Norsk Hydro Acquires SDFI Shares On the Norwegian Shelf

Norsk Hydro has strengthened its position in core-operated areas through an agreement with the Norwegian State to acquire interests in eight licenses in the North Sea.

These licenses cover the Oseberg, Oseberg Ost, Oseberg Sor, Tune and Grane fields, and were previously part of the State Direct Financial Interest (SDFI) on the Norwegian Continental Shelf. Hydro pays NOK 3.45 billion for the acquisition.

"We are very pleased to be able to significantly increase our ownership in Oseberg and Grane, two of Hydro's most important operator fields, at an acceptable price. The transaction will strengthen our role as operator and simplify the ownership structure, leading to increased value creation to the benefit of both direct stakeholders and the society as a whole. Hydro will be able to realize synergy effects, as the additional ownership interest can be handled within the present organizational structure. The acquisition of SDFI interest is an important step in Hydro's Oil and Energy growth strategy," says Eivind Reiten, Hydro's President and CEO.

In the Oseberg area Hydro acquires a 14.4% interest in license PL 053, a 7.5% interest in PL 079 and divests a 6% interest in PL 171B. Hydro also purchases a 10% interest in each of PL 190 and PL 034 in the Tune area and a 17% interest in PL 169B1 in addition to 5% in each of PL169, PL169B2 and PL028C in the Grane area. This increases Hydro's equity from 22.23% to 34% in Oseberg, from 32.02% to 34% in Oseberg Sor, from 19.6% to 34% in Oseberg Ost, from 30% to 40% in Tune and from 24.4% to 38% in Grane.

The purchase of SDFI shares will boost Hydro's production by 35,000 boe per day for the remainder of 2002, with an estimated daily peak production increase of 60,000 boe in 2005. The additional production will be 80% oil up to 2006, with the proportion of gas gradually increasing from then.

Hydro's SEC proven reserves will grow by approximately 190 million boe, 59% of which will be oil.

The transaction will be presented in Hydro's consolidated accounts as an investment of NOK 5.8 billion. In addition to the purchase price of NOK 3.45 billion, this figure includes approximately NOK 200 million in investments in the purchased interests after January 1 this year, and approximately NOK 2.1 billion calculated as deferred tax (non-cash item ). The transaction will come into effect on March 19.