Norsk Hydro. Second quarter 1997

Norsk Hydro Second quarter 1997

Norsk Hydro 2nd quarter 1997 CONSOLIDATED RESULTS (US GAAP) 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 2,633 3,145 2,830 Operating income 5,975 5,749 158 83 135 Non-consolidated investees 218 331 1,414 1,540 1,496 Net income 3,036 3,282 6.10 6.70 6.60 Earnings per share 13.30 14.30 Norsk Hydro's net income in the first half of 1997 was NOK 3,036 million (USD 443.0 million), or NOK 13.30 per share (USD 1.94). This was a decline of 7% compared to the first half of 1996. Increased operating income was offset by reduced earnings from non-consolidated investees and higher financial expense. Operating income for the first six months of 1997 rose 4% to NOK 5,975 million (USD 872.9 million). The improvement was due to increased earnings for Oil and Gas, Light Metals and Petrochemicals. For Agriculture, earnings declined. Hydro's net income in the second quarter was NOK 1,496 million (USD 211.1 million), compared to NOK 1,414 million (USD 216.0 million) in the same period of 1996. Higher operating income and lower tax provisions led to the improvement, while increased financial expense negatively affected the result. Earnings per share were NOK 6.60 (USD 0.93) in the second quarter of 1997 and NOK 6.10 (USD 0.93) in the second quarter of 1996.

Norsk Hydro 2nd quarter 1997 Second quarter operating income of NOK 2,830 million (USD 399.3 million) was 7% above that in the same quarter of 1996. As for the first six months as a whole, results for Oil and Gas, Light Metals and Petrochemicals strengthened, while Agriculture showed reduced earnings. Earnings for non-consolidated investees declined compared to the second quarter of 1996 by 15% to NOK 135 million. This was due to weaker results for Hydro Texaco's retail gasoline activities. Earnings for the fertilizer affiliates located outside Europe improved compared to last year, largely as a result of the of urea and ammonia production from Qafco III. In spite of lower product prices, the other fertilizer affiliates also showed improved earnings due to higher sales volumes. Hydro's investments during the first half of 1997 totalled NOK 5.7 billion. This was 15% less than in the comparable period of 1996. AGRICULTURE 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 866 856 543 Operating income 1,399 1,755 Operating income for Agriculture in the first half of 1997 was NOK 1,399 million, a decrease of 20% compared to the first half of last year. The reduction was mainly due to a decline in prices for nitrogen fertilizers in the European market, which weakened earnings. The effect of lower prices was partly compensated by higher sales volumes and the contribution from the new fertilizer activities in Italy.

Norsk Hydro 2nd quarter 1997 Second quarter operating income showed a decrease of 37% from the same period last year to NOK 543 million. The decrease was mainly due to lower nitrogen fertilizer prices in Europe, while prices for complex fertilizers were relatively stable. During the second quarter, prices also weakened somewhat as a result of seasonal adjustments. The price decrease was partially offset by higher sales, compared to the second quarter of 1996. Total deliveries in Western Europe for the fertilizer season from July 1996 through June 1997 were comparable with those of the preceding season. After relatively low volumes in the two previous quarters, deliveries in the second quarter of 1997 were higher than in the corresponding period last year. Total imports of nitrogen fertilizer to Western Europe for the 1996/97 season as a whole were on the same level as in the previous season. Excluding the volumes from the Italian fertilizer operations acquired from ENI, Hydro's fertilizer deliveries to Europe in the 1996/97 season were at the same level as in the previous season. Production regularity at Hydro's fertilizer plants was high in the first half of 1997. To adjust to the market situation, Hydro increased its export volumes from Europe and reduced production somewhat in the second quarter. Higher gas prices and a stronger US dollar exchange rate led to a slight increase in raw materials costs. Increased product development and higher activity in new markets were also reflected in somewhat higher fixed costs.

Norsk Hydro 2nd quarter 1997 Earnings for Hydro's fertilizer trading operations outside of Europe were somewhat weaker than in the second quarter of 1996. Urea prices continued to fall, partly due to China's suspension of imports beginning in April. The ammonia market was relatively stable in the second quarter. The market for DAP, the most important phosphate-based fertilizer, remained tight and prices rose moderately throughout the quarter. Hydro's Industrial Chemicals activities had a somewhat better result in the second quarter than in the same period last year, as a result of higher margins for chemicals and industrial gas products. OIL AND GAS 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 1,448 1,924 1,555 Operating income 3,479 2,945 241 114 237 Exploration expense 351 375 3.3 3.5 3.2 Oil and gas production (mill. toe) 6.7 6.7 19.80 21.40 18.10 Oil price (USD/bbl) 19.70 19.40 129.30 141.00 127.50 Oil price (NOK/bbl) 134.30 125.50 Operating income for Oil and Gas in the first half of 1997 was NOK 3,479 million, an increase of 18% compared to the previous year. Higher operating income was attributable to increased crude oil prices stated in Norwegian kroner, and to lower unit of production depreciation charges resulting from the upward adjustment in proved reserves at the end of 1996.

Norsk Hydro 2nd quarter 1997 In the second quarter, operating income increased by 7% compared to the second quarter last year to NOK 1,555 million. The favorable change was principally due to lower depreciation costs. The average crude oil price in the second quarter was USD 18.10 per barrel, which was 9% lower than that of the corresponding period last year. As a result of the higher US dollar exchange rate, the decrease stated in Norwegian kroner was only 1%. Average gas prices were 8% higher than in the second quarter of 1996. Hydro's oil and gas production was 3% lower than in the second quarter of last year. The decline in oil production caused by the maintenance shutdowns at the Oseberg and Brage fields was partly offset by increased gas deliveries from Troll. In addition, Hydro's share of production from Veslefrikk was transferred to Petro-Canada as a result of the exchange agreement signed in 1996. Exploration expense of NOK 237 million in the second quarter was on the same level as in the previous year. As a consequence of drilling a dry hole in Egypt, previously capitalized costs of NOK 90 million were expensed in the second quarter of 1996. Development plans for Troll C and Oseberg South were approved by the authorities in June. Hydro is operator for both of these fields with interests of 7.7% and 21.9%, respectively. Elf Norge and Hydro have agreed to exchange interests on four production licenses on the Norwegian continental shelf.

Norsk Hydro 2nd quarter 1997 As part of the agreement, Hydro will take over as operator of the Heimdal field on 1 January 1998. The agreement is contingent on approval by the authorities. Operating income for Hydro's Refining and Marketing activities was higher in the second quarter than in the same period last year. The improvement reflected increased refining margins, higher earnings for retail marketing activities in Sweden, and good results within international trade. LIGHT METALS 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 301 396 661 Operating income 1,057 990 Operating income for Light Metals in the first half of 1997 was NOK 1,057 million, an increase of 7% compared to the same period last year. The improvement was due to better earnings for energy operations and aluminium semi-fabrication activities, while the results for aluminium and magnesium production declined. In the second quarter, operating income for Light Metals was NOK 661 million. This was more than double the operating income from the corresponding period in 1996.

Norsk Hydro 2nd quarter 1997 Second quarter operating income for primary aluminium production was substantially higher than in the first quarter, and slightly above that in the second quarter of 1996. The improvement relative to the first quarter was due to higher realized prices. Although prices on the London Metal Exchange (LME) were virtually unchanged compared to the first quarter, the increase in the US dollar exchange rate led to higher prices stated in Norwegian kroner. The -up of Hydro's idle aluminium capacity will be completed in the third quarter. The result for trading activities in the second quarter was slightly higher than in the corresponding period last year, when earnings were also relatively strong. Aluminium semi-fabrication activities showed marked improvement compared to the second quarter of 1996. Increased earnings were principally a result of greater demand and higher production of both extruded and rolled products. Realignment and the further development of production processes for automotive components continued to adversely affect results in the second quarter. Raufoss Automotive, which was acquired on 1 April, made a positive contribution to operating income. Magnesium's second quarter operating income weakened relative to the same period of last year, mainly due to lower realized prices in Europe for pure magnesium. Prices showed a downward trend through most of the first half of the year, however, a strengthening in demand led to a slight increase in prices toward the end of the second quarter. Capacity utilization at Hydro's production facilities was good in the first half of 1997.

Norsk Hydro 2nd quarter 1997 Hydro's Energy operations showed considerable progress compared to the second quarter of 1996, when a low inflow of water to the reservoirs led to an operating loss. Reservoir inflow is currently at the same level as in a normal year. PETROCHEMICALS 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 3 59 119 Operating income 178 90 Petrochemicals' operating income was NOK 178 million in the first half of 1997, compared to NOK 90 million in the same period last year. Operating income in the second quarter was NOK 119 million, compared to NOK 3 million in the second quarter of 1996. The improvement in the second quarter was mainly due to higher PVC prices and reduced maintenance expenses, while earnings were negatively affected by lower caustic soda prices and an increase in raw materials costs. Prices in the international PVC and VCM markets in the second quarter were fairly stable, with some regional variations. Caustic soda prices stabilized at a relatively low level. In the first half of 1997, Hydro began phasing in S-PVC production at its new production lines in Norway and the UK. The new lines will raise capacity by approximately 65,000 tonnes per year.

Norsk Hydro 2nd quarter 1997 OTHER ACTIVITIES 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 15 (90) (48) Operating income (138) (31) Other activities include unallocated costs for corporate functions and shared services, as well as certain subsidiaries including Pronova, Hydro Seafood and Industriforsikring. FINANCE 1996 1997 1997 1997 1996 2nd qtr 1st qtr 2nd qtr NOK million 1st half 1st half 154 210 268 Net interest expense 478 291 29 59 195 Net foreign exchange loss 254 109 (155) (165) (97) Net gain on securities (262) (421) (51) (65) Other financial income, net (65) (40) (23) 104 301 Net financial (income) expense 405 (61) 6.51 6.67 7.30 NOK/USD exchange rate 1) 7.30 6.51 1) As of the end of the period.

Norsk Hydro 2nd quarter 1997 For the first half of 1997, Hydro had a net financial expense of NOK 405 million, compared to an income of NOK 61 million last year. The net realized and unrealized gain on securities was NOK 262 million in 1997, compared to NOK 421 million last year. The increase in net foreign exchange loss in the first half of the year to NOK 254 million, from NOK 109 million last year, was mainly due to the effect of a stronger US dollar exchange rate. The higher US dollar exchange rate also negatively impacted net interest expense. Capitalized interest on plant under construction totalled NOK 262 million in the first half of 1997, compared to NOK 309 million in the corresponding period last year. In the second quarter, net financial items showed an expense of NOK 301 million, compared to an income of NOK 23 million last year. Financial items were negatively impacted by higher unrealized foreign exchange losses as well as a writedown of NOK 69 million. Hydro wrote off its 10% investment in Friguia, an alumina company based in Guinea. The writedown was a result of difficult operating conditions over a long period, as well as an ongoing conflict with the authorities in the African state. Net cash flow from operations amounted to NOK 6.5 billion in the first half of this year, compared to NOK 6.6 billion in the first half of 1996. The long-term debt to equity ratio of 0.39 at the end of the first half remained at the previous year's level.

Norsk Hydro 2nd quarter 1997 TAXES The provision for current and deferred taxes in the first half of the year was NOK 2,816 million, equivalent to 48% of pre-tax income. The corresponding figure for the first half of 1996 was NOK 2,848 million, equivalent to 46% of pre-tax income. Current tax is estimated to represent about 79% of total taxes. This compares to 86% for the entire year of 1996, excluding the 1996 effect of the change in the tax law for hydro-electric power production facilities. In the second quarter, tax provision was NOK 1,149 million, compared to NOK 1,383 million in the same period of 1996. Oslo, 21 July 1997 The Board of Directors

Norsk Hydro 2nd quarter 1997 INCOME STATEMENTS Second quarter First half Year NOK million except per share data 1997 1996 1997 1996 1996 Operating revenues 25,042 21,568 48,291 42,948 84,840 Depreciation, depletion and amortization 1,701 1,666 3,360 3,331 6,725 Other operating costs 20,511 17,269 38,956 33,868 67,462 Provision for impairment and losses 1,000 Operating income 2,830 2,633 5,975 5,749 9,653 Equity in net income of non-consolidated investees 135 158 218 331 630 Financial income (expense), net (301) 23 (405) 61 (219) Other income 78 213 Income before taxes and minority interest 2,664 2,814 5,866 6,141 10,277 Income tax expense (1,149) (1,383) (2,816) (2,848) (4,829) Tax effect of changes in tax law 776 Minority interest (19) (17) (14) (11) (20) Net income 1,496 1,414 3,036 3,282 6,204 Earnings per share 6.60 6.10 13.30 14.30 27.10 Comments All figures are based on generally accepted accounting principles in the United States (US GAAP), unless otherwise stated. Interim figures are unaudited. Earnings and shareholders equity per share have been calculated based on the average number of outstanding shares of 229,072,674.

Norsk Hydro 2nd quarter 1997 INDIVIDUAL INDUSTRY SEGMENTS Operating revenues Second quarter First half Year NOK million 1997 1996 1997 1996 1996 Agriculture 11,709 9,989 22,413 19,403 37,858 Oil and Gas 4,346 4,150 9,088 8,257 17,764 Light Metals 6,910 5,723 13,103 11,843 22,026 Petrochemicals 1,615 1,337 2,908 2,699 5,522 Other activities 1,559 1,338 2,882 2,637 5,525 Intersegment sales (1,097) (969) (2,103) (1,891) (3,855) Total 25,042 21,568 48,291 42,948 84,840 Operating income Second quarter First half Year NOK million 1997 1996 1997 1996 1996 Agriculture 543 866 1,399 1,755 2,667 Oil and Gas 1,555 1,448 3,479 2,945 5,631 Light Metals 661 301 1,057 990 1,253 Petrochemicals 119 3 178 90 287 Other activities and costs not identified with a segment (48) 15 (138) (31) (185) Total 2,830 2,633 5,975 5,749 9,653

Norsk Hydro 2nd quarter 1997 QUARTERLY RESULTS NOK million except 1997 1996 per share data 1st qtr 2nd qtr 1st qtr 2nd qtr 3rd qtr 4th qtr Operating revenues 23,249 25,042 21,380 21,568 20,173 21,719 Operating income 3,145 2,830 3,116 2,633 2,150 1,754 Net income 1,540 1,496 1,868 1,414 909 2,013 Earnings per share 6.70 6.60 8.20 6.10 4.00 8.80 USD million except 1997 1996 per share data * 1st qtr 2nd qtr 1st qtr 2nd qtr 3rd qtr 4th qtr Operating revenues 3,501.0 3,533.1 3,326.4 3,294.6 3,127.9 3,369.8 Operating income 473.6 399.3 484.8 402.2 333.4 272.1 Net income 231.9 211.1 290.6 216.0 140.9 312.3 Earnings per share 1.01 0.93 1.28 0.93 0.62 1.37 Amounts have been converted to USD for convenience using the average exchange rate (NOK/USD) in effect during the quarters as follows: 6.6406 7.0879 6.4273 6.5465 6.4494 6.4451

Norsk Hydro 2nd quarter 1997 BALANCE SHEETS NOK million except per share data 30.06.1997 30.06.1996 31.12.1996 ASSETS Current assets Cash and cash equivalents 3,070 2,856 3,538 Other liquid assets 2,823 2,985 2,953 Receivables 22,159 19,251 19,497 Inventories 12,338 10,902 13,194 Total current assets 40,390 35,994 39,182 Non-current assets Property, plant and equipment, less accumulated depreciation, depletion and amortization 55,238 50,329 52,053 Other assets 15,332 14,054 14,229 Total non-current assets 70,570 64,383 66,282 Total assets 110,960 100,377 105,464 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities Bank loans and other interest bearing short-term debt 5,074 3,486 3,610 Current portion of long-term debt 1,161 1,549 1,346 Other current liabilities 18,807 17,143 18,795 Total current liabilities 25,042 22,178 23,751 Long-term liabilities Long-term debt 17,769 15,449 17,330 Deferred tax liabilities 17,779 18,047 16,887 Other long-term liabilities 5,078 4,744 4,765 Total long-term liabilities 40,626 38,240 38,982 Minority shareholders interest in consolidated subsidiaries 1,217 1,139 1,184 Shareholders equity 44,075 38,820 41,547 Total liabilities and shareholders equity 110,960 100,377 105,464 Shareholders equity per share 192.40 169.50 181.40

Norsk Hydro 2nd quarter 1997 STATEMENTS OF CASH FLOWS First half Year NOK million 1997 1996 1996 Operating activities: Net income 3,036 3,282 6,204 Adjustments: Depreciation, depletion and amortization 3,360 3,331 6,725 Provision for impairment and losses 1,000 Other adjustments 72 (45) (2,477) Net cash provided by operating activities 6,468 6,568 11,452 Investing activities: Purchases of property, plant and equipment (4,795) (5,500) (10,958) Purchases of other investments (1,013) (804) (2,223) Net sales of short-term investments 205 277 347 Proceeds from sales of property, plant and equipment 96 67 174 Other proceeds 193 751 1,305 Net cash used in investing activities (5,314) (5,209) (11,355) Financing activities: Loan proceeds 1,354 177 2,307 Principal repayments (1,463) (2,153) (2,346) Dividends paid (1,604) (1,374) (1,374) Net cash used in financing activities (1,713) (3,350) (1,413) Foreign currency effects on cash flows 91 51 58 Net decrease in cash and cash equivalents (468) (1,940) (1,258) Cash and cash equivalents at beginning of period 3,538 4,796 4,796 Cash and cash equivalents at end of period 3,070 2,856 3,538

Norsk Hydro 2nd quarter 1997 OPERATING INCOME - NORWEGIAN ACCOUNTING PRINCIPLES Norsk Hydro prepares its financial statements in accordance with the accounting principles generally accepted in Norway and with US GAAP. In the report, operating revenues and operating income according to Norwegian accounting principles are shown in the table below. All other figures in the report are presented in accordance with US GAAP. The general comments concerning developments in the operations of industry segments are applicable to both sets of accounting principles, unless otherwise stated. The main differences between Norwegian and United States accounting principles (US GAAP) are that exploration costs for oil and gas activities and interest during construction are expensed as incurred under Norwegian accounting principles. Under US GAAP, drilling costs for exploratory wells are capitalized pending a determination of whether proved reserves have been found. If commercially exploitable reserves are not proved, the drilling costs are expensed. The capitalized drilling costs are depreciated when production begins. Interest on plant under construction is capitalized under US GAAP and is depreciated along with the facilities. Second quarter First half Year NOK million 1997 1996 1997 1996 1996 Operating revenues 25,042 21,568 48,291 42,948 84,840 Depreciation 1,531 1,457 3,014 2,913 5,852 Other operating costs 20,268 17,252 38,782 33,908 67,886 Provision for impairment and losses 822 Operating income 3,243 2,859 6,495 6,127 10,280

2 Light Metals improvement offsets lower fertilizer prices Good result for Oil and Gas First half investments: NOK 5.7 billion Increased aluminium and PVC production in second half of 1997

3 NOK million 2nd quarter 1997 2nd quarter 1996 Operating revenues 25,042 21,568 Operating income 2,830 2,633 Equity in net income of non-consolidated investees Financial income (expense) 135 (301) 158 23 Income before taxes and minority interest Tax Minority interest 2,664 (1,149) (19) 2,814 (1,383) (17) Net income 1,496 1,414 Earnings per share NOK 6.60 6.10

By quarter 4 NOK million 4,000 3,500 3,000 2,500 2,000 1,500 1,915 1,900 1,616 1,537 3,556 2,719 2,405 2,024 3,116 3,145 2,830 2,633 2,150 1,754 1,000 500 0 1994* 1995 1996 1997 Accumulated 6,968 10,704 9,653 5,975 *) Excluding reversal of previously accrued restructuring charges of NOK 184 million in 3rd qtr. 1994

By business segment 5 NOK million 2nd quarter 1997 2nd quarter 1996 Agriculture Oil and Gas Light Metals Petrochemicals Other activities and costs not identified with a segment 543 1,555 661 119 (48) 866 1,448 301 3 15 Total 2,830 2,633

Operating income 6 NOK million 2nd quarter 1997 2nd quarter 1996 2,830 2,633 Variance 197 Explanation: - Higher volumes - Weaker prices and margins - Energy production - Fixed costs - Other 400 (320) 260 (80) (70)

By business segment 7 NOK million 2nd quarter 1997 1st quarter 1997 Agriculture Oil and Gas Light Metals Petrochemicals Other activities and costs not identified with a segment 543 1,555 661 119 (48) 856 1,924 396 59 (90) Total 2,830 3,145

!"# $%&' 8 NOK/USD 7.50 7.30 6.97 7.00 6.77 6.50 6.00 6.79 6.19 6.18 6.25 6.33 6.42 6.51 6.52 6.45 6.67 5.50 5.00 30.06.94 31.12.94 30.06.95 31.12.95 30.06.96 31.12.96 30.06.97

" 9 NOK million Net interest expense* Foreign exchange losses (gains) Losses (gains) on securities Other 2nd quarter 1997 268 195 (97) (65) 2nd quarter 1996 154 29 (155) (51) Net financial expense (income) 301 (23) *) After reduction of capitalized interest

By quarter 10 NOK million 2,500 2,000 2,130 1,947 1,868 2,013 1,500 1,658 1,381 1,414 1,540 1,496 1,000 877 1,097 1,049 1,013 909 1,237 500 0 1994* 1995* 1996** 1997 Accumulated 3,909 7,150 6,204 3,036 *) Before effect of changes in accounting principles in 1st qtr. 1994: NOK 127 mill. and 1st qtr. 1995: NOK (17) million **) After tax law change: Hydro-electric power 4th qtr. 1996: NOK 776 million

11 NOK million 1st half 1997 1st half 1996 Operating revenues 48,291 42,948 Operating income 5,975 5,749 Equity in net income of non-consolidated investees Financial income (expense) Other income (expense) 218 (405) 78 331 61 - Income before taxes and minority interest Tax Minority interest 5,866 (2,816) (14) 6,141 (2,848) (11) Net income 3,036 3,282 Earnings per share NOK 13.30 14.30

By business segment 12 NOK million 1st half 1997 1st half 1996 Agriculture Oil and Gas Light Metals Petrochemicals Other activities and costs not identified with a segment 1,399 3,479 1,057 178 (138) 1,755 2,945 990 90 Total 5,975 5,749 (31)

Operating income 13 NOK million 1st half 1997 1st half 1996 5,975 5,749 Variance 226 Explanation: - Higher volumes, land based activities - Increased volumes, Oil and Gas - Better prices, Oil and Gas - Lower margins, land based activities - Other 650 110 380 (790) (120)

( )*## + 14 1.20 1.00 1.03 0.80 0.60 0.60 0.40 0.45 0.41 0.39 0.20 0.00 1993 1994 1995 1996 30.06.97 Long-term debt divided by shareholders` equity plus minority interest

, By quarter 15 NOK million 1,000 800 843 798 889 866 856 600 544 580 521 526 543 400 430 347 386 200 243 0 1994 1995 1996 1997 Accumulated 1,564 2,742 2,667 1,399

(--, 16 Decline in margins, but stable sales volume in Europe Investment to renovate and upgrade ammonia plant in Porsgrunn approved Continued expansion of trade and distribution in new markets Completion of Qafco III expansion provides positive earnings effect

, Operating income 17 NOK million 2nd quarter 1997 2nd quarter 1996 543 866 Variance (323) Explanation: - Fertilizer volume - Fertilizer margin - Fixed costs - Inventory change - Other 310 (420) (90) (30) (90)

, Western Europe C&F 18 USD/tonne 300 250 200 150 100 50 1992 1993 1994 1995 1996 1997 Sources: Green Markets, British Sulphur and Fertecon

. *',. 19 USD/tonne 300 250 200 DAP Bulk FOB US Gulf 150 100 UREA Bulk FOB Arab Gulf 50 01.93 07.93 01.94 07.94 01.95 07.95 01.96 07.96 01.97 07.97 Sources: Green Markets, British Sulphur and Fertecon

!/ " 20 Index (average 1989-91 = 100) 120 110 100 90 80 70 01.92 07.92 01.93 07.93 01.94 07.94 01.95 07.95 01.96 07.96 01.97 07.97

By quarter 21 NOK million 2,500 2,000 1,500 * * 1,497 1,448 1,346 1,340 1,924 1,555 1,000 814 881 724 822 1,017 * 859 1,089 500 310 0 1994 1995 1996 1997 Accumulated 3,241 3,275 5,631 3,479 *) Frigg-area: Impairment and other losses NOK 755 million in 2nd qtr. 1995, NOK 400 million in 3rd qtr. 1996 and NOK 600 million in 4th qtr. 1996

, 22 Good result High exploration activity Development plans for Troll C and Oseberg South approved New gas exports through Frigg pipeline possible Increased interest in Visund and Heimdal through exchange agreement with Elf

Operating income 23 NOK million 2nd quarter 1997 2nd quarter 1996 1,555 1,448 Variance 107 Explanation: - Price and foreign exchange effects - Lower production - Depreciation - Refining and marketing 30 (70) 90 50

. Average per quarter USD/bbl 26 NOK/bbl 160 24 24 150 22 140 20 130 18 120 16 110 14 100 12 1992 1993 1994 1995 1996 1997 90 USD/bbl NOK/bbl 2nd quarter 1997: 127.5 NOK/bbl 18.1 USD/bbl

. Own reserves, per quarter 25 1,000 toe 4,000 3,264 3,341 3,369 3,321 3,442 3,359 3,489 3,241 3,000 2,861 2,842 2,998 2,877 2,949 2,562 2,000 1,000 0 Accumulated (mill. toe) 1994 1995 1996 1997 11.5 12.2 13.5 6.7 Gas Oil

) 26 NOK/bbl 120 100 80 92 92 85 75 78 73 60 63 64 63 56 58 53 40 20 0 1992 1993 1994 1995* 1996* 2nd qtr. 1997 Transportation costs Depreciation and abandonment Exploration Net operating costs *) Excl. impairment Frigg-area Field and production costs

!" 27 NOK million 300 250 200 150 100 Expensed share 50 0-50 -100-150 1/94 2/94 3/94 4/94 1/95 2/95 3/95 4/95 1/96 2/96 3/96 4/96 1/97 2/97 Capitalized share Activity Previously capitalized wells expensed

(#0 By quarter 28 NOK million 1,500 1,341 1,200 900 933 943 600 300 689 661 509 438 391 396 305 301 246 158 105 0 1994* 1995 1996 1997 Accumulated 1,451 3,655 1,253 1,057 *) Excluding reversal of restructuring charges of NOK 184 million in 3rd qtr. 1994

(#0#- 29 Demand is good for metal and semi-fabricated products Electricity production to normal: 1 TWh higher than in 2nd quarter 1996 Full re- of idle primary aluminium capacity expected soon Acquisition of Raufoss Automotive strengthens automotive activities Aluminium metal project: Cost improvement from average to top third

(#0 Operating income 30 NOK million 2nd quarter 1997 2nd quarter 1996 661 301 Variance 360 Explanation: - Metal margin - Downstream metals - Tolling and trading, aluminium - Electricity production - Fixed costs (10) 100 40 260 (30)

(#0 Operating income 31 NOK million 2nd quarter 1997 1st quarter 1997 661 396 Variance 265 Explanation: - Metal margin - Tolling and trading, aluminium - Downstream metals - Electricity production - Fixed costs - Other 140 100 90 (50) (40) 25

. 3-month LME price, monthly average 32 USD/tonne 2,200 2,000 1,800 1,600 1,400 1,200 1,000 1993 1994 1995 1996 1997

1 Registered inventories in the western world 33 1,000 tonnes 5,000 4,000 3,000 2,000 1,000 0 1984 1986 1988 1990 1992 1994 1996 Jan Feb Mar Apr May IPAI (Producers` inventories) LME (London Metal Exchange) Sources: IPAI and Reuter

!") 34 Index (1st qtr. 1994 = 100) 130 120 110 100 90 80 70 1994 1995 1996 1997

. Pure and alloy 35 Index 1st qtr. 1993 = 100 140 Pure 120 Alloy 100 80 1993 1994 1995 1996 1997

02 36 1,000 tonnes 80 70 60 50 40 30 20 10 0 1/93 2/93 3/93 4/93 1/94 2/94 3/94 4/94 1/95 2/95 3/95 4/95 1/96 2/96 3/96 4/96 1/97 Western production Imports FSU and China Western demand

3-37 Percent 100 80 60 Maximum level 1982-91 Minimum level 1982-91 40 Median 1982-91 20 0 1 8 16 24 32 40 48 52 Reservoir levels 1996 Reservoir levels 1997 Week

.# By quarter 38 NOK million 400 392 350 334 353 348 300 250 259 200 172 150 133 118 119 100 87 79 59 50 45 3 0 1994 1995 1996 1997 Accumulated 898 1,138 287 178

1.# 39 Higher PVC prices offset lower caustic soda prices Increased PVC production capacity "Petro 1" improvement program under way

.# Operating income 40 NOK million 2nd quarter 1997 2nd quarter 1996 119 3 Variance 116 Explanation: - Margin - Volume - Fixed costs - Depreciation 75 30 35 (25)

.. S-PVC (pipe grade) CIF, Northwest Europe 41 DEM/kg 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Source: Platt s

. Contract prices Northwest Europe 42 DEM/tonne 700 600 500 400 300 200 100 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Source: Harriman

)# 44 NOK million 30.06.97 30.06.96 31.12.96 Cash and cash equivalents Other liquid assets Receivables and inventories Non-current assets 3,070 2,823 34,497 70,570 2,856 2,985 30,153 64,383 3,538 2,953 32,691 66,282 Total assets 110,960 100,377 105,464 Short-term interest bearing debt Other short-term liabilities Long-term interest bearing debt Deferred tax liabilities Other long-term liabilities Minority interest Shareholders` equity 6,235 18,807 17,769 17,779 5,078 1,217 44,075 5,035 17,143 15,449 18,047 4,744 1,139 38,820 4,956 18,795 17,330 16,887 4,765 1,184 41,547 Total liabilities and shareholders` equity 110,960 100,377 105,464 Shareholders` equity per share, NOK 192.40 169.50 181.40

) ) 45 NOK million 30,000 27,420 25,000 25,332 20,000 20,840 16,712 18,748 20,934 15,000 10,000 5,000 0 1992 1993 1994 1995 1996 30.06.97 Interest bearing debt less cash and cash equivalents

" 46 NOK million 1st half 1997 1st half 1996 Net interest expense* Foreign exchange losses (gains) Losses (gains) on securities Other 478 254 (262) (65) 291 109 (421) (40) Net financial expense (income) 405 (61) *) After reduction of capitalized interest

, Operating income 47 NOK million 1st half 1997 1st half 1996 1,399 1,755 Variance (360) Explanation: - Fertilizer volume - Fertilizer margin - Fixed costs - Inventory change - Other 590 (680) (120) (80) (70)

, Operating income 48 NOK million 2nd quarter 1997 1st quarter 1997 543 856 Variance (313) Explanation: - Fertilizer margin - Fertilizer volume - Fixed costs - Inventory change - Other (190) (110) (130) 50 70

!/ 49 GBP/tonne 150 AN United Kingdom Bagged ex warehouse FRF/tonne 1,200 AN France Bulk delivered wholesalers 120 1,000 90 800 60 1992 1993 1994 1995 1996 1997 600 1992 1993 1994 1995 1996 1997 DEM/tonne 300 CAN Germany Bulk delivered wholesalers FRF/tonne 1,200 NPK 15-15-15 France Bulk delivered wholesalers 250 200 1,000 150 1992 1993 1994 1995 1996 1997 800 1992 1993 1994 1995 1996 1997 Sources: British Sulphur and Fertecon

Western Europe 50 Mill. tonnes Nitrogen 12 10 8 6 4 2 0 Import as % of consumption 89/90 90/91 91/92 92/93 93/94 94/95 95/96 96/97E 13% 20% 19% 21% 22% 24% 23% 23% Consumption Imports from central Europe and FSU Imports from rest of the world Import estimate 96/97 Ekvartal 21.07.97 * 50 Hydro Media Sources: EFMA, Pub.stat. and Hydro estimates

Operating income 51 NOK million 1st half 1997 1st half 1996 3,479 2,945 Variance 534 Explanation: - Price and foreign exchange effects - Depreciation - Other 380 140 20

Operating income 52 NOK million 2nd quarter 1997 1st quarter 1997 1,555 1,924 Variance (369) Explanation: - Reduced production - Price and foreign exchange effects - Exploration and field evaluation - Depreciation - Refining and marketing - Other (190) (160) (120) 40 80 (20)

. ) 2nd quarter 53 Daily average barrel/day Hydro`s share Hydro`s production 1997 Field 1996 1997 Percent 1.000 toe Oil (incl. NGL/cond.) Oseberg Gullfaks Ekofisk Snorre Brage Troll Oil Other fields 495,000 451,000 315,000 202,000 119,000 210,000-453,000 467,000 339,000 204,000 96,000 256,000 13.68 9.00 6.70 8.27 22.42 7.68 751 526 272 203 264 247 306 Sum oil 2,569 Gas - 672 Total production - 3,241

(#0 Operating income 54 NOK million 1st half 1997 1st half 1996 1,057 990 Variance 67 Explanation: - Metal margin - Downstream metals - Tolling and trading, aluminium - Raw material production - Electricity production - Other (170) 160 70 (60) 190 (120)

, -- January 1993 - May 1997 55 Million tonnes 16 15.5 15 14.5 14 1993 1994 1995 1996 1997

.# Operating income 56 NOK million 1st half 1997 1st half 1996 178 90 Variance 88 Explanation: - Margin - Fixed costs - Depreciation 60 70 (40)

.# Operating income 57 NOK million 2nd quarter 1997 1st quarter 1997 119 59 Variance 60 Explanation: - Margin - Volume - Other 40 30 (10)

. 0 Spot prices FOB Northwest Europe for export to Asia 58 USD/tonne 1,000 800 600 400 200 0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 Source: ICIS

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