Spring Energy Annual Report 2009

ANNUAL REPORT 2009
A YEAR OF SIGNIFICANT DEVELOPMENT
A RAPIDLY GROWING OIL AND GAS EXPLORATION AND PRODUCTION COMPANY
CONTENT
OVERVIEW Description of Spring Review of 2009 Key figures Newsflash Team awards Objectives and strategy CEOs statement Asset portfolio Operational overview Oil and gas reserves and resources Governance HSEQ Our team Management Board of Directors FINANCIAL CONTENT Directors report Financial statements Notes to the accounts Auditors report Glossary 3 4 5 6 8 10 12 14 16 18 20 24 26 28 30
This annual report includes Spring Energys consolidated financial statements and the Directors report for the Group and the parent company Spring Energy Norway AS. The financial statements for the parent company are not included but are available upon request to Spring Energy by sending an email to lars.husby@springenergy.no. The financial statements for 2008 cover the period 19 October 2007 to 31 December 2008.
34 40 46 63 64
Tordenskiolds gate 6B 0160 Oslo NORWAY www.springenergy.no
SPRING ENERGY NORWAY AS
SPRING ENERGY ANNUAL REPORT 2009
A BUSINESS DRIVEN BY SOUND COMMERCIAL AND TECHNICAL EXPERTISE
DESCRIPTION OF SPRING
Founded in 2007, Spring Energy is a privately owned Norwegian oil and gas exploration, development and production company focused on the mature and immature areas of the Norwegian Continental Shelf. The Companys headquarters are in Oslo where it has a small team of highly experienced management and staff. The team has both high level technical and commercial competence and an excellent network of industry contacts which combine to give it a commercial edge. Since its inception, the Company has already enjoyed considerable success. The active management of its portfolio through a combination of successful applications for acreage in NCS licensing rounds, acquisitions, exploration and the swapping of assets has resulted in a well balanced combination of quality exploration, appraisal and production assets. With a consistent and focused strategy, the Company is rapidly striving towards its vision of becoming a highly profitable, fully integrated exploration, development and production company. The Company is backed by HitecVision, a private equity company with a track record of making sound strategic investments in the Norwegian oil and gas sector.
PROVEN AND PROBABLE RESERVES

2,0 1,5 1,0 0,5 0,0 2008 2009 MMboe
CONTINGENT RESOURCES
40 30 20 10 0 2008 2009 MMboe
PROSPECTIVE RESOURCES - RISKED

200 150 100 50 0 2008 2009 MMboe
SOURCING FUTURE GROWTH
ACTIVE PORTFOLIO MANAGEMENT LEADS TO FINANCIAL AND COMMERCIAL REWARDS
REVIEW OF 2009
BRIEF OVERVIEW
2009 was a year of substantial development for Spring Energy as the Company continued to remain focused on its strategy of pursuing attractive growth opportunities on the Norwegian Continental Shelf. During the year the Company added a further 11 licenses and ended the year with a portfolio of 20 licenses including one producing asset. During the year Spring Energy recorded significant exploration success in two licenses. In PL 378 and PL 375 oil and gas discoveries were made in the Grosbeak and Beta prospects. In PL 407 the Bream discovery was successfully appraised. At the year end the Company had booked contingent resources of 30.9 MMboe up 197% from 10.4 MMboe a year earlier. Spring Energy added significant value for shareholders by swapping a portion of the Grosbeak discovery in PL 378 for an interest in the Brage field. This has provided the Company with its first production and enabled the Company to fulfil one of its key objectives to become a full cycle E&P company. Financially, Spring Energy remains in very strong position with the drill queue fully funded for the next 36 months and the Company able to utilise a loan facility for exploration drilling. The gain from the asset swap has enabled Spring Energy to record a profit in its second full year of trading.
FINANCIAL HIGHLIGHTS
Substantial increase in income: NOK 90.0 million up from NOK 1.2 million (2008) Net profit for the year: NOK 32.1 million up from a loss of NOK 32.3 million (2008) NOK 1 000 million credit facility signed with banking group Oil and gas resources added in all categories Continued financial support from HitecVision Fully funded exploration programme
OPERATIONAL HIGHLIGHTS
Significant Grosbeak and Beta oil and gas discoveries Bream appraisal wells drilled, oil discovery closer to development Step change through acquisition of first producing asset via swap structure Award of two further licenses in 20th NCS licensing round Working interests acquired in seven further North Sea licenses Total licenses up from 9 to 20 Pre-qualified as NCS operator
WELLS DRILLED
3
WELLS IN DRILL QUEUE

12 10
NET RISKED RESOURCES TARGETED IN DRILL QUEUE

120 100 80 60 40 20 MMboe
8 6
4 2
0 2008 2009
0 2008 2009
0 2008 2009
PROFITABLE, WELL FUNDED AND FOCUSED ON QUALITY ASSETS
KEY FIGURES
OPERATIONAL
2009 Licenses Proven and probable reserves Contingent resources Prospective resources - risked Wells drilled Firm wells in drill queue 1) Net risked resources targeted in drill queue
1) To be drilled during the period 2010 - 2012
2008 9.0 10.4 19.4 3.0 14.0
# MMboe MMboe MMboe # # MMboe
20.0 1.0 30.9 176.7 3.0 12.0 101.9
FINANCIAL
NOK million Total assets Oil and gas properties Capitalised exploration and acqusition cost Cash and cash equivalents Total equity Other income Profit / loss (-) before income tax Net profit / loss (-) 2009 883.3 112.8 222.5 109.1 297.9 90.0 -147.0 32.1 2008 279.4 32.1 54.3 121.6 1.2 -138.5 -32.3
NUMBER OF LICENSES
20 15 10 5 0 2008 2009
OTHER INCOME
100 80 60 40 20 0 2008 2009 NOK mill
NET PROFIT/(LOSS)
35 25 15 5 -5 -15 -25 -35 2008 2009 NOK mill
IMPORTANT STEP CHANGES IN DEVELOPMENT
NEWSFLASH
STS VISION INVEY HITEC RG SPRING ENE IN
2008
ion in equity e USD 120 mill AS. ement to provid Energy Norway d today an agre nounce mpany Spring HitecVision an t oil and gas co in a independen cVision puts us investor as Hite s financing to the an experienced egy. HitecVisions our growth strat funding from such
UIRED IN 3 INTERESTS ACQ ORTH SEA NORWEGIAN N DISCOVERIES
company t-up oil and gas in Oslo, is a star e areas rway AS, located ure and immatur Spring Energy No nities in both mat , led by growth opportu management team C). The ucactively pursuing tinental Shelf (NS oration and prod expl ian Con on the Norweg e experience from ner on the NCS em, has extensiv d as a license part CEO Roar Tess participating in aims to be qualifie ng 2010, actively . Spring Energy duri tion acreage and as an operator well as acquiring ent projects as before mid 2008 aisal and developm exploration, appr ket. in the asset mar ing of Europes lead itecVision) is one outs and ate Equity AS (H gas industry, focusing on buy HitecVision Priv the investor has s in the oil and HitecVision V, equity investor private ugh its fund Energy. investments. Thro ncing to Spring growth capital ion in equity fina l USD 120 mill committed in tota
This lerate and to pursue and acce the exploration unique position k record within and Noreco from has a proven trac ng Revus Energy olios investment team , successfully taki ive and attractive license portf ness production busi nies with extens Energy together Spring d compa to further grow start-ups to liste We look forward Energy. CEO of Spring just a few years. in em, , states Roar Tess with HitecVision s more than 20 year ressed have on average are imp of Spring Energy the NCS, and we The founders on experience from rtise. This is a team with producti exploration and combining broad pool of expe ents and ion methods The Ministry of Petroleu Senior with their achievem r to pursue innovative explorat nar Halvorsen, m and Energy (MPE) has eage petence, says Gun high ambitions, prequalified licensee on the Norweg gy and strong com advanced technolo ian Continental Shelf (NC ion. cVis S) Partner at Hite in the company. is This an important milesto shareholders ne for Spring Energy. The will continue as to contribute to increas prequalification as a licensee Spring Energy ed value creation on the is a recognition by the The founders of NCS.
PRE-QUALIFIED AS A NCS LICENSEE
Spring Energy as a
round in addition to pro-activ Norwegian authorities Further that Spring Energy will ely participate in the asset tra more, this enables us to be awarded licenses in be able the upcoming APA 2008 nsaction market, states R and the 20th concession oar Tessem, CEO of Sp ring Energy.
The Oslobas signed a NO ed oil company Spri ng Energ y h with Skandi K 400 million loan facility agr as naviska En eem skilda Ban ken AB (S ent The loan EB) facility wil l assist Spr financing ing Energ the comp y in anys 2008 - 2010 ex ploration
LOAN FA AGREED CILIT Y WITH SE B

and apprais al activities Continen on the No tal Shelf. rwegian The SEB loan facilit y together 120 millio with the US n equity fin HitecVisio D ance com mitment n Private by Equity pro vide us wit ha
D UIRE ACQ WI % A 20 344 L IN P PL 344B D AN
ACQ A 2 UIRED 0% W IN P L 38 I 8
strong fin anc growth stra ial basis to pursue our tegy states Spring En Roar Tessem ambitious ergy. , CEO of
THORLEIF ENGER EL ECTED AS CHAIRMAN OF THE BOARD

The Board of Spring Ene rgy is pleased to announ ce the nomination of Mr. Thorleif Enger as new Chairman of the Board of Spring Energy Norwa y AS.
Thorleif Enger was until recently the CEO of Yara International ASA. Prior to this, he has more than 15 years of experience from the oil industry. Mr. Enger is currently a Board member of Marine Harvest ASA, and was the Chairman of Telenor ASA from 2003 until 2007. We are very pleased to have Mr. Enger with us. He brings with him a wealth of knowledge and experience that will be very important for Spring Energy in the time to come. His background from Norsk Hydro and the oil industry will be very valuable, says Roar Tessem, CEO of Spring Energy Norway AS. I am excited about this opportunity, and I look forward to again work with the oil industry. Spring Energy has everyt hing in place to be a highly successful E&P compa ny; assets with high potential, backed by long term and solid investors, and with a highly qualified staff I look forward to be working with, says Thorleif Enger Thorleif Enger will succee d Gunnar Halvorsen from HitecVision as the Chairman of the Board of Spring Energy. Mr. Gunna r Halvorsen will continue as Board memb er. An Extraordinary Gener al meeting will be convened in November 2008 to approve the appointment. The proposal to elect Mr. Enger as new Chairman is supported by Spring Energys largest shareholders and support is already secured from a majority of the general meeting.
AWARDED 4 LICENSES IN APA 2008

In addition, Spring Energy has farmed in to the license PL 344B from Revus Energy ASA. on the NCS. Following this, Spring Energy now holds a total of 10 licenses
Energy on 18 DeAs announced by the Norwegian Ministry of Petroleum and in the APA 2008. cember 2008, Spring Energy has been awarded 4 licenses
SUCCESSFUL VALIDATION OF BUSINESS MODEL
2009
OF SION N EXPAN TION LOA B LORA EXP ITH SE ITY W FACIL
NC S AWARDED T WO H ROUND LICENSES IN 20T

Energy on 30 April y of Petroleum and Norwegian Ministr Round. As announced by the licenses in the 20th has been awarded 2 2009, Spring Energy
Following this, Spring Energy now holds a total of 13 licenses on the NCS. ingen.no/en/dep/o e http://www.regjer For more information, se ed/press-center/Pre ss-releases/2009/20 ds.html?id=558299 th-licensing-round--awar
PRE-QUALIFIED AS A NCS OPERATOR.

Spring Energy as The Ministry of Petroleum and Energy (MPE) has pre-qualified an operator on the Norwegian Continental Shelf (NCS).
RST S IN FI LL ERIE ISCOV ATION WE D R EXPLO 378 ON PL

dd petro to prove ent Group in Mi per Jurassic well was Up d Br tive of the rocks an carbons both in and fluid The objec assic reservoir ction hydro per Jur ll proved tensive data colle in Up The we oir rocks. ic reservoirs. Ex th reservoirs. reserv le Jurass out in bo and and Midd s been carried tween 6 le ha ated to be ab sampling y is estim BOE) of recover M d discover combine meters (35 - 190 e of the The siz rd cubic vince, on standa bon pro 30 milli c hydrocar alents. a prolifi oil equiv uated in the license. n very is sit eak disco s identified withi The Grosb l prospect era with sev erg Spring En
r Spring Energy and a recognition by the authorities that Spri The pre-qualification as operator is an important milestone fo responsibility as an active and competent player on the NCS.
ng Energy is capable to take on more
ring Energy is pleased to announce th facility with at it has secu a banking gr red a NOK 1 oup comprisi (SEB), DnB 000 million ex ng Merchant NOR (DNB ploration loan Bankin ) and BNP Pa ribas (BNPP g, Skandinaviska Enskild a Banken AB ).
Thorleif Eng er was until rece ntly the CEO Internationa l ASA. Prior of Yara to this, he has of experience more than 15 from the oil years industry. Mr. Board member Enger of man of Telenor Marine Harvest ASA, and is currently a was the ChairASA from 2003 until 2007. We are very plea with him a wea sed to have Mr. Enger with lth us. be very importa of knowledge and experien He brings nt for Spring ce that will Energy in the His backgrou nd from Nor time to come. sk Hydro and will be very valu the oil industry able, says Roa Energy Norway r Tessem, CEO AS. of Spring I am excited abou again work with t this opportunity, and I look forward the oil industry. to thing in plac Spring Energy e to be a high has ever ly successful E&P company y; assets
SIGNIFICA NT INCREA SE IN LOA TO FURTH N FACILITY ER STEP U P EXPLOR APPRAISA ATION AN L ACTIVITIE D S Sp
D UIRE ACQ WI A 20% 78 3 IN PL
ACQUIRED A 15% WI IN PL 405 AND PL 405B
e Gros-2) on th h Sea, l (35/12 tion wel field in the Nort plora s first ex h of the Troll Energy f Spring 378, 25 km nort ense PL 378 lic rilling o D PL lf of the ll on beha spect in intersha ted by W beak pro mpleted. was opera Songa Delta. The well se. co the licen ing the rig g Group erest in group us has been the Vikin rking int ic leum in a 20 % wo le Jurass
with high pote ntia and with a high l, backed by long term and ly solid investor with, says Tho qualified staff I look forw s, ard to be wor rleif Enger king Thorleif Eng er will succeed Gunnar Halv sion as the Cha orsen from Hite irman of the cViBoard of Spri Gunnar Halv ng Energy. Mr. orsen will cont inue as Board member. An Extraord inary November 2008 General meeting will be convened in to approve the to elect Mr. Eng appointment. er as new Cha The proposal Energys larg est shareholders irman is supported by Spri ng and support from a majority is already secu of the general red meeting.
y has ents: primary rgy comm ns in both the bo from the ring Ene EO of Sp finding hydrocar well. The result other ssem, C ration of the d with Roar Te y please in our first explo ccess on several e are ver s su W ry target ance of d seconda increases the ch 8. an well PL 37 s within Grosbeak d prospect identifie
SUCCESSFUL BREAM DELINEATION WELLS 17/12-4, 17/12-4A AND 17/12-4B

; 4A and 4B on Drilling of delineation well 17/12-4 and two horizontal sidetracks the Bream oil discovery have been successfully completed.
tion test was performed from a limited reservoir interval above the heel in the first horizontal sidetrack, and produced oil at a maximum oil rate of 2500 barrels per day. The purpose of the second sidetrack was to establish reservoir properties and sand connectivity in the Eastern part of the Bream structure. The size of the Bream discovery is estimated to between 6 and 10 million standard cubic meters (38 - 63 MB) of recoverable oil. BG Norge operated the well on behalf of the PL 407 license group using the Seadrill West Alpha semi-submersible drilling rig. The well was permanently plugged and abandoned 28 August 2009. Spring Energy has a 20 % working interest in the license. The PL 407 license will now interpret the results of the delineation wells and evaluate various development options for the Bream discovery. Provided a commercially robust development solution is found, the license will work towards submitting a PDO for Bream next year. Spring Energy will also participate in an exploration well on the Gardrofa prospect in neighboring license PL 406 (Spring Energy 20 percent working interest) next year. A successful Gardrofa well would add to the commercial robustness of a potential area development solution that could incorporate Bream, Gardrofa and the 18/10-1 oil discovery (located in PL 406).
ACQUIRED FIRST PR AND EXPLORATIO ODUCING ASSET N THROUGH A SWAP PORTFOLIO STRUCTURE
Drilling of delineation well 17/12-4 and two horizontal sidetracks; 4A and 4B on the Bream oil discovery have been successfully completed. Bream is located within license PL 407, approximately 50 kilometres North West of the Yme field in the North Sea, and was discovered in 1972. The main objective of the wells was to establish oil and reservoir properties as well as fluid contacts for the Middle Jurassic Bryne Formation. All three well tracks proved oil in the Bryne Formation in sandstones with good reservoir
ACQUIR ED A 20% WI IN PL 377 S
Spring Energy and Win properties. tershall Norge ASA (W INO) have agreed The purpose of the first sidetrack was to establish transaction where Spr to a ing Energy acquires th reservoir properties and sand connectivity in the e following assets from part of the Bream structure. A producWestern NO: WI
Spring will compensate WINO by transferring a 5 % WI in PL 378 and also carry part of the exploration well costs on behalf of WINO on exploration wells listed the above. This transaction adds significant value to our shareholders. The interest in the Brage field provides Spring Energy with its first oil production and the transa ction is thus a strategically for Spring Energy in becom important step ing a fully integrated E&P company. The transaction also demon strates Spring Energy s ability to transform high quality discoveries into production throug h a swap structure. In addition this transa ction adds four very excitin g exploration and appraisal wells to our drilling queue, which after this transaction now totals 10 wells to be drilled over the next three years, says Roar Tessem, CEO of Spring Energy. 1. 2.5 % working interes t (WI) in the producing Brage Field. Effective date is 1 January 2010. 2. 10 % WI in PL 341, located in the North Sea and where the Stirby prospect is scheduled to be drilled in 2010. Effective date is 1 January 2010. 3. 15 % WI in PL 475 & PL 475BS, located in the Norwegian Sea and where the Maria prospect is scheduled to be drilled in 2010. Effective date is 1 Januar y 2010. 4. 15 % WI in PL 375, located in the North Sea and where an appraisal well is curren tly being drilled on the Beta oil discovery. Effective date is 1 Januar y 2009. 5. 10 % WI in PL 511, located in the Norwegian Sea and where the Mjsa prospect is schedule d to be drilled in 2011 - 201 date is 1 January 2010. 2. Effective Following the transaction Spring Energy still retains the prolific PL 378 license a 15 % WI in , where the significant Grosbeak oil and gas discovery was made this summer. Further explor ation and appraisal drilling will take place in PL 378 during 2010. The transaction is subjec t to Authority approv al.
D S IN SECON L 375 DISCOVERIE ELL ON P LORATION W EXP ird exploration
ys th st in the Compan 15 km Northwe ration success /4-11), located s further explo ergy announce ct in PL 375 (34 Spring En the Beta prospe mpleted on ng well recently co drilling for Spri of exploration ld. lting in the llent first year completes an exce participated in three wells, resu nt Grosbeak of the Snorre Fie success on Beta ifica has
gy The the sign t Group 2009 Spring Ener al sidetracks), dle Jurassic Bren three wells have Energy. During (with 2 horizont bons in the Mid ess on Beta. All m appraisal well well proved high finally the succ to prove hydrocar successful Brea in PL 378 and Statfjord Fm. The of the well was lin Group and The objective and gas discovery for shareholders. oil er Jurassic Dun e ord Fm. g company as well as the Low standard cubic d significant valu and in the Statfj adde me a producin Brent Group 7 and 40 million Energy has beco ng Energy quality oil in the ated to between of 2010 Spring all, where Spri discovery is estim since the start on with Wintersh The size of the able oil. Furthermore, unced transacti 52 MB) of recover the recently anno the Brage Field. meters (44 - 2 through the license. % interest in ing interest in aisal wells took over a 2.5 has a 15% work oration and appr t of n including Spring Energy in at least 5 expl etion in the even e data acquisitio be gy participating ificant value accr however extensiv . The well will With Spring Ener exposed to sign uction tested, ate the discovery shareholders are well was not prod carried out which substanti The during 2010 drilling. ess. sampling has been allow for future appraisal fluid further succ doned to group temporarily aban he PL 375 license on behalf of t Canada Norge AS ated by PetroThe well was oper Delta. the rig Songa using
GULLKRONEN
RYSTAD ENERGY NCS PERFORMANCE AWARDS
2008 NCS NEWCOMER OF THE YEAR

In 2009, Spring Energy was awarded NEWCOMER OF THE YEAR by Rystad Energy. The award was based on the following criteria: prequalified in 2008, start-up, staff growth, portfolio growth and financing.
The jury gave the following reason for the award to Spring Energy: Secured USD 120 million in equity financing with leading Norwegian Private Equity player HitecVision as well as a large exploration loan facility agreement with SEB Made a rapid build-up of a strong management team (ex. DNO/NOIL) with business development track record Built an impressive license portfolio by continued farm-in activity and through concession rounds (APA 2008) Staff build-up to 20 employees
Rystad Energy is an independent, integrated E&P advisory and business intelligence data firm that sponsors annual awards to individuals and teams that make the biggest contribution to value creation within the oil and gas sector in Norway. In January 2010, more than 150 industry representatives from 75 companies participated in a prestigious industry event where nine Rystad Energy prizes were awarded for contributions to value creation in the year 2009. Since its inception, Spring Energy has been awarded NCS newcomer of the year and NCS business developer of the year.
2009 NCS BUSINESS DEVELOPER OF THE YEAR

In 2010, Spring Energy was awarded BUSINESS DEVELOPER OF THE YEAR by Rystad Energy. The award was based on the following criteria: Activity level (number and value of transactions), type of transactions (farm-ins, swaps and acquisitions, including public companies) and results created (discoveries made, production gained). The jury gave the following reason for the award to Spring Energy: 2009 has seen a wide range of business development activities on the NCS. Many of the transactions create a basis and potential for future success. The jury wants to emphasise early results and value creation. The winner has proven its business model with focus on commercial value, deal making capabilities, and support from a high quality investor. Through several successful farm-ins and asset swaps on the NCS, the Company has within 2 years and with limited investments built a portfolio that includes production, material discoveries, and high potential exploration acreage. The other nominees were Amerada Hess, Aker Exploration / Det Norske and Bayerngas.
A CLEAR, CONSISTENT STRATEGY FOCUSED ON BUILDING A BALANCED PORTFOLIO
OBJECTIVES AND STRATEGY

MISSION STATEMENT Spring Energys mission is to create value for all stakeholders through exploration, development and production of oil and gas. VISION STATEMENT Spring Energys vision is to become a highly profitable E&P company founded on competence, sustainability and recognition. KEY OBJECTIVES AND APPROACH Spring Energys key objective is to develop an E&P company holding a risk balanced and attractive portfolio of licenses in the exploration, development and production phases. The Company has a clear strategy to deliver sustainable and profitable growth in the future which includes: Developing and maintaining a diversified portfolio of quality assets on the Norwegian Continental Shelf with significant upside potential Applying for attractive acreage in concession rounds as well as pro-active and selective participation in the asset transaction market Executing a commercially driven exploration strategy ensuring that capital and resources are allocated to the opportunities of highest potential and value Actively managing the portfolio of assets, including divesting of non-core assets to provide capital for future funding of exploration, appraisal and development opportunities Continuously investing in people, structure and systems to ensure safe operations and minimise impacts on the environment BUILDING VALUE: SEEKING THE OPTIMAL RISK REWARD RELATIONSHIP Spring Energys goal is to become an E&P company holding a risked balanced portfolio
BUSINESS MODEL DISCIPLINED INVESTMENT APPROACH THROUGH THE E&P LIFE CYCLE
VALUE CREATION AND REALISATION
Expanded focus
Divest (or swap) producing reserves
Spring Energys business model is to create value through selective investments in E&P projects according to: - Stringent investment criteria
Initial focus / growth engine

Divest (or swap) PDO approved project Divest (or swap) appraised discovery Farm-down prior to appraisal well Farm-down prior to wild cat well
Produce and sell oil and gas
- Systematic portfolio optimisation approach Initial focus on acquiring, de-risking and proving up the value of undiscovered and immature petroleum resources Increasingly also create value through investment in selected development and production opportunities Realise value created through sale of assets and/or oil and gas
Farm-down prior to development
Divest (or swap) new discovery
SOURCING/ DE-RISKING
EXPLORATION/ APPRAISAL
PLANNING/ DEVELOPMENT
PRODUCTION
10
of licenses in all phases in the upstream cycle. Spring Energy believes that the full cycle model offers a better risk-reward balance than the pure explorer model. Not only is it financially more robust with cash flow from producing assets and the opportunity to raise debt, but it also means the Company is less dependent on the asset market to grow as it is able to develop resources internally. It is the intention of Spring Energy to aggressively add to its license portfolio and through active exploration and appraisal increase its prospective as well as contingent resources, its reserves and production in order to generate increased shareholder value. DISCIPLINED INVESTMENT APPROACH Spring Energys business model is to create value through selective investments in E&P
projects using stringent investment criteria and a systematic approach to portfolio optimisation. As part of this process of building value, Spring Energy utilises the strength of its commercially driven technical team to actively manage the portfolio of assets. The initial focus of the Company has been to acquire, de-risk and prove up the value of undiscovered and immature petroleum resources. However, as the asset portfolio matures, Spring Energy will also increasingly create value through investment in selected development and production opportunities where value could ultimately be realised through asset sales, swaps or the sale of oil and gas. The employment of geological and geophysical expertise combined with financial and commercial analysis all
contribute to de-risking the activities. Utilising these tools enables Spring Energy to optimise the chances of discovering oil or gas thereby adding significant shareholder value. As part of the geological screening process all prospects are identified using play models, the latest technology and seismic processing and basin modelling tools. The prospects are then ranked according to a number of criteria which include chance of success and size of prospect. Commercially, all prospects are then economically screened and are examined in the context of the overall portfolio of the Company. This last step is critical as it helps the Company allocate its resources appropriately and also assists in the active management of the portfolio.
PORTFOLIO MATRIX SYSTEMATIC PORTFOLIO OPTIMISATION APPROACH
A B C D
CATEGORY A ASSETS Core assets to be developed and produced CATEGORY B ASSETS Core assets to be farmed-down against CAPEX carry CATEGORY C ASSETS Non-core assets to be sold after discovery/ at PDO stage to nance core assets CATEGORY D ASSETS Non-core assets to be farmed-down prior to drilling, alternatively relinquished
GENERAL CATEGORY CONSIDERATIONS: Commercial (asset quality, liquidity, size and WI) Value add potential (de-risking) Economics (ROI, break-even oil price, cash exposure, timing, funding) Prospectivity, technical risk profile and probability of success Aligned operators and partners
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CEOs statement Roar Tessem
12
I am pleased to report that 2009 was a year of substantial development for Spring Energy as it continued to remain focused on a strategy of pursuing attractive growth opportunities in both mature and immature areas of the Norwegian Continental Shelf.
The Company returned a net profit for the year of NOK 32.1 million which is an excellent achievement at such an early stage in its development. There were many important operational and commercial developments for the Company during the year. The most notable were the significant oil and gas discoveries on PL 378 (Grosbeak) and PL 375 (Beta) and the acquisition of a 2.5% interest in the oil producing Brage field from Wintershall Norge ASA in November. The acquisition, which also included an attractive exploration and appraisal portfolio, was made in exchange for a 5% interest in PL 378 and an agreement to carry part of exploration well costs on the exploration and appraisal portfolio. The interest in the Brage field is the first producing asset in the Companys portfolio and represents an important step forward in its intention to become a fully integrated exploration, development and production company. It also demonstrates the Companys ability to transform high quality discoveries into production through a swap structure. Other successes during the year included the acquisition of working interests in three further licenses located in the Northern and Southern North Sea and the award of two new licenses in the 20th Norwegian licensing round. Through successive license applications and farm-in transactions, Spring Energy now has a well balanced portfolio of
twenty exploration, appraisal and producing assets across the NCS. On license PL 407, which contains the Bream discovery, the drilling of a delineation well and two horizontal sidetracks were completed to establish oil and reservoir properties. Various options for the development of the Bream discovery are now being evaluated and it is likely that a Plan for Development and Operation (PDO) will be submitted in 2010. In May 2009, the Ministry of Petroleum and Energy pre-qualified Spring Energy as an operator on the Norwegian Continental Shelf. This demonstrates the authorities recognition that the Company is ready to take on more responsibility as a pro-active and competent player on the NCS. Further support for the Company was demonstrated when a syndicate of international energy-focused banks (Skandinaviska Enskilda Banken, DnB NOR and BNP Paribas), agreed the expansion of a revolving exploration loan facility to NOK 1 000 million. The facility, which was signed in June, was substantially oversubscribed by the banks demonstrating their confidence in the Companys strategy and prospects for future development. The Company is now adequately funded for its forthcoming exploration and appraisal activities and is in an excellent position to take advantage of attractive commercial opportunities as they arise.
The current year will be an extremely active one for the Company with at least seven exploration and appraisal wells planned, including further exploration and appraisal drilling on the exciting licenses PL 375 and PL 378. Elsewhere, there has already been an excellent start to the year with the announcement of a recent award of four further licenses in the APA, bringing the total number of licenses in the Companys portfolio to 24. With the continued support of our financial backer, HitecVision, the confidence of the banks and authorities and the support of our highly experienced team, I look forward to the continuation of the excellent progress already achieved and the creation of further shareholder value in 2010.
Roar Tessem, Chief Executive Officer. 3 March 2010
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A BROAD PORTFOLIO OF ACREAGE
ASSET PORTFOLIO
ASSET PORTFOLIO AS AT 31 DECEMBER 2009
PL 537
PL 475/PL 475BS PL 511 PL 388
PL 375 PL 344/PL 344B PL 509S
PL 519 PL 377S PL 378 Brage Unit
PL 507 PL 341 PL 500 PL 495 PL 411 PL 407 PL 406 PL 405/PL 405B
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ASSET PORTFOLIO
License North Sea PL 341 2) PL 344 PL 375 PL 377 2) PL 378 PL 405 PL 406 PL 407 PL 411 PL 495 PL 500 PL 507 PL 509 PL 055 (Brage field) PL 185 (Brage field) Norwegian Sea PL 388 PL 475 2) PL 511 2) PL 519 Barents Sea PL 537
1) 2)
WI %
Operator
Firm well 1)
10 % 30 % 15 % 20 % 15 % 15 % 20 % 20 % 30 % 40 % 30 % 20 % 30 % 2.5 %
Det Norske Wintershall Petro Canada Idemitsu Wintershall Centrica Premier BG Noreco Lundin Det Norske Wintershall Wintershall Statoil
2010 2011 2010 2011 2010 (#2) 2011 2010
20 % 15 % 10 % 20 %
BG Wintershall Wintershall Lundin
2010 2011 2011
20 %
OMV
2012
Spring Energy was awarded four licenses in 2010. One of the licenses awarded (PL 545) has a firm well commitment that according to plan will be drilled in 2010. This brings the total numbers of wells in the drill queue up from 12 to 13 firm wells. Pending Authority approval.
DISTRIBUTION OF LICENSES
NUMBER OF LICENSES
25
20
15
10
North Sea Norwegian Sea Barents Sea
0 2008 2009 2010
4 licenses awarded in 2010 (APA 2009 award)
15
OPERATIONAL OVERVIEW
Spring Energy has built up a balanced portfolio of 20 licenses in less than 24 months. A significant oil discovery made in Grosbeak has enabled Spring Energy to swap into its first producing asset.
In 2009, Spring Energy has continued to build up a considerable portfolio of assets across the Norwegian Continental Shelf (NCS) which by the end of the year encompassed 20 licenses including one producing asset. In addition the Company was pre-qualified as an operator on the NCS. This was an important milestone for Spring Energy as it is a recognition from the authorities that the Company is capable of taking on the responsibility of an pro-active and competent player on the NCS. During the year Spring Energy participated in two exploration wells both of which resulted in success. In July a discovery was made on the high potential Grosbeak prospect on the PL 378 license (WI 20%) and in December a significant discovery was made in the PL 375 license (Beta prospect, WI 15%). In August the Company announced the successful appraisal of the Bream oil discovery on PL 407 (WI 20%). The discovery in PL 378 was a vindication of Spring Energys decision to acquire a 20% working interest in January 2009. Spring Energy had identified that PL 378 was situated in a prolific petroleum province and in the license itself 11 prospects had been identified. As part of the transaction agreement Spring Energy agreed to carry part of sellers well cost on the first two wells on the license. The first well targeting the Grosbeak prospect was spudded in June and was completed in July. The objective of the well was to prove petroleum in the Viking Group and Brent Groups and hydrocarbons were discovered in both zones. The size of the discovery is estimated to be between 6 and 30 million standard cubic metres (35 190 MMboe) of recoverable oil equivalents. As part of Spring Energys active process of portfolio management, the Company took the opportunity to realise some early value from the Grosbeak discovery by swapping a 5% WI in PL 378 to Wintershall Norway ASA in exchange for an interest in four licenses (PL 341, PL 475, PL 375 and PL 511) as well as a 2.5% interest in the producing Brage field.
DRILL QUEUE RISKED RESOURCE ESTIMATES

140 120 100 80 60 40 20 0 MMboe Cumulative pre-drill risked resource estimates Cumulative post-drill resource estimates
RISKED VERSUS DISCOVERED RESOURCES

35 30 25 20 15 10 5 0 Risked resources Discovered resources MMboe
Grosbeak (PL 378)
Bream (PL 407)
Beta (PL 375)
Beta Extension (PL 375)
Maria (PL 475)
Stirby (PL 341)
Gnatcatcher (PL 378)
Gardrofa (PL 406)
Butch (PL 405)
Apollon (PL 377S)
Rdyr (PL 433)
Mjsa (PL 511)
Albert (PL 519)
Emma (PL 537)
Beta (PL 375)
Bream (PL 407)
Grosbeak (PL 378)
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FIRM DRILL QUEUE AS AT 31 DECEMBER 2009 1)

License Prospect WI % Firm well Gross unrisked MMboe 308.0 27.0 88.0 81.1 142.0 87.0 39.0 103.0 126.0 689.0 433.0 % within license Net unrisked MMboe 30.8 8.1 6.6 16.2 13.8 13.1 7.8 15.5 12.6 137.8 86.6 348.9 Probability of success (%) Risked prospective resources MMboe 7.7 1.8 3.3 5.2 4.7 2.9 2.0 7.4 2.5 38.6 26.0 101.9
PL 341 PL 344 PL 375 PL 377 PL 378 PL 405 PL 406 PL 475 PL 511 PL 519 PL 537 Total
Stirby Rdyr Beta Extention Apollon Gnatcatcher Butch Gardrofa Maria Mjsa Albert Emma
10.0 % 30.0 % 15.0 % 20.0 % 15.0 % 15.0 % 20.0 % 15.0 % 10.0 % 20.0 % 20.0 %
2010 2011 2010 2011 2010 2011 2010 2010 2011 2011 2012
100.0 % 100.0 % 50.0 % 100.0 % 65.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
25 % 22 % 50 % 32 % 34 % 22 % 25 % 48 % 20 % 28 % 30 %
1) Spring Energy was awarded four licenses in 2010. One of the licenses awarded (PL 545) has a firm well commitment that according to plan will be drilled in 2010. In addition an appraisal well will be drilled on the Grosbeak discovery in PL 378.
The PL 378 transaction added significant value for shareholders as the interest in the Brage field provided Spring Energy with its first production. The transaction demonstrated the Companys ability to transform high quality discoveries into production through asset swaps. Furthermore the addition of acreage has enriched the asset portfolio and adds four potentially exciting exploration and appraisal wells to the drill queue. The second area of success occurred in PL 407 (WI 20%) where a successful delineation well was completed on the Bream oil discovery. Bream is located approximately 50 kilometres North West of the Yme field in the North Sea and was originally discovered in 1972. The main objectives of the well were to establish the oil and reservoir properties as well as fluid contacts and all three well tracks proved oil in sandstones with good reservoir properties. The size of the Bream discovery is estimated to be between 6 and 10 million standard cubic metres (38 63 MMboe) of recoverable oil. Various
development options are currently being evaluated and it is anticipated that the license will work towards submitting a PDO for Bream in 2010. Spring Energy also intends to participate in an exploration well on the Gardrofa prospect on the neighbouring license PL 406 (WI 20%). A success on this prospect would only add to the commercial robustness of a potential area development solution that could encompass Bream. In March 2009, Spring Energy successfully acquired a 15% WI in PL 405, located in the Southern North Sea. As part of the transaction Spring Energy agreed to carry part of sellers well cost on the first exploration well to be drilled on the licenses. Later on in December, Spring Energy reached an agreement to acquire a 20% WI in PL 377S, located in the Northern North Sea with the first well due to be spudded in 2011. During 2009, Spring Energy was successfully awarded two licenses in the 20th concession round.
Spring Energy also participated in the successful drilling on the Beta prospect in PL 375 (34/4-11), located 15 km Northwest of the Snorre Field. The objective of the well was to prove hydrocarbons in the Middle Jurassic Brent Group as well as the Lower Jurassic Dunlin Group and Statfjord formation. The well proved oil in the Brent Group and in the Statfjord formation. The size of the discovery is estimated to between 7 and 40 million standard cubic meters (44 - 252 MB) of recoverable oil. Spring Energy has a 15% working interest in the license. DRILL QUEUE Spring Energy has 13 firm wells (including PL 545 awarded in 2010 and the Grosbeak appraisal well) planned over the next three years on a variety of prospects. The total net unrisked volumes to be tested by these wells are 363.1 MMboe. On a risked basis the volume is 106.0 MMboe. Of these prospects, the wells on the Emma and Albert prospects have the highest net unrisked volumes. The net unrisked volumes of the remaining prospects average 13.9 MMboe.
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A GROWING RESOURCE BASE WITH SIGNIFICANT EXPLORATION POTENTIAL
OIL AND GAS RESERVES AND RESOURCES
18
RESERVES Spring Energy calculates reserves and resources according to the Norwegian Petroleum Directorate (NPD) resource classification system as presented in Guidance to classification of Petroleum resources on the Norwegian Continental Shelf . As of 31 December 2009, Spring Energy has 1.0 million barrels (MMboe) of proven and probable oil and gas reserves. All of these reserves are located in the Brage field which was added to Spring Energys portfolio through an asset swap at the end of 2009. The booking of the Brage reserves represents Spring Energys first proven and probable reserves. CONTINGENT RESOURCES In addition to its certified reserves, Spring Energy has a number of discovered oil and gas resources which classify as contingent resources. Spring Energy has an active work programme to mature contingent resources into reserves.
As of 31 December 2009 Spring Energy has an estimated 30.9 MMboe of contingent resources up from 10.4 on 31 December 2008. During 2009, some 2.7 MMboe of contingent resources were added to the portfolio after success in PL 407 where the Bream discovery was successfully appraised. An additional 8.8 MMboe were added in PL 378 with the Grosbeak discovery and another 9.0 MMboe were booked from successful exploration drilling on PL 375. It is anticipated that further appraisal work in 2010 and 2011 will mature these resources into reserves. PROSPECTIVE RESOURCES At the end of 2009, Spring Energy has a portfolio of 20 licenses. As of 31 December 2009 and based on internal estimates these licenses could hold some 176.7 MMboe of risked prospective resources net to Spring Energy. These resources are split between the North Sea (59.5 MMboe), Norwegian Sea (74.4 MMboe) and the Barents Sea (42.8 MMboe).
As of 31 December 2009, the unrisked prospective resources net to Spring Energy were internally assessed to be 788.6 MMboe. Over the next 3 years Spring Energy has a fully funded exploration and appraisal programme of 13 wells (including PL 545 awarded in 2010 and the Grosbeak appraisal well) which aims to test 363.1 MMboe of unrisked prospective resources. The risked prospective resources net to Spring Energy of the 13 firm wells are 106.0 MMboe highlighting the exposure to value that the exciting exploration programme offers. If the risked volume is realised the size of the Company would almost triple its size (on the basis of contingent resources).
PROVEN AND PROBABLE

1,0 0,8 0,6 0,4 0,2 0,0 2008 North Sea 2009 Barents Sea MMboe
35 30 25 20 15 10 5 0 2008 North Sea MMboe
197 % increase from 2008
RISKED PROSPECTIVE RESOURCES

200 150 100 50 0 MMboe
812 % increase from 2008
2009 Barents Sea North Sea
2008
2009 Barents Sea
Norwegian Sea
Norwegian Sea
Norwegian Sea
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GOVERNANCE
The Board believes that sound governance, risk management and control enhance Spring Energys ability to achieve its objectives and create sustainable value for its shareholders and other stakeholders. Spring Energy is transparent in its commitment to best practice in corporate governance, and makes public commitments to its adherence to ethical guidelines and corporate social responsibility. A robust model of governance, risk management and control has been implemented at all Company levels, enabling management and staff to work towards achieving the Companys objectives in the common interest of all stakeholders. The governance model is based on the Norwegian Code of Corporate Governance (NUES), taking into account the private limited company status and current shareholder structure. As the Company moves towards becoming a publicly listed Company, full compliance with the NUES and all Oslo Stock Exchange requirements will be sought. The Companys governance model incorporates governance activities at the shareholder and financial market level, the Board level, and the management level. Interaction occurs between all levels, and risk management and internal control is integrated into the daily operation of the Company. Governance at the shareholder and financial market level occurs through the general meeting, investor relations activities and financial market communications, including financial reporting. Main principles at this governance level include: full and open disclosure about transactions with associates clear policy for shareholder and market communication clear procedure for representation at the general meeting through proxy a nomination committee for the Board of Directors (from 2010) with a mandate to ensure a competent Board representing the interests of all shareholders openness and fairness in remuneration of Board and management members policy for auditor communication with the Board without management presence Board level governance includes setting strategies and objectives for the Company, defining instructions, policies and risk limits, and monitoring operations, reporting and compliance. In order to strengthen the Boards monitoring capacity an Audit Committee will be appointed during 2010. The Board has adopted a risk management policy that requires pro-active identification, mitigation and reporting of all material risks to the Companys corporate objectives. The Board evaluates risks and controls on a continuous basis as an integrated part of decision making, implementation and monitoring. The Board has appointed a Chief Executive Officer (CEO) to act as the Companys principal operational manager. The powers of the CEO are set out by the Board and the CEO is required to work within that mandate and report regularly to the Board. A key governance element at the management level is the Spring Energy business management system, which includes formalised business processes for all main activities in the Company, including business planning, implementation and monitoring. Detailed policies are implemented for finance, investments, project management, financial reporting and HSE&Q. Risk management and internal control is integrated into all activities and levels of the
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SOUND GOVERNANCE ENHANCES SPRING ENERGYS ABILITY TO ACHIEVE ITS OBJECTIVES
SHAREHOLDER
SHAREHOLDER/FINANCIAL MARKETS
General meeting Investor relations Inside information policy
Quarterly interim reports Annual reports Analyst briefings Investor relations activities
BOARD OF DIRECTORS
Strategy and budgets Instructions Policies Risk limits Control activities
Ev al
n tio ua
Ob jec ti
decisions nd sa ve
Operational reports Financial reports Projects and investments Risk events and exposures Control execution
Continuous monitoring
g tin or
Im pl
CEO
BUSINESS PLANNING: Strategy and budgets Action plans Management systems
EXECUTIVE MANAGEMENT
on tati en em
Re p
BUSINESS MONITORING: Executive management team (EMT) meetings Project management Management systems
21
Company. Internal controls take a variety of forms as appropriate to the circumstances but are designed to detect weaknesses in the system and provide appropriate information to management to allow for proper and timely management action. Each year, the Company undertakes both a top-down (driven by the Board) and a bottom-up (driven by the business areas and operations) evaluation of the risk environment. The assessment process is action oriented and designed to identify: material risks the Company is exposed to what the Company does to mitigate risks whether additional measures are necessary to reduce the risk to an acceptable level
Risks identified in the process are prioritised, and appropriate actions are formalised and implemented through the business management system. Key control elements are subjected to independent monitoring. As the risk environment evolves over time the business management system continuously identifies new and emerging risks, and ensures evaluation, mitigation and reporting to the appropriate level, and if necessary, all the way to the Board. Risk management and internal control in Spring Energy is based on the Enterprise Risk Management (ERM) framework by the Commission of Sponsoring Organisations of the Treadway Commission (COSO).
COSO provides a disciplined and consistent standard against which to implement and assess a companys ERM programme. The standard is a widely accepted framework for internal control and risk assessment.
22
RISK MONITORING AND CONTROL DESIGN AND IMPLEMENTATION OF SYSTEMS
DEVELOP AND IMPLEMENT COST-EFFECTIVE PROCEDURES TO EVALUATE INFORMATION THAT RELATES TO OPERATIONAL CONTROL
4
IMP LE M E
T N
NG ORI NIT O M
1
PR IO RI T
UNDERSTAND AND PRIORITISE RISK AGAINST OPERATIONAL OBJECTIVES
E IS
K RIS
ON ATI RM FO IN
I DE NT IF
IDENTIFY INFORMATION THAT INDICATES WHETHER THE INTERNAL CONTROL SYSTEM IS OPERATING EFFECTIVELY
LS RO NT CO
ID EN TI FY
IDENTIFY KEY CONTROLS ACROSS THE INTERNAL CONTROL SYSTEM THAT ADDRESS THOSE PRIORITISED RISKS
23
AN INVESTOR IN PEOPLE, SAFETY AND THE ENVIRONMENT
HEALTH, SAFETY, ENVIRONMENT AND QUALITY

The health and safety of every employee and contractor is of paramount importance to the Company. They are our most important asset and we will continuously strive to ensure compliance with best industry practise in health, safety, environment and quality standards.
Corporate and operational procedures are in place that guide all members of the Company at all levels to adhere to the following principles: Creation of a safe work environment Minimisation of the environmental impact of all operations Pro-active co-operation with authorities and partners with respect to health, safety, environment and quality related issues Review and report environmental and safety performance Promptly and effectively respond to any environmental or safety risks and concerns In the event of an incident the Company has emergency response and crisis management procedures in place. There were no reported incidents in 2009. CORPORATE SOCIAL RESPONSIBILITY We are committed to conducting all of the affairs of the Company in a socially responsible manner. This applies to the relationship with all of our stakeholders and the environment in which we operate. BUSINESS ETHICS It is vitally important that every member of the team understands and shares the core values of the Company and its standards of business conduct. Our principal value is that all aspects of the Companys operations must be lawful and safe and are conducted in an ethical, honest and fair manner and that employees act with the utmost integrity. Each member of our team is given adequate training to ensure that all of our key values are met and understood. Our other key values are: An awareness and compliance with all applicable laws, rules and regulations. Compliance with accounting regulations, policies and procedures. Ensure full, fair, accurate, timely and understandable public disclosure in reports and documents that are filed with or submitted to all regulatory bodies and in all other public communications.
24
RESPONSIBLE AND ACCOUNTABLE MANAGEMENT AND EMPLOYEES
ETHICAL GUIDELINES The Company shall maintain a high ethical standard in its business conduct and relations with customers, suppliers and employees. The following ethical guidelines shall be practised in the Company, and shall apply to all employees of the Company: 1. Personal conduct: All employees and representatives of the Company shall behave with respect and integrity towards business relations and partners, customers and colleagues. The Management Team has a particular responsibility to promote openness, loyalty and respect. 2. Conflict of interests: The Companys employees or representatives shall avoid situations whereby a conflict between their own personal and/or financial interests and the Companys interests may occur.
3. Confidential information: Employees or representatives of the Company possessing confidential information related to the Company, shall conduct themselves and safeguard such information with great care and loyalty, and comply with any and all signed confidentiality statements. 4. Intra-company communication: The Company shall ensure openness and arrange for accessible communication channels allowing employees to report to the Board any illegal or unethical conduct by the Company. 5. Influence: The Companys employees or representatives shall neither directly nor indirectly offer, promise, request, demand or accept illegal or unjust gifts of money or any other remuneration in order to achieve a commercial benefit.
6. Competition: The Company supports fair and open competition. The Companys employees or representatives shall never take part in any activities that may constitute a breach of competition legislation. 7. Breach of ethical guidelines: Any breach of these ethical guidelines may lead to severe consequences for the Company, and any breach may have severe consequences for the employment of the person in question.
25
ACCOUNTABLE TO SHAREHOLDERS
OUR TEAM
PREVIOUS PREVIOUS EMPLOYERS AGE EMPLOYERS EMPLOYERS PREVIOUS
AGE AGE
EXPERIENCE EXPERIENCE EXPERIENCE
DNO International/NOIL/DetInternational/NOIL/Det norske oljeselskap DNODNO norske oljeselskapnorske oljeselskap years International/NOIL/Det 20-30 StatoilHydro/Norsk Hydro/Saga Petroleum Hydro/Saga Petroleum years StatoilHydro/Norsk Hydro/Saga Petroleum StatoilHydro/Norsk 31-40 RWE-Dea/Deminex RWE-Dea/Deminex RWE-Dea/Deminex 41-50 years PGS PGS PGS 51-60 years Exxon/Esso Norge Exxon/Esso Norge Exxon/Esso Norge Other Other Other
20-30 yearsyears 20-30 31-40 yearsyears 31-40 41-50 yearsyears 41-50 51-60 yearsyears 51-60
0-10 years 11-20 years 21-30 years 31-40 years
0-10 yearsyears 0-10 11-20 yearsyears 11-20 21-30 yearsyears 21-30 31-40 yearsyears 31-40
FUNCTION FUNCTION FUNCTION

26
GENDER GENDER GENDER
EDUCATION EDUCATION EDUCATION
EVERY VOICE COUNTS IN OUR TEAM
It is the Companys policy that every member skills, experience and competence. We of our team is not only actively encouraged recognise the importance of retaining and to make a valuable contribution to the attracting good people and so we invest Companys development but is also rewarded continuously in professional training and by a share of its success. In addition to a personal development in order to create competitive compensation and rewards an environment that is both exciting and package, all management and employees whilst S EMPLOYERS PREVIOUS EMPLOYERS AGE AGE EXPERIENCE EMPLOYERS challengingAGE meeting career aspirations. PREVIOUS EXPERIENCE Together we recognise that as a team we are are shareholders in the company. Our responsible for the success of the Company bonus structure is designed to encourage We are an equal opportunity employer and which will return value to our shareholders each employee to invest in the shares of the do not discriminate on the grounds of gender, and other stakeholders. We ensure that each Company so that their contribution to value disability or race. member of our team is clear about our strategy creation may be directly rewarded. and vision and the role they will play in our achievements. We welcome contributions and We are a multi faceted team with onal/NOIL/Det norske oljeselskap DNO International/NOIL/Det norsketeam at 20-30 years 20-30 years skills. Each member of 0-10 DNO 0-10 suggestions from all members of our oljeselskap complementary years International/NOIL/Det norske oljeselskap years 20-30 years Norsk Hydro/Saga Petroleum StatoilHydro/Norsk 31-40 31-40 11-20 years regular managementyearsHydro/Saga Petroleum and team meetings. the team isyears StatoilHydro/Norsk Hydro/Saga Petroleum 11-20 years 31-40 years carefully selected for their minex RWE-Dea/Deminex 41-50 years 41-50 years RWE-Dea/Deminex 21-30 years 21-30 years 41-50 years
PGS 51-60 years Exxon/Esso Norge Other 51-60 years PGS 31-40 years Exxon/Esso Norge Other 31-40 years 51-60 years
At Spring Energy we pride ourselves on our enthusiastic and motivational team spirit. We recognise that the quality of our employee base is of vital importance to the Companys successful development and we have worked hard to attract the right team of people.
EX
0 1 2 3
orge
FUNCTION GENDER
GENDER EDUCATION FUNCTION
EDUCATION GENDER
ED
planning d business development nd subsurface dministration
Drilling Male Development planning Female Production and business development Exploration and subsurface Finance and administration Management
Male Data Management Drilling Female Finance and business administration Development planning Petroleum Engineering Production and business development Geology Exploration and subsurface Geophysics and administration Finance Management
Data Management Male Finance and business administration Female Petroleum Engineering Geology Geophysics
D F P G G
27
MANAGEMENT
28
ROAR TESSEM
Position: Chief Executive Officer Born: 1956 Education: Master of Science, Petroleum Engineering, NTNU, Trondheim, Norway Previous positions: Det norske oljeselskap AS: Managing Director PGS Reservoir Consultants: Managing Director DNO, Deminex, Norske Shell and Elf Aquitaine: Various technical positions Experience: Various managerial and technical positions within the E&P industry, both in oil and gas companies as well as in the oil service industry
LARS HUSBY
Position: Chief Financial Officer Born: 1969 Education: Master of Business and Administration from Norwegian School of Economics and Business Administration, Bergen. Bachelor with Honors in Business and Administration from Heriott Watt University, Edinburgh, Scotland Previous positions: Opra Technologies ASA: Chief Financial Officer DNO ASA: Finance Manager Norske Skogindustrier ASA: Audit Manager / Business Controller Experience: Experience from various finance related positions, both in large listed companies and in start-ups
PER-GUSTAV GRANHOLM
Position: Director Exploration Born: 1960 Education: Master of Science, Applied Geophysics, University of Oslo, Norway Previous positions: Det norske oljeselskap/NOIL Energy: Exploration Manager Pelican/DONG Norge: Advisor and Chief Geophysicist PSS-Geo: Co-founder and General Manager Exxon New Orleans: Reservoir Geophysicist Saga Petroleum: Various G&G positions Experience: Various positions within E & P industry with main focus on exploration and prospect evaluation
JRN ROKK
Position: Director Production and Business Development Born: 1967 Education: MSc in Petroleum Engineering from NTH (NTNU), Trondheim, Norway Previous positions: Det norske oljeselskap AS: Chief Reservoir Engineer, Business Development responsible on NCS & UKCS PGS Reservoir Consultants: Principal Reservoir Engineer, Business Development for PGS Production Esso Norge AS: Reservoir Coordinator-Jotun Project; Senior Reservoir Engineer Imperial Oil (Canada): Reservoir Operations Engineer Experience: Various technical and business development positions within the E&P industry
JOHN MAGNE BIRKELAND

Position: Director HSEQ Born: 1962 Education: Bachelor of Business Administration from the Norwegian School of Management, Oslo, Norway Master of Management Program (Energy and International Management) from the Norwegian School of Management, Oslo, Norway Previous positions: Acona CMG AS: HSE & Q Manager and Senior Partner Scandpower Risk Management: Principal Consultant Office of the Auditor General, Senior Auditor Experience: Various managerial positions with main focus on risk management issues
JAN CHRISTIAN ELLEFSEN

Position: Director Development and Facilities Born: 1964 Education: Royal Naval Academy, Bergen, Norway. Bachelor of Engineering (Offshore Mechanical with Honors) from Heriott Watt University, Edinburgh, Scotland Previous positions: Aibel/Vetco Aibel: Vice President Floating Production, Proj. Dir. ABB: Vice President Engineering, Department Manager (Proj. Man.) Umoe: HSEQ Manager DNV: Senior Safety & Reliability Engineer Experience: Experience from various positions within the E & P industry
BJARNE SYRSTAD
Position: Director Drilling Born: 1968 Education: MSc in Petroleum Engineering, University of Trondheim, Norway Previous positions: Det norske oljeselskap ASA: Drilling Manager DNO: Drilling Manager Norsk Hydro E & P: Drilling Superintendant Head of Drilling Technology Experience: Various positions within E & P companies with main focus on the NCS, but also supported several drilling and technology project in the Middle East and Gulf of Mexico.
29
BOARD OF DIRECTORS
30
THORLEIF ENGER
Position: Chairman of the Board Elected: 2008 Born: 1943 Committees: Remuneration Committee Nationality: Norwegian Other board positions: FMC Technologies, Acergy, E.On. Ruhrgas, Marine Harvest, Spring Energy Exploration AS Education: Ph.D. from the University of Colorado in USA Experience: More than 30 years of experience from various oil and gas related companies
GUNNAR HALVORSEN
Position: Board Member Elected: 2008 Committees: Remuneration Committee Born: 1961 Nationality: Norwegian Other board positions: Spring Energy Exploration AS Education: Master of Science, University of Colorado, Boulder, USA. Bachelor of Business and Administration, University of Wisconsin, USA Experience: 20 years of experience ranging from the E & P industry to finance and banking
DAG W. REYNOLDS
Position: Board Member Elected: 2008 Committees: None Born: 1965 Nationality: Norwegian Other board positions: Spring Energy Exploration AS Education: Master of Science, University of Oslo, Norway Experience: More than 20 years experience in the offshore industry
PL REIULF OLSEN
Position: Board Member Elected: 2010 Committees: None Born: 1959 Nationality: Norwegian Other board positions: Spring Energy Exploration AS Education: CPA authorisation Master of Business and Administration from Norwegian School of Economics and Business Administration, Bergen. Experience: 20 years of experience in the oil and gas sector. Joined HitecVision in November 2009
ROB ARNOTT
Position: Board Member Elected: 2010 Committees: None Born: 1958 Nationality: British Other board positions: Spring Energy Exploration AS Petroceltic International PLC, Impax Environmental Markets PLC Education: D.Phil from the University of Oxford Experience: Over 25 years experience in the oil and gas business including 10 years in investment banking
31
32
FINANCIAL CONTENT
Directors Report Financial Statements Notes to the accounts Auditors report Glossary 34 40 46 63 64
33
DIRECTORS` REPORT 2009

2009 was a year of substantial development for Spring Energy as the Company continued to remain focused on its strategy of pursuing attractive growth opportunities on the Norwegian Continental Shelf. During the year the Company added a further 11 licenses and ended the year with a portfolio of 20 licenses including one producing asset. During the year Spring Energy recorded significant exploration success in two licenses. In PL 378 and PL 375 oil and gas were discovered in the Grosbeak and Beta prospects and in PL 407 oil was successfully appraised in the Bream discovery. At the year end the Company had booked contingent resources of 30.9 MMboe up from 10.4 MMboe a year earlier. Spring Energy added significant value for shareholders by swapping a portion of the Grosbeak discovery in PL 378 for an interest in the Brage field. This has provided the Company with its first production meeting one of its key objectives to become a full cycle E&P company. Financially, Spring Energy remains in a strong position with the drill queue fully funded for the next 36 months. The gain from the asset swap has enabled Spring Energy to record a profit in its second full year of trading.
ABOUT SPRING ENERGY Spring Energy is an exploration, development and production focused oil and gas company. Spring Energy was established in October 2007 with operations commencing 1 March 2008. The Companys main business is to explore for, develop and produce oil and natural gas. Spring Energy is headquartered in Oslo, Norway. Spring Energys financial statements are prepared on a consolidated basis. For ease of reference throughout this Directors Report, terms the Group, the Company and Spring Energy are used to refer
34
collectively to Spring Energy Norway AS and its subsidiary Spring Energy Exploration AS. This Directors report covers the activities of both the Group and the Parent company. STRATEGIC ACHIEVEMENTS During 2009 Spring Energy has successfully accomplished many of the milestones the Company set out to achieve: During the last twelve months, Spring Energy has grown its risk-balanced portfolio of high potential prospects in the early phases of the value chain with the addition of a further 11 licenses
With a highly competent and qualified organisation, the Company has been prequalified as an operator on the Norwegian Continental Shelf The Company has participated in a number of successful exploration wells which have added 20 MMboe of contingent resources during the year By swapping a portion of one of the discoveries, the Company has secured its first producing asset
NUMBER OF LICENSES
20 15 10 5 0 2008 2009
40 30 20 10 0 2008 2009 MMboe
NET PROFIT/(LOSS)
35 25 15 5 -5 -15 -25 -35 2008 2009 NOK mill
The Group recorded a net profit for the year of NOK 32.1 million in its second year of trading after realising a gain from the swap of a part of its Grosbeak discovery The Groups finances remain robust with the support of the USD 120 million in equity from HitecVision Private Equity. In addition, the exploration loan facility was expanded during the year to NOK 1 000 million THE FINANCIAL STATEMENTS Pursuant to the 3-3a of the Norwegian Accounting Act the Board of Directors confirms that the conditions for continued operations as a going concern are present for the Parent Company and for the Group and that the annual financial statements for 2009 have been prepared on the basis of this presumption. The Board of Directors of Spring Energy Norway AS expresses that the annual financial statements for the Parent company and for the Group represent a true and fair view of the financial position at 31 December 2009. The annual financial statements for the Parent Company and for the Group have been prepared according to NGAAP (Norwegian Generally Accepted Accounting
Principles). The reporting period for the financial statements is 1 January 2009 to 31 December 2009. CONSOLIDATED INCOME STATEMENTS Spring Energy had NOK 90.0 million in income in 2009, an increase of NOK 88.8 million from the preceding year. The increase was mainly contributed by a gain realised as part of swapping 5% in the Grosbeak discovery into 2.5% in the Brage unit. Spring Energy has implemented the successful efforts method to account for its oil and gas activities. According to the successful efforts method all exploration costs with the exception of acquisition costs of licenses and drilling costs of exploration wells, are charged to the income statement as incurred. Drilling costs of exploration wells are temporarily capitalised pending the determination of oil and gas reserves. If reserves are not found, the drilling costs of exploration wells are expensed. Accumulated operating costs at the end of 2009 amounted to NOK 225.8 million of which NOK 209.7 million were classified as exploration expenses. The comparative figures for the preceding year were NOK 136.4 million and NOK 127.6 million
respectively. The exploration expenses for the period include acquisition, processing and analysis of seismic data, regional studies, license related costs and allocation of own cost including G&A. Net financial expenses for the period were NOK -11.1 million, up from NOK -3.2 million from last year. The increase in net financial expenses is mainly related to funding of higher exploration activity in 2009 than in 2008 and the increase in the exploration loan facility in 2009. Accumulated loss before income tax at the end of 2009 amounted to NOK -147.0 million, an increase from the NOK -138.5 million reported at the end of 2008. For 2009 Spring Energy reported a tax income of NOK 179.1 million, up from NOK 106.2 million for 2008. Net profit for the period amounted to NOK 32.1 million. The Group reported a loss of NOK 32.3 million in the preceding period. CONSOLIDATED CASH FLOW STATEMENTS Net cash flow from operating activities was NOK 34.4 million in the reporting period.
35
OTHER INCOME
100 80 60 40 20 0 2008 2009 NOK mill
TOTAL ASSETS
1000 800 600 400 200 0 2008 2009 NOK mill
OIL AND GAS PROPERTIES

120 100 80 60 40 20 0 2008 2009 NOK mill
During the reporting period covered by this report, Spring Energy had net cash flow to investing activities of NOK 280.2 million. The main investment activities include acquisitons of licenses as well as drilling of exploration and appraisal wells. Net cash flow from financing activities was NOK 300.6 million in 2009. This figure comprises proceeds from borrowings of NOK 172.8 million under the Companys exploration loan facility, the net share capital increase of NOK 143.8 million as well as financial expenses. At the end of 2009 cash and cash equivalents was NOK 109.1 million, up from NOK 54.3 million reported at the end of 2008. CONSOLIDATED BALANCE SHEET STATEMENTS The total assets amounted to NOK 883.3 million at the end of 2009, of which total noncurrent assets represented NOK 387.5 million. Oil and gas properties at the end of 2009 amounted to NOK 112.8 million and relates entirely to the 2.5% working interest in the Brage field acquired in 2009. As described earlier in this report, Spring Energy accounts for its oil and gas activities according to the successful efforts method. According to the successful efforts method,
36
all drilling costs of successful exploration and appraisal wells are capitalised. At the end of 2009, capitalised exploration and acquisition cost amounted to NOK 222.5 million, up from NOK 32.1 million at the end of 2009. The increase of NOK 190,4 million was mainly contributed by significant exploration and appraisal successes in three licenses. In PL 378 and PL 375 oil and gas were discovered in the Grosbeak and Beta prospects adding more than 17.8 MMboe in contingent resources. In PL 407 oil was successfully appraised in the Bream discovery. Tax receivables amount to NOK 382.5 million, up from NOK 179.6 million at the end of 2008 following a step up in the Companys exploration and appraisal activities from last year. Year end cash position amounted to NOK 109.1 million, an increase of NOK 54.8 million when compared to last year. Equity amounted to NOK 297.9 million at year-end, up from NOK 121.6 million at year end 2008. Total interest bearing debt was NOK 260.0 million at the end of 2009, where the entire amount represents drawdowns on the revolving exploration loan facility signed
with Skandinaviska Enskilda Banken, DnB NOR and BNP Paribas in 2009. PARENT COMPANY FINANCIAL STATEMENTS AND ALLOCATION OF PROFITS Net profit for the parent company Spring Energy Norway AS, was NOK 34.5 million, allocated to retained earnings. Equity amounted to NOK 309.6 million at year-end. EVENTS AFTER THE BALANCE SHEET DATE In January 2010 Spring Energy was awarded 4 licenses in the APA 2009 round. One of the licenses has a firm well commitment. Following the award, the Group now holds a total of 24 licenses on the Norwegian Continental Shelf. At the end of January 2010, the Company was awarded NCS Business Developer of the year by Rystad Energy for having developed a portfolio that includes production, material discoveries and high potential exploration acreage in less than 2 years. RISK FACTORS Spring Energy is subject to a variety of inherent risks deriving from the nature of the oil and gas exploration and production business.
CAPITALISED EXPLORATION AND ACQUSITION COST

250 200 150 100 50 0 2008 2009 NOK mill
SEISMIC AND OTHER EXPLORATION COST EXPENSED

250 200 150 100 50 0 2008 2009 NOK mill
CASH POSITION
120 100 80 60 40 20 0 2008 2009 NOK mill
The Board of Directors is responsible for the development of a risk management strategy and processes within the Group and for overseeing the implementation of the requirements of this strategy. It does this by ensuring that the framework for the identification, assessment, mitigation and reporting on all areas of risk is fit for purpose and that appropriate systems and procedures are in place in relation to these risks. The Groups strategic risk identification process feeds into the annual strategy review as part of the overall annual planning cycle. Annual objectives and targets covering key company activities are established with the identification, management and reporting of risk as an integrated part of the process. Risk is inherent across the Groups operations, and all activities with a potential corporate or business impact are subject to an appropriate review to ensure that risks can be mitigated and controlled. OPERATIONAL RISKS Operational risks are dependent on the continued performance of the Companys operational assets. Future production of crude oil and natural gas is dependent on the Companys ability to find, or acquire and develop reserves
and resources. Environmental, geological and infrastructural conditions are often challenging and as a consequence costs can be higher than originally estimated. Cost of exploration, including seismic acquisition and drilling of wells, is often uncertain. As a result, the Group may incur cost overruns or may be required to curtail, delay or cancel exploration efforts. CREDIT RISKS A credit risk arises if a customer or other counterparty to a financial instrument fails to meet its contractual obligations. Spring Energy has no significant exposure to credit risk from its operating activities. FINANCING AND LIQUIDITY RISKS Liquidity risks arise from not having the necessary resources available to meet maturing liabilities with regard to timing, volume and currency structure. Based on Spring Energys current available credit lines and business model, the Group regards the occurrence probability of financing and liquidity risks, which could also lead to significant higher interest costs, as low. Nevertheless, it is important to note that failure to maintain liquidity could have a high financial impact on the Groups performance.
CURRENCY RISKS Currency risks for Spring Energy are a direct result of multi-currency cash flows within the Group. The biggest single driver behind this risk results from the mismatch of the currencies required for funding exploration and development initiatives versus the denominations of a large part of the Spring Energys funding sources. INTEREST RISKS Changes in market interest rates affect future interest payments for variable-interest liabilities. As a result, significant interest rate increases can have an adverse effect on the Groups profitability, liquidity and financial position. EQUAL OPPORTUNITY EMPLOYER Spring Energy is committed to be viewed as an attractive employer for all groups of prospective employees in all their practices. All employees and applicants will be provided equal employment opportunities without regard to age, race, colour, creed, sex, sexual orientation, national origin, religion, marital status, disability, or any other protected status. Spring Energy requires that all employees cooperate fully to ensure the fulfilment of this commitment in all actions and decisions, including hiring, promotions, upgrades, transfers, layoffs, training, education,
37
NUMBER OF EMPLOYEES
25 20 15 10 5 0 2008 2009
MALE VS FEMALE EMPLOYEES
SICK LEAVE
2,5 2,0 1,5 1,0 0,5 %
Male
Female
0,0 2008 2009
pay, benefits, and social and recreational programmes. Selection of personnel for hiring and promotion is based on such factors as education, experience, proven skills, initiative, dependability, cooperation, availability, and growth potential. Employees are encouraged to recommend for promotion those individuals whose past performance demonstrates an ability to assume greater responsibility. Such recommendations are in no way allowed to be influenced by an individuals race, sex, or other protected factors. Female employees made up 21% percent of the total number of employees at year end. Currently, no member of the Board of Directors is female. HEALTH, SAFETY AND ENVIRONMENT Health, safety and environmental care is a top priority with Spring Energy. The Group aims to carry out its operations to the best health and safety standards and seek to promote a strong safety-oriented culture. Spring Energy experienced no major accidents, injuries, incidents or any environmental claims during the year. In general, the working environment in Spring Energy is satisfactory. Absence on sick leave was 2.04% percent in 2009. Spring
38
Energy aims to keep sick leave at low levels by continuously improving the working and safety conditions. Spring Energy is continuously working on assuring the quality in its entire operations. The operations of the Group could potentially pollute the external environment, and the Company together with its Joint Venture partners work actively on measures that can reduce any negative impact on the environment. Spring Energys operations are within the environmental requirements set by the authorities and its activities satisfied all statutory environmental requirements. SHAREHOLDER RELATIONS In spite of being a non-listed company, Spring Energy puts emphasis on transparency and equal treatment of all shareholders. Spring Energys share capital is divided into common shares and two classes of preference shares. The three share classes are subject to various differences with regard to distribution rights and voting rights pursuant to the provisions set out in the Shareholders Agreement. At the shareholders meeting held on 19 February 2010 it was decided to increase the share capital by issuing new preference A and B shares by way of conversion of an amount from the share premium account
into share capital. The reason for this proposal is to ensure that the capital structure reflects the actual ownership in the Company. As of 31 December 2009 Spring Energy had 38 shareholders. The Investor Relations function in Spring Energy is covered by the Groups CEO and CFO, who will attend to any shareholder matters. Spring Energy will proactively seek to provide investors all details to enable them to assess Spring Energys true financial position as well as risks and opportunities facing the Company. GOVERNANCE The foundation of good governance is a sound company culture underpinned by adequate operational and financial control systems. The Board of Directors of Spring Energy seeks to provide effective governance of business and affairs to ensure long-term benefits for the Companys stakeholders. For more information on Governance, see page 20.
NUMBER OF LICENSES
20 15 10 5 0 2008 2009
WELLS IN DRILL QUEUE

15 12 9 6 3 0 2008 2009
NET RISKED RESOURCES TARGETED IN DRILL QUEUE

120 100 80 60 40 20 0 2008 2009 MMboe
OUTLOOK The Board of Directors believes that the longterm market fundamentals for the upstream oil and gas industry in Norway will be strong. Following Spring Energys successful performance in 2009, the Company has established a solid platform for further growth and value creation. The Board believes that further investment into organic
growth through an extensive exploration and appraisal programme will continue to deliver superior shareholder returns. Spring Energy will also actively pursue opportunities to further expand its oil and gas portfolio and will increase its reserves and resources through acquisition of producing properties, exploration activity and exploitation of existing assets.
In addition the Board of Directors will consider corporate transactions that contribute to the value creation for the Companys shareholders and support Spring Energys long-term strategic objectives.
Oslo, 3 March 2010
Thorleif Enger Chairman of the Board
Gunnar Halvorsen Board Member
Dag Wilfred Reynolds Board Member
Pl Reiulf Olsen Board Member
Rob Arnott Board Member
Roar Tessem Chief Executive Officer
39
FINANCIAL STATEMENTS
CONTENT
SPRING ENERGY
Consolidated Income Statements ............................................................................................. 41 Consolidated Balance Sheets .................................................................................................... 42 Consolidated Cash Flow Statements ........................................................................................ 44 Consolidated Statements of Changes in Equity...................................................................... 45
NOTES TO THE ACCOUNTS

Note 1. Note 2. Note 3. Note 4. Note 5. Note 6. Note 7. Note 8. Note 9. Note 10. Note 11. Note 12. Note 13. Note 14. Note 15. Note 16. Note 17. Note 18. Note 19. Note 20. Note 21. Note 22.
Summary of accounting policies ........................................................................... 46 Segment information .............................................................................................. 51 Other income ........................................................................................................... 51 Operating expense by nature ................................................................................. 51 Seismic and other exploration cost expensed ...................................................... 51 Personnel expense ................................................................................................... 52 Share options and share-based payments ............................................................ 53 Financial items ......................................................................................................... 53 Taxes .......................................................................................................................... 53 Intangible assets ....................................................................................................... 55 Property, plant and equipment .............................................................................. 56 Other receivables and non-current assets ............................................................ 56 Cash, cash equivalents ............................................................................................ 56 Interest bearing liabilities ....................................................................................... 57 Financial risk management .................................................................................... 58 Other current liabilities .......................................................................................... 59 Shareholders and share information ..................................................................... 59 Dividends paid and proposed ................................................................................ 60 Group companies .................................................................................................... 60 Commitments and contingencies ......................................................................... 60 Significant transactions in 2009 and events after the balance sheet date ......... 61 Reserves (unaudited) .............................................................................................. 62
40
SPRING ENERGY
CONSOLIDATED INCOME STATEMENTS
NOK 000 Sales Cost of goods sold Gross profit Other income Seismic and other exploration cost expensed General and administrative costs Profit / loss (-) from operating activities Finance income Finance costs Net finance Profit / loss (-) before income tax Income tax expense (-) / income Net profit / loss (-) 9 3 4,5 4,5,6,7,11 Note 2009 - - - 89967 -209696 -16074 -135802 18637 - 29816 -11180 -146981 179067 32086 2008 - - - 1162 -127621 -8818 -135277 1735 - 4987 -3252 -138529 106194 -32335
8 8
41
CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER

NOK 000 ASSETS Non-current assets Intangible non-current assets Capitalised exploration and acquisition costs Goodwill Deferred income tax asset Total non-current intangible assets Tangible non-current assets Oil- and gas properties Furniture, fixtures and office machines Total tangible non-current assets Financial non-current assets Other financial non-current assets Total financial non-current assets Total non-current assets Current assets Tax receivable, exploration refund Other receivables Cash and cash equivalents Total current assets TOTAL ASSETS Note 2009 2008
10,14 10,21 9
222548 35444 - 257992
32109 - 8347 40456
11,21 11
112800 2646 115 446
- 2345 2345
12,21
14 050 14 050 387488
42801
9,14 12 13,14
382546 4237 109071 495855 883342
179563 2710 54308 236581 279382
42
CONSOLIDATED BALANCE SHEETS AS OF 31 DECEMBER

NOK 000 EQUITY AND LIABILITIES Equity Paid in capital Share capital Share premium account Other paid in capital Capital increase under registration with the Norwegian Company Register Total paid in capital Retained earnings Total equity Non-current liabilities Deferred income tax liabilities Retirement benefit obligations Provisions for other liabilities and charges Total non-current liabilities Current liabilities Interest-bearing liabilities Income taxes payable Other current liabilities Total current liabilities Total liabilities TOTAL EQUITY AND LIABILITIES Note 2009 2008
17 7
646 253535 267 43686 298133 -243 297890
594 153073 267 - 153934 -32335 121599
9 20,21
143157 - 35050 178207
221 - - 221
14 16
259967 147279 407246 585452 883342
87188 - 70374 157562 157783 279382
Oslo, 3 March 2010
Thorleif Enger Chairman of the Board
Gunnar Halvorsen Board Member
Dag Wilfred Reynolds Board Member
Pl Reiulf Olsen Board Member
Rob Arnott Board Member
Roar Tessem Chief Executive Officer
43
CONSOLIDATED CASH FLOW STATEMENTS

NOK 000 Operating activities Profit / loss (-) from operations before exploration expenses - Exploration cost expensed Profit / loss (-) from operations Adjustments for: Tax refund NCS exploration cost Depreciation and amortisation Share based remuneration (Gain) / loss on sale of intangible assets Financial income Exchange rate gains / losses (-) Changes in working capital: - Trade and other receivables - Accounts payable and other accrued liabilities Net cash used in (-) / from operating activities Investing activities Purchases of licenses and fixed assets, drilling of exploration wells Proceeds from sale of PP&E Acquisition of subsidiary Net cash used in (-) / from investing activities Financing activities Proceeds from borrowings Net share capital increase Financial expenses Net cash used in (-) / from financing activities Net increase / decrease (-) in cash and cash equivalents Cash and cash equivalents at beginning of the period Cash and cash equivalents at end of the period 13 Note 2009 2008
73894 -209696 -135802
-7656 -127621 -135277
9 11 7 21 8 8
179597 713 - -89512 8227 -3380 -1527 76104 34421
- 401 106 - 1589 -3265 -2710 44621 -94535
16
10,11
-280221 - - -280221
-82309 - -6440 -88749
14 8
172779 143812 -16027 300564 54764 54308 109071
87188 151980 -1577 237591 54308 - 54308
44
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Share capital 594 - - - - -7 59 646 Share premium account 153073 - - - - - 100461 253535 Other paid in capital 267 - - - - - - 267 Capital increase under registration - - - - - - 43686 43686 Retained earnings -32335 - 32086 32086 - 7 - -243 Total equity 121599 - 32086 32086 - - 144206 297890
NOK 000 Balance at 1 January 2009 Net income / expense (-) recognised directly in equity Profit / loss (-) for the period Total recognised income / loss (-) for the period Share based compensation Redemption of shares Share issues, net of issue costs Balance at 31 December 2009
45
NOTES TO THE ACCOUNTS

NOTE 1. SUMMARY OF ACCOUNTING POLICIES
PRINCIPAL ACTIVITIES AND CORPORATE INFORMATION Spring Energy Norway AS (the Company, the Group or Spring Energy) is an oil and gas exploration company operating on the Norwegian Continental Shelf. Spring Energy Norway AS is a limited liability company incorporated and domiciled in Norway. Its registered office is at Tordenskioldsgate 6B, 0160 Oslo, Norway. Spring Energy Norway AS is the ultimate parent of the Group. The consolidated financial statements of Spring Energy Norway AS and its subsidiary have been prepared in accordance with the Norwegian Accounting act of 17. July 1998. Spring Energy Norway AS was established 19 October 2007 and the consolidated income statement for 2008 comprises both 2007 and 2008 activity. The consolidated financial statements were approved by the Board of Directors on 3 March 2010. USE OF ESTIMATES AND JUDGEMENTS The preparation of financial statements requires management to make judgements, use estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, revenues and expenses. Although these estimates are based on managements best knowledge of historical experience and current events, actual results may differ from these estimates. The estimates and the underlying assumptions are reviewed on an ongoing basis. Changes in estimates will be recognised when new estimates can be determined with certainty. Currently, the Groups most important accounting estimates are related to the following item: Exploration and evaluation assets: One of the critical estimates influencing carrying amount is related to valuations in connection with acquisitions. Another critical estimate is the impairment testing of exploration and evaluation assets. Such testing is based on judgement involving evaluations of future plans for such prospects and estimates of possible contingent reserves. GROUP ACCOUNTING AND CONSOLIDATION PRINCIPLES Subsidiaries The consolidated financial statements of Spring Energy Norway AS include the financial statements of the Parent Company, Spring Energy Norway AS, and its subsidiary. A subsidiary is an entity in which Spring Energy either owns, directly or indirectly, over 50% of the voting rights, or otherwise has the power to govern their operating and financial policies. Share options, convertibles and other equity instruments are considered when assessing whether an entity is controlled. Acquisitions of subsidiaries that are purchases of businesses are accounted for using the purchase method of accounting. The cost of an acquisition is measured as the fair value of the assets acquired, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. The excess cost of acquisition over the fair value of the net assets of the subsidiary acquired, measured at the date of change of control, is recorded as goodwill (see Intangible Assets for the accounting policy on goodwill). Subsidiaries acquired during the year are included in the consolidated financial 46 statements from the date on which control is transferred to the Group. Consolidation ceases from the date when the Group no longer has control. Where necessary, the accounting policies of subsidiaries have been adjusted to ensure consistency with the policies adopted by the Group. All intercompany transactions, receivables, liabilities and unrealised profits, as well as intragroup profit distributions, are eliminated. Interest in joint ventures and oil and gas licenses The Group accounts for joint ventures, including jointly controlled operations (oil and gas licenses), by proportionate consolidation, i.e. by recording its share of the joint ventures individual income, expenses, assets, liabilities and cash flows on a line-by-line basis with similar items in the Groups financial statements. FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS Functional currency and presentation currency The consolidated financial statements are presented in Norwegian Kroner; NOK. The Parent Companys functional currency is NOK. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities in foreign currencies are translated into functional currency at the balance sheet date exchange rates. Non-monetary items are translated at the historical exchange rate on the transaction date and non-monetary items that are measured at fair value are translated at the exchange rate on the date when the fair value was determined. Foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Foreign exchange differences arising in respect of operating business items are included in operating profit in the appropriate income statement account. Those arising in respect of financial assets and liabilities are recorded net as a financial item. BALANCE SHEET CLASSIFICATION Current assets and current liabilities include items due less than a year from the balance sheet date, and items related to the operating cycle, if longer. Other assets and liabilities are classified as non-current. The current portion of non-current debt is included under current liabilities. Financially motivated investments in shares are classified as current assets, while strategic investments are classified as non-current assets. PROPERTY, PLANT AND EQUIPMENT, INCLUDING OIL & GAS PROPERTIES General Property, plant and equipment acquired by the Group are stated at historical cost, less accumulated depreciation and any impairment charges. Land is not depreciated. Depreciation of other assets than oil and gas properties are calculated on a straight-line basis and adjusted for residual values and impairment charges, if any. Expected useful lives of long-lived assets are reviewed at each balance sheet date and, where they differ significantly from previous estimates, depreciation periods are changed accordingly. Any change is accounted for prospectively.
Ordinary repairs and maintenance costs, defined as day-to-day servicing costs, are charged to the income statement during the financial period in which they are incurred. The cost of major overhauls is included in the assets carrying amount when it is probable that the Group will derive future economic benefits in excess of the originally assessed standard of performance of the existing asset. Major overhauls are depreciated over the period to the next major overhaul. Gains and losses on disposals are determined by comparing the disposal proceeds with the carrying amount and are included in operating profit. The fair value of property, plant and equipment recognised as a result of a business combination is based on market values. The market value of property is the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and a willing seller in an arms length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion. The market value of items of plant, equipment, fixtures and fittings is based on the quoted market prices for similar items. Borrowing costs and capitalisation of interest Interest costs on borrowings to finance the construction of property, plant and equipment are capitalised during the period of time that is required to complete and prepare the asset for its intended use, which is defined as the development phase. Other borrowing costs are expensed when incurred. The capitalisation of borrowing costs is made monthly based on the yearly average interest rate for the Group. The basis for the monthly capitalisation is the capitalised assets for each project. The capitalised borrowing costs can not exceed the actual borrowing costs. Depreciation of oil and gas properties Oil and gas producing properties are depreciated individually (on a field level) using the unit-of-production method as proved and probable developed reserves are produced. The rate of depreciation is equal to the ratio of oil and gas production for the period over the estimated remaining proved and probable developed reserves expected to be recovered at the beginning of the period. Any changes in the reserves estimate that affect unit-of-production calculations, are accounted for prospectively over the revised remaining reserves. Exploration and development costs for oil and gas properties The Group uses the successful efforts method to account for exploration and development costs. All exploration costs with the exception of acquisition costs of licenses and drilling costs of exploration wells, are charged to expense as incurred. Drilling costs of exploration wells are temporarily capitalised pending the determination of oil and gas reserves. If reserves are not found, or if discoveries are assessed not to be technically and commercially recoverable, the drilling costs of exploration wells are expensed. Costs of acquiring licenses are capitalised and assessed for impairment at each reporting date. For accounting purposes, the field enters into the development phase when the partners in the license declare the commerciality decision. All costs of developing commercial oil and/or gas fields are capitalised, including all direct costs. Capitalised development costs are classified as tangible assets.
License acquisition costs and capitalised exploration costs are classified as intangible (during exploration phase). See section Intangible assets - Exploration and evaluation assets. INTANGIBLE ASSETS General Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired through a business combination is based on fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised. Such intangible assets are subject to impairment testing annually, irrespective of whether there is any indication of impairment or more frequently if indication of impairment exists. Testing is made either individually or at the cash generating level. Intangible assets with an indefinite life are reviewed annually to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is made prospectively. Intangible assets with finite lives are amortised over the useful economic life. These intangible assets are subject to impairment testing when there is an indication that the intangible asset may be impaired. Exploration and evaluation assets Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, and before reclassification as described below. Intangible assets relating to expenditure on the exploration for and evaluation of oil and gas resources are reclassified from intangible assets to property, plant and equipment (under development) when technical feasibility and commercial viability of the assets are demonstrable, and decision to develop a particular area is made. The assets are assessed for impairment, and any impairment loss recognised, before such reclassification. These assets are subject to unit-of-production depreciations if and when production from the field is commenced. IMPAIRMENT OF ASSETS Property, plant and equipment and other non-current assets are subject to impairment testing when there is an indication that the assets may be impaired. At each reporting date the Group assess whether there is any indication that the assets may be impaired. If any indications exist, an impairment test is performed, i.e. the Group estimates the recoverable amount of the asset. The recoverable amount is the higher of fair value less expected cost to sell and value in use (present value based on the future use of the asset). If the carrying amount of an asset is higher than the recoverable amount an impairment loss is recognised in the income statement. The impairment loss is the amount by which the carrying amount of the asset exceeds the recoverable amount. The value in use is determined by reference to discounted future net cash flows expected to be generated by the asset. Cash flows are discounted using a pre-tax discount rate that reflects current market assessments of the 47
time-value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows. An oil and gas field is considered one cash generating unit, all other assets are assessed separately. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable amount. It is not reversed to a higher amount than if no impairment loss had been recognised. Such reversal is recognised in profit or loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal, the depreciation charge is adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life. FARM-IN AND FARM-OUT Farm-in and farm-out in exploration phase Agreements in connection with acquisitions/sale of interests in licenses (farmin/farm-out agreements) in the exploration phase, often involve a situation where the owner of a working interest (the farmor) transfers a portion of its working interest to another party (the farmee) in return for the farmees performance of some agreed upon action. For example, the farmee may agree to cover drilling expenses for the farmor limited up to a fixed amount. In return, the farmor agrees to transfer a portion of the working interest in the property to the farmee. This well carry/carried interest is by the farmee accounted for as the costs occurs and is classified in accordance with the policy for treatment of the exploration expenses (successful efforts method). The farmor does not record any profit or loss but accounts for the well carry as an expense reduction when it occurs. Costs incurred prior to the completion of the transaction, and carried by the farmee, is accounted for as license costs, net of tax. In the development phase or production phase, a farm-in/farm-out agreement as described above is treated as a transaction recorded at fair value as represented by the costs carried by the farmee. LICENSE SWAPS / ASSET SWAPS Asset swaps involving only exploration and evaluation assets Spring Energy accounts for exploration and evaluation assets obtained in a swap transaction at the carrying amount of the asset given up, except in transactions where there is cash compensation in addition/in between. Asset swaps involving PP&E The acquisition of PP&E in exchange for non-monetary assets, or a combination of monetary and non-monetary assets, is measured at fair value at the time of the transaction, with recognition of profit or loss. Exception for such measurement at fair value is in transactions where the exchange transaction lacks commercial substance, or the fair value of neither the asset received nor the asset given up is reliably measurable. If exploration and evaluation assets are acquired in exchange for PP&E or intangible assets, such transaction is also measured at fair value at the time of the transaction, with recognition of profit or loss, unless the exchange transaction lacks commercial substance, or the fair value of neither the asset received nor the asset given up is reliably measurable.
FINANCIAL INSTRUMENTS General Financial instruments include trade receivables and other receivables, cash and cash equivalents, loans, trade payables and other payables. These are initially recognised at fair value adjusted for directly attributable transaction costs. After initial recognition, the measurement and accounting treatment depend on the type of instrument and classification. Investments classified as loans and receivables are measured at amortised cost using the effective interest rate method. Gains and losses are recognised in income when the loans and receivables are derecognised or impaired, as well as through the amortisation process. Amortised cost Amortised cost is calculated by taking into account any discount or premium on acquisition, over the years to maturity. For investments carried at amortised cost, gains and losses are recognised in the income statement when the investments are derecognised or impaired, as well as through the amortisation process. Trade receivables Trade receivables are recognised and carried at their anticipated realisable value, which is the original invoice amount less an estimated valuation allowance for any uncollectible amounts. A provision is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified. INTEREST-BEARING LIABILITIES All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs and transaction costs associated with the borrowing. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method, with the difference between net proceeds received and the redemption value being recognised in the income statement over the term of the loan. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. Gains and losses are recognised in net profit or loss when the liabilities are derecognised, as well as through the amortisation process. DERECOGNITION OF FINANCIAL ASSETS AND LIABILITIES A financial asset is derecognised when: the Group no longer has the right to receive cash flows from the asset, the Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement, or the Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred the control of the asset. A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. A bond loan is derecognised when it is repurchased. Derivative financial instruments and hedging As of 31 December 2009, the Group has interest rate swaps. Interests received or
48
paid during the year are recognised as financial income or expense. Derivative financial instruments are recognised on the balance sheet at fair value. The fair value of interest rate swaps is based on broker quotes. Changes in fair value are classified as financial income or expense. COST OF EQUITY TRANSACTIONS Transaction costs directly attributable to an equity transaction is recognised directly in equity, net of taxes. REVENUE RECOGNITION Revenues from production of oil and gas Revenues from the production of oil and gas properties are recognised on the basis of the Groups net working interest in those properties, regardless of whether the production is lifted and sold (the entitlement method). The revenue recognition according to the entitlement method is based on actual production in the period. Underlift and overlift of oil and gas follows from the entitlement method and is valued at its net realisable value on the balance sheet date. Underlift and overlift is calculated as the difference between Spring Energys share of production and its actual sales and are classified as respectively current assets and current liabilities. If accumulated production exceeds accumulated sales there is an underlift (asset) and if accumulated sales exceeds accumulated production there is an overlift (liability). Revenues from sales of services are recorded when the service has been performed. INCOME TAXES The income tax expense/credit consists of current income tax (taxes payable/ receivable) and changes in deferred income tax. Current income tax Current income tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted by the balance sheet date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Oil and gas companies operating on the Norwegian Continental Shelf under the offshore tax regime can claim a 78% cash refund of their exploration costs, limited to taxable losses for the year. The refund is paid out in December in the following year. This tax receivable is classified as current asset. Deferred income tax Deferred income tax is provided using the liability method on temporary differences at the balance sheet date between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that the taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. Companies operating on the Norwegian Continental Shelf under the offshore tax regime can claim the tax value of any unused tax losses or other tax credits
related to its offshore activities to be paid in cash (including interest) from the tax authorities when operations cease. Deferred tax assets that are based on offshore tax losses carry forward are therefore normally recognised in full. The carrying amount of deferred income tax assets related to onshore activities are reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets related to onshore activities are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in the income statement. Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority/tax regime. Timing differences are considered. Uplift Uplift is a special allowance in the basis for petroleum surtax in Norway. The uplift is computed on the basis of the original capitalised cost of offshore production installations, and amount to 7,5% of the investment per year. The uplift may be deducted from taxable income for a period of four years (i.e. totals 30% over four years), starting in the year in which the capital expenditures are incurred. Uplift benefit is recorded when the deduction is included in the current year tax return and impacts taxes payable. Unused uplift may be carried forward indefinitely. EMPLOYEE BENEFITS Pensions According to Norwegian law employees are mandatory members of the Norwegian Pension Scheme ( obligatorisk tjeneste pensjon). The scheme is based on a contribution plan. Contributions are paid to pension insurance plans and charged to the income statement in the period to which the contributions relate. Once the contributions have been paid, there are no further payment obligations. Share-based payment The cost of share-based payment consisting of equity-settled share options to employees and others providing similar services, is measured by reference to the fair value of the options at the date on which they are granted. The fair value of the options is estimated on the grant date and charged to expense over the vesting period, together with a corresponding increase in equity. The vesting period is the period in which the performance conditions are fulfilled, ending on the date on which they become fully entitled to the award (vesting date). The fair value is determined by using generally accepted valuation techniques, such as the Black-Scholes model. No expense is recognised for awards that do not ultimately vest. An exception is for awards where vesting is conditional upon a market condition, which is treated as vesting irrespective of whether or not the market condition is 49
satisfied, provided that all other performance conditions are satisfied. Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification. Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification of the original award, as described in the previous paragraph. The dilution effect of potentially ordinary shares from share options is reflected in the computation of earnings per share. The dilution effect is not presented in the income statement if the exercise of share options would increase earnings per share or decrease loss per share. PROVISIONS AND CONTINGENT LIABILITIES General A provision is recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable (i.e. more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. The amount of the provision is the present value of the risk adjusted expenditures expected to be required to settle the obligation, determined using the estimated risk free interest rate as discount rate. Where discounting is used, the carrying amount of provision increases in each period to reflect the unwinding of the discount by the passage of time. This increase is recognised as interest expense. Contingent liabilities are not recognised apart from contingent liabilities which are acquired through a business combination. Significant contingent liabilities are disclosed, with the exception of contingent liabilities where the probability of the liability occurring is remote. Asset retirement obligations The Group recognises the estimated fair value of asset retirement obligations in the period in which it is incurred.
The amount recognised is the present value of the estimated future expenditure determined in accordance with local conditions and requirements. This cost includes the cost of dismantlement or removal of oil and gas installations. The present value of the obligations are recognised when the assets are constructed and ready for production, or at the later date when the obligation is incurred. Related asset retirement costs are capitalised as part of the carrying value of the tangible fixed asset and are depreciated over the useful life of the asset, i.e. unitof-production method. The liability is accreted for the change in its present value each reporting period. Accretion expense related to the time value of money is classified as part of financial expense. The provision and the discount rate are reviewed at each balance sheet date. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise of cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are included within borrowings in current liabilities in the balance sheet. CASH FLOW STATEMENT The cash flow statement is prepared using the indirect method. SEGMENT REPORTING The Group has identified its reportable segments based on the nature of the risk and return within its business. The Groups only business segment is oil and gas on the Norwegian Continental Shelf. RELATED PARTIES Parties are related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the party in making financial or operational decisions. Parties are also related if they are subject to common control. Transactions between related parties are transfers of resources, services or obligations, regardless of whether a price is charged. All transactions between related parties are made based on the principle of arms length, which is the estimated market price.
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NOTE 2. SEGMENTAL INFORMATION

Spring Energy has only one business segment which is oil and gas exploration, development and production and one geographic area which is the Norwegian Continental Shelf. The segment information will therefore be the same as in the income statements, balance sheets and cash flow statements.
NOTE 3. OTHER INCOME

NOK 000 Consulting services 1) Gain on sale of licenses 2) Total other income
1) The services delivered are related to geological and geophysical activities. 2) The gain on sale of licenses is related to the swap of a 5% interest in PL 378, see note 21.
2009 455 89512 89967
2008 1162 - 1162
NOTE 4. OPERATING EXPENSES BY NATURE

NOK 000 Exploration cost expensed Personnel expenses Other operating expenses Depreciation Total operating expenses 2009 150474 55671 18912 713 225770 2008 88190 32986 14862 401 136439
NOTE 5. SEISMIC AND OTHER EXPLORATION COST EXPENSED

NOK 000 Direct seismic costs and studies outside billing Direct seismic costs and studies from billing (joint venture) Indirect salaries and related costs Other indirect costs Seismic and other exploration cost expensed 2009 81948 68526 43884 15337 209696 2008 79954 8236 27137 12294 127621
Direct seismic costs and studies include the acquisition of seismic and electromagnetic studies and data and cost of processing and interpretation of data. Salaries and related costs and other indirect costs have been allocated to exploration cost expensed based on time incurred.
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NOTE 6. PERSONNEL EXPENSE

SPECIFICATION OF SALARIES AND SOCIAL EXPENSES NOK 000 Salary expense Employer's payroll tax expense Pensions Other personnel costs Total personnel expense 1) Total number of man-years
1) See note 4.
2009 37581 6033 4976 7081 55671 22.5
2008 18222 2931 2431 9402 32986 11.7
DIRECTOR AND EXECUTIVE REMUNERATION Remuneration to Board of Directors and Chief Executive Officer : NOK 000 Chief Excecutive Officer (CEO): Remuneration Bonuses Pension Total compensation to CEO Remuneration Board of Directors Further information regarding share options is provided in note 7. The CEO is part of a bonus scheme with annual benefits ranging from 0 40% of annual salary, pending certain performance related criteria. For achievements in both 2008 and 2009, the CEO has been rewarded a bonus of 40% of annual salary. The bonus for 2008 (settled in 2009) amounted to TNOK 972 of which 50% of available amount after tax was reinvested in Spring Energy preference B-shares. The bonus for 2009 (settled in 2010) was TNOK 1.092 of which 100% of available amount after tax was reinvested in Spring Energy preference B-shares. The CEO has the right to severance pay of 6 months if certain conditions should occur. Thoeng AS, a company controlled by the Chairman of the Board of Directors, has a consulting agreement with the Company for delivery of project related services. The fee is TNOK 42 per month and the agreement can be terminated within 3 months. INCENTIVE SCHEME FOR THE EMPLOYEES IN SPRING ENERGY, MATCHING SHARES The employees in Spring Energy may, if certain objectives are met, each year be granted a bonus as a percentage of the total fixed salary in the range of 0-40%. Spring Energy is entitled to settle the cash bonus by way of issuing shares in Spring Energy, limited to the higher of 50% of the net bonus, 25% of the gross bonus and the number of shares stated in the invitation to subscribe signed by the employees. For each share Spring Energy issues as settlement for the cash bonus, the employees will have the right to receive one additional share (matching share) at nominal value or the equivalent in cash (market value less the nominal value). Settlement of the matching shares will be structured or combined at the discretion of the Board of Directors and is contingent on certain conditions. As of 31 December 2009, the number of outstanding matching shares was 43 074. PENSIONS The Company has a defined contribution pension plan for its employees which satisfies the statutory requirements in the Norwegian law on required occupational pension (lov om obligatorisk tjenestepensjon). 2009 2008
2 830 972 490 4292 -
2 209 322 2531 60
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AUDITORS FEES NOK 000 (excluding VAT) Auditor's fee Tax advisory services Other advisory services Total auditor fees 2009 417 - 134 551 2008 81 40 79 200
NOTE 7. SHARE OPTIONS AND SHARE-BASED PAYMENTS

In 2008 Thoeng AS, a company controlled by the chairman of the Board of Directors was granted share options in Spring Energy Norway AS for both ordinary shares and preference shares. These options were exercised in 2009.
NOTE 8. FINANCIAL ITEMS

NOK 000 Interest received Interest expense Net exchange rate gain / loss (-), realised items Net exchange rate gain / loss (-), unrealised items Fair value gain / loss (-) on financial instruments Other financial income Other financial expenses Net finance 2009 6934 -15 945 502 -3881 -14 1293 -68 -11180 2008 1589 -1148 -3316 52 - - -429 -3252
NOTE 9. TAXES
INCOME TAX EXPENSE NOK 000 Tax refund of exploration costs NCS Tax refund of exploration costs NCS, previous year Deferred taxes Total income tax expense (-) / income TAX REFUND NOK 000 Tax refund of exploration costs NCS recognised in tax income Tax refund of exploration costs NCS recognised on acquistion of licenses Total tax refund recognised in balance sheet 2009 318902 63644 382546 2008 101371 78192 179563 2009 318902 34 -139870 179067 2008 101371 - 4823 106194
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RECONCILIATION OF THE YEARS INCOME TAX NOK 000 Profit / (loss) before income tax Expected income tax at the nominal rate (28%) Expected petroleum tax (50%) Permanent differences Net onshore income Interest on losses carried forward Changes to prior years Financial items Valuation allowance deferred tax assets Total income taxes Effective income tax rate Taxes charged to equity TEMPORARY DIFFERENCES RELATE TO THE FOLLOWING ITEMS: Tax effect of temporary differences, NOK 000 Tangible and intangible long term assets Other current items Provisions for other liabilities and charges Tax losses carry forward, onshore Tax losses carry forward, offshore 28% Tax losses carry forward, offshore 50% Uplift acquired on Brage field Total Deferred tax asset allowance Total net deferred tax asset recognised Deferred tax assets recognised Deferred tax liabilities recognised 2009 -176157 -2662 3900 - 16101 11048 4612 -143157 - -143157 - -143157 2008 -1188 -380 - 73 6034 3660 8199 -73 8126 8347 -221 2009 -146981 41154 73491 69746 -131 400 70 -5590 -73 179067 -121,8 % 394 2008 -138529 38788 69264 -159 - - - -1626 -73 106194 -76,7 % 1848
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CHANGE IN DEFERRED TAXES NOK 000 Deferred tax expense (-) / income Taxes charged to equity Deferred tax recorded on acquisitions Total change in deferred taxes 2009 -139870 394 -11807 -151283 2008 4823 1848 1455 8126
Deferred tax is calculated at tax rates applicable at the balance sheet date. The rate of ordinary income tax applied is 28%, to which is added a special tax for oil and gas companies at the rate of 50%, giving a total tax rate of 78%. Investments on the Norwegian Shelf earn 30% uplift on total investments. Uplift can be offset in the calculation of special income tax over a four year period from the time of investment. For accounting purposes the company regards the advantage of the uplift deduction in the year of earning. Losses, including interest, can be carried forward. The interest rate will be decided by Ministry of Finance. Oil companies may claim a refund of the the tax value (78%) of its exploration costs incurred during the year (maximised to the tax value of the total tax loss for the year).
NOTE 10. INTANGIBLE ASSETS

NOK 000 Balance at 1 January 2009 Additions Disposals Transfers Balance at 31 December 2009 Depreciation and impairment losses Balance at 1 January 2009 Depreciation for the year Impairment Disposals Balance at 31 December 2009 Carrying amount At 1 January 2009 At 31 December 2009 Exploration and acquisition cost 32109 215523 -25085 - 222548 Goodwill - 35444 - - 35444 Total 32109 250967 -25085 - 257992
- - - - -
- - - - -
- - - - -
32109 222548
- 35444
32109 257992
Additions in 2009 include acquisiton cost of licenses PL 375, PL 378 and PL 405 stated net of tax. Cost of successful drilling on PL 378, PL 375 and PL 407 has been capitalised as exploration and acquisition cost in accordance with the Successful Efforts method. Goodwill additions in the year relate to the asset swap for a 2.5% interest in Brage in exchange for a 5% interest in PL 378. Based on the Companys impairment tests as of year end 2009, it has been concluded that no charge for impairment is required.
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NOTE 11. TANGIBLE NON-CURRENT ASSETS

NOK 000 Balance at 1 January 2009 Additions Disposals Transfers Balance at 31 December 2009 Depreciation and impairment losses Balance at 1 January 2009 Depreciation for the year Impairment Disposals Balance at 31 December 2009 Carrying amount At 1 January 2009 At 31 December 2009 Oil and gas properties - 112800 - - 112800 Furniture, fixtures and machinery 2746 1014 - - 3760 Total 2746 113814 - - 116560
- - - - -
-401 -713 - - -1114
-401 -713 - - -1114
- 112800
2345 2646
2345 115446
NOTE 12. OTHER RECEIVABLES

NOK 000 Prepayments VAT receivable Other Other receivables 2009 2549 1691 -2 4237 2008 1139 1714 -143 2710
RECEIVABLES DUE AFTER 1 YEAR As part of the acquisition of a 2.5% interest in the Brage Field, the Company has become entitled to receive an amount of NOK 14.1 million from Esso. The receivable was transferred from Wintershall Norge ASA as part of the swap transaction and relates to the removal of the Brage installation.
NOTE 13. CASH AND CASH EQUIVALENTS

NOK 000 Bank deposits, unrestricted Bank deposit, restricted, employee taxes Bank deposit, restricted, interest on debt exploration loan Bank deposit, restricted, office rental Total cash and cash equivalents 2009 96695 3338 7421 1617 109071 2008 44345 2090 6366 1507 54308
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NOTE 14. INTEREST BEARING LIABILITIES

The table below summarises the maturity profile of the Groups financial liabilities based on contractual undiscounted cash flows. NOK 000 At 31 December 2009 At 31 December 2008 NOK 000 At 31.December 2009 At 31 December 2008
1) The Revolving Exploration Loan Facility matures in December 2012. 2) The carried amount is stated net of establishment fees and other related costs. The costs are accounted for in accordance with the effective interest rate method.
Less than 12 months 269473 88547 Currency NOK NOK Amount 269473 88547 Undrawn facility 730527 311453
1 to 5 years - - Interest NIBOR +2.85% NIBOR +0.6%
Over 5 years - - Maturity 1) Dec 2010 Dec 2009
Total 269473 88547 Carried amount 2) 259967 87188
The Revolving Exploration Loan Facility is provided by a consortium of banks (Skandinaviska Enskilda Banken (SEB), DnB NOR and BNP Paribas). SEB is the agent of the agreement. The tax value of the exploration refund, all licenses, pledge account and restricted cash related to interest payments have been provided as collateral for the Revolving Exploration Loan Facility.
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NOTE 15. FINANCIAL RISK MANAGEMENT

OVERVIEW The Company is exposed to a variety of risks from its use of financial instruments, including liquidity risk, interest rate risk, credit risk and currency risk. This note presents information about the Companys exposure to each of the above mentioned risks, and the Companys objectives, policies and processes for managing such risks and the Companys management of capital. LIQUIDITY RISK Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying business, the Company aims to maintain flexibility in funding by keeping both commited and uncommited credit lines available. See note 14 for information about available credit lines and the maturity profile of interest bearing debt. INTEREST RATE RISK The Companys interest rate risk arises from its interest bearing borrowings. Borrowings issued at variable rates expose the Company to cash flow interest rate risk. The Company aims at reducing its interest rate risk by entering into floating-to-fixed interest rate swaps for the total of MNOK 154 of the interest bearing borrowings. The swaps will be settled during the period January 2009 and January 2010. The Company pays a fixed interest rate of 2.25% and receives a floating interest rate of NIBOR 1 month. CREDIT RISK The Company has no significant concentration of credit risk. Sales are only made to customers with an appropriate credit history. CURRENCY RISK The preferred shareholders have the right to redeem their repayments of capital in USD, which represents a potential USD cash outflow as operational costs are in NOK, USD and EUR. The currency risk measured in NOK is related to the share of non-NOK operational costs and other potential future payments in foreign currency. The Company may, from time to time, seek to reduce the currency risk by entering into foreign currency instruments. CAPITAL MANAGEMENT The overall objective of the Company is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and maximise shareholder value. The Company manages its capital structure, and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the Company may issue new shares, sell assets to reduce debt, or return capital to shareholders through dividend payments. The Company monitors capital on the basis of its equity to total assets ratio. This ratio is calculated as book equity divided by total assets. It is the Companys policy that this ratio should be 30% or higher. As of 31 December 2009 the equity ratio was 33.7% (as of 31 December 2008 the equity ratio was 43.5%).
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NOTE 16. OTHER CURRENT LIABILITIES

NOK 000 Trade creditors Witholding payroll taxes and social security Holiday pay Working capital Joint Venture Over/under call Joint Venture Other accrued expenses 1) Total other current liabilities
1) Mainly related to accrued drilling cost
2009 28773 5323 4386 47328 3823 57646 147279
2008 13219 3326 1997 5522 4242 42068 70374
NOTE 17. SHAREHOLDERS AND SHARE INFORMATION

Major shareholders HV V Invest Charlie AS Gnisten Invest AS 1) Barokk Invest AS LightHouse Invest AS Midgar AS Other shareholders 2) Total Ordinary shares - 17043479 9739130 9739130 9739130 13472464 59733333 Preference A shares 3898555 - - - - - 3898555 Preference B shares - 52330 21800 13647 2224 873777 963778 Total 3898555 17095809 9760930 9752777 9741354 14346241 64595666 Percentage Percentage 6,0 % 26,5 % 15,1 % 15,1 % 15,1 % 22,2 % 100,0 %
1) Gnisten Invest AS is controlled by the CEO of Spring Energy Norway AS 2) Thoeng AS controlled by Thorleif Enger, the Chairman of the Board holds 3 733 333 ordinary shares and 8 090 preference B shares. Dag Wilfred Reynolds, member of the Board of Directors, holds 49 778 preference B shares.
Share classes Ordinary shares Preference A shares Preference B shares
Number of shares issued 59733333 3898555 963778
Par value 0,01 0,01 0,01
Voting rights Each share one vote Each share represents 1 million voting rights No voting rights
REDEMPTION RIGHTS The holders of Preference A and Preference B shares can under certain circumstances, and within the limits of the Norwegian Limited Liability Companies Act, redeem some or all of the shares in cash or convert them into ordinary shares. Preference A shares and Preference B shares earn preference dividends at the rate of 8% per annum of the amount held, payable in USD and compounded quarterly. At the shareholders meeting held on 19 February 2010 it was decided to increase the share capital by issuing new preference A and B shares by way of conversion of an amount from the share premium account into share capital. The reason behind this proposal is to ensure that the capital structure reflects the actual ownership in the Company. As of 31 December 2009 Spring Energy had 38 shareholders.
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NOTE 18. DIVIDENDS PAID AND PROPOSED

ORDINARY AND EXTRAORDINARY DISTRIBUTION OF DIVIDEND No ordinary or extraordinary dividend has been distributed in 2009. PROPOSED DIVIDENDS No dividends have been proposed for 2009.
NOTE 19. GROUP COMPANIES

NOK 000 Spring Energy Exploration AS Business address Oslo Ownership and voting interest (in %) 100 Share capital 150
Spring Energy Exploration AS (formerly Serica Norge AS) was acquired in 2008 for a total consideration of TNOK 6.440 including transaction costs. The transaction has been treated as an asset purchase for accounting purposes. All excess value has been allocated to capitalised exploration and acquisition cost.
NOTE 20. COMMITMENTS AND CONTINGENCIES

A) ABANDONMENT PROVISION The abandonment provision is based on an implementation concept in accordance with the Act pertaining to Petroleum Activities (Petroleumsloven of 1996, chapter 5) and international rules and guidelines. The abandonment provision is based on the Operators best estimate. NOK '000 Balance at 1 January 2009 Acquired as part of the acquisition of a 2.5% in the Brage field Balance at 31 December 2009 B) LEGAL DISPUTES At 31 December 2009 the Company is not subject to any legal disputes. C) CONTINGENCIES AT 31 DECEMBER 2009 For some of the acquired licenses, Spring Energy will carry parts of the sellers share of drilling costs or seismic costs. The Company is required to participate in the approved work programme related to acquired licenses. In the case of a development of PL 407 (Bream) an additional consideration to the seller (Serica Energy) could be triggered. The additional consideration will be contingent on future development of Bream and future oil-price levels. As the development of Bream is still uncertain, the contingent liability has not been accrued for in the balance sheets. D) LIABILITY FOR DAMAGES/INSURANCE The Groups operations involves risk for damages, including pollution. Installations and operations are covered by an operations insurance policy. E) GUARANTEES AT 31 DECEMBER 2009 The Company has given an irrevocable standby Letter of Credit of NOK 100,000 authorised by GASSCO AS. The guarantee is provided in connection with Terms and Conditions for Transportation of Gas in GasLed. The Irrevocable Standby Letter of Credit expires on 31 December 2010. The guarantee was established in connection with the 2.5% interest in the Brage field Total - 30050 30050
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NOTE 21. SIGNIFICANT TRANSACTIONS IN 2009 AND EVENTS AFTER THE BALANCE SHEET DATE
SIGNIFICANT TRANSACTIONS IN 2009 The following licenses were acquired in 2009 and are included in the 2009 accounts: License PL 378 PL 405 PL 375 Brage field Share acquired 20.0 % 15.0 % 15.0 % 2.5 % Acquired from Premier Oil Norge AS Faroe Petroleum Norge AS Wintershall Norge ASA Wintershall Norge ASA
The following licenses are acquired with effective date 1 January 2010 and are not included in the 2009 accounts: License PL 341 PL 475 PL 511 PL 377S Share acquired 10.0 % 15.0 % 10.0 % 20.0 % Acquired from Wintershall Norge ASA Wintershall Norge ASA Wintershall Norge ASA Idemitsu Petroleum Norge AS
BUSINESS COMBINATION, ACQUISITION OF BRAGE The company has completed an asset swap with Wintershall Norge ASA for the licenses PL 055 (2.692%), PL 185 (2.692%) and 2.5% in PL 055B against 5.0% share in PL 378. The transaction was completed on 28 December 2009. The Brage Unit consists of the licenses PL 055, PL 185 and PL 055B. Subsequent to completion, the Company holds a 2.5% share in the Brage Unit. The transaction has been recorded at fair value. The acquistion of Brage is treated as a business combination for accounting purposes. As a part of the transaction Spring takes over a receivable of MUSD 4.5 on ExxonMobil Exploration & Production Norway AS from Wintershall. The receivable is related to the asset retirement obligation on Brage.
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The fair value of the purchase of Brage and disposal of the 5% interest in PL 378 is shown below: Assets/Liabilities Net book value 5% PL 378 Accruals Goodwill Acquisition cost producing field ARO asset ARO receivable ARO liability Deferred tax Total Income statements Gain from sale of 5% PL 378 EVENTS AFTER THE BALANCE SHEET DATE 89512 Business combination -25085 -5800 35444 96800 16000 14050 -30050 -11847 89512
In January 2010 Spring Energy was awarded 4 licenses in the APA 2009 round. One of the licenses has a firm well commitment. Following the award the Group now holds a total of 24 licenses on the Norwegian Continental Shelf. At the end of January, the Company was awarded NCS Business Developer of the year by Rystad Energy for having developed a portfolio that includes production, material discoveries and high potential exploration acreage in less than 2 years.
NOTE 22. RESERVES (UNAUDITED)

Proven and probable reserves Balance at 1 January 2009 Revision of previous estimates Discoveries, additions and extensions Acquisition of reserves (Brage field) Divestment of reserves Year 2009 production Total reserves 31 December 2009 MMboe - - - 1.0 - - 1.0
Proven and probable (P50) reserves represent the Companys share of reserves according to resource category 1-3 based on the Norwegian Petroleum Directorate resource classification system as presented in Guidance to classification of Petroleum resources on the Norwegian Continental Shelf .
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AUDITORS REPORT
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GLOSSARY
AAPG APA ARO COSO CAPEX ERM EMT MMboe E&P NCS NOK NGAAP NPD NUES UKCS PDO PL PRMS ROI SPE SPEE WI WPC American Association of Petroleum Geologists Awards in predefined areas Asset retirement obligation Sponsoring Organisations of the Treadway Commission Capital expenditure Enterprise risk management Executive management team Million barrels of oil equivalent Exploration and production Norwegian Continental Shelf Norwegian Kroner Norwegian Generally Accepted Accounting Pinciples Norwegian Petroleum Directorate Norwegian Code of Corporate Governance United Kingdom Continental Shelf Plan for development and operation Production license Petroleum resources management system Return on investment Society of Petroleum Engineers Society of Petroleum Evaluation Engineers Working interest World Petroleum Congress
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SPRING ENERGY NORWAY AS Tordenskiolds gate 6B 0160 Oslo NORWAY


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Spring Energy Annual Report 2009

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ANNUAL REPORT 2009

A YEAR OF SIGNIFICANT DEVELOPMENT

A RAPIDLY GROWING OIL AND GAS EXPLORATION AND PRODUCTION COMPANY

Tordenskiolds gate 6B 0160 Oslo NORWAY www.springenergy.no

SPRING ENERGY NORWAY AS

SPRING ENERGY ANNUAL REPORT 2009

A BUSINESS DRIVEN BY SOUND COMMERCIAL AND TECHNICAL EXPERTISE

PROVEN AND PROBABLE RESERVES

PROSPECTIVE RESOURCES - RISKED

SOURCING FUTURE GROWTH

ACTIVE PORTFOLIO MANAGEMENT LEADS TO FINANCIAL AND COMMERCIAL REWARDS

WELLS IN DRILL QUEUE

NET RISKED RESOURCES TARGETED IN DRILL QUEUE

SPRING ENERGY ANNUAL REPORT 2009

PROFITABLE, WELL FUNDED AND FOCUSED ON QUALITY ASSETS

2008 9.0 10.4 19.4 3.0 14.0

# MMboe MMboe MMboe # # MMboe

20.0 1.0 30.9 176.7 3.0 12.0 101.9

SOURCING FUTURE GROWTH

IMPORTANT STEP CHANGES IN DEVELOPMENT

UIRED IN 3 INTERESTS ACQ ORTH SEA NORWEGIAN N DISCOVERIES

PRE-QUALIFIED AS A NCS LICENSEE

LOAN FA AGREED CILIT Y WITH SE B

D UIRE ACQ WI % A 20 344 L IN P PL 344B D AN

THORLEIF ENGER EL ECTED AS CHAIRMAN OF THE BOARD

AWARDED 4 LICENSES IN APA 2008

SPRING ENERGY ANNUAL REPORT 2009

SUCCESSFUL VALIDATION OF BUSINESS MODEL

NC S AWARDED T WO H ROUND LICENSES IN 20T

PRE-QUALIFIED AS A NCS OPERATOR.

RST S IN FI LL ERIE ISCOV ATION WE D R EXPLO 378 ON PL

ng Energy is capable to take on more

D UIRE ACQ WI A 20% 78 3 IN PL

ACQUIRED A 15% WI IN PL 405 AND PL 405B

SUCCESSFUL BREAM DELINEATION WELLS 17/12-4, 17/12-4A AND 17/12-4B

ACQUIR ED A 20% WI IN PL 377 S

D S IN SECON L 375 DISCOVERIE ELL ON P LORATION W EXP ird exploration

SOURCING FUTURE GROWTH

2008 NCS NEWCOMER OF THE YEAR

SPRING ENERGY ANNUAL REPORT 2009

2009 NCS BUSINESS DEVELOPER OF THE YEAR

SOURCING FUTURE GROWTH

A CLEAR, CONSISTENT STRATEGY FOCUSED ON BUILDING A BALANCED PORTFOLIO

OBJECTIVES AND STRATEGY

Initial focus / growth engine

Produce and sell oil and gas

Farm-down prior to development

Divest (or swap) new discovery

SPRING ENERGY ANNUAL REPORT 2009

PORTFOLIO MATRIX SYSTEMATIC PORTFOLIO OPTIMISATION APPROACH

SOURCING FUTURE GROWTH

CEOs statement Roar Tessem

SPRING ENERGY ANNUAL REPORT 2009

Roar Tessem, Chief Executive Officer. 3 March 2010

SOURCING FUTURE GROWTH

A BROAD PORTFOLIO OF ACREAGE

PL 475/PL 475BS PL 511 PL 388

PL 375 PL 344/PL 344B PL 509S

PL 519 PL 377S PL 378 Brage Unit

PL 507 PL 341 PL 500 PL 495 PL 411 PL 407 PL 406 PL 405/PL 405B

SPRING ENERGY ANNUAL REPORT 2009

2010 2011 2010 2011 2010 (#2) 2011 2010

BG Wintershall Wintershall Lundin