of the projects were

more than 50% complete and therefore de-risked with regard to infla-

tion and the supply chain. They represent total reserves exceeding

500 mmboe with low production cost and an average break-even of

approximately USD 30 per barrel. This provides a solid foundation for

future value creation.

Beyond 2025, we have a clear ambition to sustain production. High

value, cost discipline and scale are key drivers for our long-term pro-

duction profile. This is founded on improved recovery, infill drilling,

near-field developments and maturation of our robust project pipeline

of standardised, efficient and low-risk subsea tie-backs. The project

pipeline continues to grow as our exploration team delivers world-class

results. Vår Energi was the operator of the largest new discovery on the

NCS in 2022 with Lupa in the Barents Sea, and our successful track

record extends into 2023 with the Countach discovery in the same

region. Finally, we continuously consider value-accretive M&A opportu-

nities – in line with our strategy.

To deliver on our targets and ambitions, we leverage strong capabilities

and a heritage that dates back to the early beginning at the NCS. Even

though Vår Energi is a young company, we have over 50 years of

experience. We are focused on realising our full potential. Becoming

a listed company was a natural step in doing that. In November, we

established a new organisation, added significant strengths to our

management team and optimised our internal structure to increase

flexibility and productivity. This includes strengthened focus on people

development, safety, cost, and operating efficiencies. In 2022, we

realised around 200 million dollars in synergies through our improve-

ment programme and we see further gains towards 2025.

Committed to deliver a better future

We want to be the partner of choice in everything we do. We cannot

deliver on our long-term ambitions without strong partnerships and

collaboration with the authorities, field partners, service providers

and the supply chain. It’s also a prerequisite that our activities should

benefit the local communities in which we operate, including industrial

development, competence building and local engagement.

We want to be the safest operator, and aligned industry programmes

are an important part of our continuous implementation of safety ini-

tiatives. We will deliver responsible and sustainable production growth

with low emissions.

I would like to use this opportunity to extend my gratitude to the entire

Vår Energi team for their dedication and hard work. Together, we are

on track to deliver industry-leading production growth with lower costs

and emissions and build an even stronger platform for high value

creation for all stakeholders in the years to come.

Stay safe!

Torger Rød

CEO, Vår Energi ASA

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Vår Energi annual report 2022

Growth and

value creation

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Strategic beliefs

Vår Energi considers the decarbonisation of oil and gas production a prerequisite for

ensuring a resilient business model and driving long-term value creation. The Company

has announced operational targets to actively reduce and minimise its environmental

impact, with a target of net zero emissions (Scope 1 and 2 emissions) by 2030.

There is a trilemma of available, reliable and

sustainable access to energy. Vår Energi plays

an important role in supplying energy. Global

energy demand is projected to increase by

around 1% annually through 2030

, with oil and

gas to account for over 50% of the global energy

mix in 2030. Hence, oil and gas will remain a

critical energy source for many years to come.

Gas is argued to be in line with EU’s climate

and environmental objectives and will allow

acceleration of the shift from more polluting

activities, such as coal generation, towards a

climate-neutral future.

The Company believes the NCS is one of the

most attractive E&P regions globally, with

proven development potential, significant

remaining reserves and resources, high

quality exploration prospects, well-understood

geology, existing infrastructure, low production

costs and a stable regulatory environment and

tax regime.

The NCS exhibits low CO

emissions relative

to other regions within the global oil and gas

sector, with an average of 7 kg CO

per barrel

as compared to the global average exceeding

18 kg per barrel. The region is a global leader in

electrification, with 40% of the NCS targeted to

be electrified by 2025. Other large-scale NCS

sustainability initiatives include a strong focus

on carbon capture and storage and utilisation

offshore wind as source of energy.

ESG and climate are global and national priorities,

a pathway to net zero will be required

Oil & Gas will continue to be a part of the energy mix long

term; gas to increase share of NCS production

The NCS will continue to be attractive driven by

cost competitiveness, low emissions, and long-

term oriented regulators

Our strategic foundation

International Energy Agency (IEA), World Energy Outlook 2022, Stated Policies Scenario

Source: Rystad Energy

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Clear strategic priorities for value creation

Committed to deliver a better future

Be the safest operator with leading ESG performance

Drive operational excellence across our portfolio

Cultivate a robust portfolio positioned for further growth

Be the partner of choice in everything we do

Foster a high-performing organisation

Vår Energi’s highest priority is to carry out its activities without causing harm

to people or the environment. It is the Company’s expressed ambition to be the

safest operator on the Norwegian Continental Shelf.

The Vår Energi organisation is high performing, flexible and collaborative.

The Company leverages its extensive capabilities across operations and aspires

to be the partner of choice for field operators, suppliers, regulators and other

stakeholders.

The Company has a clear ambition to reduce costs and increase efficiency.

This includes portfolio and reservoir optimisation, efficiency improvements and

technology implementation.

Vår Energi has a hub-focused approach to further develop and focus the port-

folio both organically and inorganically, creating opportunities through scale

and diversification.

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Realising our full potential

Vår Energi is run by people. We believe in driving change and

development through a mindset of setting direction, engaging for

action and empowering for solutions, focusing on totality and

fostering effective cooperation. At year-end 2022, the total number of

employees was more than 950. 26% of the employees were female. In

addition to fostering a safe and healthy work environment, Vår Energi

is maintaining low employee turnover and is targeting 30% female

share of permanent employees by 2025.

Vår Energi values local community engagement and in addition to awarding

long term HSSEQ contracts to local suppliers, the Company funds local scholar-

ships for educational institutions and collaborates with municipal schools.

Vår Energi is preparing for future growth. In 2022, the Company implemented

a new organisational structure and strengthened the management team. The

simplified organisation aims to increase flexibility and productivity while devel-

oping capabilities. This includes people development, continued improvement on

safety, cost reductions and operational efficiencies.

People-centred organisation

>950 employees

People

Competence, professional

development and collaboration

Competence

Systematic building

of competence

Diversity

Diverse organisation and

equal opportunities

30% gender diversity

target by 2025

Low employee turnover

Strong focus on health

and work environment

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In the new organisational structure, the numbers of business areas

were reduced and two new business areas were established to provide

expertise, projects and products across the company. Vår Energi is

gathering professions to ensure people development, governance and

to prioritise competence and capacity to realise the full potential.

In the new structure, Rune Oldervoll and Exploration and Production

has the responsibility of finding and producing oil and gas, both for

operated and partner-operated assets while ensuring safe and efficient

operations.

Ingrid Sølvberg leads the Technology, Drilling and Subsurface business

area which delivers technical expertise, experience and improvements.

This includes training and development of engineers and providing

technical services to all parts of the business. In addition, continuously

improving competence, capacity and technology are key priorities to

ensure long-term competitiveness.

Project Development and Supply Chain Management, led by Atle

Reinseth, is responsible for the development project portfolio and for opti-

misation and standardisation of Vår Energi’s supply chain. This includes

people development and expertise to improve project and contract deliv-

erables and enhance competence.

As part of optimising the organisation, Vår Energi has implemented

an improvement programme to realise synergies from commercial

excellence, production efficiency, drilling and well improvements and

supplier collaborations. In 2022, the Company realised around 200

million dollars through the initiatives and further targets to realise

200-300 million dollars annually towards 2025.

Executive

management

Ingrid Sølvberg

Technology, Drilling

& Subsurface

Stefano Pujatti

CFO

Rune Oldervoll

Exploration &

Production

Ellen W. Hoddell

Safety &

Sustainability

Atle Reinseth

Project

Development

& SCM

Tone Rognstad

People &

Communication

Ove André Årdal

Commercial

Aksel Luhr

Legal & Compliance

Ove M. Helle

Internal Audit

Torger Rød

CEO

CEO Office

Audit Committee

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Key digital initiatives

The Company aims to be an agile adopter of technological opportunities to ensure safe operations and increase competitiveness. Digital solutions are applied

across the Company, from providing field workers with access to real-time data to monitoring sustainability metrics and improving the Group’s ESG performance.

With a production heritage founded on over 50 years of operator activity on the NCS, Vår Energi benefits from leading technical capabilities. Among other

achievements, the Company has a number of technical innovations, many of which have increased safety and production efficiency on the NCS broadly.

The Company intends to build on the track record through continuous search for innovative solutions and strategic collaborations with partners.

Mobile field

worker

Improve safety,

productivity and

data quality

Optimised drilling

performance

Production

optimisation

Accelerate operations

and minimise non-

productive time (NPT)

Optimise production

levels

Maintenance

optimisation and

integrity

Inventory

optimisation

Maximise asset utilisation Secure stable operations

while reducing operating

costs

Digitalisation by

design

Data driven

safety and

sustainability

Integrate new ways

of working from early

project phase

Leverage real-time

data and analytics

improve safety and ESG

performance

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Partner of choice

Vår Energi strives to be a partner of choice in all of its activities.

The Company has a strong partnership with Equinor, the largest

and one of the most experienced operators on the NCS, with

Vår Energi being Equinor’s largest partner on the NCS.

The Company leverages its strong partnership with Equinor to seek

cost and energy efficiencies, most recently by collaboration related

to new solutions for logistics operations in the future, NCS Logistics

Project (NLP).

Other ongoing partnerships include the Hywind Tampen engagement,

to provide renewable energy to Snorre by use of floating wind, and a

joint power from shore project for the Balder/Grane area.

In 2022 Vår Energi also entered a strategic partnership with Aker

Solutions, Ocean Installer and Saipem for SPS/SURF

deliveries, in

preparation for development of future subsea tieback projects.

In addition, Vår Energi is engaged in strong collaboration with Eni

in order to leverage on Eni’s capabilities in the areas of exploration,

project development, asset operation and drilling expertise as exam-

ples. Vår Energi engages in commercial offtake agreements with Eni

(through Eni Trade & Biofuels S.p.A) to provide offtake security and

reduce the costs of hedging activity.

Subsea Production Systems/Subsea Umbilicals, Risers and Flowlines

Electrical HUB

From onshore

Jotun A / Balder X

Ringhorne

Grane

SPS/SURF supplier

collaboration

Long-term strategic subsea

partnership with Aker Solutions,

Ocean Installer and Saipem for

subsea equipment and installation

Power from shore

Collaboration with Equinor to

electrify the Balder/Grane area

Norwegian Logistics

Project

Joint logistics pilot in Stavanger with

Equinor to share resource pool and

logistic operations

Partner collaboration examples

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GROWTH AND VALUE CREATION

SUSTAINABILITY

LEADERSHIP

DIRECTORS’ REPORT

GOVERNANCE

FINANCIALS

CONTENTS

VÅR ENERGI

GROWTH AND VALUE CREATION

SUSTAINABILITY

LEADERSHIP

DIRECTORS’ REPORT

GOVERNANCE

FINANCIALS

Growth and value creation | Strategic foundationGrowth and value creation | Strategic foundation

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The NCS is ideal for value creation

The Norwegian continental shelf (NCS) is a unique place for value creation. Norway is an

open, transparent, and low-risk country. This reflects a well-regulated oil and gas industry with

industry-leading safety standards, fair working conditions and high ethical and governance

frameworks. The NCS is also characterised by a supportive and stable fiscal regime, with strong

support in the Norwegian population.

The NCS is a solid ground for a pure play E&P

company. After approximately 50 years of pro-

duction, around 50% of the estimated oil and gas

resources have been produced, amounting to close

to 50 billion barrels. The NCS has potential for

continued long-term value creation from the vast

resources remaining.

According to Rystad Energy, NCS offers low

costs and emissions per barrel, well below the

global average. The Transparency International’s

“Corruption Perception Index” ranks Norway

among the most transparent countries in the world.

The combination is unique, representing longev-

ity. Vår Energi believes the NCS will bring energy

security for decades to come.

Cost competitive

Opex per boe 2022 (USD)

Reliable framework

Score Transparency International’s

Corruption Perception Index, 2021

Lowest CO

footprint

Carbon intensity 2022 (kg CO

/boe produced)

Significant resources

Total ~100bn boe

8 8

NorwayQatarAngolaUSABrazilUKMexico

BrazilSAQatarUSAUAEUKNorway

NorwaySAUAEQatarUSRussiaUK

20%

40%

60%

80%

100%

Sold and delivered

Reserves

Contingent resources

Undiscovered resources

Production growth Continued investment

in developments

Continued exploration Supportive and stable

fiscal environment

Source: Rystad Energy

Source: Norwegian Petroleum Directorate

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Growth and value creation | Norwegian Continental ShelfGrowth and value creation | Norwegian Continental Shelf

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Delivering growth and

operational excellence

Vår Energi has set an ambitious target for growing production to above

350 000 barrels per day by end-2025. This will be delivered by a

portfolio of sanctioned projects with attractive economics. Additionally,

the Company relentlessy focuses on what can be controlled and

impacted through enhancing performance and competitiveness and

deliver operational excellence.

CONTENTS

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Growth and value creation | Delivering growth and operational excellenceGrowth and value creation | Delivering growth and operational excellence

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Ambition to be the safest operator

Operational safety is a top priority for Vår Energi, whose ambition is to be one of the safest operators

in the oil and gas industry. The Company’s ambition is to be the safest operator on the NCS, with

the aim of reducing injury totals to near-zero levels. In 2022, the Company exhibited positive

improvements with respect to safety KPIs, including a reduction in serious incidents frequency (SIF)

and total recordable incidents frequency (TRIF)

at par with 2021.

Vår Energi collaborates with Equinor, ConocoPhillips and Aker BP on the Always Safe annual wheel. The purpose

of Always Safe is to strengthen the industry’s safety behaviour and culture. Through this joint effort Vår Energi

utilises the strength of standardisation, increasing the impact in the industry with partners, suppliers, contractors

and the Company. Vår Energi believes Always Safe is a key enabler in becoming the safest operator on the NCS.

Vår Energi has incorporated the nine Life-Saving Rules as stated by the International Association of Oil & Gas

producers (IOGP). These rules provide workers with a simple set of actions to protect themselves and others from

incidents and fatalities.

Other ongoing initiatives include MARI (Major Accident Risk Indicator) tracking on operated fields and new digital

tools to ensure technical integrity, support proactiveness, facilitate standardisation of safety initiatives across our

operations and ensure compliance.

Serious incidents and near-misses per million worked hours, 12 months rolling average. Includes actual and potential consequence

Personal injuries requiring medical treatment per million worked hours, 12 months rolling average. Reporting boundaries SIF and TRIF: Health

and safety incident data is reported for company sites as well as contracted drilling rigs, floatels, vessels, projects and modifications, and trans-

portation of personnel, using a risk-based approach

CONTENTS

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LEADERSHIP

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GOVERNANCE

FINANCIALS

CONTENTS

VÅR ENERGI

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Continuous focus on reducing

production cost per barrel

Vår Energi has a high focus on operational efficiency and is targeting a continued reduction in

production costs per barrel. The Company reduced production costs from USD 14 per barrel in

2018 to USD 13.5 per boe in 2022 through accretive M&A and cost reduction programmes.

The Company is targeting a further reduction of

production costs to USD 8.0

per barrel by end-

2025.

Vår Energi intends to achieve this target through

the execution of ongoing projects, including

the Balder X and major partner-operated asset

developments at Johan Castberg and Breidablikk.

Combined, the sanctioned development portfolio

has an average production cost of approximately

USD 4 per barrel. Additional cost reductions are to

be realised through operational excellence, active

portfolio management, uptime improvements, stra-

tegic supplier partnerships, cost sharing with other

operators, digitalisation and new technologies.

Real 2021

End-2025 ambition2023 guidingFY 2022

14.5 – 15.5

13.5

Medium-term ambition of ~8 USD/boe

Production cost per barrel (USD/boe)

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CONTENTS

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De-risked project portfolio

driving production growth

Vår Energi’s development pipeline and exploration track record has positioned the Company for

growth in the coming years. Major sanctioned developments include Balder X, Breidablikk and Johan

Castberg. The Company’s development projects generally exhibit high reserve quantities and low

break-even prices.

The Company is targeting production of more than

350 kboepd by end-2025. This is supported by 17

sanctioned development projects, well into execu-

tion with committed investments. In addition, there

are a number of opportunities within Vår Energi’s

existing production base to add reserves and

extend field life through incremental investments

in infill drilling and well intervention programmes,

facilities modifications, subsea satellite develop-

ments and near field exploration.

A significant part of Vår Energi’s capital expend-

iture programme is targeted at future subsea

tie-back projects, which are typically lower risk with

relatively small-scale capital requirements and

significant potential for financial returns.

Vår Energi ensures efficiency in growth plans

and capital expenditures by taking a disciplined

approach to field development, with the ambition

of an average portfolio break-even of around

USD 30 per barrel. The Company’s exploration

strategy is focused on identifying additional in-

and near-field drilling prospects at established

assets and core hubs.

Johan Castberg

Balder X Breidablikk

Mid-term target of

>350 kboepd

Supported by 17 sanctioned

development projects, well

into execution with committed

investments

Base production

Johan Castberg Other sanctioned projects

Balder X Breidablikk

220 210 – 230

Production (kboepd)

>350

End-2025E ambition2023 guiding2022A

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CONTENTS

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Resilient and low risk growth projects

Key Areas

Åsgard

Tampen

Goliat / Johan Castberg

Other

Grane

Ekofisk

Balder

2P mmboe 2023 2024 2025

178

148

222

109

102

162

216

Operator

Statfjord East IOR

Hywind

Tampen

OL Subsea Compression

Balder X

First oil field extension

First oil new field development

Åsgard LWP Asg. B LPP3

Breidablikk

Johan Castberg

Tommeliten A

Eldfisk North

Bauge

Fenja

Subsea compression II

Frosk

Kristin South

SBMN

Halten East

Verdande

>500 mmboe

reservers in development portfolio

~30 USD/boe

average break-even in

development portfolio

11 of 17 projects

>50% complete

>25%

Project IRR

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Balder X

The Balder X project is enabling further development in the Balder and

Ringhorne area and consists of two sub-projects: the Balder Future

Project and Ringhorne Phase IV.

The Balder Future project consists of the refurbishment and relocation

of Jotun FPSO from the Jotun field to the Balder area to accommodate

tie-ins of 14 new production wells and one new water injection well,

with future expansion capacity to accommodate for tie-ins in the area.

The project will extend the technical lifetime of the Jotun FPSO beyond

2045. First oil from the Balder Future project is planned for the third

quarter of 2024.

Ringhorne Phase IV is a continuation of the Ringhorne Platform drill-

ing activities, following the Ringhorne Phase III drilling campaign and

the drilling of five platform production wells.

1967

Discovery

1999

Balder

start-up

2019

Balder X

PDO

2021

Start drilling of new wells

in the Balder area

Q2 2020

Refurbishment of Jotun FPSO

commenced at yard

Q1 2024

Sail away yard

Jotun FPSO

Q3 2024

First oil

Balder FPU

Jotun FPSO

Ringhorne

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CONTENTS

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Breidablikk

In addition, Vår Energi holds a 34% working interest in Breidablikk, one

of the largest undeveloped discoveries on the NCS. It will be developed

as a subsea tie-back to the Equinor operated Grane field, with planned

first oil in first quarter 2024. Vår Energi holds a 28% working interest in

the Grane field.

©Equinor

2020

PDO approved

Q1 2022

All four subsea templates

successfully installed

Q2 2022

Drilling

start

Q4 2022

2022 installation

campaign completed

Q1 2023

First well completed

Q2 2023

High-activity period at

Grane completed

Q1 2024

First oil

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CONTENTS

VÅR ENERGI

GROWTH AND VALUE CREATION

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Johan Castberg

The Johan Castberg field holds 174 mmboe of net recoverable reserves

to Vår Energi. Equinor is the operator of the Johan Castberg develop-

ment, which consists of 30 wells, 10 subsea templates and 2 satellites

tied back to a fully winterised FPSO. Vår Energi has a 30% working

interest in Johan Castberg.

The FPSO hull and living quarter modules are currently at Stord

(Norway) for topside integration.

Twelve of the production wells have been drilled by the end of 2022

and the subsea and marine campaign was completed in November

2022 as planned. The oil will be transferred to shuttle tankers before

being shipped to the market. A firm decision for a future gas export

solution has not been taken and the gas is currently not included in the

reserves.

2018

PDO approved

2018

Construction start of hull in Singapore

Construction start of topside in Norway

Q2 2022

Start FPSO integration at

Aker Stord, Norway

Q2 2022

Pre-drilling campaign of

12 wells completed

Q3 2022

Marine installation completed

1H 2024

Sail away to field

Q4 2024

First oil

CONTENTS

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FINANCIALS

CONTENTS

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GROWTH AND VALUE CREATION

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LEADERSHIP

DIRECTORS’ REPORT

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Strategic ambition to sustain

value creation beyond 2025

Vår Energi’s strategic ambition is to sustain value creation and

production beyond 2025, founded on a material base of long-lived

resources. Key items to ensure sustainment is:

1. Long traditions of enhancing recovery by applying new technology

and innovation within seismic, drilling, production efficiency and well

deliveries

2. Sanctioned developments coming on stream, and maturing a large

portfolio of high-value unsanctioned tie-in projects

3. Industry-leading exploration capabilities to continuously deliver high-

value development projects

4. Vår Energi itself is a testimony of a long history of successful M&A.

Ambition to strengthen the position on the NCS through value-accretive

opportunities in line with the strategy

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Operational excellence and continuous recovery

Vår Energi continuously work to prolong field life and extend the production plateau through

optimised drilling and technology advancements. This is an important part of the strong reserve

replacement ratio, with an average of more than 160% over the past four years. Historically, infill

drilling contributes to an average increase in recovery of more than 7% annually compared to

the original plan

. The Company aims to deliver the same performance going forward, indicating

more than 30 thousand additional barrels per day from infill drilling per year post 2025.

The Company works continuously to improve the operational performance. Since 2018, initiatives to drive pro-

duction efficiency at the operated assets have delivered a 10% improvement, from 80% production efficiency

to 88%. The future ambitions are higher, with 93% production efficiency in 2025 and beyond.

According to study by the Norwegian Petroleum Directorate

Source: Vår Energi, reserves and resources

For operated assets, long-term ambition not including TAR

Total resources

>1.6

billion boe

Reserve replacement ratio

>160%

average 2019-2022

Average annual

infill production

>30

kboepd 2025

to 2030

Historic increase in

improved recovery

>7%

annual average

last 5 years

Proven results from increased recovery and technology

Improved planning and execution of

maintenance and turnaround activities

High regularity and uptime on the

assets, avoid unplanned losses

2018 – 2019 2025+ ambition2020 – 2022

~80% ~88% >93%

Continuous improvement in production efficiency

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World-class exploration capabilities

Vår Energi has proven world-class exploration capabilities. Based on Rystad Energi, the Company

are at the forefront on the NCS when it comes to the average size of discoveries, lowest

exploration cost per barrel discovered and the highest return on exploration spend.

In 2022, the Company’s exploration campaign achieved a 57% success rate adding around 65 mmboe of contingent

resources with an average unit exploration cost of USD 0.2 per barrel after tax.

Going forward, Vår Energi will maintain the successful exploration strategy – planning to drill 8-10 near field

wells per year and 1-2 high risk/high reward wells. The Company have delivered a success rate exceeding 50%

the past three years and intend to continue to execute accordingly. Over the last years, Vår Energi has made

the most discoveries on the NCS.

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Maturing a high-value

project portfolio

Vår Energi has a large resource base of unsanctioned attractive projects in the

development pipeline which are being matured toward an investment decision. The

Company will have a disciplined approach of maturing the projects, with clear return

and break-even requirements, sanctioning projects when the timing is right, to ensure

high-margin barrels to the market and sustained production over time.

The majority of exploration drilling is executed near-field in hub areas, delivering infrastructure-led

wells adding value to the existing asset base. Vår Energi aims to apply a factory-based approach to

standardise and simplify subsea tie-ins. The ambition is to deliver an average break-even of around

30 dollar per barrel across the project portfolio.

The future developments will be matured and executed with the long-term strategic supplier part-

nerships, with extensive expertise and proven track records. Vår Energi has secured strong partners

with competence, capacity and priority.

Barents Sea

Goliat tie-backs

Johan Castberg tie-backs

Barents gas solution

North Sea

Fram South

Garantiana

Snorre IORs

Eldfisk North Extension

Norwegian Sea

Åsgard IORs

Kristin South phases

Åsgard - Bjørnene

Balder/Grane

King and Prince

Balder Phase V

Balder Future Phases

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CONTENTS

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Growth and value creation | Value creation beyond 2025Growth and value creation | Value creation beyond 2025

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Accretive M&A

opportunities

Vår Energi was created through an active merger and

acquisition (M&A) strategy, indicating that value-accretive

transactions are a part of the Company’s DNA.

Potential M&A transactions may involve specific license transactions,

license portfolios or corporate deals with the right asset base. Vår

Energi will evaluate opportunities against a clear set of criteria for us

to proceed, according to the strategy. Vår Energi continues to focus

on the NCS, strengthening existing core areas and asset portfolio,

responding to the ESG strategy and potentially increase operatorships

over time. M&A is a possible tool to be used in meeting the strategic

ambition of high-value future production with significant scale.

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CONTENTS

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Growth and value creation | Value creation beyond 2025Growth and value creation | Value creation beyond 2025

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Unlocking value

through a proven

hub strategy

Vår Energi’s hub strategy is to cultivate a strong

portfolio focused on four core hubs with significant

production and exploration potential. The robust

and diverse portfolio provides insights into assets

and licenses across the entire NCS, identifying and

realising opportunities for value capture

As part of Vår Energi’s hub strategy, the Company identifies

strategic focus areas that provide a framework for evaluat-

ing exploration and development opportunities, maximising

the use of resources and optimising value creation through-

out Vår Energi’s portfolio.

The Company’s core assets are located around four stra-

tegic hubs: the Balder/Grane Area, the Barents Sea Area,

the North Sea and the Norwegian Sea. No single area

accounted for more than 30% of the total 2P reserves at

the end of 2022.

Barents Sea

Balder Area

North Sea

Norwegian Sea

Barents Sea area

Norwegian Sea

North Sea

Balder area

220

kboepd

10%

42%

35%

13%

Barents Sea area

Norwegian Sea

North Sea

Balder area

1 070

mmboe

22%

25%

24%

29%

Vår Energi

Equinor

Other

220

kboepd

18%

67%

15%

Production split FY 2022 2P reserves split YE 2022

Production split per operator FY 2022

Source: Vår Energi, Annual Statement of Reserves 2022, 2P reserves

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The Barents Sea

The Barents Sea Area, which accounted for 10% of the Company’s production for 2022 and 234

mmboe in 2P reserves at the end of the year, features significant value and upside potential. Key

assets include the Goliat field (in which Vår Energi holds a 65% working interest and is operator), the

only oil producing field in the Barents Sea Area with active infill drilling ongoing. It features one of

the world’s largest and most sophisticated circular and permanently anchored FPSO units.

Another key asset in the Barents Sea Area is Johan Castberg, a sanctioned and substantially de-risked project

with first oil planned for the fourth quarter of 2024. Vår Energi holds a 30% working interest in Johan Castberg.

In 2022, oil discoveries was made in the Skavl Stø and Snøfonn prospects. The discoveries are located in close

proximity to the asset with a preliminary combined estimated discovery size between 42 and 60 mmboe of

hydrocarbons. This discovery underpins the continued prospectivity in the Johan Castberg area.

Hammerfest

Skavl Stø discovery (2022)

Snøfonn North discovery (2022)

Goliat

Operated by Vår Energi

Lupa discovery (2022)

Johan Castberg

Operated by Equinor

Isflak discovery (2021)

Rødhette discovery (2021)

Countach discovery (2023)

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The Norwegian Sea

The Norwegian Sea, which accounted for 42% of the Company’s pro-

duction in 2022 and 267 mmboe in 2P reserves as of 31 December

2022, features multiple fields with high infill drilling activity.

Key assets

• Norne (inc. Marulk)

• Heidrun

• Åsgard (inc. Smørbukk, Midgard, Mikkel, Morvin, Trestakk)

• Kristin (inc. Tyrihans)

• Njord Area (Fenja, Bauge, Hyme)

• Ormen Lange

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The North Sea

The North Sea, which accounted for 35% of the Company’s production

in 2022 and 257 mmboe in 2P reserves as of 31 December 2022, is a

combination of mature area with high activity and lifetime extension at

key fields and prosperous future tie-ins.

Key assets

• Tampen area - Snorre and Statfjord incl. satellites

• Ekofisk area (incl. Tor & Tommeliten)

• Fram area

• Sleipner area

Stavanger

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The Balder/Grane Area

The Balder/Grane Area, which accounted for 13% of the

Company’s production for 2022 and 312 mmboe in 2P

reserves at the end of the year, is a core hub with expected

long-term production upside. At Balder and Ringhorne, Vår

Energi is operator and holds 90% working interest in Balder

and 70% working interest in Ringhorne East.

Other key assets in the Balder area are Grane and Breidablikk. Grane

bottom fixed steel jacket. Vår Energi holds a ~28.3% working interest in

Grane. The Breidablikk field, which is located around 10 km northeast

of the Grane platform, is currently being developed and has a projected

production start in the first quarter of 2024. The field development

concept includes four subsea templates linked to the Grane platform

by pipeline. Vår Energi holds a 34.4% working interest in Breidablikk.

Breidablikk

Operated by Equinor

Grane

Operated by Equinor

Balder X

Vår Energi-operated

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Finance policy

Vår Energi’s profitable and resilient asset base provides a foundation to deliver significant

value to shareholders, supported by an investment grade balance sheet. The Company

believes its investment grade balance sheet and capital structure provide flexibility and a

strong long-term outlook. Vår Energi has obtained BBB and Baa3 credit ratings from S&P

and Moody’s, respectively and is committed to maintaining an investment grade rating. Vår

Energi targets a net leverage through-cycle of below 1.3x, where NIBD to EBITDAX ratio is

0.3x at the end of 2022.

The Company also delivers value to shareholders through an attractive dividend policy and has distrib-

uted a total dividend of USD 4.2 billion since 2019, of which USD 1 075 million was related to dividends

declared for 2022. The company further plans to distribute a dividend of USD 270 million for the first

quarter 2023. For 2023, the dividend is planned to be approximately 30% of CFFO after tax. Going

forward, the Company’s ambition is to distribute 20% to 30% of cash flow from operations (CFFO).

Vår Energi’s conservative financial risk policy aims to secure full funding for all committed and planned

activities, a sufficient liquidity buffer with headroom to manage market fluctuations and a diversified debt

structure. The Company successfully issued USD 2.5 billion of five- and ten-year bonds in the US debt

market in 2022. The Company further maintains a conservative risk profile through hedging, extensive

insurance coverage and investment flexibility.

Waterfall of capital allocation priorities

Sustain production of existing portfolio

Fund capex of existing developments

and new value-creating projects

Maintain a strong investment grade balance sheet

Pay dividends according to stated policy

Use additional FCF for new projects, additional

shareholder distributions and debt repayment

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Sustainability

Vår Energi annual report 2022

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Sustainability

Clearly defined ESG agenda – Becoming an ESG leader

Vår Energi supports the UN Sustainable Development Goals (SDGs)

and use them as a framework for the Company’s sustainability

approach; to create value for its stakeholders, while respecting the

environment, people and the society.

Vår Energi has made the commitment to deliver a better future,

working towards:

• a stable and secure energy supply with lower greenhouse gas emissions

• responsible management of natural resources

• material value creation for the Company’s owners and the

Norwegian society – based on increased energy production for

customers in Europe.

To support the ambition of being an ESG leader, Vår Energi has estab-

lished a sustainability framework with strategic focus areas that cover

the main impacts, further detailed in material topics with targets and

indicators to measure performance, as outlined in the figure to the right.

Environmental

Vår Energi seeks to minimise the impact of its operations on the

climate and the environment. Through the HSSEQ Policy, the

Company commits to safeguard the environment in accordance with

the principles of precaution, prevention, protection, and continuous

improvement. All Vår Energi employees are committed to safeguard

ENVIRONMENTAL SOCIAL GOVERNANCE

Net zero scope 1 and 2 and 50% reduction

in scope 1 emissions from operated assets

by 2030

Goliat platform electrified with power

from the Norwegian grid

Part of OGCI Aiming for Zero Methane

Emissions Initiative

Local ripple effects of >10,000 jobs and

NOK ~16 billion in contract value in 2022

Expected tax payment of 35 – 40 billion

NOK for 2022

>95% spend towards suppliers based in

Norway in 2022

ESG-rated as #14 of 155 E&P companies

CDP score B

Part of UN Global compact

Executive pay connected to ESG targets

Baseline 2005, operational control

Sustainalytics, a leading ESG research provider who provides research based on its independent methodology

Pathway to net zero Responsible

resource use

Responsibility, integrity and

transparency

Safest

operator

Local value

creation

High performing

organisation

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the environment, and the Company builds environmental awareness

in the organisation through training, participation in joint industry

projects and R&D, and through involvement in industrial forums and

committees.

The main goal is a 50% reduction in the direct (scope 1), operational

control GHG emissions by 2030, base year 2005, and net zero scope 1

and 2 by 2030.

Vår Energi support the KonKraft strategy as described in “The Energy

Industry of Tomorrow on the Norwegian Continental Shelf – Climate

Strategy Towards 2030 and 2050” and align Vår Energi’s climate strat-

egy and GHG emission reduction goals with the KonKraft agreement.

Collaboration between oil and gas companies is crucial to achieve the

necessary reduction in GHG emissions on the NCS in total. Several

emission reducing measures require significant investments which

need to be approved by the involved license owners. Collaboration

and alignment are very important especially with regards to the sig-

nificant portfolio of partner operated assets in the Vår Energi portfolio.

Vår Energi became a signatory to the global joint industry “Aiming

for Zero Methane Emissions Initiative”, headed by the Oil and Gas

Climate Initiative (OGCI), whose members include companies such as

ENI, BP, Chevron, Equinor, ExxonMobil, and Shell. By taking individual

and collective actions, OGCI members will help accelerate the energy

transition through near zero methane emissions by 2030.

Social

Vår Energi purchased goods and services for about NOK 16.3 billion

where more than 95% of the suppliers were based in Norway.

Local value creation and ripple effects are key to Vår Energi, con-

tribution through industrial activity, job creation and competence

development in the communities where Vår Energi operates are key

components. Combined, Vår Energi has created more than 10 000 jobs

and expects to contribute nearly NOK 40 billion in taxes for 2022.

Governance

The Vår Energi Code of Ethics sets out the rules and standards that

apply for all Vår Energi’s activities and business relationships. It consti-

tutes a guide to decision-making and action-taking that is consistent

with the Company’s culture of responsibility, legality, transparency

and long-term value creation for all stakeholders. During 2022, the

Transparency Act came into effect, promoting respect for funda-

mental human rights and decent working conditions and ensuring

the general public access to information regarding how enterprises

address adverse impacts on fundamental human rights and decent

working conditions. Vår Energi has updated the related procedures

and processes to ensure compliance and reduce the risk of negatively

impacting human rights and working conditions.

The Company acknowledges and adheres to the recommendations

set forth by the Task Force on Climate Related Financial Disclosures

(TCFD) and takes climate risks and opportunities into account when

developing strategies and financial plan.

Transparency and compliance are key to high governance standards.

Vår Energi has received solid ratings for its ESG reporting but has a

clear ambition to improve both performance and disclosure.

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Sustainability Sustainability

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Leadership

Vår Energi annual report 2022

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Leadership

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Executive management

Torger Rød

CEO

Torger Rød is the Chief Executive Officer of Vår Energi. Mr. Rød

joined the Company in June 2021. Previously, he was with Equinor

for 23 years (including 11 years in executive positions), both in

Norway and internationally. Most recently, he served as SVP and

Head of Corporate Safety and Security, and prior to that role,

he was SVP and Head of Project Development, in which he was

responsible for all operated project development deliveries and

value creation for Equinor. Mr. Rød holds a Master’s of Industrial

Economics from the Norwegian University of Science and

Technology in Trondheim.

Stefano Pujatti

CFO

Stefano Pujatti is the Chief Financial Officer of Vår Energi. Mr.

Pujatti is employed by Eni S.p.A and has been seconded to the

Company since 2019. He has more than 20 years of international

experience in the oil and gas industry. Previously, he held the

position of VP Planning & Control of the Africa sub-Saharan region

in Eni S.p.A’s headquarters in Italy and has had several international

assignments in Eni’s major oil and gas subsidiaries, including in

Angola, Nigeria and Mozambique, where he held the position of

Finance Director. In previous assignments, he headed the planning

& control function of the upstream and engineering and construc-

tion divisions at the Eni S.p.A headquarters in Rome. Mr. Pujatti

began his career as an auditor with KPMG, where he also obtained

his CPA qualification. Mr. Pujatti holds a Master of Economy

degree from Catholic University in Milan, Italy.

The persons set forth below comprise the senior

management team as of 1 November 2022.

Name Born Position

Torger Rød 1974 Chief Executive Officer

Stefano Pujatti 1972 Chief Financial Officer

Rune Oldervoll 1971 Executive Vice President Exploration & Production

Ove André Årdal 1967 Senior Vice President Commercial

Aksel Luhr 1954 General Counsel

Tone Rognstad 1967 Senior Vice President People& Communication

Ellen Waldeland Hoddell 1980 Senior Vice President Safety & Sustainability

Ingrid Sølvberg 1970 Executive Vice President Technology, Drilling & Subsurface

Atle Reinseth 1966 Executive Vice President Project Development & SCM

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Executive Management cont.

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Tone Rognstad

SVP People & Communication

Tone Rognstad is the Senior Vice President for People &

Communication. She joined the company in 2022 and comes from

the role as VP for Project Management and Control in Equinor ASA.

During her 15 years as an executive in Equinor ASA, she gained

extensive managerial experience within the field of people, leader-

ship and organisational development. She held roles in corporate,

shared services and the business areas. Prior to joining Equinor

ASA, Ms. Rognstad held various executive leadership positions

in General Electric, both in Norway and internationally, within

the areas of marketing, risk and operations. Ms. Rognstad holds

a bachelor’s degree in banking and finance from BI Norwegian

Business School.

Ove André Årdal

SVP Commercial

Ove André Årdal is the Senior Vice President Commercial of Vår

Energi. He serves as Chair of the board of directors for the subsid-

iary of the Company, Vår Energi Marine AS. He has 30 years of

experience in the oil and gas industry, including 17 years working

for Eni Norge AS prior to the formation of the Vår Energi. He joined

Eni Norge as a Senior Commercial Negotiator in 2001, following

which he held several leadership positions within the commercial

function, including 13 years as Commercial Manager. From 1992 to

2001, Mr. Årdal worked for Mobil and ExxonMobil in Norway and in

the UK as Financial Analyst and Planning and Gas Infrastructure

Negotiator. Mr. Årdal holds a Master of Science degree in business

and administration from the Norwegian School of Economics in

Bergen, Norway.

Aksel Luhr

General Counsel

Aksel Luhr is the General Counsel of Vår Energi. He has more than

40 years of experience in the oil and gas industry. He has held

various managerial positions in Eni Norge and Elf (Total) within the

areas of legal, commercial, communications and human resources.

Mr. Luhr holds the role of regular secretary to the Board of Directors

of Vår Energi. He has also worked for the Norwegian Petroleum

Directorate and as a diver. Mr. Luhr represents Vår Energi in the

International Association of Oil & Gas Producers’ Legal Advisory

Panel and Offshore Norge’s Legal Committee, including member-

ship in the Standard Contracts Board. He was Honorary Vice Consul

of Italy in Stavanger till late December. Mr. Luhr has a law degree as

cand. jur. from the University of Oslo and is licensed as advocate and

member of the Norwegian Bar Association.

Rune Oldervoll

EVP Exploration & Production

Rune Oldervoll is the Executive Vice President Exploration &

Production of Vår Energi. Mr. Oldervoll joined the Company in

December 2018. He has more than 20 years of experience working

in technical and managerial positions at ExxonMobil, both globally

and in Norway. Mr. Oldervoll began working for ExxonMobil just

after finishing his studies at the Norwegian University of Science

and Technology in Trondheim in 1997. Mr. Oldervoll was seconded

to Shell UK working on the Brent decommissioning project prior to

joining the Company. He holds a Master’s in Mechanical Engineering

from the Norwegian University of Science and Technology in

Trondheim.

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Executive Management cont.

Atle Reinseth

EVP Project Development & SCM

Atle Reinseth serves as Executive Vice President Project

Development & Supply Chain Management. He joined Vår

Energi in October 2022, having previously served as VP Shaping,

Improvement and Analyses in project development, among other

roles, for Equinor. His experience includes key leadership roles

in the public sector and software industry, including with Acergy

(succeeded by Subsea 7 S.A.). He holds a Master of Business and

Economics degree from the BI Norwegian Business School with a

specialisation in procurement and logistics.

Ellen Waldeland Hoddell

SVP Sustainability & Safety

Ellen Waldeland Hoddell serves as Senior Vice President Sustainability

& Safety of Vår Energi. Ms. Hoddell has 15 years of experience within

the oil and gas industry in Norway. She has held several positions

within the area of Sustainability and Safety within Eni Norge and Vår

Energi, including risk and barrier management, technical and opera-

tional safety and emergency preparedness and response. Ms Hoddell

graduated with a master’s degree in risk management and societal

safety from the University of Stavanger in 2010..

Ingrid Sølvberg

EVP Technology, Drilling & Subsurface

Ingrid Sølvberg serves as Executive Vice President Technology,

Drilling & Subsurface. She joined Vår Energi in December 2022,

having previously served as Director General for the Norwegian

Petroleum Directorate (NPD). Prior to this role, she held significant

leadership positions in NPD, Centrica and Equinor. She holds

a master’s degree in marine technology from the Norwegian

University of Science and Technology.

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Former Minister of Petroleum and Energy

Thorhild Widvey

Chair

Thorhild Widvey has over 15 years of experience

in the Norwegian public and private sectors, with a

focus on the energy industry. She is, among other

things, former Minister of Petroleum and Energy

and State secretary in the Ministry of Foreign Affairs.

Thorhild has been chair of Statkraft since 2016, and

member of the board at Solstad Offshore.

Board of Directors

The persons set forth below are the current members of the Board of Directors.

The address for each of our directors in relation to their directorship is Vestre

Svanholmen 1, 4313 Sandnes, Norway.

Name Born Position

Thorhild Widvey 1956 Chair

Liv Monica Bargem Stubholt 1961 Deputy Chair

Francesco Gattei 1969 Board member

Guido Brusco 1970 Board member

Clara Andreoletti 1976 Board member

Marica Calabrese 1978 Board member

Ove Gusevik 1965 Board member

Fabio Ignazio Romeo 1955 Board member

Jan Inge Nesheim 1964 Board member, employee representative

Hege Susanne Blåsternes 1977 Board member, employee representative

Bjørn Nysted 1975 Board member, employee representative

Martha Skjæveland 1966 Board member, employee representative

Selmer Partner

Liv Monica Bargem Stubholt

Deputy Chair

Liv Monica Stubholt is Partner at Selmer, a

Norwegian corporate law firm, with a focus on

ESG, governance and the energy sector. She has

previously served as Investment Director at Aker

ASA, President and CEO of Aker Seafoods ASA, CEO

of Aker Clean Carbon AS, EVP in Kværner ASA, and

State Secretary at the Norwegian Ministry of Foreign

Affairs and the MPE. Liv Monica Stubholt holds a

Master of Laws from the University of Oslo.

Francesco Gattei

Board member

Francesco Gattei has over 25 years of experience in

the oil and gas industry across various senior roles

at Eni SpA Group. He is currently Chief Financial

Officer for Eni S.p.A and he has previously served as

Upstream Director of the Americas, Head of Investor

Relations, Secretary to Eni’s Advisory Board, Senior

VP of Market Scenarios and Strategic Options, and

Head of Upstream M&A. Francesco holds a Master

in Energy and Environmental Management from the

Scuola Mattei. Furthermore, he earned a degree in

Economics and Commerce in 1994 at the University

of Bologna with a thesis on the oil market.

Chief Financial Officer

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Marica Calabrese

Board member

Marica Calabrese has about 20 years of experience

in the energy sector at Eni SpA Group. She cur-

rently serves as Head of Resources Development

Integrated Studies Africa Region at Eni S.p.A.

Between 2017 and 2019 she worked in the M&A

department at Eni S.p.A where she was in charge

of following M&A opportunities from origination,

through negotiation, up to closing of the deal. She

spent the first 14 years of her career in the Upstream

Division of Eni S.p.A in the Reservoir Department

and in Eni Norge AS. Marica holds a degree

cum Laude in Environmental Engineering from

Politecnico di Milano and a master’s degree with

honours in Petroleum Engineering from Imperial

College of London.

Head of Resources Development

Integrated Studies Africa Region

Oman Cables Chair

Fabio Ignazio Romeo

Board member

Fabio Romeo is currently the Chairman for Oman

Cables. He holds an undergraduate degree in elec-

trical engineering from Politecnico di Milano, and a

graduate degree and doctorate in electrical engi-

neering and computer science from the University of

California, Berkeley. Romeo worked as Chief Strategy

Officer in Prysmian Group S.p.A. from January 2014

to April 2021.

Board of Directors cont.

Chief Operating Officer Natural Resources

Guido Brusco

Board member

Guido Brusco has over 25 years of experience

in the energy business for Eni SpA Group. Since

2022, Guido was appointed Chief Operating

Officer Natural Resources for Eni S.p.A and has

previously served as Upstream Director, Executive

Vice President for the Sub-Saharan Region,

Managing Director of Eni Angola, Managing

Director of Agip Caspian Sea and Agip KCO

(Kazakhstan). Guido holds a degree cum laude

in mehanical engineering from Università La

Sapienza, Roma, Italy.

Clara Andreoletti

Board member

Clara Andreoletti serves as CEO of Eni Next LLC,

previously served as Head of Natural Resources

Business Support Services, Head of Geosciences &

Subsurface Operations Data Management, Head of

Prospect and Exploration Projects Validation and

Head of West Africa Exploration. She has over 20

years of experience in the oil and gas exploration

and development sector at Eni SpA Group.

CEO of Eni Next LLC

Ove Gusevik

Board member

Ove Gusevik is senior partner at HitecVision,

which he joined in 2021 from his role as Head of

Investment Banking at SpareBank1 Markets. He holds

a Master of Science degree in economic history

from the London School of Economics as well as an

MBA from the Middlebury Institute of International

Studies in Monterey, California, where he was a

Fulbright Scholar. He also holds a BA degree from

the University of Agder. Further, he completed the

officer training programme in the Norwegian Army

during his military service. Ove Gusevik brings more

than 30 years of investment banking experience,

including being one of the founders of First Securities

and serving as CEO Norway and Nordic Head of

Energy at Alfred Berg ABN AMRO. His experience

also includes being Chairman and board member

of companies at the Oslo Stock Exchange. He has

played a leading role in many of the largest energy

industry transactions in Scandinavia, including within

the oil and gas sector.

Senior Partner

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Martha Skjæveland

Board member, employee representative

Martha Skjæveland has worked for Vår Energi since

2006. Martha has more than 30 years of experience

in the oil industry and across drilling, operations,

projects, service companies and commercial.

Martha has been the leader of the union Industri

Energi within Vår Energi since 2010. She was also

Eni Norge’s representative in the Eni Corporate

European Works Council from 2011 to 2018, and

deputy Board Member of Eni Norge’s board of

directors from 2016 to 2018.

Jan Inge Nesheim

Board member, employee representative

Jan Inge Nesheim has worked offshore for Vår Energi

for more than 20 years. He holds the position as

Discipline Responsible Mechanical at Balder. Prior to

joining the Company, he worked offshore for other

companies. During recent years, he has been an

employee representative for the trade union SAFE,

as well as the head of the trade union. Previously,

Nesheim has represented the employees in numer-

ous committees, such as the Working Environment

Committee and the Works Council.

Board of Directors cont.

Hege Susanne Blåsternes

Board member, employee representative

Hege Susanne Blåsternes has worked for Vår

Energi since 2019. She currently holds the

position of Vice President E&P Improvement,

and previously served as Exploration Manager in

the Norwegian Sea and Asset Manager in POA.

She has 20 years’ experience in exploration and

received a master’s degree in petroleum geophys-

ics from the University of Bergen in 2002. She

serves on the Board of Directors as an employee

representative from Tekna.

Bjørn Nysted

Board member, employee representative

Bjørn Nysted has worked for Vår Energi since 2019.

He currently holds the position as Vice President

HSSE in Project & Operations in the Safety &

Sustainability department. He has over 25 years’ of

experience in the Norwegian oil and gas industry,

having worked in various roles from engineering to

HSE and project management. He has previously

worked for several different operator companies.

Bjørn received a bachelor’s degree in fire dynamics

from Høyskolen Stord/Haugesund in 1997. He serves

on the Board of Directors as an employee represent-

ative from NITO.

Discipline Responsible

Mechanical

Vice President E&P

Improvement

Vice President HSSE

Project & Operations

Administration Assistant

Commercial

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Vår Energi annual report 2022

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Board of Directors’ report

Vår Energi ASA is a leading independent upstream oil and gas company on the Norwegian continental shelf (NCS). The Company

holds strategic positions in some of the most productive and profitable production regions across the entire NCS. In 2022, the

Company made good progress in developing and executing its strategy for long-term value creation as a leading, growing and

profitable oil and gas company and thereby delivering value for its stakeholders and shareholders.

Vår Energi was founded in 2018 following the merger of Eni Norge AS

and Point Resources AS. On 16 February 2022, the Company was listed

on Oslo Stock Exchange (OSE) under the ticker “VAR”.

Vår Energi expects that oil and gas will continue to play a fundamental role

in the global energy mix for decades to come and is committed to deliver-

ing sustainable growth and value creation on the NCS. This is reflected in

Vår Energi’s vision statement: Committed to deliver a better future.

To deliver on the Company’s main business objectives, the Board

of Directors and management has defined the following strategic

priorities going forward: 1) Be the safest operator with leading ESG per-

formance, 2) Cultivate a robust portfolio positioned for further growth,

3) Drive operational excellence across our portfolio, 4) Be the partner

of choice in everything we do and 5) Foster a high performing organ-

isation. The Company has a target of becoming a net zero producer

measured by Scope 1 and 2 emissions by 2030.

The combination of good operational performance and high commod-

ity prices during the year led to a strong financial performance for Vår

Energi reflected in record cash flow from operations and an increased

dividend payment to the Company’s shareholders for 2022. During the

year, the Company largely refinanced the bridge facility in the US bond

market raising a total of USD 2.5 billion. The Company’s investment

grade credit ratings of BBB from S&P Global and Baa3 from Moody’s

Investors Service were reiterated, both with a stable outlook.

The Company maintained focus on safe operations with zero serious

accidents recorded during in 2022.

Commodity markets were volatile following Russia’s invasion of

Ukraine in February 2022. These events underline Vår Energi’s role

as a safe and reliable supplier of oil and gas to Europe and the world

amid energy shortages and supply uncertainty. The Company is con-

cerned about the continued conflict and give its deepest support to the

Ukrainian people and all of those affected by the crisis.

Operational review

The Company’s production of oil, liquids and natural gas averaged 220

kboepd in 2022, a decrease of 10% compared to 246 kboepd produced

in 2021. The year-on-year reduction was mainly due to natural field

decline, operational challenges leading to unplanned downtime in

operated and partner-operated assets and under-delivery from the infill

drilling programme. Total volumes produced in 2022 (including fuel

and flared gas) were 80 mmboe whereas total volumes sold were 79

mmboe. Oil represented 56% of the production in 2022, with gas and

NGL making up 37% and 7%, respectively.

At 31 December 2022, Vår Energi had production from 36 fields.

The Company’s operated fields, which comprise Balder, Ringhorne,

Ringhorne East, Goliat and Marulk, delivered 18% of the production and

the remainder came from partner-operated fields. Production effi-

ciency for the operated fields was 85% in 2022, a decrease from 87%

in 2021 due to scheduled maintenance at Balder, Ringhorne and Goliat.

Production (kboepd) 2022 2021

Balder area 29.5 36.0

Barents Sea 21.1 22.7

North Sea 78.0 86.1

Norwegian Sea 91.4 101

Total 220.1 245.8

For 2023, the Company expects a production in the range of 210-230

kboepd.

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Production cost per boe was USD 13.5 in 2022 compared to

USD 12.0 per boe in 2021. Total production cost (produced volumes) in

2022 was USD 1 087 million (+0.2%) compared to USD 1 079 million

for 2021. The increase was mainly due to higher environmental taxes,

well workovers and maintenance cost offset by foreign exchange rate

effects. Transportation and processing costs were lower year over year.

The Company expects a production cost in 2023 of USD 14.5 to

15.5 per boe. Vår Energi has an ambition to reduce the production cost

towards USD 8.0 per boe by end-2025 as new projects come onstream

and cost savings are realised.

Development projects

Vår Energi is participating in several significant development projects

on the NCS which support the Company’s ambition of producing more

than 350 kboepd by end-2025. Development activity was high with

expenditures on property, plant and equipment (PP&E) of approxi-

mately USD 2.5 billion in 2022 (USD 2.5 billion in 2021). Investments in

the Balder area, Johan Castberg, Breidablikk and the Fenja area repre-

sented 69% of PP&E expenditures for the year.

On Balder X, the project is progressing towards planned first oil in the

third quarter of 2024. Several milestones were reached during the

year and provide a de-risking of the project and basis for the revised

schedule and investment estimate announced in September. Work on

Jotun FPSO is ongoing at Rosenberg Yard where engineering is nearly

complete, and a majority of the equipment packages have arrived and

are being installed onboard. Construction work has ramped up and the

first sub-systems are already commissioned.

The majority of the subsea production systems are installed offshore.

Outstanding campaigns for 2023 have started and 2024 operations

are being planned. Drilling is ongoing with four wells completed at

year-end. All the 15 planned producing wells are expected to be com-

pleted prior to first oil to support a rapid production ramp-up.

The planned start-up of the Johan Castberg field is in the fourth quarter

of 2024. The FPSO hull and living quarter modules are currently at

Stord (Norway) for topside integration. Twelve of the production wells

have been drilled by the end of 2022 and the subsea and marine

campaign was completed in November 2022 as planned.

The Breidablikk field is being developed with four subsea templates

tied-back to the Grane platform. The project is progressing according

to plan with targeted start of production in the first quarter of 2024. At

year-end 2022, the High Activity Period (HAP) on Grane topside was

ongoing, drilling operations were progressing ahead of plan and prepa-

rations for the 2023 subsea campaign were well underway.

The Fenja development project, a subsea tie-back to Njord, is in the

final stages of the execution phase and development drilling is final-

ised. Production start-up is planned during the first half of 2023.

Hywind Tampen started in November 2022 with delivery of renewable

power to the Gullfaks platform. The final four of the 11 floating wind

turbines are planned to be installed offshore in the second quarter of

2023, with electricity production for the Snorre field expected to start

the following quarter.

Exploration

During 2022, Vår Energi engaged in exploration drilling across all

sectors of the NCS. The main objective for the exploration activities

is to replace and expand the reserve base. This is done through active

exploration close to producing assets to optimise the use of existing

infrastructure combined with selective high-impact exploration wells in

frontier areas.

The 2022 exploration campaign included drilling of seven completed

wells (Statfjord Kile, Ormen Lange Deep, Snøfonn, Skavl Stø, Othello

North, Lupa and Calypso). Four of the wells confirmed discoveries while

three wells were dry, resulting in a success rate of 57% for the year. The

Countach well, spudded in late 2022, was confirmed as an oil discov-

ery in February 2023. For 2022, the drilling campaign provided more

than 65 million barrels of recoverable oil equivalents in contingent

resources.

Three of the successful wells were drilled in the Barents Sea, where the

Company has a leading position and a long-term strategic ambition

to extend production though infrastructure-led developments. This

included the discovery of gas in the operated Lupa well, which was

the largest on the NCS in 2022 with combined estimated contingent

resources of 57-132 million barrels of recoverable oil equivalents (9-21

billion Sm3 recoverable gas resources).

At year-end, the Vår Energi portfolio totalled 147 licenses of which

48 are operated. In the APA 2022 license award in January 2023, the

company was awarded 12 new production licenses, five as an operator.

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For 2023, Vår Energi plans to drill about eight exploration wells tar-

geting a total of more than 50 million barrels of risked resources. Four

of the wells are operated by Vår Energi. The majority of exploration

drilling is in areas close to existing infrastructure, supporting the com-

pany’s hub strategy and strengthening the foundation for long-term

value creation.

Reserves and resources (PRMS)

As at 31 December 2022, Vår Energi’s total net proved and probable

reserves (2P) were 1 070 mmboe, slightly down from 1 119 mmboe at

year-end 2021. The decrease is mainly a function of high production

(80 mmboe) in 2022 and an update to the company gas conversion

factor (14 mmboe), partly offset by reserve increases/promotions and

upward revisions of reserves following more favourable commodity

prices during 2022.

Total proved and probable reserves are distributed with 24% in the

North Sea, 25% in the Norwegian Sea, 29% in the Balder Area and

22% in the Barents Sea. The Company’s proved and probable reserves

consisted of 72% oil, 23% gas and 5% NGL.

Total contingent resources (3C) at year-end 2022 were 550 mmboe,

a reduction of 12 mmboe when compared with year-end 2021.

The Company’s five largest fields, Balder/Ringhorne, Åsgard, Johan

Castberg, Breidablikk and Snorre combined, amounted to approxi-

mately 55% of total proved and probable reserves at year-end 2022.

The Company’s reserve life index (RLI) at year-end 2022, calculated based

on proved and probable reserves, was 13.3 years (12.5 years in 2021).

Sustainability

Vår Energi is committed to developing sustainable growth opportunities

on the NCS and aims to create long-term value by managing resources

in a responsible and sustainable manner. As one of the leading oil and

gas companies in Norway and a major supplier of energy to Europe, the

Company is aware that its activities have both positive and negative

effects on the communities and environment around us.

Vår Energi has an ambition of becoming an ESG leader in the oil and

gas industry on the NCS. The Company has established a sustainability

framework with strategic focus areas that cover main impacts with

detailed goals, targets and indicators to measure performance. The

Company continually identifies and assesses the actual and potential

impacts of its business and activities on sustainable development. Vår

Energi supports the UN Sustainable Development Goals (SDGs) and

uses them as a framework for the Company’s sustainability approach; to

create value for stakeholders, while respecting the environment, people

and the society.

This is why Vår Energi has made the commitment to deliver a better

future, working towards:

• a stable and secure energy supply with lower greenhouse gas emis-

sions

• responsible management of natural resources

• material value creation for the Company’s owners and the

Norwegian society – based on increased energy production for

customers in Europe

Vår Energi supports the goal of the Paris Agreement to limit tem-

perature increases to well below 2°C by reducing greenhouse gas

emissions in line with the reduction ambitions for the Norwegian oil

and gas industry. The Company also supports the KonKraft strategy

as described in “The Energy Industry of Tomorrow on the Norwegian

Continental Shelf – Climate Strategy Towards 2030 and 2050” and

climate strategy and GHG emission reduction goals are aligned with

the KonKraft strategy. The main goals are to reduce absolute green-

house gas emissions, Scope 1 and 2, by 50% in 2030 and reduce them

further to near zero in 2050.

In addition to cutting emissions from own operations, the Norwegian

oil and gas industry will gradually create a new and forward-looking

energy sector on the NCS. The Company will achieve its targets

through execution of its decarbonisation strategy:

• electrification of offshore assets

• implementation of energy efficiency and thus emission reducing

measures

• reduce emissions caused by safety flaring, cold venting and process-

ing equipment

• modifications and upgrading of relevant equipment and solutions

Additional information on environmental, social and governance (ESG)

topics is provided in the separate sustainability summary of this annual

report and in the 2022 Sustainability Report available on

www.varenergi.no.

Awards in Predefined Areas

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Health, Safety, Security, Environment and Quality (HSSEQ)

Vår Energi’s ambition is to be the safest operator on the NCS. This is a

corporate priority integrated into company culture and business plans.

The health and safety of its employees, contractors and other partners

is the top priority for the Company. Vår Energi uses certain key meas-

ures to monitor performance and learn from experiences in operations

as well as in the industry by requiring the use of the best available

technology and sustainable solutions in the Company’s and suppliers

operations emissions to air, discharges to sea, as well as waste genera-

tion are reduced as much as possible.

2022 was characterised by high activity, driven by the Balder X devel-

opment project and drilling operations. The company’s key performance

indicator Serious Incidents Frequency (SIF) developed positively in 2022

and the Total Recordable Injury Frequency (TRIF) remained stable.

For 2022, the SIF rate was 1.0, a decrease from 1.3 in 2021. The recorded

incidents were all but one classified as serious due to their potential

rather than actual consequence. The majority of the incidents were

related to dropped objects. The TRIF remained stable and was at year

end 3.2. In 2022, Vår Energi recorded several events with higher poten-

tial, however no personnel were injured during these events.

Three Tier 1 process safety events were recorded in 2022. The events

were related to leaks of hydrocarbon, diesel and hydraulic fluid. None

of the events had major accident potential or caused significant harm

to people, environment, or assets. One of the events was classified

as a significant spill in addition to a Tier 1 safety event, due to Loss

of Primary Containment (LOPC)) with direct discharge of crude oil

(16.1 m

) and hydrocarbon gas (24.76 m

) to sea. Zero Tier 2 incidents

were recorded in 2022.

The incidents were managed according to the Company’s manage-

ment system, improvements have been implemented and learnings

are shared to enable continuous improvement. Vår Energi focuses

on technical integrity and monitors major accident risk and key indi-

cators through the Company’s Major Accident Risk Indicator (MARI).

To further strengthen the culture and focus on safety, Vår Energi will,

together with its contractors, continuously monitor key measures,

such as the Always Safe Annual Wheel, the Life Saving Rules and the

Company’s internal TIR tool (Take Time, Involve, Report).

Vår Energi considers the decarbonisation of oil and gas production a

prerequisite to ensuring a resilient business model and driving long-

term value creation. The Company has announced operational targets

to actively reduce and minimise its environmental impact, with a target

of net zero Scope 1 and 2 emissions by 2030. In 2022, the CO

emis-

sions intensity for the Company’s operated licenses was 9 kg per boe,

compared to ~9 kg per boe in 2021.

The Company seeks to minimise impact on the climate and the envi-

ronment. The HSSEQ policy is based on the principles of precaution,

prevention, protection and continuous improvement. The environmen-

tal management system is an integral part of the overall management

system and certified according to ISO 14001. The Company has set

KPIs for environmental performance and monitors progress through

monthly and quarterly reports and management meetings. Vår Energi

also cooperates with local communities, other operators and national

authorities to ensure that operations are conducted in a safe and

responsible manner.

Work-related hazards with the potential of injuries and illness are

associated with Vår Energi’s activities, and the Company works

systematically to manage these risks and to conduct business in a

manner that protects the health and safety of employees and all others

involved. A comprehensive occupational health and safety manage-

ment system ensures that Vår Energi identifies, understands, mitigates

and manages occupational health and safety risks throughout its

offshore and onshore activities. The management system is based on

regulatory requirements and international, national and industry-spe-

cific standards. As part of this, information and training are provided for

workers exposed to health and safety risk as further means to protect

the individual. Vår Energi promotes a healthy workplace. Offshore and

onshore locations offer e.g., healthy food, indoor exercise facilities and

company sponsored outdoor leisure activities and cabin rentals. The

management system is certified against ISO 45001.

People, organisation and working environment

Vår Energi is run by people. Safeguarding the people working for us

will always be the number one priority. The ambition is to be the safest

operator on the NCS, and to promote a good working environment and

HSE culture at the core of all operations. Vår Energi works actively to

promote diversity and non-discrimination as they are key elements in

building a robust organisation.

At year-end 2022, Vår Energi employed a total of 1253 employees,

where 977 were permanent employees and 276 contract workers. The

permanent employees consist of 966 full-time employees and 11 part-

time employees. Most of the employees (777) work out of the Company’s

headquarter at Forus, while 34 employees work out of the Oslo office and

68 from the Hammerfest office. Some are also located at Rosenberg

yard or abroad. Of the total number of employees, 372 work offshore.

Some of the offshore employees are included in the Forus headquarters

and Hammerfest count, as they work out of these locations.

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Vår Energi promotes equal opportunities and rights for all based on qual-

ifications, and aims to prevent discrimination due to gender, ethnicity,

country of origin, age, sexual orientation, language, disability or religion.

The Company’s Code of Ethics and procedures have regulations to

prevent discrimination related to salary, career promotion and recruiting.

The proportion of women employed at Vår Energi at year-end 2022

was 26%. The current Board of Directors has eight shareholder-elected

members of which four are women. In addition, women represent 50% of

the four employee representatives on the Board. Women held 40% of the

executive management team positions and 28.5% of remaining leader-

ship positions in the Company. During the year, the Company’s Gender

Balance Task Force, established in 2020, continued to work actively

to deliver on the Company’s target to reach 40% female employees

onshore and 15% female employees offshore, and a ratio of female

leaders reflecting the gender balance onshore and offshore. At year-end

2022, 31 nationalities were represented among Vår Energi’s employees.

A comprehensive report of equality status as required by the

Norwegian Equality and Anti-Discrimination Act, is included in the

Diversity and Inclusion statement section of the 2022 Sustainability

report available on www.varenergi.no.

Leave of absence due to sickness in 2022 was 3.2% (3.8% in 2021). The

Company has an overall positive and healthy working environment.

According to the Psychosocial Working Environment Survey of 2022.

The most positive results in the survey were related to fair leadership,

support from co-workers, equality and organisational commitment.

In 2022, aiming for a significant step forward in building a high-

performing organisation, the Company has successfully completed

a large reorganisation project to enhance flexibility and cooperation

across business units, and make the organisation fit for future opportu-

nities and growth.

R&D

Vår Energi’s research and development (R&D) activities seek to provide

advanced technical solutions to support Vår Energi’s growth, opera-

tional excellence and ambition to be the safest operator with leading

ESG performance. The R&D strategy sets clear and coherent R&D

goals that echoes the company’s commitment of always operating in

line with the UN’s 17 SDGs in all business activities.

The R&D strategy is defined to meet the Company’s technology objec-

tives in the following five key areas:

• Safety and environmental protection

• Decarbonisation

• Successful exploration

• Operational excellence

• Maximise recovery

Vår Energi collaborates in several large-scale national projects, run by

Norwegian Research Institutes, and jointly funded by other operators

and the Research Council of Norway:

• Low Emission Centre, run by SINTEF, which develops concepts for

offshore energy systems and integration with renewable power

production technologies.

• Norwegian CCS Research Centre (NCCS), run by SINTEF, which

seeks to develop cost-efficient carbon capture and storage (CCS),

required to meet global climate targets while maintaining security of

energy supply.

• DigiWells SFI: Digital Well Centre for Value Creation,

Competitiveness and Minimum Environmental Footprint run by

NORCE, which seeks to enable more efficient drilling with less

emissions by developing new knowledge, methods and innovative

solutions to improve the well delivery process through digitalisation,

automation and autonomy.

• HYDROGENi is a Norwegian Centre for Environment-friendly

Energy Research (FME), run by SINTEF, which focuses on hydrogen

and ammonia research and innovation: one of two Norwegian FMEs

that were started in 2022, to put Norway on the map when it comes

to hydrogen.

In 2022, Vår Energi R&D invested across the full value chain in a

balanced portfolio of projects directly aligned with the business needs

and strategy. Some further examples from the new activities include

circular economy with additive manufacturing and digital inventory;

use of alternative fuels in maritime offshore; maturing knowledge in

the hydrogen value chain; improved subsurface understanding; and

developing knowledge and new methods for cost efficient drilling and

P&A.

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Financial review

Declaration regarding the financial statements

The Board of Directors believes that the financial statements provide

a true and fair view of the Company’s result for 2022 and the financial

position at year end.

Profit and loss

Total income in 2022 was USD 9 828 million (+62%) compared to

USD 6 073 million in 2021. Petroleum revenues in 2022 amounted to

USD 9 781 million, up from USD 6 043 million in 2021. The increase

in petroleum revenues was mainly due to higher oil and gas prices

realised in 2022. Total other operating income in 2022 was USD 47.1

million (USD 29.4 million).

Total volumes sold were 78.8 mmboe, compared with 85.2 mmboe in

2021. Realised average price per boe amounted to USD 124.1 in 2022,

an increase from USD 70.9 in 2021.

Total 2022 production cost (sold volumes) was USD 1 143 million,

compared to a restated USD 1 141 million in 2021.

Exploration expenses in 2022 were USD 72 million, an increase from

USD 57 million in 2021. The increase is mainly related to higher dry

well expenses in 2022 compared to previous year.

Depreciation and amortisation amounted to USD 1 448 million in

2022, a decrease from USD 1 705 million in 2021. Impairment losses in

2022 amounted to USD 658 million. In 2021, impairment losses and

reversals amounted to USD 1 million. Impairment is recognised when

the book value of an asset or a cash-generating unit (CGU) exceeds

the recoverable amount. Impairment is correspondingly reversed if

the conditions for the impairment are no longer present (except for

goodwill). The impairment losses in 2022 are mainly related to three

CGUs; Balder Area, Brage and Morvin. Other operating expenses were

USD 137.7 million in 2022 (USD 110.5 million).

Operating profit for 2022 was USD 6 369 million compared to an

operating profit of USD 3 059 million in 2021.

2022 net financial expenses were USD 116 million, a decrease from

USD 269 million in 2021. Vår Energi recognised a net foreign exchange

loss of 397 million, compared to a loss of USD 142 million in 2021. The

2022 tax expense was USD 4 919 million, compared to a tax expense

of USD 1 992 million in 2021.

Total profit in 2022 was USD 936 million compared to USD 654

million recorded in 2021.

Financial position

Total assets as at 31 December 2022 amounted to USD 18 797 million,

compared with USD 19 799 million a year earlier. Total non-current

assets were USD 17 077 million, a reduction from USD 18 326 million at

end of 2021.

Net additions in tangible assets in 2022 amounted to USD 701 million

and related mainly to the Company’s investments in its production

facilities, development projects and exploration activities and currency

translation effects. Total depreciation and impairment charges

amounted to USD 2 106 million.

Total current assets increased to USD 1 720 million from USD 1 473

million in 2021. The increase was mainly caused by higher cash and

cash equivalents.

The cash position at year end was USD 445 million, up from USD 224

million in 2021. In addition, at year end 2022, the Company had USD 3

600 million in undrawn credit facilities bringing total available liquidity

to USD 4 045 million.

Total equity as at 31 December 2022 was USD 1 482 million, down

from USD 1 516 million at end of 2021. This corresponds to an equity

ratio of 7.9% compared to 7.7% the previous year.

Total non-current liabilities at year-end were USD 14 007 million

(USD 16 062 million), reflecting a reduction in interest-bearing loans

and borrowings and strong cash flow from operations in 2022. Total

current liabilities were USD 3 309 million (USD 2 221 million), reflecting

an increase in taxes payable and current interest-bearing loans.

Total interest-bearing debt (including leasing) was USD 3 165 million at

year-end 2022, a decrease from USD 5 152 million in 2021. EBITDAX

was USD 8 547 million in 2022 and free cash flow (FCF) amounted to

USD 3 089 million. Due to the strong cash flow generated in 2022 the

Company reduced its leverage ratio (NIBD/EBITDAX) to 0.3x at year-

end 2022 from 1.0x a year earlier.

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Cash flow

Cash flow from operating activities (CFFO) was USD 5 682 million

(+24%) compared to USD 4 580 million in 2021. The increase in operat-

ing cash flow was mainly due to increased profit due to higher product

prices. The difference between CFFO and operating profit is mainly

explained by depreciation and amortisation in the period, impairment

and tax payments.

Net cash used for investment activities was 2 663 million in 2022

compared to USD 2 633 million in 2021. Expenditures on property, plant

and equipment were USD 2 516 million in 2022, stable from USD 2 480

million in 2021.

Net cash used in financing activities was USD 2 903 million in 2022,

compared to net cash used in financing of USD 1 976 million in 2021.

The Company’s cash position was USD 445 million at 31 December

2022 compared to USD 224 million previous year.

Dividend

Vår Energi’s material cash flow generation and Investment Grade

balance sheet support attractive and resilient distributions. In 2022, the

Company paid a total dividend of USD 775 million. The dividend was

paid in quarterly instalments. In February 2023, Vår Energi declared a

further dividend of USD 300 for the fourth quarter of 2022, which was

distributed to shareholders in March 2023.

Going concern statement

A key objective of the Company is to have sufficient liquidity to be

able to finance its operations and investments in accordance with

the company’s business plan and portfolio commitments. The Board

of Directors confirms that the financial statements of the Company

have been prepared under the going concern assumption in accord-

ance with the Norwegian Accounting Act, section 3-3-a. The Board of

Directors considers Vår Energi as well positioned to continue its oper-

ations, based on the current balance sheet, production and cash flow

forecasts and projected investments and expenses.

Accounting standards

The accounting policies used in the IFRS Financial Statements for

2022 are consistent with those used in the 2021 Financial Statements,

except for a change in valuation of over-/underlift.

EU Taxonomy

Vår Energi will prepare reporting required under the EU Taxonomy

Regulation, pending the final processing of the regulation by the EEA

Joint Committee and its implementation into Norwegian law. The

preliminary analysis indicates that a material share of the Company’s

revenue and investments are outside the scope of the taxonomy in

its current form, but that the activities related to gas production and

sales and investments in low-carbon and zero emission activities may

qualify as sustainable investments.

Corporate governance

Vår Energi is committed to providing information in an open,

transparent, and timely manner to our shareholders and stakeholders.

On 16 February 2022, the Company was listed on Oslo Børs (Oslo

Stock Exchange - OSE). As of 31 December 2022, Eni International B.V.

and Point Resources Holding AS were the two largest shareholders

with 63.1% and 20.7%, respectively.

In connection with the listing on Oslo Stock Exchange, The Company

adopted and implemented a corporate governance regime which

complies with the Norwegian Code of Practice for Corporate

Governance dated 14 October 2021 (the “Corporate Governance Code”

- www.nues.no). Please see the separate corporate governance section

of this annual report for further information.

Information about shareholder matters

The shares of Vår Energi ASA are freely transferable. There are two

classes of shares in the company, A and B shares, where B class shares

have certain appointment rights in relation to the board. Except for this,

all shares carry equal rights. The Company emphasise equal treatment

of its shareholders.

The Company has a share saving programme for its employees. The

shares are purchased quarterly by DNB after the company has placed

a purchase order. DNB buys shares in the open stock market and

allocates these quarterly to employees included in the programme.

Agreements covering the debt financing of the company, including

both bank financing and senior notes issued, contain standard clauses

regarding change of control, which would allow lenders or holders of

notes to request repayment if certain restrictions are met.

For more detail on share capital and shareholders see note 23 in the

financial statement.

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Transparency Act

According to the Transparency Act the Company shall carry out due

diligence assessments. These assessments are included in the 2022

Sustainability Report available on www.varenergi.no.

Director and Officer’s Liability Insurance

Vår Energi has implemented a Directors and Officers insurance

scheme for the Board of Directors and key managers. The insurance

covers personal legal liabilities including defence and legal costs.

Reporting of payments to governments

Vår Energi has prepared a report on government payments in

accordance with the Norwegian Accounting Act Section 3-3 d) and

the Norwegian Securities Trading Act Section 5-5a. It states that

companies engaged in activities within the extractive industries shall

annually prepare and publish a report containing information about

their payments to governments at country and project level. The

report is provided in a separate section of the annual report and on the

Company’s website.

Risks and risk management

Vår Energi’s financial and operating results are subject to a variety

of risks inherent in the oil and gas business. Many of these risks are

outside of the company’s control and could adversely affect business

activities, the financial and operating results, and/or the Company’s

financial condition.

The company’s corporate risk management framework ensures effec-

tive management of threats and opportunities relevant to the business.

Managing threats and opportunities is essential to the business

planning to achieve Vår Energi’s strategic objectives. Implementation

of appropriate measures to mitigate risk or capture opportunities is an

integral part in Vår Energi’s way of working. The framework promotes

a bottom-up approach for managing risks arising from the business

activities and a top-down approach to support and challenge.

The Board of Directors is responsible for risk management as part of

providing strategic oversight and stewardship of the Company. This

includes approving the annual budget and four-year business plan,

evaluating risks to the delivery of the plan and agreeing financial and

operational targets. Key strategic risks and opportunities are reviewed

periodically by the executive management and Board of Directors.

The risks described below may impact the Company’s business activi-

ties, the financial and operating results, and/or the financial condition.

Vår Energi’s operational, financial, strategic and compliance risks and

mitigation of those risks are also described in the Prospectus published

in February 2022, available on www.varenergi.no.

Operational risks

The Board of Directors recognises the risks associated with the

Company’s operational assets. The regulation of activities on the

NCS provides a sound framework for managing these risks, and the

Company takes an active and responsible approach as a partner.

Future production of oil and gas is dependent on the Company’s ability

to find, or acquire, and develop reserves.

Major operational incidents could occur as drilling, production and

decommissioning activities will never be completely risk-free. Further,

there are risks related to the integrity of the Company’s assets, risks

associated with the reported reserves and resources, risks associated

with inability to expand reserves or find replacement reserves and risks

associated with third-party contractors or operators, as a large share

of the Company’s assets are operated by others. The Company’s risk

management includes contingency plans to minimise the potential

impact of operational incidents.

Costs of development projects or exploration efforts are also uncertain.

As a result of these risks, the Company may incur costs that could

adversely affect the Company’s financial position or its reputation as a

player on the Norwegian Continental Shelf.

Market risks

Vår Energi operates in the crude oil and natural gas market and fluctu-

ations in hydrocarbon prices may therefore impact revenues, reserve

estimates, profitability and the rate of growth. Commodity price risks

represent the Company’s most important market risk. Vår Energi uses

commodity price hedging to manage this risk and secure cash flow

from sale of crude oil and gas.

At the end of 2022, the Company had established a hedging pro-

gramme for 2023 with 100% of planned after-tax volumes for oil were

covered by monthly settled oil price put options with a strike price of

USD 50 per barrel. To align after-tax cash flows and adjust for different

tax treatment of financial derivatives and the underlying oil production,

28.2% of the planned production volume is hedged.

Vår Energi uses fixed price contracts for up to 30% of gas sales for

down-side protection. Such fixed price transactions have been exe-

cuted for the three first quarters of 2023.

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Financial risks

The Company is exposed to market fluctuations in foreign exchange

rates and interest rates. These fluctuations could impact the Company

directly or indirectly as they may influence credit-institutions’ and

investors’ appetite to provide loans to, or invest in, the Company.

The Company considers its overall credit risk or financial risk of license

partners to be low, and procedures are in place to assess credit risk

and financial risks related to existing and new license partners and

suppliers. The Company is highly focused on active risk management

through hedging, liquidity focus and insurance.

The Company has insured its pro-rata liability on the NCS in line with

the best industry practices and has offshore insurance programmes

covering the following risks (non-exhaustive):

• Loss of production income

• Physical damage to assets

• Control of well

• Third party liability

Currency risk

Vår Energi is exposed to market fluctuations in foreign exchange

rates, as the Company’s expenses to a large degree are denominated

in NOK, while the income, as well as the price of oil, predominantly is

denominated in USD. Exchange fluctuations between NOK and USD

may consequently have an impact on the Company’s cash flow and

financial condition.

Interest rate risk

The Company’s financing arrangements is a mix of fixed rate and

floating interest rates, where fixed rates dominate (>80%). Vår Energi

has currently not entered any arrangements to hedge the interest rate

exposure and is therefore exposed to interest rate fluctuations.

Liquidity risk

The Company’s future capital requirements depend on many factors, and

the Company may need additional funds to fulfil its commitments and

further develop exploration and development programmes to support

the strategic direction of the Company. Liquidity risk is the risk that the

Company will not be able to meet the obligations of financial liabilities

when they are due. Vår Energi’s liquidity planning is based on short-term

(12 months) and long-term forecasts. These are updated regularly, for

various scenarios, and form part of the basis for the decision-making by

the Company’s leadership team and the Board of Directors.

External risk

The business landscape in which the Company operates can change

rapidly. The risks of fluctuations in commodity prices are addressed

under financial risks, but the Company also faces other external risks

that could affect its financial position over time. For instance, there can

be no assurance that legislation, including tax regulations, will not be

changed in a manner that could adversely affect the Company.

Climate risk

Vår Energi’s business and results of operations could be adversely

affected by climate change and the adoption of new climate change

laws, policies and regulations. Growing concerns about climate change

and greenhouse gas emissions have led to the adoption of various

regulations and policies and future global policy may be further

influenced by climate-related action from both government and

third-party organisations. Vår Energi has implemented an Enterprise

Risk Management process that is applied at all levels across the entire

organisation. The Company is committed to deliver a better future and

producing oil and gas in an energy efficient way with low emissions

with a key priority that is embedded in the sustainable development

goals and strategy.

Other risks

On 24 February 2022, Russia invaded Ukraine. Since then, the war has

continued with significant consequences for the global political and

economic environment. The invasion is widely condemned in the inter-

national community and sanctions have been imposed on the Russian

businesses, certain Russian nationals, and the Russian state. The war has

caused business disruptions, impacted the global economy and com-

modity prices, and impacted volatility in international debt and equity

markets. Significant uncertainty remains with regards to the extent and

duration of military conflict and how it will affect the global economy

and markets, as well as the Company’s performance over time.

The invasion and subsequent sanctions have had a material impact on

global energy markets. Oil and gas prices initially increased from already

high levels before the invasion. Russia was a leading exporter of gas, oil,

coal and other materials to Europe. Export volumes have since been

curbed by damages to infrastructure and sanctions limiting trade. There is

significant uncertainty regarding the potential impact on safe and reliable

energy supply, as well as to the market prices of oil, gas and other com-

modities which may impact the Company’s future operations and results.

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The conflict has also led to an increased awareness to threats to the

petroleum sector. High production of oil and gas and high regularity

on the Norwegian Continental Shelf is important for European energy

security. The Company cooperates closely with the relevant authorities

and its partners within the oil and gas industry. Security measures are in

place to protect personnel, installations and operations.

Internal control and audit

Vår Energi has established internal control functions to prevent mis-

takes and frauds related to financial reporting. The internal controls

are periodically assessed and modified to comply with changes in the

organisation and business activities. A compliance function has been

established to monitor internal controls with respect to compliance

with internal guidelines and external laws and regulations. Any material

deviations from the established internal control design will be reported

to the Management, the Risk and Compliance Committee, the Audit

Committee and the Board of Directors.

Vår Energi has established an internal audit department that inde-

pendently provides assurance on the effectiveness of governance, risk

management and compliance, including how the first and second lines

of control achieve risk management and control objectives. Internal

Audit is also responsible for the whistleblowing function within the

Company.

Vår Energi’s Management System – VEMS

Vår Energi governance and corporate risk management approach is

based on the Company’s integrated Management System. Vår Energi’s

Management System (VEMS) is an interactive web-based system

available to all personnel working in or for the Company. VEMS is

process-oriented, developed around a set of business process maps

with supportive links to governing and key documentation including

Norwegian regulatory requirements, Company requirements and

international standards and procedures. VEMS sets out all mandatory

policies, standards and controls necessary to manage key activities

and associated risks and thereby ensure that stakeholder’s needs and

expectations are met or exceeded. VEMS also shows how Vår Energi

manages its business through its assets, its processes and its people

(organisation) and thereby creates a sound basis for the achievement

of the Company’s objectives and value creation for stakeholders.

Furthermore, VEMS works as a management tool to communicate

company requirements and demonstrate compliance with both

Norwegian regulatory and corporate requirements.

VEMS is a vital part of the Company culture and essential for facilitat-

ing Vår Energi in reaching its objectives. It provides a set of tools for

strategic planning and tactical implementation of policies, practices,

guidelines, processes and procedures, and common direction and

guidance for effective execution of work in all parts of the organisation.

Events after the reporting period

On 10 January 2023, Vår Energi was awarded 12 new production licenses

in the 2022 Awards in Predefined Areas (APA) covering mature areas

on the NCS, five as operator, increasing the total of licenses to 148. The

licenses awarded are considered to have a good strategic fit with Vår

Energi’s existing license portfolio, strengthening the Company’s presence

in strategic hubs while also offering attractive opportunities to potentially

expand into new prospective sectors on the NCS.

The Company has decided to withdraw from the Barents Blue project as

the cooperation agreement expired on 31 January 2023. This decision will

not impact Vår Energi’s position in the Barents Sea, and the work to find

a comprehensive gas export solution continues.

Outlook

Vår Energi has an ambition to deliver value-driven growth to support

attractive and resilient long-term dividend distributions. The Company

targets production of more than 350 kboepd by end 2025, correspond-

ing to over 50% growth compared to the 2022 production level of 220

kboepd. For 2023 the production guidance is 210 to 230 kboepd.

The end 2025 ambition is based on:

• Material long-lived reserves and resources

• Improved recovery, utilising leading reservoir technology and infill

drilling to enhance and drive facilities and reservoir outperformance

• Development of a robust pipeline of sanctioned projects centred

around strategic hubs, including Balder X, Johan Castberg and

Breidablikk

Growth levers beyond 2025 include maturing and developing unsanc-

tioned projects, continuing to leverage best-in-class NCS exploration

capabilities to deliver new potential commercial discoveries and exe-

cuting on value accretive M&A in hub areas.

Based on the potential for improving operations in currently producing

fields and the attractive cost profile in sanctioned developments, Vår

Energi has an ambition to reduce production cost per boe to USD 8 by

year-end 2025 from USD 13.5 in 2022. This represents a reduction of

more than 40%.

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For 2023, the Company guidance for development capex is USD 2

400–2 700 million and USD 250 million in exploration and abandon-

ment capex.

To ensure continuous access to capital at competitive cost, retaining

Investment Grade credit ratings is a priority for Vår Energi. As such, the

Company targets a NIBD/EBITDAX of below 1.3x through the cycle.

Vår Energi’s material cash flow generation and investment grade

balance sheet support attractive and resilient distributions. The

company plans to distribute a dividend of USD 270 million for the first

quarter 2023. For 2023, the dividend is planned to be approximately

30% of CFFO after tax. From 2023 and onwards, the Company plans to

distribute 20–30% of cash flow from operations after tax, as part of the

shareholder distribution policy.

Sandnes, 29 March 2023

The Board of Directors of Vår Energi ASA

Signed electronically

Thorhild Widvey

Chair

Liv Monica Bargem Stubholt

Deputy Chair

Francesco Gattei

Director

Guido Brusco

Director

Clara Andreoletti

Director

Marica Calabrese

Director

Fabio Ignazio Romeo

Director

Ove Gusevik

Director

Martha Skjæveland

Director,

employee representative

Hege Susanne Blåsternes

Director

employee representative

Bjørn Nysted

Director,

employee representative

Jan Inge Nesheim

Director,

employee representative

Torger Rød

Chief Executive Officer

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Payments to governments report

Payments to governments is prepared in accordance with the

Norwegian Accounting Act Section § 3-3 d) and Securities Trading Act

§ 5-5 a). It states that companies in the extractive industry are required

annually to disclose payments to governments per country and project.

Vår Energi had a tax payment of USD 2 678 million (excluding interest)

in corporate tax to the Norwegian Government in 2022. The corre-

sponding tax in 2021 amounted to a repayment of USD 164 million.

Area fees per license paid as operator in 2022 to the Norwegian

authorities on behalf of the joint ventures (100% figures) are presented

in the table to the right.

Net Profit interest (NPI) payment to the Norwegian authorities amounted

to USD 12.7 million in 2022. The NPI payment is related to licenses

awarded in the second licensing round and collected by Petoro.

and NO

fees are considered to be taxes paid on consumptions

and exempted from this reporting similar to Value Added Taxes.

When companies are required to report payments to government, it

is also mandatory to report on investments, sales income, production

volumes and purchases of goods and services in the country in which

companies have activities within the extractive industries. Vår Energi

operates only on the Norwegian Continental Shelf. This reporting

requirement is therefore deemed to be met by the financial statements

as specified below:

• Total net investments in 2022 amounted to USD 2 663 million, as

specified in the cash flow analysis in the financial statements

• Petroleum revenues in 2022 amounted to USD 9 781 million, as

specified in Note 5 to the financial statements

• Total production in 2022 was 80 319 thousand barrels of oil equiva-

lents, as specified in Note 6 to the financial statements

For information about purchases of goods and services, reference is

made to the Income Statement and the related notes.

Area fees paid / (refunded)

(USD thousand)

License Amount

PL393

3 593

PL229 1 924

PL489 1 319

PL229E 604

PL122 572

PL027 486

PL028/ PL028S 171

PL001 191

PL001 CS/DS 95

PL027 FS 28

Total

8 983

A total of USD 6 391 thousand refers to area fee 2023, whereas USD 626

thousand refers to area fee for the period of 05.22 to 05.23. For PL393, the area

fee was USD 1 754 thousand for each of the years 2022 and 2023, paid in 2022.

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Vår Energi annual report 2022

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Corporate governance report

Vår Energi is committed to provide information in an open, transparent, and timely manner to its

shareholders and stakeholders. On 16 February 2022, the Company was listed on Oslo Børs (Oslo

Stock Exchange - OSE). As at 31 December 2022, Eni International B.V. and Point Resources

Holding AS were the Company’s two largest shareholders with 63.1% and 20.7%, respectively.

1. Implementation and reporting on corporate governance

In connection with the listing on Oslo Stock Exchange the Company

adopted and implemented a corporate governance regime compliant

with the most current version of the Norwegian Code of Practice for

Corporate Governance (the “Corporate Governance Code”) dated

14 October 2021.

The Board of Directors has approved a “The Corporate Governance

Policy” (the CG Policy) which is based on the Corporate Governance

Code issued by the Norwegian Corporate Governance Board (www.

nues.no). The CG Policy addresses the framework of guidelines and

principles regulating the interaction between the Company’s share-

holders, the Board of Directors, the CEO and the Company’s executive

committee. The CG Policy supplements the Company’s Code of Ethics

and other Policies and Management System Guidelines (MSGs).

The Board provides a report on the Company’s corporate govern-

ance practices in the annual report which addresses each individual

section of the Corporate Governance Code based on the “comply

or explain” principle should the Company’s practices differ from the

recommendation of the code. As at 31 December 2022, the Company

deviated from section five of the Corporate Governance Code:

• The Company has two share classes with deviating voting rights in

respect of Board elections, whereby the holder of the Class B shares

shall be entitled to appoint four of the shareholder-elected directors

to the Board of Directors. There are no specific measures in place

regulating the exercise of the influence which follows from holding a

majority of the shares in the Company.

2. The business

Vår Energi ASA is a leading independent upstream oil and gas

company. The Company’s business is as defined by article 3 in the

Articles of Association, last updated 15 February 2022.

“The business of the company is exploration for and production and sale

of oil and gas and other business in connection therewith. The business of

the Company may be operated through participation in other companies.”

The Board of Directors has established objectives, strategies and risk

profile for Vår Energi’s activities within the scope of the definition of its

business, to create value for its shareholders in a sustainable manner,

also considering economic, social and environmental factors. The

company’s objectives, strategies and risk profile are subject to annual

review by the Board. The company’s objectives, principal strategies and

corporate responsibility framework are further described in the annual

report and sustainability report available at www.varenergi.no.

3. Equity and dividends

Equity and capital structure

As of 31 December 2022, the company’s equity was USD 1 482 million,

which is equivalent to 8% of total assets. The Board of Directors con-

sidered the capital structure at year-end to be satisfactory in relation to

the company’s objectives, strategy and risk profile.

Dividend policy

The Company is committed to create long-term value for its share-

holders. Vår Energi targets to distribute dividends of around 20-30% of

after-tax operating cash flow (CFFO) quarterly. The dividend will be con-

tingent on the Company’s financial position and the business outlook,

to ensure that the Company can prudently manage future obligations,

business cycles and opportunities for strategic development.

The annual general meeting (AGM) on 4 May 2022 authorised the

Board to resolve and declare dividends during 2022 based on the

Company’s annual financial statements for 2021. The authorisation is

valid until the Company’s annual general meeting in 2023.

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For the financial year 2022, the Company distributed a total of USD 1

075 million in dividends, of which USD 775 was paid during the year,

and USD 300 million was distributed in March 2023. The dividends

were paid quarterly in line with policy. The dividends were paid in NOK

per share, totalling approximately NOK 4.303 per share for the year.

Board authorisations

As at 31 December 2022, the Board held the following authorisations

granted by an extraordinary general meeting on 15 February 2022.

• An authorisation to increase the Company’s share capital by up to

NOK 39 942 500 through issuances of new ordinary shares. The

authorisation may be used for the purpose of raising equity capital for

investments within the Company’s scope of operations and general

corporate purposes, or as consideration in connection with acquisi-

tions, mergers, de-mergers or other transactions. The shareholder’s

preferential rights may be set aside. The authorisation is valid until the

AGM in 2023, but at the latest expires on 30 June 2023.

• An authorisation to acquire shares in the Company (treasury shares)

for an aggregate nominal value of up to NOK 3 994 250, for use i.e.,

in connection with incentive programmes as well as to deliver bonus

shares pursuant to terms of the Company’s IPO. When acquiring

treasury shares the consideration per share may not be less than

NOK 1 and may not exceed NOK 200. The authorisation is valid until

15 February 2024.

4. Equal treatment of shareholders

Pre-emption rights to subscribe

According to the Norwegian Public Limited Liability Companies Act,

the Company’s shareholders have pre-emption rights in share offerings

against cash contribution. Such pre-emption rights may, however, be

set aside, either by the General Meeting or by the Board of Directors if

the General Meeting has granted a board authorisation which allows

for this. Any resolution to set aside pre-emption rights will be justified

by the common interests of the company and the shareholders, and

such justification will be publicly disclosed through a stock exchange

notice from the company. There were no such resolutions in 2022.

Trading in own shares

In the event of a share buy-back programme, the Board of Directors

will aim to ensure that all transactions pursuant to such a programme

will be carried out either through the trading system or at prevailing

prices at Oslo Børs. In the event of such programme, the Board of

Directors will take the company’s and shareholders’ interests into

consideration and aim to maintain transparency and equal treatment

of all shareholders. If there is limited liquidity in the company’s shares,

the company shall consider other ways to ensure equal treatment of

all shareholders. All shares acquired by Vår Energi during 2022 were

acquired through the trading system at Oslo Børs.

5. Shares and negotiability

There are two classes of shares in the Company, where one class (the

B shares) has certain appointment rights in relation to the Board, save

for this all shares carry equal rights. The Company emphasises equal

treatment of its shareholders.

The ordinary shares of the Company are freely transferable on Oslo

Børs. The class B shares are not transferable as specified in article 8 of

the Articles of Association.

6. General meetings

All shareholders have the right to participate in the general meetings of

the Company, which exercise the highest authority of the Company.

The AGM shall normally be held before 31 May each year. The 2022

AGM was held on 4 May.

The full notice for general meetings shall be sent to shareholders no

later than 21 calendar days prior to the meeting and shall provide the

shareholders with sufficient details to make an assessment of all the

cases to be considered as well as the relevant information regarding

procedures of attendance and voting. The notice and related doc-

uments may be sent to or made available for the shareholders by

electronic communication, to the extent allowed in the Company’s

articles of association.

Notices for general meetings shall provide information on the proce-

dures shareholders shall observe in order to participate in and vote

at the general meeting. The notices set out: (i) the procedure for rep-

resentation at the meeting through a proxy, including a form to appoint

a proxy, and (ii) the right for shareholders to propose resolutions in

respect of matters to be dealt with by the general meeting.

The cut-off for confirmation of attendance is set as short as practically

possible and the Board will arrange matters so that shareholders who

are unable to attend in person, will be able to vote by proxy. A form of

proxy will be distributed with the notice.

7. Election committee

The Company has an election committee as set out in the Articles of

Association. The extraordinary general meeting on 26 January 2022

appointed the following two members to the election committee with

a term until the Company’s AGM in 2024: Philip Duncan Hemmens

(Chair) and Lars Christian Bacher.

The committee members were appointed considering the interests of

shareholders in general. Both are considered independent of the execu-

tive management team and the Board.

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The instructions for the election committee were issued in 2022 and

approved by the Company’s general meeting. The committee’s main

task is to propose to the general meeting (i) candidates to be elected

as members of the board other than the members of the board to be

elected by the Class B shares, (ii) candidates to be elected as members

of the election committee, and (iii) remuneration of the members of

the board and the election committee.

Each proposal is justified on an individual basis. All shareholders are

entitled to nominate candidates to the Board of Directors, and infor-

mation on how to propose candidates can be found by contacting

ir@varenergi.no.

There have been no meetings in the election committee in 2022.

8. The Board of Directors – composition and independence

Pursuant to article six of the Company’s articles of association, the

Board has eight members elected by the shareholders at a general

meeting, in addition to any employee representatives. Board members

shall be elected for periods not exceeding two years at a time, with the

possibility of re-election.

At 31 December 2022, the Board of Directors comprised of 12

members, four of which were shareholder-elected, four were appointed

by the holder of class B shares and four elected by and among the

employees. The Company does not have a corporate assembly.

The Chair of the Board was appointed from the independent directors.

Name Role

Considered

independent of main

shareholders Served since Term expires

Participation Board

meetings 2022

Shares in Vår Energi

(direct/ indirect) at

31 Dec 2022

Thorhild Widvey Chair Yes 26 Jan 22 AGM 2024 100% 62 142

Liv Monica Bargem Stubholt Deputy chair Yes 26 Jan 22 AGM 2024 91% 41 785

Francesco Gattei Member No

26 Jan 22 AGM 2024 91% -

Guido Brusco Member No

26 Jan 22 AGM 2024 64% -

Clara Andreoletti Member No

26 Jan 22 AGM 2024 100% -

Marica Calabrese Member No

26 Jan 22 AGM 2024 100% -

Ove Gusevik Member No

26 Jan 22 AGM 2024 100% -

Fabio Ignazio Romeo Member Yes 26 Jan 22 AGM 2024 91% -

Jan Inge Nesheim Employee rep.

26 Mar 20 AGM 2024 100% 22 587

Martha Skjæveland Employee rep.

04 May 22 AGM 2024 100% 4 870

Bjørn Nysted Employee rep.

04 May 22 AGM 2024 100% 19 076

Hege Susanne Blåsternes Employee rep.

04 May 22 AGM 2024 100% 5 901

Affiliated with the largest shareholder Eni International B.V.

Affiliated with the second largest shareholder Point Resources Holding AS

Elected by and among employees

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Governance Governance

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All of the shareholder-elected members of the Board of Directors are

considered independent of the company’s executive management and

material business contacts.

The Board has the necessary competence to act independently and

function well as a team. Information on the expertise of the members

of the Board of Directors is included in the Company’s annual report

and the website. The Board considers its composition to be diverse and

reprepresents required competencies and capacities including financial

and industrial experience. Board members are encouraged to own

shares in the Company.

9. The work of the Board of Directors

The Board of Directors is responsible for the overall management of

the Company and shall supervise the Company’s day-to-day manage-

ment and the Company’s activities in general.

Responsibility of the Board of Directors

The Board prepares an annual plan for its work with special emphasis

on goals and strategy. The Board’s primary responsibilities shall be

(i) participating in the development and approval of the Company’s

strategy, (ii) performing necessary control functions and (iii) acting as

an advisory body for the executive management team. Its duties are

not static, and the focus will depend on the Company’s ongoing needs.

The Board is also responsible for ensuring that the operation of the

Company is compliant with the Company’s values and ethical guide-

lines. The chair of the Board is responsible for ensuring that the Board’s

work is performed in an effective and correct manner.

The Board ensures that the Company has proper management with

internal distribution of responsibilities and duties. A division of work has

been established between the Board and the executive management

team. The CEO is responsible for the executive management of the

Company.

All members of the Board receive regular information about the

Company’s operational and financial development. The Company’s

strategies are subject to regular review and evaluation by the Board.

The Board shall prepare an annual evaluation of its work. In 2022, the

Board conducted a total of 11 Board meetings. Reference is further

made to the Rules of Procedures for the Board of Directors of Vår

Energi ASA.

Transactions with related parties

Any transactions, agreements or arrangements between the Group

and the Company’s shareholders, members of the Board, members

of the executive management team or close associates of any such

parties may only be entered into as part of the ordinary course of

business and on arm’s length market terms. All such transactions shall,

where relevant, comply with the procedures set out in the Norwegian

Public Limited Liability Companies Act and the Corporate Governance

Code. Note 30 of the Company’s financial statements provides further

information about transactions with related parties in accordance with

applicable accounting principles.

Board members shall immediately notify the Board and members of the

executive management team shall immediately notify the CEO (who,

where relevant, will notify the Board) if they have any material direct or

indirect interest in any transaction to be entered into by the Group.

The Board of Directors’ consideration of material matters in which

the chairman of the Board is, or has been, personally involved, shall

be chaired by some other member of the Board. There were no such

cases in 2022.

Sub-committees of the Board of Directors

Audit committee

The Board has established an Audit Committee in accordance with the

rules of the Norwegian Public Limited Liability Companies Act and the

listing rules of the Oslo Stock Exchange (OSE). The Board has issued

instructions to the Audit Committee, last updated 15.02.2022.

As at 31 December 2022, the Audit Committee comprised of Liv

Monica Stubholt (Chair), Ove Gusevik, Francesco Gattei and Bjørn

Nysted. A majority of the members are independent of the company’s

executive management, and at least one member has qualifications

within accounting or auditing.

The audit committee’s objective is to act as a preparatory body in

connection with the Board’s supervisory roles with respect to audit,

financial reporting and the effectiveness of the Company’s internal

control and risk management system, as well as other tasks assigned to

the committee in accordance with the provisions set forth in the audit

committee instructions.

The Committee supports the Board in the administration and exercise

of its responsibility for supervision in accordance with applicable pro-

visions of the Norwegian Public Limited Liability Companies Act and

other relevant legislation.

In 2022, the Audit Committee conducted a total of seven meetings

with 100% participation.

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Remuneration committee

The Board has established a Remuneration Committee. The committee

reviews and recommends to the Board the remuneration policy for the

Company’s Executive and Senior Management, and provides general

advice related to compensation.

As at 31 December 2022, the Remuneration Committee comprised of

Thorhild Widvey (Chair), Guido Brusco and Martha Skjæveland.

In 2022, the Remuneration Committee conducted a total of three

meetings with 100% participation.

Safety & Sustainability committee

The Board has also established a Safety & Sustainability committee to

assist the Board in reviewing the performance of the Company within

safety and sustainability.

As at 31 December 2022, the Safety & Sustainability Committee

comprised of Marica Calabrese (Chair), Fabio Ignazio Romeo, Jan Inge

Nesheim and Hege Susanne Blåsternes.

In 2022, the Safety & Sustainability Committee conducted a total of

two meetings with 100% participation.

The Board’s evaluation of its own work

The Board of Directors conducts an annual assessment of its perfor-

mance and expertise, which is presented to the Election committee. As

there have been no meetings in the Election committee during 2022,

the annual assessment has not been shared with the Election com-

mittee.

10. Risk management and internal control

The Board shall ensure that the Company has sound internal control

and risk management routines that are appropriate in relation to the

extent and nature of the Company’s activities. Risk management and

internal control routines shall also encompass the Company’s corpo-

rate values and ethical guidelines. Reference is further made to the

Policy on HSSEQ as approved by the Board on 16 September 2020

and the Code of Ethics approved by the Board on 24 October 2022.

Both documents are available at www.varenergi.no.

The objective of the risk management and the internal control system

is to manage exposure to risks in order to ensure successful conduct of

the Company’s business, to support the quality of its financial reporting

and ensure compliance with laws and regulations.

The Board carries out an annual review of the Company’s most impor-

tant areas of exposure to risk and its internal control arrangements. The

Company prepares a statement of its financial policy, providing details

of the Company’s handling of financial risks, hedging, funding policies,

etc, which is included in the annual report. The Board also provides an

account in the annual report of the main features of the Company’s

internal control and risk management systems as they relate to the

Company’s financial reporting.

11. Remuneration of the Board of Directors

The AGM determines the Board’s remuneration annually, based on a

recommendation from the election committee included in the notice

to the general meeting. The remuneration is reasonable and reflects

the Board’s responsibilities, work, time invested and the complexity of

the enterprise. Detailed information on the remuneration of the Board

members is specified note 7 of the financial statements.

The Board shall be informed if individual Board members perform

tasks for the Company other than exercising their role as Board

members. Work in sub-committees is compensated in addition to the

remuneration received for Board membership.

12. Salary and other remuneration for executive personnel

The Board, based on proposal from the Remuneration Committee, has

issued guidelines for the remuneration of the CEO and the executive

management team. The salary level should not be of a size that could

harm the Company’s reputation or above the norm in comparable

companies. The salary level should, however, ensure that the Company

is able to attract and retain executive employees with the desired

expertise and experience. The guidelines were approved by the AGM on

4 May 2022.

The Board decides the salary, bonus and other compensation of the

CEO based on an evaluation of the CEO’s and the Company’s overall

performance. Any fringe benefits shall be in line with market practice

and should not be substantial in relation to the CEO’s basic salary.

The Board annually carries out an assessment of the salary and other

remuneration to the CEO. The CEO determines the remuneration of

executive employees within the guidelines and instructions provided by

the Board. See note 7 of the financial statements for more information

on salary and other remuneration for executive personnel.

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One member of the Executive committee, the Chief Financial Officer, is

employed by ENI SPA and has a separate arrangement with regard to

compensation and benefits.

13. Information and communication

The Board and the executive management team assign considerable

importance to giving the shareholders relevant and current informa-

tion about the Company and its activity areas. Emphasis is placed on

ensuring that the shareholders receive the same and simultaneous

information.

Sensitive information will be handled internally in a manner that mini-

mises the risk of leaks.

The Company has routines for who is allowed to speak on behalf of the

Company on different subjects and who is responsible for submitting

information to the market and investor community. The CEO, CFO

and Head of Investor Relations will be the main contact persons of the

Company in such respects.

The Board ensures that the shareholders are given the opportunity to

make known their points of view at and outside the general meeting.

Reference is made to the Investor Relations Policy approved by the

Board on 15 February 2022 available on www.varenergi.no.

14. Take-overs

In the event of a take-over process, the Board and the executive man-

agement team each have an individual responsibility to ensure that

the Company’s shareholders are treated equally and that there are no

unnecessary interruptions to the Company’s business activities. The

Board has a particular responsibility in ensuring, to the extent possible,

that the shareholders have sufficient information and time to assess

the offer.

In the event of a take-over process, the Board shall ensure that:

a. the Board will not seek to hinder or obstruct any takeover bid for

the Company’s operations or shares unless there are particular

reasons for doing so;

b. the Board will not undertake any actions intended to give share-

holders or others an unreasonable advantage at the expense of

other shareholders or the Company;

c. the Board will not institute measures with the intention of protect-

ing the personal interests of its members at the expense of the

interests of the shareholders; and

d. the Board shall be aware of the particular duty it has for ensuring

that the values and interests of the shareholders are protected.

In the event of a take-over bid, the Board will, in addition to complying

with relevant legislation and regulations, seek to comply with the rec-

ommendations in the Corporate Governance Code unless there are

specific reasons not to. This includes obtaining a valuation from an

independent expert. On this basis, the Board will seek to make a recom-

mendation as to whether the shareholders should accept the bid.

15. Auditor

The Company’s auditor is PwC. The auditor is appointed by the general

meeting and is independent of Vår Energi ASA. The auditor is invited to

attend all general meetings.

Each year, the auditor presents to the Board a plan for the implemen-

tation of the audit work and a written confirmation that the auditor

satisfies established requirements as to independence and objectivity.

The auditor is present at Board meetings that deal with the annual

accounts. Whenever necessary, and at least once per year, the Board

and/or audit committee meets with the auditor to review the Company’s

accounting principles, risk areas, internal control routines, etc.

The board has established guidelines for use of the auditor for other

services than audit. Only the Company’s CEO and/or CFO have the

authority to enter into agreements in respect of such counselling

assignments.

A review of the auditor’s compensation for audit work and remuner-

ation associated with other concrete assignments is presented to the

AGM and in note 8 of the financial statements.

In connection with the auditor’s presentation to the Board of the

annual work plan, the Board should specifically consider if the auditor

to a satisfactory degree also carries out a control function.

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Shareholder information

Share price development

Vår Energi ASA has two classes of shares. There were 2 496 406 246 ordinary shares and 4 Class B shares

issued at the end of 2022, each with a nominal value of NOK 0.16. The number of shares issued is unchanged

since the IPO 16 February 2022.

The Company’s shares listed on Euronext Oslo Stock Exchange (OSE) 16 February 2022 at NOK 28.00 per

share. In 2022, the shares traded between NOK 25.56 and NOK 47.20 per share. During the year, 1 557.3 million

shares were traded in total.

Major shareholders and voting rights

Vår Energi ASA had 29 025 registered shareholders in the Norwegian Central Securities Depository (VPS) on

31 December 2022, up from two shareholders (ENI Sp.A and Point Resources Holding) at the end of 2021. The

20 largest shareholders owned 91%. The percentage of issued shares held by foreign shareholders was 70.27%.

All the shares registered by name carry equal voting rights. The shares are freely negotiable.

Vår Energi ASA’s 20 largest shareholders as at 31 December 2022

No. Name No. of shares Holding %

1 Eni International BV 1 574 616 035 63.08

2 POINT RESOURCES HOLDING AS 517 635 559 20.74

3 JPMorgan Chase Bank, N.A., London 42 817 057 1.72

4 Folketrygdfondet 18 821 721 0.75

5 JPMorgan Chase Bank, N.A., London 15 688 203 0.63

6 Geveran Trading Co Ltd 12 762 876 0.51

7 State Street Bank and Trust Comp 11 882 536 0.48

8 Verdipapirfondet Alfred Berg Gamba 9 420 000 0.38

9 JPMorgan Chase Bank, N.A., London 9 119 362 0.37

10 JPMorgan Chase Bank, N.A., London 8 131 806 0.33

11 State Street Bank and Trust Comp 7 741 550 0.31

12 Danske Invest Norske Instit. II. 7 570 000 0.3

13 The Bank of New York Mellon SA/NV 5 829 371 0.23

14 Verdipapirfondet KLP AksjeNorge In. 5 756 193 0.23

15 UBS Switzerland AG 4 804 979 0.19

16 Verdipapirfondet DNB Norge 4 676 717 0.19

17 Pareto Invest Norge AS 4 581 338 0.18

18 The Bank of New York Mellon SA/NV 4 156 465 0.17

19 Verdipapirfondet Alfred Berg Aktiv 3 452 790 0.14

20 Verdipapirfondet Alfred Berg Norge 3 287 192 0.13

An overview of the 20 largest shareholders is available on the Vår Energi ASA website, updated daily.

Dec

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2022

Sep

2022

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2022

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Jun

2022

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2022

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2022

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2022

16 Feb

2022

Share price

Ex dividend Q1 Ex dividend Q2 Ex dividend Q3

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Shareholder information Shareholder information

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Vår Energi annual report 2022Vår Energi annual report 2022

Corporate actions

Date

Q4 2022 dividend payment of NOK 1.226 per share, totalling USD 300 million 03 Mar 2023

Allocation of bonus shares to eligible investors granted by the Company’s shareholders Eni

International B.V and Point Resources Holding 23 Feb 2023

Purchase and allocation of 351 152 shares to employee share saving programme 08 Dec 2022

Q3 2022 dividend payment of NOK 1.225 per share, totalling USD 290 million 09 Nov 2022

Purchase and allocation of 236 108 shares to employee share saving programme 07 Sep 2022

Q2 2022 dividend payment of NOK 1.025 per share, totalling USD 260 million 11 Aug 2022

Purchase and allocation of 210 665 shares to employee share saving programme 07 Jun 2022

Q1 2022 dividend payment of NOK 0.827 per share, totalling USD 225 million 12 May 2022

First day of trading on Euronext Oslo Stock Exchange (OSE) 16 Feb 2022

Dividends and dividend policy

Vår Energi ASA is committed to delivering attractive and sustainable

returns to its shareholders, enabled by material cash flow generation

and an investment-grade balance sheet. For 2022, the Company

distributed a total of USD 1 075 million in dividends to its shareholders,

paid on a quarterly basis.

From 2023 onwards, the Board of Directors at Vår Energi ASA has

introduced a flexible dividend policy whereby the ambition is to distrib-

ute 20-30% of cash flow from operations (CFFO) after tax in dividend

over the cycle. The dividend level is subject to a quarterly assessment

considering the Company’s underlying financial performance, macro

environment and other eligible factors. For 2023, the dividend is expected

to be approximately 30% of CFFO (after tax).

The 2022 AGM granted the Board of Directors an authorisation to

resolve and declare dividends based on the Company’s annual finan-

cial statements for 2021. The authorisation is valid until the 2023 AGM.

Dividend is declared on a quarterly basis and paid to shareholders

approximately two weeks after date of approval.

Analyst coverage

Nine Nordic and seven international investment banks had active cov-

erage of Vår Energi ASA at the end of 2022. For contact details, please

see the company website www.investors.varenergi.no.

General Meetings and Board authorisations

An extraordinary general meeting on 15 February 2022 granted the

Board of Directors the following authorisations:

1. Authorisation to increase the share capital by up to NOK 39 942

500 in connection with investments or potential merger and acqui-

sitions

2. Authorisation to acquire treasury shares in Vår Energi ASA for up to

a maximum nominal value of NOK 3 994 250 in connection with

incentive programmes as well as bonus shares pursuant to terms of

the Company’s IPO

Further information can be found in the minutes from the

Annual General Meeting, available from the Company’s website

www.varenergi.no and www.newsweb.no.

Financial calendar 2023

Event Date

Full-year and Q4 report, Capital Markets Update 16 Feb 2023

Annual General Meeting 04 May 2023

Interim report - Q1 24 Apr 2023

Half-yearly interim report - Q2 25 Jul 2023

Interim report - Q3 24 Oct 2023

IR Policy

Vår Energi’s IR policy can be found at

www.varenergi.no.

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Shareholder information Shareholder information

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Vår Energi annual report 2022

Financial statements

Auditor’s report

118

Responsibility statement

123

Financial statements

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Statement of comprehensive income

Balance sheet statement

Statement of changes in equity

Statement of cash flows

Notes to the financial statements

Note 1 Corporate information

Note 2 Summary of IFRS accounting principles

Note 3 Summary of restatements

Note 4 Segment information

Note 5 Income

Note 6 Production costs

Note 7 Staff costs and remuneration

Note 8 Auditor’s fee

Note 9 Other operating expenses

Note 10 Exploration expenses

Note 11 Financial items

Note 12 Income Taxes

Note 13 Intangible assets

Note 14 Tangible assets

Note 15 Right of use assets

Note 16 Impairment

Note 17 Investment in shares and other non-current assets

Note 18 Inventories

Note 19 Trade receivables

Note 20 Other current receivables and financial assets

Note 21 Financial instruments

Note 22 Cash and cash equivalents

105

Note 23 Share capital and shareholders

105

Note 24 Financial liabilities and borrowings

106

Note 25 Asset retirement obligations

107

Note 26 Other non-current liabilities

107

Note 27 Other current liabilities

107

Note 28 Commitments, provisions and contingent consideration

108

Note 29 Lease agreements

109

Note 30 Related party transactions

110

Note 31 License ownerships

111

Note 32 Proved developed reserves (unaudited)

113

Note 33 Climate risk

114

Note 34 Subsequent events

117

Financial statements

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Financials | Financial statementsFinancials | Financial statements

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Statement of comprehensive income

USD 1000, except earnings per share data Note 2022

Restated

2021

Petroleum revenues 5 9 780 543 6 043 375

Other operating income 5 47 088 29 357

Total income 9 827 630 6 072 732

Production costs 3, 6 (1 143 139) (1 141 021)

Exploration expenses 10, 13 (72 063) (57 138)

Depreciation and amortisation 14, 15 (1 447 966) (1 704 561)

Impairment loss and reversals 13, 14, 16, 33 (657 922) (982)

Other operating expenses 9 (137 721) (110 483)

Total operating expenses (3 458 811) (3 014 186)

Operating profit / (loss) 6 368 820 3 058 546

Net financial income / (expenses) 11 (115 889) (269 489)

Net exchange rate gain / (loss) 11 (397 039) (142 371)

Profit / (loss) before taxes 5 855 891 2 646 687

Income tax (expense) / income 3, 12 (4 919 489) (1 992 331)

Profit / (loss) for the period 936 402 654 356

Other comprehensive income:

Items that may be reclassified to profit or loss:

Currency translation differences (203 234) (63 113)

Net gain / (loss) on put options used for hedging 5 173 6 919

Other comprehensive income for the period, net of tax (198 060) (56 194)

Total comprehensive income 738 342 598 162

Earnings per share

EPS Basic 3, 23 0.38 0.26

EPS Diluted 3, 23 0.38 0.26

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Balance sheet statement

USD 1000 Note 31 Dec 2022

Restated

31 Dec 2021

ASSETS

Non-current assets

Intangible assets

Goodwill 13 2 019 512 2 531 897

Capitalised exploration wells 13 225 287 199 981

Other intangible assets 13 93 515 104 520

Tangible fixed assets

Property, plant and equipment 14 14 562 237 15 188 917

Right of use assets 15 175 423 298 432

Financial assets

Investment in shares 17 763 853

Other non-current assets 532 1 809

Total non‑current assets 17 077 268 18 326 409

Current assets

Inventories 18 265 811 301 329

Trade receivables 19, 30 796 317 745 921

Other current receivables and financial assets 3, 20 213 286 201 809

Cash and cash equivalents 22 444 607 223 588

Total current assets 1 720 020 1 472 647

TOTAL ASSETS 18 797 288 19 799 056

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Balance sheet statement

USD 1000 Note 31 Dec 2022

Restated

31 Dec 2021

EQUITY AND LIABILITIES

Equity

Share capital 23 45 972 45 972

Share premium 1 868 181 2 643 181

Other equity 3 (432 582) (1 173 324)

Total equity 1 481 571 1 515 828

Non-current liabilities

Interest-bearing loans and borrowings 24 2 452 589 4 493 426

Deferred tax liabilities 12, 3 8 127 971 7 953 676

Asset retirement obligations 25 3 156 126 3 235 640

Lease liabilities, non-current 29 113 334 216 208

Other non-current liabilities 26 156 544 162 870

Total non-current liabilities 14 006 564 16 061 820

Current liabilities

Asset retirement obligations, current 25 60 012 61 536

Accounts payable 30 368 589 422 155

Taxes payable 12 1 778 222 801 432

Interest-bearing loans, current 24 500 000 333 149

Lease liabilities, current 29 99 312 108 880

Other current liabilities 3, 27 503 019 494 256

Total current liabilities 3 309 154 2 221 408

Total liabilities 17 315 718 18 283 228

TOTAL EQUITY AND LIABILITIES 18 797 288 19 799 056

Sandnes, 29 March 2023

The Board of Directors of Vår Energi ASA

Signed electronically

Thorhild Widvey

Chair

Liv Monica Bargem Stubholt

Deputy Chair

Francesco Gattei

Director

Guido Brusco

Director

Clara Andreoletti

Director

Marica Calabrese

Director

Fabio Ignazio Romeo

Director

Ove Gusevik

Director

Martha Skjæveland

Director,

employee representative

Hege Susanne Blåsternes

Director

employee representative

Bjørn Nysted

Director,

employee representative

Jan Inge Nesheim

Director,

employee representative

Torger Rød

Chief Executive Officer

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Vår Energi annual report 2022Vår Energi annual report 2022

Statement of changes in equity

Other equity

USD 1000 Note Share capital Share premium Other equity

Translation

differences Hedge reserve Total equity

Balance at 1 January 2021 before restatement 45 972 3 593 181 (1 595 366) (160 173) (28 737) 1 854 877

Impact of restatement 3 - - 11 040 639 - 11 679

Balance at 1 January 2021 after restatement 45 972 3 593 181 (1 584 326) (159 534) (28 737) 1 866 556

Profit / (loss) for the period - - 654 356 - - 654 356

Other comprehensive income / (loss) - - - (63 113) 6 919 (56 194)

Total comprehensive income / (loss) - - 654 356 (63 113) 6 919 598 162

Dividends paid - (950 000) - - - (950 000)

Other - - 1 111 - - 1 111

Balance at 31 December 2021 45 972 2 643 181 (928 860) (222 647) (21 818) 1 515 828

Balance at 1 January 2022 45 972 2 643 181 (928 860) (222 647) (21 818) 1 515 828

Profit / (loss) for the period - - 936 402 - - 936 402

Other comprehensive income / (loss) - - - (203 234) 5 173 (198 060)

Total comprehensive income / (loss) - - 936 402 (203 234) 5 173 738 342

Dividends paid - (775 000) - - - (775 000)

Share-based payments

23 - - 2 401 - - 2 401

Balance at 31 December 2022 45 972 1 868 181 9 943 (425 880) (16 644) 1 481 571

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Statement of cash flows

USD 1000 Note 2022

Restated

2021

Profit / (loss) before income taxes 3 5 855 891 2 646 687

Adjustments to reconcile profit before tax to net cash flows:

- Depreciation and amortisation 14, 15 1 447 966 1 704 561

- Impairment loss and reversals 13, 14 657 922 982

- (Gain) / loss on sale and retirement of assets 5 31 721 (2 232)

- Impairment of exploration wells 10, 13 30 600 5 887

- Accretion expenses (asset retirement obligation) 11, 25 94 243 94 733

- Unrealised (gain) / loss on foreign currency transactions and balances 11 81 175 558 940

- Other non-cash items and reclassifications 299 499 (161 069)

Working capital adjustments: -

- Changes in inventories, accounts payable and receivables (155 346) (437 761)

- Changes in other current balance sheet items 20, 27 25 059 34 734

Contingent consideration paid related to prior business combination - (30 000)

Income tax received / (paid) 12 (2 686 852) 164 439

Net cash flows from operating activities 5 681 877 4 579 902

USD 1000 Note 2022

Restated

2021

Cash flows from investing activities

Expenditures on exploration and evaluation assets 13 (77 050) (104 318)

Expenditures on property, plant and equipment 14 (2 516 097) (2 480 298)

Payment for decommissioning of oil and gas fields 25 (70 318) (70 418)

Proceeds from sale of assets (sales price) 300 24 398

Expenditures on goodwill and other intangible assets - (295)

Net cash used on business combination - (2 208)

Net cash used in investing activities (2 663 165) (2 633 140)

Cash flows from financing activities

Dividends paid (775 000) (950 000)

Net proceeds from bond issue 21, 24 2 463 523 -

Net proceeds/(payments) of revolving credit facilities 21, 24 (4 020 500) 4 494 104

Net proceeds/(payments) of reserve based lending facility 21, 24 - (5 335 000)

Payment of other loans and borrowings 21, 24 (300 000) -

Payment of principal portion of lease liability 29 (110 447) (43 790)

Interest paid 3 (160 803) (141 532)

Net cash from financing activities (2 903 227) (1 976 218)

Net change in cash and cash equivalents 115 485 (29 456)

Cash and cash equivalents, beginning of period 223 588 272 411

Effect of exchange rate fluctuation on cash 105 534 (19 367)

Cash and cash equivalents, end of period 444 607 223 588

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Notes to the financial statements

Note 1 Corporate information

The financial statements of Vår Energi ASA for the twelve months period

ended 31 December 2022 were authorised for issue in accordance with a

Board resolution on 29 March 2023.

Vår Energi ASA is a public limited liability company incorporated and domi-

ciled in Norway and the Company’s shares are listed on Oslo Stock Exchange.

The head office is located at Vestre Svanholmen 1, 4313 Sandnes, Norway.

Vår Energi is an independent exploration and production (E&P) company with

a diverse portfolio of production, development and exploration assets on the

Norwegian Continental Shelf (NCS).

Vår Energi ASA has two subsidiaries per 31 December 2022 which are not

consolidated into group accounts for 2022 due to materiality considerations.

Restructuring of subsidiaries directly or indirectly owned by Vår Energi ASA

took place during 4Q 2022. Dividends were paid to Vår Energi ASA which

reduced investments in subsidiaries to zero. There are no business activities in

the two remaining subsidiaries as of 31 December 2022. The balance sheets of

the subsidiaries hold tax positions of USD 31 225 thousand which are offset by

receivables towards Vår Energi ASA.

Below table show the group structure per 31 December 2022.

Shares in subsidiaries

Name Business location

Voting/Ownership

2022

Vår Energi Marine AS Sandnes, Norway 100%

PR Jotun DA Sandnes, Norway 5%

Shares in subsidiaries indirectly owned

Name Business location

Voting/Ownership

2022

PR Jotun DA Sandnes, Norway 95%

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Note 2 Summary of IFRS accounting principles

2. Significant accounting policies

2.1 Basis of preparation

The financial statements of the Company have been prepared in accordance

with International Financial Reporting Standards (IFRSs) as adopted by The

European Union (EU).

The financial statements have been prepared on a historical cost basis, except for

certain financial instruments that have been measured at fair value. The financial

statements have been prepared based on the assumption of going concern.

All figures in the financial statements are presented in USD and all values are

rounded to the nearest thousand (000), except when otherwise indicated. Vår

Energi’s functional currency is NOK, but the Company has chosen to present

its financial statements in USD, primarily as this is the common presentation

currency among upstream oil & gas companies.

Transactions in foreign currencies are recorded at the exchange rate on the

transaction date. Monetary items are valued at year-end exchange rates and

the corresponding currency loss/gain is recognised in profit or loss.

For presentation purposes, balance sheet items are translated from func-

tional currency to presentation currency by using spot rates of exchange at

the balance sheet date. Items within profit & loss and other comprehensive

income are translated from functional currency to presentation currency by

using quarterly average exchange rates, or rates at the dates of the transac-

tions if significantly different. For share capital and share premium historical

exchange rates are used. I.e. these equity items are not re-translated and the

cumulative translation adjustment (CTA) only include the cumulative differ-

ences between opening and closing rates on total net assets, and average to

closing rates on retained earnings and other performance statement items,

such as revaluation gains or cash flow hedging reserves.

Comparative information has been provided for the previous period.

2.2 Summary of significant accounting policies

Revenue and over- and underlift balances

Revenue from the sale of liquids or gas is recognised at the point in time

when Vår Energi’s contractual performance obligations have been fulfilled

and control is transferred to the customer. This will generally be at the time of

delivery which is also when title passes to the customer. Revenues are recog-

nised on the basis of volumes lifted and sold to customers during the period

(sales method). To the extent the Company has lifted and sold more than its

entitled share of production based on the ownership interest, an accrual is

recognised at cost. To the extent the Company has lifted and sold less than its

entitled share of production, costs are deferred for the underlift

Interests in joint arrangements

Vår Energi has interests in licences on the Norwegian Continental Shelf. IFRS

defines a joint arrangement as an arrangement over which two or more parties

have joint control. Joint control is the contractually agreed sharing of control

which exists only when decisions about the relevant activities (being those that

significantly affect the returns of the arrangement) require unanimous consent

of the parties sharing control.

Under IFRS 11 Joint Arrangements, a joint operation is a joint arrangement

whereby the parties that have joint control of the arrangement have rights to the

assets and obligations for the liabilities, relating to the arrangement. Vår Energi

recognises investments in joint operations (oil and gas production licences) by

reporting its share of related revenues, expenses, assets, liabilities and cash flows

under the respective items in the Company’s financial statements.

For those licences that are not deemed to be joint arrangements pursuant to

the definition in IFRS 11 as there is no joint control (“undivided interests”), the

Company recognises its share of related expenses, assets, liabilities and cash

flows in the same way as under IFRS 11. The terms “joint operations” and “undi-

vided interests” are used interchangeably throughout the financial statements.

Income taxes

Income taxes include current taxes payable or refundable, adjustments of prior

years’ taxes payable and deferred taxes. The deferred taxes are calculated

using the full liability method, under which tax on temporary differences

between the carrying amounts of assets and liabilities and their tax bases are

recognised. Deferred tax assets are recognised to the extent it is probable that

the asset will be realised. An “uncertain tax treatment” is a tax treatment relat-

ing to which there is uncertainty whether the relevant tax authority will accept

the tax treatment under the local tax law. Uncertain tax positions are recog-

nised and presented as assets or liabilities depending on whether an outflow

or inflow of economic resources embodying economic benefits has become

probable. Taxes relating to items recognised in OCI are recognised in OCI.

Exploration costs

Exploration drilling costs are treated in accordance with the successful efforts

method; each well making the basis for the evaluation. Costs related to explo-

ration wells in progress and exploration wells with finds are capitalised until the

evaluation of the well has been completed. Such capitalised costs may remain

capitalised for more than one year. The main criteria for keeping exploration

costs capitalised are that there is a plan for future activity in the licence area

and a development decision is expected in the near future. To the extent that

no resources are discovered, or recovery of the resources is considered com-

mercially unviable, the capitalised exploration expenditures are charged to the

profit or loss. Other exploration costs, including seismic studies, are expensed

as incurred.

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Development expenditures

The development phase commences when the licence partners have decided

field evaluation. Direct and indirect expenditures and financing costs related to

development projects are capitalised.

Property, plant and equipment

Property, plant and equipment (PPE) are measured at depreciated cost adjusted

for impairments. Capital spare parts are defined as critical, often tailormade

long-lead items purchased in connection with development of a field and are

recognised as PPE. Upon disposal or retirement, the difference between any

proceeds and the carrying amount is recognised as gains or losses.

Maintenance is expensed as incurred, whereas costs for improving and upgrad-

ing production facilities are added to the acquisition cost and depreciated with

the related asset.

Depreciation

Offshore installations are depreciated in accordance with the unit-of-

production method based on proven reserves (the ratio between annual

production quantity and the reserves, whereupon the reserves are updated

quarterly). Onshore assets are depreciated over the estimated useful life,

according to the straight-line method, 3-15 years.

Impairment

Tangible fixed assets are assessed for potential impairment when events or

changes in circumstances indicate that the book value of the assets is higher

than their recoverable amounts. The unit of account for assessment of impair-

ment is the lowest level for which independent cash inflows are possible to

identify. For oil and gas assets, this is typically the field or licence level, but can

also be at a hub level. Impairment is recognised when the carrying amount of

the cash generating unit (CGU), including any allocated goodwill, exceeds the

recoverable amount. The recoverable amount is the higher of the asset’s fair

value less costs of disposal and its value in use. When estimating value in use

and fair value less costs of disposal, expected future cash flows are discounted

to the net present value applying a discount rate after tax that reflects the

current market valuation of the time value of money and risks specific to

the asset or CGU. The discount rate is derived from a weighted average cost

of capital (WACC) determination. For the purpose of impairment testing the

lifetime of the field is normally determined to be the time when the operating

cash flows from the field becomes negative. A previously recognised impair-

ment can only be reversed if changes to the estimates used for the calculation

of the recoverable amount have been observed. Reversals are recognised in

profit or loss. After a reversal, the depreciation amount is adjusted on a pro-

spective basis in order to distribute the asset’s revised book value, minus any

residual value, on a systematic basis over the asset’s expected remaining life.

Inventories

Consumable spare parts and drilling stock are measured at weighted average

cost. Physical stock of crude oil is measured at production cost.

Asset retirement obligations

Vår Energi recognises an asset retirement obligation (ARO) to the extent it has

a present legal or constructive obligation as a result of past events, and it is

probable that an outflow of resources will be required to settle the obligation,

and a reliable estimate of the obligation amount can be made. The obligation

generally arises when the asset is installed at the field location. Vår Energi

recognises its share of the estimated AROs based on its working interest in the

various fields both for Vår Energi operated fields and partner operated fields.

When the liability is initially recognised, the present value of the estimated

costs is capitalised by increasing the carrying amount of the related tangible

oil and gas asset and depreciated over the useful life of the asset (generally by

the application of the unit-of-production method).

The discount rate used to discount the liability is based on a risk free interest

rate that reflects current market assessments and the risks specific to the

liability, and does not include the Company’s credit risk. The periodic unwind-

ing of the discount is recognised in profit or loss as financial items.

The term of the discount rates used is aligned with the estimated timing of the

removal, plugging and decommissioning activities at the fields. Changes in the

estimated timing or cost of decommissioning are dealt with prospectively by

recording an adjustment to the provision and a corresponding adjustment to

assets.

Upon retirement of the Gassled pipelines, the costs of ARO will be recharged

to the users (shippers) of the pipelines based on shipped volumes. As a shipper

Vår Energi has incurred such liabilities. These liabilities have also been recog-

nised as the net present value of estimated future retirement costs on the basis

of accumulated shipped volumes in Other non-current liabilities.

Pension liability

Vår Energi has a defined contribution pension plan that satisfies the statutory

requirements in the Norwegian law on required occupational pension (“lov

om obligatorisk tjenestepensjon”). Contributions are paid to pension insurance

plans and charged to profit or loss in the period to which the contributions

relate. Once the contributions have been paid, there are no further payment

obligations.

Leasing commitments

At the inception of a contract, Vår Energi assesses whether the contract is, or

contains, a lease.

The lease liability is recognised at the commencement date and measured

at the present value of the remaining lease payments, discounted using the

Company’s incremental borrowing rate at the commencement date. The

borrowing rate is derived from the terms of the Company’s existing credit

facilities. RoU assets are depreciated over the lease term.

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Vår Energi applies the exemption for short term leases (12 months or less) and

low value leases. As such, related lease payments are not recognised in the

balance sheet but expensed or capitalised in line with the accounting treat-

ment for other non-lease expenses. The inclusion of non-lease components

may vary across different lease categories, but for the most material classes

of assets (rigs and supply vessels), the Company has excluded the non-lease

components when measuring the lease liability.

Vår Energi, as operator of an unincorporated joint operation, from time to time,

enters into a lease contract as the sole signatory and recognises on the balance

sheet: (i) the entire lease liability if, based on the contractual provisions and any

other relevant facts and circumstances, it has primary responsibility for the

liability towards the third party supplier; and (ii) the entire right-of-use asset,

unless, the terms and conditions of the joint operation and other arrangements

are separately negotiated with the non-operators and effectively extinguish Vår

Energi’s primary obligation for the lease with the third-party supplier.

If a lease contract is signed by all the partners, Vår Energi recognises its share

of the right-of-use asset and lease liability on the balance sheet based on its

working interest. If Vår Energi does not have primary responsibility for the

lease liability, it does not recognise any right-of-use asset and lease liability

related to the lease contract. Whether a contract is entered into on behalf of

the licence is subject to a contract specific assessment.

Other lease contracts, such as offices and supply vessels not linked to specific

fields, are recognised on a gross basis even when the related cashflows are

charged to the licence partners. For such contracts, the partner’s share of the

costs recovered by the Company are presented as other income.

Operators on licences in which Vår Energi is a partner may enter into lease

contracts in their own name at the initial signing, and subsequently formally

sublease the related asset to operated licences. In such cases, the sublease will

be the basis for determining both the right of use, commencement, and the

duration of the lease (and the application of the short-term lease exemption).

Financial assets and liabilities

Vår Energi’s financial assets and liabilities comprise non-listed equity instru-

ments, derivative financial instruments (assets and liabilities), receivables, cash

and cash equivalents, payables, other current and non-current liabilities. The

classification of financial assets and liabilities at initial recognition depends

on the financial instrument’s contractual cash flow characteristics and the

Company’s business model for managing them.

Vår Energi classifies its financial instruments in the following categories:

• Financial assets and liabilities at amortised cost

• Derivative financial assets and liabilities designated as accounting hedge

instruments (cash flow hedges) for which the effective portion is recognised

at fair value through other comprehensive income

• Financial assets at fair value through profit and loss

Vår Energi measures financial assets at amortised cost if both of the following

conditions are met:

• The financial instrument is held within a business model with the objective

to hold the instruments in order to collect contractual cash flows and the

contractual terms of the financial instrument give rise on specified dates

to or requires cash flows that are solely payments of principal and interest

on the principal amount outstanding. Financial assets at amortised cost

are subsequently measured using the effective interest (EIR) method and

are subject to impairment testing. Gains and losses are recognised in profit

or loss when the instrument is derecognised, modified or impaired. The

Company’s financial instruments at amortised cost includes trade receiv-

ables and other short-term deposits, trade payables and other current and

non-current liabilities. Receivables are initially recognised at fair value less

estimated credit losses (impairment losses). Accounts receivables that do

not contain a significant financing component are measured at the transac-

tion price determined under IFRS 15.

Derivative financial instruments

Vår Energi uses derivative financial instruments, such as Brent Crude put

options, to hedge its commodity price risks on future oil production volumes

(cash flow hedges). Such derivative financial instruments are initially recog-

nised at fair value on the date on which a derivative contract is entered into

and subsequently re-measured at fair value. The put options are measured

using market inputs such as observable forward curves, interest rates and time

to maturity. Implied volatilities from market observable option prices are used

when the price of the option is modelled. The Company has designated these

put options as cash flow hedges relating to expected future production and

sales of crude oil, and applied hedge accounting. The effective portion of the

gain or loss on the hedging instrument is recognised in other comprehensive

income (OCI) and the hedge reserve in equity, while any ineffective portion is

recognised immediately in profit or loss. Amounts accumulated in the hedge

reserve is reclassified to profit or loss when the hedged transaction affects

profit or loss.

Option premiums paid (time value at date of purchase) are treated as cost of

hedging and presented in operating expenses when the hedged transaction

affects profit or loss, while the intrinsic value (“in-the-money value”) on put

options exercised are presented in gains on cash flow hedges in petroleum

revenues. As option premiums are paid at exercise or expiry they are presented

as current liabilities in the balance sheet.

Contracts to buy or sell a non-financial item that can be settled net in cash or

another financial instrument, or by exchanging financial instruments, as if the

contracts were financial instruments, are accounted for as financial instru-

ments. However, contracts that are entered into and continue to be held for the

purpose of the receipt or delivery of a non-financial item in accordance with

the Company’s expected purchase, sale or usage requirements, also referred

to as own-use contracts, are not accounted for as financial instruments. Such

sales and purchases of physical commodity volumes are reflected in profit or

loss as Petroleum revenues and Other operating expenses, respectively. This

is applicable to a number of contracts for the sale of natural gas, which are

recognised upon delivery of the volumes.

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Cash flow statement

The statement of cash flows has been prepared in accordance with the indi-

rect method. Cash consist of cash, bank deposits and short-term deposits in

affiliated banks.

Sale and swaps of assets

Sale of assets on the Norwegian continental shelf are carried out on an

after-tax basis according to the petroleum tax act § 10. When entering into

agreements regarding the purchase/ swap of assets, the parties agree on an

effective date for the takeover of the net cash flow (usually 1 January in the

calendar year, which is also normally the effective date for tax purposes).

In the period between the effective date and the completion date, the seller will

include revenues and expenditures relating to its sold share of the licence in

its financial statements. In accordance with the purchase agreement, there is

a settlement with the seller of the net cash flows from the asset in the period

from the effective date to the completion date (pro & contra settlement). The

pro & contra settlement will result in an adjustment to the seller’s losses/gains

and to the cost of the assets for the purchaser, in that the settlement (after a

tax reduction) is deemed to be part of the consideration in the transaction.

Revenues and expenses from the relevant licence are included in the purchas-

er’s profit or loss from the acquisition date.

For tax purposes, the purchaser will include the net cash flow (pro & contra)

and any other income and costs as from the effective date. When acquiring

licences that are defined as asset acquisitions, no provision is made for

deferred tax in accordance with the initial recognition exemption.

A gain or loss related to an after-tax-based sale of assets includes the release

of tax liabilities previously recognised related to the assets. The resulting after-

tax gain or loss is recognised in full in Other income in profit or loss.

Important accounting judgments, estimates and assumptions

The preparation of financial statements in accordance with IFRS requires

management to make judgements, estimates and assumptions that have an

effect on the application of accounting principles and the reported assets, lia-

bilities, income and expenses. The main significant judgements management

has made regarding the application of accounting principles are the following:

Identifying a lease within joint operating arrangements

When applying IFRS 16 Leases in situations where the asset is being used in

a joint arrangement or in relation to an undivided interest, significant judge-

ment is required in determining what party is the primary obligor, whether the

arrangement constitutes or contains a lease, commencement date, lease term

and whether there is a sublease arrangement.

Oil and gas reserves

Oil and gas reserves are estimated by the Company’s experts in accord-

ance with industry standards. The estimates are based on Vår Energi’s own

assessment of internal information and information received from operators.

Reserves are certified by an external party, which also issues an independent

reserves report. Oil and gas reserves consist of the estimated quantities of

crude oil, natural gas and condensates shown by geological and technical data

to be recoverable with reasonable certainty from known reservoirs under exist-

ing economic and operational conditions, i.e. on the date that the estimates are

prepared. Current market prices are used when establishing the estimates.

Reserves and production volumes are used to calculate the depreciation of oil

and gas fields by applying the unit-of-production method. Reserve estimates

are also used as basis for impairment testing of licence-related assets and

goodwill. Changes in petroleum prices and cost estimates may change reserve

estimates and accordingly economic cut-off, which may impact the timing

of assumed decommissioning and removal activities. Changes to reserve

estimates can also result from updated production and reservoir information.

Future changes to oil and gas reserves can have a material effect on depre-

ciation, life of field, impairment of licence-related assets and goodwill, and

operating results.

Successful Effort Method - exploration and exploration potential

Expenses relating to the drilling of exploration wells and exploration poten-

tial (presented in other intangible assets) are temporarily recognised on the

balance sheet as capitalised exploration expenditures and other intangible

assets, pending an evaluation of potential oil and gas discoveries. If resources

are not discovered, or if recovery of the resources is considered technically or

commercially unviable, the costs of exploration wells and exploration potential

are expensed. Judgments as to whether these assets should remain capitalised

or be expensed at the reporting date may materially affect the operating result

for the period.

Fair value measurement

The fair values of non-financial assets and liabilities are required to be deter-

mined, for example in a business combination, to determine the allocation of

purchase price in an asset deal or when the recoverable amount of an asset or

CGU is based on fair value less costs to sell. Fair value is the price that would

be received to sell an asset or paid to transfer a liability in an orderly transac-

tion between market participants at the measurement date. The fair value of

an asset or a liability is measured using the assumptions that market partici-

pants would use when pricing the asset or liability.

A fair value measurement of a non-financial asset takes into account a market

participant’s ability to generate economic benefits by using the asset in its

highest and best use or by selling it to another market participant that would

use the asset in its highest and best use. Vår Energi uses valuation techniques

that are appropriate in the circumstances and for which sufficient data are

available to measure fair value, maximising the use of relevant observable

inputs and minimising the use of unobservable inputs. The fair value of oil

fields in the production and development phase is generally based on dis-

counted cash flow models, where the determination of inputs to the models

may require significant judgement, as described in the section below regarding

impairment.

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Impairment/reversal of impairment

Changes in the expected future value/cash flows of CGUs results in impair-

ment if the estimated recoverable amount is lower than the book value

(including any allocated goodwill) or the reversal of previously recognised

impairments if the recoverable value is higher than the book value (impair-

ment of goodwill is not reversed). Estimation of recoverable amounts involves

the use of judgement and assumptions, including the modelling of future cash

flows to estimate the CGUs value in use or fair value less costs of disposal.

Impairment assessments require long-term assumptions concerning a number

of often volatile economic factors, including future oil prices, oil production,

currency exchange rates and discount rates. Such assumptions require the

estimation of relevant factors such as long-term prices, the levels of capex and

opex, production estimates, decommissioning costs and impact from climate

changes. These evaluations are also necessary to determine a CGU’s fair value

unless information can be obtained from an actual observable market trans-

action. See individual notes on Property, plant and equipment and intangible

assets, including goodwill and note on Impairment for details of impairments.

Asset retirement obligations

There is significant uncertainty in the estimate of ARO. These estimates are

based on currently applicable laws and regulations, and existing technologies.

Many decommissioning activities will take place decades into the future,

and the technology and related costs are expected to evolve over time. The

estimates include costs based on expected removal concepts using existing

technology and estimated costs of maritime operations, hiring of lifting vessels

and drilling rigs. As a result, there may be significant adjustments to the esti-

mates of ARO and associated assets that can affect future financial results.

Income taxes

Income taxes are significant amounts in Vår Energi’s financial statements.

There may be uncertainties related to interpretation of applicable tax laws

and regulations regarding amounts in Vår Energi’s filed tax returns. In cases of

uncertain tax treatments, it may take a long time to complete the discussions

with the tax authorities or to reach resolutions of the appropriate tax positions.

The carrying values of income tax related assets and liabilities are based on

Vår Energi’s interpretations of applicable laws, regulations and relevant court

decisions. The quality of these estimates, including the most likely outcomes of

uncertain tax treatments, is highly dependent upon proper application of very

complex sets of rules and the recognition of changes in applicable rules.

Standards and amendments issued but not yet effective

Certain new accounting standards and amendments to standards are

issued, but not yet effective as of 31 December 2022. These standards and

amendments are not expected to have a material impact on the Company in

the current or future reporting periods.

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Note 3 Summary of restatements

Restatements in 2022 include change in presentation of payment of borrowing costs in the statement of cash flows,

change in accounting principles for overlift/underlift from Q4 2022 and correction of NGL overlift/underlift.

Restatement of interest paid in cash flow statement

Vår Energi decided during Q2 2022 to change its accounting principles related to presentation of interest payments in the

cash flows statement. Interest payments are restated to be shown as financing activities in the statement of cash flows.

In prior reporting periods, these cash flows were presented as operational activities. The reason behind the change is that

interest payments are directly linked to Vår Energi’s financing activities and the change is in line with peers and upcom-

ing changes in IAS 1. Comparative figures have been restated accordingly and the impact on relevant previous periods is

included in the table below.

Restating impact on Statement of Cash Flow

Net cash flows from operating activities

USD 1000 2021

Before restatement 4 438 371

Impact of restatement 141 532

After restatement 4 579 902

Net cash from financing activities

USD 1000

Before restatement (1 834 686)

Impact of restatement (141 532)

After restatement (1 976 218)

Restatement of overlift/underlift of NGL lifted at the Kårstø terminal

Vår Energi has corrected calculation of overlift/underlift of NGL lifted at the Kårstø terminal due to data quality issues in

allocation of liftings at field level. Overlift/underlift of NGL from the fields that are lifted at the Kårstø terminal is recognised

at the net position of the company’s total portfolio. This was previously calculated at field level.

Restatement of overlift/underlift due to change in accounting principles

Vår Energi has elected to change its accounting policy for measurement of overlift to measure both overlift/underlift at

cost as we believe this will provide more relevant information about financial performance and financial position of the

Company. In addition, this change will also make Vår Energi more comparable to peer companies on the NCS. In prior

reporting periods, the overlift was recognised for the fair value / sale price while the underlift was measured at the lower of

production cost and sale price.

Comparative figures have been restated accordingly and the impact on relevant comparison periods is included in the

table below.

Restating impact on Balance Sheet Statement

USD 1000 Note 01 Jan 2021 31 Dec 2021

Underlift before restatement 142 257 189 105

Impact of restatement (67 948) (78 888)

Underlift after restatement 20 74 309 110 217

Overlift before restatement 166 175 317 605

Impact of restatement (121 034) (276 428)

Overlift after restatement 27 45 142 41 177

Equity before restatement 1 854 877 1 472 369

Impact of restatement 11 679 43 459

Equity after restatement 1 866 556 1 515 828

Deferred tax before restatement 7 342 952 7 799 594

Impact of restatement 41 407 154 082

Deferred tax after restatement 12 7 384 359 7 953 676

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Restating impact on Statement of Comprehensive Income

USD 1000 Note 2021

Adjustment of (over)/under lift before restatement (116 947)

Impact of restatement 148 960

Adjustment of (over)/under lift after restatement 6 32 013

Income tax (expense) / income before restatement (1 876 143)

Impact of restatement (116 188)

Income tax (expense) / income after restatement 12 (1 992 331)

Earnings per share before restatement 0.25

Impact of restatement 0.01

Earnings per share after restatement 0.26

Impact of restatement include both NGL correction and change in accounting policy for measurement of overlift.

Difference between impact in P&L vs. change in equity is related to translation effects.

Note 4 Segment information

Vår Energi operates within the geographical area Norway and the business is entirely related to exploration for and

production of petroleum in Norway. Vår Energi’s activities are considered to have a homogeneous risk and return profile

before tax. Vår Energi operates within a single operating segment which matches the internal reporting to the executive

management.

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Note 5 Income

Petroleum revenues

USD 1000 EU/UK Norway 2022 2021

Revenue from crude oil sales 4 669 095 4 669 095 3 448 157

Revenue from gas sales 4 423 340 308 942 4 732 282 2 227 332

Revenue from NGL sales 365 029 14 137 379 166 367 885

Total petroleum revenues 9 457 464 323 079 9 780 543 6 043 375

Sales of crude (boe 1000) (unaudited) 45 923 49 006

Sales of gas (boe 1000) (unaudited) 27 115 28 011

Sales of NGL (boe 1000) (unaudited) 5 796 8 180

Other operating income

(USD 1000) 2022 2021

Gain/(loss) from sale of assets 300 2 232

Partner share of lease cost 13 529 8 001

ExxonMobil settlement 10 882 -

Other operating income 22 377 19 124

Total other operating income 47 088 29 357

Increase of other operating income mainly reflect final settlement with ExxonMobil related to the 2019 business combination.

Note 6 Production costs

USD 1000 2022

Restated

2021

Cost of operations 701 441 688 120

Transportation and processing 213 551 243 150

Environmental taxes 122 988 101 658

Insurance premium 48 786 46 466

Production cost based on produced volumes 1 086 766 1 079 394

Back-up cost shuttle tankers 19 245 33 148

Changes in overlift/underlift 3 (2 411) (32 013)

Premium expense for crude put options 21 39 540 60 492

Production cost based on sold volumes 1 143 139 1 141 021

Total produced volumes (boe 1000) (unaudited) 80 319 89 732

Production cost per boe produced (USD/boe) (unaudited) 13.5 12.0

The changes in overlift/underlift are due to timing of liftings vs. production.

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Note 7 Staff costs and remuneration

USD 1000 2022 2021

Salary expenses 152 286 195 324

Social security tax (incl. pension and social

charges for foreign personnel) 29 766 25 262

Pension cost, defined contribution scheme 14 298 14 976

Other personnel expenses 8 216 4 945

Total 204 567 240 508

Average number of employees 960 921

The share charged to partners in operated joint ventures amounted to

USD 34 176 thousand (USD 41 306 thousand in 2021).

Vår Energi has a defined contribution pension plan that satisfies the statutory

requirements in the Norwegian law on required occupational pension (“lov om

obligatorisk tjenestepensjon”). Contributions are paid to pension insurance plans

and charged to the profit or loss in the period to which the contributions relate.

Once the contributions have been paid, there are no further payment obligations.

Employee share savings plan

Vår Energi ASA’s share saving program gives employees the opportunity to buy

shares in Vår Energi ASA for 5% of the base salary. If the shares are retained

for two full calendar years with continuous employment after the end of the

saving year, the employees will be awarded a bonus share for each share they

have purchased. This will be settled by Vår Energi ASA buying shares in the

market. The award is treated as equity settled. In 2022 employees subscribed

for USD 4 195 thousand when Vår Energi was listed on the Oslo Stock Exchange

16 February 2022, and USD 2 908 thousand as a part of the share saving plan.

Key management personnel compensation 2022 *

USD 1000,

except total number of

shares and owing interest Position Salary

Annual

Variable Pay** Other

Payment in

kind Pension costs

Long-term

incentive plan

Total number

of shares

Owing

interest

Torger Rød

Chief Executive Officer 682 333 338 2 101 203 107 784 -

Rune Oldervoll EVP Exploration & Production 303 65 - 9 42 73 46 544 -

Atle Reinseth

EVP Project Development & Supply

Chain Management

81 21 68 1 20 - - -

Ingrid Sølvberg

EVP Technology, Drilling & Subsurface - - - - - - - -

Ove Andrè Årdal SVP Commercial 252 74 - 8 80 62 23 792 -

Tone Rognstad

SVP People & Communication 223 76 130 2 36 63 29 434 -

Aksel Luhr General Counsel 238 68 - 2 33 58 28 252 -

Ellen W. Hoddell

SVP Safety & Sustainability 34 46 - 1 8 51 11 947 -

Stefano Pujatti

Chief Financial Officer 453 73 - 40 - - -

Ove Mikal Helle SVP Internal Audit 242 57 - 9 34 58 15 699 -

Tor Tangvald VP internal Audit 261 70 - 2 102 - - -

Charlotte Vedø

VP Corporate Services 201 43 - 8 54 - - -

Alessandro Barberis

VP Exploration 270 28 - 36 - - - -

Ørjan Jentoft

VP Partner Operated Assets 272 57 - 8 17 - - -

Bjørn Thore Ribesen

VP Field Development & Projects 288 61 - 8 18 - - -

Annethe Gjerde

VP Contract & Procurement 202 50 - 2 17 - - -

Total compensation 4 000 1 121 537 139 562 568 263 452

Other: as per prospectus - bonus paid by successful IPO 2022

Employed since October 2022. Other: as per contract - compensation for documented loss

of bonus with previous employer

Employed since December 2022

Employed 01.01.2022. Other: as per contract - compensation for documented loss of bonus

with previous employer

Appointed in November 2022

Expatriated from ENI SPA

Left the Executive Management group October 2022, compensation prorated for 2022

Expatriated from ENI SPA. Left the Executive Management group October 2022

Left the Executive Management group October 2022, compensation prorated for 2022

Remuneration is paid in NOK and converted to USD using a yearly average USD/NOK-rate

Numbers represent actual bonus earned in 2022

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Key management personnel compensation 2021 *

USD 1000,

except total number of shares and

owing interest Position Salary

Annual Variable

Pay** Other Payment in kind Pension costs

Long-term

incentive plan

Total number

of shares Owing interest

Torger Rød

Chief Executive Officer 369 343 - 1 66 - - -

Kristin Kragseth

Chief Executive Officer 425 - - 3 41 - - -

Stefano Pujatti

Chief Financial Officer 406 81 - - - - - -

Rune Oldervoll Vice President Operations 333 116 - 8 45 - - -

Ove André Årdal Vice President Commercial 275 110 - 7 85 - - -

Alessandro Barberis

Vice President Exploration 127 31 - - - - - -

Denis Palermo

Vice President Exploration 205 - - - - - - -

Ørjan Jentoft Vice President Partner Operated Assets 338 127 - 8 49 - - -

Annethe Gjerde Vice President Contracts & Procurement 257 93 - 2 36 - - -

Bjørn Thore Ribesen Vice President Field Development & Projects 394 124 - 8 52 - - -

Aksel Luhr General Counsel 262 92 - 2 36 - - -

Charlotte Vedø Vice President Corporate Services 261 93 - 9 85 - - -

Ove M. Helle Vice President Safety & Sustainability 265 93 - 2 36 - - -

Tor B. Tangvald Vice President Internal Audit 290 101 - 2 111 - - -

Total compensation 4 208 1 404 - 51 643 - - -

Employed since June 2021.

Employed until end of May 2021

Paid by Eni S.p.A. Inpat on shadow payroll – figures are based on contract. Amount is gross paid. Pension is handled by Eni S.p.A.

Seconded from Eni S.p.A to Vår Energi since September 2021.

Employed until end of October 2021, figures are based on contract. Amount is gross paid. Pension is handled by EIRL (Eni International Resources Ltd)

Remuneration is paid in NOK and converted to USD using a yearly average USD/NOK-rate.

Numbers represent actual bonus earned in 2021.

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Board of Directors remuneration 2022

USD 1000 Position

Board of

Directors Audit Committee

Safety &

Sustainability

Committee

Remuneration

Committee Sum

Thorhild Widvey Chair Board of Directors, Chair Safety & Sustainability Com. 96 - - 7 103

Liv Monica Bargem Stubholt

Deputy Chair Board of Directors, Chair Audit Committee 45 23 - - 68

Francesco Gattei Board of Directors - Elected by Eni

- - - - -

Gudio Brusco Board of Directors - Elected by Eni

- - - - -

Clara Andreoletti Board of Directors - Elected by Eni

- - - - -

Marica Calabrese Board of Directors - Elected by Eni

- - - - -

Ove Gusevik Board of Directors member 45 14 - - 59

Fabio Ignazio Romeo Board of Directors member 45 - 14 - 59

Jan Inge Nesheim Board of Directors - Employee representative 26 - 4 - 30

Martha Skjæveland Board of Directors - Employee representative 26 - - 4 30

Bjørn Nysted Board of Directors - Employee representative 26 4 - - 30

Hege Susanne Blåsternes Board of Directors - Employee representative 26 - 4 - 30

Total compensation 336 40 21 10 408

Paid to Advokatfirmaet Selmer AS

Directors elected by Eni shall not receive any remuneration

Remuneration is paid in NOK and converted to USD using a yearly average USD/NOK-rate

In 2021 none of the members of the Board of Directors, including the chair

received any remuneration from Vår Energi for their responsibility as a Director.

Vår Energi has made arrangements to provide subsidised loans to local employ-

ees. No other loans, guarantees or other commitments have been granted to any

member of the Board or to any member of the Management.

The CEO and other members of Executive Management have a termination

period of 6 months. Upon termination of employment initiated by the Company,

the CEO is entitled to a severance pay of 12 months. Other members of Executive

Management are normally entitled to six months’ severance pay. No other

employee has entered into employment agreements which provide for any

special benefits upon termination. None of the Board members has a service

contract and none will be entitled to any benefits upon termination.

Vår Energi has a bonus scheme for all employees calculated according

to achieved objectives. In addition to bonus based on the general element,

Management can receive an additional bonus if certain KPI targets are met (the

KPI element) and on individual performance (the individual element).

The Management takes part in the general pension plan as described in this note.

In addition, Vår Energi has, on an administrative basis, established an arrange-

ment granting a 15% deposit of salary above 12G. “G” is the bacic amount in the

National Insurance Scheme. As of 1 May 2022 1G was USD 11.91 thousand.

Guidelines and adherence to the guidelines for management

compensation

The Board makes guidelines for executive remuneration, including the CEO’s

remuneration and other terms and conditions of employment. These guide-

lines set out the main principles applied in determining the salary and other

remuneration of executive personnel and are addressed as a separate item at

the General Meeting.

In 2022, the Company`s remuneration policy has been in accordance with the

guidelines of remuneration decided by the Annual General Meeting 4 May 2022.

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Note 8 Auditor’s fee

USD 1000 2022 2021

Statutory audit 545 445

Other attestations and quarterly reviews 1 051 434

Other services

104 70

Reinvoiced to Eni S.p.A. (68) -

Total fee 1 631 949

Services other than audit in 2022 provided by the auditors mainly related to non-financial process improvement activities. In 2021 services

other than audit provided by the auditors mainly related to project support and assistance to offshore operations department and non-financial

process improvement activities.

Note 9 Other operating expenses

USD 1000 Note 2022 2021

R&D expenses 31 535 32 183

Pre-production costs 24 761 20 612

Guarantee fee decommissioning obligation 28 22 190 22 138

Administration expenses 8 26 331 26 499

Other expenses 32 905 9 051

Total other operating expenses 137 721 110 483

Other expenses include disposal of the Brasse licences in 4Q 2022.

Note 10 Exploration expenses

USD 1000 Note 2022 2021

Seismic 4 741 2 989

Area Fee 7 861 9 762

Dry well expenses 13 30 600 5 887

Other exploration expenses 28 861 38 501

Total exploration expenses 72 063 57 138

Dry well expenses in 2022 are mainly related to the wells PL901 7122/6-3 S Rødhette, PL209 6305/5-C-3 H Ormen Lange

Deep, the 34/4-18 S Statfjord Kile Well and the PL124 6507/8-11 Othello North.

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Note 11 Financial items

USD 1000 Note 2022 2021

Other financial income 10 011 14 043

Interests on debts and borrowings 17 (129 782) (143 462)

Interest on lease debt (9 312) (7 819)

Capitalised interest cost, development projects 130 974 49 034

Amortisation of fees and expenses (17 801) (73 495)

Accretion expenses (asset retirement obligation) 25 (94 243) (94 733)

Other financial expenses (5 737) (13 056)

Net financial income / (expenses) (115 889) (269 489)

Unrealised exchange rate gain / (loss) (81 175) (558 940)

Realised exchange rate gain / (loss) (315 864) 416 570

Net exchange rate gain / (loss) (397 039) (142 371)

Net financial items (512 929) (411 859)

Increase of capitalised interest cost in 2022 is mainly due to increased interest rate after refinancing in November 2022

with USD 2 000 million in bond financing.

Vår Energi’s functional currency is NOK, whilst interest bearing loans and bonds are in USD. A down payment of

USD 2 500 million on the bridge facility was completed in 2022 causing a realised exchange rate loss of USD 282 million.

Note 12 Income Taxes

USD 1000 2022

Restated

2021

Current period tax payable / (receivable) 3 851 161 1 147 119

Prior period adjustments to current tax 20 828 15 917

Current tax expense / (income) 3 871 989 1 163 036

Deferred tax expense / (income) 1 047 499 829 295

Tax expense / (income) in profit and loss 4 919 489 1 992 331

Effective tax rate in % 84% 75%

Tax expense / (income) in put option used for hedging (341) 1 965

Tax expense / (income) in total comprehensive income 4 919 148 1 994 296

The tax calculation in 2022 is based on the new cash flow based petroleum tax legislation, enacted by the Norwegian

Parliament in June 2022 with effect from 01.01.22. The main feature of the new legislation is that investments from

1 January 2022 can be expensed when incurred for special petroleum tax purposes, replacing the 6 years depreciation. The

uplift deduction will be discontinued for investment not covered by the temporary 2020 tax regime.

Reconciliation of tax expense Tax rate 2022

Restated

2021

Marginal (78%) tax rate on profit / loss before tax 78.0% 4 567 829 2 064 416

Tax effect of uplift 71.8% (211 687) (377 467)

Impairment of goodwill 78.0% 184 022 158 388

Tax effects of items taxed at other than marginal (78%) tax rate

56.0% 314 393 136 792

Tax effects of new legislation on other items

50 885 -

Other permanent differences, prior period adjustments and change in

estimates of uncertain tax positions 78.0% 14 047 10 202

Tax expense / (Income) 4 919 489 1 992 331

The effects of items taxed at other than marginal (78%) tax rate are mainly impacted by fluctuation in currency exchange rate on the

company’s external borrowings and working capital.

Tax effects in 2022 of USD 50.9 million related to an updated valuation allowance for lack of statutory tax deduction at effective rate 6.204%

related to abandonment without anticipated tax shield.

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Temporary timing differences at end of period 2022 2021

Tangible fixed assets 9 787 501 10 919 602

Capitalised exploration cost 225 287 199 981

Other intangible assets 93 515 104 520

Abandonment obligation (3 274 814) (3 357 278)

Financial instruments over OCI (21 339) (21 932)

Other 141 719 137 112

Basis for deferred ordinary taxes 6 951 868 7 982 004

Uplift recognised as part of business combinations - (19 607)

Additional depreciation for special tax 4 288 592 3 304 522

Temporary differences not relevant for special tax (110 830) (199 716)

Ordinary tax deductible for special tax (2 010 081) -

Basis for deferred special taxes 9 119 549 11 067 205

Ordinary tax 22.0% (1 529 411) (1 756 041)

Special tax 71.8% / 56.0%

(6 547 836) (6 197 635)

Valuation allowance for lack of statutory tax deduction at effective

rate 6.2%r elated to abandonment (50 724) -

Net deferred tax asset / (liability) as of closing balance (8 127 971) (7 953 676)

Breakdown of tax effect on temporary differences 2022 2021

Tangible fixed assets (10 353 775) (10 320 384)

Capitalised exploration cost (175 733) (155 985)

Other intangible assets (72 945) (81 526)

Abandonment obligation 2 503 762 2 618 677

Lease liabilities 165 873 246 074

Financial instruments over OCI 4 695 4 825

Other Provisions (199 848) (265 357)

Net deferred tax asset / (liability) as of closing balance (8 127 971) (7 953 676)

In the new tax regime (enacted June 2022), the formal corporate tax rate is 22%, whereas the special tax rate is 71.8%. However, since the corpo-

rate tax may be deducted in the special tax base, the effective corporate tax is only 6.204%. Thus, the overall combined tax rate remains stable

at 78% (from 2022 increasing somewhat to 78.004%).

Deferred tax asset / (liability) 2022

Restated

2021

Deferred tax asset / (liability) at beginning of period (7 953 676) (7 384 359)

Current period deferred tax income / (expense) (1 047 499) (829 295)

Deferred taxes recognised directly in OCI or equity 341 (1 965)

Currency translation effects 872 864 261 944

Net deferred tax asset / (liability) as of closing balance (8 127 971) (7 953 676)

Calculated tax (payable) / receivable 2022 2021

Tax (payable) / receivable at beginning of period (801 432) 506 349

Current period payable taxes (3 851 161) (1 147 119)

Payable taxes related to business combinations - 969

Net tax payment / (tax refund) 2 686 852 (164 439)

Prior period adjustments and change in estimate of uncertain tax positions (20 828) (15 917)

Currency translation effects 208 347 18 726

Net tax (payable) / receivable as of closing balance (1 778 222) (801 432)

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Note 13 Intangible assets

USD 1000 Note Goodwill

Other

intangible

assets

Capitalised

exploration

wells Total

Cost as at 1 January 2021 5 175 509 107 732 113 327 5 396 567

Additions - 295 104 318 104 613

Additions through business combination 2 208 - - 2 208

Reclassification - - (4 593) (4 593)

Disposals / expensed exploration wells - - (5 887) (5 887)

Currency translation effects (168 327) (3 507) (7 185) (179 019)

Cost as at 31 December 2021 5 009 390 104 520 199 981 5 313 891

Depreciation and impairment as at 1 January 2021 (2 354 669) - -

(2 354 669)

Provision for impairment reversal / (loss) (203 061) - - (203 061)

Currency translation effects 80 238 - - 80 238

Depreciation and impairment as at 31 December 2021 (2 477 492) - -

(2 477 492)

Net book value as at 31 December 2021 2 531 897 104 520 199 981 2 836 399

USD 1000 Note Goodwill

Other

intangible

assets

Capitalised

exploration

wells Total

Cost as at 1 January 2022 5 009 390 104 520 199 981 5 313 891

Additions - - 77 050 77 050

Disposals / expensed exploration wells 10 - - (30 600) (30 600)

Currency translation effects (527 451) (11 005) (21 145) (559 601)

Cost as at 31 December 2022 4 481 939 93 515 225 287 4 800 740

Depreciation and impairment as 1 January 2022 (2 477 492) - -

(2 477 492)

Impairment loss 16, 33 (235 913) - - (235 913)

Currency translation effects 250 980 - - 250 980

Depreciation and impairment as at 31 December 2022 (2 462 426) - -

(2 462 426)

Net book value as at 31 December 2022 2 019 512 93 515 225 287 2 338 314

Other intangible assets include exploration potentials acquired through business combinations and measured according to the successful efforts method.

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Note 14 Tangible assets

USD 1000 Note

Wells and

production

facilities

Facilities under

construction

Other property,

plant and

equipment Total

Cost as at 1 January 2021 15 045 348 3 778 102 23 011 18 846 461

Additions 867 496 1 595 281 17 521 2 480 298

Estimate change asset retirement cost 25 (922 730) - - (922 730)

Reclassification 114 861 (105 327) - 9 534

Disposals (21 837) - - (21 837)

Currency translation effects (465 561) (154 627) (1 183) (621 370)

Cost as at 31 December 2021 14 617 577 5 113 429 39 350 19 770 356

Depreciation and impairment as at 1 January 2021 (3 245 385) - (7 100) (3 252 485)

Depreciation (1 663 998) - (6 951) (1 670 948)

Impairment reversal / (loss) 202 079 - - 202 079

Currency translation effects 139 536 - 380 139 916

Depreciation and impairment as at 31 December 2021 (4 567 768) - (13 671) (4 581 439)

Net book value as at 31 December 2021 10 049 809 5 113 429 25 679 15 188 917

USD 1000 Note

Wells and

production

facilities

Facilities under

construction

Other property,

plant and

equipment Total

Cost as at 1 January 2022 14 617 577 5 113 429 39 350 19 770 356

Additions 665 016 1 832 590 18 491 2 516 097

Estimate change asset retirement cost 25 266 380 - - 266 380

Reclassification 143 700 (29 043) - 114 657

Disposals - (32 021) - (32 021)

Currency translation effects (1 582 375) (577 449) (4 253) (2 164 077)

Cost as at 31 December 2022 14 110 298 6 307 507 53 587 20 471 393

Depreciation and impairment as at 1 January 2022 (4 567 768) - (13 671) (4 581 439)

Depreciation (1 408 863) (74) (9 180) (1 418 117)

Impairment reversal / (loss) 16, 33 (422 008) - - (422 008)

Currency translation effects 510 825 1 1 583 512 408

Depreciation and impairment as at 31 December 2022 (5 887 814) (73) (21 268) (5 909 156)

Net book value as at 31 December 2022 8 222 484 6 307 434 32 319 14 562 237

Capitalised interests for facilities under construction were USD 130 974 thousand in 2022 and USD 49 034 thousand in 2021.

Rate used for capitalisation of interests was 3.8% in 2022 and 2.7% in 2021.

Effective from 1 January 2022, Vår Energi has changed reserves classification system from U.S. Securities and Exchange

Commission (SEC) to SPE-PRMS (Petroleum Resources Management System). The impacts in UOP-depreciation rates are

limited with increased total proved reserves of 0.7%.

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Note 15 Right of use assets

USD 1000 Offices

Rigs, helicopters

and supply

vessels Warehouse Total

Cost as at 1 January 2021 77 236 108 728 12 360 198 323

Additions - 208 819 - 208 819

Reclassification - (4 941) - (4 941)

Currency translation effects (1 406) (8 423) 1 186 (8 643)

Cost as at 31 December 2021 75 830 304 183 13 546 393 558

Depreciation and impairment as at 1 January 2021 (8 806) (51 792) (3 880) (64 477)

Depreciation (5 859) (25 531) (2 223) (33 613)

Currency translation effects (1 042) 4 399 (393) 2 964

Depreciation and impairment as at 31 December 2021 (15 707) (72 924) (6 496) (95 126)

Net book value as at 31 December 2021 60 123 231 259 7 050 298 432

USD 1000 Offices

Rigs, helicopters

and supply

vessels Warehouse Total

Cost as at 1 January 2022 75 830 304 183 13 546 393 558

Additions 4 081 2 596 - 6 677

Reclassification - (73 006) - (73 006)

Currency translation effects (13 178) (28 473) 1 610 (40 042)

Cost as at 31 December 2022 66 732 205 300 15 155 287 188

Depreciation and impairment as at 1 January 2022 (15 707) (72 924) (6 496) (95 126)

Depreciation (4 091) (23 748) (2 010) (29 849)

Provision for impairment reversal / (loss) - - - -

Disposals - - - -

Currency translation effects 2 115 10 486 609 13 211

Depreciation and impairment as at 31 December 2022 (17 683) (86 186) (7 896) (111 765)

Net book value as at 31 December 2022 49 049 119 114 7 259 175 423

See note 29 for the lease liability.

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Note 16 Impairment

Impairment testing

Impairment tests of individual cash-generating units (CGUs) are performed quarterly when impairment triggers are iden-

tified, and full impairment testing is performed annually. Impairment testing of fixed assets and related intangible assets,

including technical and ordinary goodwill were performed as of 31 December 2022.

Key assumptions applied for impairment testing purposes as of 31 December 2022 are based on Vår Energi’s macroeco-

nomic assumptions. Below is an overview of the key assumptions applied:

Prices

Future price level is a key assumption and has significant impact on the net present value. The oil and gas prices are based

on the forward curve for the next three-year period and from the fourth year the oil and gas prices are based on the com-

pany’s long-term price assumptions. Vår Energi’s long term oil price assumption increased from 65 USD/BBL (real) per

31 December 2021 to 70 USD/BBL (real) per 31 December 2022 and long-term gas price assumption increased from 35.5

USD/BOE (real) per 31 December 2021 to 56.2 USD/BOE (real) per 31 December 2022.

The nominal oil prices (USD/BBL) applied in the impairment tests are as follows:

Year 31 Dec 2021 31 Dec 2022

2023 68.9 80.1

2024 68.1 75.5

2025 69.4 75.3

The nominal gas prices (NOK/SM3) as applied in impairment tests are as follows:

Year 31 Dec 2021 31 Dec 2022

2023 61.6 132.4

2024 40.6 106.0

2025 38.1 70.4

Oil and gas reserves

Future cash flows are calculated based on expected production profiles and estimated proven, probable and risked possible

reserves.

Production (mmboe) per period as applied in the impairment test:

Year 31 Dec 2021 31 Dec 2022

2023 - 2026 451 435

2027 - 2031 325 353

2032 - 2036 156 163

2037 - 2041 83 83

2042 - 2054 59 62

Future expenditure

Future capex, opex and abandonment cost are calculated based on the expected production profiles and the best estimate

of the related cost.

Discount rate

The discount rate is derived from the Company’s weighted average cost of capital (“WACC”). The capital structure consid-

ered in the WACC calculation is derived from the capital structures of an identified peer group and market participants

with consideration given to optimal structures. The cost of equity is derived from the expected return from an investor of

the Company. The cost of debt is based on the interest-bearing borrowings for a market participant specific to the assets

acquired. The beta factors are evaluated annually based on publicly available market data about the identified peer group. The

post tax nominal discount rate increased from 7.0% per 31 December 2021 to 8.0% per 31 December 2022.

Currency rates

While there are inherent uncertainties in the assumptions, the foreign currency assumptions reflect management’s best

estimate of the foreign currency development over the life of the assets. The impairment testing per 31 December 2022 is

using 9.50 NOK/USD for 2023 and 9.00 NOK/USD from 2024 onwards and 9.90 NOK/EUR for both short and long term.

The currency rates used per 31 December 2021 were 8.50 NOK/USD and 9.90 NOK/EUR for both short and long term.

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Inflation

Inflation rate on the functional currency NOK assumed per 31 December 2022 was 4.0% for 2023 and 2.0% from 2024

onwards. The long term inflation rate per 31 December 2021 was assumed to be 1.9%.

Impairment testing of goodwill

The technical goodwill recognised in previous business combinations is allocated to each CGU for the purpose of impair-

ment testing. Hence, technical goodwill is included in the impairment testing of the CGU, and the technical goodwill is

written down before the asset. The carrying value of the CGU is the sum of tangible assets, intangible assets, technical

goodwill and deferred taxes as of the assessment date. When deferred tax liabilities from the acquisitions decreases as a

result of depreciation, more goodwill is exposed for impairment. This may lead to future impairment charges even though

other assumptions remain stable as goodwill is not depreciated.

The ordinary goodwill is tested for impairment on an operating segment level. If the net recoverable amount calculated as

total of NPV less Net book value (NBV) for the offshore asset portfolio exceeds the carrying value of ordinary goodwill, no

impairment is recorded.

Impairment charge/reversal

The impairment testing for 2022 identified impairment to three CGUs; Balder Area (USD 640 million), Brage (USD 16

million) and Morvin (USD 2 million). The Balder impairment is mainly related to updated cost, schedule and production

profile for the Balder X project.

No impairment triggers for ordinary goodwill.

Impairment allocated

Cash generating unit

(USD 1000)

Net carrying

value

Recoverable

amount

Impairment/

reversal (-) Goodwill PP&E

Deferred tax

impact

Balder Area 1 375 411 1 052 038 640 248 233 998 406 250 (316 875)

Brage 4 075 608 15 758 - 15 758 (12 291)

Morvin 13 209 11 293 1 916 1 916 - -

Total 657 922 235 913 422 008 (329 166)

Sensitivity analysis

The table below shows how the impairment or reversal of impairment of assets and technical goodwill would be affected

by changes in the various assumptions, given that the remaining assumptions are constant.

Change in impairment after

Assumption (USD 1000) Change

Increase in

assumption

Decrease in

assumption

Oil and gas prices +/-25% (445 000) 3 407 000

Production profile +/- 5% (64 000) 919 000

Discount rate +/- 1% point 224 000 (190 000)

The sensitivities are created for illustration purposes, based on a simplified method and assumes no changes in other input

factors. Significant reductions are likely to result in changes in business plans, cut-offs as well as other factors used when esti-

mating an asset’s recoverable amount. Changes in such input factors would likely significantly reduce the actual impairment

amount compared to the illustrative sensitivity above. The impact of the sensitivities is mainly related to the Balder Area.

Climate related risks

The climate related risk assessment is generally described in the company’s sustainability reporting and note 33 Climate

Risk. Financial reporting and impairment testing includes a step up of CO

tax/fees from current levels to approximately

NOK 2 000 per ton in 2030.

Scenarios from the International Energy Agency have been included in a sensitivity test as presented below. The price

assumptions in those senarios have been provided by IEA at 2030 and 2050 in 2021 real terms. For the sensitivity calcula-

tion, a linear development between spot price at year end 2022 and IEA price in 2030, as well as between 2030 and 2050

have been applied. The table below summarises how the impairment charge would increase (+) or decrease (-) using the

oil and gas price assumptions in the following scenarios:

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Change in impairment

IEA Scenario (USD 1000) Net Zero Announced pledges Stated policies

Balder Area 2 265 000 (273 000) (420 000)

Grane 110 000 - -

Snorre 73 000 - -

Other 2 000 (12 000) (18 000)

Total 2 450 000 (285 000) (438 000)

Scenario price ranges Oil USD/bbl Gas USD/mmbtu

Real terms (USD 2021) 2030 2050 2030 2050

Net Zero 35 24 4.6 3.8

Announced Pledges 64 60 7.9 6.3

Stated Policies 82 95 8.5 9.2

Impairment testing in 2021

The 2021 macro assumptions are shown in tables and text in this note.

The 2021 impairments of USD 203 million were mainly related to revised baseline for sanctioned projects while the 2021

impairment reversals of USD 202 million were mainly related to higher price assumptions.

The following impairments/reversals of impairments were recorded in 2021:

Cash generating unit (USD 1000) Impairment goodwill Impairment reversal

Balder Area 113 273 -

Fenja 72 200 -

Goliat - 137 410

Tor - 39 790

Other 17 588 24 879

Total 203 061 202 079

Note 17 Investment in shares and other non‑current assets

USD 1000 Business Location Ownership 31 Dec 2022 31 Dec 2021

Norpipe Oil AS Tananger, Norway 6.52% 155 173

Tjeldbergodden Utvikling AS Kjørsvikbugen, Norway 0.48% 61 68

Ormen Lange Eiendom DA Tananger, Norway 6.34% 547 612

Investment in shares 763 853

Alve slot fee 532 1 809

Total other non‑current assets 532 1 809

The investments in shares are at historical cost. No adjustment to fair value due to the immaterial values.

Other non-current assets mainly consists of slot fee prepayment, where Marulk is paying a fee to Alve for use of umbilical at Alve.

Note 18 Inventories

USD 1000 31 Dec 2022 31 Dec 2021

Spare parts and drilling material 223 529 258 726

Physical oil inventory 42 281 42 603

Total inventory 265 811 301 329

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Note 19 Trade receivables

USD 1000 Note 31 Dec 2022 31 Dec 2021

Trade receivables - related parties 30 478 714 424 834

Trade receivables - external parties 382 405 412 627

Sale of trade receivables (64 802) (91 540)

Total trade receivables 796 317 745 921

Vår Energi has Credit Discount Agreements with several banks. Under the arrangements the ownership, including credit

risk, of invoices for oil cargos sold are transferred to the respective banks, and the receivables to which the payments relate

are derecognised from Vår Energi’s balance sheet. Payments to the banks are made when Vår Energi receives payments

from the customers.

Trade receivables are presented net of payments received from the banks for the sold invoices, as Vår Energi has retained

the right to receive payments from the customers and obligation to pay these cash flows to the banks without material

delay, but only to the extent Vår Energi collects the payments from the customers.

Note 20 Other current receivables and financial assets

USD 1000 Note 31 Dec 2022

Restated

31 Dec 2021

Underlift of hydrocarbons 3 101 889 110 217

Prepaid expenses 30 672 8 305

Brent crude put options - financial assets 21 14 805 17 407

Other 65 920 65 880

Total other current receivables and financial assets 213 286 201 809

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Note 21 Financial instruments

Capital management

For the purpose of Vår Energi’s capital management, capital includes equity attributable to the equity holders and

current and non-current debt financing. The primary objective of the Company’s capital management is to ensure that

it maintains a solid balance sheet and investment grade credit rating in order to support its business and maximise

shareholder value

The Company manages its capital structure and makes adjustments in light of changes in economic conditions and

planned activities in order to meet requirements of the financial covenants and support the Company’s investment grade

credit rating provided by Moody’s and S&P. To maintain or adjust the capital structure, the Company may issue new or

refinance existing debt using both bank loans or bonds, adjust the dividend payment to shareholders, return capital to

shareholders, issue new shares or sell assets. As part of the refinancing to an unsecured financing structure, obtaining

external credit rating and the initial public offering, the Company’s financial policies were reviewed and updated.

In order to achieve this overall objective, the Company’s capital management, amongst other things, aims to ensure that

it meets financial covenants attached to its interest-bearing loans and borrowings that form part of its capital structure

requirements. Breaches in the financial covenants would permit the bank to immediately call interest-bearing loans and

borrowings. There have been no breaches in the financial covenants of any interest-bearing loans and borrowings in the

current or prior period.

The Company monitors the leverage ratio using net interest bearing debt (NIBD) divided by rolling 12 months earnings

before interest, tax, depreciation, amortisation and exploration expenses (EBITDAX). Net interest-bearing debt is defined as

interest-bearing loans and borrowings less cash and short-term deposits.

Please refer to note 24 for more details related to financial liabilities and borrowings.

Risk Management

Vår Energi recognises that effectively managing risks and opportunities is essential to the Company’s long-term success and is

a key enabler in achieving Vår Energi’s strategic objectives. The Board of Directors is responsible for risk management as part of

its role in providing strategic oversight and stewardship of the Company. This includes approving the annual budget and four-

year business plan, evaluating risks to the delivery of the plan and agreeing financial and operational targets. Key strategic risks

and opportunities are also reviewed quarterly by the Risk and Compliance Committee and on a regular basis by the Board.

Vår Energi is subject to various controllable and uncontrollable risks associated with the nature of the oil and gas business

operations. Companies operating in the oil and gas industry are exposed to a variety of operational, financial and external risks

that may not be entirely possible to eliminate even with robust risk management routines and experiences.

Operational risks

The Board of Directors recognises the risks associated with the Company’s operational assets. The regulation of activities on

the NCS provides a sound framework for handling these risks, and the Company takes an active and responsible approach as

a partner. Future production of oil and gas is dependent on the Company’s ability to find, or acquire, and develop reserves.

Costs of development projects or exploration efforts are also uncertain. As a result of these risks, the Company may incur

costs that could adversely affect the Company’s financial position or its reputation as a player on the NCS. The Company

intends to act as a sound, responsible and technically competent partner across the whole spectrum of activities in all its

operations. Vår Energi works actively with our partners and has established mitigating actions to reduce the possibility of

operational incidents occurring.

Commodity price risk

Vår Energi operates in the crude oil and natural gas market and fluctuations in hydrocarbon prices have a significant effect

on the Company’s revenues. Commodity price risk represent the Company’s most important market risk. To manage this

risk, Vår Energi protects cash flows from sale of crude oil through entering into commodity price hedging instruments and

cash flows from sale of natural gas through entering into fixed price gas sales contracts. In order to reduce the risk related

to oil price fluctuations, the Company has established an oil price hedging program for 2023 where 100% of planned after-

tax volumes for oil have been hedged by acquiring monthly settled oil price put options. To align after-tax cash flows and

adjust for different tax treatment of financial derivatives and the underlying oil production, 28% of the planned production

volume is hedged. Approximately 19% of the Company’s expected gas production in 2023 has been sold on fixed price

terms as of 31 December 2022. An additional 5% of expected gas production for 2023 is sold at Gas Year Ahead basis

where the price will be fixed by start of the Gas Year 2023, i.e. October 2023.

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Financial risks

The Company is exposed to market fluctuations in commodity prices, foreign exchange rates and interest rates.

The main financial risks Vår Energi is exposed to are:

• Fluctuation in foreign exchange rates due to currency mismatch between income and cost currencies, including tax payments

• Fluctuation in interest rates leading to a fluctuation in finance costs

• Funding and liquidity risk due to unavailability of funding, deposits or loss of income

• Credit risk of customers and other counterparties

Currency risk

Vår Energi is receiving proceeds in USD, EUR and GBP. The sale of crude oil is denominated in USD, whereas natural gas

sales are mainly denominated in EUR with a minor part being denominated in GBP. Cash expenditures (OPEX, CAPEX,

G&A and tax payments) are split between NOK, USD and EUR. Bonds and interest bearing loans are in USD. Currency risk

is mainly linked to a change in the value of NOK vs USD and EUR. The main currency risk relates to debt denominated in

USD, but also exposure to receivables and payables per year-end has been included in the below sensitivity tables.

The table below shows the Group’s main exposure in USD as of 31 December:

Exposure (USD 1 000) 31 Dec 2022 31 Dec 2021

Interest-bearing loans and bonds 3 000 000 4 853 649

Receivables due in USD 385 841 368 423

Receivables due in EUR 352 148 311 737

Payables due in USD 53 453 49 730

2 315 464 4 223 219

The following table demonstrates the sensitivity to a reasonably possible change in the foreign exchange rate, with all

other variables held constant, of the Company’s profit before tax due to changes in the carrying value of monetary assets

and liabilities at the reporting date.

Exposure (USD 1 000)

Increase/decrease in foreign exchange rate USD/NOK

Effect on profit before tax for the

year ended 31 December 2022

Increase/(Decrease)

Effect on profit before tax for the

year ended 31 December 2021

Increase/(Decrease)

10% (231 546) (422 322)

-10% 231 546 422 322

Interest rate sensitivity

Interest rate risk arises from the effects fluctuations in underlying market rates may have on future cash flows. At present,

the main source of interest rate risk for Vår Energi is the floating interest rate in the interest-bearing loans and borrowings

line items, namely the Bridge facility, see table in note 24, which as at year end 2022 amounted to USD 500 million.

The following table demonstrates the sensitivity to a reasonable possible change in interest rates on the Company’s profit

before tax from the impact of changes in interest rates on floating rate borrowings with all other variables held constant.

Note that the rate will never be lower than the margin, i.e. if the SOFR rate (Secured Overnight Financing Rate) + CAS

(Compounded Reference Rate) is below zero, this will result in the interest rate being equal to the agreed margin, hence

downward sensitivity has been set to -0.15% for 2021. For 2022 upward and downward sensitivity for 2022 has been set to

1%. In the current volatile economic environment reasonable possible changes could be significantly higher. A 2% sensitiv-

ity would double the effect and a 3% would triple the effect.

Exposure (USD 1 000)

Increase/decrease in interest rate

Effect on profit before tax for the

year ended 31 December 2022

Increase/(Decrease)

Effect on profit before tax for the

year ended 31 December 2021

Increase/(Decrease)

1.00% (5 000) (48 536)

-1.00% 5 000

-0.15% 7 280

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Liquidity risk

The Company’s future capital requirements depend on many factors, and the Company may need additional funds to

fulfil its commitments and further develop exploration and development programs to support the strategic direction of the

Company. Liquidity risk is the risk that the Company will not be able to meet the obligations of financial liabilities when

they become due.

Risk levels are analysed by at least quarterly updates of cash flow projections for the strategic plan period and comparing

with available liquidity during the period. Additional updates will be made if significant macroeconomic changes occur.

The Company’s objective is to maintain a balance between continuity of funding and flexibility through the use of credit

facilities, bank loans and debt capital markets.

See note 24 for an overview of available credit facilities and bonds issued.

The table below shows the payment structure for the Company’s financial commitments, based on undiscounted contrac-

tual payments:

Year ended 31 December 2022

USD 1000 On demand < 1 year 1 - 2 years 2 - 5 years > 5 years Total

Interest-bearing loans - 523 747 - - - 523 747

Bond USD Senior Notes

- 155 000 180 000

1 027 500 2 437 500 3 800 000

Lease liabilities -

99 312 - 104 792

41 390 245 494

- 778 059 180 000 1 132 292 2 478 890 4 569 241

Year ended 31 December 2021

USD 1000 On demand < 1 year 1 - 2 years 2 - 5 years > 5 years Total

Interest-bearing loans and borrowings - 45 263 3 159 085 1 435 376 - 4 639 724

Deferred payment ExxonMobil 2022 - 333 149 - - - 333 149

Lease liabilities 108 880 - 195 053 45 091 349 024

- 487 292 3 159 085 1 630 429 45 091 5 321 897

The long-term loans were refinanced in November 2021. The new loans are no longer using LIBOR interest rate as refer-

ence. The reference rate for all existing long term loans are now SOFR (Secured Overnight Financing Rate).

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,

leading to a financial loss. Vår Energi is exposed to credit risk from its operating activities and from its financing activities,

including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. In

2022 Vår Energi sold the crude oil to Eni and ExxonMobil trading entities and natural gas primarily to Eni trading entities

and other major international oil and gas players. Towards the end of 2022, Eni became the sole offtaker of crude oil. We

consider the risk related to Eni to be negligible. The Company only uses investment grade and highly reputable banks as

counterparties. Based on this, credit risk is considered limited.

The Company primarily sells to investment grade customers and have established procedures to assess credit risk.

Payment performance is closely monitored for both license partners and customers. Overall, the credit risk is considered to

be low based on the financial strenght of the counterparties and the procedures in place.

100

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Categories of financial assets and liabilities

The Company has the following categories of financial assets and liabilities: derivative financial assets and liabilities

recognised at fair value through profit or loss, derivative financial assets and liabilities designated as accounting hedge

instruments (cash flow hedges) for which the effective portion is recognised at fair value through other comprehensive

income, accounts receivables that do not contain a significant financing component are measured at the transaction price

determined under IFRS 15, cash and cash equivalents measured at fair value, loans and borrowings and other liabilities

measured at amortised cost.

2022

USD 1000 Note

Financial assets/ liabilities at

fair value through profit and loss

Cash, cash equivalents

and receivables, payables

Financial liabilities

measured at amortised cost

Cash flow hedge

fair value through OCI Total

Assets

Trade receivable 19 - 796 317 - - 796 317

Investments in shares 17 763 - - - 763

Cash and cash equivalents 22 - 444 607 - - 444 607

Oil put options asset 20 - - - 14 805 14 805

Other short term receivables 20 - 65 920 - - 65 920

Total financial assets 763 1 306 843 - 14 805 1 322 411

- - - - -

Liabilities - - - - -

Accounts payable - 368 589 - - 368 589

Net payables to joint operations 27 - 378 167 - - 378 167

Employees, accrued public charges and other payables 27 - 50 748 - - 50 748

Deferred payment for option premiums 27 - - 36 143 - 36 143

Bond USD Senior Notes 24 - - 2 500 000 - 2 500 000

Bridge credit facility 24 - - 500 000 - 500 000

Prepaid loan and bond expenses 24 - - (47 411) - (47 411)

Total financial liabilities - 797 504 2 988 732 - 3 786 236

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2021

USD 1000 Note

Financial assets/ liabilities at

fair value through profit and loss

Cash, cash equivalents

and receivables, payables

Financial liabilities

measured at amortised cost

Cash flow hedge

fair value through OCI Total

Assets

Trade receivable 19 - 745 921 - - 745 921

Investments in shares 17 853 - - - 853

Cash and cash equivalents 22 - 223 588 - - 223 588

Oil put options asset 20 - - - 17 407 17 407

Other short term receivables 20 - 65 880 - - 65 880

Total financial assets 853 1 035 389 - 17 407 1 053 649

- - - - -

Liabilities - - - - -

Accounts payable - 422 155 - - 422 155

Net payables to joint operations 27 - 408 426 - - 408 426

Employees, accrued public charges and other payables 27 - 5 314 - - 5 314

Deferred payment for option premiums 27 - - 39 339 - 39 339

Bridge and working capital facility 24 - - 4 520 500 - 4 520 500

Prepaid loan expenses 24 - - (27 074) - (27 074)

Deferred payment ExxonMobil 2022 24 333 149 - - - 333 149

Total financial liabilities 333 149 835 895 4 532 765 - 5 701 809

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Fair Value

Management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables, bank over-

drafts, and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these

instruments. Derivative assets and liabilities are, as described above, measured at fair value. And they have been deter-

mined to constitute level 2 fair value measurements. Investment in shares (in the fair value through profit or loss category)

are measured at fair values using level 3 fair value estimates. See below discussion related to fair value hierarchy.

Carrying amounts of long term floating rate loans are assumed to approximate fair value due to short term interest rate

periods. See below table for a comparison of carrying amounts of bonds measured at amortised cost with the fair value

based on trading values:

USD 1000 Note

Financial liabilities

measured at amortised cost

Fair value based on trading

at Year End

Bond USD Senior Notes 24 2 500 000 2 525 800

Prepaid expenses bond 24 (36 420) -

Total 2 463 580 2 525 800

Year End meaning closest to 31 December 2022

Derivative financial instruments

The Company uses derivative financial instruments, such as Brent crude put options to hedge its commodity price risks.

As of 31 December 2021 and 2022, the Company had the following volumes of Brent crude oil put options in place and

with the following strike prices:

Hedging instruments

Volume (no of put options

outstanding at balance sheet date)

in thousands (BBL) Excercise price (USD per BBL)

Brent crude oil put options 31 Dec 2021, exercisable in 2022 14 349 47

Brent crude oil put options 31 Dec 2022, exercisable in 2023 14 038 50

Brent crude put options - financial assets

USD 1 000 2022 2021

The beginning of the period 17 407 26 354

New Brent crude put options 36 143 39 339

Change in fair value (38 745) (48 286)

The end of the period 14 805 17 407

As of 31 December 2022, the fair value of outstanding Brent Crude oil put options amounted to USD 14 805 thousand.

Unrealised gains and losses are recognised in OCI. Note that the cost price (option premium agreed at the inception of the

contracts) for the options is paid at the time of realisation (time of exercise or expiration) and that this deferred payment is

presented as current liabilities in the balance sheet, see below table.

Brent crude put options – deferred premiums

USD 1 000 Note 2022 2021

The beginning of the period (39 339) (58 263)

Settlement 6 39 540 60 492

New Brent crude put options (36 143) (39 339)

FX-effect (200) (2 229)

The end of the period (36 143) (39 339)

All outstanding put option contracts at 31 December 2022 are due to expire in 2023. The full intrinsic value (“in the money

value”) of the options at the time of expiry, if any, has been presented in petroleum revenues. No gain included in petroleum

revenue for 2021 and 2022. The premiums paid for the put options of USD 58 263 thousand in 2021 and USD 39 339

thousand in 2022 have been accounted for as cost of hedging and recycled from OCI to the profit or loss in the period in

which the hedged revenues were realised, and presented as production costs.

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Change in Hedge Reserve

USD 1000 2022 2021

The beginning of the period (21 932) (31 908)

Realised cost of hedge 39 339 58 262

Change in fair value (38 745) (48 286)

The end of the period (21 338) (21 932)

End of period 2022 after tax balance is USD 16 644 thousand.

Reconciliation of liabilities arising from financing activities

The table below shows a reconciliation between the opening and the closing balances in the statement of financial posi-

tion for liabilities arising from financing activities.

Non-cash changes

USD 1000 31 Dec 2021 Cash flows

Amortisation/

Accretion Currency Other 31 Dec 2022

Long-term interest-bearing debt 4 520 500

(4 020 500)

- - (500 000) -

Short-term interest-bearing debt - - - - 500 000 500 000

Bond USD Senior Notes - 2 500 000 - - - 2 500 000

Deferred payment ExxonMobil

333 149 (300 000) 18 091 1 095 (52 335) -

Prepaid loan expenses (27 074) (36 477) 17 801 1 320 (2 981) (47 411)

Totals 4 826 575

(1 856 977)

35 892 2 415 (55 316) 2 952 589

USD 352.335 thousand was paid to ExxonMobil 30 December 2022 (USD 300.000 thousand plus interest).

Non-cash changes

USD 1000 31 Dec 2020 Cash flows

Amortisation/

Accretion Currency Other 31 Dec 2021

Long-term interest-bearing debt - 4 520 500 - - - 4 520 500

Long-term interest-bearing debt (RBL) 5 335 000

(5 335 000)

- - - -

Deferred payment ExxonMobil 320 490 - 12 659 - - 333 149

Prepaid loan expenses (71 939) (26 396) 73 495 (2 234) - (27 074)

Totals 5 583 551 (840 896) 86 154 (2 234) - 4 826 575

Fair value hierarchy

The fair value of the financial instruments is included at the price that would be received to sell an asset or paid to transfer

a liability in an orderly transaction between market participants at the measurement date. The following methods and

assumptions were used to estimate the fair values:

The Company enters into derivative financial instruments with various counterparties, principally financial institutions

with investment grade credit ratings. Derivatives measured using valuation techniques with market observable inputs are

mainly commodity option contracts. The most frequently applied valuation techniques include forward pricing and swap

models that use present value calculations. The models incorporate various inputs including the credit quality of coun-

terparties and forward rate curves of the underlying commodity. As at 31 December 2022, the marked-to-market value

of derivative asset positions is net of a credit valuation adjustment attributable to derivative counterparty default risk. The

changes in counterparty credit risk had no material effect on financial instruments recognised at fair value.

All assets and liabilities, for which fair value is measured or disclosed in the financial statements, are categorised within the

fair value hierarchy, described as follows, based on the lowest-level input that is significant to the fair value measurement

as a whole:

• Level 1 input in the form of listed (unadjusted) prices in active markets for identical assets or liabilities.

• Level 2 — input other than listed prices of assets and liabilities included in Level 1 that is observable for assets or liabilities,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 — input for assets or liabilities for which there is no observable market data (non-observable input).

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Note 22 Cash and cash equivalents

USD 1000 31 Dec 2022 31 Dec 2021

Bank deposits, unrestricted 434 693 214 133

Bank deposit, restricted, employee taxes 9 914 9 454

Total bank deposits 444 607 223 588

Note 23 Share capital and shareholders

Vår Energi ASA was listed on the Oslo Stock Exchange 16 February 2022, and as a consequence of this, company bylaws,

voting rights and composition of the board was changed.

In 2021, the share capital was 399 425 shares at par value NOK 1 000. Every share had equal voting rights, one share

corresponded to one vote.

As of 31 December 2022, the total share capital of the Company is USD 45 972 thousand or NOK 399 425 thousand. The

share capital is divided into 2 496 406 246 ordinary shares and four Class B shares. Each share has a nominal value of

NOK 0.16. The ordinary shares represent NOK 399 424 999.36 of the total share capital, while the Class B shares represent

NOK 0.64 of the total share capital.

All shares rank pari passu and have equal rights in all respect, including with respect to voting rights and dividends and

other distributions, except from the class B shares. 4 members to the board, will be elected by the general meeting with a

simple majority among the votes cast for Class B shares. Such number to be reduced if the holder of the Class B shares

holds less shares of the Company.

Earnings per share are calculated by dividing the net result attributable to shareholders by the number of shares after the

listing on Oslo Stock Exchange. The calculation for all periods presented have been adjusted retrospectively to the new

number of shares.

Vår Energi ASA’s share saving program gives employees the opportunity to buy shares in Vår Energi ASA through monthly

salary deductions. If the shares are retained for two full calendar years with continuous employment after the end of the

saving year, the employees will be awarded a bonus share for each share they have purchased. This will be settled by Vår

Energi ASA buying shares in the market. The award is treated as equity settled, hence it will not affect earnings per share.

USD 1000 2022 2021

Profit for the year attributable to ordinary equity holders 936 402 654 356

Number of shares after the listing on Oslo Stock Exchange (in thousand) 2 496 406 2 496 406

Earnings per share in USD 0.38 0.26

Earnings per share in USD diluted 0.38 0.26

Overview of the 20 largest shareholders

registered as of 31 December 2022 Type of account

Number of shares

(in 1000) Owing interest

ENI INTERNATIONAL BV Ordinary 1 574 616 63.1%

POINT RESOURCES HOLDING AS Ordinary 517 636 20.7%

JPMorgan Chase Bank, N.A., London Nominee 42 817 1.7%

FOLKETRYGDFONDET Ordinary 18 822 0.8%

JPMorgan Chase Bank, N.A., London Nominee 15 688 0.6%

GEVERAN TRADING CO LTD Ordinary 12 763 0.5%

State Street Bank and Trust Comp Nominee 11 883 0.5%

VERDIPAPIRFONDET ALFRED BERG GAMBA Ordinary 9 420 0.4%

JPMorgan Chase Bank, N.A., London Nominee 9 119 0.4%

JPMorgan Chase Bank, N.A., London Nominee 8 132 0.3%

State Street Bank and Trust Comp Nominee 7 742 0.3%

DANSKE INVEST NORSKE INSTIT. II. Ordinary 7 570 0.3%

The Bank of New York Mellon SA/NV Nominee 5 829 0.2%

VERDIPAPIRFONDET KLP AKSJENORGE IN Ordinary 5 756 0.2%

UBS Switzerland AG Nominee 4 805 0.2%

VERDIPAPIRFONDET DNB NORGE Ordinary 4 677 0.2%

PARETO INVEST NORGE AS Ordinary 4 581 0.2%

The Bank of New York Mellon SA/NV Nominee 4 156 0.2%

VERDIPAPIRFONDET ALFRED BERG AKTIV Ordinary 3 453 0.1%

VERDIPAPIRFONDET ALFRED BERG NORGE Ordinary 3 287 0.1%

OTHER 223 654 9.0%

Total number of shares 2 496 406 100%

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Note 24 Financial liabilities and borrowings

Interest-bearing loans and borrowings

USD 1000 Coupon/ Int. Rate Maturity 31 Dec 2022 31 Dec 2021

Bond USD Senior Notes (22/27) 5.00% 500 000 -

Bond USD Senior Notes (22/28) 7.50% 1 000 000 -

Bond USD Senior Notes (22/32) 8.00% 1 000 000 -

Bridge facility 1.00%+SOFR +CAS Nov 2023 500 000 3 000 000

RCF Working capital facility 1.08%+SOFR +CAS Nov 2024 - 1 420 500

RCF Liquidity facility 1.13%+SOFR +CAS Nov 2026 - -

RCF Credit facility 1.13%+SOFR +CAS Mar 2023 - 100 000

Deferred payment ExxonMobil - 333 149

Prepaid loan expenses (47 411) (27 074)

Total interest‑bearing loans and borrowings 2 952 589 4 826 575

Of which current and non-current:

Interest-bearing loans, current 500 000 333 149

Interest-bearing loans and bonds, non-current 2 452 589 4 493 426

Credit facilities - utilised and unused amount

USD 1000 31 Dec 2022 31 Dec 2021

Drawn amount RCF credit facility 500 000 4 520 500

Undrawn amount credit facilities

3 600 000 2 079 500

Where current share is USD 600 million as of 31 December 2022

In 2022, Vår Energi ASA made three issuances of senior notes in the US debt capital markets. The inaugural issue of

USD 500 million of 5% Senior Notes due in May 2027 was made on 18 May 2022. On 15 November 2022 Vår Energi ASA

issued USD 1000 million of 7.5% Senior Notes due in January 2028 and USD 1000 million of 8.0% Senior Notes due in

November 2032. The senior notes are registered on the Luxembourg Stock Exchange (“LuxSE”) and coupon payments are

made semi-annually. The proceeds have been used for partial repayment of the bridge facility. The senior notes have no

financial covenants.

As of 31 December 2022, Vår Energi’s senior unsecured facilities agreement entered into with a group of 12 international

banks contains of three separate facilities amounting to USD 3.5 billion; (1) bridge to bond facility of USD 500 million

which including extension options at the borrower’s discretion has a final maturity 1 November 2023, (2) working capital

revolving credit facility of USD 1.5 billion maturing 1 November 2024 and (3) liquidity facility of USD 1.5 billion maturing

1 Nov 2026. The facilities have no amortisation structure and all amounts outstanding fall due at maturity. The facilities

have covenants covering leverage (net interest-bearing debt to 12 months rolling EBITDAX not to exceed 3.5) and interest

coverage (EBITDA to 12 months rolling interest expenses shall exceed 5) which will be tested at the end of each calendar

quarter.

The interest rate payable for each of the facilities is determined by timing and the company’s credit rating taking the

aggregate of the Secured Overnight Financing Rate (SOFR) and the Credit Adjustment Spread (CAS) and adding the appli-

cable margin for the present period as shown in the table above.

Deferred payment to ExxonMobil is part of the consideration for the 2019 acquisition of ExxonMobil’s ownership interests

in Partner-Operated fields and licenses on the Norwegian Continental Shelf and was fully repaid in 2022 in accordance

with the sales and purchase agreement.

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Note 25 Asset retirement obligations

USD 1000 2022 2021

Beginning of period 3 297 176 4 286 451

Change in estimate 266 380 (922 730)

Accretion of discount 94 243 94 733

Payment for decommissioning of oil and gas fields (70 318) (70 418)

Currency translation effects (371 343) (90 860)

Total asset retirement obligations 3 216 138 3 297 176

Short-term 60 012 61 536

Long-term 3 156 126 3 235 640

Breakdown by decommissioning period 2022 2021

2022-2030 339 511 269 534

2031-2040 1 721 737 1 989 456

2041-2057 1 154 890 1 038 186

Change in estimate include updated discount rates and revised cost estimates.

The estimate is based on executing a concept for abandonment in accordance with the Petroleum Activities Act and inter-

national regulations and guidelines. The calculations assume inflation rates of 4.0% in 2023 and 2.0% from 2024 onwards

and discount rates between 3.1% - 3.2% per 31 December 2022. For year end 2021 the inflation rates were 1.8% – 2.3%

and the discount rates between 1.15% - 3.0%. The discount rates are based on risk-free interest without addition of credit

margin.

Payment for decommissioning of oil and gas fields (abex) is mainly related to Balder Area (USD 35 300 thousand com-

pared to USD 29 054 tousand in 2021 ), Ekofisk/Tor (USD 22 000 thousand compared to USD 39 693 tousand in 2021)

and Åsgard (USD 12 600 thousand compared to USD 5 228 tousand in 2021).

Note 26 Other non‑current liabilities

USD 1000 Note 31 Dec 2022 31 Dec 2021

Contingent consideration 28 76 950 78 187

Deferred gain 9 259 10 852

Removal provision Gassled 25 70 336 73 832

Total other non‑current liabilities 156 544 162 870

Deferred gain relates to the 2017 transaction of the office buidling located in Grenseveien 6, 4313 Sandnes. Point

Resources AS sold the shares in ExxonMobil Property Norway AS and immediately entered into a finance lease for the

office building. The excess of sales proceeds is deferred and amortised over the lease term (20 years).

Note 27 Other current liabilities

USD 1000 Note 31 Dec 2022

Restated

31 Dec 2021

Overlift of hydrocarbons 3 37 961 41 177

Net payables to joint operations 378 167 408 426

Employees, accrued public charges and other payables 50 748 5 314

Deferred payment for option premiums - oil puts 21 36 143 39 339

Total other current liabilities 503 019 494 256

The liability for oil put options relates to cost of oil put options that under the purchase agreement is due for payment at

the time of settlement of the option (exercise/expiry) and is not a measure of fair value.

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Note 28 Commitments, provisions and contingent consideration

Other contractual obligations

Minimum work programs

Vår Energi is required to participate in the approved work programs for the licences. Together with the licence partners

there is also an obligation to participate in exploration wells according to the license agreements. Remaining drilling

commitments at 31 December 2022 are eight wells, with an estimated cost of USD 95 995 thousand.

Commitments

Vår Energi has entered into contractual commitments to secure planned activities. The numbers disclosed in the table

below, represents Vår Energi’s share of capital and operation expenditures from its participation in operated and non-

operated exploration, development and production projects, as well as corporate activities. The current main development

projects are Johan Castberg, Balder Future and Breidablikk. The table below excludes contracts reported as lease, as

disclosed in note 29 Lease agreements.

USD 1000 31 Dec 2022 31 Dec 2021

Within one year 272 660 266 234

After one year but not more than five years 80 366 199 463

More than five years 2 738 3 273

Total commitments other than leases 355 764 468 970

Liability for damages/insurance

Vår Energi’s operations involve risk for damages, including pollution. Installations and operations are covered by an

operations insurance policy.

Guarantees

Vår Energi has contingent liabilities in respect of agreements with pipeline and processing companies, whereby it may

be required to provide such companies with additional funds against future transportation and processing of petroleum

liquids and natural gas delivered by Vår Energi to these companies.

Eni International B.V. has issued a guarantee to ExxonMobil for the seller’s subsidiary removal cost obligations per

Norwegian Law, in connection with Vår Energi’s asset acquisitions from ExxonMobil in 2017 and 2019. Vår Energi pays and

expenses an annual fee to Eni International B.V, see note 9. The total estimated net present value of the fee payments as of

31 December 2022 is USD 257 000 thousand, with a payment profile that is reduced according to the payment profile of

decommissioning of asset acquired from ExxonMobil in 2017 and 2019.

Provisions and Contingencies

As part of the purchase agreement between Point Resources AS and ExxonMobil in 2017, Point Resources AS agreed to

pay a contingent consideration related to possible development of the Forseti structure. The total consideration shall in no

event exceed USD 110 000 thousand, and will be paid on the earlier of 1 March 2024 and completion of the Forseti Drilling

Program. In June 2021, a minimum payment of USD 30 000 thousand was paid. Vår Energi is due to pay USD 2 per barrel

if the P50 reserves estimate exceeds 15 million BOE. As of 31 December 2022, the net present value of the remaining

consideration was estimated to USD 76 950 thousand and was recognised as a liability.

During the normal course of its business, Vår Energi will be involved in disputes, including tax disputes. The Company has

made accruals for probable liabilities related to litigation and claims based on management’s best judgment and in line

with IAS37 and IAS12.

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Note 29 Lease agreements

Vår Energi has entered into lease agreements for drilling rigs, helicopter, storage vessel and other vessels to secure planned

activities.

The Company has lease agreements for offices in Sandnes, Oslo and Hammerfest. The most significant office contract is

the lease of the main office building in Vestre Svanholmen 1, Sandnes.

Vår Energi also has leases for supply vessels, helicopters and warehouses supporting operation at Balder and Goliat, where

the most significant are for the supply vessels operating at Goliat.

Non-lease components such as the service element of rig and helicopter commitments are not included as part of the

lease debt. As at 31 December 2022 the service share of these contracts amount to USD 113 million (USD 136 million in

2021).

The total expenditure relating to short-term leases which are not recognised as part of lease liabilities was USD 4 million

(USD 18 million in 2021).

See note 15 for the Right of use assets.

USD 1000 2022 2021

Opening Balance lease debt 325 088 164 482

New lease debt in period 6 149 208 819

Payments of lease debt (116 893) (48 401)

Interest expense on lease debt 9 245 7 819

Currency exchange differences (10 942) (7 631)

Total lease debt 212 646 325 088

Breakdown of the lease debt to short-term and long-term liabilities 31 Dec 2022 31 Dec 2021

Short-term 99 312 108 880

Long-term 113 334 216 208

Total lease debt 212 646 325 088

Lease debt split by activities 31 Dec 2022 31 Dec 2021

Offices 55 941 66 525

Rigs, helicopters and supply vessels 149 140 250 811

Warehouse 7 566 7 752

Total 212 646 325 088

Nominal lease debt maturity breakdown 31 Dec 2022 31 Dec 2021

Within one year 99 312 108 880

Two to five years 104 792 195 053

After five years 41 390 45 091

Total 245 494 349 024

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Note 30 Related party transactions

Vår Energi has a number of transactions with other wholly owned or controlled companies by the shareholders. The related party transactions

reported is with entities owned or controlled by the majority ultimate shareholder of Vår Energi, Eni SpA. Revenues are mainly related to sale of oil,

gas and NGL while the expenditures are mainly related to technical services, seconded personnel, insurance guarantees and rental cost.

Current assets

USD 1000 31 Dec 2022 31 Dec 2021

Trade receivables

Eni Trade & Biofuels SpA 251 129 160 533

Eni SpA 129 270 123 884

Eni Global Energy Markets 97 768 138 342

Other 546 2 075

Total trade receivables 478 714 424 834

All receivables are due within 1 year.

Current liabilities

USD 1000 31 Dec 2022 31 Dec 2021

Account Payables

Eni International BV 21 740 21 336

Eni Global Energy Markets 22 063 24 547

Eni SpA 11 751 19 387

Other 1 340 915

Total account payables 56 894 66 185

Sales revenue

USD 1000 2022 2021

Eni Trade & Biofuels SpA 2 759 010 1 910 883

Eni SpA 1 472 251 703 428

Eni Global Energy Markets 629 765 473 372

Total sales revenue 4 861 026 3 087 683

Operating and capital expenditures

USD 1000 2022 2021

Eni Trade & Biofuels SpA 48 841 29 020

Eni International BV 22 138 21 904

Eni SpA 21 462 46 294

Eni Global Energy Markets (5 155) 21 590

Eni International Resources Ltd. 2 026 2 019

Other 455 1 616

Total operating and capital expenditures 89 768 122 443

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Note 31 License ownerships

Fields WI % Operator Licenses

Concession

period expires

BALDER 90.0% Vår Energi PL 001/PL 027/PL 027C/PL 169/PL 028 2030

BAUGE 17.5% Equinor PL 348/PL 348B 2029

BRAGE 12.3% Wintershall Dea PL 053B/PL 055/PL 185/PL 055B/PL 055D 2030

BREIDABLIKK 34.4% Equinor PL001DS/PL027FS/PL169/PL169B2 2030

BØYLA 20.0% Aker BP PL340/PL340BS 2029

EKOFISK 12.4% ConocoPhillips PL 018/PL 018 B 2028

ELDFISK 12.4% ConocoPhillips PL 018 2028

EMBLA 12.4% ConocoPhillips PL 018 2028

FENJA 45.0% Neptune Energy PL 586 2039

FRAM 25.0% Equinor PL 090 / 090E 2024

FROSK 20.0% Aker BP PL340 2029

GOLIAT 65.0% Vår Energi PL229 2042

GRANE 28.3% Equinor PL 001CS/PL 169B1 2030

GUNGNE 13.0% Equinor PL 046 2028

HALTEN ØST 24.6% Equinor PL074CS/PL074B/PL263/PL263B/PL312/PL312B/PL473 2042

HEIDRUN 5.2% Equinor PL 095/PL 124 2024/2025

HYME 17.5% Equinor PL 348 2029

JOHAN CASTBERG 30.0% Equinor PL 532 2049

KRISTIN 16.7% Equinor PL 134D 2027

LAVRANS 15.0% Equinor PL199 2033

MARULK 20.0% Vår Energi PL 122 2025

MIKKEL 48.4% Equinor PL 092/PL 121 2024

MORVIN 30.0% Equinor PL 134B/P L034C 2027

Fields WI % Operator Licenses

Concession

period expires

NORNE 6.9% Equinor PL 128/PL 128 B 2026

ORMEN LANGE 6.3% Norske Shell PL 208/PL 250 2041

RINGHORNE ØST 70.0% Vår Energi PL 027/PL 169E/PL 053B/PL 055/PL 185 2030

SIGYN 40.0% Equinor PL 072 2022

SKULD 11.5% Equinor PL 128 2026

SLEIPNER VEST 17.2% Equinor PL 029/PL 046 2028

SLEIPNER ØST 15.4% Equinor PL 046 2028

SNORRE 18.6% Equinor PL 057 2040

STATFJORD 21.4% Equinor PL 037 2026

STATFJORD NORD 25.0% Equinor PL 037 2026

STATFJORD ØST 20.6% Equinor PL 037/PL 089 2040

SVALIN 13.0% Equinor PL 169 2030

SYGNA 21.0% Equinor PL 037/PL 089 2040

TOMMELITEN ALPHA 9.1% ConocoPhillips PL044 2028

TOR 10.8% ConocoPhillips PL 006/PL 018 2028

TORDIS 16.1% Equinor PL 089 2040

TRESTAKK 40.9% Equinor PL 091/PL 091D 2029

TYRIHANS 18.0% Equinor PL 073/PL 073 B/PL 091 2029

URD 11.5% Equinor PL 128 2026

VERDANDE 10.5% Equinor PL128F 2026

VIGDIS 16.1% Equinor PL 089 2040

ÅSGARD 22.7% Equinor PL 062/PL 074/PL 094 2027

/PL 094 B/PL 134/PL 237/PL 479

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Licenses WI % Operator

PL001 90% Vår Energi

PL001 CS 100% Vår Energi

PL001 DS 100% Vår Energi

PL018 12% ConocoPhillips

PL018 B 12% ConocoPhillips

PL027 90% Vår Energi

PL027 C 90% Vår Energi

PL027 FS 100% Vår Energi

PL027 HS 90% Vår Energi

PL028 90% Vår Energi

PL028 C 13% Equinor

PL028 S 90% Vår Energi

PL029 85% Vår Energi

PL037 25% Equinor

PL044 13% ConocoPhillips

PL046 13% Equinor

PL053 B 12% Wintershall Dea

PL055 12% Wintershall Dea

PL055 B 12% Wintershall Dea

PL055 D 12% Wintershall Dea

PL055 E 12% Wintershall Dea

PL057 5% Equinor

PL062 10% Equinor

PL072 40% Equinor

PL072 B 50% Equinor

PL073 12% Equinor

PL073 B 15% Equinor

PL074 39% Equinor

PL074 B 39% Equinor

Licenses WI % Operator

PL074CS 39% Equinor

PL074DS 39% Equinor

PL074ES 39% Equinor

PL089 16% Equinor

PL090 25% Equinor

PL090 E 25% Equinor

PL090 I 25% Equinor

PL091 41% Equinor

PL091 D 41% Equinor

PL091 E 41% Equinor

PL091 F 41% Equinor

PL092 55% Equinor

PL094 34% Equinor

PL094 B 22% Equinor

PL095 5% ConocoPhillips

PL107 B 5% Equinor

PL107 D 5% Equinor

PL121 35% Equinor

PL122 20% Vår Energi

PL122 B 20% Vår Energi

PL122 C 20% Vår Energi

PL122 D 20% Vår Energi

PL124 5% Equinor

PL128 12% Equinor

PL128 B 7% Equinor

PL128 D 12% Equinor

PL128 E 12% Equinor

PL134 30% Equinor

PL134 B 30% Equinor

Licenses WI % Operator

PL134 C 30% Equinor

PL134 D 30% Equinor

PL145 20% ConocoPhillips

PL169 13% Equinor

PL169 B1 7% Equinor

PL169 B2 10% Equinor

PL169 E 13% DNO Norge

PL185 12% Wintershall Dea

PL199 15% Equinor

PL209 10% Equinor

PL209 BS 10% Equinor

PL219 50% Equinor

PL220 15% Equinor

PL229 65% Vår Energi

PL229 B 65% Vår Energi

PL229 E 50% Vår Energi

PL229 G 50% Vår Energi

PL229 H 65% Vår Energi

PL237 22% Equinor

PL250 6% Shell

PL257 15% Equinor

PL263 C 10% Equinor

PL275 12% ConocoPhillips

PL293 25% Equinor

PL312 41% Equinor

PL312 B 41% Equinor

PL340 20% Aker BP

PL340 BS 20% Aker BP

PL348 18% Equinor

Licenses WI % Operator

PL348 B 18% Equinor

PL375 20% Equinor

PL393 80% Vår Energi

PL473 39% Equinor

PL479 34% Equinor

PL489 40% Vår Energi

PL532 30% Equinor

PL554 30% Equinor

PL554 B 30% Equinor

PL554 C 30% Equinor

PL554 D 30% Equinor

PL586 45% Neptune

PL586B 45% Neptune

PL608 30% Equinor

PL784 20% Aker BP

PL820S 30% Vår Energi

PL820SB 30% Vår Energi

PL869 20% Aker BP

PL901 50% Vår Energi

PL917 40% Vår Energi

PL917 B 40% Vår Energi

PL938 20% Neptune

PL947 40% Vår Energi

PL947 B 40% Vår Energi

PL956 50% Vår Energi

PL984 30% DNO Norge

PL984 BS 30% DNO Norge

PL985 30% Vår Energi

PL1002 40% Vår Energi

Licenses WI % Operator

PL1002B 40% Vår Energi

PL1005 40% Aker BP

PL1025 S 30% Vår Energi

PL1025 SB

30% Vår Energi

PL1042 30% Aker BP

PL1043 40% Vår Energi

PL1043B 40% Vår Energi

PL1072 70% Vår Energi

PL1072 B 70% Vår Energi

PL1073 70% Vår Energi

PL1074 40% Vår Energi

PL1075 60% Vår Energi

PL1078 30% Equinor

PL1079 30% Vår Energi

PL1080 30% Equinor

PL1090 50% Vår Energi

PL1096 30% Vår Energi

PL1114 30% Chrysaor Norge AS

PL1117 30% OKEA ASA

PL1120 20% DNO Norge AS

PL1121 30% Equinor

PL1122 20% ConocoPhillips

PL1131 40% Vår Energi

PL1132 60% Vår Energi

PL1139 20% Lundin

PL1154 40% Vår Energi

PL1163 20% ConnocoPhillips

PL1168 50% Vår Energi

PL1169 30% Equinor

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Note 32 Proved developed reserves (unaudited)

MBOE

Production 2021 (89.7)

Changes in estimate 2021 100.0

Proved developed reserves as of 31 December 21 373.8

Production 2022 (80.3)

Change in gas conversion factor (6.7)

Change in estimate 2022 25.0

Proved developed reserves as of 31 December 22 311.8

Effective from 1 January 2022, Vår Energi changed reserves classification system from U.S. Securities and Exchange

Commission (SEC) to SPE-PRMS (Petroleum Resources Management System). The impacts were limited with increased

total proved reserves of 5 mmboe.

Proved developed reserves as of 31 December 2022 are Vår Energi ASA’s own evaluation based on Petroleum Resources

Management System (PRMS) principles.

Total proved reserves, developed and undeveloped, as of 31 December 2022 were 673 mmboe.

As of 31 December 2022 (PRMS), the Company’s total proved and probable reserves (2P) net to Vår Energi were 1070 mmboe,

slightly down from 1 119 mmboe as of 31 December 2021 (SEC).

The reduction from 2021 to 2022 is mainly due to a combination of high production (80 mmboe) in 2022 and an update

to the Company gas conversion factor (14 mmboe), partly offset by reserves increases/promotions and upward revisions of

reserves following more favorable commodity prices during 2022.

Vår Energi’s total proved and probable reserves are distributed in four major geograhpical regions: Balder Area 29%, Barents

Sea Area 22%, Norwegian Sea Area 25% and North Sea Area 24%. 72% of the Company’s proved and probable reserves were

oil, whereas nearly 23% were gas and 5% were NGL.

The Company’s five largest fields - Balder/Ringhorne, Johan Castberg, Snorre, Åsgard and Breidablikk account for approxi-

mately 55% of total proved and probable reserves.

The Company’s reserve life index (RLI) at year-end 2022, calculated on the basis of proved and probable reserves, was 13.3 years.

Total contingent resources (3C) at year-end 2022 were 550 mmboe, a reduction of 12 mmboe compared to year-end 2021.

The main reasons were reduction of 12 mmboe due to updated gas conversion factor and new project/drilling activities being

matured from resources to the reserves category. This was partially offset by recent discoveries including Snøfonn Nord

and Skavl Stø.

For further information see the Annual Statement of Reserves published on www.varenergi.no

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Note 33 Climate risk

Climate risk as described in detail in our sustainability reporting, may have a significant impact on our financial reporting.

Climate risk may be related to transitional risk and physical risk. Transitional risks relate to risks associated with transi-

tioning to a lower-carbon economy and may comprise of market, reputational and policy risks. Physical risks are the risks

which arise from the physical effects of climate change and environmental degradation and may arise through changes in

weather patterns, temperature increases and other physical effects of climate change.

Vår Energi continually identifies and assesses the actual and potential impacts on sustainable development from our

business and activities. Vår Energi is mainly impacted by transitional risks but could also be impacted by physical risk in a

longer perspective.

Scenario analysis

Vår Energi acknowledges and adheres to the recommendations set forth by the Task Force on Climate Related Financial

Disclosures (TCFD) and take climate risks and opportunities into account when developing strategies and financial plans.

In line with the recommendations by TCFD, Vår Energi has conducted scenario analysis under the International Energy

Agency (IEA) scenarios of future energy trends, in order to assess the impacts on the Company’s business and financial

performance. The Global Energy and Climate (GEC) Model includes key input data for three modelled scenarios; Stated

Policies Scenario (STEPS), Announced Pledges Scenario (APS) and Net Zero Emissions by 2050 Scenario (NZE).

The figure below illustrates the changes in the net present value (NPV) of Vår Energi’s portfolio under the scenarios

described in IEA’s World Energy Outlook (WEO) report subject to assumptions described below. The latest WEO report

published in October 2022 further describes the scenarios mentioned above and can be found at www.iea.org.

Change in NPV of Vår Energi portfolio under IEA scenarios

IEA - NZEIEA - APSIEA - STEPS

28%

-22%

Notes

1. The NPV of Vår Energi portfolio under the selected

scenarios is compared to the NPV of the portfolio valued

at Vår Energi’s latest economic assumptions. Fixed

exchange rates are used for all scenarios.

2. IEA defines the prices for 2030 and 2050 in real 2021

terms. Vår Energi assumes a linear price development

from 2023-2030 and 2030-2050.

Oil and gas price scenarios by the IEA:

Scenario price ranges Oil USD/bbl Gas USD/mmbtu

Real terms (USD 2021) 2030 2050 2030 2050

Net Zero 35 24 4.6 3.8

Announced Pledges 64 60 7.9 6.3

Stated Policies 82 95 8.5 9.2

Prices applied in the scenario assume a linear forecasted price development and do not take price fluctuations, changes

in portfolio and costs into account. Further, the scenarios imply that no new oil and gas fields will be approved for devel-

opment beyond already committed projects as of 2022. NGL prices are estimated to be 70% of oil prices and foreign

exchange rates have been kept unchanged compared to base assumptions used for impairment purposes.

As illustrated in the figure above, the NPV of Vår Energi’s portfolio is 28% higher under the IEA’s STEPS scenario compared

to the Company’s latest planning and budget assumptions. Under the APS scenario, the NPV of the portfolio is 9% higher

than the Vår Energi base case.

The Net Zero Emissions by 2050 scenario models a collapse in commodity prices of crude oil and natural gas dependent

on a significant reduction in demand. Between 2021 and 2050, the demand for oil is expected to decline by around 80%,

and natural gas to decline by more than 70%. Thus, this scenario entails ambitious policies and measures to reduce energy

demand through behavioural change. As indicated in the above figure, the NPV of Vår Energi’s portfolio is valued 22%

lower compared to the base assumptions under this scenario.

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Climate-related risk assessment

Vår Energi has implemented an Enterprise Risk Management process that is

applied at all levels across the entire organisation. We are committed to deliver

a better future and producing oil and gas in an energy efficient way with low

emissions, a key priority that is embedded in our sustainable development

goals and strategy. At the same time, we also see that the energy system and

the oil and gas industry are in transition, and mitigating climate change is a

global endeavour requiring economic and social transformation as we move

towards a carbon neutral world. In this context, Vår Energi has processes

in place that actively assess climate risk and opportunities and implement

actions to mitigate risks and pursue opportunities that are identified.

We have conducted a climate risk and opportunity assessment based on the

TCFD recommendations and framework.

Transitional risks

Vår Energi is mainly impacted by transitional risks, which may include the

following:

Regulatory and legal risks

Vår Energi’s business and results of operations could be adversely affected by

the adoption of new climate change laws, policies and regulations. Growing

concerns about climate change and greenhouse gas emissions have led to

the adoption of various regulations and policies and future global policy may

further influence climate related action from the government.

Future changes in climate related regulations, such as increased CO

, NO

other emissions related taxes, are likely to impact Vår Energi’s financial results

through an increase in operating costs. Uncertainty exists related to develop-

ment in actual quota prices going forward, and the timing of ramp-up of the

total CO

costs towards 2030.

Another regulatory risk may be an implementation of new regulations to

reduce or stop exploration activities and/or reduce tax relief on exploration

activities on the NCS. If this risk were to materialise, it would potentially result

in an inability to fully replace produced oil and gas reserves and continue to

grow as a company due to the lack of new resources. There is also a risk that

mature assets with higher emissions may not be granted extension of licence

and will be decommissioned earlier than anticipated.

Lawsuits related to environmental harmful production or spills are also identi-

fied as climate related legal risks.

Market risk

In context of the ongoing energy transition process, the demand for oil and

gas, and subsequently the price of oil and gas may decrease.

Vår Energi’s financing arrangements consist mainly of fixed interest rates, but

also some floating interest rates and the Company is therefore exposed to

interest rate fluctuations. Regulations related to the availability of funding in

the capital market and implementations of higher interest rates for companies

in the oil and gas sector and/or with high production emissions may be identi-

fied as a regulatory risk.

By electrification of our assets, operational costs may increase if the electricity

prices continue to increase or stay at the high 2022-levels.

Technological risk

Innovative technology and sources of energy may reduce the demand for oil

and gas, such as renewable energy, hydrogen, electrification and batteries.

Transitions into substitutional energy sources may have an impact on the

financial results.

Reputational risk

We realise that our activities may have both positive and negative effects on

communities and the environment, and we are continuously assessing the

reputational risks of the Company in this context. From a general industry

perspective, the climate related reputational risks associated with being in the oil

and gas business could impact the Company in the form of negative media cov-

erage, reduced attractiveness as an employer, operator or business partner and/

or increased cost of or access to capital. The reputational risk in this context is

dependent on how we respond to the climate related issues within our industry.

Physical risks

Extreme weather events such as storms, extreme waves and heavy rain

may affect own production and supply chain logistics, resulting in halting

or shutdown of production affecting the financial results. Installations may

require improvement and investments to handle extreme weathers, increasing

expenditures. It may also affect the assets in terms of reduced useful life and

technical reserves.

Increased volatility in weather, sea-level rise and wave height are considered

chronic physical risk factors that are climate related. These are all elements

that would potentially affect the working environment (conditions) on our

producing offshore assets as well as the long-term integrity of the installations.

Mitigating actions

Vår Energi is continuously assessing market trends with regards to financial

impact and include sensitivity analysis (alternative price scenarios) in the

process to evaluate the robustness of new projects.

Having set ambitious climate targets for our company, we are shifting our

focus towards operationalising already developed plans for achieving GHG

(greenhouse gas) reductions in line with our goals. One way of achieving

reduction of direct emissions is by electrification of assets with renewable

power from shore or offshore renewable energy sources. Our strategy is that

all future greenfield developments where Vår Energi is the operator shall be

electrified with power from shore or from offshore renewable sources. We are

also exploring opportunities for further electrification from renewable sources

of our existing fields to reduce GHG emissions.

Technological development is a key enabler with regards to mitigating climate

risks and pursuing climate opportunities and plays a key part in Vår Energi’s

long term target to reach net zero Scope 1 and 2 emissions by 2030. Vår

Energi’s research and development (R&D) activities seek to provide advanced

technical solutions supporting the Company’s ambitions of reducing environ-

mental impacts and improving production efficiency.

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To manage the commodity price risk, Vår Energi protects cash flows from sale

of crude oil through entering commodity price hedging instruments and cash

flows from sale of natural gas through entering fixed price gas sales contracts.

These mitigating actions help manage the price risk in the short-term as

contracts are normally within the next 12 months.

Key targets and actions in 2022

Emissions reductions

Vår Energi has reduced the flaring at Balder, Ringhorne and Goliat through

active use of flaring strategy and changing valves. The Company has

increased the energy efficiency at Balder, Goliat and Jotun through running

compressors at 50% load, rebundled the compressor train and modified water

injection pumps, respectively.

The first production of renewable energy from Hywind Tampen started in

November 2022, with delivery of power to the Gullfaks platform. Vår Energi

holds a 10% partner share in the development project.

Risk management

Potential environmental impacts are included in Vår Energi’s procurement

process and may have up to a 30% weight in the decision model. Assessment

of potential environmental impact are included in all investment decisions.

In 2022, Vår Energi published its first CDP Report (formerly known as Carbon

Disclosure Project). The report is a voluntary reporting framework to disclose

environmental information to stakeholders on an annual basis. Reporting of

identified risks and opportunities, as well as targets and performance, contrib-

ute a large part of the report which can be found at www.varenergi.no.

Potential financial impacts

Estimates of future financial impacts related to increased operating costs due

to increased tax on CO

emissions, decreased revenues due to reduced pro-

duction capacity or reduced demand for oil and gas are included in Annex 3 in

Vår Energi’s Sustainability Report 2022.

A scenario of shutdown of production of oil and gas from 2050 in order to

reach the KonKraft strategy of near zero scope 1 emissions by 2050 will have

limited to no impact on the 2022 financials. This is due to limited assumed

production and decommissioning cost after 2050.

If no exploration activity is allowed after 2022, an impairment of exploration

bonus potential included in Other tangible assets of USD 47 million is esti-

mated to be suffered.

An increase in the fixed interest rates on the Senior Notes by 100 points would

impact the expected interest payments by USD 25 million (14% increase),

whereas an increase by 200 points would impact the interest payments by

USD 50 million (28% increase). Although such an increase is not applicable on

the fixed rates at present, the scenario shows the possible increased exposure

in the longer term.

Opportunities

Main identified climate-related opportunities with potential substantial finan-

cial impact identified by Vår Energi are:

• Shift in supplier: Vår Energi’s assets being preferred in terms of lower emis-

sions per produced boe, e.g. compared to non-NCS suppliers

• Electrification of assets may reduce production costs

• Underinvestment in the oil and gas industry may lead to increased prices on

the commodities, in which may generate higher revenues

• Lower interest rates on loans due to lower emissions compared to other

non-NCS producers

• Availability of capital; loan issuers may prefer companies with lower emissions

Offsetting our impacts

Vår Energi has an ambitious strategy to compensate for the remaining Scope

1 and 2 emissions from our production while we continue the work to reduce

absolute Scope 1 and 2 emissions to near zero by 2050. To achieve these

commitments, remaining GHG emissions will be balanced by permanently

removing an equivalent volume of CO

by using available carbon offsetting

mechanisms in the voluntary carbon market. We have developed a carbon

credit policy to ensure the purchased carbon credits will be consistent with

the Core Carbon Principles; High Quality Voluntary Carbon Credits Principles

(icvcm.org).

Further, from 2021 we have started offsetting emissions from employee

commuting, business travel and power for our office buildings, using the

Trefadder solution. Through Trefadder, Vår Energi is supporting carbon capture

by planting trees in Norwegian climate forests. Growing these forests will

store more CO

and contribute to an improved environment, in addition to the

positive social impact of creating local jobs.

The Company provides a more detailed analysis of climate risks and oppor-

tunities, financial impacts of climate change and implemented measures to

ensure long-term value creation in the Sustainability Report available at

www.varenergi.no

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Note 34 Subsequent events

In January 2023, Vår Energi was awarded 12 licenses in the APA 2022 licensing round, of which five as operator. Vår Energi

is offered licenses in both the North Sea, the Norwegian Sea and the Barents Sea – most of them in areas close to existing

infrastructure.

Vår Energi has decided to withdraw from the Barents Blue project as the cooperation agreement expired on 31

January

2023. This decision will not impact Vår Energi’s position in the Barents Sea, and the work to find a comprehensive gas

export solution continues.

Vår Energi has elected to sell part of its gas on a fixed price/forward basis. For the 1

Quarter 2023, Vår Energi has sold

33% of the estimated gas production on a fixed price basis at an average price of 288 USD/boe. Vår Energi has also

chosen to forward sell 20% of its estimated gas production in the 2

and 3

Quarter 2023 at an average sales price of 192

USD/boe. The current market situation is very much impacted by the war in Ukraine and the resulting reduced flow of gas

from Russia into the European market.

Vår Energi operates only on the Norwegian Continental Shelf and market its petroleum products to customers in Norway,

EU and UK. While not directly exposed to Russia’s invasion of Ukraine, there is significant uncertainty regarding the poten-

tial impact on safe and reliable energy supply, as well as to the market prices of oil, gas and other commodities which may

impact future operations and results.

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Auditor’s report

PricewaterhouseCoopers AS, Kanalsletta 8, Postboks 8017, NO-4068 Stavanger

T: 02316, org. no.: 987 009 713 MVA, www.pwc.no

Statsautoriserte revisorer, medlemmer av Den norske Revisorforening og autorisert regnskapsførerselskap

To the General Meeting of Vår Energi ASA

Independent Auditor’s Report

Report on the Audit of the Financial Statements

Opinion

We have audited the financial statements of Vår Energi ASA (the Company), which comprise the balance sheet statement as at 31 December 2022, the

statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial

statements, including a summary of significant accounting policies.

In our opinion

● the financial statements comply with applicable statutory requirements, and

● the financial statements give a true and fair view of the financial position of the Company as at 31 December 2022, and its financial performance and

its cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by EU.

Our opinion is consistent with our additional report to the Audit Committee.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the

Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company as required by relevant laws and

regulations in Norway and the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including

International Independence Standards) (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We

believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

To the best of our knowledge and belief, no prohibited non-audit services referred to in the Audit Regulation (537/2014) Article 5.1 have been provided.

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We have been the auditor of the Company for 4 years from the election by the general meeting of the shareholders on 5 July 2019 for the accounting year

2019.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period.

These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a

separate opinion on these matters. The Company’s business activities are largely unchanged compared to last year. We have not identified regulatory

changes, transactions or other events that qualified as new key audit matters. The impairment assessment for goodwill and property, plant and equipment and

estimation of a

sset retirement obligations have the same characteristics and risks this year as the previous year and consequently have been an area of

focus also for the 2022 audit.

Key Audit Matters

How our audit addressed the Key Audit Matter

Impairment of goodwill and property, plant and

equipment

Vår Energi ASA has property, plant and equipment wit

h a

carrying amount of USD 14 562 237 thousands at 31

December 2022. In addition, the carrying value of

goodwill

(including technical goodwill) was USD 2 019 512

thousands at 31 December 2022.

In line with Vår Energi’s accounting policies for impairment

non-financial assets, management has assessed

whether there are impairment or impairment reversal

indicators. Based on identified impairment indicators, an

impairment calculation was prepared.

We assessed management’s identification of impairment or impairment reversal indicators and

agreed that indicators were present. We obtained management’s im

pairment calculation as of

31 December 2022. Management’s identification of cash generating units were in line with our

expectations. For relevant cash generating units, including allocated technical goodwill, we

assessed the key inputs into the calculatio

n of recoverable amount by:

● comparison of management´s short-term price assumptions against external price

forward curves,

●

comparison of long-term oil and gas price assumptions against long-term price

assumptions communicated by peers and other publicly available sources,

●

tested CGU and underlying asset specific assumptions underlying the impairment test

model (e.g. production profiles, capital expenditures, operating costs, removal costs),

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Management’s assessment of recoverable amounts of

goodwill and

property, plant and equipment requires

estimates and assumptions relating to operational and

market factors and involves a significant amount of

judgement. In addition, the calculation of recoverable

amounts requires financial modelling of the cash flows

related to the cash generating units, which can be

inherently complex, and may require use of additional

judgement.

Based on the results of the assessment of impairment

triggers and the corresponding calculation of recoverable

amounts, a total net impairme

nt charge of USD 657 922

thousands was recognised in 2022. The impairment

charges relate to impairments of technical goodwill of

USD 235 913 thousands and impairments on property,

plant and equipment of USD 422 008 thousands.

We focussed on this area becau

se goodwill and property,

plant and equipment constitute a significant share of total

assets in the balance sheet, and because the assessment

of recoverable amount is complex and involves significant

management judgement which may have a direct impact

on n

et profit.

Please refer to note 16 for a description of management’s

assessment of impairment.

● assessing the reasonableness of CGU and underlying asset specific assumptions by

comparing current year actual data to data that were forecasted for the current year

and comparing current year actual data to data forecasted for future years,

●

reconciling removal costs and years in the impairment models towards the removal

costs applied in the calculation of asset retirement obligations,

●

evaluation of internal reserves estimation process, testing certain controls in the

reserves process and comparing reserves volumes to external verifications of

reserves. We also evaluated the professional qualifications and objectivity of

management’s internal and external experts (reservoir engineers) who performed the

detailed preparation of, or audited, the reserve estimates and analysed production and

other changes in reserves throughout the year,

●

testing tax assumptions and calculations of tax basis and tax cash flows,

●

assessing the calculation from post to pre tax impairment charge or reversal, and

●

benchmarking of inflation, discount rates and exchange rates applied against external

market data.

The valuation of goodwill and property, plant and equipment are inherently uncertain due to the

judgemental natu

re of the underlying estimates.

We further assessed the mathematical and methodological integrity of management’s

impairment models.

Management determined that ordinary goodwill at the balance sheet date was not impaired.

We obtained and considered managem

ent’s assessment supporting the carrying value of

goodwill at 31 December 2022. We also calculated the market capitalization at 31 December

2022 based on the quoted share price at year

-end. We found support for the carrying value of

oil and properties and

ordinary goodwill as of 31 December 2022.

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We evaluated the appropriateness of the related note disclosures and found that they were

reasonable.

We also assessed the sensitivity analysis and underlying calculations showing how the

recoverable amounts of ta

ngible assets and technical goodwill would be impacted by changes

to underlying assumptions, such as change in hydrocarbon prices and discount rates. In

addition, we considered consistency between the climate risk related disclosures in note 33

and the sen

sitivity analysis to the impairment testing in note 16.

Estimation of asset retirement obligations

Asset retirement obligations as of 31 December 2022 were

calculated for operated and non

-operated assets. Asset

retirement obligations represent USD 3 216

138

thousands in the balance sheet as of 31 December 2022

and are accounted for as a non

-current provision of

USD 3 156 126 thousands and current provision of USD

60 012 thousands.

The estimation and measurement of asset retirement

obligations requires a

number of estimates and judgments

to be applied. This includes timing of actual cash flows,

amount of retirement costs and discount rate. The timing

of removal is also dependent on the reserves estimation

and is impacted by the commodity price outlook. The

calculation of the asset retirement obligations requires

financial modelling of cash flows related to the removal

and decommissioning cost. Such modelling can be

complex and may require use of additional judgement.

We obtained management’s assessment and model for calculation of asset retirement

obligations as at 31 December 2022 and held meetings with management to und

erstand the

nature and details of the calculation. We found the methodology to be in line with requirements

in IFRS.

The decommissioning cost estimates for the non

-operated assets are based on the respective

Operators cost estimate. We obtained the cost es

timate prepared by the external Operators of

the non

-operated fields from management. We checked that the external cost estimates were

included as input in the calculation of the asset retirement obligation for the non

operated fields

and challenged assump

tions applied.

For the operated Balder, Ringhorne and Goliat fields, the cost estimates are based on Vår

Energi’s internal calculation and assessment. Vår Energi has involved a multi

-discipline project

team with professionals from various technical areas.

The calculation of cost estimates for the

Vår Energi operated fields are based on several cost inputs. We assessed the cost estimate

assumptions applied for reasonableness. This included, but were not limited to, number of

wells to be plugged, rig rates pe

r day, decommissioning year and contingency level. We also

tested the model used for calculating the asset retirement obligations and found that the model

makes calculations as expected. We received management’s assessment of the timing of

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We focused on this area due to the significant value the

provision for asset retirement obligations represents in the

balance sheet, and the level of management judgement

used in determining the provision for asset retirement

obligations.

Please refer to n

ote 25 for a description of how

management has accounted for the asset retirement

obligations.

decommissioning and removal activities for each field. We benchmarked the inflation rate and

the discount rate used in calculation of the

asset retirement obligations. Our testing

substantiated that management assumptions were fair.

We evaluated the appropriateness of th

e related note disclosures and found that they were

reasonable.

Other Information

The Board of Directors and the Managing Director (management) are responsible for the information in the Board of Directors’ report and the other information

accompanying the financial statements. The other information comprises information in the annual report, but does not include the financial statements and

our auditor’s report thereon. Our opinion on the financial statements does not cover the information in the Board of Directors’ report nor the other information

accompanying the financial statements.

In connection with our audit of the financial statements, our responsibility is to read the Board of Directors’ report and the other information accompanying the

financial statements. The purpose is to consider if there is material inconsistency between the Board of Directors’ report and the other information

accompanying the financial statements and the financial statements or our knowledge obtained in the audit, or whether the Board of Directors’ report and the

other information accompanying the financial statements otherwise appear to be materially misstated. We are required to report if there is a material

misstatement in the Board of Directors’ report or the other information accompanying the financial statements. We have nothing to report in this regard.

Based on our knowledge obtained in the audit, it is our opinion that the Board of Directors’ report

● is consistent with the financial statements and

● contains the information required by applicable statutory requirements.

Our opinion on the Board of Director’s report applies correspondingly to the statements on Corporate Governance and Corporate Social Responsibility, and to

the report on payments to governments.

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Responsibilities of Management for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting

Standards as adopted by the EU, and for such internal control as management determines is necessary to enable the preparation of financial statements that

are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as

applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or

to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to

fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an

audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of

these financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

● identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error. We design and perform audit

procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not

detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional

omissions, misrepresentations, or the override of internal control.

● obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not

for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

● evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by

management.

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● conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether

a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If

we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of

our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

● evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements

represent the underlying transactions and events in a manner that achieves a true and fair view.

We communicate with the Board of Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings,

including any significant deficiencies in internal control that we identify during our audit.

We also provide the Audit Committee with a statement that we have complied with relevant ethical requirements regarding independence, and to

communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related

safeguards.

From the matters communicated with the Board of Directors, we determine those matters that were of most significance in the audit of the financial statements

of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public

disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the

adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

Report on Compliance with Requirement on European Single Electronic Format (ESEF)

Opinion

As part of the audit of the financial statements of Vår Energi ASA, we have performed an assurance engagement to obtain reasonable assurance about

whether the financial statements included in the annual report, with the file name “VarEnergiASA-2022-12-31-en”, have been prepared, in all material

respects, in compliance with the requirements of the Commission Delegated Regulation (EU) 2019/815 on the European Single Electronic Format (ESEF

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Regulation) and regulation pursuant to Section 5-5 of the Norwegian Securities Trading Act, which includes requirements related to the preparation of the

annual report in XHTML format, and iXBRL tagging of the consolidated financial statements.

In our opinion, the financial statements, included in the annual report, have been prepared, in all material respects, in compliance with the ESEF regulation.

Management’s Responsibilities

Management is responsible for the preparation of the annual report in compliance with the ESEF regulation. This responsibility comprises an adequate

process and such internal control as management determines is necessary.

Auditor’s Responsibilities

For a description of the auditor’s responsibilities when performing an assurance engagement of the ESEF reporting, see:

https://revisorforeningen.no/revisjonsberetninger

Stavanger, 29 March 2023

PricewaterhouseCoopers AS

Gunnar Slettebø

State Authorised Public Accountant

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Statement by the

Board of Directors and the

Chief Executive Officer

Pursuant to the Norwegian Securities Trading Act Section 5-5 with related regulations, we hereby confirm that, to the best of

our knowledge, the Company’s and the group’s financial statements for 2022 have been prepared in accordance with IFRS,

as adopted by the EU, and requirements in accordance with the Norwegian Accounting Act. The information presented in the

financial statements gives a true and fair view of the company’s liabilities, financial position and results overall.

To the best of our knowledge, the Board of Directors’ Report gives a true and fair view of the development, performance

and financial position of the Company, and includes a description of the principal risk and uncertainty factors facing the

Company and the Group.

In addition, we confirm to the best of our knowledge, that the report “Payment to governments” as provided in a separate

section in this annual report, has been prepared in accordance with the requirements in the Norwegian Securities Trading

Act Section 5-5a with related regulations.

Sandnes, 29 March 2023

The Board of Directors of Vår Energi ASA

Signed electronically

Thorhild Widvey

Chair

Liv Monica Bargem Stubholt

Deputy Chair

Francesco Gattei

Director

Guido Brusco

Director

Clara Andreoletti

Director

Marica Calabrese

Director

Fabio Ignazio Romeo

Director

Ove Gusevik

Director

Martha Skjæveland

Director,

employee representative

Hege Susanne Blåsternes

Director

employee representative

Bjørn Nysted

Director,

employee representative

Jan Inge Nesheim

Director,

employee representative

Torger Rød

Chief Executive Officer

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Alternative Performance Measures (APMs)

In this report, in order to enhance the understanding of the Group’s performance and liquidity, Vår Energi presents certain alternative

performance measures (“APMs”) as defined by the European Securities and Markets Authority (“ESMA”) in the ESMA Guidelines on

Alternative Performance Measures 2015/1057.

Vår Energi presents the APMs: CAPEX, CAPEX Coverage, EBITDAX,

EBITDAX Margin, Free Cash Flow, NIBD, Adjusted NIBD, NIBD/

EBITDAX Ratio, Adjusted NIBD/EBITDAX Ratio, TIBD/EBITDAX Ratio

and Adjusted TIBD/EBITDAX Ratio.

The APMs are not measurement of performance under IFRS (“GAAP”)

and should not be considered to be an alternative to: (a) operating

revenues or operating profit (as determined in accordance with GAAP),

as a measure of Vår Energi’s operating performance; or (b) any other

measures of performance under GAAP. The APM presented herein

may not be indicative of Vår Energi’s historical operating results, nor is

such measure meant to be predictive of the Group’s future results.

Vår Energi believes that the APMs described herein is commonly

reported by companies in the markets in which it competes and is

widely used in comparing and analysing performance across compa-

nies within the Group’s industry.

The APMs used by Vår Energi are set out below (presented in alphabet-

ical order):

• “CAPEX” is defined by Vår Energi as expenditures on property, plant

and equipment as presented in the cash flow statements within cash

flow from investing activities.

• “CAPEX Coverage” is defined by Vår Energi as cash flow from oper-

ating activities as presented in the cash flow statements (“CFFO”), as

a ratio to CAPEX.

• “EBITDAX” is defined by Vår Energi as profit/(loss) for the period

before income tax (expense)/income, net financial items, net

exchange rate gain/(loss), depreciation and amortisation, impair-

ments and exploration expenses.

• “EBITDAX margin” is defined by Vår Energi as EBITDAX and EBITDA

as a percentage of total income, respectively.

• “Free cash flow” (“FCF”) is defined by Vår Energi as CFFO less CAPEX

and expenditures on exploration and evaluation assets.

• “Net interest- bearing debt” or “NIBD” is defined by Vår Energi as

interest-bearing loans and borrowings and lease liabilities (“Total

interest-bearing debt” or “TIBD”) less cash and cash equivalents.

• “Adjusted Net interest-bearing debt” or “Adjusted NIBD” is defined by

Vår Energi as TIBD excluding lease liabilities (“Adjusted total inter-

est-bearing debt” or “Adjusted TIBD”) less cash and cash equivalents.

• “NIBD/EBITDAX” is defined by Vår Energi as NIBD as a ratio of

EBITDAX.

• “Adjusted NIBD/EBITDAX” is defined by Vår Energi as Adjusted NIBD

as a ratio of EBITDAX.

• “TIBD/EBITDAX” is defined by Vår Energi as interest-bearing loans

and borrowings and lease liabilities as a ratio of EBITDAX.

• “Adjusted TIBD/EBITDAX” is defined by Vår Energi as interest bearing

loans and borrowings (but excluding lease liabilities) as a ratio of

EBITDAX.

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Glossary

Term Definition/description

E&P Exploration and Production

FPSO Floating, production, storage and offloading vessel

HSEQ Health, Safety, Environment and Quality

HSSE Health, Safety, Security and Environment

HSSEQ Health, Safety, Security, Environment and Quality

Kboepd Thousands of barrels of oil equivalent per day

mmboe Millions of barrels of oil equivalents

MPE Ministry of Petroleum and Energy

NCS Norwegian Continental Shelf

NGL Natural gas liquids

NPD Norwegian Petroleum Directorate

PDO Plan for Development and Operation

PRMS Petroleum Resources Management System

Sm3 Standard cubic meters

1P reserves The quantities of petroleum which can be estimated with reasonable certainty to be commercially recoverable, also referred to as "proved reserves".

2P reserves Proved plus probable reserves consisting of 1P reserves plus those additional reserves, which are less likely to be recovered than 1P reserves.

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General ESEF data (ParsePort)

Name of reporting entity or other means of identification VÅR ENERGI ASA

Domicile of entity Norway

Legal form of entity Public limited liability company

Country of incorporation Norway

Address of entity’s registered office Vestre Svanholmen 1, 4313 Sandnes, Norway

Principal place of business Norway

Description of nature of entity’s operations and principal activities Oil and gas exploration, development and production

Name of parent entity VÅR ENERGI ASA

Name of ultimate parent of group VÅR ENERGI ASA

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