Noreco endeavours to maintain high standards of Corporate Governance, and will in all material aspects follow the Norwegian Code of Practice for Corporate Governance. The company has adopted and implemented apporpriate Corporate Governance Principles.

Noreco was listed on the Oslo Stock Exchange on 9 November 2007 (ticker NOR). Prior to the listing, the company conducted a private placement of 550 mill NOK at a subscription price of 33 NOK per share. The company also issued shares in conjunction with the acquisition of Altinex ASA. The majority of the shares were issued at a price of 22.25 NOK. The share price at 31 December 2007 was 30 NOK.

As of 31 December 2007 Noreco’s share capital was 345 384 509.80 NOK, divided on 111 414 358 shares, each with a nominal value of NOK 3.10. In 2007 the company issued a convertible loan in the amount of NOK 440 million, of which NOK 10 million has been converted to equity as per 31 December 2007. The remaining loan is convertible into 19 325 843 shares at a conversion price of 22.25 NOK per share, and is currently held by 14 investors. The last date for conversion is 8 May 2012.

A number of research analysts follow the company. An updated list of analysts can be found on http://www.noreco.com/eng/Investor-Relations/Analyst-Coverage

As at 31 December 2007 Noreco had a total of 912 shareholders divided into 834 Norwegian and 78 foreign owners. The share­holders as of the end of 2007 are shown in note 22 to the accounts.

Corporate Governance in Noreco

Noreco is committed to maintain a high standard of corporate governance and believe that effective corporate governance is essential to its success.

Noreco endeavors to exercise a corporate governance policy built on Norwegian corporate law, and that follows the Norwegian Code of Practice for Corporate Governance of 4 December 2007 (the “Code”).

The company’s Board of Directors has the overall responsibility for corporate governance in Noreco. The Board of Directors has established a remuneration and corporate governance committee consisting of three of the members of the Board of Directors. This committee reviews and assesses on a regular basis the company’s corporate governance policies and procedures, and recommends any proposed changes to the Board of Directors for approval.

Noreco’s business and main strategy

During 2007, Noreco has grown from being a small privately owned E&P company into a larger publicly owned independent E&P company listed on Oslo Stock Exchange. From inception, the company has combined strong commercial principles with a long-term growth perspective. Confidence in Noreco and its businesses is essential for the company’s competitiveness and value creation. In accordance with Noreco’s Articles of Association section 3, “The business of the Company is exploration, production and sale related to oil and gas activities. The Company will obtain participating interests in production licences by participating in licence rounds and through acquisition of participating interests”.

The Company’s vision is to be one of the leading independent energy companies whose activities are focused on the North Sea (mainly Norway, Denmark and United Kingdom) Noreco provides value creation for all its shareholders by building an optimized portfolio of exploration, development and production assets.

To achieve its vision, Noreco is actively participating in exploration rounds and acquisition activity, as well as building on core areas were Noreco has the understanding and knowledge to develop unique value creating options for the company and its shareholders. Further, Noreco endeavours to create values in the core areas through competence and commitment to generate activity and take risk. Noreco’s employees, and their competence and commitment to succeed, is at the centre of the company’s strategy. Noreco will ensure that the company has and maintains competitive competence in all key disciplines, and that it has the necessary capacity to both deliver value creation on Noreco’s assets and sustainable growth in portfolio and capability.

Noreco believes that its integrity and standards are critical to the company’s sustainability and value as a company, and that success is both about achieving the right results and delivering in the right way. Noreco’s business decisions and actions are made in accordance with the following values:

Being a good corporate citizen

Caring for Noreco’s people and the environment

Developing Noreco’s people and competence

Committing to competitive performance

Conducting its business with integrity and honesty

The company’s ethical guidelines are based on the values mentioned above.

Equity and dividends

The company’s equity is considered to be adequate to Noreco’s objectives, strategies and risk profile. Noreco has not previously paid any dividends, and it does not expect to pay ordinary dividends to its shareholders to give shareholders a competitive return on capital relative to the underlying risk. Any future dividend payment will be subject to determination based on the Company’s results and other factors the Board of Directors finds relevant.

Any proposal by the Board of Directors concerning dividends must be approved by Noreco’s shareholders at the General Meeting. Thus, the company’s policy concerning dividends is predictable and corresponding with its objectives, strategies and risk profile.

The Board of Directors currently possesses two authorizations to undertake an increase of the company’s share capital. One of the authorizations may only be used for issuing of new shares directed towards existing shareholders in full or in part, or in order to bring new investors into the company, in order to fund the company’s equity plans (other than issuance of shares as part of a share option program for employees). The other authorization may only be used for issuing of new shares relating to the purchase of shares and redemption of options in Altinex ASA (a wholly-owned subsidiary of Noreco). Both authorizations expire 11 October 2008, one year after registration in the Norwegian Register of Business Enterprises.

The Board of Directors has not been granted an authorization for Noreco to purchase its own shares.

Equal treatment of shareholders

Noreco has only one class of shares and each share in the company carries one vote at general meetings. According to the authorizations to undertake an increase of the company’s share capital, the Board of Directors is further authorized to waive the preferential rights pursuant to Section 10-4 of the Norwegian Public Limited Liability Companies Act (hereinafter the “PLCA”). Any decision to waive the preferential right of existing shareholders to subscribe for shares in an event of an increase in share capital must be justified.

Noreco does not have any authorizations to carry out transactions in its own shares.

Transactions with close associates

In 2007 there have been no significant transactions between closely related parties. If the company should enter into a transaction with associated parties within Noreco or with companies in which a Director or the CEO have a direct or indirect vested interest, those concerned shall immediately notify the Board of Directors. Any such transaction must be approved by the CEO and the Board of Directors, and where required also be reported to the market through Noreco’s investor relations communications.

If a transaction, which is not immaterial, is entered into between the company and shareholders, member of the Board of Directors, member of the executive management or close associates of such parties, or related companies with minority shareholders, the Board of Directors will, where deemed necessary, seek to arrange an independent valuation to be obtained from an independent third party.

Freely negotiable shares

The Noreco shares are freely negotiable and the Articles of Association do not impose any restriction on the transfer of shares. Noreco is listed on the Oslo Stock Exchange.

General Meetings

Noreco’s General Meetings held in 2007 were conducted under the requirements of the Public Limited Companies Act and the Norwegian Code of Practice for Corporate Governance of 28 November 2006.

The General Meeting is the Noreco’s highest corporate body. The Board of Directors strives to ensure that the General Meeting is an effective forum for communication between the Board of Directors and the shareholders. Therefore, Noreco encourages all shareholders to exercise their right to partici­pate at the General Meeting. The General Meeting will normally be held in April or May each year. Noreco endeavors to make the calling notice and detailed support information and the resolutions to be considered at the General Meeting, available on Noreco’s website no later than 21 days prior to the General Meeting. The resolutions and the supporting information distributed are sufficiently detailed and comprehensive to allow shareholders to form a view on all matters to be considered at the meeting. The calling notice will be distributed to all shareholders no later than two weeks before the General Meeting, cf. PLCA section 5-10. The notice includes a reference to Noreco’s website where the notice calling the meeting and other supporting documents are made available. Further, the right for shareholders to propose resolutions in respect of matters to be dealt with by the general meeting will be described on the website. As the right for shareholders to propose resolutions is described on Noreco’s website, it is not specifically included in the calling notice.

According to Noreco’s Articles of Association section 9, shareholders must give written notice to the company of their intention to attend the General Meeting by the date stated in the calling notice, which date must be at least two working days before the General Meeting. Shareholders, who are unable to be present, are encouraged to participate by proxy. Such proxy is enclosed to the calling notice. To the extent necessary, members of the Board of Directors and the auditor will strive to be present at the General Meeting.

To the extent adequate to the company, Noreco will arrange elections in such manners that the general meeting may vote separately for each candidate nominated for election to the Noreco’s corporate bodies. The Board of Directors decides the agenda for the General Meeting. However, the main agenda items are determined by the requirements of the PLCA and requirements in Noreco’s Articles of Association. The chairman of the Board of Directors will also act as chairman for the General Meeting. The shareholders have found it adequate that the chairman of the Board of Directors also acts as chairman for the General Meeting, and this is stipulated in the company’s Articles of Association.

Nomination committee

The nomination committee consists of three members elected by the General Meeting, whereas two of the members are independent of the Board of Directors and the management. The service shall be two years unless the General Meeting determines that the period shall be shorter, cf. Noreco’s Articles of Association section 7.

The Articles of Association states that: “the nomination committee shall prepare a motion for the Annual General Meeting relating to:

Election of members of the Board of Directors and the chairperson of the Board of Directors.

Election of the members of the Nomination Committee and the chairperson of the Committee.

The remuneration of the Directors and the members of the Nomination Committee.

Any amendments of the Nomination Committee’s Mandate and Charter”.

The members of the Nomination Committee are currently Lars Takla (chairperson), Ole Melberg and Eimund Nygaard. The committee had two meetings in 2007. Board candidates are selected considering the competence, experience, capacity and diversity of each individual and the group as a whole. The nomination committee also proposes the remuneration of the Directors to the General Meeting, reflecting the responsibility, competence, time and complexity of the work involved. The remuneration is a fixed amount, which does not depend on results or involve options. The General Meeting makes all decisions.

Corporate assembly

Noreco does not have a corporate assembly as it is not required to.

Board of Directors: Composition and Independence

The Board of Directors is organized in accordance with the PLCA and currently exists of five members, whereas two are women. The chairman, the deputy chairman and the three other directors were all elected by the shareholders at an extraordinary General Meeting held on 10 October 2007. The members are elected for a two-year period, cf. PLCA section 6-6. This period of service is not deviated in Noreco’s Articles of Association.

All the directors have a wide experience and represent both industry specific and professional expertise from national and international companies. Further information on each director is available on http://www.noreco.com/eng/About-Us/Board In Noreco’s opinion, all the directors are independent of the company’s executive management and material business contacts.

Three of the directors are directly or indirectly currently holding shares in Noreco. None of the directors have any options to buy or subscribe for shares in the Company, nor has a decision to issue options to the directors been made.

The work of the Board of Directors

In 2007 the Board of Directors held 23 board meetings. The Board of Directors has the overall and ultimate responsibility for the management of Noreco and for supervising its day-to-day management and activities in general. Their main duties are to develop Noreco’s strategy and monitor its implementation. The Board of Directors also exercises supervision responsibilities to ensure that the company manages its business and assets in a prudent and satisfactory manner, and that an appropriate level of internal control and risk management systems are upheld. In accordance with the provisions of the PLCA, the terms of reference for the Board of Directors are set out in a formal mandate that includes specific rules on the work of the board and decision-making. The chairman of the Board of Directors is responsible for ensuring that the work of the Board of Directors is carried out in an effective and proper manner in accordance with the relevant legislation.

The Board of Directors prepares annually a work plan for the upcoming year especially emphasizing their objectives, strategies and implementation. The Board of Directors issues a mandate for the work of the CEO. There is a clear division of responsibilities between the Board of Directors and the executive management. The CEO is responsible for the operational management of the group and reports to the Board of Directors on a regular basis.

The Board of Directors is informed of Noreco’s financial position and ensures adequate control of the company’s activities, accounts and asset management. The Board of Directors receives monthly reports on the company’s commercial and financial status. The company also follows the timetable laid down by the Oslo Stock Exchange concerning publication of interim and annual reports.

The Board of Directors has established an audit committee consisting of three members elected by and among the Board of Directors. Lars Takla, Therese Log Bergjord and Roger O’Neil are currently the members of the committee. In addition, the Company’s CFO is attending the audit committee meetings. The Board of Directors has resolved a charter stating the purpose and responsibilities of the committee. According to the audit committee charter, the audit committee shall, inter alia, act as preparatory body in connection with the supervisory role of the Board of Directors with respect to financial control and review and external audit of Noreco’s financial statements and propose to the Board of Directors, who then propose to the General Meeting, the election of the independent auditor of the company.

Further, a remuneration and corporate governance committee has been established. The committee consists of three members elected by and among the Board of Directors and the committee’s purpose and responsibilities are stated in a charter approved by the Board of Directors. Lars Takla, John Hogan and Heidi Petersen are currently the members of the committee. The remuneration and corporate governance committee charter states, inter alia, that the remuneration and corporate gover­nance committee shall act as preparatory body in connection with the supervisory role of the Board of Directors with respect to remuneration compensation and other benefits of Noreco’s CEO and other senior executives and make proposals for long-term incentive schemes applicable to the Company’s CEO and other senior executives.

The Board of Directors carries out an annual evaluation of its own work, competence and performance. A similar evaluation of the CEO is also carried out annually. Further, the Board of Directors carries out an annual risk- and internal control review evaluating inter alia the company’s reporting routines, monitoring, internal audit functions and Noreco’s ability to cope with a variety of potential changes.

Risk management and internal control

The Noreco management system covers all areas of operation of the company. The system is divided into four levels. Level 1 describes the company’s vision and values, level 2 is the management documents and level 3 general requirements in work processes flow diagrams and procedures and 4 contains supporting documentation (e.g. guidelines)

Management documents for risk management, internal control and financial reporting are covered in level 2 in the manage­ment system. Noreco’s risk management process covers all types of risks, opportunities and threats. The financial manual describes how financial management and reporting is performed in Noreco.

Noreco’s management conduct day-to-day follow-up of financial management and reporting. The board’s audit committee assesses the integrity of the company’s accounts, and prepares for the board items related to financial review and control and external audit of accounts. Non-conformances are systematically followed up and corrective measures initiated.

Remuneration of the Board of Directors

The nomination committee proposes the remuneration of the Directors. The General Meeting approves the remunera­tion to the Directors and reflects the responsibility, qualifications, time commitment and the complexity of their tasks and Noreco in general. The remuneration to the Directors is included in the notes to the annual accounts.

Remuneration of the executive Management

The remuneration committee reviews and advises on proposals made by the CEO with regard to the remuneration payable to senior executive employees, and presents it to the Board of Directors.

The remuneration payable to senior executive employees is determined on the basis of competence, experience and achieved results. The Board of Directors prepares guidelines concerning remuneration and presents these for the General Meeting’s consideration in accordance with the PLCA.

The executive management, as well as other employees, has performance-related bonus programmes. Further information is included in the notes to the annual accounts.

An incentive scheme for the management, and other employees under which options exercisable into ordinary shares in Noreco are granted, has been approved by the shareholders in a Extraordinary General Meeting held 14 January 2008.

Information and communications

Noreco will on a regular basis keep shareholders and investors informed about commercial and financial develop­ment and performance. Such information will also be made available on Noreco’s website simultaneously with the informing of shareholders. Noreco is committed to ensuring that the participants in the stock market receive the same information at the same time. Hence, key value drivers and risks will be disclosed through Hugin on www.newsweb.no as soon as it becomes known to the Board of Directors and the executive management, subject to rules relating to drilling results.

Noreco’s annual report is distributed to shareholders prior to the General Meeting. Quarterly earnings releases are published within two months following the end of the quarter. Presentations of the Quarterly earnings are communicated directly via the internet. Noreco publishes an annual financial calendar which can be consulted on the Oslo Stock Exchange web site, through news agencies and on the Noreco website. The Board of Directors performs the financial and other reporting and their contact with shareholders outside the General Meeting with basis in the requirement for openness and equal treatment for all participants in the market.

Noreco strives to ensure that the information provided in announcements to the market, reports, presentations and meetings at all times will give the correct picture of Noreco’s current position in all relevant matters.

Take-Overs

Noreco’s Articles of Association do not contain any restrictions, limitations or defence mechanisms on acquiring the company’s shares. The Board of Directors has not prepared internal guidelines for the event of a take-over bid. In the event of a take-over bid, the Board of Directors will, in accordance with its overall responsibility for corporate governance, act for the benefit of all company shareholders.

Noreco has not been subject for a take-over after the listing of the company on Oslo Stock Exchange.

Auditor

Year-end accounts are audited. The Board of Directors receives a report from the auditor after year-end audits for the year concerned. Yearly, the auditor presents to the Board of Directors a review of the company’s internal control procedures. The auditor participates in the meetings of the Board of Directors that deal with annual accounts. The auditor also presents a declaration of independence and objectivity. The Board of Directors also regularly reviews this relationship to ensure that the auditor is fulfilling an independent and satisfactory control function. The Board of Directors reports the remuneration of the auditor at the General Meeting for the approval of the shareholders.

Ethics

In our pursuit of business opportunities and value creation for all our stakeholders, Noreco will conduct our business with integrity and in compliance with expected standards for ethical business conduct.