1st March 2006
Rocksource
Company presentation March 1 2006
• 4Q 2005 and preliminary accounts 2005 • Operational update • Technology update • Strategy update • Q&A
1. March 2006
4 Quarter 2005
Profits and loss All figures are stated in NOK 1,000
31.12.2005
Total operating income
10 980
6 873
2 325
1 743
39
Total operating cost
59 150
33 159
10 910
10 093
4 980
Operating result
-48 169
-26 286
-8 585
-8 350
- 4 490
635
2 374
-1 218
-580
58
-47 534
-23 911
- 9 803
- 8 930
- 4 882
-0.128
-0.045
-0.026
-0.030
-0.016
Net financials Result ESP diluted NOK
Q4 2005
Q3 2005
Q2 2005
Q1 2005
Balance statement – key figures All figures are stated in NOK 1,000 Goodwill
31.12.2005
2004
(IFRS)
(IFRS) 154 563
117 534
17 902
-
3 702
41
10 755
947
2 030
85
188 951
118 607
10 276
1 009
Bank deposits
242 217
25 544
Current assets
252 492
26 553
TOTAL ASSETS
441 443
145 160
Total equity
419 246
142 342
22 197
2 818
441 443
145 160
Seismic library Patents and development costs Oil and gas properties Furniture and office machines Fixed assets Total receivables
Total liabilities Total equity and liabilities
Cash Flow – Key figures All figures are stated in NOK 1,000
31.12.2005
Q4 2005
Q3 2005
Q2 2005
Q1 2005
Net cash flow from: operating activities
-32 328
- 7 045
-11 150
-7 135
-6 427
investing activities
-37 497
-27 277
-286
-10 215
-126
financing activities
286 020
226 503
0
59 588
--
477
180
-4
50
17
216 673
192 361
- 11 440
42 288
- 6 536
Cash at start of period
25 544
49 856
61 297
19 009
25 544
Cash at end of period
242 217
242 217
49 857
61 297
19 008
Exchange rate changes
Net Change in cash
Production and revenues Production and Revenue Quantity: Oil, barrels Gas, million cubic feet Revenue [1,000 USD]: Oil Gas Total Revenue Average prices: Per barrel of oil Per 1,000 cubic feet of gas
31.12.05 Q4 2005 Q3 2005 Q2 2005 3 184 91.9
1 222 31
854 31.1
1 108 29.0
176.6 906.1 1 082.7
72.8 378.2 451.0
49.8 309.7 359.6
53.9 216.0 269.9
55.45 9.86
59.60 12.04
58.37 9.96
48.63 7.45
Rocksource Shareholder top twenty 28.02.06 Name of shareholder DNO ASA DEXIA BANQUE INTERNA SEC.DEPT. * DAG DVERGSTEN AS STIFTELSEN UNIVERSITETSFORSKNING BERGEN JONNY HESTHAMMER AS BALANCED ROCK AS SKEIE GROUP AS THOMAS A. COLLINS ARVE JOHNSEN FIDELITY FUNDS-EUR. SM. JAN SJØLIE THE C.R.BEARDEN FAM. MARTIN BEKKEHEIEN ARVE JOHNSEN AS ENGER LARS H GOLDMAN SACHS INTERN. EQUITY DANSKE BANK A/S MADSEN ØISTEIN MIKHAIL BOULALENKO EF JPMORGAN CHASE BANK CLIENTS Top 20 shareholders Others Total
Number of shares 66 569 014 43 499 715 26 153 421 22 225 000 21 200 519 21 200 519 18 425 428 16 474 504 12 542 758 12 508 400 9 683 054 9 299 966 8 850 000 8 850 000 4 230 000 4 015 000 4 000 000 3 715 000 3 500 000 3 494 873 320 437 171 205 720 563 526 157 734
% 12.7 % 8.3 % 5.0 % 4.2 % 4.0 % 4.0 % 3.5 % 3.1 % 2.4 % 2.4 % 1.8 % 1.8 % 1.7 % 1.7 % 0.8 % 0.8 % 0.8 % 0.7 % 0.7 % 0.7 % 60.9 % 39.1 % 100.0 %
Summary of activities 4 Quarter 2005
• Continued technology development • Continued recruitment • Bergen office established • Ghana evaluation • New Ace re-development programme • Business development activities to access acreage on NCS/UKCS and international opportunities
Summary of Activities 2005 • Development of cutting edge exploration technology • Established an organisation with capacity to deliver • Successful fund raising • Portfolio - Acquired New Ace production opportunity - Ghana evaluation - Colombia project - Earn-in agreement on 211/22b (Jaguar)
• Business development activity to prepare for access to acreage
1. March 2006
Operational update
Current UKCS Exploration - 211/22b 211/22b-5 ’Jaguar’ •
211/22b-5 Spudded 23rd Jan 2006 by the Bredford Dolphin 211/22b
•
Primary target unsuccessful -
•
Current operation 28.02 drilling to planned TD
•
Dry Hole Cost - £9.21mm (mean) -
211/22b
Ref announcement 28.02
£1.42mm net RGT
Colombia seismic project
•
RGT and Investor in Inseis seismic aqcuisition
•
RGT will also evaluate seismic for exploration potential
•
Seismic shoot Completed
•
Seismic data expected in April – June 2006
•
Seismic in both Cayos (Carribean) & Pacifica (Pacific) Basins
•
Frontier basins
•
Both fit in EM suitable water depths
•
Sales completed giving revenue to RGT of 3,8 mill NOK
Cayos Pacifica
International Opportunities – Ghana •
Tano block containing proven reserves with significant development challenges
•
Accra Keta exploration potential AK (d) AK (a)
AK (c)
NAK – 1X
AK (d)
•
Poor prospectivity coupled with challenged developments lead to negative conclusion
AK (b)
Accra Keta Tano Map courtesy of GNPC
Tarpon 1
REC – US Operations New Ace
•
1.1mmscf/day & 30bo/day
•
10.8mbo & 477mmscf reserves
•
Rocksource is currently building reservoir model to fully assess infill and recompletion potential
Yegua Prospect
•
Planned drilling 2Q – 3Q (rig availability dependant)
•
On stream in 2 weeks from completion
Technical team currently evaluating suitable onshore EM test sites within the REC portfolio
1. March 2006
Technology update
Seismic data with numerous high amplitude anomalies. Red dots are EM receivers on sea bed.
Seismic data with main sand bodies extracted.
Potential HCfilled reservoirs
Which one would you drill?
Seismic section with Rocksource processed EM data superimposed
HC-filled reservoirs
Water-filled sand bodies
Now which one would you drill?
EM work process status • Rocksource Discover v. 1 in place • Tested on numerous EM data sets with good well control • EM results are consistent with well data and seismic data in all cases • Significant improvements over previous algorithms • Best results require integrated approach (EM, seismic, well, geology) • Improvements include - Better vertical constraints - Better lateral constraints - Less noise, more reliable data - Better delineation of HC-filled reservoirs (risk and volume calculations) - Quicker processing - Applicable to EM complex settings (salt, volcanic rocks, carbonates etc.)
Results are highly promising and provides Rocksource with a reliable tool for identification of HC.
EM activities • Basin evaluation (ongoing) - Screening of EM suitable areas worldwide - NCS screening • Feasibility studies (ongoing) - Testing of EM suitability for specific prospects for farm-ins and acquisition • Survey analyses (ongoing) - Integrated analyses of real EM data • R&D - Started development of Rocksource Discover v.2 (including algorithm development and testing) - Complex settings - Shallow water project – possible test in 2006 - Onshore project – possible test in 2006 - Risk and volume calculations – in place medio 2006 - Patents – 3 patents pending - Participation in EM consortia - External research projects
1. March 2006
Strategy update What do we want to achieve ? How do we want to do it ?
Time Line 2004 Amergy formed Acquisition of REC Amergy & Ecuanor Merger
2005
2006
2007
Main achievement 2005
Key target 2006
Key target 2007
Technology Organisation
Establish portfolio of attractive EM suitable licenses through farm-in and awards
Participate in 2 EM based wells
Ecuanor to Rocksource ASA Rocksource Geotech fully acquired EM ’Discover’ Version 1 EM ’Discover’ Version 2 Continued EM Development (Onshore, shallow marine and production) Bergen office established NCS exploration UKCS exploration 211/22b - Jaguar
International exploration
Mission Statement
Rocksource aims to be an innovative, fast growing E&P company. Our goal is to build a solid reserves base by delivering amongst the highest exploration success rates in the industry We aim towards a long-term position as a mid-size producer, recognised for our successful application of technology
Growth Targets Short term Exploration •
•
Build a portfolio of licenses which allows participation in 6-10 EM surveys/year 2 EM based wells per year Focus on licensing rounds and selected partnerships
Opportunity assessment 40-60
Licensed prospects 10-20
EM surveys 6-10
Short Term Production
•
Focus on current portfolio
•
Evaluate acquisitions where EM technology and reservoir management skills can be applied to create value
2 EM based wells per year
Growth Strategy Partnership model Short Term Exploration •
•
Develop core exploration business in the NCS and UKCS through farm-ins and license rounds International review of EM suitable basins
Rocksource
Partner/operator
•Integrated interpretation of seismic and EM data
•Existing licenses and portfolio development
•Capital
Medium Term Exploration •
Test NCS and UKCS licences and further develop acreage position
•
Focussed exploration in 2-3 international basins for acreage capture
•
EM survey aquisition and post EM wells
Short Term Production •
Evaluate New Ace Field
•
Refine REC production growth model – onshore US
•Subsurface expertise
+
•Capital •Local subsurface expertise
Competive license applications High drilling success rates
NCS Exploration Strategy •
Significant acreage currently in proven EM suitable water depths
•
Pre-qualification process started
•
Acreage access by farm-ins and license round applications Suitable water depth
Current
Exploration
discoveries
potential
Current fields
Bill Sm3 o.e.
10 8 6
Sold & Delivered Sanctioned
Planning
Future IOR
4 2 0 -2 -4 -6
* Source: NPD, Petroleumsressursene på norsk sokkel 2005, www.npd.no
Water depth – too shallow
International Exploration Strategy
•
Continued work with several independents with the aim to form partnerships
•
We have started a structured Global Basin Screening to identify suitable basins for EM technology.
•
Focus on high reward opportunities and application of EM technology
•
We target quality operators with first rate knowledge of local geology and an open mindset towards technology
Exploration and Business development process Screen Identify the right opportunities where Rocksource can apply technology advantage
Access Do the right deal where Rocksource can extract superior value
Global screening
Farm-in agreements
NCS and UKCS opportunity search
License applications
Evaluate
Execute
Make the right decisions
Drill the right wells
Avoid drilling dry wells
Where EM ensures maximum value creation
Seismic and EM surveys
2006 Focus 2005 Focus Market announcement
Drill exploration wells Plan for development
2007 Focus
What are the future success criteria for 2006 ?
• Announcement of acquisition of EM suitable acreage - Farm-in agreements - License round applications and awards
• Continued technology advances - Onshore - Shallow waters - Further EM algorithm development
• Build up of organisational capabilities - Pre-qualification on the NCS - Hiring further skilled commercial and technical professionals
1. March 2006
Questions
Fourth Quarter 2005
RESULTATREGNSKAP / INCOME STATEMENT Q4 2005
Q4 2004
31.12.2005
31.12.2004
IFRS NOK 000'
IFRS NOK 000'
IFRS NOK 000'
NOK 000'
IFRS
Driftsinntekter/operating Income Salgsinntekter / Revenue
6 873
138
10 980
219
Sum driftskostnader/Total Operating Income
6 873
138
10 980
219
Driftskostnader/Operating Expenses Driftskostnader olje og gass / Operating costs, oil & gas Lønnskostnad / Payroll and related cost Avskrivning på varige driftsmidler / Depreciation and amortization Nedskrivning av varige driftsmidler / Impairment loss fixed assets Annen driftskostnad / Other operating expenses
5 104 1 946 3 619 70 22 420
1 592 995 32 578 4 526
11 367 4 591 4 838 70 38 284
215 1 592 1 110 32 578 7 006
Sum driftskostnader/Total operating expenses
33 159
39 906
59 150
42 501
-26 286
-39 768
-48 169
-42 282
Finansinntekter / Financial income Finansutgifter / Financial expenses
3 241 867
363 520
3 935 3 300
363 615
Netto finansposter/Net financials
2 374
-158
635
-253
Resultat/Result
-23 911
-39 925
-47 534
-42 534
Herav majoritetens andel av resultatet / Majority share of profit Herav minoritetens andel av resultatet / Minority share of profit
-23 911 -
-39 473 -452
-46 215 -1 319
-41 824 -710
-0,045 -0,045
-0,135 -0,135
-0,128 -0,128
-0,286 -0,286
Driftsresultat/operating result
Resultat pr aksje / Result per share Utvannet resultat pr aksje / Diluted result per share
BALANSE / BALANCE SHEET 31.12.2005
31.12.2004
31.12.2004
IFRS NOK 000'
IFRS NOK 000'
NGAAP NOK 000'
EIENDELER / ASSETS Anleggsmidler/Fixed Assets Immatrielle eiendeler/Intangible fixed assets Patenter og utviklingskostnader / Patents and development costs Seismikkbibliotek / Seismic library Goodwill Sum immatrielle eiendeler/Total intangible assets
3 702 17 902 154 563 176 167
41 117 534 117 575
3 536 3 536
10 755 2 030 12 784
947 85 1 032
908 65 973
-
-
4 710
-
188 951
118 607
9 219
1 390 8 886 10 276
1 009 1 009
787 787
Bankinnskudd/ Bank deposits Bankinnskudd / Bank deposits Sum bankinnskudd / Total bank deposits
242 217 242 217
25 544 25 544
21 379 21 379
Sum omløpsmidler / Total current assets
252 492
26 553
22 166
Sum eiendeler / Total assets
441 443
145 160
31 385
131 539 -25 287 732 419 246
74 060 -25 -49 066 117 373 142 342
74 060 -25 -45 236 28 799
Sum kortsiktig gjeld/ Total current liabilites
4 949 17 248 22 197
2 088 730 2 818
1 968 618 2 586
Sum gjeld/Total liabilities
22 197
2 818
2 586
441 443
145 160
31 385
Varige driftsmidler/Tangible fixed assets Olje- og gasseiendommer / Oil- and gas properties Inventar og kontormaskiner / Furniture, fixtures and office machines Sum varige driftsmidler / Total Tangible Fixed Assets Finansielle anleggsmidler/Financial Fixed Assets Investeringer i tilknyttet selskap/ Investmensts in associates
Sum finansielle anleggsmidler/Total financial fixed assets Sum anleggsmidler/Total fixed assets OMLØPSMIDLER / CURRENT ASSETS Kortsiktige fordringer/Short term receivables Kundefordringer / Trade receivables Andre fordringer / Other receivables Sum kortsiktige fordringer/total short term receivables
EGENKAPITAL OG GJELD / EQUITY AND LIABILITIES Egenkapital og Gjeld/ Equity and liabilities Aksjekapital / Share capital Egne aksjer / Own shares Overkursfond / Share premium reserve Annen egenkapital / Other equity Minoritetsinteresser / Minority interest Sum egenkapital / Total Equity Gjeld / Liabilities Kortsiktig gjeld/ Current Liabilites Leverandørgjeld / Trade payables Annen kortsiktig gjeld / Current liability
SUM EGENKAPITAL OG GJELD / TOTAL EQUITY AND LIABILITIES
KONTANTSTRØMOPPSTILLING/ CASH FLOW STATEMENT Q4 2005
Q4 2004
31.12.2005
IFRS
IFRS
IFRS
31.12.2004 IFRS
NOK 000'
NOK 000'
NOK 000'
NOK 000'
Operasjonelle aktiviteter / Operational activities -23 911 3 619 70 -0 1 708
-39 925 995 32 578 -
-47 534 4 837 70 7 1 708
-42 534 1 110 32 578 -
Endring av andre tidsavgrensningsposter / Changes in other current balance sheet items
12 941
-3 326
10 096
-6 539
Effekt av valutakursendringer / Changes in exchange rates
-1 472
65
-1 512
65
Netto kontantstrøm fra operasjonelle aktiviteter / Net cash flow from operational activities
-7 045
-9 613
-32 328
-15 320
-27 275
-287
-37 704
-483
-2
-
207
-
-
-224
-
750 -224
-27 277
-511
-37 497
43
-19 080 245 928
-
19 080 -19 080 286 426
40 413
-345
-
-406
-
226 503
-
286 020
40 413
180
-57
477
-57
192 361
-10 181
216 673
25 079
49 856
35 725
25 544
465
242 217
25 544
242 217
25 544
Ordinært resultat før skattekostnad / Result Avskrivning og amortisering / Depreciation and amortization Nedskrivninger / Write-downs Gevinst/tap ved salg av eiendeler / Gain/loss on sale of assets Kostnader ansattes aksjeopsjoner / Cost employees share based payment
Investeringsaktiviteter / Investing activities Utbetalinger ved kjøp av driftsmidler/prosjektkostnader / Investments in tangible assets Innbetaling ved salg driftsmidler/prosjekter / Cash flow from sales of assets Innbetaling ved endret konsernsammensetning / Cash flow from changes to the group Effekt av valutakursendringer / Effect of changes in exchange rates Netto kontantstrøm fra investeringsaktiviteter / Net cash flow from investing activities
Finansieringsaktiviteter / Financing activities Innbetalinger ved opptak av ny kortsiktig gjeld / Proceeds from issuance of short term debt Tilbakebetaling av kortsiktig gjeld / Repayment of short term debt Innbetalinger ved utstedelse av aksjekapital / Capital increase Effekt av valutakursendringer / Effect of changes in exchange rates Netto kontantstrøm fra finansieringsaktiviteter / Net cash flow from financing activities Effekt av valutakursendringer på kontanter / Exchange rate changes
Netto endring i kontanter / Net change in cash Beholdning av kontanter periodestart / Cash at start of period Beholdning av kontanter periodeslutt / Cash at end of period
Egenkapital / Equity Aksjekapital/ Share capital
Egenkapital 01.01.2005 IFRS Kontant emisjoner/ Equity Issue Emisjon ved gjennomført trekantfusjon/ New issues due to three party merger Omregningsdifferanser valuta/ Exchange rate adjustments Ansattes aksjeopsjoner/ Option program Periodens resultat inkl minoritet/ Net Income Egenkapital 31.12.2005 IFRS
Antall aksjer /Number of shares
Egne aksjer/ Own Shares
Overkursfond/ Share premium reserves
Annen egen kapital/ Other Equity
Minoritet/ Minority
Sum egenkapital/ Total Equity
74 060
-25
0
49 066
117 373
142 342
32 479
0
253 957
-10
0
286 426
25 000
0
89 000
40 402
-117 373
37 029
0
0
0
-725
0
-725
0
0
0
1 708
0
1 708
0 131 539
0 -25
0 342 957
-47 534 42 907
0 0
-47 534 419 246
a NOK 0,25
Antall aksjer 01.01.2005 (i hele tusen)
296 241
Antall aksjer 30.06.2005 (i hele tusen) Antall aksjer 30.09.2005 (i hele tusen) Antall aksjer 31.12.2005 (i hele tusen)
325 865 425 865 526 158
In an extraordinary shareholders meeting held 23rd of February 2006 the shareholders made descisions which implicates issuance of new shares and the possibility of buying own shares.
ROCKSOURCE Group - Notes 4th quarter 2005 Principles and reporting The quarterly reports are with effect from 2005 prepared in accordance with IFRS, stating converted 2004 IFRS accounting figures for comparison purposes. Brief information on the transition from NGAAP to IFRS is included in note 1. Refer otherwise to more detailed information in the interim financial statement for Q1 2005. The quarterly reports are in accordance with IAS 34 – Interim Financial Reporting and IFRS-standards issued and effective at date of reporting. The quarterly report accounting policies are consistent with the policies applied in the annual reports. The transition to IFRS took place when Amergy AS was established/formed in March 2004. This was the acquiring company for accounting purposes in the merger with Ecuanor ASA (later Rocksource ASA) that was carried out in the autumn of 2004. The IFRS accounting policies have been applied consistently in 2005 and for the 2004 comparative figures. The consolidated accounts include Rocksource ASA (Rocksource), Rocksource Energy Corporation (Rocksource Energy) and Rocksource Geotech AS (Rocksource Geotech). Rocksource acquired 20% of the shares in Rocksource Geotech in September 2004 and also had an option to buy the remaining 80% of the shares for NOK 150 million by 1 July 2009. As a result of this option, Rocksource Geotech has become consolidated for accounting purposes from the acquisition date, 3 September 2004. The option are exercised in 2005 by way of a merger with subscription of 100 million new shares in Rocksource, Rocksource Geotech are now a wholly owned subsidiary. All of the estimated excess value relating to the acquisition of consolidated companies has been defined as goodwill. Following a concrete assessment, the excess value that has been acquired is mainly regarded as being linked to person-related expertise and geology experience, as well as to access/rights to technology that is promising and still being developed. The excess value cannot therefore, in the Company’s opinion, be classified as an intangible asset, either in whole or in part, but should instead be classified as goodwill. Capitalized goodwill is stated at cost less impairment losses. Exploration and development costs for oil and gas properties are capitalised according to the successful effort method. The IFRS currently do not specify any industry-specific standard for oil and gas activities, and IFRS 6 allows the continued application of previously used principles. Nonetheless, the Group has chosen to start using successful effort instead of full cost. All exploration costs, with the exception of licence purchases and costs relating to drilling are charged to expenses as they are incurred. Development costs (including those relating to exploration drilling) are capitalised using continuous write-down testing. Capitalised costs are depreciated as from and including the year when commercial reserves are proven on the field. Expenditure on research activities is recognised in the income statement as an expense as incurred. Expenditure on development activities is capitalized if the product or process is technically and commercially feasible and the company has sufficient resources to complete development. The expenditure capitalised includes the cost of external services. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalized development expenditure is stated at cost less accumulated amortization based on expected lifetime and impairment losses. Rocksource has positioned the company for exploration and production licenses on the Columbian continental shelf on the Caribbean and Pacific coast, as part of the company’s E&P activities, by participating in a larger collection of seismic data together with the seismic company InSeis AS. The multi-client seismic library capitalised per 31.12.2005 is related to this joint venture project. Costs directly related to the collection and processing of data is capitalized. Capitalized collection and processing expenditure is stated at cost less accumulated amortization and impairment losses. Revenues are recognised in the income statement according to the degree of completion of the project.
ROCKSOURCE Group - Notes 4th quarter 2005 Note 1: The effect of the transition to IFRS Rocksource ASA has conducted an analysis of the differences between NGAAP and IFRS, and the reconciliation below shows a summary of the effects on the equity and results. The date of the transition from NGAAP to IFRS is the date when Amergy AS was formed (March 2004). At that time, there were no differences between NGAAP and IFRS, so no reconciliation has been prepared for the opening balance sheet on the transition date. Reconciliation of transition to IFRS
31.12.2004
NGAAP equity
28 799 1 497 114 000 -2 130 176 142 342
Result after transition Consolidation Rocksource Geotech AS, minority interests Merger - changed implementation date Rocksource EC - adjusted differences in exchange rates
IFRS equity - incl. minority interests
Reconciliation of transition to IFRS NGAAP result
Q4 2004 -40 853 463 -275 702 40 -39 923
Goodwill - reversed amortisation Consolidation Rocksource Geotech AS Merger - changed implementation date Rocksource EC - conversion to "successful effort" method
IFRS result - incl. minority interests
31.12.2004 -44 031 771 -597 1 460 -136 -42 534
Note 2: Segment information per. 31.12.05 The Group’s primary business areas (segments) are: 1. Oil and gas exploration and production 2. Geo-technical services 3. Minerals and metals The mineral and metals related operations no longer form part of the Group’s core areas, and will be demerged into a separate company in 2006, see note 6. The segments do not have separate financing/funding and net financials is not allocated. There have been no transactions between the segments.
YTD Revenue Operating result Assets
Q 4 2005 Revenue Operating result
Oil/gas 7 031 -41 600 15 369
Geotechnical services 3 887 -5 850 173 582
Minerals/ metals 62 -719 0
Total 10 980 -48 169 188 951
Oil/gas 2 986 -24 279
Geotechnical services 3 887 -1 872
Minerals/ metals 0 -135
Total 6 873 -26 286
ROCKSOURCE Group - Notes 4th quarter 2005 Note 3: Pro forma figures The transferring company in the merger with Ecuanor Geotech - Rocksource Geotech - was consolidated for accounting purposes as from the acquisition date in September 2004. Pro forma figures would not, therefore, provide any additional information and have thus not been prepared.
Note 4: Related parties /share based payments Reference is made to detailed information disclosed in the annual report for 2004 concerning related parties. The management agreement with Dag Dvergsten AS has been renegotiated in 4th quarter. As a result of this renewed agreement a share based compensation was approved at the extraordinary shareholders meeting held 23 February 2006. The additional compensation is fully recognized in the 2005 income statement. Stock exchange notifications have been published regarding employment of new CEO, both in June 2005 (Martin Bekkeheien) and January 2006 (Trygve Pedersen). Both former and present CEO has received share based payments through share options. The organisation has been considerably strengthened in 4th quarter. A share based incentive programme was approved at the shareholders meeting held 23 February 2006.
Note 5: Loan agreement In April 2005 Rocksource ASA entered a USD 3 mill loan agreement with term 01.05.2005 – 30.04.2006, at a fixed interest rate of 15 per cent payable at maturity date. The agreement included a call option with maturity at earlier dates. The loan was repaid in full primo November 2005.
Note 6: Demerger of mineral and metals activities. Rocsource ASA will demerge its business activities and assets within exploration and production of coal, metals and minerals, where after the demerged entity shall be incorporated as Nordic Mining ASA. The demerger was approved at the shareholders meeting held 23 February 2006.
Note 7: Value Added Tax Claim Amergy AS, the assigned company in the merger with Ecuanor ASA carried out in 2004, has received a claim for NOK 2.1 mill in Value Added Tax. The claim is regarded as incorrect, and no liability has been capitalized in the 2005 accounts.