EXCHANGE OFFER - AGR reports other/exchange...The Norwegian FSA has not made any form of control or...

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EXCHANGE OFFER

(EDS Group AS, a private limited liability company incorporated under the laws of Norway)

(AGR Group ASA, a public limited liability company incorporated under the laws of Norway)

Exchange ratio EDS Share : AGR Share

44 : 56 Giving the right to exchange one EDS Share into 0.7857 AGR Share or one AGR Share into 1.2727 EDS Share

Application Period: From 12 August 2013 to 16:30 hours CET on 26 August 2013

The information in this prospectus (the “Prospectus”) relates to (i) an offer to existing shareholders of EDS Group AS (“EDS Group”) as of 6 August 2013 (and being registered as such in the Norwegian Central Securities Depository (“Verdipapirsentralen” or the “VPS”) on the 9 August 2013 (the “Record Date”) pursuant to the three days’ settlement procedure) except for (a) Altor Oil Service Invest AS (“Altor”), and (b) shareholders being resident in a jurisdiction where the EDS Exchange Offer (as defined below) would be unlawful or in a jurisdiction, other than Norway, where the making of the EDS Exchange Offer would require any filing, registration or similar action (the “EDS Shareholders”) to apply for an exchange of up to all of its shares in EDS Group (the “EDS Shares”) into shares in AGR Group ASA (“AGR Group”) (the “AGR Shares”) (the “EDS Exchange Offer”) and (ii) an offer to existing shareholders of AGR Group (also referred to as the “Company”, and, together with its consolidated subsidiaries, “AGR” or the “Group”) as of 6 August 2013 (and being registered as such in the VPS on the Record Date) except for (a) Altor, and (b) shareholders being resident in a jurisdiction where the AGR Exchange Offer would be unlawful or in a jurisdiction, other than Norway, where the making of the AGR Exchange Offer would require any filing, registration or similar action (the “AGR Shareholders”) to apply for an exchange of its AGR Shares into EDS Shares (the “AGR Exchange Offer” and together with the EDS Exchange Offer, the “Exchange Offer”). The exchange ratio between one EDS Share and one AGR Share under the Exchange Offer is 44:56, giving the right to exchange one EDS Share into 0.7857 AGR Share or one AGR Share into 1.2727 EDS Share.

Under the EDS Exchange Offer, the full settlement of all applications for exchange of EDS Shares for AGR Shares is guaranteed by Altor. Under the AGR Exchange Offer, settlement of AGR Shares in exchange for EDS Shares is subject to the number of EDS Shares tendered under the EDS Exchange Offer.

The application period will commence on 12 August 2013 and expire at 16:30 hours, Central European Time (“CET”), on 26 August 2013 (the “Application Period”). Settlement of AGR Shares and EDS Shares under the Exchange Offer is expected to take place on or about 29 August 2013 through the facilities of the VPS.

The AGR Shares (also referred to as the “Shares”) are listed on Oslo Børs, a stock exchange operated by Oslo Børs ASA (the “Oslo Stock Exchange”) under the ticker code “AGR”. The EDS Shares are not, and will not be, listed on any regulated market place.

Neither the AGR Shares nor the EDS Shares have been, nor will be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or under the securities laws of any state or other jurisdiction of the United States of America (the “U.S.” or the “United States”) and the Exchange Offer will be offered in reliance on Regulation S under the U.S. Securities Act (“Regulation S”). The Exchange Offer will not be made to persons who are residents of Australia, Canada, Hong Kong, Japan or the United States or in any jurisdiction in which the making of such offer would be unlawful. For more information regarding restrictions in relation to the Exchange Offer pursuant to this Prospectus, see Section 5.15 “Selling and transfer restrictions”.

Investing in the Company’s Shares involves a high degree of risk. See Section 2 “Risk Factors” beginning on page 12.

The date of this Prospectus is 9 August 2013

Exchange Offer – AGR Group ASA – EDS Group AS – Prospectus

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IMPORTANT INFORMATION

This Prospectus has been prepared in connection with the Exchange Offer.

The Group has furnished the information in this Prospectus. This Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the “Norwegian Securities Trading Act”) and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses, as amended, and as implemented in Norway (the “EU Prospectus Directive”). This Prospectus has been prepared solely in the English language. The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet) (the “Norwegian FSA”) has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information included in this Prospectus. The approval by the Norwegian FSA only relates to the information included in accordance with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or referred to in this Prospectus.

This Prospectus has also been prepared to comply with Section 7-4 of the Regulations to the Securities Trading Act and has been registered with the Norwegian Register of Business Enterprises in accordance with Sections 7-10 cf. 7-2 of the Norwegian Securities Trading Act. For this purpose, the Prospectus has neither been reviewed nor approved, by neither the Norwegian FSA nor any other governmental authorities of Norway.

For definitions of certain other terms used throughout this Prospectus, see Section 20 “Definitions and Glossary”.

The information contained herein is current as of the date hereof and subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the Shares between the time of approval of this Prospectus by the Norwegian FSA and the completion of the Exchange Offer, will be included in a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus, nor the exchange of any shares related to the Exchange Offer, shall under any circumstances imply that there has been no change in the Group’s affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus.

Other than the Company, no person is authorised to give information or to make any representation concerning AGR Group, EDS Group or in connection with the Exchange Offer other than as contained in this Prospectus. If any such information is given or made, it must not be relied upon as having been authorised by the Company or by any of the affiliates, representatives or advisors of any of the Company or the Group.

The Exchange Offer is being made only in those jurisdictions in which, and only to those persons to whom, offers, sales and exchange of shares may lawfully be made. Neither the AGR Shares nor the EDS Shares have been, nor will be, registered under the U.S. Securities Act, or under the securities laws of any state or other jurisdiction of the United States and may not be offered, sold or exchanged except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities law of any state or other jurisdiction of the United States. Pursuant to this Prospectus, the shares under the Exchange Offer are being offered, sold and exchanged outside the United States in reliance on Regulation S. The Exchange Offer will not be made to persons who are residents of Australia, Canada, Hong Kong, Japan or the United States or in any jurisdiction in which such offering would be unlawful. For more information regarding restrictions in relation to the Exchange Offer pursuant to this Prospectus, see Section 5.15 “Selling and transfer restrictions”.

This Prospectus and the terms and conditions of the Exchange Offer as set out herein and any offers, sales or exchange of shares hereunder shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Exchange Offer or this Prospectus.

In making an investment decision, prospective investors must rely on their own examination, and analysis of, and enquiry into each of AGR Group and EDS Group and the terms of the Exchange Offer, including the merits and risks involved. Neither AGR Group nor EDS Group, or any of their respective representatives or advisers, is making any representation to any offeree or purchaser of the shares under the Exchange Offer regarding the legality of an investment in such shares by such offeree or purchaser under the laws applicable to such offeree or purchaser. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of an exchange of shares under the Exchange Offer.

All Sections of the Prospectus should be read in context with the information included in Section 4 “General Information”.

Investing in the Company’s Shares involves a high degree of risk. See Section 2 “Risk Factors” beginning on page 12.


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NOTICE TO UNITED KINGDOM INVESTORS

This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “Relevant Persons”). The exchange of AGR Shares and EDS Shares under the Exchange Offer are only available to, and any invitation, offer or agreement to exchange, subscribe, purchase or otherwise acquire AGR Shares and EDS Shares under the Exchange Offer will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on this document or any of its contents.

NOTICE TO INVESTORS IN THE EEA

In any member state of the European Economic Area (the “EEA”) that has implemented the EU Prospectus Directive, other than Norway (each, a “Relevant Member State”), this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the EU Prospectus Directive. The Prospectus has been prepared on the basis that all offers to exchange AGR Shares and EDS Shares under the Exchange Offer outside Norway will be made pursuant to an exemption under the EU Prospectus Directive from the requirement to produce a prospectus for offer of shares. Accordingly, any person making or intending to make any offer within the EEA of AGR Shares and EDS Shares which is the subject of the Exchange Offer contemplated in this Prospectus within any EEA member state (other than Norway) should only do so in circumstances in which no obligation arises for AGR or EDS to publish a prospectus or a supplement to a prospectus under the EU Prospectus Directive for such offer. Neither AGR nor EDS have authorised, nor do they authorise, the making of any offer to exchange AGR Shares and EDS Shares under the Exchange Offer through any financial intermediary

Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in this Prospectus in Norway, who receives any communication in respect of, or who exchanges any AGR Shares and EDS Shares under the Exchange Offer contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with AGR and EDS that:

a) it is a qualified investor as defined in the EU Prospectus Directive, and

b) in the case of any AGR Shares and EDS Shares exchanged by it as a financial intermediary under the Exchange Offer, as that term is used in Article 3(2) of the Prospectus Directive, (i) such AGR Shares and EDS Shares exchanged by it under the Exchange Offer have not been exchanged on behalf of, nor have they been exchanged with a view to their exchange to, persons in any Relevant Member State other than qualified investors, as that term is defined in the EU Prospectus Directive, or in circumstances in which the prior consent of AGR or EDS have been given to the exchange; or (ii) where such AGR Shares and EDS Shares have been exchanged by it on behalf of persons in any Relevant Member State other than qualified investors, the exchange of those AGR Shares and EDS Shares is not treated under the EU Prospectus Directive as having been made to such persons.

For the purposes of this provision, the expression an “offer to the public” in relation to any of the AGR Shares and EDS Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any AGR Shares and EDS Shares to be exchanged so as to enable an investor to decide to exchange any AGR Shares and EDS Share under the Exchange Offer, as the same may be varied in that Relevant Member State by any measure implementing the EU Prospectus Directive in that Relevant Member State, and the expression “EU Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.


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TABLE OF CONTENTS

1 SUMMARY ....................................................................................................................................... 2 2 RISK FACTORS .............................................................................................................................. 12 3 RESPONSIBILITY FOR THE PROSPECTUS ........................................................................................... 18 4 GENERAL INFORMATION ................................................................................................................. 19 5 THE EXCHANGE OFFER ................................................................................................................... 23 6 THE DEMERGER ............................................................................................................................. 33 7 DIVIDEND AND DIVIDEND POLICY ................................................................................................... 37 8 INDUSTRY AND MARKET OVERVIEW ................................................................................................. 38 9 BUSINESS OF THE GROUP ............................................................................................................... 40 10 CAPITALISATION AND INDEBTEDNESS ............................................................................................. 50 11 SELECTED FINANCIAL AND OTHER INFORMATION .............................................................................. 52 12 OPERATING AND FINANCIAL REVIEW ............................................................................................... 58 13 BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE ............................ 75 14 RELATED PARTY TRANSACTIONS ..................................................................................................... 84 15 CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL ..................................................... 85 16 SECURITIES TRADING IN NORWAY .................................................................................................. 93 17 TAXATION ..................................................................................................................................... 97 18 DESCRIPTION OF EDS GROUP AS................................................................................................... 100 19 ADDITIONAL INFORAMTION .......................................................................................................... 108 20 DEFINITONS AND GLOSSARY ........................................................................................................ 110

APPENDICES

Appendix A ARTICLES OF ASSOCIATION ............................................................................................ A1 Appendix B EDS EXCHANGE OFFER ACCEPTANCE FORM ...................................................................... B1 Appendix C AGR EXCHANGE OFFER ACCEPTANCE FORM ...................................................................... C1


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1 SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These Elements are numbered in Sections A– E (A.1 – E.7) below. This summary contains all the Elements required to be included in a summary for this type of securities and the Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of “not applicable”.

Section A – Introduction and Warnings

A.1 Warning This summary should be read as introduction to the Prospectus;

any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor;

where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated; and

civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities.

Section B - Issuer

B.1 Legal and commercial name AGR Group ASA.

B.2 Domicile and legal form, legislation and country of incorporation

The Company is a public limited liability company organised and existing under the laws of Norway pursuant to the Norwegian Public Limited Companies Act.

The Company’s registered and business address is Karenslyst Allé 4, 0278 Oslo, P.O. Box 444 Skøyen, 0213 Oslo, Norway.

B.3 Current operations, principal activities and markets

The Group is a supplier of services and technology to the oil and gas offshore industry. The Group’s main operations are based in Oslo, with other offices around the world, including Stavanger, Straume (Bergen), Trondheim, Aberdeen, Guilford, Houston, Perth, Almathy, Moscow, Dubai and Abu Dhabi and Tel Aviv.

The Group provides independent oil companies with access to scarce drilling rig capacity, as well as providing specialized geology and geophysics and reservoir expertise and distinctive knowledge in well engineering, well planning and management of full drilling operations.

The Group’s core competences are geology, geophysics, petro physics, reservoir engineering, drilling and well construction, field management, subsea services. The Group is organized around the areas of Well Management, Reservoir Management, Facilities Solutions, Consultancy, HSE- and Training and Software Solutions. The Group delivers reservoir, well management, and integrated field development services, including subsea project management services, to international petroleum companies across the complete asset life cycle – from prospect generation, exploration drilling, field development, and production and field operations to field abandonment. The Group has established itself as a global supplier


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of rig campaigns, drilling and subsurface consultancy as well as offering bespoke training for the E&P Industry.

The Group provides technology, expertise and services to several of the world’s major oil and gas fields, with a customer base comprising several small and medium sized operators as well as a number of the large international oil companies and national oil companies.

B.4a Significant recent trends The Group believes the market outlook for 2013 and beyond to be very strong. The industry is facing high demand for drilling of wells, while at the same time there is a shortage of capacity in the market. In such a market, track record is vital. Petroleum Services has spudded 11 wells year to date in 2013, approximately 500 wells during the last 12 years and the Group believes it is well positioned to offer cost efficient well operations to the global oil & gas industry. AGR’s experience is expected to be in high demand going forward, as drilling efficiency, cost efficiency and safety during drilling operations will be key for oil companies to deliver on their exploration plans.

The Group has a strong secured order backlog of drilling operations. This is specially the case within its most important regions. At year end 2012 the Group was working on well planning and preparation work for 2013 operations - in Norway alone 10 wells are scheduled for 2013. With a large number of new contracts and agreements secured during the year, the Group believes its outlook to be positive. However, the Group’s experienced employees are in high demand, and recent year’s trend with salary increases in excess of the general economy continues within the oil industry. The Group is also sensitive to external factors such as the oil-price and clients’ access to funding.

No significant trend changes have occurred since the end of 2012 for the Company’s business. Given a fairly stable oil price, no trend shifts are reasonably expected for the next six to 12 months.

On 24 May 2013, the General Meeting of AGR resolved to separate its two business areas Petroleum Services and Drilling Services into two separate legal entities, by spinning off the Drilling Services business area into a newly incorporated private, non-listed, company, EDS Group AS (the “Demerger”). Following a two-month statutory creditor period, the Demerger was completed on 6 August 2013. Except for completion of the Demerger, there have been no significant changes in the financial or trading position of the Group since the date of the unaudited interim condensed consolidated financial information for the Group as of and for the three-month periods ended 31 March 2013 and 2012 (the “Interim Financial Information”).

B.5 Description of the Group The Company is a holding company and the parent company of the Group. The Company was incorporated in Norway on 11 May 2005 with the organisation number 986 922 113 in the Norwegian Register of Business Enterprises. All of the operations of the Group are being carried out through the Company’s subsidiaries.

B.6 Interests in the Company and voting rights

The Company is controlled by Altor Funds, holding 78.6% of the Shares as of the date of this Prospectus. Altor Funds is a private fund with business address 11-15 Seaton Place, St. Helier Jersey JE4 0QH, Channel Islands. Altor is holding the Shares through Altor Oil Service Invest AS, with registered address Tjuvholmen Allé 19, 0252 Oslo, Norway. In addition, RBC Dexia Investors Service Bank, being a wholly owned subsidiary of Royal Bank of Canada, holds 6.2% of the Shares as of the date of this


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Prospectus. The Company is not aware of any other persons or entities that, directly or indirectly, have an interest in 5% or more of the Shares.

There are no differences in voting rights.

B.7 Selected historical key financial information

This Prospectus includes the audited consolidated annual financial statements for the Group as of and for the years ended 31 December 2012, 2011 and 2010 (the “Financial Statements”). The following selected financial information present selected financial information in respect of the Group as of and for the three-month periods ended 31 March 2013 and 2012, and the year ended 31 December 2012, 2011 and 2010, and have been derived from and are based on the Interim Financial Information and the Financial Statements, respectively. The Financial Statements and the Interim Financial Information have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the European Union (“EU”).

In NOK thousand As of and for the

three-months ended 31 March

As of and for the

year ended 31 December

Income statement Continuing operations

2013 (unaudited)

2012 (unaudited)

2012 (audited)

2011 (audited)

2010 (audited)

Total operating revenue ................................ 315,752 313,068 1,777,913 1,867,914 1,445,256 Total operating expenses .............................. 286,693 286,995 1,734,852 1,727,460 1,370,683 Operating profit ........................................... 29,059 26,072 43,061 140,454 74,573 Profit (loss) from continued operations ........... 19,828 11,462 (103.975) 17,582 (19,739) Profit (loss) after tax from discontinued operations ................................................... 11,608 (19,238) - 737,016 13,378 Profit (loss) for the year ................................ 31,437 (7,776) (103,957) 754,598 (6,631) Statement of financial position Total assets ................................................. 2,123,785 - 2,170,949 2,790,739 2,661,860 Total equity ................................................. 713,507 - 681,461 1,411,469 665,372 Total liabilities ............................................. 1,410,278 - 1,489,488 1,379,270 1,996,488 Statement of cash flow Net cash flow from operational activities ......... (210,249) (24,430) 299,988 70,441 375,256 Net cash flows used in investing activities ....... (4,115) (23,561) (119,288) 876,109 (108,207) Net cash flow from/(used) in financing activities ..................................................... 16,012 (29,002) (729,506) (154,459) (253,175)

The table below shows the statement of financial income of the Group for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012.


Three-months ended

31 March

Year ended

31 December

In NOK thousand 2013

(unaudited) 2012

(unaudited) 2012

(unaudited) Operating revenue ............................................................................... 315,752 313,068 1,249,148 Operating expenses before depreciation .................................................. (282,419) (281,804) (1,138,865) Operating profit (EBIT) ......................................................................... 29,059 26,072 88,835 Profit after taxes .................................................................................. 19,828 11,462 83,610 Profit (loss) for the year ........................................................................ 31,437 (7,776) (103,976)


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The tables below shows the statement of financial income of the discontinued operations of Drilling Services for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012. The presentation of the discontinued operations of Drilling Services below comprises the Drilling Services segment and the companies AGR CannSeal AS and AGR Marine Engineering AS. AGR CannSeal AS and AGR Marine Engineering AS have previously been presented under the Group segment.

In NOK thousand (unaudited)

Income statement Discontinued operations EDS T&T

DS Group/ Other Total

Three-months ended 31 March 2013 Operating revenue ........................................................... 97,941 794 (972) 97,762 Operating expenses before depreciation .............................. (75,094) (6,635) (813) (82,543) EBIT ............................................................................... 4,158 (6,788) (1,806) (4,436) Profit/(loss) for the year ................................................... 1,617 (4,092) 14,083 11,608 Three-months ended 31 March 2012 Operating revenue ........................................................... 93,738 14,309 (4,820) 103,227 Operating expenses before depreciation .............................. (78,782) (19,107) (15) (97,903) EBIT ............................................................................... (3,740) (5,587) (5,525) (14,852) Profit/(loss) for the year ................................................... (10,119) (4,689) (4,430) (19,238) Year ended 31 December 2012 Operating revenue ........................................................... 469,180 25,330 (1,277) 493,233 Operating expenses before depreciation .............................. (384,386) (61,569) (706) (446,661) EBIT ............................................................................... 84,794 (36,239) (1,983) 46,572 Profit/(loss) for the year ................................................... (128,563) (32,984) (18,267) (179,813)

In NOK thousand As of 31 March

Statement of financial position Discontinued operations

2013 (unaudited)

Total assets .............................................................................................................................. 2,123,785 Total equity .............................................................................................................................. 713,507 Total liabilities .......................................................................................................................... 1,410,278

B.8 Selected key pro forma financial information

Not applicable. There is no pro forma financial information.

B.9 Profit forecast or estimate Not applicable. No profit forecast or estimate is made.

B.10 Audit report qualifications Not applicable. There are no qualifications in the audit reports.

B.11 Insufficient working capital Not applicable. The Company is of the opinion that the working capital available to the Group is sufficient for the Group’s present requirements, for the period covering at least 12 months from the date of this Prospectus.

Section C - Securities

C.1 Type and class of securities admitted to trading and identification number

The Company has one class of shares, being the Shares. The Shares are registered in book-entry form with VPS under ISIN NO 001 0277171.

C.2 Currency of issue The currency of the Shares is issued in NOK.

C.3 Number of shares in issue As of the date of this Prospectus, the Company’s share capital is NOK 139,050,680.16, divided into 124,152,393 Shares with each Share having


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and par value a nominal value of NOK 1.12. All the Shares have been created under the Norwegian Public Limited Companies Act, and are validly issued and fully paid.

C.4 Rights attaching to the securities

The Company has one class of Shares in issue, and in accordance with the Norwegian Public Limited Companies Act, all Shares in that class provide equal rights in the Company. Each of the Company’s Shares carries one vote.

C.5 Restrictions on transfer The Articles of Association do not provide for any restrictions on the transfer of Shares, or a right of first refusal for the Company. Share transfers are not subject to approval by the Board of Directors.

C.6 Admission to trading The Company has been listed on the Oslo Stock Exchange in Norway since 3 July 2006 under the ticker “AGR”.

C.7 Dividend policy Under the current dividend policy adopted by the Company’s Board of Directors, it is an objective for the Company to over time yield a competitive profit from the shareholders’ investments. The Company’s dividend profile shall at the same time ensure the AGR’s need for stability and development in accordance with its objectives and strategies. Under the current dividend policy, the Company’s Board of Directors intends to pay no dividends in the foreseeable future. Moreover, the Company has undertaken not to declare any dividend, repurchase any shares or make other distributions to its shareholders during the term of the Bonds issued.

Section D - Risks

D.1 Key risks specific to the Company or its industry

(i) General market conditions

The oil service industry in which the Group and its customers operate is focused on providing products and services to the worldwide oil and gas industry. The Group’s business and operations depend principally upon conditions prevailing in the oil and gas industry and, in particular, the exploration, development and production spending of oil and gas companies. Such spending is influenced by many factors, including the current and anticipated prices of oil and gas and the global economic activity. A reduction of the currently high oil price could therefore adversely affect the Group’s revenues. While the Group is currently experiencing favourable market conditions, there can be no assurances as to the duration of such conditions. A future downturn in general economic condition could have a material adverse effect on the Group’s business, operating results and financial condition.

(ii) Competitive industry

The market for the Group’s products and services is competitive. The Group’s competitive position may be harmed if its current competitors strengthen their market position or if new competitors with similar products and services establish operations in the same segments of the market. The failure of the Group to maintain competitiveness through the successful management of its product and services strategy could have a material adverse effect on the Group’s business, operating results and financial condition.

(iii) Management of growth; maintaining and recruiting management and other key personnel

The Group’s future performance will to a large extent depend on its ability to manage its growth effectively. If the Group fails to attract and retain management and key personnel who can manage the Group’s growth effectively, it could have a material adverse effect on the Group’s business, operating results and financial condition. Further, potential


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strikes could have an adverse effect on the Group’s operating results and financial condition.

(iv) Dependency on the activity in the geographic areas which the Group operates in

The Group’s main operations are based in Oslo, with other offices around the world including Stavanger, Trondheim, Aberdeen, Guilford, Houston, Perth, Almaty, Moscow, Dubai, Abu Dhabi and Tel Aviv. Thus, the Group will be exposed to fluctuations in the general exploration and production (“E&P”) activity level in the geographic areas where the Group provide services.

(v) Oil prices

Historically, demand for offshore exploration, development and production services has been volatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reduction in exploration drilling as the oil companies’ scale down their investment budgets. A decrease in the oil prices may have a material adverse impact on the financial position of the Group. However, current Group policy is to not hedge oil price changes.

(vi) Fluctuation in the Group’s earnings

The Group’s profitability can vary from quarter to quarter. Trends in business volumes are correlated with oil prices and general economic conditions. Moreover, the Group is to a certain degree exposed to seasonal fluctuations, primarily related to holidays and work constraints during the winter season.

(vii) Credit risk of clients; the risk of default by contractual counterparties

The Group’s customers consist of large, medium and small oil companies, of which the majority are publicly listed. The Group consider some of the customers to have moderate credit risk potential. The risk that the counterparties do not have the financial ability to meet their financial obligations is considered low as the Group’s historical loss on receivables has been low. However, there is always a risk of the Group’s counterparties not having the financial ability to meet their financial obligations and there

(viii) Delay in or cancellation of significant projects

The Group’s revenues and earnings rely upon prompt start-up of scheduled projects. In case of a delay in a project, the Group’s earnings relating to such project will be delayed accordingly. Further, projects could be cancelled, in which case the Group may not be entitled to compensation according to the contract, but only to compensation for work performed, incurred expenses and costs related to an orderly close out of the contract.

(ix) Legal claims and disputes

The Group may be exposed to legal claims from authorities, customers and other third parties and from time to time be involved in disputes in the ordinary course of its business activities. Such disputes may disrupt business operations and adversely affect the results of operations and financial condition.

(x) Liquidity risk

The Group has a significant customer portfolio with large, medium and small cap customers. Delayed payments from some of the largest customers at the same time could have a significant impact on the Group’s liquidity positions. The Group’s management and the individual business units have a high focus on working capital management, and continuously


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take actions if customers do not settle their obligations towards the Group in due time. The Group’s policy is to reduce the liquidity risk by having a committed long term loan facility.

(xi) Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar, Australian Dollar and GBP. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Thus, the fluctuations in currencies in relation to NOK may affect the Group’s result.

D.3 Key risks specific to the securities

(i) The price of the Shares may fluctuate significantly, which could cause investors to lose a significant part of their investment

The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Group’s control, including quarterly variations in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, announcements by the Group or its competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships, publicity about the Group, its products and services or its competitors, lawsuits against the Group, unforeseen liabilities, changes in management, changes to the regulatory environment in which it operates or general market conditions. Market conditions may affect the Shares regardless of the Group’s operating performance or the overall performance of the oil and gas sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Group’s assets and operations, and the price at which investors may dispose of their shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company while others of which may be outside the Group’s control. In recent years, the Oslo Stock Exchange has experienced wide price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies. Those changes may occur without regard to the operating performance of these companies.

(ii) Future sales of Shares by Altor may depress the price of the Shares

The market price of the Shares could decline as a result of sales of a large number of Shares in the market by Altor or the perception that these sales could occur. These sales, or the possibility that these sales may occur, might also make it more difficult for the Company to sell equity securities in the future at a time and at a price that it deems appropriate.

(iii) Future issuances of Shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Shares

It is possible that the Company may in the future decide to offer additional Shares or other equity-based securities through directed offerings without pre-emptive rights for existing shareholders. Any such additional offering could reduce the proportionate ownership and voting interests of the shareholders, as well as the earnings per Share and the net asset value per Share.

(iv) Pre-emptive rights to secure and pay for Shares in any additional issuance may not be available to U.S. or certain other shareholders


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Under Norwegian law, unless otherwise resolved at a general meeting, existing shareholders have pre-emptive rights to participate on the basis of their existing share ownership in the issuance of any new shares for cash consideration. Shareholders in the United States, however, may be unable to exercise any such rights to subscribe for new shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Norway may be similarly affected if the rights and the new shares being offered have not be registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Norway in respect of any such rights and shares and doing so in the future may be impractical and costly. To the extent that the Company’s shareholders are not able to exercise their rights to subscribe for new shares, their proportional interests in the Company will be reduced.

(v) The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions

The Shares have not been registered under the U.S. Securities Act or any U.S. state securities laws or any other jurisdiction outside of Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable securities laws. In addition, there can be no assurances that shareholders residing or domiciled in the U.S. will be able to participate in future capital increases or rights offerings.

(vi) Shareholders outside of Norway are subject to exchange rate risk

The Shares are priced in NOK, and any future payments of dividends on the Shares will be denominated in NOK. Accordingly, investors outside Norway are subject to adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends paid on the Shares or of the price received in connection with any sale of the Shares could be materially adversely affected.

Section E - Offer

E.1 Net proceeds and estimated expenses

Not applicable. The Company is not issuing any new Shares or raising any funds under the Exchange Offer.

The total costs and expenses of, and incidental to, the Exchange Offer are estimated to amount to approximately NOK 1 million (including VAT).

E.2a Reasons for the Exchange Offer and use of proceeds

To meet potential preference among investors to hold shares in a publicly listed company rather than in a privately held company, AGR Group, on 17 April 2013 announced that it would seek to facilitate a swap whereby shareholders receiving shares in EDS Group, subsequent to and following completion of the Demerger, would be offered to exchange up to all their shares in EDS Group for shares in AGR Group and, further, a swap whereby shareholders in AGR Group would be offered to, subject to the number of available shares being tendered by shareholders in EDS Group, exchange their shares in AGR Group for shares in EDS Group.


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E.3 Terms and conditions of the Exchange Offer

The following is a summary of main terms and conditions of the Exchange Offer:

The Exchange Offer comprises of (i) the EDS Exchange Offer, whereby EDS Shareholders as of the Record Date (9 August 2013) are offered to apply for an exchange of their shares in EDS Group for shares in AGR Group; and (ii) the AGR Exchange Offer, whereby AGR Shareholders as of the Record Date are offered to apply for an exchange of their shares in AGR Group for shares in EDS Group.

The Exchange Ratio is 44/56, being equal to the exchange ratio of the Demerger, whereby each EDS Share held by an EDS Shareholder gives the right to exchange one EDS Share for 0.7857 AGR Share under the EDS Exchange Offer, and whereby each AGR Share held by an AGR Shareholder gives the right to apply for an exchange of one AGR Share for 1.2727 EDS Share under the AGR Exchange Offer, however, so that the maximum number of EDS Shares being made available for the AGR Shareholders are limited to the total number of EDS Shares actually being tendered for exchange by the EDS Shareholders under the EDS Exchange Offer.

Subject to the number of the exchanged EDS Shares or AGR Shares not ending up in whole AGR Shares or EDS Shares, respectively, the remaining value will be settled in cash, however, so that any remaining value of less than NOK 10 will not be settled.

Altor will only participate in the Exchange Offer as necessary in order to guarantee for full settlement of AGR Shares under the EDS Exchange Offer. In the event that not all EDS Shares being tendered for exchange under the EDS Exchange Offer are covered by a corresponding amount of EDS Shares applied for under the AGR Exchange Offer, Altor has undertaken to settle such uncovered demand for AGR Shares by exchanging the remaining tendered EDS Shares with AGR Shares held by Altor. No such guarantee has been given for the AGR Exchange Offer. Hence, there is no guarantee that AGR Shareholders will be allocated the full amount of EDS Shares applied for under the AGR Exchange Offer.

There is no minimum application amount. The maximum application amount is equal to each EDS Shareholder’s and AGR Shareholder’s value of EDS Shares and AGR Shares, respectively.

The Application Period will run from 12 August 2013 at 09:00 hours (CET) and will expire on 26 August 2013 at 16:30 hours (CET). The Application Period may not be extended or shortened.

Arctic Securities ASA is acting as Settlement Agent under the Exchange Offer. Any applications received by the Settlement Agent under the Exchange Offer are binding on the EDS Shareholders and AGR Shareholders, respectively.

Notifications of allocation of AGR Shares and EDS Shares in the EDS Exchange Offer are expected to be issued on or about 26 August 2013. Delivery of the allocated AGR Shares and EDS Shares against a swap of the tendered EDS Shares and AGR Shares are expected to take place on or about 29 August 2013.

The Exchange Offer does not constitute an offer of, or an invitation to


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purchase or exchange, EDS Shares for AGR Shares or AGR shares for EDS Shares in any jurisdiction in which such offer or sale or exchange would be unlawful.

E.4 Material and confliction interests

Arctic Securities ASA is acting as Settlement Agent. The Settlement Agent or its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Group and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Settlement Agent does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Altor holds, as of the date of this Prospectus 97,659,680 AGR Shares and 97,659,680 EDS Shares. Altor will not receive any consideration for its undertaking in the EDS Exchange Offer.

Beyond the abovementioned, the Company is not known with any interest of natural and legal persons involved in the Exchange Offer.

E.5 Selling shareholders and lock-up agreements

Not applicable.

E.6 Dilution resulting from the Scheme

Not applicable.

E.7 Estimated expenses charged to investor

AGR Group will pay commissions or transactions cost in VPS directly attributable to the Exchange Offer. This means that EDS Shareholders and AGR Shareholders who applies for exchange of their shares under the Exchange Offer will not be debited with brokers’ fees or similar costs in connection with the Exchange Offer.


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2 RISK FACTORS

An investment in the Shares, involves inherent risk. Before making an investment decision with respect to the Shares, investors should carefully consider all of the information contained in this Prospectus, and in particular the risks and uncertainties described in this Section 2, which the Company believes are the principal known risks and uncertainties faced by the Group as of the date hereof. An investment in the Shares is suitable only for investors who understand the risks associated with this type of investment and who can afford to lose all or part of their investment. The absence of negative past experience associated with a given risk factor does not mean that the risks and uncertainties described are not a genuine potential threat to an investment in the Shares. If any of the following risks were to materialise, this could have a material adverse effect on the Group and/or its business, results of operations, cash flow, financial condition and/or prospects, which may cause a decline in the value and trading price of the Shares, resulting in the loss of all or part of an investment in the same.

The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude of their potential impact on the Group. The information in this Section 2 is as of the date of this document.

2.1 Risks relating to the Group and the industry in which the Group operates

2.1.1 General market conditions

The oil service industry in which the Group and its customers operate is focused on providing products and services to the worldwide oil and gas industry. The Group’s business and operations depend principally upon conditions prevailing in the oil and gas industry and, in particular, the exploration, development and production spending of oil and gas companies. Such spending is influenced by many factors, including the current and anticipated prices of oil and gas and the global economic activity. A reduction of the currently high oil price could therefore adversely affect the Group’s revenues. While the Group is currently experiencing favourable market conditions, there can be no assurances as to the duration of such conditions. A future downturn in general economic condition could have a material adverse effect on the Group’s business, operating results and financial condition.

2.1.2 Competitive industry

The market for the Group’s products and services is competitive. The Group’s competitive position may be harmed if its current competitors strengthen their market position or if new competitors with similar products and services establish operations in the same segments of the market. The failure of the Group to maintain competitiveness through the successful management of its product and services strategy could have a material adverse effect on the Group’s business, operating results and financial condition.

2.1.3 Management of growth; maintaining and recruiting management and other key personnel

The Group’s future performance will to a large extent depend on its ability to manage its growth effectively. If the Group fails to attract and retain management and key personnel who can manage the Group’s growth effectively, it could have a material adverse effect on the Group’s business, operating results and financial condition. Further, potential strikes could have an adverse effect on the Group’s operating results and financial condition.

2.1.4 Government regulations

The oil service industry is subject to numerous and international conventions, as well as national, state and local laws and regulations in force, in the jurisdictions in which the Group conducts, or will conduct, its business. These laws and regulations relate to, inter alia, the protection of the environment, human health and safety, taxes, labour and wage standards, certification, licensing, safety and training and other requirements.

Laws, regulations and licenses granted by the local governments, regarding the exploration for and development of their oil and gas reserves, can impact the rate of development of oil and gas fields, which in turn affects the demand for the Group’s services. The oil service industry is dependent on demand for services from the oil and gas exploration industry and, accordingly, is affected by changing taxes, regulations and other laws or policies affecting the oil and gas industry generally.

The amendment of existing laws and regulations, or the adoption of new laws and regulations, curtailing or further regulating exploratory or development drilling and production for oil and gas for political, economic or other reasons, could harm the Group’s business, operating results or financial condition. The Group cannot predict the extent to which its future cash flow and earnings may be affected by mandatory compliance with any such new legislation or regulations. In addition, the Group may become subject to additional laws and regulations as a result of future rig relocations or other operations of the Group being conducted in jurisdictions in which it is not currently operating.


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Moreover, the Group may have no right to compensation from its customers if its costs are increased through such governmental actions, and its operating margins may fall as a result.

2.1.5 Fluctuation in the Group’s earnings

The Group’s profitability can vary from quarter to quarter. Trends in business volumes are correlated with oil prices and general economic conditions. Moreover, the Group is to a certain degree exposed to seasonal fluctuations, primarily related to holidays and work constraints during the winter season.

2.1.6 Credit risk of clients; the risk of default by contractual counterparties

The Group’s customers consist of large, medium and small oil companies, of which the majority are publicly listed. The Group consider some of the customers to have moderate credit risk potential. The risk that the counterparties do not have the financial ability to meet their financial obligations is considered low as the Group’s historical loss on receivables has been low. However, there is always a risk of the Group’s counterparties not having the financial ability to meet their financial obligations and there can be no assurance that losses will not occur in the future and impact the Group’s earnings and cash balances.

2.1.7 Dependency on the activity in the geographic areas which the Group operates in

The Group’s main operations are based in Oslo, with other offices around the world including Stavanger, Straume (Bergen), Trondheim, Aberdeen, Guilford, Houston, Perth, Almaty, Moscow, Dubai, Abu Dhabi and Tel Aviv. Thus, the Group will be exposed to fluctuations in the general exploration and production (“E&P”) activity level in the geographic areas where the Group provide services.

2.1.8 Oil prices

Historically, demand for offshore exploration, development and production services has been volatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reduction in exploration drilling as the oil companies’ scale down their investment budgets. A decrease in the oil prices may have a material adverse impact on the financial position of the Group. However, current Group policy is to not hedge oil price changes.

2.1.9 Market interest rates may influence the price of the Shares

The annual growth as compared to yields on other financial instruments may influence the price of the Shares. Furthermore, the interest AGR pays on its debt fluctuates with market interest rates, see Section 12.7.1 “Bonds”. Thus, an increase in market interest rates will result in higher yields on other financial instruments and higher cost for AGR, which could adversely affect the price of the Shares.

2.1.10 Delay in or cancellation of significant projects

The Group’s revenues and earnings rely upon prompt start-up of scheduled projects. In case of a delay in a project, the Group’s earnings relating to such project will be delayed accordingly. Further, projects could be cancelled, in which case the Group may not be entitled to compensation according to the contract, but only to compensation for work performed, incurred expenses and costs related to an orderly close out of the contract.

2.1.11 Act of disaster, war, terrorism or other criminal acts

Incidents such as natural disasters such as earthquakes, tsunamis etc or acts of war, terrorism or other criminal acts can affect the Group’s business directly or indirectly through an adverse effect on the general economic climate or direct attacks on the Group’s assets and properties.

2.1.12 Legal claims and disputes

The Group may be exposed to legal claims from authorities, customers and other third parties and from time to time be involved in disputes in the ordinary course of its business activities. Such disputes may disrupt business operations and adversely affect the results of operations and financial condition.

2.1.13 Access to funds

The Group may be dependent on obtaining additional debt or equity financing in the future. There is no assurance that the Group will be able to obtain such future financing or that such financing will be on acceptable terms. If the Group is unable to obtain future debt and/or equity financing on acceptable terms this could materially adversely affect the Group’s business, financial condition, results of operation and liquidity.


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2.1.14 Interest rate risk

As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. An increase in the Group’s floating interest rates may have a material adverse effect on the Group’s financial condition and liquidity. The Group’s interest rate risk arises from long-term borrowings being the bonds issued by AGR Petroleum Services Holdings AS on 5 February 2013 (the “Bonds”), see Section 12.7.1 “Bonds”. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. The Group’s policy is that long-term borrowings shall be based on floating interest rates. However, interest rate derivatives can be applied in order to avoid catastrophic losses due to interest rate changes. Based on the risk analysis where a 1% interest rate increase/decrease is applied, the impact of net interest expenses would be negative NOK 5.5 million and positive NOK 5.5 million. At 30 June 2013 the Group held no interest derivatives.

2.1.15 Liquidity risk

The Group has a significant customer portfolio with large, medium and small cap customers. Delayed payments from some of the largest customers at the same time could have a significant impact on the Group’s liquidity positions. The Group’s management and the individual business units have a high focus on working capital management, and continuously take actions if customers do not settle their obligations towards the Group in due time. The Group’s policy is to reduce the liquidity risk by having a committed long term loan facility.

2.1.16 Risk related to future development and forward-looking statements

This Prospectus includes “forward looking” statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the Group’s actual results, performance or achievements to be materially different from any future results, performances achievements expressed or implied by the forward looking statements. See “Important Information” above for further details.

2.1.17 Additional indebtedness in the future

The Group may incur additional indebtedness which may have directly or indirectly effects on the investment in the Shares, which could limit the Group’s ability to satisfy its obligations under the Bonds, the loan facility being a revolving credit facility made available by DNB Bank ASA to AGR Petroleum Services Holdings AS pursuant to a senior facility agreement dated 27 February 2013 (the “RCF”) and other debt, and increase the Group’s vulnerability to adverse general economic and industry conditions, require the Group to dedicate a portion of its cash flow from operations to servicing and repaying the Group’s indebtedness which may place the Group at a competitive disadvantage to its competitors with less debt. The Group’s ability to generate sufficient cash to satisfy its outstanding and future debt obligations will depend upon the Group’s future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond the Group’s control.

In addition, certain of the Group’s financing arrangements impose operating and financial restrictions on the Group’s business. The indenture governing the Bonds and the RCF prohibits the Group from incurring additional indebtedness, subject to certain exceptions. If the Group incurs additional debt, the risks that it already faces as a result of the Group’s existing indebtedness could further increase, and agreements with respect to future indebtedness may contain additional affirmative and negative covenants which could be more restrictive than those contained in the indenture governing the Bonds and the RCF. The indenture governing the Bond and the RCF also contains covenants which impose substantial limitations on, among other things, the Group’s ability and the ability of the Group’s subsidiaries to incur additional debt, make investments or other restricted payments, pay dividends or distributions on the Group’s capital stock or repurchase its capital stock, enter into transactions with its affiliates, create liens on the Group’s assets to secure debt, enter into sale and leaseback transactions, sell assets, enter into agreements that restrict the ability of the Group’s subsidiaries to pay dividends or make intercompany loans and merge or consolidate with another company. Further, the Company is a guarantor for the Bonds and the RCF, and the Group cannot assure investors that Petroleum Services Holdings AS will have the funds necessary to satisfy the financial obligations under the Bonds if it is unable to do so. If the Company is made responsible for the financial obligations under the Bonds and/or the RFC, see Section 12.7 “Borrowings”, it may have substantial effect on the Company’s financial situation and its ability to raise capital. This may in turn affect the price of the Shares.

2.1.18 Foreign exchange risk

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar, Australian Dollar and GBP. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and net investments in foreign operations. Thus, the fluctuations in currencies in relation to NOK may affect the Group’s result.


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2.1.19 Uninsured losses

The Group’s insurance coverage may under certain circumstances not provide sufficient funds to protect the Group from all losses and liabilities that could result from its operations. The Group has a liability cap on its operations. The exception is loss or damage caused by gross negligence or wilful misconduct. The principal risks against which the Group may not be fully insured or insurable are, inter alia, loss due to disruptions in production and environmental liabilities, which may result from a blowout or similar accident, and liabilities resulting from reservoir damage caused by the Group’s gross negligence or wilful misconduct.

Moreover, any insurance is typically subject to substantial deductibles and provides for premium adjustments based on claims, and the Group’s insurance coverage would not protect fully, if at all, against loss of income. The occurrence of a casualty, loss or liability against which the Group is not fully insured, could significantly reduce its revenues and cause the Group to pay fines or damages or otherwise impair its ability to meet its obligations under its indebtedness and to operate profitably. In addition, the Group cannot guarantee that insurance will be available to the Group at all or on terms acceptable to it, that the Group will maintain insurance or, if the Group is so insured, that its policy will be adequate to cover its loss or liability in all cases.

The Group has generally been and expects to continue to be able to obtain contractual indemnification pursuant to which its customers agree to protect and indemnify the Group to some degree from liability for reservoir, pollution and environmental damages. Nonetheless, the Group cannot guarantee that it will be able to obtain full indemnities in all of its contracts, that the level of indemnification the Group can obtain will be adequate, that the indemnification provisions will be enforceable or that its customers will be financially able to comply with their indemnity obligations. The Group will always, to some extent, be exposed to potential contractual liabilities and third party claims. Although the Group seeks to obtain adequate coverage under its liability insurance and also to limit its exposure in its agreements with its customers, there can be no assurance that such attempts to limit, reduce or offset such liability will be sufficient.

2.2 Risk related to the completed Demerger

2.2.1 The completed Demerger rendered the Group less diversified

Upon completion of the Demerger, the Group has become a less diversified Group. Furthermore, the Group will no longer be present in all jurisdictions it was prior to the Demerger, and this might reduce the number of business opportunities the Group is able to identify, and it might be less capable of doing business in jurisdiction where no such presence exists. Thus, the Demerger of the Group’s Drilling Services business described in Section 18 “Description of EDS Group AS”, may not improve, and may even adversely affect, the results of operations of the Group. The Group's ability to benefit from enhanced business opportunities, after spinning off the Drilling Services business, is dependent on business conditions in future periods that cannot be predicted or measured with certainty.

2.2.2 Norwegian law subjects AGR Group ASA and EDS Group AS to joint liability after the Demerger

Upon completion of the Demerger, the obligations of the Group have been divided between AGR Group ASA and EDS Group AS in accordance with the principles of the demerger plan signed by the Board of Directors on 17 April 2013 (the “Demerger Plan”). If either AGR Group ASA or EDS Group AS is liable under the Demerger Plan for an obligation that arose from the Demerger Plan and fails to satisfy that obligation, the non-defaulting party will be jointly and severally liable for the obligation. This statutory liability is unlimited in time, but is limited in amount to the equivalent of the net value allocated to the non-defaulting party in the Demerger.

2.3 Risks relating to the Shares

2.3.1 The price of the Shares may fluctuate significantly, which could cause investors to lose a significant part of their investment

The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Group’s control, including quarterly variations in operating results, adverse business developments, changes in financial estimates and investment recommendations or ratings by securities analysts, announcements by the Group or its competitors of new product and service offerings, significant contracts, acquisitions or strategic relationships, publicity about the Group, its products and services or its competitors, lawsuits against the Group, unforeseen liabilities, changes in management, changes to the regulatory environment in which it operates or general market conditions.

Market conditions may affect the Shares regardless of the Group’s operating performance or the overall performance of the oil and gas sector. Accordingly, the market price of the Shares may not reflect the underlying value of the Group’s assets and operations, and the price at which investors may dispose of their shares at any point in time may


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be influenced by a number of factors, only some of which may pertain to the Company while others of which may be outside the Group’s control.

In recent years, the Oslo Stock Exchange has experienced wide price and volume fluctuations. This volatility has had a significant impact on the market price of securities issued by many companies. Those changes may occur without regard to the operating performance of these companies.

2.3.2 The Company’s ability to pay dividends is dependent on the availability of distributable equity

Norwegian law provides that any declaration of dividends must be adopted by the shareholders at the Company’s general meeting of shareholders (the “General Meeting”). With effect from 1 July 2013, the general meeting may following the approval of the annual accounts also authorize the board of directors of the Company (the “Board of Directors”) to declare dividend. Dividends may only be declared to the extent that the Company has distributable equity and that the Company’s equity and liquidity is sound in relation to the risk and scope of the Company’s business. As the Company’s ability to pay dividends is dependent on the availability of distributable equity, it is, among other things, dependent upon receipt of dividends and other distributions of value from its subsidiaries and the companies in which the Company has invested.

As a general rule, the General Meeting may not declare higher dividends than the Board of Directors has proposed or approved. If, for any reason, the General Meeting does not declare dividends in accordance with the above, a shareholder will, as a general rule, have no claim in respect of such non-payment, and the Group will, as a general rule, have no obligation to pay any dividend in respect of the relevant period.

2.3.3 The Company has, and will continue to have, a major shareholder whose commercial goals may not always be aligned with the Group’s or other shareholders’ commercial goals

Altor holds 78.6% of the shares in the Company and has the ability to influence matters requiring shareholder approval, including the election of the Board of Directors, approval of annual financial statements and significant transactions and changes in the Articles of Association (including any change in the number of shares or share capital of the Company). The commercial goals of Altor as the major shareholder, and the Group’s or other shareholders’ goal, may not always remain aligned. Furthermore, this concentration of ownership may affect the liquidity in the Shares itself.

2.3.4 Future sales of Shares by Altor may depress the price of the Shares

The market price of the Shares could decline as a result of sales of a large number of Shares in the market by Altor or the perception that these sales could occur. These sales, or the possibility that these sales may occur, might also make it more difficult for the Company to sell equity securities in the future at a time and at a price that it deems appropriate.

2.3.5 Future issuances of Shares or other securities may dilute the holdings of shareholders and could materially affect the price of the Shares

It is possible that the Company may in the future decide to offer additional Shares or other equity-based securities through directed offerings without pre-emptive rights for existing shareholders. Any such additional offering could reduce the proportionate ownership and voting interests of the shareholders, as well as the earnings per Share and the net asset value per Share.

2.3.6 Pre-emptive rights to secure and pay for Shares in any additional issuance may not be available to U.S. or certain other shareholders

Under Norwegian law, unless otherwise resolved at a general meeting, existing shareholders have pre-emptive rights to participate on the basis of their existing share ownership in the issuance of any new shares for cash consideration. Shareholders in the United States, however, may be unable to exercise any such rights to subscribe for new shares unless a registration statement under the U.S. Securities Act is in effect in respect of such rights and shares or an exemption from the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions outside Norway may be similarly affected if the rights and the new shares being offered have not be registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws of any other jurisdiction outside Norway in respect of any such rights and shares and doing so in the future may be impractical and costly. To the extent that the Company’s shareholders are not able to exercise their rights to subscribe for new shares, their proportional interests in the Company will be reduced.


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2.3.7 Investors may not be able to exercise their voting rights for Shares registered in a nominee account

Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the general meetings. The Company can provide no assurances that beneficial owners of the Shares will receive the notice of a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote for their Shares in the manner desired by such beneficial owners.

2.3.8 Investors may be unable to recover losses in civil proceedings in jurisdictions other than Norway

The Company is a public limited liability company organised under the laws of Norway. The majority of the members of the Board of Directors and of the Group’s management reside in Norway. As a result, it may not be possible for investors to effect service of process in other jurisdictions upon such persons or the Company, to enforce against such persons or the Company judgments obtained in non-Norwegian courts, or to enforce judgments on such persons or the Company in other jurisdictions.

2.3.9 Norwegian law may limit shareholders’ ability to bring an action against the Company

The rights of shareholders are governed by Norwegian law and by the Articles of Association. These rights may differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law limits the circumstances under which shareholders of Norwegian companies may bring derivative actions. For instance, under Norwegian law, any action brought by the Company in respect of wrongful acts committed against the Company will be prioritised over actions brought by shareholders claiming compensation in respect of such acts. In addition, it may be difficult to prevail in a claim against the Company under, or to enforce liabilities predicated upon, securities laws in other jurisdictions.

2.3.10 The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions

The Shares have not been registered under the U.S. Securities Act or any U.S. state securities laws or any other jurisdiction outside of Norway and are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable securities laws. See Section 5.15 “Selling and transfer restrictions”. In addition, there can be no assurances that shareholders residing or domiciled in the U.S. will be able to participate in future capital increases or rights offerings.

2.3.11 Shareholders outside of Norway are subject to exchange rate risk

The Shares are priced in NOK, and any future payments of dividends on the Shares will be denominated in NOK. Accordingly, investors outside Norway are subject to adverse movements in the NOK against their local currency, as the foreign currency equivalent of any dividends paid on the Shares or of the price received in connection with any sale of the Shares could be materially adversely affected.


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3 RESPONSIBILITY FOR THE PROSPECTUS

3.1 Board of Directors of AGR Group ASA


The Board of Directors of AGR Group ASA accepts, except for Section 18 “Description of EDS Group AS”, responsibility for the information contained in this Prospectus. The members of the Board of Directors of AGR Group ASA confirm that, after having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, except for Section 18 “Description of EDS Group AS, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.

9 August 2013

The Board of Directors of AGR Group ASA

Eivind Kristofer Reiten Chairman

Hugo Lund Maurstad

Board member

Tove Magnussen Board member

Thomas Nils Robert Nilsson Board member

Reynir Kjær Indahl Board member

Maria Tallaksen Board member

Celeste Anette Mackie Board member

3.2 Board of Directors of EDS Group AS


The Board of Directors of EDS Group AS accepts responsibility for the information contained in Section 18 “Description of EDS Group AS” in this Prospectus. The members of the Board of Directors of EDS Group AS confirm that, after having taken all reasonable care to ensure that such is the case, the information contained in Section 18 “Description of EDS Group AS” in this Prospectus is, to the best of their knowledge, in accordance with the facts and contains no omission likely to affect its import.

9 August 2013

The Board of Directors of EDS Group AS

Eivind Kristofer Reiten Chairman

Hugo Lund Maurstad

Board member

Tove Magnussen Board member

Thomas Nils Robert Nilsson Board member

Reynir Kjær Indahl Board member

Maria Tallaksen Board member

Celeste Anette Mackie Board member


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4 GENERAL INFORMATION

4.1 Presentation of financial and other information

4.1.1 Financial information

This Prospectus includes the Financial Statements. Such Financial Statements have been prepared in accordance with IFRS as adopted by the European Union and audited by Ernst & Young, the Group’s independent auditor, as set forth in their report thereon included herein, see Section 11.9 “Auditor”.

The unaudited Interim Financial Information has been prepared in accordance with International Accounting Standard (“IAS”) 34, and is also included in this Prospectus. The Financial Statements and the Interim Financial Information is together referred to as the “Financial Information”. The Financial Statements and the Interim Financial Information are incorporated by reference hereto, see Section 19.3 “Incorporation by reference”.

The Group’s financial information presented for the financial year ended 31 December 2010, as presented herein, are extracted from the Group’s financial statements for the financial year ended 31 December 2011, in which the results from AGR Field Operations Holdings AS and its subsidiaries, which was divested in December 2011, are presented as discontinued operations in the income statement for 2010 and 2011.

In addition, unless otherwise indicated herein, the Group’s financial information presented for the three-month periods ended 31 March 2013 and 2012, reflects that Drilling Services is reported as discontinued operations for the same periods in accordance with IFRS5 since the Demerger was announced late February 2013 and that it at this stage was highly probable that the demerger would be approved.

For details regarding the basis of preparation of the Financial Information, see Section 19.3 “Incorporation by reference”, note 2 to the Financial Statements and note 1 to the Interim Financial Information.

In addition, the audited consolidated financial statements for Petroleum Services Holdings AS for the years ended 31 December 2012 and 2011 and the three-month periods ended 31 March 2013 and 2012, reflecting the main business of the Group going forward following completion of the Demerger, have been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.

4.1.2 Non-IFRS financial measures

In this Prospectus, the Company presents certain non-IFRS financial measures and ratios, including EBITDA. EBITDA represents earnings before interest, tax, depreciation and amortization, excluding inventory/asset write downs. Although EBITDA is a widely used financial indicator of a company‘s ability to service and incur debt, it should not be the sole financial indication used, as an alternative to net income, as an indicator of the Group’s operating performance or as a substitute for analysis of the Group’s results as reported under IFRS, since, among others:

EBITDA does not reflect the Group’s cash expenditures or future requirements for capital expenditures or contractual commitments;

• it does not reflect changes in, or cash requirements for, the Group’s working capital needs; • it does not reflect the Group’s interest expense or the cash requirements to service the interest or principal

payments of the Group’s debt; • it does not reflect any cash income taxes or employees‘ profit sharing the Group may be required to pay; • it does not reflect the effect of non recurring expenses or gains; and • it is not adjusted for all non-cash income or expense items that are reflected in the Group’s statements of

changes in financial position.

Due to the abovementioned limitations, the Group’s EBITDA measure should not be considered a measure of discretionary cash available to the Group to invest in the growth of its business or as a measure of cash that will be available to the Group to meet its obligations. EBITDA is not a recognized financial measure under IFRS and it may not be comparable to similar titled measures presented by other companies in the Group’s industry because not all companies use the same definition. As a result, the Group should rely primarily on its IFRS results and use the Group’s EBITDA measurement only as a supplement.

The non-IFRS financial measures presented herein are not measurements of performance under IFRS or other generally accepted accounting principles and investors should not consider any such measures to be an alternative to: (a) operating revenues or operating profit (as determined in accordance with generally accepted accounting


20

principles), as a measure of the Group’s operating performance; or (b) any other measures of performance under generally accepted accounting principles. The non-IFRS financial measures presented herein may not be indicative of the Group’s historical operating results, nor are such measures meant to be predictive of the Group’s future results. The Company believes that the non-IFRS measures presented herein are commonly reported by companies in the markets in which it competes and are widely used by investors in comparing performance on a consistent basis without regard to factors such as depreciation and amortisation, which can vary significantly depending upon accounting methods (particularly when acquisitions have occurred) or based on non-operating factors. Accordingly, the Group discloses the non-IFRS financial measures presented herein to permit a more complete and comprehensive analysis of its operating performance relative to other companies and across periods, and of the Group’s ability to service its debt. Because companies calculate the non-IFRS financial measures presented herein differently, the Group’s presentation of these non-IFRS financial measures may not be comparable to similarly titled measures used by other companies.

4.1.3 Industry and market data

This Prospectus contains statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data pertaining to the Group’s business and the industries and markets in which it operates. Unless otherwise indicated, such information reflects the Group’s estimates based on analysis of multiple sources, including data compiled by professional organisations, consultants and analysts and information otherwise obtained from other third party sources, such as Annual Market Report 2013 – 20161 published by Rystad Energy and INTSOK, referred to in Section 8.3 “High oil prices and falling reserve replacement ratios drive E&P spending”, annual and interim financial statements and other presentations published by listed companies operating within the same industry as the Group, as well as the Group’s internal data and its own experience, or on a combination of the foregoing.

The Company confirms that when information in the Prospectus has been sourced from a third party it has been accurately reproduced and that as far as the Company is aware and is able to ascertain from information published by that third party, no facts have been omitted which would render the reproduced information inaccurate or misleading.

Although the Company believes its estimates to be reasonable, these estimates have not been verified by any independent sources, and the Company cannot assure prospective investors as to their accuracy or that a third party using different methods to assemble, analyse or compute market data would obtain the same results. In addition, behaviour, preferences and trends in the marketplace tend to change. The Company does not intend, and does not assume any obligations to update industry or market data set forth in this Prospectus.

Industry publications or reports generally state that the information they contain has been obtained from sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The Company has not independently verified and cannot give any assurances as to the accuracy of market data contained in this Prospectus that was extracted from these industry publications or reports and reproduced herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions. Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the researchers and the respondents, including judgments about what types of products and transactions should be included in the relevant market.

As a result, prospective investors should be aware that statistics, data, statements and other information relating to markets, market sizes, market shares, market positions and other industry data in this Prospectus and projections, assumptions and estimates based on such information may not be reliable indicators of the Group’s future performance and the future performance of the industry in which it operates. Such indicators are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of other factors, including those described in Section 2 “Risk Factors” and elsewhere in this Prospectus.

4.1.4 Other information

In this Prospectus, all references to “NOK” are to the lawful currency of Norway, all references to “EUR” are to euro; the single currency of the member states (“Member States”) of the EU participating in the European Monetary Union having adopted the euro as its lawful currency, all references to “USD” or “U.S. Dollar” are to the lawful currency of the United States, all references to “AUD” or “Australian Dollar” are to the lawful currency of Australia and all references to “GBP” are to the lawful currency of the United Kingdom. The Financial Information is published in NOK.

1 Only available by subscription at http://intsok.no/index.php?id=5952

http://intsok.no/index.php?id=5952


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Amounts included in the Financial Information that were not originally denominated in NOK have been translated into NOK using the exchange rates prevailing at the dates of the transactions or valuation where items are re-measured.

4.1.5 Rounding

Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the nearest whole number or decimal or fraction, as the case may be), accordingly, figures shown for the same category presented in different tables may vary slightly.

4.2 Cautionary note regarding forward-looking statements

This Prospectus includes forward-looking statements that reflect the Group’s current intentions, beliefs or current expectations concerning, among other things, financial position, operating results, liquidity, prospects, growth, strategies and the industries and markets in which the Group operates. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms “anticipates”, “assumes”, “believes”, “can”, “could”, “estimates”, “expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “projects”, “should”, “will”, “would” or, in each case, their negative, or other variations or comparable terminology. Forward-looking statements as a general matter are all statements other than statements as to historic facts or present facts or circumstances. They appear in a number of places throughout this Prospectus, including, without limitation, in Section 7 “Dividend and dividend policy”, Section 8 “Industry and market overview”, Section 9 “Business of the Group” and Section 12 “Operating and financial review”, and include, among other things, statements relating to:

• the Group’s strategy, outlook and growth prospects and the ability of the Group to implement its strategic initiatives;

• the Group’s future results of operations; • the Group’s financial condition; • the Group’s working capital, cash flows and capital investments; • the Group’s dividend policy; • the impact of regulation on the Group; • general economic trends and trends in the Group’s industries and markets and • the competitive environment in which the Group operates.

Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future performance and that the Group’s actual financial position, operating results and liquidity, and the development of the industries and markets in which the Group operates, may differ materially from those made in or suggested by the forward-looking statements contained in this Prospectus. The Group can provide no assurances that the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur.

Although the Group believes that the expectations implied by these forward-looking statements are reasonable, the Group can give no assurances that the outcomes contemplated will materialise or prove to be correct. By their nature, forward-looking statements involve and are subject to known and unknown risks, uncertainties and assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, outcomes may differ materially from those set out in any forward-looking statement. Important factors that could cause those differences include, but are not limited to:

• supply of raw materials required for production; • disruptions to production process; • implementation of its strategy and its ability to further expand its business and growth; • technological changes and new products and services introduced into the Group’s market and industry; • ability to develop new products and enhance existing products; • the competitive nature of the business the Group operates in and the competitive pressure and changes to

the competitive environment in general; • loss of important customers; • earnings, cash flow, dividends and other expected financial results and conditions; • fluctuations of exchange and interest rates; • changes in general economic and industry conditions; • political and governmental and social changes; • changes in the legal and regulatory environment; • environmental liabilities; • changes in consumer trends; • access to funding and


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• legal proceedings.

Additional factors that could cause the Group’s actual results, performance or achievements to differ materially include, but are not limited to, those discussed under Section 2 “Risk Factors” and Section 12 “Operating and financial review”. Prospective investors in the Offer Shares are urged to read all sections of this Prospectus and, in particular, Section 2 “Risk Factors” and Section 12 “Operating and financial review” for a more complete discussion of the factors that could affect the Group’s future performance and the industry in which the Group operates when considering an investment in the Company.

These forward-looking statements speak only as of the date of this Prospectus. Save as required by Section 7-15 of the Norwegian Securities Trading Act or by other applicable law, the Company expressly disclaims any obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or to persons acting on the Group’s behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this Prospectus. Accordingly, prospective investors are urged not to place undue reliance on any of the forward-looking statements herein.


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5 THE EXCHANGE OFFER

5.1 Background and reasons for the Exchange Offer

On 24 May 2013, the Company’s general meeting resolved to separate its two business areas Petroleum Services and Drilling Services into two separate legal entities, by spinning off the Drilling Services business area into a newly incorporated private, non-listed, company, EDS Group AS. Following a two-month statutory creditor period, the Demerger was completed on 6 August 2013, see Section 6 “The Demerger”.

To meet potential preference among investors to hold shares in a publicly listed company rather than in a privately held company, AGR Group, on 17 April 2013 announced that it would seek to facilitate a swap whereby shareholders receiving shares in EDS Group, subsequent to and following completion of the proposed demerger, would be offered to exchange up to all their shares in EDS Group for shares in AGR Group and, further, a swap whereby shareholders in AGR Group would be offered to, subject to the number of available shares being tendered by shareholders in EDS Group, exchange their shares in AGR Group for shares in EDS Group.

5.2 Overview of the Exchange Offer

The Company hereby offers to facilitate for the Exchange Offer on the terms and conditions set forth in this Prospectus.

The Exchange Offer comprises of

• The EDS Exchange Offer, whereby EDS Shareholders as of the Record Date (9 August 2013) are offered to apply for an exchange of their shares in EDS Group for shares in AGR Group; and

• The AGR Exchange Offer, whereby AGR Shareholders as of the Record Date are offered to apply for an exchange of their shares in AGR Group for shares in EDS Group.

The Exchange Ratio is 44/56, being equal to the exchange ratio of the Demerger, see Section 6 “The Demerger”, whereby each EDS Share held by an EDS Shareholder gives the right to exchange one EDS Share for 0.7857 AGR Share under the EDS Exchange Offer, and whereby each AGR Share held by an AGR Shareholder gives the right to apply for an exchange of one AGR Share for 1.2727 EDS Share under the AGR Exchange Offer, however, so that the maximum number of EDS Shares being made available for the AGR Shareholders are limited to the total number of EDS Shares actually being tendered for exchange by the EDS Shareholders under the EDS Exchange Offer. Subject to the number of the exchanged EDS Shares or AGR Shares not ending up in whole AGR Shares or EDS Shares, respectively, the remaining value will be settled in cash, however, so that any remaining value of less than NOK 10 will not be settled.

Altor will only participate in the Exchange Offer as necessary in order to guarantee for full settlement of AGR Shares under the EDS Exchange Offer. In the event that not all EDS Shares being tendered for exchange under the EDS Exchange Offer are covered by a corresponding amount of EDS Shares applied for under the AGR Exchange Offer, Altor has undertaken to settle such uncovered demand for AGR Shares by exchanging the remaining tendered EDS Shares with AGR Shares held by Altor. No such guarantee has been given for the AGR Exchange Offer. Hence, there is no guarantee that AGR Shareholders will be allocated the full amount of EDS Shares applied for under the AGR Exchange Offer, see Section 5.6.4 “Allocation and delivery of the EDS Shares” below.

There is no minimum application amount. The maximum application amount is equal to each EDS Shareholder’s and AGR Shareholder’s value of EDS Shares and AGR Shares, respectively.

Arctic Securities ASA is acting as Settlement Agent under the Exchange Offer.

The timetable set out below provides dates for the Exchange Offer:

Completion of the Demerger ........................................................................... 6 August 2013 Record Date .................................................................................................. 9 August 2013 Application Period commences ......................................................................... 12 August 2013 at 09:00 hours (CET) Application Period ends................................................................................... 26 August 2013 at 16:30 hours (CET)] Publication of the results of the Exchange Offer ................................................. On or about 26 August 2013 Distribution of allocation letters ....................................................................... On or about 27 August 2013 Settlement and completion of the Exchange Offer .............................................. On or about 29 August 2013


24

Any applications received by the Settlement Agent under the Exchange Offer are binding on the EDS Shareholders and AGR Shareholders, respectively.

This Prospectus does not constitute an offer of, or an invitation to purchase or exchange, EDS Shares for AGR Shares or AGR shares for EDS Shares in any jurisdiction in which such offer or sale or exchange would be unlawful. The Exchange Offer will be made in compliance with Regulation S. For further details, see “Important Notice” and Section 5.15 “Selling and transfer restrictions”.

Participating in the Exchange Offer may, for certain EDS Shareholders and AGR Shareholders, result in a taxable capital gain or a deductible loss in the year of realisation of the EDS Shares and AGR Shares, respectively. See Section 17 “Taxation” for a brief description of certain tax implications of the Exchange Offer for EDS Shareholders and AGR Shareholders subject to Norwegian tax laws.

5.3 Exchange ratio

The exchange ratio between one EDS Share and one AGR Share under the Exchange Offer is 44/56.

5.4 The application period

The Application Period will run from 12 August 2013 at 09:00 hours (CET) and will expire on 26 August 2013 at 16:30 hours (CET). The Application Period may not be extended or shortened.

5.5 EDS Exchange Offer

5.5.1 EDS Shareholders who may participate in the EDS Exchange Offer

EDS Shareholders, being the shareholders of EDS Group as of the Record Date except for (i) Altor, and (ii) shareholders being resident in a jurisdiction where the EDS Exchange Offer would be unlawful or in a jurisdiction, other than Norway, where the making of the EDS Exchange Offer would require any filing, registration or similar action, are eligible to participate in the EDS Exchange Offer and may apply for an exchange of up to all of its EDS Shares into AGR Shares under the EDS Exchange Offer.

5.5.2 The rights conferred by the AGR Shares

The AGR Shares offered under the EDS Exchange Offer are existing shares in AGR carrying full shareholders’ rights in AGR on an equal basis as any other shares in AGR, including the right to any dividends

The AGR Shares have been created under the Norwegian Public Limited Liability Companies Act, each with a nominal value of NOK 1.12, and are registered in book-entry form with the VPS under ISIN NO 001 0277171. AGR Group’s register of shareholders with the VPS is administrated by DNB Bank ASA, Registrars Department, 0021 Oslo, Norway. The AGR Shares have been listed on the Oslo Stock Exchange since 3 July 2006, with ticker code “AGR”.

For a description of AGR and the AGR Shares, including the rights attached to the AGR Shares, see Section 9 “Business of the Group” and Section 15 “Corporate information and description of share capital”.

5.5.3 Application office and procedure

In order for an EDS Shareholder to apply for an exchange of EDS Shares for AGR Shares under the EDS Exchange Offer, an application form (the “EDS Exchange Offer Acceptance Form”), properly completed and duly executed, must be received by the Settlement Agent, on or prior to the expiry of the Application Period, i.e. 26 August 2013. The EDS Exchange Offer Acceptance Form, duly completed and signed, can be sent by regular mail or fax or otherwise delivered, together with any other required documents to the Settlement Agent, acting on behalf of the Company and Altor, at the following address:

Arctic Securities ASA P.O. Box 1833 Vika

N-0123 Oslo Norway

E-mail: [email protected] Fax: +47 21013137

EDS Shareholders holding EDS Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person in the event that they wish to apply for an exchange of its EDS Shares for

mailto:[email protected]


25

AGR Shares under the EDS Exchange Offer. Such broker, bank, agent, trustee, nominee, custodian or other manager must execute and deliver the appropriate EDS Exchange Offer Acceptance Form and any other documentation that may be required to establish the right of an EDS Shareholder to participate in the EDS Exchange Offer on behalf of such EDS Shareholder.

EDS Exchange Offer Acceptance Forms that are incomplete or incorrectly completed, electronically or physically, or that are received after the expiry of the Application Period, may be disregarded without further notice to the applicant. Properly completed EDS Exchange Offer Application Forms must be received by the Settlement Agent by 16:30 hours (CET) on 26 August 2013. The Settlement Agent, on behalf of the Company, is not required to honour applications that are received after the expiry of the Application Period but may do so at its sole discretion. Neither the Company nor the Settlement Agent may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by the Settlement Agent.

All applications made in the EDS Exchange Offer will be irrevocable and binding upon receipt of a duly completed EDS Exchange Offer Acceptance Form upon registration of the application and cannot be withdrawn, cancelled or modified by the shareholders after having been received by the Settlement Agent upon registration of the application.

EDS Shares tendered for exchange for AGR Shares under the EDS Exchange Offer will be blocked in favour of the Settlement Agent (and must be otherwise free of any third-party rights). Accordingly, it will not be possible for EDS Shareholders to administer EDS Shares tendered after the block has been established. This restriction will only apply for the tendered EDS Shares and EDS Shareholders may freely administer any other securities registered on the current VPS account. EDS Shareholders will retain ownership of their EDS Shares and all shareholder rights until completion of the EDS Exchange Offer.

5.5.4 Allocation, delivery of and trading in the AGR Shares

In the EDS Exchange Offer, all EDS Shareholders will, pursuant to the undertaking by Altor, be allocated the full number of AGR Shares applied for, limited up 0.7857 AGR Share per EDS Share held by such EDS Shareholder, however, so that the total number of AGR Shares will be adjusted downwards to one whole share with the remaining value, if exceeding NOK 10, being paid in cash, see above. No AGR Shares have been reserved for any specific national market.

The Settlement Agent expects to issue notifications of allocation of AGR Shares in the EDS Exchange Offer on or about 27 August 2013, by issuing allocation notes to the applicants by mail or otherwise. Any applicant wishing to know the precise number of AGR Shares allocated to it, may contact the Settlement Agent on or about 27 August 2013 during business hours. Applicants who have access to investor services through an institution that operates the applicant’s account with the VPS for the registration of holdings of securities (“VPS account”) should be able to see how many AGR Shares they have been allocated from on or about 30 August 2013.

Further details and instructions will be set out in the allocation notes to the applicant to be issued on or about 27 August 2013, or can be obtained by contacting the Settlement Agent at +47 21013100.

Delivery of the allocated AGR Shares against a swap of the tendered EDS Shares are expected to take place on or about 26 August 2013.

Prior to delivery of the allocated AGR Shares to the applicants VPS account, trading in the allocated AGR Shares on the Oslo Stock Exchange may not commence.

5.6 AGR Exchange Offer

5.6.1 AGR Shareholders who may participate in the AGR Exchange Offer

AGR Shareholders, being the shareholders of AGR Group as of the Record date except for (i) Altor, and (ii) shareholders being resident in a jurisdiction where the AGR Exchange Offer would be unlawful or in a jurisdiction, other than Norway, where the making of the AGR Exchange Offer would require any filing, registration or similar action, may apply for an exchange of AGR Shares into EDS Shares under the AGR Exchange Offer.

5.6.2 The rights conferred by the EDS Shares

The EDS Shares offered under the AGR Exchange Offer are existing shares in EDS Group carrying full shareholders’ rights in EDS Group on an equal basis as any other shares in EDS Group, including the right to any dividends.


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EDS Group was incorporated on 17 April 2013 and registered with the Norwegian Register of Business Enterprises on 6 August 2013 as the Drilling Services business of AGR where spun off to EDS Group as part of the Demerger, see Section 6 “The Demerger”. EDS Group is a private limited liability company, organised and existing under the laws of Norway, with business number 912 274 896, and having its registered address at Smålonane 16, 5353 Straume, Norway.

The EDS Shares have been created under the Norwegian Private Limited Liability Companies Act, each with a nominal value of NOK 0.88, and are registered in book-entry form with the VPS under ISIN NO 001 0685464. EDS Group’s register of shareholders with the VPS is administrated by DNB Bank ASA, Registrars Department, 0021 Oslo, Norway. The EDS Shares are not, and will not be, listed on any stock exchange or regulated market place. As of the date of this Prospectus, EDS Group’s share capital is NOK 109,254,105.84 divided into 124,152,393 EDS Shares, each with a nominal value of NOK 0.88.

For a description of EDS Group, see Section 18 “Description of EDS Group AS”.

5.6.3 Application office and procedure

In order for an AGR Shareholder to apply for an exchange of AGR Shares for EDS Shares under the AGR Exchange Offer, an application form (the “AGR Exchange Offer Acceptance Form”), properly completed and duly executed, must be received by the Settlement Agent, on or prior to the expiry of the Application Period, i.e. 26 August 2013. The AGR Exchange Offer Acceptance Form, duly completed and signed, can be sent by regular mail or fax or otherwise delivered, together with any other required documents to the Settlement Agent, acting on behalf of the Company, at the following address:

Arctic Securities ASA P.O. Box 1833 Vika

N-0123 Oslo Norway

E-mail: [email protected] Fax: +47 21013137

AGR Shareholders holding AGR Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person in the event that they wish to apply for an exchange of its AGR Shares for EDS Shares under the AGR Exchange Offer. Such broker, bank, agent, trustee, nominee, custodian or other manager must execute and deliver the appropriate AGR Exchange Offer Acceptance Form and any other documentation that may be required to establish the right of an AGR Shareholder to participate in the AGR Exchange Offer on behalf of such AGR Shareholder.

AGR Exchange Offer Acceptance Forms that are incomplete or incorrectly completed, electronically or physically, or that are received after the expiry of the Application Period, may be disregarded without further notice to the applicant. Properly completed AGR Exchange Offer Application Forms must be received by the Settlement Agent by 16:30 hours (CET) on 26 August 2013. The Settlement Agent is not required to honour applications that are received after the expiry of the Application Period but may do so at its sole discretion. Neither the Company nor the Settlement Agent may be held responsible for postal delays, unavailable fax lines, internet lines or servers or other logistical or technical matters that may result in applications not being received in time or at all by the Settlement Agent.

All applications made in the AGR Exchange Offer will be irrevocable and binding upon receipt of a duly completed AGR Exchange Offer Acceptance Form and cannot be withdrawn, cancelled or modified by the shareholders after having been received by the Settlement Agent.

AGR Shares applied for exchange into EDS Shares under the AGR Exchange Offer will be blocked in favour of the Settlement Agent (and must be otherwise free of any third-party rights). Accordingly, it will not be possible for AGR Shareholders to administer AGR Shares tendered after the block has been established. This restriction will only apply for the tendered AGR Shares and AGR Shareholders may freely administer any other securities registered on the current VPS account. AGR Shareholders will retain ownership of their AGR Shares and all shareholder rights until completion of the AGR Exchange Offer.

mailto:[email protected]


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5.6.4 Allocation and delivery of the EDS Shares

In the AGR Exchange Offer, AGR Shareholders will, subject to sufficient number of EDS Shares being tendered under the EDS Exchange Offer, be allocated the number of EDS Shares applied for, limited up to 1.2727 EDS Share per AGR Share held by such AGR Shareholder, against exchange for one AGR Share per 1.2727 EDS Share allocated to such shareholder, however, so that the total number of EDS Shares allocated will be adjusted downwards to one whole EDS Share with the remaining value, if exceeding NOK 10, being paid in cash, see above.

The maximum number of EDS Shares being available for application for exchange against AGR Shares by AGR Shareholders under the AGR Exchange Offer is limited to the total number of EDS Shares actually being tendered by EDS Shareholders under the EDS Exchange Offer. Consequently, allocation of EDS Shares to AGR Shareholders applying for exchange of its AGR Shares into EDS Shares will be adjusted on a pro-rata basis to reflect the number of available EDS Shares tendered under the EDS Exchange Offer. No Offer Shares have been reserved for any specific national market.

The Settlement Agent expects to issue notifications of allocation of EDS Shares in the AGR Exchange Offer on or about 27 August 2013, by issuing allocation notes to the applicants by mail or otherwise. Any applicant wishing to know the precise number of EDS Shares allocated to it, may contact the Settlement Agent on or about 27 August 2013 during business hours. Applicants who have access to investor services through an institution that operates the applicant’s VPS account should be able to see how many EDS Shares they have been allocated from on or about 30 August 2013.

By completing an AGR Exchange Offer Acceptance Form, each applicant will authorise the Settlement Agent to block the relevant number of AGR Shares applied for an exchange into EDS Shares from each shareholder’s VPS account.

Further details and instructions will be set out in the allocation notes to the applicant to be issued on or about 27 August 2013, or can be obtained by contacting the Settlement Agent at +47 21013100.

Delivery of the allocated EDS Shares against a swap of the tendered AGR Shares are expected to take place on or about 26 August 2013.

5.7 Conditions to completion of the Exchange Offer

There are no conditions for completion of the Exchange Offer.

5.8 VPS account

To participate in the Exchange Offer, each applicant must have a VPS account. The VPS account number must be stated when registering an application through the VPS online application system or on the EDS Exchange Offer Application Form or the EDS Exchange Offer Application Form, respectively. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised investment firms in Norway and Norwegian branches of credit institutions established within the EEA. However, non-Norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Norwegian Ministry of Finance. Establishment of VPS accounts require verification of identification by the relevant VPS registrar in accordance with the Norwegian anti-money laundering legislation, see Section 5.9 “Mandatory anti-money laundering procedures”.

5.9 Mandatory anti-money laundering procedures

The Exchange Offer is subject to applicable anti-money laundering legislation, including the Norwegian Money Laundering Act of 6 March 2009 No. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 No. 302 (collectively, the “Anti-Money Laundering Legislation”).

Applicants who are not registered as existing customers of the Settlement Agent must verify their identity to the Settlement Agent in which the order is placed in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Applicants who have designated an existing Norwegian bank account and an existing VPS account on the EDS Exchange Offer Application Form or the EDS Exchange Offer Application Form, respectively, are exempted, unless verification of identity is requested by any of the Settlement Agent. Applicants who have not completed the required verification of identity prior to the expiry of the Application Period may not be allocated shares under the Exchange Offer.


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5.10 Publication of information in respect to the Exchange Offer

In addition to press releases which will be posted on each of the companies’ websites; www.agr.com and www.enhanced-drilling.com, AGR Group will use the Oslo Stock Exchange’s information system to publish information relating to the Exchange Offer.

5.11 Expenses of the Exchange Offer

AGR Group will pay commissions and transactions cost in VPS directly attributable to the Exchange Offer. This means that EDS Shareholders and AGR Shareholders who applies for exchange of their shares under the Exchange Offer will not be debited with brokers’ fees or similar costs in connection with the Exchange Offer. No other expenses, if any, incurred by the individual EDS Shareholders and AGR Shareholders for advisory services, including fees charged by a broker, bank, agent, trustee, nominee, custodian or other managers for the execution and delivery of the EDS Exchange Offer Acceptance Form or the AGR Exchange Offer Acceptance Form, respectively, will be covered by AGR Group.

The total costs and expenses of, and incidental to, the Exchange Offer are estimated to amount to approximately NOK 1 million (including VAT).

5.12 Interests of natural and legal persons involved in the Exchange Offer

The Settlement Agent or its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to AGR and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Settlement Agent does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

Altor holds, as of the date of this Prospectus 97,659,680 AGR Shares and 97,659,680 EDS Shares. Altor will not receive any consideration for its undertaking in the EDS Exchange Offer.

Beyond the abovementioned, the Company is not known with any interest of natural and legal persons involved in the Exchange Offer.

5.13 Participation of major existing shareholders and members of the AGR’s Management, supervisory and administrative bodies in the Exchange Offer

The Company is not aware of whether any major shareholders of the Company or members of its Management, supervisory or administrative bodies intend to apply for exchange of its EDS Shares into AGR Shares in the AGR Exchange Offer, or whether any person intends to apply for an exchange of EDS Shares equalling to more than 5% of AGR Shares.

5.14 Governing law and jurisdiction

This Prospectus, the EDS Exchange Offer Application Form, the AGR Exchange Offer Application Form and the terms and conditions of the Exchange Offer shall be governed by and construed in accordance with Norwegian law. The AGR Shares are issued in accordance with the provisions of the Norwegian Public Limited Liability Companies Act. The EDS Shares are issued in accordance with the provisions of the Norwegian Private Limited Liability Companies Act. Any dispute arising out of, or in connection with, this Prospectus, the EDS Exchange Offer Application Form, the AGR Exchange Offer Application Form or the Exchange Offer shall be subject to the exclusive jurisdiction of the courts of Norway, with Oslo District Court as legal venue.

5.15 Selling and transfer restrictions

5.15.1 General

The distribution of this Prospectus and the exchange of AGR Shares and EDS Shares under the Exchange Offer in certain jurisdictions may be restricted by law. This Prospectus does not constitute an offer of, or an invitation to, exchange AGR Shares and EDS Shares in any jurisdiction in which the making of such exchange, offer or sale would be unlawful. Neither this Prospectus nor any advertisement or any other offering material may be distributed or published in any jurisdiction except under circumstances that will result in compliance with applicable laws and regulations. Persons in possession of this Prospectus are required to inform themselves about and to observe any such restrictions and should consult their professional advisors as to whether they require any governmental or other consents or need to observe any other formalities to enable them to participate in the Exchange Offer. In addition, the AGR Shares and EDS Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to


29

bear the financial risks of this investment for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

Neither the AGR Shares nor the EDS Shares have been nor will be registered under the U.S. Securities Act or under the securities laws of any state or jurisdiction of the United States, and may not be exchanged, offered, sold, pledged, resold, granted, delivered, allocated, taken up, transferred or delivered, directly or indirectly, within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements under the U.S. Securities Act and in compliance with the applicable securities laws of any state or jurisdiction of the United States. Receipt of this Prospectus will not constitute an offer in those jurisdictions in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in any territory other than Norway, such investor may not treat this Prospectus as constituting an invitation or offer to it, nor should the investor in any event deal in the AGR Shares and EDS Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be made to that investor, or the AGR Shares and EDS Shares could lawfully be dealt in without contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a copy of this Prospectus, the investor should not distribute or send the same, or transfer the AGR Shares or EDS Shares to any person or in or into any jurisdiction where to do so would or might contravene local securities laws or regulations. If the investor forwards this Prospectus into any such territories (whether under a contractual or legal obligation or otherwise), the investor should direct the recipient’s attention to the contents of this Section.

Except as otherwise noted in this Prospectus and subject to certain exceptions: (i) the AGR Shares and EDS Shares being offered for exchange under the Exchange Offer may not be offered, sold, resold, transferred or delivered, directly or indirectly, in or into, Member States of the EEA that have not implemented the Prospectus Directive, Australia, Canada, Japan, Hong Kong, the United Sates or any other jurisdiction in which it would not be permissible to exchange or offer the AGR Shares or the EDS Shares (the “Ineligible Jurisdictions”) and; (ii) this Prospectus may not be sent to any person in, or who is a resident of, any Ineligible Jurisdiction (referred to as “Ineligible Persons”). Ineligible Persons may not participate in the Exchange Offer.

If an investor applies for an exchange of AGR Shares or EDS Shares under the Exchange Offer or trades or otherwise deals in the AGR Shares or EDS Shares pursuant to this Prospectus, unless AGR and EDS in their sole discretion determine otherwise on a case-by-case basis, that investor will be deemed to have made or, in some cases, be required to make, the following representations and warranties to AGR and EDS and any person acting on their or its behalf:

(i) the investor is not located in an Ineligible Jurisdiction;

(ii) the investor is not an Ineligible Person;

(iii) the investor is not acting, and has not acted, for the account or benefit of an Ineligible Person;

(iv) the investor acknowledges that AGR Group and EDS Group are not taking any action to permit a public offer to apply for an exchange of the AGR Shares or the EDS Shares under the Exchange Offer in any jurisdiction other than Norway; and

(v) the investor may lawfully apply for an exchange of, be offered, take up and receive AGR Shares and EDS Shares in the jurisdiction in which it resides or is currently located.

AGR Group, EDS Group and their affiliates and others will rely upon the truth and accuracy of the above acknowledgements, agreements and representations, and agree that, if any of the acknowledgements, agreements or representations deemed to have been made by its application for exchange of AGR Shares and EDS Shares under the Exchange Offer is no longer accurate, it will promptly notify AGR Group and EDS Group. Any provision of false information or subsequent breach of these representations and warranties may subject the investor to liability.

If a person is acting on behalf of an AGR Shareholder or EDS Shareholder (including, without limitation, as a nominee, custodian or trustee), that person will be required to provide the foregoing representations and warranties to AGR Group and EDS Group with respect to application for an exchange of AGR Shares or EDS Shares under the Exchange Offer on behalf of the holder. If such person cannot or is unable to provide the foregoing representations and warranties, AGR Group and EDS Group will not be bound to authorize the allocation of any AGR Shares or EDS Shares under the Exchange Offer to that person or the person on whose behalf the other is acting. Subject to the specific restrictions described below, if an investor (including, without limitation, its nominees and trustees) is located


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outside Norway and wishes to participate in the Exchange Offer, the investor must satisfy itself as to full observance of the applicable laws of any relevant territory including obtaining any requisite governmental or other consents, observing any other requisite formalities and paying any issue, transfer or other taxes due in such territories.

The information set out in this Section is intended as a general guide only. If the investor is in any doubt as to whether it is eligible to participate in the Exchange Offer, such investor should consult its professional advisor without delay.

Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other information about the Exchange Offer into any Ineligible Jurisdiction or to any Ineligible Persons. Exercise instructions or certifications sent from or postmarked in any Ineligible Jurisdiction will be deemed to be invalid and AGR Shares and EDS Shares will not be delivered to an addressee in any Ineligible Jurisdiction. The Company reserves the right to reject any exercise (or revocation of such exercise) in the name of any person who provides an address in an Ineligible Jurisdiction for acceptance, revocation of exercise or delivery of such AGR Shares and EDS Shares, who is unable to represent or warrant that such person is not in an Ineligible Jurisdiction and is not an Ineligible Person, who is acting on a non-discretionary basis for such persons, or who appears to AGR Group and EDS Group or their agents to have executed its exercise instructions or certifications in, or dispatched them from, an Ineligible Jurisdiction. Furthermore, AGR Group and EDS Group reserve the right, with sole and absolute discretion, to treat as invalid any application for an exchange of shares under the Exchange Offer which appears to have been executed, effected or dispatched in a manner that may involve a breach or violation of the laws or regulations of any jurisdiction.

No action has been or will be taken by AGR Group or EDS Group to permit the possession of this Prospectus (or any other offering or publicity materials or application form(s) relating to the Exchange Offer) in any jurisdiction where such distribution may lead to a breach of any law or regulatory requirement.

Neither AGR Group nor EDS Group, nor any of their respective representatives, is making any representation to any investor participating in the Exchange Offer regarding the legality of an investment in the AGR Shares or the EDS Shares by such investor under the laws applicable to such investor. Each investor should consult its own advisors before participating in the Exchange Offer. Investors are required to make their independent assessment of the legal, tax, business, financial and other consequences of applying for an exchange of its AGR Shares or EDS Shares under the Exchange Offer.

A further description of certain restrictions in relation to the Exchange Offer in certain jurisdictions is set out below.

5.15.2 United States

Neither the AGR Shares nor the EDS Shares have been nor will be registered under the U.S. Securities Act and may not be offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the United States except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act.

Pursuant to this Prospectus, the offer to exchange the AGR Shares and EDS Shares under the Exchange Offer are being made in reliance on Regulation S under the U.S. Securities Act. Accordingly, this Prospectus will not be sent to any shareholder with a registered address in the United States. In addition, AGR Group and EDS Group will reject any instruction sent by or on behalf of any account holder with a registered address in the United States.

5.15.3 European Economic Area

In relation to each Relevant Member State, with effect from and including the Relevant Implementation Date, an offer to the public to exchange AGR Shares and EDS Shares under the Exchange Offer as contemplated by this Prospectus may not be made in that Relevant Member State, other than the Exchange Offer as described in this Prospectus, once the Prospectus has been approved by the competent authority in Norway and published in accordance with the EU Prospectus Directive as implemented in Norway, except that an offer to the public in that Relevant Member State to exchange AGR Shares and EDS Shares under the Exchange Offer may be made at any time with effect from and including the Relevant Implementation Date under the following exemptions under the EU Prospectus Directive, if they have been implemented in that Relevant Member State:

a) to legal entities which are qualified investors as defined in the EU Prospectus Directive

b) to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the EU


31

Prospectus Directive), as permitted under the EU Prospectus Directive, subject to obtaining the prior consent of AGR Group and EDS Group for any such offer, or

c) in any other circumstances falling within Article 3(2) of the EU Prospectus Directive;

provided that no such offer to exchange AGR Shares and EDS Shares under the Exchange Offer shall require AGR Group or EDS Group to publish a prospectus pursuant to Article 3 of the EU Prospectus Directive or supplement a prospectus pursuant to Article 16 of the EU Prospectus Directive.

For the purposes of this provision, the expression an “offer to the public” in relation to the Exchange Offer in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any securities to be offered so as to enable an investor to decide to apply for the exchange of AGR Shares and EDS Shares under the Exchange Offer, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State the expression “EU Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

In the case of the Exchange Offer being offered to a financial intermediary as that term is used in Article 3(2) of the Prospectus Directive, such financial intermediary will also be deemed to have represented, acknowledged and agreed that the AGR Shares and EDS Shares exchanged by it in the Exchange Offer have not been exchanged on a non-discretionary basis on behalf of, nor have they been exchanged with a view to their exchange offer to, persons in circumstances which may give rise to an exchange offer of AGR Shares and EDS Shares to the public other than their exchange offer in a Relevant Member State to qualified investors as so defined or in circumstances in which the prior consent of AGR Group and EDS Group have been obtained to each such proposed exchange offer. Each of AGR Group and EDS Group and their respective affiliates will rely upon the truth and accuracy of the foregoing representation.

This EEA selling restriction is in addition to any other selling restrictions set out in this Prospectus.

5.15.4 Transfer restrictions

Neither the AGR Shares nor the EDS Shares have been nor will be registered under the U.S. Securities Act and may not be exchanged, offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and applicable state securities laws. Terms defined in Regulation S shall have the same meaning when used in this section.

Each investor applying for an exchange of AGR Shares and EDS Shares in the Exchange Offer outside the United States pursuant to Regulation S will be deemed to have acknowledged, represented and agreed that it has received a copy of this Prospectus and such other information as it deems necessary to make an informed decision and that:

• The investor is authorised to consummate the exchange of AGR Shares and EDS Shares in compliance with all applicable laws and regulations.

• The investor acknowledges that neither the AGR Shares nor the EDS Shares have been nor will be registered under the U.S. Securities Act, or with any securities regulatory authority or any state of the United States, and are subject to significant restrictions on transfer.

• The investor is, and the person, if any, for whose account or benefit the investor is exchanging AGR Shares and EDS Shares under the Exchange Offer was located outside the United States at the time the order for the exchange was originated and continues to be located outside the United States and has not exchanged the AGR Shares and EDS Shares for the benefit of any person in the United States or entered into any arrangement for the transfer of AGR Shares or EDS Shares to any person in the United States.

• The investor is not an affiliate of AGR Group or EDS Group or a person acting on behalf of such affiliate, and is not in the business of buying and selling securities or, if it is in such business, it did not acquire AGR Shares or EDS Shares from AGR Group or EDS Group, respectively, or an affiliate thereof in the initial distribution of such shares.

• The investor is aware of the restrictions on the offer and sale of the AGR Shares and EDS Shares pursuant to Regulation S described in this Prospectus.

• Neither the AGR Shares nor the EDS Shares have been offered to it by means of any “directed selling efforts” as defined in Regulation S.


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• Neither AGR Group nor EDS Group shall recognise any exchange, offer, sale, pledge or other transfer of the AGR Shares or the EDS Shares made other than in compliance with the above restrictions.

• The investor acknowledges that AGR Group, EDS Group and their respective advisers will rely upon the truth and accuracy of the foregoing acknowledgements, representations and agreements.


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6 THE DEMERGER

On 24 May 2013, the General Meeting of AGR resolved to separate its two business areas Petroleum Services and Drilling Services into two separate legal entities, by spinning off the Drilling Services business area into a newly incorporated private, non-listed, company, EDS Group AS.

Prior to the Demerger, AGR was consisting of two main business areas, the Petroleum Services business area which is continued within AGR, and the Drilling Services business area, which is separated into EDS Group. The Petroleum Services business area and the Drilling services business area had successfully been developed into stand alone entities within AGR, with separate management teams and separate financing. Both business areas had exiting prospects that the Board of Directors believed that the two business areas would be best developed by full separation of the Petroleum Services business area and the Drilling Services business area. As a part of a strategic restructuring of the Group, whereby the legal structure was amended to be more in line with the operational structure, the Board of Directors of AGR proposed the Demerger by signing the Demerger Plan, and the Annual General Meeting of AGR Group resolved and approved the Demerger Plan on 24 May 2013. Following the two months creditor notice period pursuant to Section 14-7, cf. Sections 13-14 and 13-16, of the Norwegian Public Limited Liability Companies Act, the Demerger was completed on 6 August 2013.

6.1 Overview of the Demerger

The Demerger is structured in accordance with the provisions set out in Chapter 14, including the special provisions in Section 14-11a concerning symmetrical demergers, of the Norwegian Public Limited Liability Companies Act, by transferring the Drilling Services business with related assets and liabilities to a new private limited liability company being established as part of the proposed demerger and being named EDS Group.

The nominal and paid up share capital of AGR Group was, in accordance with the provisions in Section 11-8 (1) of the Norwegian Taxation Act, allocated between AGR Group and EDS Group with 56% on AGR and with 44% on EDS Group. Each shareholder in AGR Group at the time of the completion of the Demerger received one share in EDS Group for each share held in AGR Group on that date.

As part of the Demerger, the share capital of AGR Group was reduced with NOK 109,254,105.84 from NOK 248,304,786 to NOK 139,050,680.16, by reducing the nominal value of each share with NOK 0.88 from NOK 2 to NOK 1.12. At the same time, EDS Group was incorporated with a share capital of NOK 109,254,105.84, divided into 124,152,393 shares, each with a nominal value of NOK 0.88, issued as consideration to the shareholders in AGR, and distributed to the shareholders in AGR Group in the same ratio as the shares held by them in AGR Group. One share in AGR Group gave the right to receive one share in EDS Group, reflecting the distribution of actual value between the companies.

6.2 Financial information

The following financial information presents AGR following completion of the Demerger, as the Drilling Services business area as spun off to EDS Group is presented as discontinued operations.

A business may be presented as “Discontinued operations” if a significant part of the Group’s operations is divested or a decision has been made to divest it and the transaction is assumed to take place within the next 12 months. This business is presented as “Discontinued operations” on a separate line of the income statement, balance sheet and cash flow statement. The earnings on internal sales to other companies in the Group are retained in the Group. The comparative figures for the discontinued operations in the income statement are restated and presented on a single line. Comparative figures in the balance sheet and cash flow statement are not correspondingly restated.

The condensed consolidated interim financial information set out in Section 6.2.1 “Statement of income” for the three-month periods ended 31 March 2013 and 2012, and for the year ended 31 December 2012, and the condensed consolidated interim financial information set out in Section 6.2.2 “Statement of financial position” for the three-month period ended 31 March 2013, has been prepared in accordance with IAS 34 “Interim financial reporting”. The condensed consolidated interim financial information should be read in conjunction with the annual financial statement for the year ended 31 December 2012, which has been prepared in accordance with IFRS. This condensed consolidated interim information has not been audited.

In addition, the audited consolidated financial statements for AGR Petroleum Services Holdings AS for the years ended 31 December 2012 and 2011 and the three-month periods ended 31 March 2013 and 2012, reflecting the main


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business of the Group going forward following completion of the Demerger, have been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.

6.2.1 Statement of income

The table below shows the statement of financial income of the Group for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012.


Three-months ended 31 March

Year ended 31 December


(unaudited) 2012

(unaudited) 2012

(unaudited)

Operating revenue .............................................................................................. 315,752 313,068 1,249,148

Operating expenses before depreciation ................................................................ (282,419) (281,804) (1,138,865)

Operating profit before depreciation (EBITDA) ................................................ 33,333 31,264 110,282 Depreciation and amortisation .............................................................................. (4,274) (5,192) (21,447)

Write downs and provisions.................................................................................. - - -

Operating profit (EBIT) .................................................................................... 29,059 26,072 88,835

Net financial items .............................................................................................. 100 (9,217) (14,804)

Profit (loss) before taxes ................................................................................. 29,159 16,855 74,031

Taxes ................................................................................................................ (9,331) (5,394) 9,578

Profit after taxes ............................................................................................. 19,828 11,462 83,610

Profit after tax from discontinued operations .......................................................... 11,608 (19,238) (187,586)

Gain from sale of discontinued operations .............................................................. - - -

Result from discontinued operations1 .............................................................. 11,608 (19,238) (187,586)

Profit (loss) for the year .................................................................................. 31,437 (7,776) (103,976)

1 For presentation of the discontinued operations of Drilling Services, see “Discontinued operation of Drilling Services” below.

The tables below shows the statement of financial income of the discontinued operations of Drilling Services for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012. The presentation of the discontinued operations of Drilling Services below comprises the Drilling Services segment and the companies AGR CannSeal AS and AGR Marine Engineering AS. AGR CannSeal AS and AGR Marine Engineering AS have previously been presented under the Group segment.

Income statement Discontinued operations

Three-months ended 31 March 2013

(unaudited)

In NOK thousand EDS T&T DS Group/

Other Total

Operating revenue, external ............................................................ 96,447 974 (533) 96,887 Operating revenue, internal ............................................................ 1,494 (180) (439) 875

Operating expenses before depreciation ........................................... (75,094) (6,635) (813) (82,543)

EBITDA ....................................................................................... 22,846 (5,841) (1,786) 15,219 Depreciation and amortization ......................................................... (18,688) (946) (20) (19,655)

Write downs and provisions............................................................. - - - -

EBIT ............................................................................................ 4,158 (6,788) (1,806) (4,436)

Net financial items ......................................................................... (1,779) 770 (2,210) (3,219)

Profit before taxes ...................................................................... 2,378 (6,017) (4,016) (7,655)

Taxes ........................................................................................... (761) 1,926 1,285 2,450

Profit after taxes ........................................................................ 1,617 (4,092) (2,731) (5,205)

Profit after tax from discontinued operations ..................................... - - 16,814 16,814

Profit/(loss) for the year ............................................................ 1,617 (4,092) 14,083 11,608


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Three-months ended 31 March 2012

(unaudited)


Other Total

Operating revenue, external ............................................................ 89,102 13,949 200 103,252 Operating revenue, internal ............................................................ 4,636 360 (5,020) (25)


EBITDA ....................................................................................... 14,957 (4,798) (4,835) 5,324 Depreciation and amortization ......................................................... (18,697) (789) (690) (20,176)


EBIT ............................................................................................ (3,740) (5,587) (5,525) (14,852)

Net financial items ......................................................................... (11,140) (1,130) (1,548) (13,818)

Profit before taxes ...................................................................... (14,881) (6,717) (7,073) (28,670)

Taxes ........................................................................................... 4,762 2,028 2,263 9,053

Profit after taxes ........................................................................ (10,119) (4,689) (4,810) (19,617)

Profit after tax from discontinued operations ..................................... - - 379 379

Profit/(loss) for the year ............................................................ (10,119) (4,689) (4,430) (19,238)


Year ended 31 December 2012

(unaudited)


Other Total

Operating revenue, external ............................................................ 457,466 22,181 10,822 490,469 Operating revenue, internal ............................................................ 11,714 3,149 (12,099) 2,764


EBITDA ....................................................................................... 84,794 (36,239) (1,983) 46,572 Depreciation and amortization ......................................................... (74,628) (3,726) (687) (79,042)


EBIT ............................................................................................ 10,166 (39,966) (2,670) (32,470)

Net financial items ......................................................................... (26,876) (4,292) (8,347) (39,515)

Profit before taxes ...................................................................... (16,710) (44,258) (11,017) (71,985)

Taxes ........................................................................................... (111,853) 11,274 (3,567) (104,146)

Profit after taxes ........................................................................ (128,563) (32,984) (14,584) (176,130)

Profit after tax from discontinued operations ..................................... - - (3,683) (3,683)

Profit/(loss) for the year ............................................................ (128,563) (32,984) (18,267) (179,813)

6.2.2 Statement of financial position

The table below shows the statement of financial income of the Group for the three-month period ended 31 March 2013.

As of 31 March


(unaudited)

Fixed assets Deferred tax assets .......................................................................................................................................... 105,738 Patents, research and development ................................................................................................................... 19,713 Goodwill ......................................................................................................................................................... 589,610 Machinery and other equipment......................................................................................................................... 16,561

Financial fixed assets ....................................................................................................................................... 33,489

Total fixed assets .......................................................................................................................................... 765,111


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As of 31 March


(unaudited)

Current assets Inventory ....................................................................................................................................................... 123 Accounts receivables ........................................................................................................................................ 390,615 Other receivables ............................................................................................................................................. 118,308 Shares held for trading purposes ....................................................................................................................... 90 Assets classified as held for sale ........................................................................................................................ 775,599

Cash and cash equivalents ................................................................................................................................ 73,939

Total current assets ...................................................................................................................................... 1,358,674

Total assets .................................................................................................................................................. 2,123,785

Equity Paid-in capital ................................................................................................................................................. 248,305 Other equity.................................................................................................................................................... 369,439

Non-controlling interest .................................................................................................................................... 95,763

Total equity .................................................................................................................................................. 713,507

Long-term liabilities Provisions ....................................................................................................................................................... 10,271 Deferred tax liability ......................................................................................................................................... 7,545

Liabilities to financial institutions ....................................................................................................................... 524,223

Total long-term liabilities ............................................................................................................................. 542,039

Short-term liabilities Liabilities classified as held for sale .................................................................................................................... 432,441

Short-term liabilities ........................................................................................................................................ 435,798

Total short-term liabilities ............................................................................................................................ 868,239

Total liabilities .............................................................................................................................................. 1,410,278

Total equity and liabilities............................................................................................................................. 2,123,785


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7 DIVIDEND AND DIVIDEND POLICY

7.1 Dividend policy

In deciding whether to propose a dividend and in determining the dividend amount, the Company’s Board of Directors will take into account legal restrictions, as set out in the Norwegian Public Limited Liability Companies Act of 13 June 1997 No 45 (the “Norwegian Public Limited Companies Act”) (see Section 7.2 “Legal constraints on the distribution of dividends”), the Company’s capital requirements, including capital expenditure requirements, its financial condition, general business conditions and any restrictions that its credit agreements or other contractual arrangements in place at the time of the dividend may place on its ability to pay dividends and the maintaining of appropriate financial flexibility. Except in certain specific and limited circumstances set out in the Norwegian Public Limited Companies Act, the amount of dividends paid may not exceed the amount recommended by the Board of Directors.

Under the current dividend policy adopted by the Company’s Board of Directors, it is an objective for the Company to over time yield a competitive profit from the shareholders’ investments. The Company’s dividend profile shall at the same time ensure the AGR’s need for stability and development in accordance with its objectives and strategies. Under the current dividend policy, the Company’s Board of Directors intends to pay no dividends in the foreseeable future. Moreover, the Company has undertaken not to declare any dividend, repurchase any shares or make other distributions to its shareholders during the term of the Bonds issued, see Section 12.7.1 “Bonds”.

Except for the dividend distributed of NOK 700,219 thousand (NOK 5.64 per share) in 2012, the Company has not distributed dividend to its shareholders since 2010.

7.2 Legal constraints on the distribution of dividends

Dividends may be paid in cash or in some instances in kind. For resolutions made on or after 1 July 2013, the Norwegian Public Limited Companies Act provides the following constraints on the distribution of dividends applicable to the Company:

• Section 8-1 of the Norwegian Public Limited Liability Companies Act provides that the Company may distribute dividend to the extent that the Company’s net assets following the distribution covers (i) the share capital, (ii) the reserve for valuation variances and (iii) the reserve for unrealized gains. The Company’s total nominal value of treasury shares which the Company has acquired for ownership or security prior to the balance sheet date, as well as credit and security which, pursuant to Section 8–7 to Section 8-10 of the Norwegian Public Limited Liability Companies Act fall within the limits of distributable equity, shall be deducted from the distributable amount.

The calculation of the distributable equity shall be made on the basis of the balance sheet in the approved annual accounts for the last financial year, but so that the registered share capital as of the date of the resolution to distribute dividend shall apply. Following the approval of the annual accounts for the last financial year, the General Meeting may also authorise the Board of Directors to declare dividend on the basis of the Company’s annual accounts.

Dividend may also be distributed by the General Meeting based on an interim balance sheet which has been prepared and audited in accordance with the provisions applying to the annual accounts and with a balance sheet date not further into the past than six months before the date of the General Meeting’s resolution.

• Divided can only be distributed to the extent that the Company’s equity and liquidity following the distribution is considered sound.


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8 INDUSTRY AND MARKET OVERVIEW

8.1 Introduction

The oil services market is affected by the oil companies’ E&P activities and spending levels, which in turn are primarily affected by the oil price level. The Group believes the most important developments in the market to be a tight supply/demand balance with a high oil price and the resulting need to increase E&P spending to increase the addition of reserves and production. The Group believes that these macro-trends are further exacerbated by bottlenecks in the industry, e.g., (i) availability of rigs and personnel, (ii) a more complex E&P environment, (iii) higher HSE&Q standards, and (iv) maintenance requirements. The Group believes that its portfolio of products and services is critical for oil companies in addressing certain of these industry bottlenecks.

8.2 Tight supply/demand balance has led to high oil prices

The world’s energy consumption has increased constantly during recent years. The trend shows that there still is a growth in consumption of oil, together with natural gas and coal while the use of nuclear energy and hydroelectric energy has stagnated and the development of renewable energy has not become large enough to play an important part in the worlds energy supply.

As a consequence of a solid global economy and a strong increase in oil demand, the general international offshore oil and gas market showed a healthy development from 1995 until 1997. The financial crisis in Asia and the oil price collapse in 1998/99 led to a weak market in the period from 1998 to 2000. As energy prices increased, this contributed to an improvement during 2001, but the upturn was short as the weakening in global economy negatively influenced the rate of new investments in new oil and gas fields, whereas the market for offshore services and modifications were only modesty affected due to the continuous upgrading and production support. This development continued into 2002 and 2003, but during the end of 2003 and 2004, demand for oil showed a significant improvement. This continued through 2006 and during late 2007 the price of oil started rapidly increasing. During the financial crunch in 2008, the oil price fell to 2005-levels, but increased rapidly and has since 2011 been fluctuating around the 100 USD mark. As a result of this the prices in the offshore modification and services markets have been very high the last years. Going forward, the Group believes the record high oil prices will continue to fuel a favourable market outlook for 2013 and 2014. The high oil prices will further drive investments in marginal fields and the industry. These market conditions will favour the companies with key competences supplying critical services.

8.3 High oil price and falling reserve replacement ratios drive E&P spending

As oil prices increased, the oil companies responded by increasing their development budgets and accelerating the development of already identified reserves. While this brought more oil to the market short term, it reduced reserve replacement ratios, which likely will result in an even tighter market longer-term.

With reserves/production (R/P) ratios falling, oil companies need to identify new reserves, by increasing recoverable reserves from identified sources (Increased Oil Recovery, IOR), mainly a result of technological developments, and by identifying new reserves.

According to - Rystad Energy and INTSOK – Annual Market Report 2013 – 20162, the number of producing fields on the Norwegian Continental Shelf (the “NCS”) is expected to grow from approximately 70 in 2010 to 130 in 2020. In terms of USD value, both the Norwegian and the UK offshore markets are expected to grow by 8% p.a. For AGR, the most important driver is the number of wells drilled. On the NCS, the number of drilled wells has increased significantly recent years. Some of the key drivers for this have been the high oil price, the increased number of licenses rewarded, the new tax regime favouring exploration and some recent exploration successes. The Group believes drilling activity will remain high and growing, especially amongst small and mid-sized E&P companies.

The Group believes that new reserves will increasingly come from:

• Unconventional sources. Sources that are becoming profitable due to technological advances or higher output prices, e.g. the Canadian oil sands;

• New frontiers. Areas previously not explored due to technological or other challenges, such as deep and ultra deep water, or arctic regions;

• New exploration acreage. Areas previously not opened for exploration, often for environmental or political reasons, such as the Barents Sea;

2 Source: http://intsok.no/index.php?id=5952 (only available by subscription).

http://intsok.no/index.php?id=5952


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• Marginal fields. Fields previously not economically viable, which are turning economical due to increased prices, improved technology, or availability of existing infrastructure; and

• Increased oil recovery. Technologic advances make it possible to extract more oil from existing fields.

Increased E&P spending has led to bottlenecks in product and service segments where markets require time to adjust. Examples of such bottlenecks of particular relevance to the Group include:

• Drilling rigs. Uncontracted drilling rigs have become scarce, witnessed by the strong increases in rig day rates. As a result, drilling contractors are requiring increasingly longer contracts, meaning fewer drilling rigs tend to be available for shorter-term engagements.

• Tools, equipment, and specialty steel. Demand for several types of tools and equipment, and the specialty steel to make them, has increased strongly, leading to increased lead times and price increases. One notable example is drill pipes, where increased demand is accentuated by increased wear from horizontal drilling.

• Personnel. Demand for skilled personnel has increased, reinforced by increased HSE and regulatory requirements.

The Group believes the E&P industry bottlenecks, as presented above, will lead to increased contracting and in sourcing of core and non-core activities, and promote development of new technologies and business models to bypass such bottlenecks, e.g. technology reducing the need for rig time or personnel.

The Group’s main clients are small and midsized E&P companies see Section 9.4 “The Group’s customers”. The Group believes there are strong trends working to increase the number of new, smaller oil companies (independents):

• The major oil companies have been slow to respond to the need for increased exploration, opening the markets for new exploration-focused oil and gas companies, as well as contributing to give these companies access to experienced exploration personnel.

• The increasing complexity of new supply sources lead to the emergence of niche specialists, such as the tail production specialists.

• Resource owners (governments) have accommodated new oil companies to increase competition for licenses, and accelerate development.

• The Group believes that independents will have larger variation in their work programs, meaning they cannot commit long-term to scarce resources like drilling rigs or personnel, and that many independents will not be able to nor be interested in building the full range of skills and capabilities required of an operator in all regions where they are present. Consequently, the Group believes the growth in importance of independents will drive increased demand for contracting and in sourcing of core and non-core activities, even covering core oil company functions such as license applications, seismic interpretation and reservoir modelling, drilling planning and engineering, and so forth.

8.4 Oil exploration is gradually moving to more complex areas

Exploration activities are moving towards more complex areas (complex geologies, more environmentally challenging, and more marginal fields). Mature basins such as the North Sea and the U.S. onshore continue to decline and offer little potential for incremental growth. Traditional fields outside of the OECD are mostly off-limits for Western oil companies. This forces the companies to take more risk, in order to replace reserves and keep attractive returns. The number of companies operating on deepwater is expanding, and the Group believes that the average water depth growth seen in recent years will continue going forward. AGR anticipates that the technological challenges related to exploration will consequently increase. AGR anticipates that oil service companies providing services enabling E&P companies to manage exploration challenges in complex areas will benefit from these trends.


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9 BUSINESS OF THE GROUP

9.1 Introduction

AGR is a leading supplier of services and technology to the oil and gas offshore industry. The Group’s main operations are based in Oslo, with other offices around the world including Stavanger, Straume (Bergen), Trondheim, Aberdeen, Guilford, Houston, Perth, Almaty, Moscow, Dubai, Abu Dhabi and Tel Aviv.

The Group provides technology, expertise and services to several of the world’s major oil and gas fields, with a customer base comprising several small and medium sized operators as well as a number of the large international oil companies and national oil companies (the “NOCs”).

Following completion of the Demerger, as set out in Section 6 “Demerger”, the Group will provide independent oil companies with access to scarce drilling rig capacity, as well as providing specialized G&G (“Geology and Geophysics”) and reservoir expertise and distinctive knowledge in well engineering, well planning and management of full drilling operations.

9.2 History and important events

AGR Group ASA was incorporated as a shelf company on 11 May 2004 under the name Tekågel Invest 41 AS and was converted to a public limited liability company on 24 April 2006. The Company was acquired by Altor in September 2004 and has been the parent company of the Group since it acquired all the shares in AGR Group Holdings AS in September 2004. The Group’s activities date back to 1987. In the following the important steps in the Group’s evolution are described.

The Group was created by entrepreneurs, and further developed by these and other innovators. This entrepreneurial culture and creative power is still reflected in the Group. In the past, the majority of the business took place in Norway, but an increasing share of revenues now stems from international operations. The Group is one of the leading providers of innovative technology-driven products and services to the worldwide oil and gas markets, for the benefit of shareholders, clients, employees and society in general.

Since 1987, the Group has acquired a significant number of complementary businesses to strengthen the depth and range of its products and services. The Company has expanded its expertise and broadened its international reach.

The table below provides an overview of key events in the history of Group:

Year Event

1987 .................... AGR Services AS founded – cleaning of oil and gas installations. 2000 .................... Sale of AGR Ability Group to PSL Group. 2001 .................... AGR Ability Group changes name to PSL Norway AS. 2003 .................... Sale of PSL Norway AS back to the founders of AGR Services AS and a group of managers. PSL Norway AS changes name back to AGR Ability Group. 2004 .................... Management seeks financial backers. Altor Private Equity acquires 70% of the Group. 2005 .................... RC Consultants AS acquired. DPT (Drilling Production Technology) acquired. Triangle acquired. 2006 .................... First rig consortia awarded in Norway. RES (Reservoir Evaluation Services) acquired. Peak Group acquired. IPO on Oslo Stock Exchange 3 July 2006. 2007 .................... Upstream Petroleum acquired. F.J. Brown acquired. Sale of AGR Consultants. 2008 .................... Altor increased its ownership in AGR from 32% to 77%. TRACS International Consultancy Ltd acquired. 2011 .................... Sale of AGR Field Operations. 2012 .................... Acquisition of Steinsvik AS. AGR approved as Operator. 2013 .................... NOK 550 million Bonds launched. Demerger of AGR Group ASA.


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9.3 Overview of the Group’s business areas

9.3.1 Introduction

The Group delivers reservoir, well management, and integrated field development services, including subsea project management services, to international petroleum companies across the complete asset life cycle – from prospect generation, exploration drilling, field development, and production and field operations to field abandonment. Through organic growth and M&A, the Group has established itself as a pre-eminent and global supplier of rig campaigns, drilling and subsurface consultancy as well as a global leader in offering bespoke training for the E&P Industry.

The Group is a competence based organisation where people are its greatest assets and does its utmost to attract, develop and reward highly talented professionals. The Group deploys approximately 604 people (approximately 292 permanent employees, 278 contracted-in staff and 26 associates) from 12 office locations, mostly engineers working onshore on a global basis. It has a proven track record of operating in some of the most challenging offshore environments, of managing drilling of complex wells, and of successfully employing the latest in technology and know-how in each of its business areas. As a notable example, the Group has during the last 12 years drilled close to 500 successful wells.

The Group is organized around the areas of Well Management, Reservoir Management, Facilities Solutions, Consultancy, HSE- and Training and Software Solutions. It has grown from being a strong Norwegian business, to now having a majority of its revenues internationally. Operationally, AGR’s services are offered regionally by business centres established in Norway, United Kingdom, USA, Australia, Russia and the United Arabic Emirates.

With these business areas, the Group provides integrated services and innovative technological solutions to complement a client’s capabilities to whatever degree is required, from total well management to the delivery of individual, specialist services, technologies, training or consultants.

The Group’s core competences are geology, geophysics, petro physics, reservoir engineering, drilling and well construction, field management, subsea services. The services are offered to a broad range of clients and are managed, offered and followed up by the following categories:

Well Management

The Well Management team comprises highly-qualified and experienced personnel across the globe, delivering services that enable clients to achieve increased HSE&Q and operational performance, enhanced operability and cost savings. Services span areas such as Well Engineering, Well planning, logistics management, procurement and management of drilling operations.

Reservoir Management

Reservoir Management provides independent reservoir management advice to international oil companies, national oil companies, independent operators and investment groups. The team comprises more than 100 professionals covering the disciplines of geophysics, geology, petro physics, reservoir and petroleum engineering, completions engineering and petroleum economics. Services range from early phase seismic interpretation to end of field life advice.

Facilities Solutions

Facilities Solutions provides Integrated Field Development with a multi-discipline approach, driven by an experienced and dedicated team. The AGR Facilities Solutions team is a provider of management support for engineering and management services for subsea projects, including services such as Management/Support to Operators within field development, feasibility studies and Technical-

HSEQ Services

HSEQ Services include experience and knowledge about best HSEQ practice in the industry, as well as internally developed tools and working methods within key areas of the operations. This division has extensive experience in providing full HSEQ support covering requirements in all phases of drilling projects, including initiation, planning, execution, follow-up and closing. This also includes

http://www.agr.com/agr-petroleum-services/facilities-solutions

http://www.agr.com/agr-petroleum-services/hseq-services


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Economical evaluations, concept selection and FEED studies and system.

preparation of regulatory application documents. Additionally, AGR offers safety coaches and performs safety inspections of rigs internationally.

AGR Consultancy

AGR Consultancy is a preferred global provider of recruitment and consultancy solutions to the upstream oil and gas industry with offices in Aberdeen, Stavanger, Dubai and Perth and associated offices in numerous locations worldwide. From a database comprising more than 8,000 professionals, AGR offers services within a wide range, inter alia, drilling and subsea services.

AGR TRACS Training

AGR TRACS Training offers 50 technical and commercial courses to the oil and gas industry. The division is unique in providing customised courses tailored to each client’s specific needs. The series are developed by in-house professionals who have, on average, more than 20 years’ industry experience.

9.3.2 Well management

9.3.2.1 Business overview

AGR Well Management is the largest business area within the Group. The division was created by the acquisition of Drilling Production Technology AS in Norway, the Peak Group in the UK and F.J. Brown in the US. The Group believes that AGR Well Management is one of the world’s largest well management groups, with a scale (in terms of employees and number of wells drilled) rivalling E&P majors.

AGR Well Management plans and executes drilling programmes for the smaller oil companies lacking such resources, and for larger companies who have made the strategic decision to use outsourcing to gain a competitive edge in a resource constrained market.

AGR Well Management has been instrumental in establishing new companies as operators in the UK and Norwegian sectors of the North Sea, and has provided extensive well management services to a large variety of clients in Houston.

AGR Well Management has operated more than 470 wells for 104 clients in 23 countries, operating in every type of drilling environment including onshore, shallow water, deep water, and extended-reach and high pressure/high temperature in all the major oil provinces. Operations include single string exploration wells through to multi-well development drilling projects. At the heart of AGR Well Management’s well construction process is an unrelenting commitment to thorough planning and a focus on performance.

AGR Well Management is a commercial innovator pioneering new business models such as multi-well, multi-client rig campaigns in Europe and Asia. In 2012 alone, AGR Well Management drilled 10 wells worldwide and operated 6 rigs in 5 countries. These campaigns were created, planned and executed by AGR Well Management and are believed by the Group to be the largest of their kind ever undertaken by an independent well management company. AGR Well Management drill as many wells and run as many rigs as the largest oil companies.

9.3.2.2 Well Management’s different business models

The customer base of AGR Well Management consists of small E&Ps without internal drilling departments, combined with some large and medium sized E&Ps who leverage WM to address their own resource constraints and sometimes lack of local presence when moving into new regional areas. AGR Well Management offers its customers the value proposition of a one stop shop for rig time and management of the well drill, as well as all safety aspects of the operations managed. For smaller E&Ps, the well management business offers the small E&Ps the ability to capitalize on AGR Well Management’s size and experience in identifying optimal solutions as well as defraying insurance and other costs by utilizing AGR Well Management’s track record as a benchmark. The smaller E&Ps do represent increased exposure through exploration failure, financing and license removal. The main driver for smaller E&Ps entering into drilling agreements is to get available rig time. AGR Well Management will run an extensive evaluation of potential customers prior to entering into any form of agreement. In addition AGR Well Management will demand a Letter of Credit to reduce the risk exposure related to smaller E&P’s.


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9.3.2.3 Competitive position

Overall, the Group considers AGR Well Management’s well management position to be strong. Competitors include other similar outsourced drilling departments, drilling consultancies, rig owners and E&P companies’ own internal divisions.

AGR Well Management’s access to people, both permanent employees and swing capacity from the consultancy business, gives it a strong position in an environment where the key barriers to entry are skilled drilling personnel, as well as access to rigs, which AGR is able to offer. The group of companies that make up the well management business have extensive experience and skills base, including strong abilities in contracting, evaluation and pricing of risk.

9.3.3 G&G Reservoir Management


AGR Reservoir Management offers high quality sub-surface consultancy, from the initial exploration phase through to field abandonment. Reservoir Management’s team of specialists covers all of the sub-surface disciplines: geophysics, geology, sedimentology, petro physics, reservoir engineering and reservoir modelling.

AGR Reservoir Management assists oil companies in a wide range of tasks, ranging from assisting with exploration licence applications and asset promotion campaigns, to production optimisation and enhanced oil recovery projects, redeterminations and asset valuations.

Given AGR Reservoir Management’s deep knowledge of the major exploration areas, in particular the North Sea, the Group has established a strong reputation for preparing multi-client reports on the possible prospects of exploration regions and specific basins. In this way, Reservoir Management was largely responsible for stimulating interest in exploring Norway’s Farsund area under the 18th round of licences.

AGR Reservoir Management’s engineers have demonstrated advanced production experience, having operated the Varg field enhanced oil recovery campaign for Petra – this team also provided integrated sub surface for one of the major operators on the NCS on two of their fields.

Following the acquisition of TRACS International Consultancy Ltd in 2008 the reservoir evaluation business has approximately 100 consultants, and with a skilled personnel scarcity and a continuing emphasis on outsourcing, the market for these services is expected to continue to exhibit positive demand growth, both from smaller E&Ps as well as from NOCs who lack the manpower to undertake all projects.

Currently, the majority of the business customers are on the NCS and the UKCS and in Russia, but with a growing number of clients outside these areas. Clients include small E&Ps as well as larger Norwegian and global companies. TRACS´ reserve evaluation and training services expose the AGR Reservoir Management to a large number of international clients who are also looking for additional services. The reservoir evaluation business offers support for companies that are resource constrained with large asset management and operation requirements as well as support in regional and license rounds.


The key competitors are similar G&G consultancies and the internal divisions within E&P companies fulfilling the same tasks. With the Group having established a strong core of personnel in Norway, former Soviet Union and UK, in addition to a growing base in APAC, AGR Petroleum Services considers itself well placed to maintain its strong position and expand internationally.

9.3.4 Facilities Solutions


The Facilities Solutions division adds the experience of the Well and Reservoir Management teams to sub-sea and facilities engineers to provide engineering and management support services for subsea and topsides projects that result in optimising value while reducing risks. Facilities Solutions core strength is the ability to combine multi-discipline knowledge in field development ensuring adequate quality at minimum cost.

Value is enhanced through investigating options, selecting an optimum field development solution, and then planning correctly with a full understanding of risk and performance management.


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The clients of Facility Solutions benefit from the integration of services which provides consistency and efficiency, while reducing the number of interfaces required, delivering a successful project.


The competitors are internal divisions within E&P companies and Services Companies similar to the Group’s where they offer field developmental planning including feasibility studies and technical-economical evaluations, concept selection, FEED Studies (Front End Engineering Design) and system definition - preparing for execution as well as specification and preparation of ITT packages.

9.3.5 HSE&Q Services


HSEQ Services has advisors and senior advisors with extensive experience from the oil and gas industry through projects and co-operation with both large and small operators, including regulatory authorities. The services available to the Operators cover all phases of the value chain and include experience and knowledge about best HSEQ practice in the industry, as well as own developed tools and working methods within key areas of the operations.

HSEQ Services work closely with other business areas in AGR to improve clients’ performance within HSEQ. HSEQ services can be divided into the following main areas:

Well Management, Field Development, HSEQ - Studies and coaching services, Environmental studies and coaching services, Corporate Responsibility - Studies and coaching services and Management for hire. The HSEQ area was strengthened by the acquisition of Steinsvik in 2012, adding Safety coaches to AGR’s product offerings.


The competitors are internal divisions within E&P companies and Services Companies similar to the Group’s. A safety coach is a product where AGR has a strong niche without many competitors.

9.3.6 Consultancy


Consultancy Services provides recruitment and consultancy solutions to the upstream oil and gas industry, specialising on the drilling business.

It was created from Peak Consultancy Services, AGR Triangle Technology AS and the HSE&Q services business which was transferred from AGR Project Partner AS (formerly RC Consultants AS).

The Group is ideally located to ensure the best identification of consultants with the key skills and background that will expertly match the client’s requirements, based on its proprietary database of in excess of 8,000 consultants. The division is currently providing over 350 consultants to 66 clients around the world.

The Aberdeen office hosts the citrix-based consultant database. This is a real-time system, continually updated and providing a global platform that enables detailed and comprehensive search and interrogation of candidate skills and attributes and facilitating the rapid matching of candidate with client requirements.

The drivers contributing to the Well Management business also feed in to support the robustness of the Consultancy Services business. With the forecasted growth in drilling activity and the concurrent manpower requirements, the Group’s consultancy services, which provides personnel to the drilling sector is well placed for the future.

The customer base is predominantly the medium and large E&Ps and Petroleum Services’ own well management business. The larger E&Ps tend to prefer to recruit through consultancy businesses, which offer quality assurance on personnel and easier administration issues to temporarily support their internal drilling departments.


The competitors to the Consultancy Services business mirror those in well management, along with other consultancies. With an excellent, deep database of job ready consultants, built up over many years combined with the global shortage of personnel, the Group believes the business is in a strong competitive position.


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9.3.7 AGR TRACS Training


AGR’s Training division is unique in providing customised courses tailored to each client’s specific needs. It is regularly called upon by HR departments to assist with the development of in-house training programmes. All trainers have worked for international exploration and production majors, are practicing engineers and geoscientists and on average have more than 15 years’ experience.


AGR TRACS works with the larger oil companies’ own training departments (e.g. BP), or supplements companies who require training but do not fully staff up a training centre (e.g. Maersk, Hess). The prime competition comes from the large scale ‘commodity’ providers, such as Petroskills or IHRDC, from whom AGR TRACS distinguishes itself by the delivery of bespoke training, which commodity providers do not have flexibility to provide.

9.3.8 AGR Energy


During 2011, AGR established AGR Energy AS, with registration no. 996 508 250, business address Karenslyst Allé 4, 0213 Oslo, Norway (“AGR Energy”). Following a divestment of 56% of the shares in the company in August 2013, AGR owns 44% of AGR Energy at the date of this Prospectus.

AGR Energy brings together several of the Group’s areas of expertise and enables the Group to take a stake in the licenses where that is required. As Operator, AGR has the overall responsibility for the activity in the licenses, including management, evaluations, operations (seismic and drilling) and contact with the authorities. On the drilling side, the work includes preparing the locations of drilling, sourcing of the rig and other third party services, project management, manning of operational team, procedures, drilling, reporting etc. These are long term rights and obligations where the activity levels will depend on the partners’ timing and ability to get financing. The licenses are of a character where they must be drilled by a certain date or the license rights will lapse.

AGR is paid on a cost-recovery basis, while the services provided by Well Management, Reservoir etc are paid by the clients on regular terms. In addition, AGR’s 5% interest is carried. That means that the partners pay AGR’s share of the exploration cost. At certain decision gates post the exploration drilling, AGR must choose to retain its 5% and pay its share of past exploration cost or forego its share without paying anything.

Except for Israel, AGR Energy will hold the licenses. AGR Petroleum Services Holdings AS is the operator of several exploration licenses, holding 5% of each license and will remain so after the partial sale of AGR Energy.

AGR Energy’s licenses in Israel, held by AGR Petroleum Services Holdings AS, are:

License Number Name Partners

370 ............................ Ishai Nammax, Daden, Frendum, Israel Opportunities 371 ............................ Aditia Nammax, Daden, Frendum, Israel Opportunities 372 ............................ Lela Nammax, Daden, Frendum, Israel Opportunities 373 ............................ Yahav Nammax, Daden, Frendum, Israel Opportunities 374 ............................ Yohad Nammax, Daden, Frendum, Israel Opportunities 380 ............................ Yitshak Adira, Brownstone, Ellomay 389 ............................ Shikma Yam Cassal Drilling, Cassal Winery 395 ............................ Arie Coleridge, ARI Investment, Frendum, Lapidot 396 ............................ Gulliver Ginko, Zherach, Alstrom

License number 370 is drilled and will therefore be extended beyond expiry date 1 September 2013. License number 371 to 374 expires 1 September 2013, and the partners have applied for an extension for a combination of parts of the licenses comprising two new licenses. The license number 380 expires 1 December 2013, and the partners have applied for an extension to September 2015. The license number 389 expires 31 July 2013, and the partners plan to apply for a two year extension. The license number 395 expires 19 December 2014 and the license number 396 expires 24 March 2015.

AGR Energy has as part of a consortium applied for a license in Cyprus and a license in Ghana. The license in Cyprus has been declined, but the consortium is in ongoing discussions with the regulators to get back in position. The Group expects the license in Ghana to be awarded during 2013.


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In Cyprus, AGR will, if successful, have a 30% interest as operator and a minor share as co-owner of a listed company. The work program for the license is seismic acquisition during the first 3 year. In Ghana, AGR will, if successful, have a 5% carried interest in addition to options.


There are many small E&P companies competing for licenses. AGR Energy’s main competitive driver is its link to AGR and all the experience and services AGR can offer. Furthermore, AGR Energy does not require taking a large stake in the fields, something which makes it a good candidate in countries where the NOCs want to retain the reserves on their own balance sheet.

9.4 The Group’s customers

AGR’s clients range from the largest oil companies to small E&P companies in a start-up phase. Large clients tend to use AGR for capacity reasons or because AGR offers a specific service complementary to own competence and experience, while small- and midsized clients often use a broader range of AGR services to do the whole job. AGR has approximately 140 contracts with clients worldwide ranging from a single consultant to a full well management contract that includes all phases and services required for drilling of a well.

The majority of the revenue from the Well Management business is generated by small E&P companies while a growing minority of revenues stems from the large international oil companies.

The small E&P companies are typically companies with funding capacity for a limited work program that normally consists of just a few wells to be drilled. These companies are often lacking procedures and processes covering all aspects of the drilling operation, simply because they are lacking the experience. They do not have a full in-house drilling department, as they do not have sufficient volumes to take on such cost. They might also have a challenge in contracting a rig, as the rig owner normally requires the rig to be contracted for a longer duration than the small E&P can offer with such a limited program. These clients therefore need support during all phases of planning and execution of a project, including contracting of rig, regulatory approval processes, logistics and operations management. With this client base being 70% of AGR’s annual revenue, AGR has strong teams working continuously within all the phases and disciplines of such a drilling project. AGR offers an organization and setup that comply with all regulatory requirements, and therefore AGR by using all parts of its existing organization, as well as systems and processes enable the smaller E&P a project execution to be carried out by a team with a size and experience that is similar to what the largest international oil companies have. By having a large number of smaller E&P companies in the client portfolio AGR will also be able to secure these clients rig capacity or slots by pairing the need of various companies and through this establish rig campaigns or rig clubs. This is a key enabler that allows the smallest E&P companies to create value by drilling exploration wells.

The second largest client group is the large oil companies. The content of services for these clients is slightly different from what has been described for the smaller E&P companies. All of the major oil companies have internal capacities within the service areas offered by AGR. They have comprehensive and mature systems and processes well implemented and therefore do not need support on the systems and processes to the same extent as the smaller companies. These clients are using AGR as a support organization that works in parallel with their own internal organization. For some clients the support is given to their internal team in the planning and execution of the operations, while the majority of services for these companies consist of AGR being responsible for the delivery of a defined work scope in compliance with the company’s procedures and processes. For the major oil companies AGR is normally not assisting in securing rig capacity, as these companies have internal capabilities for such processes, as well as having a long term drilling backlog that allows them to contract rigs on long term contracts. The major oil companies are drilling both exploration wells, development wells and production wells, which increase the volume potential, as well as securing more work throughout the value chain of a field’s life cycle.

9.5 The Group’s operations

The various business areas offer services into each market segment. The commercial structure is different between each of the business areas, but common for all the areas of AGR is that as a service provider, the business is very much focused on not taking on any liabilities or risk that is not fully within the Company’s control.

When providing single sourcing of personnel through the consultancy services business, the consultants are sourced through AGR. Each individual consultant acts as a sub-contractor to AGR and this way AGR will not have liabilities as an employer for this group of personnel. All services are normally provided based on a call-off from long term frame agreements established between AGR and the end client being the oil company. The contract for these services is


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normally based on hourly rates or day rates for the provision of services. The consultant works within the client’s organization and is being supervised by the client. Potential liabilities for AGR are limited within this business model.

Within the Well Management business there is a larger share of fixed pricing of individual tasks. When entering into a contract with lump sum elements included AGR will only accept lump sum when AGR stays fully in control of the task. AGR will not accept any risk related to weather conditions or other factors beyond the companies control.

AGR is engaged both in Exploration drilling, Field Development and Production.

9.6 Geographic presence

The Group’s main office are based in Oslo, with other offices around the world including Stavanger, Straume (Bergen), Trondheim, Aberdeen, Guilford, Houston, Perth, Almaty, Moscow, Dubai, Abu Dhabi and Tel Aviv.

9.6.1 AGR offices

The figure below sets out the Group’s offices:

All AGR services are offered out of Norway and the UK, while Moscow primarily offers Reservoir Services, Americas Consultancy services, the Middle East Well Management services and Perth Well Management, Reservoir services and Consulting. The Group’s two main regions both in terms of employees and revenue are Norway and the UK.

9.6.2 Overview of employees and consultants per office

The table below sets out an overview of employees and consultants per office

Norway Russia UK ME APAC US Total

Permanent employees ............ 113 17 127 14 21 37 329 Contractors, associates and hired personnel ..................... 16 2 64 10 13 1 106

Consultants .......................... 91 0 89 0 27 42 249

Total .................................. 220 19 280 24 61 80 684

9.6.3 Service offerings by region

The table below sets out an overview of the different services offered in the different geographical regions:

Norway & Russia UK, Africa Americas

Middle East APAC

Well mgt ....................................................................... √ √ √ √ Reservoir mgt. .............................................................. √ √ √ Consulting ................................................................... √ √ √ √ Software1 ..................................................................... √ HSEQ1 .......................................................................... √ 1 Managed out of this office, but can be offered in all regions.


48

The Norwegian offices predominantly serve clients on the Norwegian continental shelf, while the UK office serves as the hub for services across Europe, Africa and South America. The Company’s main areas of activity shift with clients’ needs. For instance, over the last few years, the UK office has been engaged in two major campaigns off the Falklands while the newly announced Genel Energy campaign will be in the Mediterranean and West Africa. The Australian (APAC) office predominantly serves clients in Australia, but has also followed Australian clients to Africa in cooperation with the UK office. Similarly, the Middle East office is currently, in cooperation with the UK office, engaged in Tunis.

9.7 Dependency on contracts, patents, licenses etc.

It is the opinion of the Company that the Group’s existing business or profitability is not materially dependant on any specific patents, licences or intellectual property rights, industrial, commercial or financial contracts.

9.8 Material contracts

Other than set out below, neither the Company nor any member within the Group has entered into any material contracts, other than contracts entered into in the ordinary course of business, for the two years immediately preceding the date of this Prospectus, and no member within the Group has entered into any contracts, other than contracts entered into in the ordinary course of business, containing obligations or entitlements that are, or may be, material to the Group as of the date of this Prospectus.

On 20 December 2011, the Group sold its shares in AGR Field Operations Holdings AS to Oceaneering AS. The agreement included regular guarantees for such transactions

In 2011, the Group entered into an agreement for the Operatorship in Israel, see Section 9.3.8.1 “AGR Energy”. The first well is completed and there are no other firm planned wells. AGR, as Operator, has additional responsibility within the license groups regulated by the Joint Operating Agreement and towards the authorities on behalf of the license to execute the work program in a safe and timely matter. For operations the Operator holds the contracts on behalf of the licenses and is in general indemnified by the license partners.

On 24 May 2013, the Group resolved the Demerger, see Section 6 “The Demerger”.

9.9 Environmental, health and safety matters

The AGR Petroleum Services Management System is built in accordance with;

• ISO 9001:2008 on Quality Management • ISO 14001:2004 on Environmental Management • OSHAS 18001:2007 on Safety and Health Management • ISO 26000:2010 on Social Responsibility

The system and its use are certified (Corporate certificates) against:

• ISO 9001:2008 on Quality Management in 2010 (Norway, UK and AP) • ISO 14001:2004 on Environmental Management in 2013 (Norway, UK)

This means that AGR has management systems and processes in accordance with international acknowledged standards.

The certification body is Bureau Veritas.

Safeguarding health, safety and environment is critical to our performance and risk management is an integrated part of our AGR’s activities. We strive to identify and manage any risk in all our activities and constantly work to avoid;

• Personnel injuries • Work-related illness • Negative environmental impact • Reputational and Economical loss

In case of an accident, the Group works to have a robust and effective emergency response system, to limit the consequences to personnel and the environment to the extent possible, and to manage stakeholders (e.g. authorities, next-of-kin, media) in the best possible way.


49

The Group monitors the HSE performance. As per the date of this Prospectus, the H-value (number of fatalities and lost time incidents (LTI) per million working hours) and H2-value (number of fatalities, lost time incidents (LTI) and medical treatment incidents (MTI) per million working hours) are zero for AGR as a group and 0.4 and 0.8, respectively, for projects.

9.10 Insurance

The Group considers that it has adequate insurance cover for its business.

9.11 Litigation and disputes

From time to time, the Group is involved in litigation, disputes and other legal proceedings arising in the normal course of its business. Neither the Company nor any other company in the Group are, nor have been during the course of the preceding twelve months involved in any legal, governmental or arbitration proceedings which may have, or have had in the recent past, significant effects on the Company’s and/or the Group’s financial position or profitability, and the Company is not aware of any such proceedings which are pending or threatened, with the exceptions below:

• The Group is involved in arbitration relating to a dispute with UP Offshore (UK) Limited, a sub-contractor, which is alleging that the Group has breached the terms of a contract between the parties, and is seeking damages of GBP 1.54 million. The information usually required by IFRS is not disclosed on the grounds that it can be expected to seriously prejudice the outcome of the arbitration. The directors are of the opinion that the claim can be successfully resisted by the Group.

• An invoice and demand for settlement for approximately U.S. Dollar 5.8 million has been presented to the Group by Awilco Drilling plc (“Awilco”), a drilling contractor, in respect of services it claims was performed during January 2012 on a contract between the parties. The services were allegedly performed for a customer of the Group, Antrim Energy Inc (“Antrim”). This liability has not yet been accepted pending the outcome of a dispute between the Group and Antrim. The directors, based on legal advice, understand that the Group has an agreement with Antrim, which, in their opinion, provides the Group with an enforceable indemnification against any costs arising in connection with the claim from Awilco, however Antrim are presently disputing this.

• A claim for approximately U.S. Dollar 47.3 million has been made against the Group by SCS Corporation in respect of cost over-runs incurred against the pre-estimate of costs for the Sabu-1 well which was completed in 2012. A defence and counterclaim for U.S. Dollar 22.2 million has been made by the Group against SCS Corporation in respect of amounts outstanding under the contract. The directors are of the opinion that the claim by SCS Corporation can be successfully resisted by the company. There is no impact on the financial position of the Group at 31 December 2011 in respect of this matter. An invoice and demand for settlement for approximately U.S. Dollar 10.25 million has been made against the Group by Jasper Drilling Private Limited, a service provider, in respect of services it claims were provided under a contract between the parties for the ultimate benefit of a customer of the Group, SCS Corporation. This liability has not been accepted pending the outcome of the dispute between the Group and SCS Corporation, as well as management’s concerns about the validity of various line items being claimed.


50

10 CAPITALISATION AND INDEBTEDNESS

10.1 Capitalisation

The tables below should be read in conjunction with the information included elsewhere in this Prospectus, including Section 11 “Selected financial and other information” and the Financial Statements and the Interim Financial Information and related notes, which have been incorporated by reference hereto, see Section 19.3 “Incorporation by reference“.

The tables set forth the capitalisation and indebtedness of the Group as of 31 March 2013 in accordance with IFRS on a historical basis and adjusted to reflect the completed Demerger, see Section 6 “The Demerger”.

Capitalisation

In NOK thousand

As of 31 March

20131

(unaudited) Demerger2 (unaudited)

Adjusted to reflect

the Demerger3 (unaudited)

Indebtedness Total current debt ............................................................................................................ 622,461 (186,662) 435,799 - Guaranteed .................................................................................................................. - - - - Secured4 ...................................................................................................................... 45,000 (25,000) 20,000 - Unguaranteed/unsecured ............................................................................................... 577,461 (161,662) 415,799 Total non-current financial debt ......................................................................................... 787,817 (245,778) 542,039 - Guaranteed .................................................................................................................. - - - - Secured4 ...................................................................................................................... 798,106 (248,106) 550,000

- Unguaranteed/unsecured ............................................................................................... (10,289) 2,328 (7,961)

Total indebtedness ....................................................................................................... 1,410,278 (432,440) 977,838

Shareholders’ equity a. Share capital ............................................................................................................... 248,305 (114,220) 134,085 b. Additional paid-in capital ............................................................................................... - - - c. Other reserves ............................................................................................................. 369,439 (155,025) 214,414

d. Non-controlling interests ............................................................................................... 95,763 (58,968) 36,795

Total equity .................................................................................................................. 713,507 (328,213) 385,294

Total capitalisation Net indebtedness (A) Cash ......................................................................................................................... 109,922 (35,983) 73,939 (B) Cash equivalents ........................................................................................................ - - -

(C) Interest bearing receivables ........................................................................................ - - -

(D) Liquidity (A)+(B)+(C) ............................................................................................ 109,922 (35,983) 73,939

(E) Current financial receivables .................................................................................. - - -

(F) Current bank debt ...................................................................................................... 20,000 - 20,000 (G) Current portion of long-term debt ................................................................................ 25,000 (25,000) -

(H) Other current financial liabilities ................................................................................... - - -

(I) Current financial debt (F)+(G)+(H) ........................................................................ 45,000 (25,000) 20,000

(J) Net current financial indebtedness (I)-(E)-(D) ....................................................... (64,922) 10,983 (53,939)


51

Capitalisation

In NOK thousand

As of 31 March

20131

(unaudited) Demerger2 (unaudited)

Adjusted to reflect

the Demerger3 (unaudited)

(K) Long-term interest bearing debt ................................................................................... 223,000 (223,000) - (L) Bonds issued .............................................................................................................. 550,000 - 550,000

(M) Other non-current financial liabilities ............................................................................ 25,106 (25,106) -

(N) Non-current financial indebtedness (K)+(L)+(M) .................................................. 795,106 (248,106) 550,000

(O) Net financial indebtedness (J)+(N) ........................................................................ 733,184 (237,123) 496,061

1 The figures are extracted from first quarter financial information as of 31 March 2013. The figures include Drilling Services (i.e., Drilling Services

business area is not presented as discontinued operations). 2 The figures represent the reduction of values based on the actual allocation of assets and liabilities in the Demerger, however, so that allocation of the

share capital is based on the conversion ratio in the Demerger (56:44), see Section 6.1 “Overview of the Demerger”. 3 The figures reflect the Group’s, i.e., mainly Petroleum Services business area, capitalisation and indebtedness adjusted for the Demerger. 4 The secured financial debt of NOK 843,106 thousand as of 31 March 2013 is secured by share pledge in each of AGR Petroleum Services Holdings AS

and AGR EDS and T&T Holdings AS, and all their material subsidiaries’ intra-group loans, accounts receivables, machinery and plant and inventory.

10.2 Working capital statement

The Company is of the opinion that the working capital available to the Group is sufficient for the Group’s present requirements, for the period covering at least 12 months from the date of this Prospectus.

10.3 Contingent and indirect indebtedness

As of 31 March 2013 and as of the date of this Prospectus, the Group did not have any contingent or indirect indebtedness.

The Company has certain joint liabilities under Norwegian statutory regulations following the Demerger of its Drilling Services business area. Under Section 14-11 of the Norwegian Public Limited Liability Companies act, AGR Group and the EDS Group, established in connection with the Demerger, are jointly liable for liabilities of AGR Group and EDS Group accrued before the Demerger date of 6 August 2013. This statutory liability is unlimited in time, but is limited in amount to the net value allocated to the non-defaulting party in the Demerger.


52

11 SELECTED FINANCIAL AND OTHER INFORMATION

11.1 Introduction

The following tables present selected financial information in respect of the Group. Unless otherwise stated herein, the selected interim financial information as of and for the three-month periods ended 31 March 2013 and 2012 and the selected financial information as of and for the years ended 31 December 2012, 2011 and 2010 have been derived from and are based on the Interim Financial Information and the Financial Statements, respectively. The Financial Statements and the Interim Financial Information have been prepared in accordance with IFRS, as adopted by the EU.

The Group’s financial information presented for the financial year ended 31 December 2010, as presented herein, are extracted from the Group’s financial statements for the financial year ended 31 December 2011, in which the results from AGR Field Operations Holdings AS and its subsidiaries, which was divested in December 2011, are presented as discontinued operations in the income statement for 2010 and 2011.

In addition, unless otherwise indicated herein, the Group’s financial information presented for the three-month periods ended 31 March 2013 and 2012, reflects that Drilling Services is reported as discontinued operations for the same periods in accordance with IFRS5 since the Demerger was announced late February 2013 and that it at this stage was highly probable that the demerger would be approved.

The selected financial information should be read in connection with and is qualified in its entirety by reference to the Financial Statements and the Interim Financial Information, hereunder the auditor’s reports and accounting policies, incorporated hereto by reference, see Section 19.3 “Incorporation by reference” of this Prospectus, and should be read together with Section 12 “Operating and financial review”, and note 2 to the Financial Statements and note 1 to the Interim Financial Information for further details regarding the basis of preparation of the Financial Information.

11.2 Statement of income

The table below sets out selected data from the Group’s statement of income for the three-month periods ended 31 March 2013 and 2012 and for the years ended 31 December 2012, 2011 and 2010.





(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Revenue ................................................................ 311,209 310,490 1,716,148 1,832,245 1,397,018

Other operating revenue .......................................... 4,543 2,578 61,765 35,669 48,238

Total operating revenue....................................... 315,752 313,068 1,777,913 1,867,914 1,445,256

Goods and consumables used ................................... 169,904 190,361 823,422 977,184 677,375 Payroll expenses ..................................................... 92,878 70,611 601,173 494,916 427,154 Depreciation, amortisation and impairments .............. 4,274 5,192 111,681 106,728 122,808

Other operating expenses ........................................ 19,637 20,830 198,575 148,632 143,346

Total operating expenses ..................................... 286,693 286,995 1,734,852 1,727,460 1,370,683

Operating profit ................................................... 29,059 26,072 43,061 140,454 74,573

Financial income ..................................................... 59,793 56,874 217,379 277,733 298,495

Financial expenses .................................................. 59,693 66,090 272,235 362,549 389,893

Net financial items ............................................... 100 (9,217) (54,856) (84,815) (91,398)

Profit (loss) before income tax ............................ 29,159 16,855 (11,795) 55,639 (16,825)

Income tax expense ................................................ 9,331 5,394 92,180 38,056 2,914

Profit (loss) from continued operations ............... 19,828 11,462 (103.975) 17,582 (19,739)

Profit after tax from discontinued operations .............. 11,608 (19,238) - 737,016 13,378

Profit (loss) for the year ...................................... 31,437 (7,776) (103,957) 754,598 (6,631)

Non-controlling interests’ share of profit (loss) for the year ................................................................ 1,679 117 (2,401) 9,330 (1,559)

Profit attributable to equity holders ........................... 29,757 (7,893) (101,574) 745,268 (4,802)

Total allocated profit (loss) for the year 31,437 (7,776) (103,975) 754,598 (6,631)


53

The table below sets out selected data from The Group’s interim statements of comprehensive income for the three-month periods ended 31 March 2013 and 2012 and for the years ended 31 December 2012, 2011 and 2010.

Comprehensive income statement Three-months ended 31 March



(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Profit for the period ............................................. 31,437 (7,777) (103,975) 754,598 (6,361) Other comprehensive income .............................. - - - - - Currency translation differences ............................... 183 (2,619) 4,520 6,835 35,596 Currency translation differences discontinued operations ............................................................. - - - (27,063) -

Total comprehensive income for the period ......... 31,620 (10,396) (99,455) 734,370 29,235

Profit attributable to: Owners of the company ........................................... 33,116 (7,895) (101,547) 745,268 (4,802)

Non-controlling interest ........................................... (1,679) 118 (2,401) 9,330 (1,559)

Total allocated profit (loss) for the year 31,437 (7,777) (103,975) 754,598 (6,361)

11.3 Statement of financial position

The table below sets out selected data from the Group’s statement of financial position as of 31 March 2013 and as of 31 December 2012, 2011 and 2010.

As of 31 March

As of 31 December


(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Assets Deferred tax assets ........................................................................ 105,738 110,027 176,838 173,291 Other intangibles ........................................................................... 19,713 206,780 166,757 183,214

Goodwill ....................................................................................... 589,610 649,277 581,627 921,887

Intangible assets ........................................................................ 715,061 966,084 925,222 1,278,392

Machinery and operating equipment ................................................. 16,561 297,805 345,169 453,868

Tangible fixed assets .................................................................. 16,561 297,805 345,169 453,868 Investments in associated companies ............................................... - - - 256

Long term receivables .................................................................... 33,489 32,387 40,887 30,841

Financial fixed assets.................................................................. 33,489 32,387 40,887 31,097

Total non-current assets ............................................................. 765,111 1,296,276 1,311,278 1,763,357

Inventories ................................................................................. 123 23,995 20,535 13,266 Trade receivables........................................................................... 390,615 478,315 521,410 727,270

Other receivables ........................................................................... 118,308 99,588 116,437 112,349

Receivables ................................................................................. 508,923 577,903 637,847 839,619 Financial assets at fair value ........................................................... 90 92 95 93 Assets of disposal group classified as held for sale ............................. 775,599 - - 6

Cash and cash equivalents .......................................................... 73,939 272,683 820,984 45,519

Current assets ............................................................................ 1,358,674 874,673 1,479,461 898,503

Total assets ................................................................................ 2,123,785 2,170,949 2,790,739 2,661,860

Equity and liabilities Share capital ................................................................................. 251,797 251,797 251,797 251,797 Treasury Shares ............................................................................ (3,492) (3,492) (3,631) (3,631)

Share premium fund ...................................................................... - - - 827,543

Total paid-in equity..................................................................... 248,305 248,305 248,166 1,075,709

Retained earnings .......................................................................... 369,439 339,071 1,138,745 (434,157)

Non-controlling interest in equity ..................................................... 95,763 94,085 24,558 23,820

Total equity ................................................................................ 713,507 681,461 1,411,469 665,372


54

As of 31 March

As of 31 December


(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Pension liabilities ........................................................................... 8,132 8,596 8,146 10,830 Deferred tax ................................................................................. 7,545 988 5,457 13,038 Provisions ..................................................................................... 2,139 2,271 1,158 7,599

Debt to credit institutions ............................................................... 524,223 - 651,067 877,949

Total non-current liabilities ........................................................ 542,039 11,854 665,828 909,416

Debt to credit institutions ............................................................... 16,796 744,646 77,395 275,175 Trade payables .............................................................................. 228,588 437,627 271,822 441,156 Tax payable .................................................................................. - 63 61,158 45,584 VAT payable and other taxes payable ............................................... 49,816 74,917 34,286 60,478 Liabilities classified as held for sale 432,441 - - -

Other current liabilities ................................................................... 140,597 220,382 268,778 264,679

Total current liabilities ................................................................ 868,239 1,477,634 713,442 1,087,072

Total liabilities ............................................................................ 1,410,278 1,489,488 1,379,270 1,996,488

Total equity and liabilities........................................................... 2,123,785 2,170,949 2,790,739 2,661,860

11.4 Statement of cash flow

The table below sets out selected data from the Group’s interim statement of cash flow for the three-month periods ended 31 March 2013 and 2012 and for the years ended 31 December 2012, 2011 and 2010.




(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Operating activities Profit/(loss) before taxes from continuing operations... 29,159 (11,435) (11,795) 55,639 16,444

Profit before taxes from discontinued operations1 ....... 11,608 - - 725,197 (138)

Profit/(loss) before taxes .................................... 40,767 (11,435) (11,795) 780,836 16,306 Non-cash adjustments to reconcile profit before tax to net cash flows Depreciation, amortisation and impairment of tangible assets ....................................................... 4,274 26,718 111,681 106,728 172,045 Loss/(gain) on disposal of property, plant and equipment ............................................................. - - (822) - - Loss/(gain) on disposal of discontinued operations ...... - - - (701,197) - Finance income ...................................................... (59,793) (71,916) (238,270) (277,733) (367,167) Finance costs ......................................................... 59,693 94,842 293,126 362,549 482,821 Other operating income ........................................... - - - (5,026) (7,924) Share of loss/(profit) from associates ........................ - - - - 122 Pension ................................................................. - - - (605) 1,247 Working capital adjustments Increase in trade and other receivables and prepayments .......................................................... (87,227) (175,739) 59,944 (53,337) (83,481) Increase in inventory .............................................. (12) (278) (3,460) (10,557) (2,529) Decrease (increase) in trade and other payables......... (140,176) 100,693 157,663 (57,583) 205,631

Decrease(increase) in other provisions ...................... (26,567) 14,054 (26,654) (63,549) 5,814

(209,041) (23,061) 341,413 80,526 422,822 Interest received .................................................... 565 4,394 9,992 3,116 1,146

Income tax paid ..................................................... (1,773) (5,763) (51,417) (13,201) (48,712)

Net cash flow from operational activities ............. (210,249) (24,430) 299,988 70,441 375,256


55




(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Investing activities Proceeds from sale of property, plant and equipment and intangible assets .............................................. - - 1,125 - 1,713 Capital expenditure for property, plant and equipment and intangible assets ............................... (4,115) (23,561) (92,809) (85,804) (112,213) Purchase of financial instruments .............................. - - - (1,542) - Proceeds from sale of financial instruments ................ - - - 1,224 - Final earn out payment former acquisition of subsidiary .............................................................. - - - (25,297) - Net outflow from acquisition of subsidiary .................. - - (27,604) - - Net inflow from sale of subsidiary, net of cash disposed ................................................................ - - - 986,134 - Receipt of government grant .................................... - - - 1,394 2,553 Cash out flows for investments in associated companies ............................................................. - - - - (260)

Net cash flows used in investing activities........... (4,115) (23,561) (119,288) 876,109 (108,207)

Financing activities Proceeds from borrowings ........................................ 570,000 - 100,000 - Repayment of borrowings ........................................ (519,843) (16,094) (79,785) (76,383) (146,821) Interest paid .......................................................... (34,145) (12,908) (49,502) (78,076) (99,605) Dividends paid to equity holders of the parent ............ - - (700,219) - -

Issuance of shares .................................................. - - - - (6,749)

Net cash flow from/(used) in financing activities .............................................................. 16,012 (29,002) (729,506) (154,459) (253,175)

Net increase in cash and cash equivalents.................. (198,352) (76,992) (548,806) 792,091 13,874 Net foreign exchange differences .............................. (392) 25 505 (737) -

Cash and cash equivalents at starts of period ............. 272,683 820,948 820,984 29,630 31,645

Cash and cash equivalents at end of period ......... 73,939 744,017 272,683 820,984 45,519

1 Profit before taxes from discontinued operations for the three-month period ended 31 March 2013 is related to AGR Drilling Services. For the year

ended 31 December 2011 it is related to AGR Field Operations, which was disposed in December 2011

11.5 Statement of changes in equity

The table below sets out selected data from the Group’s statement of changes in equity for the years ended 31 December 2012, 2011 and 2010 (all figures are audited) and for the three-month period ended 31 March 2013.

In NOK thousand Total paid-in equity

Translation effects

Retained earnings Total Group

Non-controlling interests Total Equity

Opening balance 01.01.11 ........... 1,075,709 13,610 (447,767) 641,552 23,820 665,372

Increase in share capital from cash deposit .......................................... - - - - - - Reduction of share premium fund ..... (827,542) - 827,542 - - - Capital contribution from non-controlling interest .......................... - - 20,319 20,319 (8,592) 11,727

Total other equity movements 2011 ............................................ (827,542) - 847,861 20,319 (8,592) 11,727

Profit for the period ......................... - - 745,268 745,268 9,330 754,598 Translation effects foreign subsidiaries .................................... - 6,835 - 6,835 - 6,835 Translation effects discontinued operations ..................................... - (27,063) - (27,063) - (27,063)

Total recognised income and expense for 2011 ......................... - (20,228) 745,268 725,040 9,330 734,370

Adjustment to equity for 2011 ..... (827,542) (20,228) 1,593,129 745,359 738 746,097

Closing balance 31.12.11 ............. 248,166 (6,618) 1,145,363 1,386,911 24,558 1,411,469


56

In NOK thousand Total paid-in equity

Translation effects

Retained earnings Total Group

Non-controlling interests Total Equity

Dividend payment ........................... - - (700,219) (700,219) - (700,219) Reduction of Treasure Shares ........... 139 - - 139 - 139 Acquisition of subsidiary .................. - - - - 90,437 90,437 Acquisition of Non-controlling interest ......................................... - - - - (18,510) (18,510) Capital contribution, Non-controlling interest .......................... - - (2,401) (2,401) - (2,401)

Total other equity movements 2012 ............................................ 139 - (702,620) (702,481) 71,928 (630,553)

Profit for the period ......................... - - (101,574) (101,574) (2,401) (103,975) Translation effects foreign subsidiaries ....................................

-

4,520

-

4,520

-

4,520

Total recognised income and expense for 2012 ......................... - 4,520 (101,574) (97,054) (2,401) (99,455)

Adjustment to equity for 2012 ..... 139 4,520 (804,194) (799,535) 69,527 (730,008)

Closing balance 31.12.12 ............. 248,305 (2,098) 341,169 587,376 94,085 681,461

11.6 Key financial information and other operational data by segment

The table below sets out the Group’s key financial information by segment for the three-month periods ended 31 March 2013 and 2012 and the years ended 31 December 2012, 2011 and 2010.




(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

External operating revenues - Petroleum Services ............................................... 314,172 311,623 1,246,163 1,169,426 1,093,004 - Drilling Services ................................................... - - 519,160 710,330 341,242 - Field Operations ................................................... - - - - - - Group ................................................................. 1,580 1,444 12,758 9,853 9,767

- Elimination .......................................................... - - (167) (21,694) 1,243

-Total ................................................................... 315,752 313,068 1,777,913 1,867,914 1,445,256

EBITDA - Petroleum Services ............................................... 36,544 36,336 128,624 150,506 149,181 - Drilling Services ................................................... - - 46,498 140,087 65,350 - Field Operations ................................................... - - - - - - Group ................................................................. (3,212) (5,072) (20,379) (43,410) (17,150)

- Elimination .......................................................... - - - - -

-Total ................................................................... 33,333 31,264 154,742 247,182 197,381

Operating profit/loss EBIT - Petroleum Services ............................................... 32,407 31,282 107,728 125,877 106,809 - Drilling Services ................................................... - - (37,254) 61,502 (12,981) - Field Operations ................................................... - - - - - - Group ................................................................. (3,349) (5,210) (27,412) (46,924) (19,255)

- Elimination .......................................................... - - - - -

- Total .................................................................. 29,059 26,072 43,061 140,454 74,573

Following completion of the Demerger, the Group’s business will be limited to providing services to the oil and gas industry, hence, the chief operating decision-maker has decided that the Group’s business will be organized and managed as one segment based upon the service provided. Consequently, the Group will following completion of the Demerger only have one operating segment going forward.


57

11.7 Sales revenues by geographic area

The table below sets out the Group’s sales revenues by geographic area for the three-month periods ended 31 March 2013 and 2012 and for the years ended 31 December 2012, 2011 and 2010.


Year ended

31 December


(unaudited) 2012

(unaudited) 2012

(audited) 2011

(audited) 2010

(audited)

Norway.............................................................................. 142,633 110,304 556,330 771,326 548,026 Europe (excluding Norway) .................................................. 71,864 84,059 386,744 387,819 106,210 Australia ............................................................................ 19,047 18,040 93,310 95,725 284,413 America ............................................................................. 40,276 46,131 332,641 304,139 176,699 Asia .................................................................................. 8,565 23,200 256,443 187,766 192,396

Africa ................................................................................ 33,367 31,334 152,446 121,138 137,513

Total ................................................................................. 315,752 313,068 1,777,913 1,867,914 1,445,256

11.8 Financial key figures

The table below sets out the Group’s financial key figures for the three-month periods ended 31 March 2013 and 2012 and the year ended 31 December 2012, 2011 and 2010.

Key Figures


Year ended

31 December

2013 2012 2012 2011 2010

Average number of shares (in thousand) ................................ 125,898.3 125,898.3 125,898.3 125,898.3 125,898.3 Earnings per share continued operations ................................ 0.16 0.09 (0.96) 0.14 (0.08) Earnings per share ............................................................... 0.25 (0.06) (0.96) 5.99 0.02 EBITDA-margin ................................................................... 10.6% 10.0% 8.7% 13.2% 13.7% EBIT-margin ....................................................................... 9.2% 8.3% 2.4% 7.5% 5.8% Equity ratio ......................................................................... 33.6% 48.7% 30.9% 50.6% 25.4%

The Group’s gearing ratio (net interest bearing debt to twelve months EBITDA) was 3.71 at 31 March 2013. The interest cover ratio (twelve month EBITDA to twelve month interest expenses) was 3.89 at 31 March 2013. The Group´s gearing ratio was 4.17 at 31 December 2012. The interest cover ratio was 3.86 at 31 December 2012. The Group´s gearing ratio was 0.003 at 31st December 2011. The interest cover ratio was 3.87 at 31 December 2011.

11.9 Auditor

The Company’s auditor is Ernst & Young AS (“EY”). EY’s business address is Dronning Eufemias gate 6, 0191 Oslo, Norway. The audit partners of EY are members of the Norwegian Institute of Public Accountants (DnR). EY has been the Company’s auditors since the audit of the 2011 financial statements of the Company. The 2010 financial statements of the Company are audited by PricewaterhouseCoopers AS (“PwC”). PwC’s business address is Dronning Eufemias gate 8, 0191 Oslo, Norway. The audit partners of PwC are members of the Norwegian Institute of Public Accountants (DnR).

EY has not audited or reviewed or produced any report on information provided in this Prospectus.

3 Gearing ratio is set to zero as net interest bearing debt was negative at 31 December 2011 following the sale of AGR Field Operations.


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12 OPERATING AND FINANCIAL REVIEW

This operating and financial review should be read together with Section 11 “Selected financial and other information” and the Financial Statements and Interim Financial Information, and related notes, as incorporated hereto by reference, see Section 19.3 “Incorporation by reference”. The following discussion contains forward-looking statements. These forward-looking statements are not historical facts, but are rather based on the Group’s current expectations, estimates, assumptions and projections about the Group’s industry, business and future financial results. Actual results could differ materially from the results contemplated by these forward-looking statements because of a number of factors, including those discussed in Section 2 “Risk factors” of this Prospectus and Section 4.2 “Cautionary note regarding forward-looking statements” as well as other sections of this Prospectus.

12.1 Overview

The Group is a leading supplier of services and technology to the global oil and gas offshore industry. It provides goods, expertise and services to several of the world’s major oil and gas fields, with customer base comprising several small and medium sized operators, as well as a number of large international oil companies. The main operations are based in Oslo, with other offices around the world, including Stavanger, Straume (Bergen), Trondheim, Aberdeen, Guilford, Houston, Perth, Almaty, Moscow, Dubai, Abu Dhabi and Tel Aviv.

Following the sale of AGR Field Operations, the Group consisted of two main business areas at the end of 2012; AGR Petroleum Services and AGR Drilling Services:

• Petroleum Services: Petroleum Services delivers a broad service offering within reservoir evaluations, well planning, well operations and integrated field management to the upstream oil and gas industry. Its core competencies include geology, geophysics, petro physics, reservoir and petroleum engineering, well construction, drilling management, completion design and installation, field development planning, risk and economics evaluation. The Group also delivers a broad training portfolio within these scopes, as well as a suite of software solutions for efficient planning and execution of the well delivery process. The services are offered regionally by regional business centres established in Norway, United Kingdom, USA, Russia, United Arabic Emirates and Australia. See Section 9 “Business of the Group” for further details of the Group’s business.

• Drilling Services :Drilling Services develops and supplies market-leading technologies and services for the

offshore oil and gas market consists of two sub-divisions; Enhanced Drilling Solutions (EDS) and Tools and Technology (T&T):

• Enhanced Drilling Solutions’ cornerstone technologies consists of the Riserless Mud Recovery System (the “RMR”) and the Cutting Transportation System (the “CTS”), see Section 18.2 “Enhanced Drilling Services” for further information about the RMR and the CTS. The RMR system improves drilling operations by reducing the risk and cost of drilling top-hole sections. It also replaces “pump-and-dump” and ensures zero discharge to the environment. The CTS system enables the operator to keep the well-head area clear of cuttings by transporting them away from the site. In addition Enhanced Drilling Solutions has introduced EC-Drill and Managed Pressured Cementing (MPC). EC Drill is a step-change solution, solving a challenge commonly encountered in deep-water wells: drilling in narrow pressure windows. MPC uses conventional cement to facilitate T&T provide equipment, tools and services, each performing task oriented offshore and onshore operations.

• T&T consists of two companies; CannSeal AS (CannSeal) and AGR Seabed Intervention Ltd (Seabed Intervention). AGR’s CannSeal features epoxy-based annular zonal isolation technology. The CannSeal service allows a designer epoxy to be deployed downhole to provide a durable annular seal. The epoxy properties can be tailored to the application both prior to hardening to optimize deployment and after hardening to enhance the durability of the seal. Within Seabed Intervention, AGR's technology includes a range of hydrodynamic and suction-dredging solutions that can be used individually or together in order to deliver low-cost, low-risk seabed intervention i.e. for rock-dump removal, freespan correction, pre-or-post-lay trenching, dropped object recovery or excavation for platform salvage/decommissioning.

On 24 May 2013, the General Meeting of the Company resolved to spin off the Drilling Services by way of a demerger. The Demerger was completed on 6 August 2013, see Section 6 “The Demerger” and Section 18 “Description of EDS Group AS” for further description of the Demerger and the Drilling Services business, respectively.


59

During 2011 the Group established AGR Energy and grew it through 2012. AGR Energy is acting as operator of several licenses held by AGR Petroleum Services Holdings AS in Israel, holding 5% of each license. This new business line is bringing together several of the Group’s areas of expertise and enabling the Group to take a stake in the licenses where that is required.

In 2012, AGR implemented a number of significant strategic changes and secured a number of contracts ensuring the basis for long-term sustainable growth of the business. Despite a high activity level throughout 2012, the EBITDA for 2012 ended at NOK 155 million, down from NOK 247 million in 2011. The decline of the EBITDA was mainly related to T&T which saw lower activity and an accrual for a possible bad debt. In Petroleum Services business, a change in the activity mix where the majority of activity for second half of the year was planning for future well operations led to lower margins. In 2012, the Petroleum Services business spudded 11 wells and has in total spudded 474 wells the last twelve years. In Drilling Services business, a total of 23 RMR wells and 20 CTS wells were drilled during the year.

In second quarter of 2012, the Group acquired 80% of the shares in Steinsvik & Co AS. The company offers safety coaching and other HSE related services related to drilling operations. This strengthened the Group´s HSE and Risk Management offerings by adding new services and more capacity with additional 23 professionals to the portfolio of services. HSE & Risk Management services will be a key part of the business portfolio and growth in the future.

In third quarter of 2012, the Enhanced Drilling Solutions (EDS) and the Ocean Riser Systems (ORS) joined forces to form EDS-ORS.

In first quarter of 2013, the Group completed a refinancing of its interest-bearing debt, where the two business areas Petroleum Services and Drilling Services were financed separately. This enabled the two divisions to seek separate strategic alternatives with autonomous managements. As a part of this work, AGR announced that its Board of Directors contemplated a legal demerger of the Group’s two business areas, where the Drilling Services business was to be separated from the Petroleum Services business by way of a demerger. The proposed Demerger was approved by the General Meeting on 24 May 2013 and was completed on 6 August 2013, see Section 6 “The Demerger”.

12.2 Presentation of financial information

The audited Financial Statements as of and for the years ended 31 December 2010, 2011 and 2012 and the unaudited Interim Financial Information as of and for the three-month ended 31 March 2013 and 2012 have been prepared in accordance with IFRS as adopted by the EU. The Drilling Services business is reported as “Discontinued operations” in the Interim Financial Information see Section 4.1 “Presentation of financial and other information”. The Financial Statements have been audited by EY in 2011 and 2012.

12.3 Key drivers affecting the Company’s business and results

The Group’s results of operations have been, and will continue to be, affected by a range of factors, many of which beyond the Group’s control. The factors that Management believes have had a material effect on the Group’s results of operations during the periods under review, as well those considered likely to have material effect on its results of operations in the future, are as follows:

• The oil- and gas prices are very important drivers for AGR’s profitability. High energy prices support high exploration activity while a consistent low price will render many oil and gas field unprofitable and wells will thus not be drilled.

• A majority of AGR’s clients are small- and midsized oil- and gas companies, of which the majority are publicly listed. These are often sensitive to availability of funding. The more available funding, the higher activity levels for AGR one would expect.

• AGR’s clients do not own rigs, so availability of rigs is a main driver for AGR’s profitability as it is a prerequisite for drilling.

• AGR’s balance sheet is affected by fluctuations in its account receivables and account payables, which can vary considerably from period to period.

• AGR’s result is dependent on fluctuations in the currency exchange rates. The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US Dollar, Australian Dollar and GBP. Foreign exchange risk arises from future


60

commercial transactions, recognised assets and liabilities and net investments in foreign operations. Thus, the fluctuations in currencies in relation to NOK may affect the Group’s result.

• Other factors driving AGR’s performance include oil company tax regimes, delays in operations, licensing rounds, the general state of the economy, and availability and cost of people (AGR reports costs related to own employees as “Payroll expenses” and costs related to hire of consultants as “Goods and consumables used”).

12.4 Financial review

12.4.1 Results of operations for the three-month period ended 31 March 2013 compared to 31 March 2012

The table below sets out the Group’s financial information for the three-month periods ended 31 March 2013 and 2012. The figures in the below table are excluding the Drilling Services business, which was reported as discontinued operations from 31 March 2013 (with comparable figures for the corresponding period in 2012).

Three-months ended

31 March


(unaudited) 2012

(unaudited) % change

Revenue ............................................................................................................... 311,209 310,490 0.2 Other operating revenue ......................................................................................... 4,543 2,578 76.2 Total operating revenue...................................................................................... 315,752 313,068 0.9 Goods and consumables used .................................................................................. 169,904 190,361 (10.7) Payroll expenses .................................................................................................... 92,878 70,611 31.5 Depreciation, amortisation and impairments ............................................................. 4,274 5,192 (17.7) Other operating expenses ....................................................................................... 19,637 20,830 (5.7) Total operating expenses .................................................................................... 286,693 286,995 (0.1) Operating profit .................................................................................................. 29,059 26,072 11.5 Financial income .................................................................................................... 59,793 56,874 5.1 Financial expenses ................................................................................................. 59,693 66,090 (9.7) Net financial items .............................................................................................. 100 (9,217) 101.1 Profit before income tax ..................................................................................... 29,159 16,855 73 Income tax expense ............................................................................................... 9,331 5,394 73 Profit for the year ............................................................................................... 19,828 11,462 73 Total assets ........................................................................................................ 2,123,785 2,877,105 (26.2) Total liabilities .................................................................................................... 1,410,278 1,475,914 (4.4) EBITDA ............................................................................................................... 33,333 31,264 6.6

12.4.1.1 Total operating revenue

For the Group, total operating revenues increased by NOK 2,684 thousand or 0.2% from NOK 313,068 thousand for the three-month period ended 31 March 2012 to NOK 315,752 thousand for the three-month period ended 31 March 2013.

The table below sets out the Group’s operating revenues by segment for the three-month periods ended 31 March 2013 and 2012.

Three-months ended

31 March


(unaudited) 2012

(unaudited) % change

Group................................................................................................................... 9,338 2,626 255.6 Petroleum Services ................................................................................................ 316,207 314,960 0.4

Elimination ............................................................................................................ (9,794) (4,519) 116.7

Total revenue ...................................................................................................... 315,752 313,068 0.9


61

For the Petroleum Services business, total operating revenue increased slightly by NOK 1,247 thousand or 0.4% from NOK 314,960 thousand for the three-month period ended 31 March 2012 to NOK 316,207 thousand for the three-month period ended 31 march 2013. This increase was primarily attributable to revenue generated by Steinsvik & Co AS, a company acquired in second quarter of 2012.

For the Group, total operating revenue increased by NOK 6,712 thousand or 255.6% from NOK 2,626 thousand for the three-month period ended 31 March 2012 to NOK 9,338 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to a change in Group cost allocation principle. The majority of AGR Group ASA cost was charged to Petroleum Services in first quarter of 2013, which was not the case in first quarter 2012.

12.4.1.2 Goods and consumables used

For the Group, goods and consumables used (i.e. costs related to hire of consultants) decreased by NOK 20,457 thousand or (10.7)% from NOK 190,361 thousand for the three-month period ended 31 March 2012 to NOK 169,904 thousand for the three-month period ended 31 March 2013. This decrease was primarily attributable to a reduction in number of consultants used in the Petroleum Services business.

12.4.1.3 Payroll expenses

For the Group, Payroll expenses (i.e. costs related to own employees) increased by NOK 22,267 thousand or 31.5% from NOK 70,611 thousand for the three-month period ended 31 March 2012 to NOK 92,878 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to an increase in employed full time personnel, which has offset the reduction in use of consultants.

12.4.1.4 Other operating expenses

For the Group, other operating expenses decreased by NOK 1,193 thousand or (5.7%) from NOK 20,830 thousand for the three-month period ended 31 March 2012 to NOK 19,637 thousand for the three-month period ended 31 March 2013. This decrease was primarily attributable to reduced overhead costs in the three-month period ended 31 March 2013 compared to the three-month period ended 2012.

12.4.1.5 EBITDA

For the Group, EBITDA increased by NOK 2,069 thousand or 6.6% from NOK 31,264 thousand for the three-month period ended 31 March 2012 to NOK 33,333 thousand for the three-month period ended 31 March 2013. However, first quarter of 2013 included NOK 5,953 thousand in extraordinary costs, mainly related to the Demerger, which was not included in first quarter of 2012. In addition, first quarter of 2013 included NOK 1,599 thousand in costs related to AGR Energy, while first quarter of 2012 included NOK 1,849 thousand in costs generated by AGR Energy. Adjusted for these items, EBITDA increased by NOK 7,772 thousand, from NOK 33,113 thousand for the three-month period ended 31 March 2012 to NOK 40,885 thousand for the three-month period ended 31 March 2013.

The table below sets out the Group’s EBITDA by segment for the three-month periods ended 31 March 2013 and 2012.

Three-months ended

31 March


(audited) 2012

(audited) % change

Group................................................................................................................... (3,212) (5,072) 36.7 Petroleum Services ................................................................................................ 36,544 36,336 0.6 Total EBITDA ...................................................................................................... 33,333 31,264 6.6

For the Petroleum Services business, EBITDA increased by NOK 208 thousand or 0.6% from NOK 36,336 thousand for the three-month period ended 31 March 2012 to NOK 36,544 thousand for the three-month period ended 31 March 2013. However, due to a change in Group cost allocation principle, the first quarter EBITDA includes corporate administration costs charged by AGR Group ASA, which was not included in the same period in 2012. Adjusted for the change in group cost, the Petroleum Services business EBITDA increased by NOK 4,208 thousands. This increase was primarily attributable to increased activity in the high margin business area Well Management compared to the same period in 2012.


62

For the Group division, EBITDA increased by NOK 1,860 thousand, or 36.7%, from NOK 5,072 thousand for the three-month period ended 31 March 2012 to NOK 3,212 thousand for the three-month period ended 31 March 2013.

12.4.1.6 Depreciation, amortisation and impairments

For the Group, depreciation, amortisation and impairments decreased by NOK 918 thousand, or (17.7%), from NOK 5,192 thousand for the three-month period ended 31 March 2012 to NOK 4,274 thousand for the three-month period ended 31 March 2013. This decrease was primarily attributable to a reduction in amortisation of intangible assets.

12.4.1.7 Net financial items

For the Group, net financial items increased by NOK 9,317 thousand, or 101.1%, from (NOK 9,217) thousand for the three-month period ended 31 March 2012 to NOK 100 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to net currency gains.

12.4.1.8 Income tax expense

For the Group, income tax expense increased by NOK 3,937 thousand, or 73%, from NOK 5,394 thousand for the three-month period ended 31 March 2012 to NOK 9,331 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to increase in taxable profit in first quarter of 2013 compared to first quarter of 2012.

12.4.1.9 Profit for the year

For the Group, profit for the year increased by NOK 8,366 thousand, or 73%, from NOK 11,462 thousand for the three-month period ended 31 March 2012 to NOK 19,828 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to a decrease in net financial expenses as discussed above.

12.4.1.10 Total assets

For the Group, total assets decreased by NOK 753,320 thousand or (26.2%) from NOK 2,877,105 thousand for the three-month period ended 31 March 2012 to NOK 2,123,785 thousand for the three-month period ended 31 March 2013. This increase was primarily attributable to payment of dividends to AGR Group ASA shareholders, amounting to NOK 700,000 thousand.

12.4.1.11 Total liabilities

For the Group, total liabilities decreased by NOK 65,636 thousand or (4.4%) from NOK 1,475,914 thousand for the three-month period ended 31 March 2012 to NOK 1,410,278 thousand for the three-month period ended 31 March 2013. This decrease was primarily attributable to a reduction in trade-and other payables from first quarter of 2012 to first quarter of 2013.

12.4.2 Results of operations for the year ended 31 December 2012 compared to the year ended 31 December 2011

The table below sets out the Group’s financial information for the years ended 31 December 2012 and 2011.

Year ended

31 December


(audited) 2011

(audited) % change

Revenue ............................................................................................................... 1,716,148 1,832,245 (6.3) Other operating revenue ......................................................................................... 61,765 35,669 73.2 Total operating revenues .................................................................................... 1,777,913 1,867,914 (4.8) Goods and consumables used .................................................................................. 823,422 977,184 (15.7) Payroll expenses .................................................................................................... 601,173 494,916 21.5 Depreciation, amortisation and impairments ............................................................. 111,681 106,728 4.6 Other operating expenses ....................................................................................... 198,575 148,632 33.6 Total operating expenses .................................................................................... 1,734,852 1,727,460 0.4 Operating profit .................................................................................................. 43,061 140,454 69.3 Financial income .................................................................................................... 217,379 277,733 (21.7) Financial expenses ................................................................................................. 272,235 362,549 (24.9) Net financial items .............................................................................................. (54,856) (84,815) (35.3) Profit before income tax ..................................................................................... (11,795) 55,639 (121.2)


63

Year ended

31 December


(audited) 2011

(audited) % change

Income tax expense ............................................................................................... 92,180 38,056 142.2 Profit for the year ............................................................................................... (103,975) 17,582 (691.4) Total assets ........................................................................................................ 2,170,949 2,790,739 (22.2) Total liabilities .................................................................................................... 1,489,488 1,379,270 8.0 EBITDA ............................................................................................................... 154,742 247,182 (37.4)


For the Group, total operating revenue decreased by NOK 90,001 thousand, or (4.8%), from NOK 1,867,914 thousand for the year ended 31 December 2011 to NOK 1,777,913 thousand for the year ended 31 December 2012.

The table below sets out the Group’s total operating revenue by segment for the years ended 31 December 2012 and 2011.

Years ended

31 December


(audited) 2011

(audited) % change

Group................................................................................................................... 27,637 21,431 29.0 Petroleum Services ................................................................................................ 1,268,001 1,182,558 7.2 Drilling Services..................................................................................................... 521,895 710,536 (26.5) Elimination ............................................................................................................ (39,619) (46,610) (15.0) Total ................................................................................................................... 1,777,913 1,867,914 (4.8)

For the Petroleum Services business, total operating revenue increased by NOK 85,443 thousand or 7.2% from NOK 1,182,558 thousand for the year ended 31 December 2011 to NOK 1,268,001 thousand for the year ended 31 December 2012. This increase was primarily attributable to increased activity in the Consultancy business and the acquisition of Steinsvik & Co AS in June 2012.

For the Drilling Services business, total operating revenue decreased by NOK 188,641 thousand or (26.5%) from NOK 710,536 thousand for the year ended 31 December 2011 to NOK 521,895 thousand for the year ended 31 December 2012. This decrease was attributable to a significant reduction in activity into the Drilling Services’ sub-division Tools & Technology, while the Enhanced Drilling Solutions business experienced continued growth.

The Group division’s (AGR Group ASA, AGR Cannseal and AGR Marine Engineering) total operating revenue increased by NOK 6,206 thousand or 29% from NOK 21,431 thousand for the year ended 31 December 2011 to NOK 27,637 thousand for the year ended 31 December 2012. This increase was primarily attributable to a change in Group cost allocation principle, where fourth quarter 2012 Group administration costs were recharged to the Petroleum Services and the Drilling Services business, respectively.


For the Group, goods and consumables used decreased by NOK 153,762 thousand, or (15.7%), from NOK 977,184 thousand for the year ended 31 December 2011 to NOK 823,422 thousand for the year ended 31 December 2012. This decrease was primarily attributable to attributable to a significant reduction in activity into the Drilling Services’ sub-division Tools & Technology.


For the Group, payroll expenses increased by NOK 106,257 thousand, or 21.5%, from NOK 494,916 thousand for the year ended 31 December 2011 to NOK 601,173 thousand for the year ended 31 December 2012. This increase was primarily attributable to increased number of full time employees in the Enhanced Drilling Solutions business, in addition to an increase in employed full time personnel in the Petroleum Services business, which has offset a reduction in use of consultants.


64


For the Group, other operating expenses increased by NOK 49,943 thousand, or 33.6%, from NOK 148,632 thousand for the year ended 31 December 2011 to NOK 198,575 thousand for the year ended 31 December 2012. This increase was primarily attributable to increased overhead costs in the Drilling Services sub-division Enhanced Drilling Solutions.

12.4.2.5 EBITDA

For the Group, EBITDA decreased by NOK 92,440 thousand, or (37.4%), from NOK 247,182 thousand for the year ended 31 December 2011 to NOK 154,742 thousand for the year ended 31 December 2012. Extraordinary costs related to Group restructuring amounted to NOK 13,078 thousand for the year ended 31 December 2011 and NOK 23,510 thousand for the year ended 31 December 2012. Costs related to AGR Energy, which is considered to be non-core business, amounted to NOK 0 for the year ended 31 December 2011 and NOK 4,867 thousand for the year ended 31 December 2012. Adjusted for these items, EBITDA decreased by NOK 77,141 thousand from NOK 260,260 thousand for the year ended 31 December 2011 to NOK 183,119 thousand for the year ended 31 December 2012.

The table below sets out the Group’s EBITDA by segment for the year ended 31 December 2012 and 2011.

Years ended

31 December


(audited) 2011

(audited) % change

Group................................................................................................................... (20,379) (43,410) 53.1 Petroleum Services ................................................................................................ 128,624 150,506 (14.5) Drilling Services..................................................................................................... 46,498 140,087 (66.8) Total ................................................................................................................... 154,742 247,182 (37.4)

For the Petroleum Services business, the EBITDA decreased by NOK 21,882 thousand, or (14.5%), from NOK 150,506 thousand for the year ended 31 December 2011 to NOK 128,624 thousand for the year ended 31 December 2012. This decrease was primarily attributable to a change in activity mix in 2012 compared to 2011, with increased activity in low margin business such as Consultancy compared to the high margin business Well Management In addition, the majority of the second half 2012 activity in Well Management was planning for future well operations, which is less profitable than well operations. Also, due to a change in Group cost allocation principle, AGR Group ASA charged NOK 7,998 thousands in fourth quarter of 2012, which was not included in the same period last year. Extraordinary items related to the Group restructuring amounted to NOK 1,603 thousand for the year ended 31 December 2011 and NOK 6,231 thousand for the year ended 31 December 2012. Costs related to AGR Energy, which is considered to be non-core business, amounted to NOK 0 for the year ended 31 December 2011 and NOK 4,867 thousand for the year ended 31 December 2012. EBITDA adjusted for changes in the Group cost allocation, extraordinary costs and AGR Energy, decreased by 4,399 thousand, from to NOK 152,109 thousand for the year ended 31 December 2011 to NOK 147,710 thousand for the year ended 31 December 2012.

For the Drilling Services business, EBITDA decreased by NOK 93,589 thousand, or (66.8%), from NOK 140,087 thousand for the year ended 31 December 2011 to NOK 46,498 thousand for the year ended 31 December 2012. Due to a change in the Group cost allocation principle, AGR Group charged NOK 4,421 thousand to Drilling Services business segment in fourth quarter of 2012, which was not included in fourth quarter of 2011. Extraordinary items related to the Group restructuring amounted to NOK 0 for the year ended 31 December 2011 and NOK 12,503 thousand in for the year ended 2012. EBITDA adjusted for changes in the Group cost allocation and extraordinary costs decreased by 77,015 thousand, from to NOK 140,087 thousand for the year ended 31 December 2011 to NOK 63,072 thousand for the year ended 31 December 2012. The decrease in earnings was related to the sub-division Tools & Technology, with a decrease from positive NOK 71,147 thousands in 2011, to negative NOK 33,875 thousands in 2012. The Enhanced Drilling Solutions business experienced continued growth, increasing EBITDA from NOK 68,940 thousands in 2011 to NOK 84,881 thousands in 2012.

For the Group division, EBITDA increased by NOK 23,031 thousand, or 53.1%, from NOK (43,410) thousand for the year ended 31 December 2011 to NOK (20,379) thousand for the year ended 31 December 2012. This increase was primarily attributable to an extraordinary cost accrual in 2011 relating to office rent in addition to the above mentioned allocation of Group administration cost to Drilling Services and Petroleum Services in 2012.


65


For the Group, depreciation, amortisation and impairments increased by NOK 4,953 thousand, or 4.6%, from NOK 106,728 thousand for the year ended 31 December 2011 to NOK 111,681 thousand for the year ended 31 December 2012. This increase was primarily attributable to depreciation of acquired assets and capitalized R&D in the Drilling Services division.


For the Group, net financial items decreased by NOK 29,959 thousand, or (35.3%), from NOK (84,815) thousand for the year ended 31 December 2011 to NOK (54,856) thousand for the year ended 31 December 2012. This decrease was primarily attributable to net currency gains in 2012.


For the Group, income tax expense increased by NOK 54,124 thousand, or 142.2%, from NOK 38,056 thousand for the year ended 31 December 2011 to NOK 92,180 thousand for the year ended 31 December 2012. This increase was primarily attributable to an extraordinary write down of deferred tax assets relating to the Drilling Services business.


For the Group, profit for the year decreased by NOK 121,557 thousand, or (691.4%), from NOK 17,582 thousand for the year ended 31 December 2011 to NOK (103,975) thousand for the year ended 31 December 2012. This decrease was primarily attributable to the above mentioned significant decrease in activity in Drilling Services sub-division Tools & Technology, in addition to the extraordinary write down of deferred tax assets.


For the Group, total assets decreased by NOK 619,790 thousand, or (22.2%), from NOK 2,790,739 thousand for the year ended 31 December 2011 to NOK 2,170,949 thousand for the year ended 31 December 2012. This decrease was primarily attributable to payment of dividends to AGR Group ASA shareholders, amounting to NOK 700,000 thousands.


For the Group, total liabilities increased by 111,218 thousand, or 8%, from NOK 1,379,270 thousand for the year ended 31 December 2011 to NOK 1,489,488 thousand for the year ended 31 December 2012. This decrease was primarily attributable to increase in trade payables.

12.4.3 Results of operations for the year ended 31 December 2011 compared to the year ended 31 December 2010

The table below sets out the Group’s financial information for the years ended 31 December 2011 and 2010.

Year ended

31 December


(audited) 2010

(audited) % change

Revenue ............................................................................................................... 1,832,245 1,397,018 31.2 Other operating revenue ......................................................................................... 35,669 48,238 (26) Total operating revenue...................................................................................... 1,867,914 1,445,256 29.2 Goods and consumables used .................................................................................. 977,184 677,375 44.3 Payroll expenses .................................................................................................... 494,916 427,154 15.9 Depreciation, amortisation and impairments ............................................................. 106,728 122,808 (13.1) Other operating expenses ....................................................................................... 148,632 143,346 3.7 Total operating expenses .................................................................................... 1,727,460 1,370,683 26 Operating profit .................................................................................................. 140,454 74,573 88.3 Financial income .................................................................................................... 277,733 298,495 (7) Financial expenses ................................................................................................. 362,549 389,893 (7) Net financial items .............................................................................................. (84,815) (91,398) 7.2 Profit before income tax ..................................................................................... 55,639 (16,825) 430.7 Income tax expense ............................................................................................... 38,056 2,914 1.2 Profit for the year ............................................................................................... 17,582 (19,739) 189.1 Total assets ........................................................................................................ 2,790,739 2,661,860 4.8


66

Year ended

31 December


(audited) 2010

(audited) % change

Total liabilities .................................................................................................... 1,379,270 1,996,488 (30.9) EBITDA ............................................................................................................... 247,182 197,381 25.2


For the Group, total operating revenue increased by NOK 422,658 thousand, or 29.2%, from NOK 1,445,256 thousand for the year ended 31 December 2010 to NOK 1,867,914 thousand for the year ended 31 December 2011.

The table below sets out the Group’s total operating revenue by segment for the years ended 31 December 2011 and 2010.

Years ended

31 December


(audited) 2010

(audited) % change

Group................................................................................................................... 21,431 21,913 (2.2) Petroleum Services ................................................................................................ 1,182,558 1,104,224 7.1 Drilling Services..................................................................................................... 710,536 354,266 100.6 Elimination ............................................................................................................ (46,610) (35,147) (32.6) Total ................................................................................................................... 1,867,914 1,445,256 29.2

For the Petroleum Services business, total operating revenue increased by NOK 78,334 thousand or 7.1% from NOK 1,104,224 thousand for the year ended 31 December 2010 to NOK 1,182,558 thousand for the year ended 31 December 2011. This increase was primarily attributable to increased activity in the Well Management and Consultancy businesses.

For the Drilling Services business, total operating revenue increased by NOK 356,270 thousand or 100.6% from NOK 354,266 thousand for the year ended 31 December 2010 to NOK 710,536 thousand for the year ended 31 December 2011. This increase was primarily attributable to high activity in the sub-division Tools & Technology which delivered all time high revenue due to works conducted for Shell on Ormen Lange.

For the Group division, total operating revenue decreased slightly by NOK 482 thousand or (2.2%) from NOK 21,913 thousand for the year ended 31 December 2010 to NOK 21,431 thousand for the year ended 31 December 2011.


For the Group, goods and consumables used increased by NOK 299,809 thousand or 44.3% from NOK 677,375 thousand for the year ended 31 December 2010 to NOK 977,184 thousand for the year ended 31 December 2011. This increase was primarily attributable to high activity in the sub-division Tools & Technology which delivered all time high revenue due to works conducted for Shell on Ormen Lange.


For the Group, payroll expenses increased by NOK 67,762 thousand or 15.9% from NOK 427,154 thousand for the year ended 31 December 2010 to NOK 494,916 thousand for the year ended 31 December 2011. This increase was primarily attributable to high activity in 2011 compared to 2010.


For the Group, other operating expenses increased by NOK 5,286 thousand or 3.7% from NOK 143,346 thousand for the year ended 31 December 2010 to NOK 148,632 thousand for the year ended 31 December 2011. This increase was primarily attributable to increased administration costs due to increased activity.


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12.4.3.5 EBITDA

For the Group, EBITDA increased by NOK 49,801 thousand, or 25.2%, from NOK 197,381 thousand for the year ended 31 December 2010 to NOK 247,182 thousand for the year ended 31 December 2011.

The table below sets out the Group’s EBITDA by segment for the year ended 31 December 2011 and 2010.

Years ended

31 December


(audited) 2010

(audited) % change

Group................................................................................................................... (43,410) (17,150) (153.1) Petroleum Services ................................................................................................ 150,506 149,181 0.9 Drilling Services..................................................................................................... 140,087 65,350 114.4 Total ................................................................................................................... 247,182 197,381 25.2

For the Petroleum Services business, EBITDA increased by NOK 1,325 thousand or 0.9% from NOK 149,181 thousand for the year ended 31 December 2010 to NOK 150,506 thousand for the year ended 31 December 2011. This increase was primarily attributable to increased activity in the high margin Well Management business.

For the Drilling Services business, EBITDA increased by NOK 74,737 thousand or 114.4% from NOK 65,350 thousand for the year ended 31 December 2010 to NOK 140,087 thousand for the year ended 31 December 2011. This increase was primarily attributable to high activity in the sub-division Tools & Technology which delivered all time high revenue due to works conducted for Shell on Ormen Lange.

For the Group, EBITDA decreased by NOK 26,260 thousand or (153.1%) from NOK (17,150) thousand for the year ended 31 December 2010 to NOK (43,410) thousand for the year ended 31 December 2011. This increase was primarily attributable to an extraordinary cost accrual in 2011 relating to office rent but was offset a positive effect related to an incentive program that was originally introduced in 2007.


For the Group, depreciation, amortisation and impairments decreased by NOK 16,080 thousand or (13.1%) from NOK 122,808 thousand for the year ended 31 December 2010 to NOK 106,728 thousand million for the year ended 31 December 2011. This decrease was primarily attributable to reduced amortisation in Petroleum Services.


For the Group, net financial items decreased by NOK 6,583 thousand or 7.2% from NOK (91,398) thousand for the year ended 31 December 2010 to NOK (84,815) thousand for the year ended 31 December 2011. This decrease was primarily attributable to reduced net interest costs in 2011.


For the Group, income tax expense increased by NOK 35,142 thousand or 1,206% from NOK 2,914 thousand for the year ended 31 December 2010 to NOK 38,056 thousand for the year ended 31 December 2011. This increase was primarily attributable to increased taxable income in 2011.


For the Group, profit for the year increased by NOK 37,321 thousand or 189.1% from NOK (19,739) thousand for the year ended 31 December 2010 to NOK 17,582 thousand for the year ended 31 December 2011. This increase was primarily attributable to increased earnings in Drilling Services business.


For the Group, total assets increased by NOK 128,879 thousand or 4.8% from NOK 2,661,860 thousand for the year ended 31 December 2010 to NOK 2,790,739 thousand for the year ended 31 December 2011. This increase was primarily attributable to net proceeds from the divestment of AGR Field Operations in December 2011.


For the Group, total liabilities decreased by NOK 617,218 thousand or (30.9%) from NOK 1,996,488 thousand for the year ended 31 December 2010 to NOK 1,379,270 thousand for the year ended 31 December 2011. This decrease


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was primarily attributable to repayment of interest bearing debt following the divestment of AGR Field Operations in December 2011.

12.5 Liquidity and capital resources

12.5.1 Sources of liquidity

The Group obtains its liquidity from three main sources: cash flow from operating activities, short-term credit facilities and long term loans such as bank loans or bonds. The Group’s primary source of liquidity, in addition to bank deposits, is as of 31 March 2013, the NOK 550 million Bonds and the RCF.

As of 31 March 2013, the Group had cash of NOK 74 million, NOK 20 million outstanding and NOK 60 million in available credit under its credit facilities, see Section 12.7.2 “Revolving credit facility”, and NOK 550 million outstanding in Bonds. The Bonds are classified as a long-term loan, accrues an interest margin of 6.25% and are due 5 February 2018, see Section 12.7.1 “Bonds”.

In addition, the Group could consider raising further equity in the capital markets.

The Group believes that it has a financing structure designed to support further developments of the business and distributions to its shareholders.

12.5.2 Financial risk policy

AGR’s activities are exposed to a variety of financial risks: currency risk, interest rate risk, credit risk and liquidity risk. AGR’s overall risk management program seeks to reduce potential adverse effects from financial risks on AGR’s financial performance. AGR uses foreign currency debt and derivative financial instruments to hedge certain risk exposures.

Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in co-operation with AGR’s operating units. The Board of Directors provides a financial risk management policy covering foreign exchange risk, interest rate risk, liquidity risk and credit risk.

For further information about the Group’s funding policies, hereunder financial risk management, see note 2 to the Financial Statements, as incorporated by reference hereto, see Section 19.3 “Incorporation by reference”.

12.6 Cash and cash flow information

As of 31st March 2013, the Group maintained cash in banks denominated in NOK, USD, GBP, EUR, CAD and AUD. The majority of the cash flow is in NOK, GBP and USD. Company does not believe that there are significant obstacles or barriers to transfers of funds to it from its subsidiaries that may affect its ability to meet or fulfil its financial or other obligations.

The following table sets out the Group’s statement of cash flow for the periods indicated. It has been extracted without material adjustment from, and should be read in conjunction with Section 11 “Selected financial and other information” above and the Financial Statements including the auditor’s reports in respect of the Financial Statements and the Interim Financial Information. There has been no significant change in the Group’s cash flow after the three-month period ended 31 March 2013.

Three-month ended 31 March



(unaudited)

2012

(unaudited)

2012

(audited)

2011

(audited)

2010

(audited)

Net cash (used in) / from operating activities ............. (210,249) (24,430) 299,988 70,441 375,256 Net cash (used in) / from investments activities ......... (4,115) (23,561) (119,288) 876,109 (108,207) Net cash (used in) / from financing activities .............. 16,012 (29,002) (729,506) (154,459) (253,175) Cash and cash equivalents at the end of the period ..... 73,939 744,017 272,683 820,984 (45,519)

12.6.1 Operating activities

Net cash generated from operating activities was NOK (210,249) thousand for the three-month period ended 31 March 2013, compared with net cash generated of NOK (24,430) thousand for the three-month period ended 31 March 2012. This decrease was primarily due to increased working capital in the AGR Energy which held significant


69

advance payments from its partners at year end 2012. Most of the advance funds were applied in drilling operations for Pelagic in Israel in first quarter of 2013.

Net cash generated from operating activities was NOK 299,988 thousand for the year ended 31 December 2012, compared with net cash generated of NOK (70,441) thousand for the year ended 31 December 2011. This increase was primarily due to decreased working capital in 2012, mainly due to significant advance payments from partners of AGR Energy.

Net cash generated from operating activities was NOK 70,411 thousand for the year ended 31 December 2011, compared with net cash generated of NOK 375,256 thousand for the year ended 31 December 2010. This decrease was primarily due to an increase in working capital in Petroleum Services in 2011 compared to 2010.

12.6.2 Investments activities

Net cash used in investing activities was NOK (4,115) thousand for the three-month period ended 31 March 2013, compared with net cash used of NOK (23,561) thousand for the three-months period ended 31 March 2012. This decrease was primarily due to Drilling Services being reported as discontinued operations in first quarter of 2013, while the division is included in the cash flow report in first quarter of 2012.

Net cash used in investing activities was NOK (119,288) thousand for the year ended 31 December 2012, compared with net cash generated of NOK 876,109 thousand for the year ended 31 December 2011. This decrease was primarily due to the divestment of AGR Field Operations in December 2011.

Net cash generated in investing activities was NOK 876,109 thousand for the year ended 31 December 2011, compared with net cash generated of NOK (108,207) thousand for the year ended 31 December 2010. This increase was primarily due to the divestment of AGR Field Operations in December 2011.

12.6.3 Financing activities

Net cash generated in financing activities was NOK 16,012 thousand for the three-month period ended 31 March 2013, compared with net cash used of NOK (29,002) thousand for the three-month period ended 31 March 2012. This was primarily due to the refinancing of the Group completed in the first quarter of 2013.

Net cash used in financing activities was NOK (729,506) thousand for the year ended 31 December 2012, compared with net cash generated of NOK (154,459) for the year ended 31 December 2011. This increase was primarily due to dividends paid to AGR Group ASA shareholders in 2012.

Net cash used in financing activities was NOK (154,459) thousand for the year ended 31 December 2011, compared with net cash used of NOK (253,175) thousand for the year ended 31 December 2010. This decrease was primarily due to changed loan amortization schedule following restructuring of the Group´s debt in March 2011.

12.7 Borrowings

As of 31 March 2013 the Group’s borrowings comprised the following:

Three-month ended

31 March

Year ended

31 December


(unaudited) 2012

(audited) 2011

(audited)

2010

(audited)

Total Borrowings: Bonds................................................................................................ 550,000 - - - Bank borrowings ................................................................................. 20,000 747,657 737,698 1,160,946

Total borrowings ............................................................................. 570,000 747,657 737,698 1,160,946

Less current portion of borrowings: Bonds (accrued interests) .................................................................... - - - - Bank borrowings ................................................................................. 20,000 747,657 80,647 275,175

Total current portion of borrowings ................................................. 20,000 747,657 80,647 275,175


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Three-month ended

31 March

Year ended

31 December


(unaudited) 2012

(audited) 2011

(audited)

2010

(audited)

Total long term borrowings: Bonds................................................................................................ - - - - Bank borrowings ................................................................................. 550,000 - 657,052 885,771

Total long term borrowings ............................................................. 550,000 - 657,052 875,771

Current borrowings: Total current portion of long-term borrowings ........................................ - 644.877 80,647 195,175 Bank borrowings ................................................................................. 20,000 102,780 - 80,000

Total current borrowings ................................................................. 20,000 747,657 80,647 275,175

12.7.1 Bonds

In the first quarter of 2013, the Group refinanced its Petroleum Services division by placing the 5 year Bonds issued by AGR Petroleum Services Holding AS of NOK 550 million in the market. The interest rate is NIBOR + 6.25% p.a. and the final maturity date is 5 February 2018. The proceeds from the Bonds were released to AGR in March 2013 and the existing loans were repaid simultaneously. The Bonds were listed on the Oslo Stock Exchange on 11 June 2013. The reference of the Bonds is “FRN Petroleum Services Holdings AS Senior Secured Bond Issue 2013/2018” with ISIN NO 0010670730.

The obligations and liabilities of AGR Petroleum Services Holding AS under the Bonds are guaranteed by AGR Group ASA, AGR Consultancy Services AS (Norwegian company registration no. 961 605 881), AGR Consultancy Solutions Ltd. (Scottish registration number SC172261), AGR Energy AS (Norwegian company registration no. 996 508 250), AGR F.J. Brown Inc. (State of Texas registration no. 01015466), AGR Group (Holdings) Ltd. (Scottish company registration no. SC216504), AGR Group Americas Inc. (State of Texas registration no. 800654956), AGR Peak Group Asia Pacific Pty. Ltd. (Australian registration no. 094 489 602), AGR Petroleum Services AS (Norwegian company registration no. 984 705 093), AGR Well Management Ltd. (Scottish registration no. SC189858), Tracs International Consultancy Ltd. (Scottish registration no SC177956); and

(i) any Group Company which (by reference to the latest audited financial statements of that Group Company (consolidated in the case of a Group Company which itself has subsidiaries) and the latest financial statements, but if a Group Company has been acquired since the date as at which the latest financial statements were prepared, the financial statements shall be deemed to be adjusted in order to take into account the acquisition of that Group Company) represents 7.5% or more of either the consolidated revenue of the Group (excluding intra-Group items), consolidated EBITDA of the Group, or gross assets of the Group (excluding intra-Group items); and

(ii) any further Group Company designated by AGR in order to ensure that AGR and the guarantors (for the avoidance of doubt, other than AGR Group ASA) in aggregate constitute at least 80% of such revenue, EBITDA and gross assets of the Group.

The Bonds are issued under, inter alia, following covenants:

• AGR Petroleum Services Holdings AS shall not make or declare any dividend, repurchase any shares or make other distributions to its shareholders during the term of the Bonds issue.

• AGR Petroleum Services Holdings AS shall ensure that any shareholder loan shall in all respects be fully subordinated to the Bonds, the RCF and the permitted hedging, and that no repayments of principal or payment of cash interest is made on any shareholder loan (for the avoidance of doubt, any accrued interests shall be accumulated and added to the principal of such shareholder loan).

• AGR Petroleum Services Holdings AS shall not, and shall ensure that no Group Company shall, create, incur or allow to subsist any security on any of their assets or revenues except for (i) the security interests granted in favour of the security agent as security for the Bonds issue, the RCF and the secured hedging liabilities (if any), (ii) any payment or close out netting or set-off in respect of permitted hedging and any


71

credit support arrangement in relation to a permitted hedging transaction (other than secured hedging liabilities), (iii) security provided in the ordinary course of business up to an aggregate amount at any given time of NOK 10,000,000, (iv) any security arising by operation of law and (v) any security arising under any group account system (konsernkontosystem) of the Group.

• AGR Petroleum Services Holdings AS shall not, and shall ensure that no Group Company shall, incur or permit to remain outstanding any financial indebtedness from any third party not being a member of the Group, other than (i) financial indebtedness arising under the Bonds issue, (ii) the RCF, (iii) any shareholder loan, (iv) financial indebtedness under permitted hedging and (v) any financial indebtedness arising in the ordinary course of trading.

• AGR Petroleum Services Holdings AS shall not, and shall ensure that no Group Company shall, grant or permit to subsist any loan or other financial assistance to, or any guarantee in respect of obligations of any third party not being a member of the Group other than (i) the security interests, (ii) guarantees in the ordinary course of business and (iii) any loan, financial support or guarantee arising under any group account system (konsernkontosystem) of the Group.

• AGR Petroleum Services Holdings AS shall ensure that no subsidiary, except for AGR Energy AS, creates or permits to exist any contractual obligation (or encumbrance) restricting the right of any subsidiary to pay dividends or make other distributions to its shareholders.

• AGR Petroleum Services Holdings AS shall ensure that no Group Company assumes any obligations or commitments (financial or otherwise) related to exploration and production activities, with the exception of AGR Energy AS which may assume operational obligations and commitments (including without limitation capital expenditures relating to exploration fields and abandonment liabilities) related to exploration and production activities limited upwards to USD 10 million. The USD 10 million limitation amount shall be calculated based on the net liability of AGR Energy AS.

• In addition, the Bonds are issued, subject to general covenant regarding, inter alia, mergers, de-mergers, continuation of business, and disposal of business and disposal of secured assets.

The issue of the Bonds includes the following financial covenants:

• AGR shall ensure that the Group maintains a maximum gearing ratio as follows:

Relevant period: Gearing ratio:

31 March 2013 ............................................................................................................................ 5.50 30 June 2013 .............................................................................................................................. 5.25 30 September 2013 ..................................................................................................................... 5.00 31 December 2013 ...................................................................................................................... 4.75 31 March 2014 ............................................................................................................................ 4.75 30 June 2014 .............................................................................................................................. 4.50 30 September 2014 ..................................................................................................................... 4.25 31 December 2014 ...................................................................................................................... 4.00 31 March 2015 ............................................................................................................................ 3.75 30 June 2015 (and each relevant period thereafter) ......................................................................... 3.50

• AGR shall ensure that the Group maintains an interest cover ratio above 2.00.

12.7.2 Revolving credit facility

In addition to the Bonds set out in Section 12.7.1, the Group obtained the RCF of NOK 100 million from DNB Bank ASA pursuant to a senior facility agreement dated 27 February 2013. The maturity date is 5 February 2018. The purpose of the RCF is to issue financial guarantees and working capital funding. The covenants and guarantors are the same as for the Bonds, as described above.

The RCF has three reduction dates, where the RCF will be reduced to NOK 80,000,000 on 13 March 2014 (reduction date one), to NOK 60,000,000 on 13 March 2015 (reduction date two) and to NOK 50,000,000 on 13 September 2015 (reduction date three).


72

12.8 Contractual cash obligations and other commitments

The following table sets out the Group’s future payments of liabilities, including lease payments, with minimum payments within (1) 1 year, (2) 1-2 years, (3) 2-5 years, (4) over 5 years, as of 31 December 2012, 2011 and 2010.

Payments due by period

In NOK thousand 1

year 1-2

years 2-5

years Over 5 years

Total

31 March 2013 Short-term borrowings ................................................................... 20,000 - - - 20,000 Long-term borrowings .................................................................... - - - - -

Bonds........................................................................................... - - 550,000 - 550,000

Total 31 March 2013 ................................................................... 20,000 - 550,000 - 570,000

2012 Short-term borrowings ................................................................... 102,780 - - - 102,780 Long-term borrowings .................................................................... 644,877 - - - 644,877

Bonds........................................................................................... - - - - -

Total 2012 .................................................................................. 747,657 - - - 747,657

2011 Short-term borrowings ................................................................... - - - - - Long-term borrowings .................................................................... 80,647 657,051 - - 737,698

Bonds........................................................................................... - - - - -

Total 2011 .................................................................................. 80,647 657,051 - - 737,698

2010 Short-term borrowings ................................................................... 80,000 - - - 80,000 Long-term borrowings .................................................................... 195,175 294,064 591,706 - 1,160,945

Bonds........................................................................................... - - - - -

Total 2010 .................................................................................. 275,175 294,064 591,706 - 1,160,945

In the first quarter of 2013, the Group issued NOK 550 million in Bonds, and in addition obtained a NOK 100 million RCF, provided by DNB Bank ASA. Drawings under the RCF amounted to NOK 20 million as of 31 March 2013. See section 12.7.1 “Bonds” and 12.7.2 “Revolving credit facility”.

12.9 Investments

12.9.1 Principal investment in progress

The Group has limited investments going forward and thus a high cash conversion rate. The total investment budget for 2013 is NOK 18 million, of which NOK 9 million on Norway and NOK 9 million in the UK, whereof AGR Energy’s investments in developing its carried interests in oil- and gas licenses amount to NOK 3 million. The majority of the regular investments are purchase and license cost for software related to the Reservoir business, development of AGR’s own Software products such as P1 and regular investments in infrastructure such as IT and telephony-systems, furniture etc. All machinery & plant and inventory in Norway are pledged towards the holders of the Bonds and DNB BANK ASA. No environmental issues are deemed to affect the Group's utilisation of the tangible fixed assets. The investments will be financed by internal funds that are obtained from the Group’s debt and equity funding.

12.9.2 Future investments

The Group has made no firm commitments to investments beyond 2013. However, the Group estimates its investments for 2014 and 2015 to resemble the 2013 budget, although further investments in AGR Energy will depend on the company’s development.


73

12.9.3 Historical investments

The table below sets out the Group’s principal historical investments since 2010 and up to 31 March 2013.

Three-month ended

31 March

Year ended

31 December


(unaudited) 2012

(audited) 2011

(audited)

2010

(audited)

Other intangibles ............................................................................ 2,489 61,663 43,209 60,960 Goodwill ........................................................................................ - 82,668 - - Machinery and operating equipment .................................................. 1,626 78,900 46,418 65,927

Total ............................................................................................ 4,115 223,231 89,627 126,887

Norway.......................................................................................... 2,499 209,980 78,522 105,902 Europe excluding Norway................................................................. 1,549 8,584 9,364 7,836 Australia ........................................................................................ 54 2,142 406 9,856 America ......................................................................................... - 684 815 2,533 Asia .............................................................................................. 12 1,841 520 760 Africa ............................................................................................ - - - -

Total ............................................................................................ 4,115 223,231 89,627 126,887

Most of the Group’s investments are in Norway, where the Group’s major operations are located. The principle historical investments are financed by internal funds that are obtained from the Group´s debt and equity funding.

For the three-month period ended 31 March 2013, total investments amounted to NOK 4 million, which is mainly related to development of software systems within the Petroleum Services business.

For 2012, total investments amounted to NOK 223 million, of which NOK 83 million relate to acquisitions of Steinsvik & Co AS and Ocean Riser Systems AS. Investments in research and development (intangibles), machinery and equipment was NOK 140 million of which the majority relates to further investments in development of the EC Drill and the Managed Pressure Cementing concepts within Drilling Services, and in addition further investments in the development of the CannSeal technology. In the Petroleum Services business there was substantial investments related to the establishment of AGR Energy.

For 2011, total investments amounted to NOK 90 million. Investments in research and development (intangibles) amounted to NOK 43 million of which the majority relates to development of the CannSeal technology and also development of new systems solutions such as EC Drill within the Drilling Services business. Investments in machinery and equipment were NOK 46 million of which the majority relates to investments in the RMR. For further information regarding the RMR, see Section 18.2.2 “The RMR”.

For 2010, total investments amounted to NOK 127 million. Investments in research and development (intangibles) amounted to NOK 61 million of which the majority relates to development of the CannSeal technology and also development of new systems solutions such as EC Drill within the Drilling Services business. Investments in machinery and equipment was NOK 65 million of which the majority relates investments in technology and machinery with the AGR Field Operations, and investments in the RMR.

12.10 Foreign exchange exposure and hedging strategy

For the Group’s exchange exposure and hedging strategy, please see Note 2 of the AGR Group ASA’s annual reports 2012, which has been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.

12.11 Quantitative and qualitative disclosure about financial risk

For the Group’s quantitative and qualitative disclosure about financial risks, see Note 2, 16 and 29 of the AGR Group ASA’s annual report 2012, which has been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.

12.12 Critical accounting policies and estimates

The Company’s significant accounting policies are summarised in note 1 and note 3 to the Financial Statements, which has been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.


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12.13 Trend information

The Group believes the market outlook for 2013 and beyond to be very strong. The industry is facing high demand for drilling of wells, while at the same time there is a shortage of capacity in the market. In such a market, track record is vital. Petroleum Services has spudded 11 wells year to date in 2013, approximately 500 wells during the last 12 years and the Group believes it is well positioned to offer cost efficient well operations to the global oil & gas industry. AGR’s experience is expected to be in high demand going forward, as drilling efficiency, cost efficiency and safety during drilling operations will be key for oil companies to deliver on their exploration plans.

The Group has a strong secured order backlog of drilling operations. This is specially the case within its most important regions. At year end 2012 the Group was working on well planning and preparation work for 2013 operations - in Norway alone 10 wells are scheduled for 2013. With a large number of new contracts and agreements secured during the year, the Group believes its outlook to be positive.

However, the Group’s experienced employees are in high demand, and recent year’s trend with salary increases in excess of the general economy continues within the oil industry. As further described in Section 12.3 “Key drivers affecting the Company’s business and results”, the Group is also sensitive to external factors such as the oil-price and clients’ access to funding.

No significant trend changes have occurred since the end of 2012 for the Company’s business. Given a fairly stable oil price, no trend shifts are reasonably expected for the next six to 12 months.

12.14 Significant changes

Except for completion of the Demerger, as described in Section 6 “The Demerger”, there have been no significant changes in the financial or trading position of the Group since the date of the Interim Financial Information, which has been incorporated by reference to this Prospectus, see Section 19.3 “Incorporation by reference”.


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13 BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE GOVERNANCE

13.1 Board of Directors

13.1.1 Overview of the Board of Directors

The Company’s Articles of Association provide that the Board of Directors shall consist of a minimum of three and a maximum of nine members (“Board Members”). The current Board of Directors consist of seven Board Members, as listed in the table below, see Section 13.1.1 “The Board of Directors”.

The Company’s registered business address, Karenslyst Allé 4, 0278 Oslo, P.O. Box 444 Skøyen, 0213 Oslo, Norway, serves as the c/o address for the members of the Board of Directors in relation to their directorship of the Company.

13.1.2 The Board of Directors

The names and positions of the Board Members are set out in the table below.

Name Position Served since Term expires4

Eivind Kristofer Reiten .................................................... Chairman 2009 2015 Hugo Lund Maurstad ...................................................... Board Member 2006 2014 Tove Magnussen ............................................................ Board Member 2007 2014 Thomas Nils Robert Nilsson ............................................. Board Member 2008 2014 Reynir Kjær Indahl ......................................................... Board Member 2006 2014 Maria Tallaksen ............................................................. Board Member 2008 2014 Celeste Annette Mackie .................................................. Board Member 2011 2015

13.1.3 Brief biographies of the Board Members

Set out below are brief biographies of the Board Members, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the Group and names of companies and partnerships of which a Board Member is or has been a member of the administrative, management or supervisory bodies or partner in the previous five years (not including directorships and executive management positions in subsidiaries of the Company).

Eivind Kristofer Reiten, Chairman

Eivind Reiten was President and Chief Executive Officer of Hydro, a position he held from 2001-2009. In the period since 1986, he held several management positions in the various Hydro businesses and divisions. He was in politics prior to 1986 and from 1989-1991, where he held positions as Minister of Petroleum and Energy, State Secretary in Ministry of Finance, and Minister of Fisheries. Previous and current non-executive positions include membership of the board of directors of the Global Bank Board, chairman of the board of directors of the Norwegian Postal Service, Telenor and recently of Norske Skog. Eivind Reiten holds 17,679 Shares indirectly through Mocca Invest AS and no options in the Company.

Current directorships and senior management positions ................. Norske Skog (chairman), Mocca Invest AS, Norske Skogindustrier ASA, AGR Drilling Services Holdings AS, Anaxo Capital AS, Klaveness Marine Holdings AS, D&H Solutions AS, Constructor Group AS.

Previous directorships and senior management positions last five years .......................................................................................

Reynir Kjær Indahl, Vice Chairman/Board Member

Reynir Indahl has an MBA and BSc in Economics and he is a Partner with Altor Equity Partners. Prior to Altor, he was CEO of Ignis Photonyx, Investment Director with Kistefos and engagement manager with McKinsey & Company. He was previously a member of the board of directors of AGR from 2004 until the IPO in 2006. Reynir Indahl holds no Shares and no options in the Company.

4 In accordance with Section 6-6 of the Norwegian Public Limited Companies Act and related secondary legislation, the term in office of the Company’s Board Members expires at the conclusion of the ordinary General Meeting in the year of which the period in office expires.


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Current directorships and senior management positions ................. Fireg AS (chairman), Norsk Gjenvinning AS (chairman) POS Holding AS (chairman), VV Holding II AS (chairman), Elixia Holding III AS (chairman), SPV 2 AS (board member), SPV 3 AS (board member), Altor Equity Partners AS (board member), Altor Oil Service Invest AS (board member), Elixia Holding IV AS (chairman), VV Holding AS (chairman), SPV I AS (board member), Navico, Navico International, Helly Hansen, Byggmax, Helly Hansen Exit, Helly Hansen Invest.

Previous directorships and senior management positions last five years ....................................................................................... SPT Group AS (chairman), Constructor Group AS (board member).

Tove Magnussen, Board Member

Tove Magnussen joined AGR in November 2005, after being hired in as a consultant for almost 3.5 years. She is working as the VP HSE & Q in AGR and also as HSE coordinator in several of AGR’s pending well management projects. Previous work experience with inter alia HSE includes 5 years with Acona Group and 12 years with DNV. Tove Magnussen holds 30,065 Shares directly, and no option in the Company.

Current directorships and senior management positions ................. None. Previous directorships and senior management positions last five years ....................................................................................... None.

Hugo Lund Maurstad, Board Member

Hugo Maurstad is Partner of Altor Equity Partners, and member of the board of directors of Lindorff, Simrad Yachting, Relacom and Byggmax. He acts as the Director of McKinsey & Company and Managing Director of Lefac. Hugo Maurstad holds no Shares and no options in the Company.

Current directorships and senior management positions ................. Navico Holding AS (chairman), Helly Hansen Group (board member), Eltek ASA (board member), Lindorf Group (chairman), Altor Equity Partners (chairman), FunkyBiz AS (chairman), HHH Invest (chairman), Constructor Group (board member), Teodin Holdco AS (board member), Altor Oil Service Invest AS (chairman), SPV 1 AS (chairman), SPV 2 AS (chairman), SPV 3 AS (chairman), Ketlav Invest AS (chairman).

Previous directorships and senior management positions last five years ....................................................................................... Teodin Acquire AS (board member).

Thomas Nils Robert Nilsson, Board Member

Thomas Nilsson has an MSc in Economics and is the CEO of Firesteed Capital Limited in London. He has previously been a Partner with Thomas Weisel Partners LLC, Managing Director of Investor AB in UK, CEO of AB Export Invest and Assistant Director of Enskilda Securities Ltd. Thomas Nilsson holds no Shares and no options in the Company.

Current directorships and senior management positions ................. Alder LLP (partner), Firesteed Capital Ltd. (CEO), Chinsay AB (board member), ScandiNova Systems AB (board member), Meinl Bank AG (supervisory board member), Bay Capital Partners Ltd. (chairman), Nordic Water Products AB (board member).

Previous directorships and senior management positions last five years .......................................................................................

Kandia N.V (chairman), Dyconex AG (chairman), Industri Kapital (chairman).

Celeste Annette Mackie, Board Member

Celeste Mackie has a member of the Board of Directors since May 2011. After nearly 12 years as Resources Manager with Hays Information Management (HIM) Inc. in Texas, she moved to Scotland where she joined Dundee University Students Association as Administration Manager and from 2004 – 2008 managed Customer Services with Mansell Homes. Her professional career covers more than 15 years of experience in managing HR, of which she held the position as HR advisor in AGR since 2008 to September 2013, and she is currently a Chartered Member of the CIPD (Chartered Institute of Personnel Development) in the UK. Celeste Mackie acted as member of the board of directors of HIM in 1990-2001 and Dundee Tayside Furniture Project (2004 - 2006). Celeste Mackie holds no Shares and no options in the Company.


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Maria Tallaksen, Board Member

Maria Tallaksen has an MSc in economics and is an Investment Professional with Altor Equity Partners. Prior to Altor, she spent several years with Morgan Stanley in London within their Investment Banking Division and within Global Capital Markets. Maria Tallaksen holds no Shares and no options in the Company.

Current directorships and senior management positions ................. AGR Group ASA (board member), Ketlav Invest AS (board member and managing director), VV Holding II AS (managing director), VV Holding AS (managing director), POS Holding AS (managing director).

Previous directorships and senior management positions last five years ....................................................................................... SPT Group AS (deputy board member).

13.2 Management

13.2.1 Overview

The current Management is comprised of seven individuals. The names of the members of Management as of the date of this Prospectus, and their respective positions, are presented in the table below:

Name Current position within the Group Employed with the Group since

Åge Landro ........................................ Chief Executive Officer April 2012 Svein Sollund ..................................... Chief Financial Officer January 2008 Tove Magnussen ................................. Senior Vise President, HSEQ May 2002 Sjur Talstad ....................................... EVP Norway and Russia October 2008 Ian Burdis .......................................... EVP UK and West Africa September 2004 Bruce Roebuck ................................... EVP Asia Pacific April 2006 Patrick McKinley EVP Americas May 2012

The Company’s registered business address, Karenslyst Allé 4, 0278 Oslo, P.O. Box 444 Skøyen, 0213 Oslo, Norway, serves as the c/o address for the members of Management in relation to their employment with the Company.

Management’s organisation is as set out in the table below:

13.2.2 Brief biographies of the members of Management

Set out below are brief biographies of the members of Management, including their relevant management expertise and experience, an indication of any significant principal activities performed by them outside the Group and names of companies and partnerships of which a member of Management is or has been a member of the administrative, management or supervisory bodies or partner the previous five years (not including directorships and executive management positions in subsidiaries of the Company).

CEO

EVP Norway and Russia

EVP UK and West-Africa

EVP Asia Pacific

EVP Americas

CFO SVP HSEQ


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Åge Landro, CEO

Åge Landro has more than 10 years’ experience in the oil and gas industry. Prior to joining AGR in 2004, Åge Landro worked as the discipline head of the surface and insulation maintenance in Aker Kvaerner (now Aker Solutions) and before this in other roles in Kværner Oil & Gas MMO. Åge Landro has held several managerial positions in AGR Group ASA’s divisions, including the executive vice president position of AGR Field Operations which was sold to Oceaneering in late 2011, see Section 9.2 “History and important events”. Åge Landro holds a B.Sc degree from the Bergen University College (HiB). Åge Landro holds 69,930 Shares indirectly through Nordstrøm Invest AS, and no options in the Company.

Current directorships and senior management positions ................. Nordstrøm Invest AS. Previous directorships and senior management positions last five years ....................................................................................... Vest Næringsråd.

Svein Sollund, CFO

Svein Sollund started his career with the insurance company Storebrand ASA in Norway. In Storebrand ASA, Svein Sollund managed a project that became a company, Fair Insurance. He assumed the responsibility as insurance director with the firm in Denmark before returning to Norway as finance director with Storebrand Life Insurance. More recently, Svein Sollund has been CFO at Skuld, a Norway-based marine insurer, where he worked for six years until assuming his current role with AGR in January 2008. Svein Sollund holds a CEMS Master from the University of Wien and Siviløkonom (MBA equivalent) from Norges Handelshøyskole (NHH) in Norway. Svein Sollund holds 5,715 Shares indirectly through Amaldine AS, and no options in the Company.

Current directorships and senior management positions ................. None. Previous directorships and senior management positions last five years ....................................................................................... Amaldine AS (owner and chairman).

Tove Magnussen, Senior Vise President HSEQ

See Section 13.1.3 “Brief biographies of the Board Members”.

Sjur Talstad, EVP Norway and Russia

Sjur Talstad started his career with Statoil in 1986 as a reservoir engineer and later transferred to Statoil E&P International as a senior petroleum engineer. There he had responsibility for regions including Azerbaijan and Venezuela. In 2000, Sjur Talstad was appointed Senior Vice President within Exploration and Reservoir Exploitation and, in 2004, he took over responsibility as SVP for Statoil's subsurface organisation, including drilling. From 2007 until joining AGR Group in 2008, he was Vice President of StatoilHydro, in charge of the Sleipner field assets, consisting of the Sleipner East field, the Sleipner West field and the Sleipner Outside area. Prior to his current position, Sjur Talstad has worked in management roles in the Group serving as the CEO of Petroleum Services and Member of the Board of Directors. Sjur Talstad holds a master degree in petroleum technology and in industrial economy from the Norwegian University of Science and Technology in Trondheim. Sjur Talstad holds no Shares and no options in the Company.

Current directorships and senior management positions ................. None. Previous directorships and senior management positions last five years ....................................................................................... Spectrum ASA (board member).

Ian Burdis, EVP UK and West-Africa

Ian Burdis spent his early career in a variety of roles as staff and contractor with Boldon Drilling, Burmah Oil, Arco British and BP. From 1987 to 1995 he was a key member of Amerada Hess, progressing from drilling engineer to well engineering manager. From 1995 to 2003 Ian Burdis held several senior roles within Kerr McGee North Sea, primarily as drilling manager and latterly as operations support and supply chain manager. Prior to joining AGR, he worked for Global Santa Fe as general manager of the Applied Drilling Technology International Division. Ian is a key member of the team that grew the AGR’s well management division from drilling 20 wells a year to more than 70 wells per year. Ian Burdis holds no Shares and no options in the Company.

Current directorships and senior management positions ................. None.


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Previous directorships and senior management positions last five years ....................................................................................... None.

Bruce Roebuck, EVP Asia Pacific

Bruce Roebuck began his oil and gas career with Halliburton in New Zealand in 1980 and over the following 25 years he worked in numerous locations including Australia, Thailand and Russia. He progressed through the organisation into business development and operations management roles up to and including country manager for the Australasian area. Bruce joined AGR as business development manager in 2006 and was promoted to EVP in the Asia Pacific region the following year. Bruce Roebuck holds no Shares and no options in the Company.


Patrick McKinley, EVP Americas

Patrick McKinley has more than 30 years' experience in the oil and gas industry both in the US and internationally. He has an established reputation within the US Gulf Coast and international drilling industry. Patrick McKinley has worked with many industry leaders including Schlumberger and Sedco-Forex (now part of Transocean). He has a strong background in management of drilling operations, including directional drilling, short-radius drilling, and multilateral completions technology, and in senior-level project management and business development. Prior to joining AGR, he served as the drilling and completions manager for Tecpetrol Corp, Houston, playing a key role in the organisation’s operational success. Patrick McKinley attended Oregon Institute of Technology in the engineering program. Patrick McKinley holds no Shares and no options in the Company.


13.3 Remuneration and benefits

13.3.1 Remuneration of the Board of Directors

Remuneration of the Board Members is decided by the General Meeting and is believed to reflect the responsibilities, time commitment and complexity of the Company’s activities and expertise of the Board Members. The remuneration of the Board Members is not linked to AGR’s performance. No Board Member has been granted share options, see Section 13.1.3 “Brief biographies of the Board Members”. With the exception of Eivind Reiten, no Board Members have been engaged in any specific assignments for AGR or its associated companies in addition to their appointment to the Board of Directors.

On 24 May 2013, the General Meeting resolved the following to be paid to the current Board Members for their services for the period from the annual general meeting 25 May 2012 to the annual General Meeting 24 may 2013.

In NOK thousand Name Remuneration in NOK

Eivind Reiten1 .................................................................................................................................. 450 Thomas Nilsson ............................................................................................................................... 200 Reynir Kjær Indahl .......................................................................................................................... 0 Tove Magnussen .............................................................................................................................. 0 Celeste Annette Mackie .................................................................................................................... 0 Hugo Lund Maurstad ........................................................................................................................ 0 Maria Tallaksen ............................................................................................................................... 0 1 In addition, Eivind Reiten received NOK 750 thousand for his services as a consultant for the Board of Directors in 2012.

13.3.2 Remuneration of Management

The main principles for AGR Group ASA’s management remuneration policy are that executive management shall be offered competitive compensation, when salaries, benefits in kind, bonuses, share awards and pension arrangements are taken into consideration. Salaries and other benefits for executive management determined in the 2012 were in


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accordance with the abovementioned main principles, see note 25 to the Financial Statements, incorporated by reference hereto, see Section 19.3 “Incorporation by reference”.

The Board of Directors has set guidelines for remuneration of the executive management. The guidelines are presented to the General Meeting for an advisory vote. Although advisory, the guidelines will be binding, and thus subject to the General Meetings approval, in respect of any remuneration related to shares in the Company. Salary and other remuneration to the CEO are determined by the Board of Directors. AGR’s guidelines for remuneration to the executive management are described in the attachment to the notices of the Annual General Meetings and therefore appear on AGR’s website, and remuneration to the members of the executive management is presented in note 25 in to the Financial Statements, see Section 19.3 “Incorporation by reference”. Members of Management have the opportunity to participate in AGR’s management share scheme, in which management can buy shares directly in Petroleum Services. Members of Management are also entitled to bonuses of up to 40% of their salary. The bonus scheme is linked to company performance. AGR does not offer any other form of remuneration to Management other than where expatriate packages may require some additional benefits. AGR does not have a share option scheme, see Section 13.4 “Bonus programme”.

The remuneration paid to the members of the current Management in 2012 was NOK 14,848,000 and USD 574,085. In addition to annual remuneration, the Management also receives benefits in kind, see Section 13.4 “Share incentive schemes for Management”.

The table below sets out the remuneration paid to the Management in 2012.

Wages Bonus Pension premiums Other

remuneration Total

Åge Landro1 ............................. NOK 1,430,000 - NOK 46,000 NOK 5,000 NOK 1,481,000 Svein Sollund ............................ NOK 2,214,000 NOK 2,628,000 NOK 62,000 NOK 19,000 NOK 4,922,000 Tove Magnussen ........................ NOK 1,599,000 NOK 245,000 NOK 69,000 NOK 25,000 NOK 1,938,000 Sjur Talstad .............................. NOK 3,326,000 NOK 489,000 NOK 63,000 NOK 191,000 NOK 4,070,000 Ian Burdis ................................. NOK 1,891,000 NOK 402,000 NOK 143,000 - NOK 2,437,000 Bruce Roebuck .......................... USD 340,673 USD 85,980 USD 30,661 - USD 457,314 Patrick McKinley2 ....................... USD 111,345 - USD 4,879 USD 547.000 USD 116,771 1 The figures present remuneration paid to Åge Landro during the period from 1 April 2012 to 31 December 2012. 2 The figures present remuneration paid to Patrick McKinley from during the period from 16 May 2012 to 31 December 2012.

13.4 Bonus programme

As a guideline, annual bonuses in addition to base salary may be offered to Management. Such bonuses shall however, be limited to certain percentages of the base salary and to achievement of certain predetermined objectives. Guidelines for distribution of bonuses shall be determined by the Board of Directors. Bonuses to the AGR CEO shall be determined by the Board of Directors, after consulting with the Company’s Remuneration Committee.

The executive management shall as a general rule, be entitled to participate in pension schemes that ensure pension benefits in proportion to their level of salary as employees. The Management of the Company are members of the Company’s collective pension scheme.

The members of Management have other ordinary benefits in kind, such as free phone, newspapers and trade magazines etc, but do not have other material benefits in kind. Where appropriate, employees working under expatriate conditions may also receive a car allowance. As a guideline car allowances shall not be offered to AGR employees, and existing arrangements will be phased out when the employment contracts are due for renegotiation.

In respect of severance payments these will be agreed on an individual basis. Some of the current members of the Management have rights to severance payment, corresponding from six to 12 months base salary, if their employment is terminated by the Company. As a guideline severance payments shall be in accordance with the Company’s main principles, i.e. that the level of remuneration shall be competitive when all benefits are seen as a whole.

AGR does not have a share option scheme for its employees or other forms of remuneration which are linked to the shares in the Company or the quoted price of the Company’s shares. Some employees have, however, invested directly in the two holding companies, PetCo Invest AS and Petco Invest II AS, owning Petroleum Services Holding AS, see Section 13.5 “Share incentive schemes for Management”.


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13.5 Share incentive schemes for Management

In April 2011, the Company established an investment program for certain employees, management and members of the board of directors of the Company, AGR Petroleum Services Holdings AS and its subsidiaries, through the incorporation of the investment management vehicle, PetCo Invest AS, a wholly owned subsidiary of the Company.

The Company sold 90,954 shares in AGR Petroleum Services Holdings AS for NOK 102 per share, a shareholding which at this point in time corresponded to 2.1% of the Petroleum Services Holding AS. Following the transaction, the Company was the owner of the remaining 97.9%, and held one controlling B-share. In May 2011, the Company sold 42,939 A-shares in PetCo Invest AS to key employees and members of the board of directors of the Company and AGR Petroleum Services Holdings AS again, at a price of NOK 102 per share, while keeping the controlling B-share. In April 2012, Petco Invest AS increased its ownership further in AGR Petroleum Services Holdings AS with 41,532 shares and owned 132,480 shares per December 2012, corresponding to 3.1%. The Company was at this point in time the owner of the remaining 96.9% of AGR Petroleum Services Holdings AS.

The price per share in PetCo Invest AS was determined based on the estimated fair value of AGR Petroleum Services Holdings AS, using over-the-cycle EV/EBITDA trading multiples in accordance with EVCA guidelines. Accordingly, the transactions have not affected the profit and loss accounts of AGR. In order to increase the investments made by PetCo Invest AS, the Company granted Petco Invest AS a loan in the form of a seller’s credits with an annual interest rate of 8%. The Company has an option to increase its shareholding in PetCo Invest AS by cash payment or set-off against any outstanding amount under the loan agreements.

The investment program of PetCo Invest AS for AGR Petroleum Services Holdings AS is governed by a shareholders’ agreement. The shareholders’ agreement is entered into by and between the Company, AGR Petroleum Services Holdings AS, PetCo Invest AS and the participants in the program. Among other things, the shareholders’ agreement contains drag-along and tag-along provisions for the event that the Company should sell its shares in AGR Petroleum Services Holdings AS. The participants cannot sell or transfer the shares in PetCo Invest AS without the consent of the Company. If a participant in the program gives or is given notice of termination of employment before the second anniversary of the program, the Company has an option to buy the shares of such participant at fair value.

In April 2013, the Company expanded the co-investment program in AGR Petroleum Services Holding AS through incorporation of a second investment management vehicle, PetCo Invest II AS. PetCo Invest II AS has purchased 184,589 shares in AGR Petroleum Services Holdings AS, corresponding to 4.3% of the shares. The Company and PetCo Invest AS own the remaining 95.7% of the shares.

On 5 June 2013, it was announced that the Company has committed to sell 68,663 A-shares in PetCo Invest II AS to key employees and members of the board of directors of the Company and AGR Petroleum Services Holdings AS at a price per share of NOK 102. Following this transaction, the Company’s shareholding in PetCo Invest II AS will be 29,337 A-shares and the controlling B-share. The Company may sell the remaining 29,337 A-shares to persons eligible for the investment program at a later point in time.

The investment program of PetCo Invest II AS for AGR Petroleum Services Holdings AS is governed by a separate shareholders’ agreement. The shareholders’ agreement is entered into by and between the Company, AGR Petroleum Services Holdings AS, PetCo Invest II AS and the participants in the program. Among other things, the shareholders’ agreement contains drag-along and tag-along provisions for the event that the Company should sell its shares in AGR Petroleum Services Holdings AS. The participants cannot sell or transfer the shares in PetCo Invest II AS without the consent of the Company. If a participant in the program gives or is given notice of termination of employment, the Company has an option to buy the shares at fair value.

13.6 Benefits upon termination

Members of Management have between three and 12 months’ notice period, and their salary is paid during the notice period. In addition, members of Management are entitled to six to nine month severance pay, in addition to payment under the notice period. None of the Board Members, not being employees of the Group, have service contracts and none will be entitled to any benefits upon termination of office. Except as set out above, no employee, including members of Management, has entered into employment agreements which provide for any special benefits upon termination.

13.7 Pensions and retirement benefits

For the year ended 31 December 2012, the cost of pensions for members of Management was NOK 668 thousand. Board Members are not entitled to pension payments or related benefits from the Group.


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For more information regarding pension and retirement benefits, see note 19 and note 25 to the Financial Statements, incorporated by reference hereto, see Section 19.3 “Incorporation by reference”.

13.8 Employees

As of the date of this Prospectus, the Group has approximately 648 professionals, whereof 285 permanent employees, 7 project employees, 336 contracted-in staff (consultants) and 20 associates.

The table below shows the development in the numbers of full-time employees over the last three years (including employees in Drilling Services business area).


2012 2011 2010

Total Group ......................................................................................................... 458 434 445

By geographic region: - Norway ................................................................................................ 201 196 197 - Europe (excluding Norway) ..................................................................... 136 130 124 - Australia............................................................................................... 27 22 26 - America ............................................................................................... 84 74 66 - Asia ..................................................................................................... 10 12 32 - Africa 0 0 0

13.9 Nomination committee

The Company’s Articles of Association provide for a nomination committee composed of three members who are shareholders or representatives of shareholders. The members of the nomination committee are elected by the General Meeting, which also elects the chairman of the committee. The current members of the nomination committee are Reynir Indahl (Chairman), Pål Stampe and Fredrik Strømholm. The nomination committee will be responsible for nominating the shareholder-elected members of the Board of Directors and members of the nomination committee and make recommendations for remuneration to the Board Members and members of the nomination committee.

13.10 Audit committee

The Board Members have established an audit committee. The current members of the audit committee are Thomas Nilsson (Chairman), Maria Tallaksen and Pål Stampe.

The primary purposes of the audit committee are to:

• assist the Board of Directors in discharging its duties relating to the safeguarding of assets; the operation of adequate system and internal controls; control processes and the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards and

• provide support to the Board of Directors on risk profile and risk management.

The audit committee shall report and make recommendations to the Board of Directors, but the Board of Directors retains responsibility for implementing such recommendations. One member has qualifications within accounting/auditing and is independent of the Group’s operations.

13.11 Remuneration committee

The Board Members have established a remuneration committee composed of 3 Board Members. The current members of the remuneration committee are Reynir Indahl (Chairman), Hugo Maurstad and Maria Tallaksen. The primary purpose of the remuneration committee is to provide advice to the Board of Directors on CEO compensation, compensation to Management and overall guidance on bonus, share awards and remuneration for the employees of AGR. No additional compensation is awarded to the members of the remuneration committee for their participation in the work of the remuneration ommittee.

13.12 Corporate governance

The Company has adopted and implemented a corporate governance regime which complies with the Norwegian Code of Practice for Corporate Governance dated 23 October 2012, as amended, (the “Corporate Governance Code”).


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Except for that Tove Magnussen being a member of Management, also serves as Board Member, the Company is in compliance with the recommendations set out in the Corporate Governance Code.

13.13 Conflicts of interests etc.

During the last five years preceding the date of this Prospectus, none of the Board Members or a member of Management has, or had, as applicable:

• any convictions in relation to indictable offences or convictions in relation to fraudulent offences;

• received any official public incrimination and/or sanctions by any statutory or regulatory authorities (including designated professional bodies) or was disqualified by a court from acting as a member of the administrative, management or supervisory bodies of a company or from acting in the management or conduct of the affairs of any company, or

• been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his or her capacity as a founder, director or senior manager of a company.

To the Company’s knowledge, there are currently no actual or potential conflicts of interest between the Company and the private interests or other duties of any of the members of the Management and the Board of Directors, including any family relationships between such persons.


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14 RELATED PARTY TRANSACTIONS

The table below sets forth the Group’s related party transactions for the three-month period ended 31 March 2013 and the years ended 31 December 2012, 2011 and 2010.

All transactions with related parties are carried out at market prices in connection with ordinary business transactions. There is not given or received any guarantees related to transaction with related parties in 2012, 2011 and 2010. There is not recognised any provisions for doubtful debts related to the amount of outstanding balances, and there is not recognised any expense during 2012, 2011 and 2010 in respect of bad or doubtful debts due from related parties.

Years ended 31 December


(audited) 2011

(audited) 2010

(audited)

Other Income K&K Design AS ................................................................................................ - 21 10 Altor Equity Partners (rental of premises) ........................................................... 184 2,537 1,942 Purchase of goods/other operating costs Sartor Næringspark AS ..................................................................................... - - 12,341 Acatos Consulting AS ....................................................................................... 750 750 750 Combiunits AS ................................................................................................. - 576 1,544 G&G Consultans AS .......................................................................................... 4,997 4,546 3,100 BroCo Marin AS ............................................................................................... - - 125 K&K Design AS ................................................................................................ - 569 60 Dorothy Hasler ................................................................................................ - - 107 Grieg Logistics AS ............................................................................................ - 1 2,717 PIR AS ........................................................................................................... 1,989 - 400 Rasco Ltd........................................................................................................ - 1,750 681 Tøkon AS ........................................................................................................ 3,148 3,282 - Altor Equity Partners AS ................................................................................... 968 169 342 Trade receivables K&K Design AS ................................................................................................ - 18 18 Trade payables BroCo Marin AS ............................................................................................... - (131) (131) Combiunits AS ................................................................................................. - 57 227 G&G Consultans AS .......................................................................................... 532 233 310 PIR AS ........................................................................................................... 246 - - Tøkon AS ........................................................................................................ 212 234 - Rasco Ltd........................................................................................................ - - 377 Altor Equity Partners AS ................................................................................... - 32 -


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15 CORPORATE INFORMATION AND DESCRIPTION OF SHARE CAPITAL

The following is a summary of certain corporate information and material information relating to the Shares and share capital of the Company and certain other shareholder matters, including summaries of certain provisions of the Company’s Articles of Association and applicable Norwegian law in effect as of the date of this Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company’s Articles of Association and applicable law.

15.1 Company corporate information

The Company’s registered name is AGR Group ASA. The Company is a public limited liability company organised and existing under the laws of Norway pursuant to the Norwegian Public Limited Companies Act. The Company’s registered business address is in the municipality of Oslo, Norway. The Company was incorporated in Norway on 11 May 2005. The Company’s organisation number in the Norwegian Register of Business Enterprises is 986 922 113, and the Shares are registered in book-entry form with VPS under ISIN NO 001 0277171. The Company’s register of shareholders in VPS is administrated by DNB Bank ASA, Registrars Department, 0021 Oslo, Norway. The Company’s registered office is located at Karenslyst Allé 4, 0278 Oslo, P.O. Box 444 Skøyen, 0213 Oslo, Norway, and the Company’s main telephone number at that address is +47 240 61 000. The Company’s website can be found at www.agr.com. Neither the content of www.agr.com nor of the Group’s other websites, is incorporated by reference into or otherwise forms part of this Prospectus.

The table below sets out the Company’s significant subsidiaries of the Company.

Company Head Office Owner Equity Interest Voting Power

AGR Australia Pty Ltd Perth – Australia AGR Group Holdings Ltd 100.0% 100.0% AGR Consultancy Services AS Stavanger – Norway AGR Petroleum Services AS 100.0% 100.0% AGR Consultancy Solutions Ltd Aberdeen – UK AGR Group Holdings Ltd 100.0% 100.0% AGR F.J Brown Inc Houston – USA AGR Group Americas Inc 100.0% 100.0% AGR Group Americas Inc Houston – USA AGR Petroleum Services

Holdings AS 100.0% 100.0%

AGR Group Holdings Ltd Aberdeen – UK AGR Petroleum Services Holdings AS

100.0% 100.0%

AGR Petroleum Services AS Oslo – Norway AGR Petroleum Services Holdings AS

100.0% 100.0%

AGR Petroleum Services Holdings AS Fjell – Norway AGR Group ASA 92.6% 100.0% AGR Well Management Ltd Aberdeen – UK AGR Group Holdings Ltd 100.0% 100.0% Tracs International Consultancy Ltd Aberdeen – UK AGR Group Holdings Ltd 100.0% 100.0% 1 The Company controls 100% of the voting power in AGR Petroleum Services Holdings AS through a controlling B-share in each of PetCo Invest AS and

PetCo Invest II AS, holding the remaining 7.4% of the equity interest.


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was further reduced with NOK 109,254,105.84, from NOK 248,304,786 to NOK 139,050,680.16, by reducing the nominal value of each share with NOK 0.88 from NOK 2 to NOK 1.12.

The table below sets out the development of the Company’s share capital since 1 January 2010 up to the date of this Prospectus:

Date of resolution Type of change

Change in share capital

(NOK) Nominal value

(NOK) New number

of shares New share

capital (NOK)

1 January 2010 - - 2 125,898,308 251,796,616.00 24 May 2013 Share capital reduction by

cancellation of own Shares. 3,491,830.00 2 124,152,393 248,304,786.00

24 May 2013 Share capital reduction by reduction of the nominal value of the Shares.

109,254,105.84 1.12 124,152,393 139,050,680.16

15.5 Ownership structure

As of 8 August 2013, the Company had approximately 630 shareholders. Approximately 90% of the Shares were held by Norwegian citizens and approximately 10% were held by foreign citizens. The Company’s 20 largest shareholders as shown by the VPS transcript as of 8 August 2013 are set out in the table below.

Name Number of shares ALTOR OIL SERVICE INVEST AS 97,659,680 78.66%

RBC Investor Services Bank S.A 7,700,514 6.20%

HEMACA AS 2,489,759 2.01%

INVESCO PERP EUR SMALL COMP FD 1,832,185 1.48%

VERDIPAPIRFONDET DNB NAVIGATOR 1,691,174 1.36%

VERDIPAPIRFONDET DNB SMB 1,367,530 1.10%

AEQUITAS AS 1,334,092 1.07%

THE NORTHERN TRUST CO. 1,042,620 0.84%

HEMACA AS 1,000,000 0.81%

The Bank of New York Mellon (Luxembourg) 700,000 0.56%

SANTANDER INVESTMENT S.A. 691,480 0.56%

CANICA AS 598,056 0.48%

NORDEA BANK NORGE ASA MARKETS, MARKET-MAKING DERIVATER 573,000 0.46%

CACEIS BANK LUXEMBOURG 435,319 0.35%

INDEX ADVISORS AS 384,866 0.31%

BOMA HOLDING AS 359,652 0.29%

STAVE INVEST AS 263,563 0.21%

SISA INVEST AS 250,000 0.20%

The Bank of New York Mellon SA/NVT 243,390 0.20%

JENSEN, ODD HARALD 175,028 0.14%

Total 124,152,393 100.00%

There are no differences in voting rights between the shareholders.

Shareholders owning 5% or more of the Shares have an interest in the Company’s share capital which is notifiable pursuant to the Norwegian Securities Trading Act. See Section 16.7 “Disclosure obligations” for a description of the disclosure obligations under the Norwegian Securities Trading Act. As of the date of this Prospectus, Altor owns 78.6% and RBC Dexia Investor Services Bank owns 6.2% of the Shares. The Company is not aware of any other persons or entities that, directly or indirectly, have an interest in 5% or more of the Shares.


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The Company is controlled by Altor, with registered business address Tjuvholmen Allé 19, 0252 Oslo, Norway. Altor is controlled by Altor Funds, a private fund with business address 11-15 Seaton Place, St. Helier Jersey JE4 0QH, Channel Islands. RBC Dexia Investors Service Bank is a wholly owned subsidiary of Royal Bank of Canada.

The Company is not aware of any arrangements which may at a subsequent date result in a change of control of the Company.

The Company has not any special measures to prevent abuse of control, except following the provisions set out in the Norwegian Public Limited Liability Companies Act and the Corporate Governance Code regarding the protection of the minority shareholders, see Section 15.9 “Shareholder rights” and 13.12 ”Corporate governance.

The Company’s Articles of Association do not contain any provisions that would have the effect of delaying, deferring or preventing a change of control of the Company.

The Shares have not been subject to any public takeover bids during the current or last financial year.

15.6 Authorisation to increase the share capital

The Board of Directors has been granted a general authorisation to increase the share capital by up to NOK 25,179,661.60, corresponding to 18.1% of the Company’s current share capital.

The authorisations are valid until the Company’s annual general meeting in 2014, but no longer than to 30 June 2014. The preferential rights of the existing shareholders to subscribe for the new shares pursuant to Section 10-4 of the Norwegian Limited Liability Companies Act may be deviated from. The authorisations do comprise potential share capital increases against contribution in kind, but do not comprise share capital increases in connection with mergers.

15.7 Authorisation to acquire treasury shares

The Board of Directors has been granted authorisation to repurchase the Company’s own shares within a total nominal value of NOK 25,179,661.60, corresponding to 18.1% of the Company’s current share capital. The purchase price per share shall not be lower than NOK 2 and not be higher than NOK 100. The authorisation is valid until the Company’s annual general meeting in 2014, but no longer than to 30 June 2014. The method of acquisition and disposal of treasury shares shall be at the Board of Directors’ discretion, however, not by way of subscription of own Shares.

15.8 Other financial instruments

Neither the Company nor any of its subsidiaries has issued any options, warrants, convertible loans or other instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or its subsidiaries. Furthermore, neither the Company nor any of its subsidiaries has issued subordinated debt or transferable securities other than the Shares and the shares in its subsidiaries which will be held, directly or indirectly, by the Company.

15.9 Shareholder rights

The Company has one class of Shares in issue, and in accordance with the Norwegian Public Limited Companies Act, all Shares in that class provide equal rights in the Company. Each of the Company’s Shares carries one vote. The rights attaching to the Shares are described in Section 15.10 “The Articles of Association and certain aspects of Norwegian law”.

15.10 The Articles of Association and certain aspects of Norwegian law

15.10.1 The Articles of Association

The Company’s Articles of Association are set out in Appendix A. The Articles of Association does not set out conditions that are more significant than what is required by the Norwegian Public Limited Liability Companies Act when it comes to actions necessary to change the rights of holders of the Shares. Below is a summary of provisions of the Articles of Association.

Objective of the Company

The objective of the Company is to operate its business within trade, industry and property investments and in businesses in connection with this, including participation in other companies operating within similar businesses and investments in real estate, securities and other assets.


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Registered office

The Company’s registered office is in the municipality of Oslo, Norway.

Share capital and nominal value

The Company’s share capital is NOK 139,050,680.16 divided into 124,152,393 Shares, each Share with a nominal value of NOK 1.12. The Shares are registered with the Norwegian Central Securities Depository (VPS).

Board of Directors

The Company’s Board of Directors shall consist of a minimum of 3 and a maximum of 9 members.

Restrictions on transfer of Shares

The Articles of Association do not provide for any restrictions on the transfer of Shares, or a right of first refusal for the Company. Share transfers are not subject to approval by the Board of Directors.

General meetings

Documents relating to matters to be dealt with by the Company’s general meeting, including documents which by law shall be included in or attached to the notice of the general meeting, do not need to be sent to the shareholders if such documents have been made available on the Company’s website. A shareholder may nevertheless request that documents which relate to matters to be dealt with at the general meeting are sent to him/her.

Nomination committee

The Company shall have a nomination committee. See Section 13 “Board of Directors, Management, Employees and Corporate Governance”.

15.10.2 Certain aspects of Norwegian corporate law

General meetings

Through the general meeting, shareholders exercise supreme authority in a Norwegian company. In accordance with Norwegian law, the annual general meeting of shareholders is required to be held each year on or prior to 30 June. Norwegian law requires that written notice of annual general meetings setting forth the time of, the venue for and the agenda of the meeting be sent to all shareholders with a known address no later than 21 days before the annual general meeting of Norwegian private limited liability company listed on stock exchange or regulated market shall be held, unless the articles of association stipulate a longer deadline, which is not currently the case for the Company.

A shareholder may vote at the general meeting either in person or by proxy appointed at their own discretion. Although Norwegian law does not require the Company to send proxy forms to its shareholders for general meetings, the Company plans to include a proxy form with notices of general meetings. All of the Company’s shareholders who are registered in the register of shareholders maintained with the VPS as of the date of the general meeting, or who have otherwise reported and documented ownership to Shares, are entitled to participate at general meetings, without any requirement of pre-registration. The Company’s Articles of Association do however include a provision requiring shareholders to pre-register in order to participate at general meetings.

Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the Board of Directors considers it necessary. An extraordinary general meeting of shareholders must also be convened if, in order to discuss a specified matter, the auditor who audits the company’s annual accounts or shareholders representing at least five percent of the share capital demands this in writing. The requirements for notice and admission to the annual general meeting also apply to extraordinary general meetings. However, the annual general meeting of a Norwegian public limited liability company may with a majority of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting resolve that extraordinary general meetings may be convened with a fourteen days notice period until the next annual general meeting provided the company has procedures in place allowing shareholders to vote electronically. The Company’s Articles of Association does currently not permit electronic voting and extraordinary general meetings may accordingly not be convened with a fourteen days notice period.

Voting rights–amendments to the Articles of Association

Each of the Company’s Shares carries one vote. In general, decisions that shareholders are entitled to make under Norwegian law or The Company’s Articles of Association may be made by a simple majority of the votes cast. In the case of elections or appointments, the person(s) who receive(s) the greatest number of votes cast are elected.


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However, as required under Norwegian law, certain decisions, including resolutions to waive preferential rights to subscribe in connection with any share issue in the Company, to approve a merger or demerger of the Company, to amend Articles of Association, to authorise an increase or reduction in the share capital, to authorise an issuance of convertible loans or warrants by the Company or to authorise the Board of Directors to purchase the Shares and hold them as treasury shares or to dissolve the Company, must receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds of the share capital represented at a general meeting. Norwegian law further requires that certain decisions, which have the effect of substantially altering the rights and preferences of any shares or class of shares, receive the approval by the holders of such shares or class of shares as well as the majority required for amending the Articles of Association.

Decisions that (i) would reduce the rights of some or all of the Company’s shareholders in respect of dividend payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90% of the share capital represented at the general meeting in question vote in favour of the resolution, as well as the majority required for amending the Articles of Association. Certain types of changes in the rights of shareholders require the consent of all shareholders affected thereby as well as the majority required for amending the Articles of Association.

In general, only a shareholder registered in the VPS is entitled to vote for such Shares. Beneficial owners of the Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law, nor are any person who is designated in the VPS register as the holder of such Shares as nominees. Investors should note that there are varying opinions as to the interpretation of the right to vote on nominee registered shares. In the Company’s view, a nominee may not meet or vote for Shares registered on a nominee account (NOM-account). A shareholder must, in order to be eligible to register, meet and vote for such Shares at the general meeting, transfer the Shares from such NOM-account to an account in the shareholder’s name. Such registration must appear from a transcript from the VPS at the latest at the date of the general meeting.

There are no quorum requirements that apply to the general meetings.

Additional issuances and preferential rights

If the Company issues any new Shares, including bonus share issues, the Company’s Articles of Association must be amended, which requires the same vote as other amendments to its Articles of Association. In addition, under Norwegian law, the Company’s shareholders have a preferential right to subscribe for new Shares issued by the Company. Preferential rights may be derogated from by resolution in a general meeting passed by the same vote required to approve amending the Articles of Association. A derogation of the shareholders’ preferential rights in respect of bonus issues requires the approval of all outstanding Shares.

The general meeting may, by the same vote as is required for amending the Articles of Association, authorise the Board of Directors to issue new Shares, and to derogate from the preferential rights of shareholders in connection with such issuances. Such authorisation may be effective for a maximum of two years, and the nominal value of the Shares to be issued may not exceed 50% of the registered nominal share capital when the authorisation is registered with the Norwegian Register of Business Enterprises.

Under Norwegian law, the Company may increase its share capital by a bonus share issue, subject to approval by the Company’s shareholders, by transfer from the Company’s distributable equity or from the Company’s share premium reserve and thus the share capital increase does not require any payment of a subscription price by the shareholders. Any bonus issues may be effected either by issuing new shares to the existing shareholders of the Company or by increasing the nominal value of the Company’s outstanding Shares.

Issuance of new Shares to shareholders who are citizens or residents of the United States upon the exercise of preferential rights may require the Company to file a registration statement in the United States under United States securities laws. Should the Company in such a situation decide not to file a registration statement, the Company’s U.S. shareholders may not be able to exercise their preferential rights. If a U.S. shareholder is ineligible to participate in a rights offering, such shareholder would not receive the rights at all and the rights would be sold on the shareholder’s behalf by the Company.

Minority rights

Norwegian law sets forth a number of protections for minority shareholders of the Company, including but not limited to those described in this paragraph and the description of general meetings as set out above. Any of the Company’s shareholders may petition Norwegian courts to have a decision of the Board of Directors or the Company’s shareholders made at the general meeting declared invalid on the grounds that it unreasonably favours certain


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shareholders or third parties to the detriment of other shareholders or the Company itself. The Company’s shareholders may also petition the courts to dissolve the Company as a result of such decisions to the extent particularly strong reasons are considered by the court to make necessary dissolution of the Company.

Minority shareholders holding five percent or more of the Company’s share capital have a right to demand in writing that the Company’s Board of Directors convene an extraordinary general meeting to discuss or resolve specific matters. In addition, any of the Company’s shareholders may in writing demand that the Company place an item on the agenda for any general meeting as long as the Company is notified in time for such item to be included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a renewed notice must be issued if the deadline for issuing notice of the general meeting has not expired.

Rights of redemption and repurchase of Shares

The share capital of the Company may be reduced by reducing the nominal value of the Shares or by cancelling Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at a general meeting. Redemption of individual Shares requires the consent of the holders of the Shares to be redeemed.

The Company may purchase its own Shares provided that the Board of Directors has been granted an authorisation to do so by a general meeting with the approval of at least two-thirds of the aggregate number of votes cast and at least two-thirds of the share capital represented at the meeting. As of 1 July 2013, the aggregate nominal value of treasury shares so acquired, and held by the Company must not exceed 10% of the Company’s share capital, and treasury shares may only be acquired if the Company’s distributable equity, according to the latest adopted balance sheet or an interim balance sheet, exceeds the consideration to be paid for the shares. The authorisation by the General Meeting of the Company’s shareholders cannot be granted for a period exceeding two years.

Shareholder vote on certain reorganisations

A decision of the Company’s shareholders to merge with another company or to demerge requires a resolution by the general meeting of the shareholders passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the general meeting. A merger plan, or demerger plan signed by the Board of Directors along with certain other required documentation, would have to be sent to all the Company’s shareholders, or if the Articles of Association stipulate that, made available to the shareholders on the company’s website, at least one month prior to the general meeting to pass upon the matter.

Liability of Directors

Members of the Board of Directors owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the Board Members act in the best interests of the Company when exercising their functions and exercise a general duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the Company.

Members of the Board of Directors may each be held liable for any damage they negligently or wilfully cause the Company. Norwegian law permits the general meeting to discharge any such person from liability, but such discharge is not binding on the Company if substantially correct and complete information was not provided at the general meeting of the Company’s shareholders passing upon the matter. If a resolution to discharge the Company’s directors from liability or not to pursue claims against such a person has been passed by a general meeting with a smaller majority than that required to amend the Company’s Articles of Association, shareholders representing more than 10% of the share capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim on the Company’s behalf and in its name. The cost of any such action is not the Company’s responsibility but can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge any of the Company’s directors from liability or not to pursue claims against the Company’s directors is made by such a majority as is necessary to amend the Articles of Association, the minority shareholders of the Company cannot pursue such claim in the Company’s name.

Indemnification of Directors

Neither Norwegian law nor the Articles of Association contains any provision concerning indemnification by the Company of the Board of Directors. The Company is permitted to purchase insurance for the Company’s directors against certain liabilities that they may incur in their capacity as such.


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Distribution of assets on liquidation

Under Norwegian law, the Company may be wound-up by a resolution of the Company’s shareholders at the general meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share capital represented at the meeting. In the event of liquidation, the Shares rank equally in the event of a return on capital.

15.10.3 Shareholder agreements

There is no shareholders’ agreement related to the Shares.


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16 SECURITIES TRADING IN NORWAY

16.1 Introduction

The Oslo Stock Exchange was established in 1819 and is the principal market in which shares, bonds and other financial instruments are traded in Norway. As of May 2013, the total capitalisation of companies listed on the Oslo Stock Exchange amounted to approximately NOK 1,172 billion. Shareholdings of non-Norwegian investors as a percentage of total market capitalisations as of May 2013 amounted to approximately 36%.

The Oslo Stock Exchange has entered into a strategic cooperation with the London Stock Exchange group with regards to, inter alia, trading systems for equities, fixed income and derivatives.

16.2 Trading and settlement

Trading of equities on the Oslo Stock Exchange is carried out in the electronic trading system TradElect. This trading system was developed by the London Stock Exchange and is in use by all markets operated by the London Stock Exchange as well as by the Borsa Italiana and the Johannesburg Stock Exchange.

Official trading on the Oslo Stock Exchange takes place between 09:00 hours (CET) and 16.20 hours (CET) each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET), closing auction from 16:20 hours (CET) to 16:30 hours (CET). Reporting of after exchange trades can be done until 17:30 hours (CET).

The settlement period for trading on the Oslo Stock Exchange is three trading days (T+3).

Oslo Clearing ASA, a wholly-owned subsidiary of Oslo Børs VPS Holding ASA, has a license from the Norwegian FSA to act as a central clearing service, and has from 18 June 2010 offered clearing and counterparty services for equity trading on the Oslo Stock Exchange.

Investment services in Norway may only be provided by Norwegian investment firms holding a license under the Norwegian Securities Trading Act, branches of investment firms from an EEA member state or investment firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member state may also provide cross-border investment services into Norway.

It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in the case of investment firms in an EEA member state, a license to carry out market-making activities in their home jurisdiction. Such market-making activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers’ trading for their own account. However, such market-making activities do not as such require notification to the Norwegian FSA or the Oslo Stock Exchange except for the general obligation of investment firms that are members of the Oslo Stock Exchange to report all trades in stock exchange listed securities.

16.3 Information, control and surveillance

Under Norwegian law, the Oslo Stock Exchange is required to perform a number of surveillance and control functions. The Surveillance and Corporate Control unit of the Oslo Stock Exchange monitors all market activity on a continuous basis. Market surveillance systems are largely automated, promptly warning department personnel of abnormal market developments.

The Norwegian FSA controls the issuance of securities in both the equity and bond markets in Norway and evaluates whether the issuance documentation contains the required information and whether it would otherwise be unlawful to carry out the issuance.

Under Norwegian law, a company that is listed on a Norwegian regulated market, or has applied for listing on such market, must promptly release any inside information directly concerning the company (i.e. precise information about financial instruments, the issuer thereof or other matters which are likely to have a significant effect on the price of the relevant financial instruments or related financial instruments, and which are not publicly available or commonly known in the market). A company may, however, delay the release of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the confidentiality of the information and that the delayed release would not be likely to mislead the public. The Oslo Stock Exchange may levy fines on companies violating these requirements.


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16.4 The VPS and transfer of shares

The Company’s principal share register is operated through the VPS. The VPS is the Norwegian paperless centralised securities register. It is a computerised book-keeping system in which the ownership of, and all transactions relating to, Norwegian listed shares must be recorded. The VPS and the Oslo Stock Exchange are both wholly-owned by Oslo Børs VPS Holding ASA.

All transactions relating to securities registered with the VPS are made through computerised book entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank (being, Norway’s central bank), authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA are allowed to act as account agents.

As a matter of Norwegian law, the entry of a transaction in the VPS is prima facie evidence in determining the legal rights of parties as against the issuing company or any third party claiming an interest in the given security. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such shares unless such transferee or assignee has registered such shareholding or has reported and shown evidence of such share acquisition, and the acquisition is not prevented by law, the relevant company’s Bye-laws or otherwise.

The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of, rights in respect of registered securities unless the error is caused by matters outside the VPS’ control which the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the VPS may, however, be reduced in the event of contributory negligence by the aggrieved party.

The VPS must provide information to the Norwegian FSA on an ongoing basis, as well as any information that the Norwegian FSA requests. Further, Norwegian tax authorities may require certain information from the VPS regarding any individual’s holdings of securities, including information about dividends and interest payments.

16.5 Shareholder register – Norwegian law

Under Norwegian law, shares are registered in the name of the beneficial owner of the shares. As a general rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to register their shares in VPS through a nominee. However, foreign shareholders may register their shares in the VPS in the name of a nominee (bank or other nominee) approved by the Norwegian FSA. An approved and registered nominee has a duty to provide information on demand about beneficial shareholders to the company and to the Norwegian authorities. In case of registration by nominees, the registration in the VPS must show that the registered owner is a nominee. A registered nominee has the right to receive dividends and other distributions, but cannot vote in general meetings on behalf of the beneficial owners.

16.6 Foreign investment in shares listed in Norway

Foreign investors may trade shares listed on the Oslo Stock Exchange through any broker that is a member of the Oslo Stock Exchange, whether Norwegian or foreign.

16.7 Disclosure obligations

If a person’s, entity’s or consolidated group’s proportion of the total issued shares and/or rights to shares in a company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question has an obligation under the Norwegian Securities Trading Act to notify the Oslo Stock Exchange and the issuer immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a change in the Company’s share capital.

16.8 Insider trading

According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such dispositions, must not be undertaken by anyone who has inside information, as defined in Section 3-2 of the Norwegian Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or futures/forward contracts or equivalent rights whose value is connected to such financial instruments or incitement to such dispositions.


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16.9 Mandatory offer requirement

The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the owner of shares representing more than one-third of the voting rights of a Norwegian company listed on a Norwegian regulated market to, within four weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A mandatory offer obligation may also be triggered where a party acquires the right to become the owner of shares that, together with the party’s own shareholding, represent more than one-third of the voting rights in the company and the Oslo Stock Exchange decides that this is regarded as an effective acquisition of the shares in question.

The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.

When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately notify the Oslo Stock Exchange and the company in question accordingly. The notification is required to state whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place. As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer and the offer document required are subject to approval by the Oslo Stock Exchange before the offer is submitted to the shareholders or made public.

The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the shares in the six-month period prior to the date the threshold was exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer is obliged to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash alternative at least equivalent to any other consideration offered.

In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant threshold within four weeks, the Oslo Stock Exchange may force the acquirer to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however, exercise his/her/its rights to dividends and pre-emption rights in the event of a share capital increase. If the shareholder neglects his/her/its duty to make a mandatory offer, the Oslo Stock Exchange may impose a cumulative daily fine that runs until the circumstance has been rectified.

Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a Norwegian company listed on a Norwegian regulated market is obliged to make an offer to purchase the remaining shares of the company (repeated offer obligation) if the person, entity or consolidated group through acquisition becomes the owner of shares representing 40%, or more of the votes in the company. The same applies correspondingly if the person, entity or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes in the company. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the mandatory offer obligation was triggered.

Any person, entity or consolidated group that has passed any of the above mentioned thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, obliged to make a mandatory offer in the event of a subsequent acquisition of shares in the company.

16.10 Compulsory acquisition

Pursuant to the Norwegian Public Limited Companies Act and the Norwegian Securities Trading Act, a shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total number of issued shares in a Norwegian public limited liability company, as well as 90% or more of the total voting rights, has a right, and each remaining minority shareholder of the company has a right to require such majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the remaining shares with immediate effect.

If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as more than 90% of the total voting rights, through a voluntary offer in accordance with the Securities Trading Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder being obliged


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to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a financial institution authorised to provide such guarantees in Norway.

A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a specific price per share, the determination of which is at the discretion of the majority shareholder. However, where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and the offeror pursuant to Section 4-25 of the Public Limited Companies Act completes a compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of the offer price for the mandatory/voluntary offer unless specific reasons indicate another price.

Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the compulsory acquisition.

Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the minority shareholders would be deemed to have accepted the offered price after the expiry of the specified deadline.

16.11 Foreign exchange controls

There are currently no foreign exchange control restrictions in Norway that would potentially restrict the payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect the right of shareholders of a company that has its shares registered with the VPS who are not residents in Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no maximum transferable amount either to or from Norway, although transferring banks are required to submit reports on foreign currency exchange transactions into and out of Norway into a central data register maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs and excise authorities, the National Insurance Administration and the Norwegian FSA have electronic access to the data in this register.


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17 TAXATION

Set out below is a summary of certain Norwegian tax matters related (i) an exchange of shares in a Norwegian company for shares in another Norwegian company, and (ii) the holding and disposal of shares in a Norwegian limited liability company.

The statements below regarding Norwegian taxation are based on the laws in force in Norway as of the date of this Prospectus, which may be subject to any changes in law occurring after such date. Such changes could possibly be made on a retrospective basis.

The summary does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to take part in the share exchange, purchase, own or dispose of shares in AGR Group or EDS Group. Shareholders who wish to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders resident in jurisdictions other than Norway and shareholders who cease to be resident in Norway for tax purposes (due to domestic tax law or tax treaty) should specifically consult with and rely upon their own tax advisors with respect to the tax position in their country of residence and the tax consequences related to ceasing to be resident in Norway for tax purposes.

Please note that for the purpose of the summary below, a reference to a Norwegian or non-Norwegian shareholder refers to the tax residency rather than the nationality of the shareholder.

17.1 Norwegian taxation related to exchange of shares for shares in another company

17.1.1 General

The exchange of shares in a Norwegian limited liability company against shares in another Norwegian limited liability company is considered a realisation of shares for Norwegian tax purposes.

17.1.2 Taxation of capital gains on realisation of shares

17.1.2.1 Norwegian Personal Shareholders

A capital gain or loss generated by shareholders who are individuals resident in Norway for tax purposes (“Norwegian Personal Shareholders”) through a realisation of shares is taxable or tax deductible in Norway. Such capital gain or loss is included in or deducted from the basis for computation of ordinary income in the year of realisation. Ordinary income is taxable at a rate of 28%. The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number of shares realised.

The taxable gain/deductible loss is calculated per share, as the difference between the consideration for the share and the Norwegian Personal Shareholder’s cost price of the share, including any costs incurred in relation to the acquisition or realisation of the share. From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance, provided that such allowance has not already been used to reduce taxable dividend income. See Section 17.2.1.1 “Norwegian Personal Shareholders” below for a description of the calculation of the allowance. The allowance may only be deducted in order to reduce a taxable gain, and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital gain upon the realisation of a share will be annulled.

If the shareholder owns shares acquired at different points in time, the shares that were acquired first will be regarded as the first to be realised, on a first-in first-out basis.

17.1.2.2 Norwegian Corporate Shareholders

Shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax purposes (“Norwegian Corporate Shareholders”) are exempt from tax on capital gains derived from the realisation of shares qualifying for participation exemption. Losses upon the realisation and costs incurred in connection with the purchase and realisation of such shares are not deductible for tax purposes.

17.1.2.3 Non-Norwegian Personal Shareholders

Gains from disposal of shares by individuals not resident in Norway for tax purposes (“Non-Norwegian Personal Shareholders”) will not be subject to taxation in Norway unless the Non-Norwegian Personal Shareholder holds the shares in connection with business activities carried out or managed from Norway.


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17.1.2.4 Non-Norwegian Corporate Shareholders

Capital gains derived by realisation of shares by shareholders who are limited liability companies (and certain other entities) not resident in Norway for tax purposes (“Non-Norwegian Corporate Shareholders”), are not subject to taxation in Norway.

17.2 Norwegian taxation related to holding shares in Norwegian companies

17.2.1 Taxation of dividends

17.2.1.1 Norwegian Personal Shareholders

Dividends received by Norwegian Personal Shareholders are taxable as ordinary income for such shareholders at a flat rate of 28% to the extent the dividend exceeds a tax-free allowance.

The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by a determined risk-free interest rate based on the effective rate after tax of interest on treasury bills (Nw.: “statskasseveksler”) with three months maturity. The allowance is calculated for each calendar year, and is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar year. Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the share (“excess allowance”) may be carried forward and set off against future dividends received on the same share. Any excess allowance will also be included in the basis for calculating the allowance on the same share the following years.

17.2.1.2 Norwegian Corporate Shareholders

Dividends distributed from Norwegian limited liability companies to Norwegian Corporate Shareholders, are effectively taxed at rate of 0.84% (3% of dividend income from such shares is included in the calculation of ordinary income for Norwegian Corporate Shareholders and ordinary income is subject to tax at a flat rate of 28%).

17.2.1.3 Non-Norwegian Personal Shareholders

Dividends distributed to Non-Norwegian Personal Shareholders are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident. The withholding obligation lies with the company distributing the dividends and both AGR Group and EDS Group assume this obligation.

Non-Norwegian Personal Shareholders resident within the EEA for tax purposes may apply individually to Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each individual share (see above).

If a Non-Norwegian Personal Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Personal Shareholder, as described above.

Non-Norwegian Personal Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.

17.2.1.4 Non-Norwegian Corporate Shareholders

Dividends distributed to Non-Norwegian Corporate Shareholders are as a general rule subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which the shareholder is resident.

Dividends distributed to Non-Norwegian Corporate Shareholders resident within the EEA for tax purposes are exempt from Norwegian withholding tax provided that the shareholder is the beneficial owner of the shares and that the shareholder is genuinely established and performs genuine economic business activities within the relevant EEA jurisdiction.

If a Non-Norwegian Corporate Shareholder is carrying on business activities in Norway and the shares are effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a Norwegian Corporate Shareholder, as described above.


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Non-Norwegian Corporate Shareholders who have suffered a higher withholding tax than set out in an applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.

Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial owners that are subject to withholding tax at a reduced rate.

The withholding obligation in respect of dividends distributed to Non-Norwegian Corporate Shareholders and on nominee registered shares lies with the company distributing the dividends and both AGR Group and EDS Group assume this obligation.

17.2.2 Taxation of capital gains on realisation of shares

17.2.2.1 Norwegian Shareholders

Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes and will be subject to the same tax taxation of capital gains as described above, cf. Section 17.1.2.1 “Norwegian Personal Shareholders” and 17.1.2.2 “Norwegian Corporate Shareholders”.

17.2.2.2 Non-Norwegian Shareholders

Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes and will be subject to the same tax taxation of capital gains as described above, cf. Section 17.1.2.3 “Non-Norwegian Personal Shareholders” and 17.1.2.4 “Non-Norwegian Corporate Shareholders”.

17.2.3 Net wealth tax

17.2.3.1 Norwegian Shareholders

The value of shares is included in the basis for the computation of wealth tax imposed on Norwegian Personal Shareholders. Currently, the marginal wealth tax rate is 1.1% of the value assessed. The value for assessment purposes for shares listed on the Oslo Stock Exchange is equal to the listed value as of 1 January in the year of assessment (i.e. the year following the relevant fiscal year).

Norwegian Corporate Shareholders are not subject to net wealth tax.

17.2.3.2 Non-Norwegian Shareholders

Shareholders not resident in Norway for tax purposes are not subject to Norwegian net wealth tax. Non-Norwegian Personal Shareholders can, however, be taxable if the shareholding is effectively connected to the conduct of trade or business in Norway.

17.2.4 Inheritance Tax

When shares are transferred by way of inheritance or gift, such transfer may give rise to inheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time of the gift, is a resident or citizen of Norway, or if the shares are effectively connected with a business carried out through a permanent establishment in Norway. However, in the case of inheritance tax, if the decedent was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if inheritance tax or a similar tax is levied by the decedent’s country of residence. Irrespectively of residence or citizenship, Norwegian inheritance tax may be levied if the shares are held in connection with the conduct of a trade or business in Norway.

Inheritance tax will be applicable to gifts if the donor is a citizen of Norway at the time the gift was given. However, for taxes paid in the donor’s country of residence a credit will be given in the Norwegian gift taxes.

The basis for the computation of inheritance tax is the market value at the time the transfer takes place. The rate is progressive from 0 to 15%. For inheritance and gifts from parents to children, the maximum rate is 10%.

17.2.5 Duties on transfer of shares

No VAT, stamp or similar duties are currently imposed in Norway on the transfer of shares in Norwegian companies.


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18 DESCRIPTION OF EDS GROUP AS5

18.1 Introduction and overview of EDS Group’s business areas

EDS Group is a supplier of a number of technologies and services to the offshore industry. The EDS Group comprises three businesses – Enhanced Drilling, plus Seabed Intervention and CannSeal, both of which come under the banner of Tools & Technologies.

• Enhanced Drilling provides innovative offshore drilling technology and services that include the RMR, Dual Gradient Drilling system, the EC-Drill Managed Pressure Drilling system, MPC (Managed Pressure Cementing) and CTS. EDS Group’s customer base includes several major operators as well as a number of NOCs and medium-sized firms independent operators.

Enhanced Drilling’s head office is in Straume (Bergen), Norway, plus there is also an office in Oslo following a merger with the former Ocean Riser Systems in 2012. Regional offices globally include Houston in the U.S., Perth in Australia and Baku in Azerbaijan. There are also facilities in St John's in Canada, Mossoro/Rio in Brazil and Houston in the U.S, currently being under construction. The company has approximately 220 employees worldwide.

• Seabed Intervention provides design, manufacture and operation of subsea excavation and trenching systems. Seabed Intervention's technology includes a range of hydrodynamic and suction-dredging solutions that can be used individually or together in order to deliver low-cost, low-risk seabed intervention. Solutions include the SeaVator, E-Vator and ClayCutter X systems, as well as high-pressure pumping systems. The company is based in Aberdeen, UK.

• CannSeal manufactures an epoxy-based annular zonal isolation technology. The CannSeal service allows a designer epoxy to be deployed downhole to provide a durable annular seal. The sealant can be deployed both in an open annulus or gravel/proppant pack. The treatment effectively seals off unwanted fluid x-flow behind liners, tubing and screens by placing a solid external annulus packer. The company is based in Røyneberg, Norway.

Following the Demerger, as described in Section 6 “The Demerger”, EDS Group will continue to provide technology, services and solutions to the marketplace as set out below, see Section 18.2 “Enhanced Drilling Services” and 18.3 “Tools & Technologies”. EDS Group's technology, services and solutions are offered to a broad range of clients and are managed, offered and followed up by the following:

18.2 Enhanced Drilling Services

Enhanced Drilling’s cornerstone technologies include the EC-Drill Managed Pressure Drilling system, the RMR (Dual Gradient Drilling technology), the CTS and MPC (Managed Pressure Cementing). In late 2011, RMR and CTS was deployed on a total of 500 wells.

All the technologies for the RMR and CTS were developed in-house by Enhanced Drilling, which owns all associated property rights.

The RMR encompasses a subsea pump enabling a closed-loop circulation system. The system improves drilling operations by reducing the risk and cost of drilling top-hole sections; it also replaces pump-and-dump technique and ensures zero discharge to the environment.

In 2011, further conceptual studies were undertaken to utilize the RMR system in Managed Pressure Drilling applications, where conventional drilling practices are not sufficient to reach the reservoir. During drilling with a riser or conductor pipe, the EC-Drill system can manage the bottom hole pressure of a well in challenging zones. Here, EC-Drill will ease, and in some cases enable, the drilling of the well.

5 This Section 18 “Description of EDS Group AS”, together with Section 5 “The Exchange Offer”, presents the information required under Section 7-4 of the Regulations to the Securities Trading Act, and for this purpose, the Prospectus has also been registered with the Norwegian Register of Business Enterprises in accordance with Sections 7-10 cf. 7-2 of the Norwegian Securities Trading Act, and for this purpose, the Prospectus has neither been reviewed nor approved, by neither the Norwegian FSA nor any other governmental authorities of Norway.


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Controlled Mud Pressure (CMP), a technology for Dual Gradient Drilling and also to manage ECD (Equivalent Circulating Density) effects including well control, is at the date of this Prospectus in development.

These enabling technologies are based on patents, licenses and core technology, plus know-how as a result of the proven RMR technology. They also represent next-generation systems in addition to the RMR.

18.2.1 The CTS

The CTS system is based on proven technology used in the offshore market for over approximately 17 years. The system is of modular design allowing ease of installation on most rig types. The system was developed to transport cuttings away from the well area during top-hole drilling on semi-submersible rigs and during clean-up operations on the seabed. The system has evolved to complement our RMR operations and requires limited deck space for installation. The CTS system is capable of running for long periods of time without maintenance and is able to pump large particles without blockages to the system.

The pump is designed to run underwater with discharge over two kilometres away from the actual pump. Appropriate hoses are fitted, dependant on location and the disposal area is configured. Once operations commence, the velocity in the hoses is kept at a speed which prevents any settling of slurry or cuttings in the hose. Benefits of using this technology are cost savings to the operator by removing the necessity for a supply vessel, plus the equipment can be used in environmentally sensitive areas as there is little or no footprint on the seabed.

18.2.2 The RMR

RMR seeks to offer improved top-hole drilling thanks to the ability to use engineered fluids as there is zero-discharge. RMR has completed more than 200 successful drilling operations. The EDS Group believes that the RMR technology provides a reputable and highly commercial solution for drilling top holes offshore, especially under difficult seabed conditions as well as in general. RMR provides a number of benefits, including:

• Complex drilling: Existence of gas, high pressure, etc. creates risky and unstable drilling conditions where use of mud is absolutely necessary to prevent holes from collapsing, blow-outs, etc. RMR provides control and stability when drilling the top hole section as opposed to pump-and-dump.

• To identify geologies with shallow gas (problematic areas) a small hole (pilot hole) is typically drilled. Due to drilling with weighted mud, pilot hole may be avoided by using the RMR.

• Zero discharge: the RMR enables collection of cuttings at seabed and recycling of mud and thereby reduced discharge to sea.

• Deeper top-hole – Extended casing depth.

RMR is a Dual Gradient Drilling technology. Top-hole sections (pre-BOP) can be drilled without “walking the pore pressure line” and thereby inviting an influx of gas or water. A gauged hole can be drilled and planned TD can be reached and, in some cases, a top-hole liner can be saved. This in turn enables a better cement job and isolation of pressure zones as well as a more stable foundation for the well. Being able to reach planned TD is a prerequisite for saving casings and liners post-BOP.

RMR seeks to improve safety by introducing a mud barrier with a “closed-loop” circulation system and advanced kick/loss detection system.

Drilling without a riser may prove an efficient way to create the top-hole when seabed conditions complicate this initial phase of exploration drilling. In addition, the system may allow the operator to take used fluid and cuttings back to the rig via the zero-discharge closed-loop system, which may enable engineered fluids to be used and volume control to be implemented on the top-holes, impacting well construction. The drilling fluid savings may be substantial when using RMR. The figures below show how the RMR works:


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The company experiences positive client feedback on the technology and it continues to be utilised by major petroleum companies including Shell, BP and Statoil.

18.2.3 EC- Drill Managed Pressure drilling technology

EC-Drill is a technology that seeks to enable operators to succeed with drilling the more complex wells. It falls within the Dual Gradient segment of the MPD market and can be used off floaters, jack-ups and semi-submersibles. It seeks to solve a challenge commonly found in many deepwater wells – drilling in a narrow pressure window. The EC-Drill technology is also suited for drilling in low pressure environment/depleted fields where conventional MPD techniques where back-pressure cannot be used. With traditional drilling techniques, the slightest excess or lack of wellbore pressure can mean the difference between success or failure: too much pressure and the formation will fracture, leading to losses; not enough will lead to hole instability and increases the chance of influx.

EC-Drill seeks to offer higher degree of control in such a scenario, enhancing safety and enabling operators to cost effectively negotiate the Narrow Pressure Window and hit deep targets that are simply impractical to reach via traditional techniques. The system also addresses Equivalent Circulating Density (ECD) effects arising from fluid frictional losses in the wellbore. ECD effects cause undesirable variations in bottom hole pressure during drilling. The EC-Drill Managed Pressure Drilling system seeks to solve these problems. EC-Drill is also used to manage pressure during cementing. During 2012, three deepwater wells were drilled in eastern Gulf of Mexico in water depths between 1,800-2,200 meters. Clients were three major operators, with operations taking place in the Gulf of Mexico. In August 2012, it was announced that Enhanced Drilling had entered into an agreement with Statoil to develop a new generation of MPD solution for floating rigs. In July 2013, it was further announced that Enhanced Drilling had entered into a second agreement, superseding the first agreement, to further develop the new generation MPD system for floating rigs together with Statoil.

18.2.4 MPC (Managed Pressure Cementing)

MPC enables operators to cement surface casings against problematic formations in terms of narrow pressure window and shallow water/gas.

Enhanced Drilling’s Managed Pressure Cementing (MPC) is management of wellbore pressure, in such a way that unwanted fluid exchanges between the wellbore and casing annulus are avoided during circulation of cement slurry and its setting time.

With MPC, precise control over the pressure and return flow is possible to keep the wellbore pressure profile inside the drilling pressure window. This technique has proven effective in controlling pressure and flow while placing cement against problematic formations in terms of tight drilling pressure windows and the presence of high-pressure fluids. The technique has also proved promising in addressing early shallow gas/water flow after placement of cement in subsea wells as well.


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The pressure at the wellhead is manipulated by a subsea pump in accordance with a predetermined pressure schedule so that the pressure at the critical zone remains constant. This assures safe wellbore pressure, mitigating risks of kicks and losses to a great extent.

Should any loss of cement slurry to the formation or any flow of fluid from the formation occur, it would be detected immediately by the changes seen in the speed of pump and cured by the proper adjustments on the pump speed.

MPC has been applied to 16 wells during top-hole cementing. The technique has been extended to post-BOP in combination with EC-Drill.

18.3 Tools & Technologies

Tools & Technologies has two business areas that provide equipment, tools and services, each performing task oriented offshore and onshore operations.

18.3.1 Seabed Intervention

The Seabed Intervention product line (previously called Trenching & Excavation) undertakes seabed excavation and trenching to prepare for subsea pipelines and –structures, as well as burial/deburial of such structures. Seabed Intervention experienced an unprecedented activity level during 2011 while activity levels have been low thereafter. The main contributor in 2011 was the seabed levelling and pre-laying trenching of the Ormen Lange field for Shell. Seabed Intervention has throughout 2012 and 2013 maintained market presence and positioning, by completing smaller projects, while actively pursuing larger scale RFQ’s for tentative award in late 2013 and execution in 2014.

18.3.2 CannSeal

CannSeal is a tool for sealing off water and gas inflow in oil wells. Using a specialized resin, the technology creates a barrier in the annulus in completion wells to optimize production flow. The tool was qualified for zonal isolation in 2010. During 2011, further development of both the resin and tool took place to accommodate clients’ expressed needs. A commercial agreement was signed with a key client to develop a 3.3 version of the tool, thereby extending the pre-operational phase until 2012. CannSeal has supplemented the client portfolio, with a similar structured commercial agreement with one additional global major in 2012. EDS Group’s aim is to apply the CannSeal technology in commercial field operations with indentified client projects.

18.4 Selected Financial Information and other information of EDS Group

18.4.1 General

EDS Group was incorporated on 17 April 2013 and registered with the Norwegian Register of Business Enterprises by registration of consummation of the Demerger of AGR, and does not have any historical financial information available at the date of this Prospectus.

The financial information presented below are based on (i) the unaudited draft demerger balance sheet for EDS Group as of 31 March 2013, as presented in the Demerger Plan and (ii) the statement of financial income of the discontinued operations of Drilling Services (including CannSeal AS and AGR Marine Engineering AS which are being presented as part of the discontinued operations) for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012 which was transferred to EDS Group upon completion of the Demerger on 6 August 2013.

18.4.2 Draft demerger balance sheet for EDS Group

The table below sets out the unaudited draft demerger balance sheet for EDS Group as of 31 March 2013, as presented in the Demerger Plan.

As of 31 March

In NOK 2013

(unaudited)

Fixed assets Deferred tax assets ............................................................................................................................................. - Investments in subsidiaries .................................................................................................................................. 402,883,811 Loan to group companies ..................................................................................................................................... 80,857,271

Other fixed assets ............................................................................................................................................... 18,020,915

Total fixed assets ............................................................................................................................................. 501,761,997


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As of 31 March

In NOK 2013

(unaudited)

Current assets

Group receivables ............................................................................................................................................... 10,122,147

Total current assets ......................................................................................................................................... 10,122,147

Equity

Share capital ...................................................................................................................................................... 109,254,106

Total paid-in equity.......................................................................................................................................... 109,254,106

Other equity....................................................................................................................................................... 365,634,376

Total other equity ............................................................................................................................................ 365,634,376

Total equity ..................................................................................................................................................... 474,888,482

Long-term liabilities

Loan to group companies ..................................................................................................................................... 35,500,000

Total long-term liabilities ................................................................................................................................ 35,500,000

Short-term liabilities

Group payables .................................................................................................................................................. 1,495,663

Total short-term liabilities ............................................................................................................................... 1,495,663

Total liabilities ................................................................................................................................................. 36,995,662

Total equity and liabilities................................................................................................................................ 511,884,144

18.4.3 Statement of income for the discontinued operations of Drilling Services

The table below sets out the statement of financial income of the discontinued operations of Drilling Services (including CannSeal AS and AGR Marine Engineering AS which are being presented as part of the discontinued operations) for the three-month periods ended 31 March 2013 and 2012 and for the year ended 31 December 2012, and which was transferred to EDS Group upon completion of the Demerger on 6 August 2013. For further details, see Section 6 “The Demerger”.

Income statement




(unaudited) 2012

(unaudited) 2012

(unaudited)

Operating revenue, external ............................................................. ................... 96,887 103,252 490,469 Operating revenue, internal ............................................................. ................... 875 (25) 2,764

Operating expenses before depreciation ............................................ ................... (82,543) (97,903) (446,661)

EBITDA ............................................................................................................ 15,219 5,324 46,572 Depreciation and amortisation .............................................................................. (19,655) (20,176) (79,042)

Write downs and provisions.................................................................................. - - -

EBIT ................................................................................................................. (4,436) (14,852) (32,470)

Net financial items .............................................................................................. (3,219) (13,818) (39,515)

Profit (loss) before taxes ................................................................................. (7,655) (28,670) (71,985)

Taxes ................................................................................................................ 2,450 9,053 (104,146)

Profit after taxes ............................................................................................. (5,205) (19,617) (176,130)

Profit after tax from discontinued operations .......................................................... 16,814 379 (3,683)

Profit (loss) for the year .................................................................................. 11,608 (19,238) (179,813)


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18.5 Corporate information, description of share capital and board of directors of EDS Group AS

18.5.1 Corporate information of EDS Group

The company’s registered name is EDS Group AS. The company is a private limited liability company organised and existing under the laws of Norway pursuant to the Norwegian Private Limited Liability Companies Act. EDS Group’s registered office is in the municipality of Fjell, Norway.

EDS Group AS was incorporated in Norway on 17 April 2013 and registered with the Norwegian Register of Business Enterprises by registration of the completion of the Demerger on 6 August 2013. EDS Group AS’ organisation number in the Norwegian Register of Business Enterprises is 912 274 896. The EDS Shares have been created under the Norwegian Private Limited Liability Companies Act, each with a nominal value of NOK 0.88, and the shares are registered in book-entry form with VPS under ISIN NO 001 0685464. The EDS Group’s register of shareholders in VPS is administrated by DNB Bank ASA, Registrars Department, 0021 Oslo, Norway. EDS Group AS’ registered office is located at Smålonane 16, 5353, Straume, P.O. Box 163, 5342 Straume, Norway, and the company’s main telephone number at that address is +47 561 54 000. EDS Group AS’ website can be found at www.enhanced-drilling.com. Neither the content of www.enhanced-drilling.com nor of the EDS Group AS’ other websites is incorporated by reference into or otherwise forms part of this Prospectus. However, see www.enhanced-drilling.com for further information about EDS Group’s businesses.

18.5.2 Legal structure

EDS Group AS is the holding company of the Drilling Services business, holding 93.1% of AGR EDS and T&T Holdings AS. In addition, DrillCo Invest AS holds 6.9% of AGR EDS and T&T Holdings AS.

The table below sets out EDS Group’s subsidiaries, all of which are owned 100% unless otherwise stated:

18.5.3 Share capital and share capital history

The share capital of EDS Group is NOK 109,254,105.84, divided into 124,152,393 shares, each with a nominal value of NOK 0.88. As of the date of this Prospectus, the board of directors of EDS Group AS has neither been granted authorisation to increase the share capital nor to acquire treasury shares.

18.5.4 Articles of Association of EDS Group AS

Below is a summary of provisions of EDS Group’s articles of association.

EDS Group AS

AGR EDS and T&T Holdings AS

(93.1%)

AGR Drilling Services Holdings AS

(82.5%)

AGR Drilling Services Pty Ltd

AGR Drilling Services do Brasil

LTDA (99%)

AGR Subsea AS

AGR Subsea Inc

Ocean Riser Systems AS

AGR Subsea Ltd

AGR Set Ltd

AGR SeabedIntervention Ltd

AGR CannSeal AS(95%)

Baku (branch)

AGR Drilling Services Canada

Inc

AGR Marine Engineering AS

http://www.enhanced-drilling.com/


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Objective of the company

The objective of the company is to operate its business within trade, industry and property investments and in businesses in connection with this, including participation in other companies operating within similar businesses and investments in real estate, securities and other assets.

Registered office

The company’s registered office is in the municipality of Fjell, Norway. The company may hold the general meetings in Oslo and Bergen municipality.

Share capital and nominal value

The company’s share capital is NOK 109,254,105.84 divided into 124,152,393 shares, each share with a nominal value of NOK 0.88. The shares shall be registered with a register of securities.

Board of directors

The company’s board of directors shall consist of a minimum of three and a maximum of nine members.

Restrictions on transfer of shares

The articles of association do not provide for any restrictions on the transfer of shares, or a right of first refusal for the company. Share transfers are not subject to approval by the board of directors.

General meetings

Documents relating to matters to be dealt with by the company’s general meeting, including documents which by law shall be included in or attached to the notice of the general meeting, do not need to be sent to the shareholders if such documents have been made available on the company’s website. A shareholder may, however, request for such documents to be sent.

Except as set out in the articles of association above, the rights attached to the shares of EDS Shares, and procedure for the exercise of those rights, are in accordance with the provisions set out in the Norwegian Private Limited Liability Companies Act.

18.5.5 Board of directors and management

18.5.5.1 Board of directors

EDS Group’s current board of directors consist of seven board members, as listed in the table below.

Name Position

Eivind Kristofer Reiten .................................................................................... Chairman Hugo Lund Maurstad ...................................................................................... Board member Tove Magnussen ............................................................................................ Board member Thomas Nils Robert Nilsson ............................................................................. Board member Reynir Kjær Indahl ......................................................................................... Board member Maria Tallaksen ............................................................................................. Board member Celeste Annette Mackie .................................................................................. Board member For the CV’s of the members of the board of directors in EDS Group, please see Section 13.1 “Board of Directors”.

EDS Group’s registered business address, Smålonane 16, 5353 Straume, P.O. Box 163, 5342 Straume, Norway, serves as the c/o address for the members of the board of directors of EDS Group in relation to their directorship of the company.


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18.5.5.2 Management

The current management is comprised of 11 individuals. The names of the members of EDS Group’s management as of the date of this Prospectus, and their respective positions, are presented in the table below:

Name Current position within the Group

David Hine ................................................................................................. CEO Andrès Escalante ........................................................................................ Sales and marketing Harald Fiksdal ............................................................................................ Global operations Kai Andrè Stæger Holst ............................................................................... Finance and business services Kristin Falk ................................................................................................ Product development, engineering and training Helge Mortensen ......................................................................................... HSE & Q Monica Hansen ........................................................................................... Human Resources Terry Scanlon ............................................................................................. Regional Manager, Americas Christopher French ..................................................................................... Regional Manager, Asia Pacific Ruud Van de Meer ...................................................................................... Regional Manager, Africa, Commonwealth of

Independent States Lasse Nergaard .......................................................................................... CEO, AGR EDS and T&T Holdings AS EDS Group’s registered business address, Smålonane 16, 5353 Straume, P.O. Box 163, 5342 Straume, Norway, serves as the c/o address for the members of management in relation to their employment with the company.


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19 ADDITIONAL INFORAMTION

19.1 Auditor and advisors

The Company’s auditor is EY with company registration no. 976 389 387, and business address Dronning Eufemias gate 6, 0191 Oslo, Norway. The audit partners of EY are members of the Norwegian Institute of Public Accountants (DnR).

Advokatfirmaet Thommessen AS with company registration no. 957 423 248, and business address Haakon VII’s gate 10, P.O. Box 1448 Vika, N-0116 Oslo, is acting as Norwegian counsel to the Company.

19.2 Documents on display

Copies of the following documents will be available for inspection at the Company’s offices at Karenslys Allé 4, 0278 Oslo, during normal business hours from Monday to Friday each week (except public holidays) for a period of twelve months from the date of this Prospectus:

• The Company’s Certificate of Incorporation and Articles of Association.

• All reports, letters, and other documents, historical financial information, valuations and statements prepared by any expert at the issuer's request any part of which is included or referred to in the registration document.

• The historical financial information of the Group for each of the three financial years preceding the publication of this Prospectus, and for its subsidiary undertakings for each of the two financial years preceding the publication of this Prospectus.

• This Prospectus.

19.3 Incorporation by reference

The information incorporated by reference in this Prospectus shall be read in connection with the cross-reference list set out in the table below. Except as provided in this Section, no information is incorporated by reference in this Prospectus.

The Company incorporates by reference the Group’s audited consolidated financial statements as of and for the years ended 31 December 2012, 2011 and 2010, the Company’s unaudited condensed consolidated financial information as of and for the three-month period ended 31 March 2013 (with comparable figures for the corresponding period of 2012), and the adjusted financial statements as of and for the years ended 31 December 2012 and 2011 and as of and for the three-month period ended 31 March 2013 (with comparable figures for the corresponding period of 2012) of Petroleum Services Holdings AS.

Section in the Prospectus

Disclosure requirements of the Prospectus

Reference document and link Page (P) in reference document6

Sections 10, 11, 12

Audited historical financial information (Annex I, Section 20.1)

The Group’s consolidated Financial Statements 2012: http://www.agr.com/annual%20reports/AGR%20Annual%20Report%202012.pdf

P 27 - P 33

The Group’s consolidated Financial Statements 2011: http://www.agr.com/annual%20reports/AGR_AnnualReport_2011.pdf

P 28 – P 33

The Group’s consolidated Financial Statements 2010: http://www.agr.com/annual%20reports/agr%20group%202010.pdf

P 24 – P 29

Section 11 Audit report (Annex I, Section 20.4.1)

Auditor’s Report 2012 for the Group: http://www.agr.com/annual%20reports/AGR%20Annual%20Report%202012.pdf

P 105 – P 106

Auditor’s Report 2011 for the Group: http://www.agr.com/annual%20reports/AGR_AnnualReport_2011.pdf

P 104 – P 105

Auditor’s Report 2010 for the Group: http://www.agr.com/annual%20reports/agr%20group%202010.pdf

P 82

Section 11 Accounting policies

The Group’s Accounting Principles: http://www.agr.com/annual%20reports/AGR%20Annual%20Report%202012.pdf

P 34 – P 43

(Annex I, Section 20.1)

Sections 10, 11, 12

Interim financial

The Group’s unaudited consolidated first quarter Interim Report: http://www.agr.com/financial%20reports%20other/quarterly%20reports/2013/A

P 3 – P 15

6 The original page number as stated in the reference document.


109

information (Annex I, Section 20.6.1)

GR%20Group%20Q1%202013.pdf

The Petroleum Services Holdings AS’ adjusted Financial Statement 2012: http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/AGR-PS_Annual_Report.pdf

P 1 – P 52, P 71 – P 72

The Petroleum Services Holdings AS’ adjusted first quarter Interim Report: http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/PS%20Group%20Q1%202013v1.pdf

P 4 – P 12

Section 12.5 Funding policies (Annex I, Section 10.1)

The Group’s consolidated Financial Statements 2012: http://www.agr.com/annual%20reports/AGR%20Annual%20Report%202012.pdf

p 43 – P 46

http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/AGR-PS_Annual_Report.pdf

http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/AGR-PS_Annual_Report.pdf

http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/PS%20Group%20Q1%202013v1.pdf

http://www.agr.com/financial%20reports%20other/quarterly%20reports/ps/PS%20Group%20Q1%202013v1.pdf


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20 DEFINITONS AND GLOSSARY

In the Prospectus, the following defined terms have the following meanings:

2010 PD Amending Directive .......... Directive 2010/73/EU amending the EU Prospectus Directive.

AGR ............................................ The Company taken together with its consolidated subsidiaries.

AGR Energy ................................. AGR Energy AS.

AGR Exchange Offer ...................... Offer to AGR Shareholders to apply for an exchange of its AGR Shares into EDS Shares.

AGR Exchange Offer Acceptance Form ...........................................

Application form in order for an AGR Shareholder to apply for an exchange of its AGR Shares into EDS Shares under the AGR Exchange Offer, attached as Appendix C of this Prospectus.

AGR Group ................................... AGR Group ASA.

AGR Shareholders ......................... Shareholders in the Company.

AGR Shares ................................. Shares in the Company.

Altor ........................................... Altor Oil Service Invest AS.

Antrim ......................................... Antrim Energy Inc.

Application Period ......................... 12 August 2013 – 26 August 2013.

AUD or Australian Dollar ................ The lawful currency of Australia.

Awilco ......................................... Awilco Drilling plc.

Articles of Association.................... The Company’s Articles of Association, attached as Appendix A of this Prospectus.

Board Member(s) .......................... Member(s) of the Board of Directors.

Board of Directors or the Board ...... The Board of Directors of the Company.

Bonds.......................................... The Bonds issued by AGR Petroleum Services Holdings AS on 5 February 2013.

CET ............................................. Central European Time.

Company ..................................... AGR Group ASA.

Corporate Governance Code ........... The Norwegian Code of Practice for Corporate Governance dated 2010, as amended.

CTS ............................................ Cutting Transportation System.

Demerger .................................... The demerger of the Company completed on 6 August 2013.

Demerger Plan The demerger plan signed by the Company on 17 April 2013 for the Demerger.

EDS Exchange Offer ...................... Offer to EDS Shareholders to apply for an exchange of up to all of its EDS Shares into shares in the Company.

EDS Exchange Offer Acceptance Form ...........................................

Application form in order for an EDS Shareholder to apply for an exchange of EDS Shares into AGR Shares under the EDS Exchange Offer, attached as Appendix B of this Prospectus.

EDS Group ................................... EDS Group AS.

EDS Shareholders ......................... Shareholders in EDS Group.

EDS Shares .................................. Shares in EDS Group.

EEA ............................................. The European Economic Area.

E&P ............................................. Exploration and Production.

EU .............................................. The European Union.

EUR ............................................ The lawful currency of the participating member states in the European Union.

EU Prospectus Directive ................. Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003, and amendments thereto, including the 2010 PD Amending Directive to the extent implemented in the Relevant Member State.

Exchange Offer ............................. AGR Exchange Offer and EDS Exchange Offer together.

EY ............................................... Ernst & Young AS.

Financial Information .................... The Financial Statements and the Interim Financial Information together.

Financial Statements ..................... The audited consolidated annual financial statements for the Group as of and for the years ended 31 December 2012, 2011 and 2010.

General Meeting ........................... The general meeting of the shareholders in the Company.

GBP ............................................ The lawful currency of United Kingdom.

Group.......................................... The Company taken together with its consolidated subsidiaries.

IAS ............................................. International Accounting Standard.

IFRS ........................................... International Financial Reporting Standards as adopted by the EU.

Interim Financial Information ......... The unaudited interim financial information for the Group as of and for the three-month periods


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ended 31 March 2013 and 2012.

Management ................................ The senior management team of the Company.

Member States ............................. The participating member states of the European Union.

NCS ............................................ The Norwegian Continental Shelf.

NOCs .......................................... National Oil Companies.

NOK ............................................ The lawful currency of Norway.

Non-Norwegian Corporate Shareholders ................................

Shareholders who are limited liability companies and certain similar corporate entities not resident in Norway for tax purposes.

Non- Norwegian Personal Shareholders ................................

Shareholders who are individuals not resident in Norway for tax purposes.

Norwegian Corporate Shareholders . Shareholders who are limited liability companies and certain similar corporate entities resident in Norway for tax purposes.

Norwegian FSA ............................. The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet).

Norwegian Personal Shareholder..... Shareholders who are individuals resident in Norway for tax purposes.

Norwegian Public Limited Companies Act .............................

Norwegian Public Limited Liability Companies Act of 13 June 1997 No 45, as amended.

Norwegian Securities Trading Act .... The Norwegian Securities Trading Act of 28 June 2007, no. 75 (Nw.: verdipapirhandelloven).

Order .......................................... The Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended.

Oslo Stock Exchange ..................... Oslo Børs ASA, or, as the context may require, Oslo Børs, a Norwegian regulated stock exchange operated by Oslo Børs ASA.

Prospectus ................................... This Prospectus dated 9 August 2013.

PwC ............................................ Pricewaterhousecoopers AS.

RCF ............................................. The Revolving Credit Facility made available by DNB BANK ASA to AGR Petroleum Services Holdings AS pursuant to a senior facility agreement dated 27 February 2013.

Record Date ................................. 9 August 2013

Regulation S ................................ Regulation S under the U.S. Securities Act.

Relevant Member State ................. Each Member State of the European Economic Area which has implemented the EU Prospectus Directive.

Relevant Persons ......................... Persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Order or (ii) high net worth entities, and other persons to whom the Prospectus may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order.

RMR ............................................ Riserless Mud Recovery System.

Settlement Agent Arctic Securities ASA.

Share(s) ...................................... The shares of the Company, each with a nominal value of NOK 1.12.

U.S. or United States .................... The United States of America.

U.S. Securities Act ........................ The U.S. Securities Act of 1933, as amended.

USD or U.S. Dollar ........................ The lawful currency of the United States.

VPS or Verdipapirsentralen ............ The Norwegian Central Securities Depository (Nw.: Verdipapirsentralen).

VPS account ................................. An account with VPS for the registration of holdings of securities.

APPENDIX A:

ARTICLES OF ASSOCIATION

Articles of Association

for

AGR Group ASA

(As of 24 May 2013)

Section 1 – Company name

The company’s name is AGR Group ASA. The company is a public limited liability company.

Section 2 – Registered office

The company’s registered office is in Oslo municipality.

Section 3 – Company’s business

The company’s objective is to operate its business within trade, industry and property investments and in businesses in connection with this, including participation in other companies operating within similar businesses and investments in real estate, securities and other assets.

Section 4 – Share capital

The company’s share capital is NOK 139,050,680.16, divided into 124,152,393 shares, each with a par value of NOK 1.12.

Section 5 – Board of Directors

The company’s Board of Directors shall consist of 3 to 9 members, as decided upon by the General Meeting. The Chairman of the Board of Directors is elected by the General Meeting.

Section 6 – Nomination Committee

The company shall have a Nomination Committee consisting of 3 members. The members of the committee are elected by the General Meeting, which also elects the Chairman of the committee. The Nomination Committee shall submit recommendation to the General Meeting regarding election of members of the Board of Directors, and shall also propose the remuneration to the members of the Board of Directors. The General Meeting may adopt instructions for the Nomination Committee’s work.

Section 7 – Signature

The Chairman of the Board of Directors alone or two Board members jointly may sign for and on behalf of the company.

Section 8 – General Meeting

In the Annual General Meeting, the following issues shall be discussed and resolved:

• Approval of the Annual Accounts and the Annual Report, including distribution of dividend. • Other issues which according to law or the Articles of Association falls under the responsibility of the General

Meeting.

Documents regarding matters to be discussed on the General Meeting, including documents which pursuant to law must be included with the notice of the General Meeting, are not required to be sent the shareholders if these documents are available on the company’s website. A shareholder may, however, request for such documents to be sent.

Section 9 – Consent to transfer

Transfer of shares does not require consent by the company, and the shareholders do not have the right of first refusal.

APPENDIX B:

EDS Exchange Offer Acceptance Form

Appendix B – EDS Exchange Offer Acceptance Form

For use in accepting the EDS Exchange Offer whereby EDS Shareholders may apply for an exchange of up to all of its EDS Shares into AGR

Shares on the terms set forth in the Prospectus dated 9 August 2013 to which this form is attached. Capitalized terms used in this EDS Exchange

Offer Acceptance Form shall have the same meaning as set forth in the Prospectus. The terms for the EDS Exchange Offer is set forth in the

Prospectus, see in particular Section 5 “The Exchange Offer”.

Exchange Ratio: 44/56 (equal to the exchange ratio in the Demerger)

Acceptance period: 12 August 2013 – 26 August 2013 at 16:30 (CET)

Shareholder: RETURN TO:

Arctic Securities ASA

Haakon VII’s gt 5

P.O. Box 1833 Vika 0123 Oslo

Norway Tel: (+47) 21 01 30 40

Fax: (+47) 21 01 31 36

E-mail: [email protected]

The shareholders’ registry of EDS Group AS as of the date of the Prospectus shows:

VPS-account: Bank account number for cash payment:

No. of EDS Shares: Rights holders registered:

ACCEPTANCE DEADLINE:

THIS ACCEPTANCE FORM MUST BE RECEIVED BY ARCTIC SECURITIES ASA (THE SETTLEMENT AGENT) BY 16:30 (CET) ON 26 AUGUST 2013.

THE SETTLEMENT AGENT RESERVES THE RIGHT TO REJECT ANY OR ALL INCORRECT OR ILLEGALLY UNDERTAKEN ACCEPTANCES.

Acceptance Guidance:

1. EDS Shareholders who’s EDS Shares are held in several VPS-accounts will receive one EDS Exchange Offer Acceptance Form for each such VPS account, and must also submit a separate EDS Exchange Offer Acceptance Form for each VPS account.

2. This acceptance includes all the EDS Shares stipulated in the box "No of EDS Shares" above as well as any EDS Shares which have been or will be acquired and which will be registered in the VPS on the above stated account prior to the settlement of the EDS Exchange Offer,

unless otherwise indicated below.

3. I/We accept that I/we may not sell, otherwise dispose, encumber or transfer to another VPS account, the EDS Shares tendered hereunder. The Settlement Agent is irrevocably authorised to block the EDS Shares tendered hereunder on the above-mentioned VPS account in favour of

the Settlement Agent.

4. The Settlement Agent is given irrevocable authorisation to block EDS Shares tendered for under the EDS Exchange Offer, and to exchange

the EDS Shares tendered hereunder against AGR Shares according to the Exchange Ratio.

5. I/We accept that settlement in the form of AGR Shares will be made by way of transfer to the VPS account.

6. Any third party with registered encumbrances or other third-party rights over the EDS Shares and/or the VPS account(s) must sign this EDS Exchange Offer Acceptance Form and thereby waive their rights therein and approve the exchange of the EDS Shares free of any

encumbrances and any other third party right whatsoever. This acceptance may only be regarded to be valid if any rights holder (marked with

a "Yes" under "Rights holders registered" in the right-hand box above) has consented to the exchange of the EDS Shares, free of any encumbrances and any other third party right whatsoever, by signing this EDS Exchange Offer Acceptance Form under "Rights holder(s)"

below.

Acceptance:

By duly executing and delivering this EDS Exchange Offer Acceptance Form I/we confirm that I/we have received and reviewed the Prospectus and accept the EDS Exchange Offer to exchange my/our EDS Shares for AGR Shares according to the terms of the EDS Exchange Offer as set

forth in the Prospectus.

I/we accept the EDS Exchange Offer for __________ of my/our (only to be filled in by those EDS Shareholders who wishes to accept the EDS

Exchange Offer for a number of EDS Shares, which is less than the number of EDS Shares registered on the VPS Account and/or limit the

acceptance to the number of EDS Shares currently registered on the VPS account).

Place Date Telephone no. Signature *)

*) If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be enclosed

Rights holder(s):

In the event that there is registered holder(s) of rights on the VPS-account this is marked with a YES above on right-hand box of this EDS

Exchange Offer Acceptance Form. As holder(s) of rights the undersigned consents to the exchange of the EDS Shares free of any encumbrances

and any other third party right whatsoever.

Place

Date Telephone no. Rights holder’s signature *)


APPENDIX C:

AGR Exchange Acceptance Form

Appendix C – AGR Exchange Offer Acceptance Form

For use in accepting the AGR Exchange Offer whereby AGR Shareholders may apply for an exchange of its AGR Shares into EDS Shares on the

terms set forth in the Prospectus dated 9 August 2013 to which this form is attached. Capitalized terms used in this AGR Exchange Offer

Acceptance Form shall have the same meaning as set forth in the Prospectus. The terms for the AGR Exchange Offer is set forth in the

Prospectus, see in particular Section 5 “The Exchange Offer”.

Exchange Ratio: 44/56 (equal to the exchange ratio in the Demerger)

Acceptance period: 12 August 2013 – 26 August 2013 at 16:30 (CET)

Shareholder: RETURN TO:

Arctic Securities ASA

Haakon VII’s gt 5 P.O. Box 1833 Vika

0123 Oslo Norway

Tel: (+47) 21 01 30 40

Fax: (+47) 21 01 31 36 E-mail: [email protected]

The shareholders’ registry of AGR Group ASA as of the date of the Prospectus shows:

VPS-account: Bank account number for cash payment:

No. of AGR Shares: Rights holders registered:

ACCEPTANCE DEADLINE:

THIS ACCEPTANCE FORM MUST BE RECEIVED BY ARCTIC SECURITIES ASA (THE SETTLEMENT AGENT) BY 16:30 (CET) ON 26 AUGUST 2013.

THE SETTLEMENT AGENT RESERVES THE RIGHT TO REJECT ANY OR ALL INCORRECT OR ILLEGALLY UNDERTAKEN ACCEPTANCES.

Acceptance Guidance:

1. AGR Shareholders whose AGR Shares are held in several VPS-accounts will receive one AGR Exchange Offer Acceptance Form for each such VPS account, and must also submit a separate AGR Exchange Offer Acceptance Form for each VPS account.

2. This acceptance includes all the AGR Shares stipulated in the box "No of AGR Shares" above as well as any AGR Shares which have been or will be acquired and which will be registered in the VPS on the above stated account prior to the settlement of the AGR Exchange Offer,

unless otherwise indicated below.

3. I/We accept and acknowledge that the maximum number of EDS Shares being available for application for exchange against AGR Shares by AGR Shareholders under the AGR Exchange Offer is limited to the total number of EDS Shares actually being tendered by EDS

Shareholders under the EDS Exchange Offer. Consequently, allocation of EDS Shares to AGR Shareholders applying for exchange of its

AGR Shares into EDS Shares will be adjusted on a pro-rata basis to reflect the number of available EDS Shares tendered under the EDS

Exchange Offer.

4. I/We accept that I/we may not sell, otherwise dispose, encumber or transfer to another VPS account, the AGR Shares tendered hereunder. The Settlement Agent is irrevocably authorised to block the AGR Shares tendered hereunder on the above-mentioned VPS account in favour

of the Settlement Agent.

5. The Settlement Agent is given irrevocable authorisation to block AGR Shares tendered for under the AGR Exchange Offer, and to exchange the AGR Shares tendered hereunder against EDS Shares according to the Exchange Ratio.

6. I/We accept that settlement in the form of EDS Shares will be made by way of transfer to the VPS account.

7. Any third party with registered encumbrances or other third-party rights over the AGR Shares and/or the VPS account(s) must sign this AGR

Exchange Offer Acceptance Form and thereby waive their rights therein and approve the transfer of the AGR Shares free of any encumbrances and any other third party right whatsoever. This acceptance may only be regarded to be valid if any rights holder (marked with

a "Yes" under "Rights holders registered" in the right-hand box above) has consented to the exchange of the AGR Shares, free of any encumbrances and any other third party right whatsoever, by signing this AGR Exchange Offer Acceptance Form under "Rights holder(s)"

below.

Acceptance:

By duly executing and delivering this AGR Exchange Offer Acceptance Form I/we confirm that I/we have received and reviewed the Prospectus and accept the AGR Exchange Offer to exchange my/our AGR Shares for EDS Shares according to the terms of the AGR Exchange Offer as set

forth in the Prospectus.

I/we accept the AGR Exchange Offer for __________ of my/our (only to be filled in by those AGR Shareholders who wishes to accept the AGR

Exchange Offer for a number of AGR Shares, which is less than the number of AGR Shares registered on the VPS Account and/or limit the

acceptance to the number of AGR Shares currently registered on the VPS account).

Place Date Telephone no. Signature *)


Rights holder(s):

In the event that there is registered holder(s) of rights on the VPS-account this is marked with a YES above on right-hand box of this AGR

Exchange Offer Acceptance Form. As holder(s) of rights the undersigned consents to the exchange of the AGR Shares free of any encumbrances

and any other third party right whatsoever.

Place Date Telephone no. Rights holder’s signature *)


Registered office

AGR Group ASA

Karenslyst Allé 4

0278 Oslo

P.O. Box 444 Skøyen

0213 Oslo

EDS Group AS

Smålolane 16

5353 Straume

P.O.Box 163

5342 Straume

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